Labour to scrap two-child benefit cap, families may get £20,000 extra

Labour party of UK is planning to remove to the two-child benefit cap and if they successfully do so, tens of thousands of larger families could see big increase in their yearly payments.

Official figures show that 70,000 households would be entitled to over £18,000 a year in child benefits. The biggest families could gain £20,000 or more compared with what they get now.

The cap was introduced in 2017 under Conservative reforms. It blocks parents from receiving the child element of Universal Credit, worth about £293 a month, for a third or later child.

More than 71,500 families with five or more children will benefit from this support. Nearly 15,000 of them have six children, around 5,000 are raising seven, and over 400 families are looking after ten or more.

Labour MPs are pressing Sir Keir Starmer to remove the cap, calling it unfair and harmful to children in low-income homes. Economists at the Institute for Fiscal Studies estimate that ending the policy could lift around half a million children out of poverty.

Conservatives disagree, they argue the cap ensures fairness for taxpayers. Critics say families on benefits should not receive more than workers on minimum wage.

Helen Whately, the shadow work and pensions secretary, warned: “Labour will hand out thousands in extra benefits if the cap goes. This is unfair, working people don’t get higher pay for having more children, so parents on benefits should not get unlimited support either.”

Chancellor Rachel Reeves would need to find around £3.5bn to fund the policy. Options being discussed include a proposal from Gordon Brown to raise gambling levies.

Nigel Farage has also supported scrapping the cap, leaving Conservatives increasingly isolated in defending it.

For Labour, the choice is a test of its fairness pledge. Supporters see it as a way to cut child poverty. Opponents call it too expensive and unfair to workers. The final decision will show which argument carries more weight.