Sir Keir Starmer has hinted that he could scrap the two-child benefit cap at the Budget, saying he is “determined” to drive down child poverty.
The prime minister said that the government will be “taking a number of measures” to tackle the issue, amid speculation that the cap will be altered or scrapped entirely following pressure from Labour MPs.
It is the latest hint that the cap could be removed after Rachel Reeves said on Monday that there are “costs to our economy in allowing child poverty to go unchecked”.
In a clip broadcast on ITV’s Lorraine programme on Tuesday, the prime minister said: “I can tell you in no uncertain terms I am determined to drive child poverty down. It is what the last Labour government did, and that’s one of the things we were proudest of.
“I am personally determined that is what we’re going to do. You won’t have to wait much longer to see what the measures are.”
Pushed on whether that would involve getting rid of the cap, the PM added: “We won’t have to wait much longer. But I wouldn’t be telling you that we’re going to drive down child poverty if I wasn’t clear that we will be taking a number of measures in order to do so.”
The chancellor is due to deliver her Budget on 26 November. On Monday, she told BBC 5 live: “In the end, a child should not be penalised because their parents don’t have very much money.
“Now, in many cases you might have a mum and a dad who were both in work, but perhaps one of them has developed a chronic illness, perhaps one of them has passed away. There are plenty of reasons why people make decisions to have three, four children, but then find themselves in difficult times.”
She continued: “So, we will take action on child poverty. The last Labour government proudly reduced child poverty, and we will reduce child poverty as well.”
The two-child limit – which was first announced in 2015 by the Conservatives and came into effect in 2017 – restricts child tax credits and universal credit (UC) to the first two children in most households.
The Institute for Fiscal Studies has estimated that removing the cap would cost around £3.6bn and that it would lift some 630,000 children out of poverty.
It comes after former prime minister Gordon Brown said he was confident that the two-child rule would be addressed.
“We’re waiting for Rachel Reeves’s budget, which I think will mention this,” he told Sky News.
The chancellor also gave her biggest indication yet that the government could break its manifesto promises on tax at the Budget. She said that it would be “possible” for ministers to stick to their election pledges, but warned that doing so would mean “deep cuts” in other areas of spending.
Speculation has been rampant in recent days that the chancellor is preparing to increase income tax in the Budget as she looks to balance the country’s books.
Labour’s manifesto for the 2024 general election campaign pledged that the party would not raise income tax, VAT, or employee national insurance contributions.
Ms Reeves said that when Labour composed its manifesto, “it had in it our spending commitments and then the tax changes that would be needed to pay for those … the truth is, what we inherited is significantly worse.”
Pushed on the party’s commitment to the manifesto, the chancellor told the BBC: “I will set out the choices in the Budget. It would of course be possible to stick with the manifesto commitments, but that would require things like deep cuts in capital spending.”
