Universal Credit (Removal of Two Child Limit) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateTuesday 3rd February 2026
(1 month, 2 weeks ago)
Commons ChamberUniversal Credit (Removal of Two Child Limit) Act 2026 Read Hansard Text Watch Debate
18:59 - The House having divided: - Ayes: 458 / Noes: 104 - Question accordingly agreed to.
This text is a record of ministerial contributions to a debate held as part of the Universal Credit (Removal of Two Child Limit) Act 2026 passage through Parliament.
In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.
This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Secretary of State for Work and Pensions (Pat McFadden)
I beg to move, That the Bill be now read a Second time.
Core to our belief is the idea that no one, no matter their background, should be trapped by their circumstances. People should have the chance to make the best life they possibly can. Poverty is a barrier to that ambition, and it makes it much harder for people to achieve their full potential.
This legislation has its roots in the change made during the Conservative years to introduce the two-child limit on support for families on universal credit. Let us be clear at the start about what this was always about. It was never really about welfare reform, nor was it even about saving money. No, this was always, first and foremost, a political exercise—an attempt to set a trap for opponents, with children used as the pawns. This was all about the politics of dividing lines: between the so-called shirkers and strivers, or the old distinction between the deserving and undeserving poor. Politics first and policy second, every time.
Sir Oliver Dowden (Hertsmere) (Con)
The right hon. Gentleman has provoked me into responding. I served in the previous Conservative Government, and I was involved in all those decisions. There was a clear principle behind them: will people take responsibility for their own actions? There are thousands—millions—of people who choose not to have more children because they want to take responsibility for their lives, rather than the state doing so. With this change, the Government are saying to those people, “Not only will the state take responsibility, but you as the individual will have to pay for it through higher taxes.” That is the principle at stake here, and the Government are reversing a clear principled position taken by the last Government.
Madam Deputy Speaker
Order. Before the Secretary of State responds, let me say that there are many colleagues in the Chamber and I can understand how passionate this debate is, but let us try to keep the noise down when colleagues are contributing.
Pat McFadden
The right hon. Gentleman has set out the previous Government’s justification. I am about to explain why that did not stack up at the time, and why it certainly does not stack up after the experience of the policy.
We should begin by considering why no other neighbouring country has this two-child limit. Given that the policy was always primarily about politics, it is no surprise that it did not achieve the objectives that the right hon. Gentleman just tried to set out. The Tories claimed that this would lead to people making different choices about the number of children to have, but that did not happen. The family size premise was itself based on the fundamental misconception that there is a static group of people who are always on universal credit.
Pat McFadden
Not at the moment. This is not a static group; people’s circumstances change, marriages break up, spouses die and jobs can be lost. In fact, around half of the families who will benefit from the lifting of the two-child limit were not on universal credit when they had any of their children. This is not a static group of people, which drives directly at the heart of the argument that the right hon. Member for Hertsmere (Sir Oliver Dowden) tried to make.
Sir Ashley Fox (Bridgwater) (Con)
Twelve months ago, not only did the Government support the two-child cap, but they were busy suspending Labour Back Benchers who voted against it. Can the Secretary of State tell the House what it was about the Prime Minister’s weak position that caused him to change his mind?
Pat McFadden
I will come on to the timing of our decision, and exactly why it is right.
Pat McFadden
Not at the moment.
As I said, around half the families who will benefit were not on universal credit when they had any of their children. These are people who found themselves in need of help long after any decisions about family size had been taken.
No account was taken of the costs of the policy further down the line, such as lower educational attainment, worse mental health and lower earnings, perhaps for the whole of people’s working lives.
Kirsty Blackman (Aberdeen North) (SNP)
Does the Secretary of State regret saying that whether the two-child cap on benefits causes harm is “open to debate”?
Pat McFadden
No, I do not regret anything I have ever said on this issue. All along in this debate, there has been an attempt to divide workers from non-workers—
Wendy Morton (Aldridge-Brownhills) (Con)
On that point, will the Secretary of State give way?
Pat McFadden
I shall if the right hon. Lady shows a little patience.
Around 60% of the families affected by the current policy are in work, and of those who are not working, a significant number are affected by serious health conditions or caring responsibilities—circumstances in which any of us could find ourselves. As I have said, this was never really about work, decisions about family size or saving money; it was political through and through. It was children who paid the price, with 300,000 more of them going into poverty as a result.
Sir Desmond Swayne
It appears that those 300,000 were in poverty a year ago, but the Secretary of State has allowed that to persist till now. What has changed? It is not the fiscal situation, and it is not any room in the benefits budget. This is the Labour equivalent of Project Save Big Dog, is it not?
Pat McFadden
Timing matters, and if the right hon. Gentleman shows a little patience, I will tell him exactly why we have done this in the timeframe that we have.
All the policy did was force more children into poverty, alongside the Conservatives’ other key welfare measure of trapping the sick out of work. Even some voices on the right recognise the damage that this policy did. Former Tory Welfare Minister Lord Freud described it as “vicious” and said it had been forced on the Department for Work and Pensions by the Treasury at the time, and the former Conservative Home Secretary and new recruit for Reform, the right hon. and learned Member for Fareham and Waterlooville (Suella Braverman), has said,
“Let’s abolish the two-child limit, eradicate child poverty for good”.
I do not know whether that is still her position—we will find out at tonight’s vote—but it seems that the party she has now joined wants to restore the two-child limit. Reform is importing not just failed Tory politicians, but failed Tory policies.
Between 2010, when the Conservatives came into office, and the summer of 2024 when they left it, the number of children in poverty had risen by some 900,000. That is something to ponder as Members on the Opposition Benches have their debate about whether or not Britain is broken. If it is, who was responsible? Who designed the welfare system that they tell us on a daily basis is broken? They did. Who broke the prisons system that we have had to rescue? They did. Who shook international confidence in our economy and its key institutions? They did. This is the inescapable problem with the Conservatives’ current position: an attack line that says, “We trashed the country and left you with a terrible inheritance,” might just not be the winning argument they think it is. Let them have their debate about whether Britain is broken while we get on with the task of fixing what they left behind.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
As my right hon. Friend has described, this is a crucial policy, but it is a downpayment on tackling other failures of the former Government, including the poor-quality and overcrowded housing that puts too many children in poverty of situation. Is he proud, as I am, that we now have a Labour Government who are tackling these issues and getting our children where they should be?
Pat McFadden
My hon. Friend is right, and the point she makes is that we also tackle these issues piece by piece and over time.
I turn now to the question that people have asked: “Why not do this right away?” Here is the difference between government and opposition. The truth is that in opposition, it is easy to tally up everything that is wrong with the country and promise to reverse it, but a winning manifesto has to be more than a list of what is wrong.
Pat McFadden
Not at the moment. We spent plenty of time in opposition writing those lists—we had many years to do it—only to see them turn to dust on the morning of an election defeat. Good intentions were written off by the voters because the hard yards of winning their trust on the essentials of exercising power had not been done. Change comes only by earning the trust that is essential to victory, and it is because we did that that we are able to sit on the Government Benches and change anything at all, whether for children, low-paid workers or anyone else.
Our first job when we came into office was to stabilise the economy after the irresponsibility and chaos of the Tory years, and even after my right hon. Friend the Chancellor had done that, change still has to be paid for. That is why she was right to spell out at the Budget that this policy can only be introduced now, and can only be funded through a combination of savings from fraud and error in the benefits system, changes to the Motability scheme, and reform of online gambling taxation.
