Universal Credit (Removal of Two Child Limit) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateTuesday 3rd February 2026
(1 day, 12 hours ago)
Commons ChamberUniversal Credit (Removal of Two Child Limit) Bill 2024-26 View all Universal Credit (Removal of Two Child Limit) Bill 2024-26 Debates Read Hansard Text
18:59 - The House having divided: - Ayes: 458 / Noes: 104 - Question accordingly agreed to.
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?