Universal Credit (Removal of Two Child Limit) Bill

Debbie Abrahams Excerpts

Monday 23rd February 2026 Commons Chamber

[Rebecca Smith]

I thank the hon. Gentleman for his intervention. Of course how we care for the most vulnerable is the mark of our society, but as Conservatives we do not believe that it is simply about trying to lift them up by giving them extra cash. All we are doing is changing the relative poverty measure; we are not suddenly lifting all these people out of poverty because we are giving them more money. We do not know what they are going to spend that money on. What we need to do is spend the money not on sticking plasters, but on putting things in place that actually have a systemic impact. We need to bring people from long-term poverty into a long-term position in which they can afford what they need.

Inflation has soared to nearly twice as high a level as when this Government entered office. Food prices are rising. Utility bills are rising. Even the cost of relaxing at the pub with a beer is rising. We cannot lift children out of poverty by making the whole country poorer, as my hon. Friend the Member for Faversham and Mid Kent (Helen Whately) has argued so persuasively. When inflation rises, spending power falls. The money people earn buys less, because each pound is worth less than before; indeed, the money people receive on benefits is also worth less because of inflation. Families feel it at the checkout, at the petrol station and with every bill that drops through the door.

Inflation not only squeezes families’ budgets, but narrows their choices. With the cost of everyday essentials continuing to climb, many working families are being forced to delay or even abandon plans for another child. Scrapping the two-child cap gives families on benefits a choice that many working households can no longer dream of: the ability to grow their family without facing financial choices.

This unfairness erodes trust in our social contract. The social contract is an implicit agreement between citizens and the state that gives the state its legitimacy. People work and pay their taxes; in return, they trust the state to step in if they fall on hard times. They trust the state to spend their taxes responsibly on their behalf, but the welfare system has become totally lopsided. Over half the households in this country now receive more from the state than they pay into it. Taxpayers are supporting a system larger than themselves. Scrapping the two-child limit will further exacerbate the imbalance.

The problem does not stop there. There is an entire shadow system working alongside universal credit. As I have mentioned, passported benefits are costing the taxpayer £10 billion every single year. They include healthy food cards, discounted broadband and free prescriptions. Together, they distort work incentives, leading to a cliff-edge denial of entitlements when a claimant comes off universal credit. Many parents want to work, but are better off remaining on benefits once they factor in their loss of eligibility for those extra entitlements. Yet again, they have been let down by a system that should be supporting them into work, not trapping them on benefits.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

Can the shadow Minister remind the Committee of the weekly rate for the standard UC allowance?

[Rebecca Smith]

I am not particularly well today, so the right hon. Lady will forgive me if my memory is foggier than normal. That is why I am wearing my glasses, and it is why I am struggling not to cough throughout this debate. I am happy to have a conversation with her afterwards, but testing me on those sorts of things at this particular time is perhaps not the kindest thing to do.

The two-child limit is about basic fairness to working parents—the very people whose taxes fund our welfare system. They are already making tough decisions about the size of their own families, and we cannot exempt people on benefits from those hard choices. Scrapping the cap is a direct insult to the working families on whom this country relies.

The Government should remember the case that they once made for keeping the cap. When the Prime Minister suspended seven of his own MPs in 2024 for voting to scrap it, he did so on the basis that the policy was simply too expensive. He has now bowed to pressure from his Back Benchers, but nothing has changed—it is still unaffordable. Why are this Government preparing to spend billions by removing the two-child limit, when they cannot even get a grip on rising unemployment? We should be expanding real routes into work, not deepening incentives to remain on benefits.

--- Later in debate ---

[Charlie Maynard (Witney) (LD)]

It has been a very painful path to get to this point, but I simply want to welcome what the Government are bringing in. Reversing the decision on the two-child limit will lift 540,000 children out of absolute poverty, and it is unquestionably the right thing to do—certainly for those children and for their families, but also for our economy, our public services and our society as a whole. Children growing up in poverty face worse educational outcomes, poorer physical and mental health, and fewer opportunities in adulthood. As the hon. Member for Salford (Rebecca Long Bailey) pointed out, this has a huge economic cost on our society, and investing a relatively small amount now for great gains later is very sensible.

This change will be worth up to £5,000 per year for each of the more than 500 families in my constituency who have been impacted by the cap. I have had heartbreaking emails from and surgeries with constituents impacted by this cap, as I am sure we all have. They have had to skip meals to ensure their children do not go without, because each month their money simply does not stretch far enough. Our food banks help enormously, but relying on them is obviously not the solution.

Too many children and families have been trapped in poverty because of the previous decision to impose the cap and this Government’s stubborn decision to keep it until now. I wish this change had happened a year ago, which would have saved a lot of trouble and stress for families and children involved, as well as for a few Members in this Chamber. I commend the Labour MPs who lost the Whip for fighting to end this policy for their courage. I am sure that their voices and actions have played a large part in the Government now bringing forward this Bill.