Wendy Morton
I am grateful to the right hon. Gentleman for giving way. I have tried my best to be patient, as he indicated I should be, but surely he agrees that there is only one way for him to pay for these increases, which is taxes?
Pat McFadden
My right hon. Friend the Chancellor spelled out at the Budget how this was going to be paid for. If the right hon. Lady did not hear me the first time, I am happy to repeat myself: savings from fraud and error in the benefits system, changes to the Motability scheme—which the Conservatives did not make when they were in power—and reform of online gambling taxation.
It was also right that we took the time to do the work on the child poverty strategy, which was so ably co-chaired by my right hon. Friend the Secretary of State for Education. That work meant that the strategy included wider policies on childcare, school holidays help and a number of other measures, as well as those that are in today’s Bill.
The Bill is about ensuring that children have the chance of a better life. It will mean 450,000 fewer children in poverty in the last year of this Parliament and, taken together with the other measures in the child poverty strategy, will lift an estimated 550,000 children out of poverty. This Labour Government will reduce child poverty, just as the last Labour Government did.
Ann Davies (Caerfyrddin) (PC)
I am glad that the UK Government are finally taking action on child poverty and removing the two-child cap on universal credit—a policy, of course, that Plaid has opposed from the start. However, more than one in five households affected by the two-child limit will not benefit because of the cap on benefits. Does the Secretary of State agree that the Government should now lift the benefit cap, so that every eligible household and every eligible child receives the full support this Bill sets out to provide?
Pat McFadden
I remind the hon. Lady that the benefit cap does not apply to families who are in work or who have a disabled child. It is in place, and that approach balances support and fairness without undermining incentives to work.
The Bill removes the need for the vile policy known as the rape clause, which is a feature that we inherited from the Conservative regime. Women will no longer have to relive terrible experiences to get support for their child. For the families who will benefit, this measure will help all children, regardless of the circumstances of their birth. My understanding is that it is the current position of the Conservative party to bring back the limit, and therefore to bring back that provision. Perhaps the shadow Secretary of State, the hon. Member for Faversham and Mid Kent (Helen Whately), can clarify that when she comes to speak, and perhaps Reform Members can clarify their position when they contribute to the debate.
The policy change made by this Bill is not just about the redistribution of money—it is not just about placing children on the right side of an income line in a spreadsheet. It is about changing the story of children’s lives. That is an investment worth making for the whole country. It is about giving children a genuine shot at life, so that they can do well at school, stay healthy, and contribute to their country and community as an adult. That is harder when children grow up poor, as they are less likely to do well at school, with less than a quarter of children in the lowest-income households getting five good GCSEs.
By the age of 30, those who grew up poor are likely to be earning about 25% less than their peers. They are four times more likely to experience mental health problems, with growing consequences for worklessness and for the benefits bill that we are seeing in today’s system. They are more likely not to be in education, employment or training—those numbers grew rapidly in the final years of the Conservatives’ time in power, and they did nothing about it. That is why we are reforming the system by changing the incentives of universal credit, ending a situation in which the sick have been signed off and written off, and increasing support to get disabled people into work. As Sir Charlie Mayfield estimated in his recent “Keep Britain Working” report,
“Someone leaving the workforce in their 20s can lose out on over £1 million in lifetime earnings—with the state incurring a similar cost”
to support them. These are the kinds of consequences that were not thought through when the Conservatives’ policy was introduced, but it is essential that they are part of our debate about changing it.
Investing in children’s potential today is about changing lives through better educational attainment, improved health and a better chance of a decent job. The most radical thing that a Government can do is enable people to change their own story. Our ambitions should go well beyond providing financially for people; they should be about providing the platform for that change, so there is a direct link between this Bill and the other things we are doing. We are providing more help with childcare for working parents in order to make work pay and to ease the choice between looking after children and taking up a job. That is in their interests and in the national interest—why should we lose the talents of those who have children?
The youth guarantee will help the young unemployed with training, work experience and ultimately a subsidised job, so that they know the pride and purpose that comes with having work. That is in their interests and in the national interest. We have more apprenticeships for young people, stopping the 40% decline in youth apprenticeship starts over the last decade. That is in their interests and in the national interest. Better life chances are part of the battle against the human and social cost of more and more young people being signed off sick and declared unfit for work. All these things will become more urgent as the population ages and we need more young workers to support the country. A better start in life is a bond between the generations. A good childhood is in all our interests and in the national interest.
This debate is part of a wider one in politics. In this debate and in others, we have seen a politics of division in this country that wants to set person against person and group against group, and I believe we are only in the foothills of it. We will see more of this division, both home-grown and imported from overseas, becoming ever harsher as it seeks to use rage to fuel itself and to win support. That is the battle to come, not just on this issue, but much more widely—and I want to make it clear today that we set ourselves against that politics, and make a clear and explicit choice to reject it.
Anger and division are not the fuel upon which this country’s future must be built. They will produce nothing. They will solve nothing. Indeed, they will only perpetuate the chaos in the country that people are so tired of. Instead, we embrace the mantle of hope to offer a chance and not a grievance—a society where we help each other up, rather than try to tear each other down, and where we say to those born into poor circumstances, “We will help you be the best you can be, not through altruism, but because we need you, we believe in you and we want your contribution.” That is in our interests and in the national interest. This is the fight to come between these two kinds of politics; that is what the change in this Bill is all about, and it is why I commend the Bill to the House.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call the shadow Secretary of State.
Kit Malthouse (North West Hampshire) (Con)
As my hon. Friend the Member for Solihull West and Shirley (Dr Shastri-Hurst) said, no one in this House doubts the importance of supporting children. Labour Back Benchers are feeling good about the fact that they have organised themselves to deliver what they see as a simple moral good, but as they know and we know, things are much more complicated than that. I know they think they have delivered a simple moral good because not a single one of them has mentioned the rate. None of them has questioned why the additional rate is set at £17.25, rising to £17.90. They have not asked whether that is enough to address poverty. They have not sought to get under the skin of whether this is a more complicated and nuanced argument than it might at first appear. Just the simple act is enough, without contemplating the unintended consequences.
I am concerned that the Government are stumbling into a “Careful what you wish for” measure. First, a number of Opposition Members—and, indeed, the Secretary of State—mentioned the demographic time bomb that we face. There has been no discussion of this measure in the context of the overall fiscal problem that our children will face. At the moment, we have about 3.6 workers per pensioner in this country. By 2050, that will have fallen to two. How will we pay for all of this in the future? How will we fund it all without enormous debt? We have only to look across the channel at France to see what a fiscal eruption can look like, with civic disruption and unrest on the streets, when the necessary correction is made to a welfare state that is running out of control. I am afraid that that is exactly the situation we find ourselves in.
No one is pretending that decisions about welfare are easy—they are not easy. Having worked briefly as a Minister in the Department for Work and Pensions, I know that these are difficult decisions, yet no one is questioning the micro-decisions that are made. It is simply enough to say to people, “We’re pumping money out there. Let’s hope for the best.” Why is the standard rate for the mobility section of the personal independence payment set at £30.30? I do not know. Does anybody else know? Is there an argument for it? These are the decisions that Ministers have to make on a daily basis, not just about whether we pay welfare but how much we pay. One of my concerns about this measure is that none of that is part of a wider conversation about the massive demographic steam train that is coming down the tunnel towards us.
