Labour is reportedly contemplating eliminating the two-child benefit limit. What exactly is this contentious cap, and how does it operate?

The two-child benefit cap was enforced in April 2017 by the Conservative government. It restricts Universal Credit and Child Tax Credit to the first two children in the majority of households.

This implies that typically, you cannot claim these benefits for any third or subsequent children born after April 2017. Advocates argue that constraining benefits leads to poverty by depriving struggling families of assistance.

According to data from the Department for Work and Pensions (DWP), nearly 1.7 million children (1,665,540) in 469,780 households are affected by the two-child limit.

There has been no official announcement from Labour at present. Any alterations to the benefit system, if implemented, are likely to be disclosed in the Autumn Budget on November 26.

Government officials emphasize that no decision has been finalized. A government source informed The Mirror politics team that “No decisions have been made. Work on the child poverty strategy is ongoing.”

Recent reports suggest that the two-child benefit limit may be replaced with a new tiered system where parents receive reduced funds for each additional child. Another option under consideration by the Treasury is whether additional benefits should be capped at three or four children, or if the cap should be lifted for working parents on Universal Credit exclusively.

Chancellor Rachel Reeves has allegedly been cautioned by Treasury officials that completely removing the two-child benefit cap could cost around £3.5 billion.

When asked if she plans to lift the cap during the Budget, she stated at the Labour conference: “Keir said in his speech today that we will reduce child poverty in this Parliament, but we will outline the policies in the Budget. I think we’ve been pretty clear this week that we can’t commit to policies without explaining where the funding will come from.”

During an interview with The Mirror politics team, the Prime Minister declared on Tuesday: “I am personally committed to reducing child poverty. I was very proud that this was achieved under the last Labour government, and I am absolutely determined that it will happen under my leadership in this Labour government. So yes, this is government policy, but it’s also a personal mission for me to combat child poverty.”