However, the Bill is very narrow in scope, and we should recognise that it is only one step towards tackling child poverty. There is much more we need to do, as highlighted by new clause 3, tabled by my hon. Friend the Member for Torbay (Steve Darling). Ministers will no doubt have seen the report published by the Joseph Rowntree Foundation that, while welcoming the decision to lift the cap, warned that progress on tackling child poverty as a result of removing the two-child benefit cap is likely to stall after April—two months away—unless it is supported by further follow-up measures. The headline from that report was that the number of people living in very deep poverty is at the highest level in more than 30 years, based on 2023-24 figures.

The Government must now make it an absolute priority to address that, which is why we are calling on them to look at the much wider issues of overall levels of child poverty, destitution and deep poverty among households with children, as well as at educational outcomes and physical and mental health outcomes for children in households affected by poverty. They need to thoroughly assess those a year after the passage of this Bill and report back to the House on its impact.

[Debbie Abrahams]

Is the hon. Member aware of the tackling child poverty strategy and the inquiry by the Education Committee and Work and Pensions Committee looking at just that, as well as at the data the Education Secretary published before Christmas?

[Charlie Maynard]

Yes, I am. I congratulate the Chair and members of the Work and Pensions Committee on doing all that good work; many thanks to them.

Assessing the wider issues may encourage the Government to take steps beyond this welcome but narrow Bill to support children and their families who are struggling to get by from week to week. Those include auto-enrolment of all those eligible for free school meals, so that children are automatically considered eligible when their parents apply for relevant benefits or financial support, and giving people the ability to juggle caring responsibilities alongside work without falling into hardship by increasing the value of carer benefits, particularly for those on low incomes.

--- Later in debate ---

[John McDonnell (Hayes and Harlington) (Lab)]

New clause 4, in my name and the names of many hon. Members, echoes new clauses 1 and 3. I take reference from points made by the hon. Member for Strangford (Jim Shannon); when we came together to discuss the two-child limit and this Bill, the House was filled largely with compassion, because we had the view that we just could not stand by and watch so many of our children living in poverty. That is why we welcome the Bill and have campaigned for it for so long.

We were building an element of consensus across a large part of the House, but the problem that we have, as has been pointed out by my hon. Friends the Members for Salford (Rebecca Long Bailey) and for York Central (Rachael Maskell) and the hon. Member for Brighton Pavilion (Siân Berry) is that a good Bill is being ruined—or damaged, anyway—by avoiding the issue of the overall benefit cap. As it is impossible for Back Benchers to move amendments that will incur Government expenditure, we could not move an amendment to abolish the overall cap, so through the amendments we have tabled we are simply saying to the Government, “Please acknowledge that the abolition of the two-child limit leaves a large number of our children in poverty.”

My hon. Friend the Member for York Central has said that 141,000 children are affected by the overall cap, but from the last estimate the figure is about 150,000, and there are 50,000 families who gain nothing as a result of the Bill, which is excellent but does not go far enough. Another 30,000 families only get some partial benefit. All these amendments say to the Government, “Because we cannot move an amendment tonight that will scrap the cap, at least consult on the implications of this Bill and those it leaves behind.”

New clause 4 lists a number of the organisations that we depend on for the analysis of poverty and the discussion of the implications. The amendments are not revolutionary; they are straightforward. They ask the Government to please tell us what their next steps are, because they must include the tackling of the overall cap. I welcome the reviews that are going on, but meanwhile time is ticking over. It took us a year to arrive at the final conclusion on the two-child limit, and there could be another year of all those children still living in poverty.

[Debbie Abrahams]

The response to my right hon. Friend will be that everything that is being asked for—the outcomes that he would like—are in the terms of reference and will be addressed within the Education Committee’s child poverty strategy inquiry.

[John McDonnell]

That is why I urge Ministers to act swiftly in response to that review. I believe that all logic will drive these reviews to recommend the elimination of the overall cap, once and for all. I hope we will get something from the Minister tonight—some form of words that acknowledges the seriousness and urgency of the issue. I hope the reviews will report swiftly, so that we can, almost consensually, get legislation on this issue though this House incredibly speedily.

I am sorry that the Opposition spokesperson, the hon. Member for South West Devon (Rebecca Smith), is not very well, and I hope that when she recovers, she will discover compassion, because that is not what we heard tonight. We need to understand the genesis of the overall cap and the two-child limit. It goes back to the financial crisis of 2008-09. Our financial sector operated like a casino. We came to a financial crisis, and when George Osborne became Chancellor in 2010, he decided that it was about not the deregulation of our financial sector but Government overspending—it never was—so he introduced a policy of austerity, which targeted the most vulnerable. He targeted—