The second issue I have is that this legislation treats children as a burden to be somehow mitigated, necessarily because it includes them in the welfare bill, rather than as a bonus to be encouraged. As my hon. Friend the Member for Hinckley and Bosworth (Dr Evans) said, we on the Conservative Benches would much rather there were work incentives that came alongside children. When I was briefly the Secretary of State for Education, I was inundated with correspondence and approaches from lots of highly productive and ambitious women who wanted assistance in work. They wanted some kind of bonus, relief or package to encourage them to have children, rather than a safety net that rescued women if they had children. For a country that needs more children, we need a tilt in our mentality and approach to move from mitigation towards encouragement; that is my concern about embedding the notion that people should have more children in the welfare system.
The final issue I will raise is the legitimacy of the system, which has been raised by a number of Members. We often pretend that we do things for the first time in this country, whereas we can in fact look overseas for lessons, and we do not have to look very far. In France, where successive Governments increased family-related welfare with weak links towards work or contribution, it has created a wider resentment in society. Any successful welfare system must have an eye to legitimacy and consent from the wider population for it to exist.
Dr Arthur
We do not have to look to France. This is fundamentally an issue that many families face around balancing their budgets; many of them are having to get second jobs. Perhaps we can learn from the right hon. Gentleman’s experience, because he has been forced out to get a second job to make ends meet. Perhaps he can give some droplets of experience to those people who are struggling to make ends meet.
Kit Malthouse
I am glad that the hon. Gentleman is paying attention to my entries in the Register of Members’ Financial Interests, but, as he will know, I have not been forced out to get a job. I founded my business 30 years ago; I am one of the few people in this House who has created jobs by the sweat of my own hands, rather than just talking about it. Frankly, I pay the Sainsbury’s bill, the mortgages and all the rest of it for all my employees every single month, and I am proud to do so. Maybe he could learn some lessons, by spending time with some businesspeople, about what it is to make true fiscal and economic decisions.
Let me return to my third point, which is about legitimacy. One thing that was found in France was a rise in resentment, which resulted in President Macron taking specific steps to means-test the access to family welfare. French political scientists will point to the rise of the National Rally in France directly stemming from a mishandling of the welfare system and a growth in resentment in those who did not participate in it.
I am afraid that today we see that writ large in the Order Paper in the Reform party’s reasoned amendment, which was not selected. It calls for open discrimination in our welfare system against those who do not have parents born entirely in this country. I must declare an interest as I am afraid that includes two of my children, who were not born to a British citizen. It also includes the children of Members of Parliament who sit for the Reform party. There is something grotesque about seeking legislation that would downgrade the citizenship of one’s own children.
The Minister for Social Security and Disability (Sir Stephen Timms)
Like the shadow Minister, I will start by quoting my right hon. Friend the Secretary of State for Work and Pensions. At the start of the debate, he said that this Government have chosen to reject the politics of division and of rage. Instead, we have chosen to seek to bring the country together and to open up a hopeful way forward. That is the choice that underpins this Bill.
It was my great privilege to take through this House the Child Poverty Act 2010, which was referred to by my hon. Friend the Member for Calder Valley (Josh Fenton-Glynn). That Bill, as he pointed out, had all-party support. George Osborne spoke in favour of it. A few months later, George Osborne was the Chancellor of the Exchequer, and the Government took the opposite stance. The four separate child poverty targets were scrapped. The headline rate of benefits was over time cut to the lowest real-terms level for 40 years. The Child Poverty Commission set up by the Act was replaced by the Social Mobility Commission, and child poverty eventually rocketed by 900,000 to 4.5 million. That is what Tory policies did. Their claim of wanting to tackle child poverty proved to be hollow, and we discovered the authentic voice of the Tory party, which we have heard again this afternoon.
We should not forget the contribution of the Tories’ coalition partners in the 2010 to 2015 Government. I warmly welcome the Lib Dem support that we have heard today. The hon. Member for Torbay (Steve Darling) made a thoughtful speech on behalf of his party, and we also heard from the hon. Members for Ely and East Cambridgeshire (Charlotte Cane), for Stratford-on-Avon (Manuela Perteghella), for Eastleigh (Liz Jarvis) and for Mid Dunbartonshire (Susan Murray). Their party leader was in the Cabinet when much of the damage was done, and he did nothing to stop it when it came to the crunch. In the battle against child poverty, the Lib Dems were nowhere to be seen.
Sir Stephen Timms
I will not just at the moment. Poverty does immense harm, as we have heard, to children and their future prospects. In the classroom, children eligible for free school meals are on the wrong end of an education gap that reaches 19 months by age 16. They earn around 25% less at age 30. Recent research by Liverpool University has shown that children growing up below the poverty line are three times more likely to be not in education, employment or training as young adults. To tackle the NEET problem—as we must, with almost a million young people left NEET by the last Government—we have to tackle child poverty, too.
We have heard arguments in this debate that we are piling up costs for the future. Actually, it is the failures of the past that have piled up those costs, and we are now having to address that. The costs of child poverty play out throughout the lives of those affected. They play out in our social security system, in the NHS and in other public services, too. The Tories claim that by making those cuts, they were saving money. What they were doing, in fact, was heaping up massive costs of future failure, which we are all now having to pick up.
The Bill will deliver a better future for our children and for the country. Removing the two-child limit in universal credit will lift 450,000 children out of poverty by the end of this decade, and that figure rises to more than half a million children alongside other measures in our child poverty strategy. That is a generation less likely to struggle with their mental health, more likely to do well at school and more likely to be in work as young adults and to thrive in their future working lives. That is a generation with the capacity to thrive. That is the future we are choosing to build.
Siân Berry
The Government narrowed the scope of the last benefits Bill, and it could widen this Bill to take in the wider benefit cap, too. The Chancellor who could find the money for that is right next to the Minister. Can the Minister explain why, despite the interest in lifting the overall benefit cap in the Chamber today, according to the impact assessment the only options assessed were doing nothing or this very narrow measure?
Sir Stephen Timms
The change for which I think the hon. Lady is arguing would make a relatively modest alteration to the figures. There is a real advantage in the benefit cap, in terms of the incentive to work. We are not proposing to change that, and in the changes that we are making we are maintaining that incentive very robustly. This is a change from the choices of the last Government, which left us with a third of primary schools running food banks.
I echo the tribute paid by my hon. Friend the Member for Liverpool Riverside (Kim Johnson) to the work of the End Child Poverty Coalition. Members including my hon. Friend the Member for St Helens North (David Baines) rightly referred to the Child Poverty Action Group, and others mentioned the Joseph Rowntree Foundation. I pay tribute to all those who have campaigned, successfully, for the change that we are making.
The shadow Secretary of State, the hon. Member for Faversham and Mid Kent (Helen Whately), said in her opening speech that her party did not accept the relative poverty definition. As we were reminded during the debate, her party embraced that definition in 2010—it was part of the change that was made at the time—but between 2010-11 and 2023-24, even absolute poverty rose. It was higher at the end of that period than it had been at the beginning. That was an extraordinary feature of her party’s record in government.
I am grateful to my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) for her contribution to the debate and for the work of her Work and Pensions Committee, alongside that of the Education Committee, chaired by my hon. Friend the Member for Dulwich and West Norwood (Helen Hayes), in scrutinising our child poverty strategy. The points that she made were absolutely right.
My hon. Friend the Member for Lewisham East (Janet Daby) was, I think, the first to draw attention to the struggle that teachers are having in supporting children in classes. According to survey evidence, in 38% of schools staff are currently paying out of their own pockets to provide essentials for their pupils because their parents cannot afford to buy them. They have full-time roles tackling hardship, taking away funds that ought to be spent on education.
