UK weighs options to reform two-child benefit cap

The government is preparing to move on the policy that limits child tax credit and universal credit to the first two children in most households, with ministers and officials considering options to lift or reform the two child benefit cap ahead of the autumn Budget. Senior figures say the change could be announced in November after a child poverty review, and ministers are weighing several models, including extending the cap to three or four children or replacing it with a tapered system that reduces payments for later children.

Labour ministers and campaigners have intensified pressure to change the cap, arguing it keeps children in poverty. More than 100 Labour MPs have written to the chancellor urging the policy be scrapped and proposing higher taxes on gambling firms to help pay for the reform. The Resolution Foundation estimated removing the cap would cost about 3.5 billion a year and lift roughly 470,000 children out of poverty. The Institute for Public Policy Research suggested higher taxes on high stakes online gambling could raise around 3.2 billion.

Chancellor Rachel Reeves has signalled a willingness to consider higher gambling taxes to help fund measures. She has...