Universal Credit (Removal of Two Child Limit) Bill

Rebecca Smith Excerpts

Monday 23rd February 2026 Commons Chamber

[Madam Deputy Speaker (Caroline Nokes)]

I call the shadow Minister.

[Rebecca Smith (South West Devon) (Con)]

I will speak in part to amendments 1 and 2, although we will not vote on them this evening. Essentially, I am speaking because we do not believe that scrapping the two-child limit and lifting it in this way is the way to tackle child poverty.

When the Conservatives introduced the two-child limit in 2017, we did so for one simple reason: fairness. We believed then, as we do now, that people on benefits should face the same financial choices about having children as those supporting themselves solely through work. Nine years later, we stand by that principle.

The welfare state should be a safety net for people in genuine need, yet too many people feel that the welfare system has drifted from its original purpose. They see a system that rewards dependency while working families and individuals shoulder the tax burden. The two-child limit is a way of saying that work should pay, that taking responsibility should matter and that the system should stand with those who pull their weight.

[Josh Fenton-Glynn (Calder Valley) (Lab)]

I am excited to hear that the hon. Member thinks work should pay. Can she tell us why, under the last Government, we went from one in three children in poverty having a parent in work to two in three children in poverty having a parent in work?

[Rebecca Smith]

We know that poverty decreased under the last Government; I will make some progress.

True compassion for families in poverty means offering sustainable solutions, not just sticking plasters. We need to tackle the root causes of poverty, rather than masking the symptoms. That means dealing with structural issues that damage children’s life chances, rather than simply handing out more cash to families.

It is worth noting that the two-child limit has had no significant negative effects on school readiness for third and subsequent children in England. School readiness is the cornerstone metric of the Government’s opportunity mission. Labour and other opponents may criticise the cap for all sorts of reasons, but scrapping it will not be a cost-effective way of improving children’s educational development.

In terms of holistic solutions, we know that work is the single most transformative route out of poverty. Work provides stability, self-respect and the crucial stepping stones to a better future. We should be doing everything we can to ensure that families on universal credit can access meaningful employment. As I have said before, children in long-term workless households are four times more likely to be materially deprived, and they are 10% more likely to end up workless themselves.

When we were in government, Conservatives oversaw a consistent reduction in the number of children in workless households, yet under Labour that number has reached a nine-year high: there are now 1.2 million children living in homes where no parent has worked for over a year. Without a working parent at home, children miss out on seeing the rhythms and rewards of working life—the morning alarm, the daily routine, the pride of earning a wage and the discipline of saving up for things that matter. This Government seem bent on disincentivising work and destroying jobs.

--- Later in debate ---

[Kirsty Blackman]

Is the hon. Lady aware of what percentage of people currently subject to the two-child cap are in work? Is she aware that 22% of people on universal credit earn more money than the personal allowance and therefore pay income tax?

[Rebecca Smith]

I thank the hon. Lady for her intervention, which provides me with a great opportunity to say something that I realised again while preparing for this debate. We know that lots of working people claim universal credit, but what we do not know is how many hours those people work, which would enable us to ascertain how many of them are full-time workers and how many are part-time workers. Of course, if they are full-time workers, there is one argument to be made, but if—as I would assume—the vast majority are part-time workers, we need to be encouraging them to work more hours. Later in my speech, I am going to get to a point where this is a problem, given all the other passported benefits that they get once they are entitled to universal credit.

How can it be fair to expect working parents to subsidise other families’ decisions that lie beyond their own financial reach? We also must not forget the single people whose household overheads are higher than in dual-income households. In 2024, there were 8.4 million people living alone in the UK—nearly 30% of households. They, too, should not be saddled with the extra tax burden that scrapping the two-child limit will inevitably create.

This Labour Government prefer handouts to hard choices. Giving away cash will always be more popular than exercising fiscal responsibility—the Back Benchers like it, and the left-wing think-tanks like it. The families who will get thousands more pounds every year like it, and who can blame them? Spending other people’s money is an easy way for the Government to feel good about themselves, but that money must come from somewhere. This Government are only pretending that they can afford to scrap the cap; originally, they said that doing so was unaffordable. That is true—the cost of this policy will be about £3.5 billion—but instead of sticking to his guns, our Prime Minister has capitulated to his Back Benchers. It requires backbone to bring the welfare budget under control, and backbone is exactly what Labour lacks.

