Chancellor Rachel Reeves said it was not right that a ‘child is penalised because they are in a bigger family’ as she vowed to cut the number of children in poverty
Rachel Reeves gave a clear signal today the government will get rid of the two-child benefit limit in full at the Budget.
Keir Starmer and the Chancellor have been looking at the Tory-era policy which restricts Universal Credit to the first two children in a family and has been blamed by charities for trapping kids in poverty. There have been reports the government was considering watering down the policy to mitigate the impact, including moving to a three-child benefit limit.
But Ms Reeves appeared to suggest on Monday she favours full abolition as called for by former Labour Prime Minister, Gordon Brown. She said it was not right that a “child is penalised because they are in a bigger family” as she vowed to cut the number of kids in poverty.
The Chancellor told BBC Radio 5 Live it was important not to let the “costs to our economy in allowing child poverty to go unchecked”. She said: “In the end, a child should not be penalised because their parents don’t have very much money. Now, in many cases you might have a mum and a dad who were both in work, but perhaps one of them has developed a chronic illness, perhaps one of them has passed away.
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“There are plenty of reasons why people make decisions to have three, four children, but then find themselves in difficult times.” Ms Reeves added: “Lots and lots of different reasons why families change shape and size over time, and I don’t think that it’s right that a child is penalised because they are in a bigger family through no fault of their own.
“So, we will take action on child poverty. The last Labour government proudly reduced child poverty and we will reduce child poverty as well.” A Treasury source suggested the comments were a clear signal of intent from the Chancellor.
TUC general secretary Paul Nowak told The Mirror: “Rachel Reeves has a generational opportunity to turn the tide on child poverty and immediately improve the lives of hundreds of thousands of kids. As the chancellor said, all children are equal and all deserve a decent start in life. This is not just a moral duty – it’s an economic one too.
He added: “Child poverty is a national emergency, costing us now and for generations to come if we don’t act. The government has recognised this with its commitment to delivering a child poverty strategy and important action on free school meals, breakfast clubs and much more. We hope that the Chancellor takes the chance at the Budget to build on this good work by scrapping the two child limit for good.”
Last week Mr Brown insisted there must be “total abolition” in order to deliver on Labour’s promise to reduce poverty by the end of the Parliament. Speaking on Monday the former Chancellor between 1997 and 2007 added: “I am confident that the two-child rule will be addressed.”
He has suggested a hike in taxes for gambling firms could fund the reversal of the policy that was introduced by the Tories in 2017. Mr Brown said: “We’re waiting for Rachel Reeves’s Budget, which I think will mention this. Keir Starmer, I know is personally concerned and interested in this. So I’m hopeful that in the next few weeks we’ll see the kind of action that we’ve been talking about.”
Mr Starmer has previously insisted he is committed to driving down levels of child poverty but insisted there is no “silver bullet”. Speaking in September, he said: “The last Labour government got child poverty down and it’s one of the proudest things that we did – I am determined to do it under this government.”
Last month leading think-tank the Resolution Foundation said fully scrapping the two-child limit is an essential step to reducing grim child poverty rates. It warned half measures – such as moving to a three-child limit, or lower child elements for third and subsequent child – would still leave higher rates of child poverty by the end of the decade.
Ms Reeves also suggested it will not be possible to stick to Labour’s manifesto promises on tax without “deep cuts” in spending. It is another sign yet the Chancellor is preparing to break the party’s vow not to raise income tax, VAT, or national insurance, on November 26.
Ms Reeves said: “I will set out the choices in the Budget. It would, of course be possible to stick with the manifesto commitments, but that would require things like deep cuts in capital spending and the reason why our productivity and our growth has been so poor these last few years is because governments have always taken the easy option to cut investment – in rail and road projects, in energy projects, in digital infrastructure.”
The Chancellor insisted the Treasury is still going through the process with the Office for Budget Responsibility (OBR) to prepare Budget measures, with just over a fortnight to go. She said: “So those final decisions haven’t been taken yet, but as I take those measures, I will do what I believe is right for our country, and sometimes that means not always making the easy decisions, but the decisions that I think are in our national interest.” She stressed the Budget will be focused on the cost of living and reducing NHS waiting lists.