Labour ‘will not lift two-child benefit cap in first budget’

Labour will not lift the two-child benefit cap in its first budget despite Rachel Reeves being bound by the “loosest fiscal rules” in 40 years, a member of the government has said.
The comment by Torsten Bell, parliamentary private secretary to Pat McFadden, the cabinet office minister who exerts a large influence over Whitehall policy, will increase tensions between Sir Keir Starmer and the left of his party.
It will also quash hopes from some of the prime minister’s allies, particularly Anas Sarwar, the Scottish Labour leader, that the policy would be scrapped in October.
The SNP in particular has attacked Labour over the issue and the Scottish nationalists hope to make Treasury austerity a key battleground in the run up to the potentially knife-edge 2026 Holyrood elections.
Speaking at the Edinburgh Book Festival, Bell, who called the cap an “appalling policy” in his book Great Britain? How We Get Our Future Back, said that the electorate would not accept politicians making promises that they cannot deliver in office.
“You’ve got to be clear where that money’s coming from and that’s what budgets are for and the government’s committed to a child poverty strategy,” he said.
“And my view is, why don’t you let the ministers that are writing your child poverty strategy publish that strategy before you start criticising them.
“They accept there is a child poverty strategy coming … not in time for the budget on October 30, but soon in the months after that, so that’s what I’ll be looking out for.”
Ministers previously said that a new child poverty strategy would be published next spring. Last month Sir Keir Starmer began the process of writing the plan as the prime minister tried to fend off internal backbench pressure to end a Conservative policy that refuses families benefits for a third or subsequent child.
John McDonnell, the former shadow chancellor, who was one of seven rebels suspended for voting to scrap the cap, said ministers needed to address the “child poverty emergency … with the utmost urgency”.
He said: “It’s fine for policy wonks and politicians living on high salaries to debate the finer points of parliamentary procedures and the timing of policies but children in my constituency are living in poverty now. Scrapping the cap would lift 300,000 children out of poverty and, according to the Resolution Foundation, nearly half a million overall. According to the latest research findings we have large numbers of children in destitution in our country.”
At the event, Bell, who used to work for the Resolution Foundation and was an adviser to Alistair Darling, the former chancellor, during the financial crash, argued that previous Labour governments had “always brought down childhood poverty”. He conceded it had not happened on a scale that satisfied him.
He criticised low public investment throughout the Conservatives’ time in power, despite Reeves signing up to many of the same constraints, and said that Labour had made a “step in the right direction”.
Bell added: “The problem with the fiscal rules isn’t that they’re incredibly tight right now … if anything, we’ve probably got some of the loosest fiscal rules in my lifetime. The issue is the relative treatment of investment spending versus other spending on tax.
“What I’m arguing doesn’t get you out of tough choices. It just says, ‘Please, please don’t scrap the long term’.” When he was challenged that his book suggests the government must invest a lot more money and therefore borrow large sums to cover that cost, Bell replied: “I wrote this book before I was a politician.”
Pete Wishart, the SNP’s deputy leader at Westminster, said: “At every opportunity so far, Labour has failed to scrap the two-child limit which would lift thousands of children out of poverty immediately, and it now seems they are preparing to scupper the next opportunity to do the right thing — it is shameful.”