What is the two-child benefit cap?

Prime Minister Sir Keir Starmer is facing growing pressure from his backbenchers to scrap the two-child benefit cap.

But what is the policy? And why is it causing such a ruckus within Labour ranks?

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What is the policy?

The two-child benefit cap was announced by the Conservatives in 2015 as part of Lord David Cameron and George Osborne’s austerity measures.

It meant, while most parents could claim a payment from the government for their first and second child, they couldn’t make claims for any further children they had.

The argument from the Tories was it made the system fairer for taxpayers, ensuring households on benefits “face the same financial choices about having children as those supporting themselves solely through work”.

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But opposition MPs and campaigners said the measure would drag more children into poverty and hit hard up families.

The policy came into force in April 2017, and the current rules mean parents can claim £287.92 for each of their first two children, but no more.

Parents, where either partner earns upwards of £60,000, can still claim the benefit, but would have to pay tax on it.

Over one million families claimed the child tax credit last year, with 23% of them in work. However, 1.6 million children are impacted by the cap as there are more than two children in their household.

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What is Labour’s stance on it?

While the Conservatives were in charge, the measure seemed certain to stay in place.

But it had long been criticised by Labour, with shadow ministers calling it “vicious” and “heinous”.

Many expected that if the party got into power, it would scrap the policy. However, in 2023, Sir Keir ruled it out due to the state of the public finances, saying he would “have to make the tough decisions” if he got into Number 10.

The Resolution Foundation has said abolishing the two-child limit would cost the government somewhere between £2.5bn and £3.6bn in 2024/25.

But the Save the Children charity estimated the move would take half a million children out of relative poverty.

After Labour’s landslide victory at the general election, the fight to secure the scrapping of the cap in the King’s Speech continued, with rafts of Labour members – including MPs – pushing for a change in position.

But despite hints of a softening from cabinet members, again the prime minister stood firm, saying the public purse they had inherited from the Conservatives was even worse than he had thought.

Instead, the government launched a child poverty taskforce, which they said would look at all options to help those who are worse off.

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What happened in the Commons?

On the final day of debate on the King’s Speech, the SNP put forward an amendment calling for the cap to be axed.

The measure had the support of other opposition parties, such as the Greens and Plaid Cymru, as well as independent MPs, including former Labour leader Jeremy Corbyn.

But for a Labour MP to vote for it, they would have to disobey party orders.

Seven Labour MPs, including former shadow chancellor John McDonnell, decided to rebel anyway, and walked through the voting lobbies with opposition colleagues.

And they faced the consequences, with the prime minister suspending the whip for six months as punishment.

A Labour source told Sky News the decision was taken “to show that we expect Labour MPs to support the programme we were elected on”.

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