Sir Keir Starmer under mounting Labour rebel pressure to scrap two-child benefit cap

The demand to remove the cap on benefit payments to families with more than two children comes in the same week that MPs forced the Prime Minister to back down on plans to cut £5 billion from the welfare budget.

The climbdown hands Chancellor Rachel Reeves a major headache ahead of the Budget in the autumn. It comes just weeks after a similar £1.25bn U-turn on winter fuel payments and leaves the Chancellor with a £6.25bn hole to fill.

Any move to ditch the two-child cap, which means families can only claim child tax credit and universal credit for their first two children, would cost the exchequer around £3.5bn, bringing the total expenditure on the welfare policies to £9.75bn, effectively wiping out Ms Reeves’s £9.9bn fiscal headroom.

Health Secretary Wes Streeting, centre, with Chancellor Rachel Reeves and Keir Starmer, at the Sir Ludwig Guttman Health & Wellbeing Centre in London, England. Picture: Jack Hill/Getty Image

The pressure mounts with the Scottish Government having confirmed it lift the two-child benefit cap on March 2 next year north of the Border – just two weeks before the Holyrood election campaign begins.

One UK Cabinet minister acknowledged there was a “significant cost” to scrapping two-child limit, but added: “There is also a significant cost in other ways, of a Labour government not taking action to bring down child poverty. And we have to be able to go into the next election having made significant progress on child poverty.”

The Cabinet member added: “Whilst it's hard and the cost is high, it's clear that it is an effective way of supporting families and making sure that fewer children grow up in poverty. And the evidence supports that.

“The challenge is less do we do it – it's whether we can do it, and what the timing would look like around that.”

Leading members of the welfare rebellion have warned the UK government will have to scrap the two-child cap if it is to meet its obligations to cut child poverty rates.

Rachael Maskell, Labour MP for York Central, said: "It is imperative that the government scrap the two-child limit and the benefit cap as this will lift 360,000 children out of poverty. But most of all, this will give these children a life of better opportunities, including to their health and wellbeing.”

Another rebel warned: “It definitely needs to go. We cannot seek to trade off poor children against poor disabled people or poor pensioners. We need to have a mission to tackle all poverty. End of.”

Ms Reeves warned MPs on Thursday via a broadcast interview there “is a cost” to the welfare changes voted for in Parliament this week that would be reflected in the Budget, when asked if there would be tax rises.

The comments followed Cabinet Office minister Pat McFadden insisting “you can’t spend the same money twice”.

“So more money spent on [welfare] means less for some other purpose,” he told the BBC this week.

But government sources have said scrapping the two-child cap still “remains on the table”, despite the warnings from the Treasury, as removing the policy remains popular within the Cabinet.

Both Sir Keir and Education Secretary Bridget Phillipson have previously signalled the cap will go, with the latter understood to be particularly opposed to the policy.

A Whitehall source said: “It's still being discussed as part of the Child Poverty Taskforce. It's still on the table. This is not something we would have done in government, and it is one of a number of levers that is being looked at to alleviate child poverty."

Social Justice Secretary Shirley-Anne Somerville has said scrapping the two-child cap in Scotland could work out at nearly £3,500 for affected children and could see 20,000 fewer children living in relative poverty.

Finance Secretary Shona Robison announced plans to scrap the cap in the 2025/26 Budget. The Scottish Government has said this is the “fastest” a Scottish social security benefit has ever been delivered.

In other UK government developments, Sir Keir Starmer said he had a good relationship with US President Donald Trump because they both “care about family”.

The Prime Minister told the BBC Radio 4 podcast Political Thinking With Nick Robinson it was “in the national interest” for the two men to connect.

He said: “We are different people and we’ve got different political backgrounds and leanings, but we do have a good relationship and that comes from a numbers of places.

“I think I do understand what anchors the president, what he really cares about.

“For both of us, we really care about family and there’s a point of connection there.”

Sir Keir said yesterday in the interview to mark a year in office he had a “good personal relationship” with Mr Trump, and revealed the first time they spoke was after the-then presidential candidate was shot at a campaign rally in July last year.

Addressing recent political turmoil, Sir Keir said he would always “carry the can” as leader after coming under fire over a climbdown on welfare reforms and that he would “always take responsibility” when asked questions.

“When things go well … the leader gets the plaudits, but when things don’t go well, it is really important that the leader carries the can – and that’s what I will always do,” he said.

Sir Keir also backed Rachel Reeves and said she would be Chancellor “for a very long time to come”, after the politician was visibly tearful in the House of Commons on Wednesday following the welfare reforms U-turn.