Starmer ‘considering relaxing two-child benefit cap’ amid warnings over child poverty

Under plans being considered to tackle child poverty, parents of under-fives could reportedly be exempted from the limit. Ministers are considering relaxing the two-child benefit cap after facing intense pressure to scrap the limit entirely, it has emerged.

Under plans being considered to tackle child poverty, parents of under-fives could reportedly be exempted from the limit. The government is also considering exempting parents of disabled children, parents in work and hiking child benefit payments for those with young children, The Guardian reported.

A person familiar with discussions said officials are “keen to mitigate the impact of the cap, if not lift it entirely”. “They have been discussing a range of options to do so, but at the moment, helping parents of under-fives seems to be one of the most likely,” the source told the paper. Another said the priority is to have child poverty falling by the next general election.

It comes days after Sir Keir Starmer was urged by Labour MPs to scrap the two-child benefit cap entirely, with a key economic think tank warning that child poverty would otherwise hit a record high under Labour. The two-child benefit cap, imposed by Tory former chancellor George Osborne, prevents parents from claiming benefits for any third or subsequent child born after April 2017.

And think tank the Resolution Foundation said the prime minister’s plan to tackle child poverty will lack credibility if it remains in place. He has previously called for the two-child benefit cap to be scrapped, but has said Labour cannot afford to abandon the policy.

Sir Keir’s child poverty taskforce is due to present a strategy in spring but the think tank’s report warned the current two-child limit is “incompatible with a credible” plan. Another option which has been floated to relax the cap is increasing the two-child benefit cap to three children, which the think tank said could reduce child poverty by 320,000 by the next general election at a cost of £3.2bn per year.

It said this would be “preferable” to the current system, but that benefits should be allocated in line with need, which would require fully scrapping the two-child limit at a cost of around £4.5bn. Taken together with other measures such as extending free school meals to all families on universal credit and ensuring local housing allowance is linked to rents, it estimated a total cost of around £9bn and some 740,000 fewer children in relative poverty in 2029-30.

The Resolution Foundation warned that, under current spending plans, child poverty could rise to 33 per cent by the end of the decade, equating to 4.6 million children living in poverty. It called for a move from “warm words” to action to begin cutting child poverty.

Speaking to The Independent this week, former shadow chancellor John McDonnell, who has sat as an independent MP since having the whip suspended by Labour in a rebellion over the two-child limit, said: “No Labour government in history has stood by and allowed child poverty to increase on its watch.

“Labour ministers must realise that in the eyes of its supporters, the credibility of this government as a force for progress stands or falls on this critical issue.”. Labour MP Nadia Whittome told The Independent anything less than abolition of the two-child limit “will not suffice”.

As well as exempting parents of under-fives and raising the cap to three children, officials have reportedly also spoken about the option of increasing universal credit payments for parents of babies and toddlers. They may also introduce a “child benefit lock” which would ensure it goes up each year in line with earnings or inflation.