The hon. Member for Hinckley and Bosworth (Dr Evans) made a thoughtful speech, as he often does, but he was wrong. He said that the extra money would be for people because they were not working. It was pointed out by my hon. Friend the Member for West Dunbartonshire (Douglas McAllister), my hon. Friend the Member for Corby and East Northamptonshire (Lee Barron)—in a spirited contribution—and my hon. Friends the Members for Ipswich (Jack Abbott), for Isle of Wight West (Mr Quigley), for Southampton Itchen (Darren Paffey), for South Derbyshire (Samantha Niblett), for Nottingham East (Nadia Whittome), for Bishop Auckland (Sam Rushworth) and for Peterborough (Andrew Pakes) that the great majority of the beneficiaries of this measure are people in work, and as a result the hon. Gentleman’s argument crumbled away.
Sir Stephen Timms
No, I will not be giving way.
It was very interesting to hear the arguments of the hon. Member for Runcorn and Helsby (Sarah Pochin). Her party is looking more and more like a cut-price Boris Johnson reunion party, with all the old faces turning up on the Reform Benches. Now they are even starting to sing some of the old songs. The leader of their party has been talking for years about opposing the two-child limit, and just a few weeks ago, the right hon. and learned Member for Fareham and Waterlooville (Suella Braverman) wrote an article in which she said that she opposed it. Today they are voting with the Tories in favour of the cap. Those old policies would cause the same damage if they were brought in again in the future.
I remember a time when there seemed to be at least some degree of consensus in the House on the importance of tackling child poverty. Well, there was not much sign of that among Conservative Members this afternoon, and I am sorry that we have lost it. Scrapping the two-child limit on universal credit is the single most effective lever that we can pull to reduce the number of children growing up poor, and in pulling that lever we are helping hundreds of thousands of children to live better lives now, and to have real grounds for hope for their futures. We are supporting their families, the majority of whom are working families, and by enabling the next generation to fulfil its potential we are investing in our country’s success in the years to come.
The Bill is the key to delivering the biggest fall in child poverty in any Parliament on record, and in doing so it will make a very big contribution to the missions of this Government. Our manifesto was summed up in one word—“change”—and this is what change looks like: ambition for families, and for the country.
Question put, That the Bill be now read a Second time.
The House proceeded to a Division.
Madam Deputy Speaker (Caroline Nokes)
Will the Serjeant at Arms investigate the delay in the Aye Lobby?
Universal Credit (Removal of Two Child Limit) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateMonday 23rd February 2026
(3 weeks, 4 days ago)
Commons ChamberUniversal Credit (Removal of Two Child Limit) Act 2026 Read Hansard Text Watch Debate Amendment Paper: Committee of the whole House Amendments as at 23 February 2026 - large print - (23 Feb 2026)
22:21 - divided: - Ayes: 73 / Noes: 286 - Question accordingly negatived.
22:46 - The House divided: - Ayes: 361 / Noes: 84 - Question accordingly agreed to.
This text is a record of ministerial contributions to a debate held as part of the Universal Credit (Removal of Two Child Limit) Act 2026 passage through Parliament.
In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.
This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Minister for Social Security and Disability (Sir Stephen Timms)
It is a privilege to bring this Bill back before the House. This Government believe that everybody should have opportunity in life: opportunity to achieve their potential and their ambitions, whatever their background. However, at the moment too many children are held back by the scourge of poverty, which affects their wellbeing, how well they do at school and their prospects in their adult working lives as well. No child should have to face lifelong consequences like those, and neither should the country have to bear the huge cost of so much wasted talent and potential.
Lifting the two-child limit in universal credit is the single most cost effective lever that we can pull to reduce substantially the number of children growing up in poverty. In doing so, we are helping hundreds of thousands of children to live better lives, supporting their families and investing in their future success. It is this Government’s mission to break down barriers to opportunity, to change the course of children’s lives for the better and to build a more hopeful future. The Bill makes a big contribution, delivering more security, more opportunity and more respect for families and communities across the UK.
Clause 1 removes the universal credit two-child limit in Great Britain from April this year. By doing so, we will lift 450,000 children out of poverty. That means that for assessment periods starting on or after 6 April, the universal credit child element will be included for all children in the household, increasing the amount of social security support available to families on universal credit with three or more children. All the associated exceptions will be removed at the same time, including the notorious rape clause.
Kirsty Blackman (Aberdeen North) (SNP)
Specifically on that point, does the Department have good enough data on subsequent children? Have people provided the information that the Department needs to ensure that the extra payments can be made timeously?
Sir Stephen Timms
We are confident that we can do that from April onwards. Reinstating support for all children in universal credit is a key step to tackling the structural drivers of child poverty. This Bill, combined with other measures in our child poverty strategy, will lift over half a million children out of poverty.
Clause 2 removes the two-child limit from universal credit in Northern Ireland from April. We are including Northern Ireland in the Bill at the request of the Northern Ireland Executive, who are bringing forward a legislative consent motion in the usual way. I am delighted to see the hon. Member for Strangford (Jim Shannon) in his place. On Second Reading, he made the point that 50,000 children in Northern Ireland will be lifted out of child poverty. He rightly said:
“If anyone is against that, there is something wrong with them.”—[Official Report, 3 February 2026; Vol. 780, c. 168.]
I agree with him on that point and I am grateful to him for making it.
Jim Shannon (Strangford) (DUP)
I very much welcome what the Government are bringing forward. It is good news and, as the Minister says, if anyone is against that, there is certainly something wrong with them. I cannot see how the measure will not be welcomed. The fertility rate in Northern Ireland is 1.71 children per woman, but for the population level to be stable it needs to be 2.1 children per woman. Does the right hon. Gentleman think that the measures in the Bill will encourage more people to have children? If they do, then that is good news as well.
Sir Stephen Timms
I am not sure what the effect will be. It is often said that a Labour Government has the effect of increasing the birth rate, but whether that will prove to be the case this time, I do not know.
Child poverty is a big challenge. Reducing it over the next 10 years will require commitment and collaboration across all four nations. The strategy, including removing the two-child limit, builds on plans under way across Government and devolved Governments. We will continue to collaborate with devolved Governments on the issue, particularly through the implementation phase that will now follow.
Clause 3 sets out the territorial extent of the Bill, the commencement dates for each of the sections, delegated powers and the short title of the Act.
The Government recognise the consequences of child poverty and the damage that it does to a child’s life chances. In the poorest 10% of areas, babies are twice as likely to die before they turn one as those in the wealthiest 10% of areas. Poorer children are more likely to have mental health difficulties by the age of 11, to be unemployed later and to earn less as adults. We estimate that the Bill will increase the universal credit award for 560,000 families, who will gain on average £5,310 per year. That is a much-needed change from the choices of the previous Government—they chose austerity, and children paid the price. Tackling child poverty is an investment in our economy and a downpayment on Britain’s future.
Rachael Maskell (York Central) (Lab/Co-op)
Before the House are four new clauses to the legislation. They set out a pathway through which we can generate data, particularly around the welfare cap, which we know holds back 141,000 children. In the assessments that the Government make, will the Minister draw out particularly the impact of the welfare cap on those children? Will he look to remove it to ensure that those children are not held back in poverty?
Sir Stephen Timms
I am sure that we will turn to the points that my hon. Friend makes in a few moments, but I reassure her that we will undertake a thorough evaluation of the impacts of the strategy. We will publish regular updates, and I think she will find there the information that she is interested in.
