Labour is preparing to make a major shift in Britain’s welfare system that could hand huge financial boosts to some of the country’s largest jobless families.
By lifting the controversial two-child benefit cap, thousands of families stand to receive windfalls averaging £25,000 each by the end of the decade.
The policy change, which ministers will introduce in new legislation on Tuesday, removes limits on benefit payments that were originally set in 2017.
Officials say the move is designed to reduce child poverty, lifting hundreds of thousands of children out of financial hardship.
Conservatives Raise Concerns About Costs
The Conservative Party has responded with sharp warnings.
They claim scrapping the cap will push the benefits bill into the billions and argue it risks discouraging work.
Official figures suggest removing the cap could cost £13.6 billion over five years.
Under the current system, families affected by the cap typically lose £3,455 per child beyond the first two.
Once lifted, these same families are projected to receive an average £25,000 boost over the same period.
For the largest families, the gains are even more dramatic: households with five children could get an extra £10,900 annually, while families with six children might see £16,600 a year added to their benefits.
Who Benefits Most
A significant portion of the families affected currently have no one in work.
Shadow Work and Pensions Secretary Helen Whately criticized the plan, saying:
“Labour are unleashing a £14 billion benefits spending spree.
Worse, this shovels nearly half the cash to jobless households with average payouts of £25,000.
Work is being punished while worklessness is rewarded.”
Labour sources countered, noting that these figures don’t account for the lifelong cost to children of growing up in poverty.
Work and Pensions Secretary Pat McFadden has argued that poverty can hinder educational outcomes and, over a lifetime, cost society £1 million per child.
However, research from the Institute for Fiscal Studies last year suggested that the original two-child cap had “no significant effect” on children’s readiness for school at age five.
How Many Families Are Affected
The Department for Work and Pensions (DWP) reports that 470,000 families are currently impacted by the two-child limit.
About 40% of these households have no adults in work. Most affected families have three or four children, but thousands have five or more.
HM Revenue and Customs data shows child benefit—unrestricted by the cap—is paid to families with six children (16,000+), seven children (5,000+), and even 13 or more children in a small number of cases.
The total benefits a family can receive are also subject to a separate overall cap: £25,320 in London and £22,020 elsewhere.
Labour MPs are pushing to lift this cap as well.
Labour Defends the Move
A Labour spokesperson argued that lifting the cap is a necessary step after years of Conservative welfare policies.
“The welfare bill rocketed by nearly £60 billion under the Tories. They’re delusional to think anyone would take advice from them.
Labour is lifting nearly half a million kids out of poverty. Reform and the Tories would cruelly plunge them back into that misery,” the spokesperson said.
Meanwhile, other parties like Reform have signaled a more limited approach, planning to lift the cap only for working, British-born parents—a change that would affect just a few thousand families.
What Comes Next
With legislation set to be introduced, families and political observers will be watching closely.
The debate highlights the tension between reducing child poverty and concerns about the cost of welfare and incentives to work.
As the new proposals move forward, the impact on families, the economy, and the political landscape will become clearer.
