Budget 2025: Could Rachel Reeves scrap the controversial two-child benefit cap?

Campaigners have claimed that scrapping the two-child benefit cap could help lift thousands of children out of poverty, as ITV News Social Affairs Correspondent Sarah Corker reports

The two-child benefit cap, which currently affects more than 1.5 million children in the UK, could be scrapped as the Chancellor Rachel Reeves prepares to deliver her second budget.

The cap, which was introduced under the last Conservative government, prevents most families from claiming universal credit or child tax credit for any third or additional children born after April 2017.

It is estimated that scrapping the cap could lift 350,000 children out of poverty and reduce the depth of poverty for a further 800,000 children, according to the the Child Poverty Action Group (CPAG).

After months of speculation about whether the government will keep the cap, scrap it entirely, or partially lift it, ITV News met families to hear how the chancellor's decision could impact their lives.

Miles Oscar Snowden is a happy, smiley toddler who lives in Thornaby, Teesside, with his parents.

His father, Christopher Snowden, 40, was working as a delivery driver but had to quit his job last month due to health issues. His mother, Lisa Prosser, 39, is unable to work due to a long-term health condition and receives universal credit.

Miles has three older half-brothers, so he doesn't qualify for benefits under the two-child cap policy. The family now rely on food banks.

"It's hard because since I've lost my job, and he's 17 months old, we are struggling financially to be able to do stuff," Mr Snowden said.

"We get the money from universal credit, and we end up with about £20 at the end of it, and we're having to rely on the food banks to get through. It's food for the cupboards, so we're not starving."

Teesside has some of the highest levels of deprivation and child poverty in the UK, while Thornaby, where the family lives, is ranked among the 10% most deprived areas nationally, according to government data.

"I didn't (rely on food banks) before because I had a job, so I was able to benefit from it and with the wages I had coming in, I was able to get shopping in and provide for the family," Mr Snowden added.

The family has been relying on Teesside GrowBaby, a volunteer-led scheme that supports around 120 families a month experiencing food, hygiene, and clothing poverty in the area.

Last year, the centre helped around 840 families by providing free access to pre-loved clothing and essential baby items, such as prams, cots, nappies, and toiletries.

It also offers a warm, safe space with a hot drink and breakfast for those struggling to put their heating on as the months grow colder.

Terrie-Lea Clinton, from Gateshead, is another parent who regularly receives help. She has five children who were born between 2017, when the cap was introduced, and 2024, and has older step-children.

She told ITV News the scrapping of the two-child benefit cap would "put a security net in place" for her family.

"(Scrapping the two-child benefit cap) would help massively and hopefully help me with the gas and electric, get myself out of debt, feed the kids and just keep us warm in the winter," she said.

"It's getting to winter now and I'm panicking because if it doesn't get scrapped, how are we going to keep going?"

Ms Clinton says her "day-to-day living was massively affected" when the then-Tory government brought in the policy, and she has struggled mentally, having to make difficult decisions, like feeding her children or heating the house.

In 2010, there were 35 food banks in the UK. There are now 2,600, and charities warn this is expected to increase.

"I've used food banks previously and they're struggling just as much. It would not just help our families, but the community too," Ms Clinton added.

Campaigners from the End Child Poverty Coalition, made up of over 135 charities and welfare organisations, say that 109 children across the country are pulled into poverty by the policy every day, and describe the cap as "cruel".

Pressure has been piling on the chancellor for the past year, with cross-party politicians, including some Labour backbenchers, increasing their calls for the limit to be abolished.

Ministers have previously argued they did not have the financial resources to lift the cap and that it was "unaffordable" to do so.

This leaves the chancellor with a big decision - who pays if the cap goes?

Unsurprisingly, the Conservatives, who introduced the cap in 2017 under then-prime minister David Cameron, are against abolishing it.

Shadow Chancellor Mel Stride previously described scrapping the two-child benefit limit as "irresponsible and unfair".

"If Labour do this, they will be handing out money they simply don’t have," he wrote in the Times in September. "They are borrowing to fund welfare, and that is not sustainable or responsible."

There has been some confusion about Reform UK's position on the policy, after its leader Nigel Farage said in May that he supported the idea of the cap being scrapped in order to encourage families to have more children.

But in recent months, Farage clarified that the party's policy is that the limit should only be lifted for "British working couples".

Meanwhile, the Liberal Democrats and the Green Party both oppose the policy and want it abolished.

Estimates vary on how much this would cost, with the Resolution Foundation estimating around £3.5 billion by the end of this Parliament in 2029/30, while the Child Poverty Action Group and Joseph Rowntree Foundation have lower calculations of around £3 billion by then.

Former Prime Minister Gordon Brown, who has been one of the more influential voices urging Reeves to act, believes he has a solution.

Speaking exclusively to ITV News in August, the former Labour chancellor proposed funding measures including an online gambling tax, a levy on commercial banks and a change to gift aid rules for higher rate taxpayers.

But the Treasury has raised doubts over whether such measures would raise the necessary funds, leaving it unclear how the government will fund the move.

Reversing it would, in the long run, bring around 630,000 children out of absolute poverty at a cost of roughly £5,700 per child, according to the Institute for Fiscal Studies (IFS).

However, the IFS says, if the policy were to be reversed, children in larger families would still have substantially higher rates of poverty than those in smaller families.

The chancellor has also pledged to get a grip on the cost of living in her budget on Wednesday. It comes as the long-delayed publication of the government's child poverty strategy is due to be released in the coming weeks.

For now, families and campaigners will be keeping a close eye on what happens next.

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