We cannot leave millions of children to succumb to the damaging impacts of poverty. The Government want instead to invest in children and in Britain’s future.
The Second Deputy Chairman of Ways and Means (Caroline Nokes)
I call the Minister.
Sir Stephen Timms
I thank all Members who have contributed to the debate. Interventions in the child poverty strategy will lead to the biggest expected reduction in child poverty over a Parliament since comparable records began. I well understand the concerns of those saying we should go further, and it is certainly right to urge the Government to do that, but let us recognise how big a change this will be. Removing the two-child limit is the key step. It will help children to live better lives, fulfil their potential, have better mental health, do better at school, and thrive in the future. That change is in the national interest.
The amendments propose a number of reports on different topics, and I am grateful that everybody who has spoken to them has indicated that they support the Bill. New clauses 1 and 4 ask the Secretary of State to report on the effect on children in households subject to the benefit cap. Indeed, new clause 4, tabled by my right hon. Friend the Member for Hayes and Harlington (John McDonnell), fulfils a commitment that he made on Second Reading to devise an amendment that would have that effect. It is an important point, and something we need to monitor carefully, but it is in the best interests of children to be in working households—and keeping the benefit cap in place protects the incentive to work. Work incentives are important. Under the policies of the last Government, far too many people gave up on work and concluded that it was not worth their while. We want it to be clear to everyone that it is worthwhile to be in work, and the Universal Credit Act 2025, enacted last summer, made an important step in that direction.
Removing the two-child limit does not undermine work incentives. From time to time, the Conservatives suggest that it does, but actually it does not. Removing the two-child limit increases the income of many families in work and increases the reward for work, and it does not undermine work incentives.
John McDonnell
There is an element of contradiction in what the Minister has said. Until now, the Government’s argument has been that one of the most disastrous disincentives to work is low wages, so they have rightly concentrated on raising the minimum wage and aiming for a proper living wage. Our argument has never been that lifting people out of poverty is a disincentive to work—it has always been about low wages.
Sir Stephen Timms
My right hon. Friend is right that raising wages has been a crucial part of the Government’s strategy, but removing the benefit cap would reduce work incentives. My hon. Friend the Member for Salford (Rebecca Long Bailey) said that there is no evidence that that is the case, but actually there is such evidence—from the Institute for Fiscal Studies, for example. It is not a huge amount of evidence but nevertheless there is evidence that the benefit cap provides a modest but significant incentive for work. Our view, for the time being at least, is that that should be maintained.
We have published an impact assessment as part of the Bill. It sets out the number of households that will not gain in full or will only partially gain from this measure because of the benefit cap. The Department publishes quarterly statistics on the benefit cap, which includes the number of households that are capped and how that changes over time. The most recent quarterly statistics show that of 119,000 households capped at the start of the quarter that ended in August last year, 40,000—about one third—were no longer capped by the end of the quarter, although others were newly capped, so there is a lot of churn in the cohort of capped households. The 40,000 households that left that cohort included 2,900 who had ceased to be capped because their earnings exceeded the threshold of full-time earnings at the national living wage. We want to encourage more people to make that transition.
We also publish statistics on the number of households affected by both the two-child limit and the benefit cap, with the next annual statistics to be published in the summer. After that, the quarterly benefit cap statistics will show how the number of capped households has changed after the two-child limit has been removed.
Kirsty Blackman
Those statistics will show the number of households that are capped, but they will not show how many have come into the benefit cap as a result of the removal of the two-child limit. Will the Minister be able to show a link between how many new families are being capped as a result of the two-child limit, meaning that those households are now disadvantaged again, even though the two-child limit has been removed?
Sir Stephen Timms
We have set out estimates of the effects that we think will result from the removal of the two-child limit, and there will be more information in the baseline evaluation report that we will publish in the summer.
My hon. Friend the Member for Portsmouth North (Amanda Martin) made some important points. I particularly agree with her about the importance of scrapping the rape clause, which had been a feature of the legislation since the two-child limit was introduced. She is right that we need to understand properly the impacts of policy interventions. We have published a monitoring and evaluation framework alongside the child poverty strategy that sets out how we will track and evaluate progress, reflecting our commitment to transparency, accountability and continuing to learn from what is effective. The baseline report will be published in the summer, as I have said, and set out details on plans alongside the latest statistics and evidence, and we will report annually on progress after that.
The information that we are committed to publish will provide the information looked for in these new clauses. I very much look forward to the report from the Work and Pensions Committee, which was referred to in an intervention by the Chair, my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams).
Siân Berry
Will the Minister tackle the point that I made in my speech? There is a possibility of people being denied disability benefits, as the result of separate work for which he is responsible, and potentially falling into the cap by losing the exemptions. That worries me greatly with respect to my own constituents.
Sir Stephen Timms
One of the new clauses touches specifically on disabled people. That new clause was not moved, but, as the hon. Lady knows, we are undertaking a review of personal independence payments, which I am co-chairing with others. We will see what the outcome of that is, but if there are to be changes in eligibility we will certainly set out details on the effects on the benefit cap and other things as those things progress.
I ask my hon. Friend the Member for York Central (Rachael Maskell) to place an order on my behalf for Kate Pickett’s latest book, which I am very keen to have a look at.
New clause 2 is specifically about households in poverty with a disabled family member. I agree that monitoring and evaluation of that and other things is very important, but we should not have an assessment that sits in isolation from the impact assessment that I have described, which we are committed to delivering alongside the wider child poverty strategy.
New clause 3 asks that we review the impact of child poverty on destitution and wider social and economic outcomes. I am grateful to the hon. Member for Witney (Charlie Maynard) for his support for the Bill. We have set out a second headline metric; we will measure deep material poverty in the child poverty strategy in the monitoring and evaluation framework. In that evaluation, we will track progress against two headline metrics. The first metric is relative low income—a metric embraced by David Cameron when he was the leader of the Conservative party but sadly not now recognised by the Conservatives. The second metric is deep material poverty, which will pick up on the concerns that the hon. Gentleman raised.
Rebecca Smith
I have been wanting to mention this point throughout the debate, but I have not had the right opportunity. Obviously a large number of these new clauses look at reporting back. I appreciate that the child poverty strategy involves a lot of reporting back, but is the Minister aware that the Department for Education does not yet have the records of which local councils have taken up auto-enrolment for free school meals? While the child poverty strategy has introduced universal breakfast clubs, there is no matrix to be able to decipher whether auto-enrolment for free school meals is working. In some cases, such as in the county that I represent, that has meant a significant amount of money for those local authorities deliberately to try to tackle poverty. Will he look into tackling that?
Sir Stephen Timms
I am sure that the hon. Lady will raise that matter with the Department for Education. That is a very important point.
We are extending free school meals to all children in families claiming universal credit; that is an important additional element of the child poverty strategy. There will be a comprehensive programme of analysis of the drivers of child poverty and the impact of specific interventions so that we can better learn what works and assess what further steps are needed. We will continue to gather evidence for further interventions beyond those that we have announced so far.
For too long, the tide of child poverty was allowed simply to rise. It is high time to turn that tide. This Bill is the centrepiece of our child poverty strategy. It will deliver the most substantial reduction in child poverty of any Parliament since records began and make a decisive break from the inaction and indifference of the past. Government can make a difference: we can help children and their families to lead better lives now and in the future for the benefit of all. It is for all those reasons that I hope the Committee will support the Bill and reject the new clauses.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clauses 2 and 3 ordered to stand part of the Bill.
