Budget: Labour warned two child benefit cap to hit 900,000 more children by 2030

Labour faces fresh pressure to scrap the two-child benefit cap following its first Budget, after new figures showed the number of children affected could soar to around 2.5 million by 2030.

The absence of the measure in the Budget prompted criticism from rival parties and some within Labour, while the Resolution Foundation published post-Budget analysis estimating an additional 63,000 children will become affected between now and April 202 alone5.

Figures also suggested that around 2.5 million children could be affected by the end of the decade if the average increase rate continues – up from 1.6 million when Labour took office in July.

READ MORE: ‘A proper Labour Budget’: MPs, unions and readers overjoyed at NHS and NMW cash – but some fear for public services

Chancellor Rachel Reeves did not scrap the policy in yesterday’s Budget amid a tight fiscal squeeze, despite mounting calls from activists to do abolish it as a means of curbing child poverty.

A spokesperson for the think tank posted on social media: “The government’s decision to leave the two-child limit in place at the Budget will have a material impact, as the policy affects an increasing number of children as time goes on.”

The two-child limit has been the subject of fierce debate in the Labour ranks since the party’s return to power this summer, with scores of campaigners and backbench MPs urging the government to scrap the policy.

Seven Labour MPs, including former Shadow Chancellor John McDonnell, lost the party whip in July after defying the government over a King’s Speech amendment calling for the cap to be abolished.

READ MORE: Who key Budget policies are aimed at – and the electoral strategy they signal

The Resolution Foundation’s report further asserted that the two-child cap has a “clear link to child poverty rates.”

One Labour MP told LabourList: “I’m really concerned about child poverty – there was no mention of the two-child cap. That’s a huge misstep, and it’s disappointing.

“Groups like Child Poverty Action Group had been calling for some sign it would be addressed. I wasn’t expecting anything, but I was hoping for a mention, or sign it would be reversed next year. It would lift so many kids instantly out of poverty who are in it through no fault of their own.

“This is going to follow the government, similar to how the winter fuel allowance row has – we’ll see charities coming out over it.”

Rival parties have also criticised Labour over not scrapping the two-child benefit cap in the Budget, including the SNP, Liberal Democrats and Plaid Cymru.

Meanwhile Labour national executive commitee member Jess Barnard, on the left of the party, also lamented that the policy was not abolished in yesterday’s Budget, saying the policy package “failed to speak to the millions of children living in poverty.”

She added: “It would be a clear and bold signal that Labour is serious about ending child poverty by scrapping the cruel two child benefit cap as a starting measure.”

HM Treasury and the Department for Work and Pensions were not immediately available for comment.

When asked about the cap in July, Keir Starmer said there is no “silver bullet” to solving child poverty while Rachel Reeves also said no “unfunded” pledge would be made to scrap it. Labour has also set up a Child Poverty Taskforce since re-entering government.

 Read more of our Budget 2024 coverage:

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  • ‘No fiscal rule is perfect. But this one means welcome investment’
  • Fiscal rules: What is Reeves changing – and why does it matter?
  • Bus fare cap row rumbles on as Burnham sticks to £2 cap
  • Sam White: ‘Budget 2024 leaves Reeves facing nine circles of fiscal hell’
  • Budget bus fare row: ‘The £2 cap was a rare policy that dramatically improves lives – it’s so cheap people talk about it’
  • Budget 2024: National Minimum Wage set for record hike and Living Wage to rise 6.7%
  • Budget 2024: ‘How Rachel Reeves will turn the page on the Tories’ economic illiteracy’
  • ‘How Labour councils can help Starmer and Reeves deliver their growth mission’
  • Who key Budget policies are aimed at – and the electoral strategy they signal
  • ‘A proper Labour Budget’: MPs, unions and readers overjoyed at NHS and NMW cash – but some fear for public services
  • Autumn Budget 2024: Read Chancellor Rachel Reeves’ full Budget speech

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