Labour’s Internal Struggle: The Controversial Two-Child Benefit Cap and its Rift Within the Party

What does the two-child benefit limit entail?

Exploring the policy that is creating divisions within the Labour Party.

Political correspondent @NifS

Thursday, July 25, 2024, 2:

Prime Minister Sir Keir Starmer is increasingly being urged by his party's backbench MPs to eliminate the two-child limit on benefit claims.

What exactly is the strategy in question, and what's behind the turmoil it's creating among members of the Labour Party?

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What does the policy state?

The policy to limit benefits to two children was introduced by the Conservative Party in 2015, spearheaded by Prime Minister David Cameron and Chancellor George Osborne as a component of their budget-cutting strategy

This stipulates that although parents are eligible to receive child tax credits or Universal Credit for their first two children, they are unable to do so for any additional children thereafter.

This is distinct from Child Benefit payments, which do not impose a cap on how many children one can claim for.

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According to a report, individuals contacting the Department for Work and Pensions experienced a total hold time equivalent to 753 years.

Members of Parliament are poised to cast their votes on the elimination of the two-child limit for welfare benefits, with anticipated support from dissenting Labour members in favor

1.6 million children impacted by the two-child welfare limit, with increasing calls for Starmer to eliminate it.

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The rationale provided by the Conservatives for capping the tax credit at two children was to equalize the burden for taxpayers. This measure was aimed at ensuring that families receiving benefits would have to make similar financial decisions regarding the number of children to have as those who are entirely self-supported through employment.

However, critics, including opposition members of parliament and activists, argued that the policy would increase child poverty and severely affect low-income families.

Implemented in April 2017, the existing regulations allow parents to receive £287.92 for each of their first two children, with no additional allowances beyond that.

Last year, over a million households took advantage of the child tax credit, and 23% of these claimants were employed. Nevertheless, the cap affects approximately 1.6 million children because their families consist of more than two children.

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What position does the Labour Party hold on this issue?

Under the Conservative leadership, the policy appeared likely to remain unchanged.

For an extended period, the Labour Party had expressed strong disapproval of the policy, with key figures within the party describing it as "brutal" and "ou

There were widespread assumptions that the party would eliminate the policy if it came to power. However, in 2023, Sir Keir dismissed the possibility, citing the condition of the public finances and stating that he would need to "make the tough decisions" should he enter Number 10.

According to the Resolution Foundation, removing the cap on child-related benefits for families with more than two children could lead to increased government expenditures ranging from £2.5 billion to £3.6 billion in the fiscal year 2024/25.

The charity Save the Children has calculated that the action could lift 500,000 children out of relative poverty.

Following Labour's overwhelming win in the general election, the campaign to abolish the cap persisted in the King's Speech discussions, supported by numerous Labour representatives, among them Members of Parliament, advocating for a shift in stance.

Despite some indications of flexibility from members of the cabinet, the prime minister remained resolute, stating that the fiscal situation handed down by the Conservatives was even more dire than anticipated.

Instead, the government initiated a task force aimed at addressing child poverty, announcing that it would explore various strategies to assist the most disadvantaged.

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What occurred in the House of Commons?

During the last day of discussions on the King’s Speech, the SNP proposed an amendment to eliminate the cap.

The proposal was backed by additional opposition groups, including the Greens and Plaid Cymru, along with independent Members of Parliament, among them ex-Labour chief Jeremy Corbyn.

However, a Labour MP would need to defy party directives to cast a vote in favor of it.

Seven Labour MPs, among them ex-shadow chancellor John McDonnell, chose to defy party lines and joined opposition members in the voting lobbies.

As a result, they endured repercussions, with the prime minister revoking their party privileges for a six-month period as a disciplinary measure.

A source from the Labour Party informed Sky News that the decision was made "to demonstrate our expectation that Labour MPs back the agenda on which we were elected."

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