New Clause 3
Review of the impact of the Act on child poverty, destitution, and wider social and economic outcomes
“(1) The Secretary of State must, within 12 months of this Act coming into force, review the effect of this Act on—
(a) overall levels of child poverty in the UK;
(b) levels of destitution and deep poverty among households with children;
(c) households in receipt of Universal Credit which include children;
(d) educational outcomes for children in households affected by poverty;
(e) physical and mental health outcomes for children in households affected by poverty; and
(f) longer-term impacts on economic participation, workforce skills, and demand on health and welfare services arising from child poverty and destitution.
(2) The Secretary of State must lay before Parliament a report setting out the conclusions of the review.”—(Charlie Maynard.)
This new clause would require the Secretary of State to undertake a review of the effects of the Act on child poverty, destitution, and wider social and economic outcomes.
Brought up, and read the First time.
Question put, That the clause be read a Second time.
Sir Stephen Timms
I beg to move, That the Bill be now read the Third time.
Scrapping the two-child limit is an investment in the future of children and of the country. Two million children will benefit from this Bill. We will be held to account on progress through the monitoring and evaluation arrangements we have put in place to ensure that the change we are making is genuinely lasting. I want to thank every Member who has contributed to these debates. Removing the two-child limit from universal credit will help more children to fulfil their potential, to grow up make a positive contribution and to be part of a fairer, stronger country. I hope that the whole House will now support this vital measure.
Madam Deputy Speaker (Caroline Nokes)
I call the shadow Secretary of State.
Universal Credit (Removal of Two Child Limit) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateThursday 12th March 2026
(1 week, 1 day ago)
Lords ChamberUniversal Credit (Removal of Two Child Limit) Act 2026 Read Hansard Text Watch Debate Amendment Paper: Committee of the whole House Amendments as at 23 February 2026 - large print - (23 Feb 2026)
This text is a record of ministerial contributions to a debate held as part of the Universal Credit (Removal of Two Child Limit) Act 2026 passage through Parliament.
In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.
This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)
My Lords, this Government believe that the UK should be a country where every person has the opportunity to fulfil their potential. That is why we are so committed to removing the barriers that stop people thriving and becoming all that they can be. Doing this will benefit not just the individuals, it will benefit our country. So I am delighted to be here today to move Second Reading of the Universal Credit (Removal of Two Child Limit) Bill. It makes a major contribution to tackling the poverty that limits children’s chances in life, and often for life.
There are now four and a half million children in poverty—900,000 more than there were in 2010. To put that in context, if we picture a classroom of 30 children, at the moment around 10 of them will be living in poverty. Some 2 million of our children are in deep material poverty, lacking the basic essentials such as a warm home or healthy food—things without which no child should be growing up. It is shocking enough that so many of our children have to live through childhood like that, but it is even more shocking when we consider the hugely detrimental consequences that growing up in poverty has on children’s health, education and future employment prospects.
Just one in four children in families with the lowest incomes gets good GCSEs. As adults, those who grew up in poverty are more likely to be unemployed or to find themselves in low-skilled, lower-paid jobs. Those who grow up poor clearly do not lack talent; what they lack is opportunity. As a result, our country is missing out on their gifts and their contributions. We are determined to break this link between children’s backgrounds and their future success. That is why, since coming into office, we have taken significant steps to help families tackle poverty and give every child the best start in life: increasing the minimum wage, expanding free school meals for over half a million children, investing in social and affordable housing, and funding more Best Start Family Hubs. We are now pulling the single most cost-effective lever available: removing the universal credit two-child limit, which will lift 450,000 children out of poverty.
This is the right move to extend opportunity, and it is right because our system should not be penalising so many of our children for the circumstances of their birth—circumstances their parents may not have chosen or expected. Life is unpredictable, and crisis can hit anyone regardless of the choices they have made or the size of their family. Marriages break up; parents lose their jobs or get sick, or injured, or die.
That unpredictability is reflected in the fact that half the families who will benefit from lifting the two-child limit were not on universal credit when they had any of their children. These are people who found themselves in need of help after decisions about family size had been taken. It simply is not right to draw dividing lines in the way the two-child limit sought to do, especially when over half the families affected by the two-child limit are already in work, and, of those who are not working, a significant number are affected by serious health conditions or caring responsibilities.
Illness, disability, bereavement, unemployment, becoming a carer—these things can hit any one of us, and have probably hit many of us in this Chamber already. Our welfare state exists to pool risk, to give all of us some protection from the impact of life’s slings and arrows. Some will look only at the cost, without looking at the cost of failing to offer support. We simply cannot afford to sit on our hands and wait for the costs of poverty to spiral. Without intervention, 150,000 more children will be pulled into poverty by 2030. That is 150,000 stories of missed opportunity, of deeper inequality, of lost productivity. But if tackling poverty is vital not just for the lives and opportunities of children, it is vital for our economy. Every pound we spend lifting children out of poverty saves so much more in future health, education and social security costs.
Few investments will reap rewards as great as investing in the next generation, in our future workforce. Failing to act on child poverty will cost Britain far more than investing now. That is why removing the two-child limit is part of our wider child poverty strategy. We committed in our manifesto to making good work the foundation of our approach to tackling poverty. Parents are doing all they can to support their children. Parental employment rates are already high but, with almost three-quarters of children in poverty being in a working family, too many parents find themselves in jobs where they are still struggling to support their families.
Meanwhile, too many of those who are not in work face barriers to entering the labour market, whether that is down to health, disability, a lack of childcare, poor skills, public transport not working in their area, or all kinds of other barriers. We want every parent who can work to feel the benefits of secure, rewarding jobs that enable them to get on in life, to support their families and to set an example to the next generation. That is why we will deliver a step change in employment and skills support for parents, helping them to balance work and caring responsibilities through high-quality, flexible jobs and improving access to affordable childcare.
The expansion of childcare comes alongside other measures in our child poverty strategy to drive down working poverty, including raising the minimum wage and creating more secure jobs by strengthening rights at work. The measures and the strategy will lift 550,000 children out of poverty. These interventions will lead to the largest expected reduction in child poverty over a Parliament since comparable records began. Together, all this represents a strong start. It kick-starts action and ambition over the next 10 years, responding to the immediate pressures families face now while delivering change to fix the structural drivers of child poverty.
But we do not underestimate the scale of the challenge: to build a society where every child grows up safe, warm and well fed, not held back by poverty but helped forward by government. So we will monitor our progress using two main metrics. First, we will use the internationally recognised and well-established “relative low income after housing costs” measure to monitor overall child poverty. Secondly, there will be a new measure of deep material poverty, which we have developed to assess families’ ability to afford the essentials. This takes account not just of their income but of the cost of essentials, their overall financial situation and the support they receive locally. It is not just the number of children in poverty that matters; it is the depth of that poverty too.
We are committed to ensuring that removing the two-child limit, along with other measures in the child poverty strategy, delivers the results children need and deserve. To support this, we have published a monitoring and evaluation framework alongside the strategy. That sets out how we will track our progress and the success of these policies, as part of an ongoing commitment to transparency, accountability and continued learning. This includes focused analysis to understand what drives child poverty and the impacts of the changes we are making, so that we can build on our successes and continue to make the case for further intervention. We will publish a baseline report in the summer setting out the latest statistics and evidence, with annual reports thereafter to monitor and evaluate progress.
