Finance
Britain considers ditching two-child cap on benefit payments
Published by Global Banking & Finance Review®
Posted on May 27, 2025
2 min readLast updated: January 23, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on May 27, 2025
2 min readLast updated: January 23, 2026
The UK Labour government is considering removing the two-child benefit cap to combat child poverty and improve its poll ratings after recent losses.
LONDON (Reuters) -Britain's Labour government is considering whether to abolish a two-child limit on welfare payments to parents as it reassesses several unpopular policies in a bid to reverse a slide in its poll ratings after less than a year in power.
Labour suffered a bruising set of local election results earlier this month, losing ground to Nigel Farage's right-wing Reform UK party, which also now leads in national opinion polls.
Last week Prime Minister Keir Starmer signalled he was open to reversing a cut in winter fuel payments to the elderly, and the government is now considering whether to scrap the two-child benefit cap, which think-tanks and critics say fuels poverty.
Asked if the government would scrap the cap, which was introduced by the Conservative government in 2017, education minister Bridget Phillipson said: "It's on the table."
"No measures are off the table," she told Times Radio, adding that a child poverty taskforce was looking at "lots of ways" to tackle the issue.
"But of course we can't ignore the impact of social security changes... that were introduced by the Conservatives, that a Labour government would not have introduced in the first place. But it's tough, it's challenging."
Labour cut winter fuel payments and refused to scrap the two-child benefit cap after being elected in July, arguing the spending reductions were necessary to fix a hole in government finances left by the previous Conservative administration.
The party even suspended seven lawmakers for six months for voting to scrap the two-child benefit cap - the position the government is now considering adopting.
Veteran lawmaker John McDonnell said the move would lift hundreds of thousands of children out of poverty yet he had been "attacked by many of the ministers now backing" the measure after last year's vote resulted in Labour suspending him.
"Stop delaying and just do it," he said.
(Reporting by Alistair Smout; Editing by Sachin Ravikumar)
The two-child benefit cap is a limit on welfare payments to parents for their first two children, introduced by the Conservative government in 2017.
The Labour government is reassessing unpopular policies in response to local election results and aims to address child poverty.
Bridget Phillipson stated that scrapping the cap is 'on the table' and that no measures are off the table in addressing child poverty.
John McDonnell expressed that abolishing the cap would lift hundreds of thousands of children out of poverty and urged the government to act without delay.
The Labour government has faced a financial hole left by previous Conservative policies, which has influenced their decisions on welfare spending.
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