Pat McFadden has insisted that the £3 billion a year cost of lifting the two-child benefit cap is an “investment” in the future, indicating that the Government still harbours ambitions for welfare reform. The Bill to abolish the cap will be officially presented to Parliament on Thursday, following Rachel Reeves’ announcement in her November budget.
This move comes after pressure from Labour backbench MPs to scrap the cap, a step the Government had initially been reluctant to take due to financial concerns. It’s estimated that removing the limit could lift approximately 450,000 children out of poverty by 2030, at an annual cost of £3 billion.
Work and Pensions Secretary Mr McFadden defended the policy’s price tag during his media rounds on Thursday morning.
Speaking to Sky News, he said: “We came into office with a manifesto commitment to reduce child poverty. We did it the last time we were in power. Child poverty has risen by about 900,000 since 2010.
“I don’t see this just as a cash transfer in terms of that £3 billion, I see it as an investment in children’s future, because we know that children from the poorest families will end up doing less well at school, less than a quarter of them get five good GCSEs, we know they’re four times more likely to have mental health problems later in life.”
Seven Labour MPs were stripped of the whip in 2024 after backing parliamentary efforts to scrap the cap, at a time when the Government wasn’t publicly supporting such moves. However, Sir Keir Starmer is now anticipated to criticise the Conservatives and Reform UK for failing to back the Government’s proposals.
When challenged that the Government’s stance appeared contradictory, Mr McFadden responded: “Look, we had to go through a process to get to the right decision on this two-child limit.”
Mr McFadden also indicated that ministers remained committed to welfare reform, despite previously struggling to win over Labour backbenchers on such measures. This included efforts to reduce the number of young people not in education, employment or training (Neets) claiming benefits and help them into work, he suggested.
The Work and Pensions Secretary revealed he had made Neets his “early emphasis” in the role, stating: “You talk about money and costs, and you’re quite right. For every young person who goes on to benefits and stays there, they will lose about £1 million in earnings over the course of their lives.”
During a visit to Bedfordshire on Thursday, the Prime Minister is anticipated to accuse Nigel Farage of “linking arms” with the Tories in a “cruel alliance to push kids who need help back into poverty”.
He will declare: “This child poverty pact is something that should worry us all. These aren’t numbers on a spreadsheet – these are children’s life chances at stake.”
Pledge to restore cap
The Tories have pledged to reinstate the cap, with Kemi Badenoch characterising the limit as “responsible”. Nigel Farage has previously indicated that his party would also scrap the two-child limit, but later specified this would only apply to families where both parents are British and employed full-time.
Of the 470,000 households impacted by the cap, a mere 3,700 have two adults working full-time – less than 0.8% of the total. On Wednesday, Mr Farage announced at a London press conference that his MPs would oppose the Government’s proposals.
Conservative shadow chancellor Sir Mel Stride argued that the “most effective way to tackle child poverty is to build a stronger economy”.
He criticised Labour’s approach: “Labour’s approach does the opposite. Because Keir Starmer and Rachel Reeves do not have the backbone to stand up to their left-wing MPs, they are hiking welfare spending, paid for with higher taxes which are killing growth and costing jobs.”
A spokesperson for Reform UK said: “We are a party that is pro-family and pro-children. This Labour Government is introducing a Bill that is going to benefit huge numbers of foreign-born people. Our policy prioritises British working parents.”