This Government will not stand by while millions of children face the long-term harm that poverty brings. Families in poverty cannot afford to give their children what they need to grow and to achieve their potential. We will boost family incomes through employment and social security, drive down the cost of essentials and strengthen local support services. We are investing in the future of our children and will hold ourselves to account on delivering the impact we promised through this Parliament and beyond. We will remove this cruel policy, which has pushed 300,000 children into poverty.
I look forward very much to this debate and especially to the maiden speeches of my noble friends Lady Antrobus and Lord Walker of Broxton and the noble Baroness, Lady Teather. Between them they bring an amazing wealth and breadth of experience and knowledge to our House. I am delighted that they have chosen this extremely important Bill to make their first contribution to our proceedings. I beg to move.
Baroness Sherlock (Lab)
My Lords, I am so grateful to all noble Lords who have contributed to this debate. I love listening to maiden speeches, when we get an insight into the range and depth of experience coming into this House. Today we heard three magnificent examples. If anyone outside is listening, that exceptional richness of experience is what this House can bring to debates. We have heard about defence and air power; conflict and resolving conflict; climbing mountains, both literal and metaphorical; the importance of business; the compelling relational power of tea in the Long Room and learning to play dominoes—I may be better at one of those than the other, but maybe time will tell. I thank all noble Lords so much for coming in and contributing.
In developing our child poverty strategy, we engaged extensively with all kinds of people, including families, campaigners and experts. The aim was to try to work out what would have the greatest impact on the day-to-day lives of children living in poverty. The message was really clear: remove the two-child limit. I am grateful to my noble friend Lady Shah for pointing out the challenges we inherited and why it takes time for Governments to work through dealing with everything that comes out.
The Bill is supported by over 60 organisations, representing anti-poverty charities, which is perhaps not surprising, but also children’s doctors, teachers and health visitors—the people who know only too well the damaging effects of poverty and see its consequences every day. I remain very grateful for the work of the campaigning organisations, those professionals who support our children and all those who pushed for this change, including the Bishops’ Bench. I share the remembrance of the former right reverend Prelate the Bishop of Durham, who pushed for this in his time in this House.
The Bill is an investment to deliver a better future for children and for our country. Many noble Lords, including the noble Baroness, Lady Teather, and the right reverend Prelate the Bishop of Leicester, have set out the devastating impact that poverty has on children. Many, including my noble friend Lord Babudu, have pointed out that poverty is not evenly distributed.
Poverty imposes really significant costs on individuals and the country. Let me start with the Official Opposition, because they have set out clearly why they oppose this. It is my experience, in many years in and around politics, that, if you want to defend the indefensible, the first thing you do is set up some clearly false dichotomies. What have we listened to today? “It is children versus defence”. Of course it is not. If I were going to play politics, I would point out that, if the Conservatives felt that passionately about it when they were in government, maybe they should not have cut £12 billion from defence spending in their first term alone; maybe they should not have cut spending from the 2.5% the last Labour Government left, pushing us to raise it to 2.6% by next year; maybe they should have slashed child poverty. They were not choosing between the two things: they attacked both of them. Now, we could have that kind of conversation, or we could have a different kind of conversation. Let us take a step back and look at what actually happens with the policies.
What is the other false dichotomy? I think we fall into making a mistake if we try to set up social security versus work. I am not repeating the figure that 59% of families hit by the two-child limit are in work, in order to make a political point; I am pointing out that our social security system is there to help people in and out of work, and to help them get from being out of work into being in work. If the barriers get in the way of people being able to move into work, the system is not doing its job. Every time we start trying to pretend that this is contrasting people lying in bed all day with the blinds shut with those who go out to work, we do everyone a disservice. Please let us not have that conversation.
What we want to do is recognise that we have to enable work, encourage work and take away the barriers to work—that is really important—and that neither those in nor out of work are static populations: people move between those states, for a whole range of reasons. Our job is to make sure that, for those who can work, they stay in work as much as they can, for as long as they can, and, if they come out, to help them back into it when they can—but, if they cannot, to support them, because that is what we do by pooling risk.
The noble Lord, Lord Redwood, made some very interesting points. I parted company with him when he got to a certain point in his speech, but he made a really interesting point in saying that this policy is clearly not a panacea. The state cannot and should not pretend that it can solve all the problems families have, and the state does not raise children: families do.
The starting point, however, is that, if we want to tackle child poverty, as the noble Viscount, Lord Younger, said he does, the first thing we have to do is stop making it worse: stop tipping more children into poverty every year. The second step is to work out what the barriers are to people moving into work and developing in their lives. The noble Lord, Lord Redwood, mentioned some of those that are nothing to do with money, and the state can only do what it can to try to make it as easy as possible for families to do the right thing: investing in relationships education, supporting families —all kinds of education—and communities and relationships. What the state can do is tackle the things it can do something about. It is definitely not all about money, but it is not not about money: the statistics show really clearly, for example, the impact of poverty on family breakup and on parents struggling to do the right thing by their kids. We need to do both.
The next thing we need to do is create opportunities. I always hate disagreeing with the noble Lord, Lord Bird, because I know that he will come back at me, rightly, but we have to start to move not away from but beyond “handout versus hand up”. I absolutely agree with him that our job is to give people a hand up. He has done that in his time—as, indeed, has the noble Baroness, Lady Stedman-Scott—but I would not contrast that with any support the state gives to those who are struggling when they need it. A lot of what we do is on both those things. Like my noble friend Lord Walker, I have a real interest in how we use my department to help those who are struggling to get into work. Just this week, I was at a conference talking to businesses that are helping ex-offenders into work.
Lord Bird (CB)
Is it not wonderful that social security can be used as a hand up? That is the point I am trying to make. I am not trying to make the point of work versus social security. I am saying that a hand up is absolutely marvellous. The greatest hand up that I got was a probation officer.
Baroness Sherlock (Lab)
Indeed, and that probation officer clearly did a very good job: look where the noble Lord has ended up. Would that they were all that successful. I suppose that that is quite a high bar at which to set them, but I commend it. That is a really great point, and I am now violently agreeing with the noble Lord; but I will move on.
I want the social security system to do its job, and for most people its job is to support them into work, and in work, and to develop them in work. That is very much what this Government are seeking to do.
One of the challenges with universal credit is about assumptions. It was designed to move people into and out of work—to work in and out of work—and when it works it does so very well. All we are doing is making sure that the system works even better than it does. But the assumption that this Government are doing the wrong thing by spending money on tackling child poverty is fundamentally mistaken. My noble friend Lord Walker talked about the need to make sure we tackle NEETs, for example. We have one in eight of our young people not in employment, education or training. They did not start at 16.
Baroness Stedman-Scott (Con)
We are not saying that the Government should not spend money. It is about what you spend it on, and how it is spent to get the best outcome from what you are trying to do.
Baroness Sherlock (Lab)
My Lords, I understand that, but I have looked at what the last Government spent the money on and at the results, and I do not like them, so we are going to do something different.
My simple view is that if we will the end of tackling child poverty, we have to will the means. We believe that removing this barrier is fundamental. Those young people who were NEETs at 16 did not start at 16: they started without the opportunities, without the education, and without the start in life they should have had. The evidence shows quite clearly that children who grow up in poverty are likely to have poorer mental health, fewer opportunities and less chance to do all those things we want them to do. What we are doing is enabling those people to have opportunities, giving them the start they need. If we can get that in place, the whole country benefits. Instead of supporting people not to work, we are giving them the chance to flourish as individuals and to make the contribution to our society that they will not get the chance to make otherwise.