In contrast, previous Conservative Governments did indeed control spending; until the pandemic, spending on working-age welfare fell in real terms. That is why we have committed to save £23 billion. We will crack down on the abuse of Motability, we will stop handing out benefits to foreign nationals—because citizenship should mean something—and we will stop giving benefits to people with low-level mental health problems, to ensure that we can target support to the people who need it most.

Under Labour, the overall benefits bill continues to balloon. By the end of this decade, health and disability benefits alone are set to reach £100 billion—I did read that right. Scrapping the cap is fiscally irresponsible and Labour knows it. This Bill will only increase the tax burden on hard-working men and women whose household budgets are already being stretched to the limit.

[Jim Shannon]

I feel I have to disagree with the hon. Lady, for a very simple reason. The Minister has mentioned my comment on Second Reading that 50,000 children will be lifted out of poverty in Northern Ireland, and some 13,000 families will have a better standard of living. The mark of any society is that whenever those who are less well off need help, we must help them. That is why I think the Government are doing the right thing: they are helping to lift people out of poverty, and what is wrong with that?

[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.

[Rebecca Long Bailey (Salford) (Lab)]

I speak in support of new clause 4, tabled by my right hon. Friend the Member for Hayes and Harlington (John McDonnell), me and others, and I will try to be as brief as I can. Scrapping the two-child limit in full remains the single most impactful step we can take to reduce child poverty, and will lift 450,000 children out of poverty by 2030. When combined with other measures in the child poverty strategy, more than 550,000 children will be lifted out of poverty by the end of the decade.

Some Members of this House have said, “How can the country justify this multibillion-pound spend?” It is around £3 billion a year, but child poverty costs the UK economy £39 billion annually—more than 10 times as much. That £39 billion reflects poorer health, lower educational attainment, increased pressure on public services and lost economic potential. Investing £3 billion to reduce a £39 billion problem is not reckless spending; it is a highly targeted, cost-effective investment with long-term returns. It is preventive policy at its very best.

Other Members have asked why taxpayers should support larger families. Well, the honest truth is that only a very small number of families have more than four children, and almost all are working hard to provide for them. The two-child limit has had no measurable impact on family planning and has not influenced fertility rates; it simply punishes children who are already here. Every child, regardless of birth order, deserves enough food, a safe home and a fair start in life. When children are supported to thrive, they do better in school, stay healthier and contribute more fully as adults, and that benefits all of us.

Those who argue that support should not go to families out of work should remember that six in 10 children affected by the two-child limit live in households where at least one parent works, and those families are taxpayers too. As my mum says, there but for the grace of God go I. A crisis can happen in an instant at any moment, and bereavement, illness, redundancy or family breakdown can push any household into temporary reliance on universal credit. A humane and flexible social security system exists to provide stability in those moments of crisis.

I urge all Members to support the passage of the Bill today, but it must be just the start and we must go further. Alongside scrapping the two-child limit, we have to address the wider benefit cap, which was introduced in 2013. It has bored down on the backs of many families like a rucksack full of lead. Organisations including the Child Poverty Action Group, the End Child Poverty Coalition, Save the Children UK, the Children’s Society, Barnardo’s, Action for Children and the Joseph Rowntree Foundation have all highlighted the damaging impact of the overall cap. It places arbitrary ceilings on support, regardless of rent levels, local costs or family size. It disproportionately affects single parents—overwhelmingly women—and families in high-cost areas. It drives rent arrears, temporary accommodation and homelessness, and the evidence is clear that it does not meaningfully increase employment; it increases hardship.

If we are serious about tackling structural poverty, we cannot remove one barrier while leaving another firmly in place. Lifting the overall benefit cap would complement the removal of the two-child limit, ensuring that the gains we make today are not clawed back through arbitrary ceilings that fail to reflect real living costs. I applaud the Government for scrapping the two-child cap, which is the right thing to do, but I hope that the Minister can give us some assurances that his next step will be to look at lifting the benefit cap.

--- Later in debate ---

[Rachael Maskell]

There could be no greater cause for a Government than to lift children out of poverty, which is why I very much welcome the removal of the two-child limit. However, the Joseph Rowntree Foundation has reported that 141,000 children will not see the full benefit of the change and 50,000 children—the poorest of our children—will get no benefit whatsoever because of the benefit cap. We must therefore examine the impact of the benefit cap on these families and how it is holding those children back in poverty.

We must strain every sinew to address poverty, looking at issues such as the sanctions in the welfare system; the spare room subsidy, which the Government championed in the bedroom tax campaign; and many more. We know that the impact of growing up in poverty, especially on disabled children, results in a greater cost to the state than were their poverty and destitution to be addressed.

Poverty is a source of many adverse childhood experiences, causing multiple disadvantages to children and changing their life trajectories. My work looking into the intersection of child poverty and the 1,001 critical days shows the causal link. When I recently met with a director of midwifery and discussed poor maternal outcomes, she impressed on me how addressing the multiple indices for which poverty is at the root is the most significant step we could take.

Low birth rate, domestic violence, substance abuse and intergenerational disadvantage lead to setting a baby, a child and then an adult on to a negative trajectory. When it comes to lifting children out of poverty, we have to look at what is currently holding 4.5 million children in poverty—2 million in deep poverty and 1 million in destitution. The steps that the Government have made are to be celebrated, but there is much more to do.

Last week, I had the privilege of launching Kate Pickett’s new book “The Good Society”, so I have spent the last couple of weeks engrossed in statistics and research on the impact of poverty on our society, its causes and the solutions. If the Minister has not read it yet, I suggest he makes it his priority. I describe the book as a manifesto because I believe it echoes our values and provides the evidence base that the Minister needs regarding why holding children down in poverty is a moral ill, when the evidence says that removing the cap will save the Government substantially, and lead to better outcomes for those children in health, education and employment, in the justice system and in society.

The Government said that they were going to invest in a decade of renewal and so would reap the benefits within two terms of office were they to remove the benefit cap. The four new clauses before us call for an assessment, which the Government must be keen to make. If we do not, academics will drive out the data and present it to us.

Conservative Members are wrong on the evidence base. We need to look at the number of children who have been pushed into poverty over the last 14 years. Life expectancy in our developed country is now ranked 24th out of 38 in the OECD, and our infant mortality is now ranked at 29th. There is a causal link. Whether it is health outcomes, educational outcomes, the impact on families, or the justice system, the roots of the issues can be traced back to poverty in childhood. If we are serious about cutting the social security cost or the prison population cost to the Exchequer, our only path is to invest in ending child poverty and taking our ambition beyond that of the child poverty strategy launched by our Government.

The evidence from York, where we have introduced free school meals, is that lifting children out of poverty has significantly enhanced their health and education outcomes.

[Rebecca Smith]

Will the hon. Lady give way?

[Rachael Maskell]

I am going to continue.

Risks including exploitation can be addressed if we put the right security around a child, so we must move all children out of poverty. A strong correlation exists between children in the justice system and poverty, with over half of children in secure accommodation being eligible for free school meals.

The evidence set out in “The Good Society” is powerful regarding why we need to lift children out of poverty. While we are rightly grateful for the steps that have been made, we have more to do. We know that 30% of disabled people live in poverty, and the risk of deep poverty is 60% higher in families with a disabled person. It is right, therefore, that in new clause 2 we seek to find deeper evidence. One reason to look at the benefit cap is that in my constituency we have among the highest costs of living in the country. The cost of housing is holding back families, as they do not have the resources to pay for the basics for their children. That is why I have worked with Citizens Advice in York, and said that I would raise these issues with the Minister.

As Pickett and Wilkinson point out in “The Spirit Level”, inequality is the root of each strand of social disadvantage, with the UK second worst in the world. Successive works of academics leading to two reports by Sir Michael Marmot have shown the impact on health outcomes, and whether in education, justice, housing or welfare, or indeed having any agency at all, we have a social and moral imperative to end the inequalities that widened following the 2008 economic crash.

I call on the Minister to look specifically at the benefit cap and to move those children forward and lift them out of poverty. We know that if we can turn the tables on their life outcomes, that can make such a significant difference.

If we are serious about our society gaining from the economic and social advantage of ending child poverty, we must look further, with a minimum income guarantee as a next step. We must also seriously consider a universal basic income so that no child experiences the deep and pernicious poverty that this place has for far too long held them in, suppressing their life chances and causing such harm.

--- Later in debate ---

[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?