Before I get myself into any more flights of rhetoric, I should answer some of the questions that have been asked. My noble friend Lady Lister asked about council tax reduction. I think she knows this, but just for the record, local councils are of course responsible for designing and reviewing their own council tax reduction schemes. My department has been working with the MHCLG to communicate the change to local authorities, and they have been encouraged to consider the impact of their schemes in the light of the removal of the two-child limit. In 2029-30 an estimated 560,000 families will see an increase in their universal credit award, with these families gaining, on average, £440 a month. The impact of transitional protection is included in the impact assessment, but not on the numbers of households.
The benefit cap was raised by my noble friend Lady Lister, and by the noble Baronesses, Lady Teather and Lady Bennett, and by my noble friend Lord Davies and a few others. This Government want to preserve the fundamental principle that work is the best route out of poverty. We believe that leaving the overall benefit cap in place encourages personal responsibility while maintaining the incentive to work. Where possible, it is in the best interests of children to be in working households. Being in work substantially reduces the chance of poverty: the poverty rate of children living in households where all adults are in work is 17%, compared to 65% for children who live in households where no adults work. We will continue to protect the most vulnerable—those who are unable to work because of a disability or a caring responsibility are protected and exempted from that.
The noble Baroness, Lady Bennett, asked about numbers. When I answered her Written Question, the impact assessment had not been published at that point. I can say that among households in scope to gain from the removal of the two-child limit in 2029-2030, approximately 50,000 are estimated to be capped before the policy change, and a further 10,000 households will be capped afterwards. In contrast, 550,000 households in Great Britain will gain in full from the removal of the two-child limit in 2029-30, as will an estimated 2 million children in the United Kingdom.
The noble Baroness, Lady Janke, and my noble friend Lady Shah raised the impact of poverty on children and schools—
Baroness Lister of Burtersett (Lab)
I am sorry to interrupt my noble friend, but a number of us have made the point about the thresholds for the benefit cap and the fact that child benefit is taken into account. When we were in opposition, we said that child benefit should not be taken into account in the cap. Can she comment on that?
Baroness Sherlock (Lab)
I have given the same answer about the levels a number of times. The cap has to be reviewed by 2027. The Secretary of State will review it at the appropriate time, certainly within the statutory deadline, and he will make the judgments he makes at the time. I am happy to convey the comments made on this to my colleagues in the department, but the Government have taken the view that they have on the cap. We will simply have to leave it at that, I am afraid.
On schools and education, it is striking that schools are using their stretched resources on services such as food banks and providing essentials to children. Research by the Joseph Rowntree Foundation shows that now one-third of primary schools run food banks, one-quarter are providing essentials, and 38% say staff provide for pupils and families out of their own pockets. We got the Children’s Commissioner’s office to do some research to support the development of the child poverty strategy. Children and young people spoke about how low income impacts their education and at times limits their career aspirations, including by restricting their access to extracurricular activities. This is an incredibly important point made by my noble friend Lord John, or possibly by my noble friend Lord Walker—I am sorry, I am getting very bad at names. We listened carefully to families when we did that, and the consistent message was that a whole range of benefits came from lifting the two-child limit. It is not just about money; it is about all the things that enables. This goes also to the points made by the noble Lord, Lord Redwood.
As for paying for this, the Government have always made clear how they will pay for things when they announce them. It was made clear that the removal of the two-child limit was fully funded by policies in the Budget, including reforming Motability tax relief, clamping down on fraud and error in tax and social security, and reforming the assessment process. Together, those measures will save £4.9 billion in 2030-31 versus the £3.2 billion cost of removing the two-child limit.
The noble Viscount, Lord Younger, raised the OBR and the welfare cap. The Government are committed to ensuring that social security spending remains on a sustainable path. We set a new welfare cap in the Autumn Budget 2024 to make sure that it remains under control for the course of this Parliament. The forecast for social security spending is virtually unchanged from the last OBR assessment, increasing by only 0.1% in 2029-30 in the forecast. Welfare spending is forecast to rise by less than half the amount it did under the previous Parliament—just over 0.3% of GDP by 2030-31 compared with 0.7% previously—and health and disability spending is expected to rise by only 0.3 percentage points compared with 0.5 under the previous Government. This Government inherited a system which did not do all the things the Opposition say they wanted it to do. In fact, we saw growing numbers of people economically inactive as a result of ill health and disability. That graph went up. We have been working hard to bend that graph by taking the steps needed to do it.
On employment, parental employment rates are already high, but if we want to get more parents into work, it is important that we remove the barriers to getting them there. One of the key barriers is childcare. That is why we have announced 30 hours of funded childcare for working parents, saving eligible families using all 30 hours up to £7,500 per eligible child per year. When we talk about the parents in larger families being in work, one of the challenges was childcare again. We are extending eligibility for universal credit upfront childcare costs to parents returning from parental leave to ease that transition back to work, and we are providing UC childcare support to help with the childcare costs of all children, instead of limiting it to two children, so that parents who have larger families can afford to go back to work. It clearly is not about work or social security; it is about social security enabling work and supporting it, as the noble Lord, Lord Bird, said so clearly. We know that there is more to do, which is why we are committing to a review led by the Department for Education across government about access to early education and childcare support and delivering a simpler system.
What is coming next? We have been clear that the child poverty strategy will not solve problems overnight. This is one step in a journey looking forward 10 years. We have already made a number of significant steps: investing heavily in expanding free school meals; introducing a fair repayment rate into universal credit; investing in support to help people with their energy bills; investing in support across the piece; raising the minimum wage; looking at what is happening with affordable housing; and investing in helping people to get into secure jobs.
The most important thing will be to monitor that, to make sure that we do it. There will be a comprehensive programme of analysis, making sure that we know the exact impact of the changes we are making. If the Opposition are worried, we will be monitoring the impact of what we do. This will enable us to work with government departments and the devolved Governments to consider what we do in future and to capture the data as we go.
This Government are determined to break down barriers to opportunity, to deliver economic growth and to raise living standards. Removing the two-child limit in universal credit remains the single fastest and most cost-effective lever we have to reduce the number of children growing up in poverty. It is at the heart of a wider strategy to drive down child poverty and set the next generation up for success. Far from being anti-work, this strategy includes our plan to make work pay, to improve job security and living standards, and to enable people to get on into work. We do not simply want to move people from being out of work into jobs from which they can never progress. If we want social mobility, we need to enable people to develop skills so that we can become a high-skilled, high-wage, high-investment economy, as we have been challenged to do. We have also announced increased universal credit support, getting people into work and into more hours because, above all, we believe in the value of every person and the contribution they can make.
The noble Baroness, Lady Teather, and the right reverend Prelate the Bishop of Leicester made some very interesting points. Part of what we have to do is to invest in communities and relationships. All we can do with money is remove barriers. What we need to do as a country is look at how we engage with our neighbours and our communities, and how we can support all those in our communities to develop and to fulfil their potential.
My noble friend Lord John said that a Labour Government are nothing if they do not do something to tackle poverty and inequality. That is exactly what we are doing here today. The Bill, along with the wider actions in the child poverty strategy, will help deliver the biggest reduction in child poverty over a Parliament since comparable records began in the 1990s. It is time to put this counterproductive and cruel policy into the dustbin of history, and to focus instead on building a system that gives children and their families the security and opportunities to build a better life, no matter their background. I commend the Bill to the House.
Bill read a second time. Committee negatived. Standing Order 44 having been dispensed with, the Bill was read a third time and passed.