Another 25,000 families will start claiming state handouts after Rachel Reeves lifted the two-child benefit cap yesterday, the fiscal watchdog has predicted.
The Chancellor was accused of caving in to Labour MPs by announcing that parents will once more be allowed to claim Universal Credit and tax reductions for their third or subsequent children.
She said the move, which the fiscal watchdog predicted would cost taxpayers £3billion a year by 2030, would lift 450,000 children out of poverty.
Some 560,000 families’ benefits will rise by an average of £5,310 by 2029-30 due to the change, the Office for Budget Responsibility (OBR) has said.
And the OBR also revealed that it expects many to start claiming Universal Credit for the first time as it becomes more generous.
It added that the total cost ‘includes £300million by 2029-30 for the cost of an estimated 25,000 additional entitled families making a claim as a result of the increase’.
Shadow Chancellor Sir Mel Stride said: ‘The OBR confirms it: this was a Benefits Budget.
‘Tens of thousands of additional families will now be claiming Universal Credit thanks to Labour making benefits more generous – the clearest sign yet that Labour has engineered a system where it pays more to claim benefits than to work.
‘Rachel Reeves has chosen to put taxes up to pay for more and more welfare.’
Ms Reeves said the Tories introduced the cap in 2017 to deter poorer families from having more children, telling the Commons: ‘They said they were punishing parents’ choices, but it is the kids who have paid the price.’
But the Conservatives accused her of only reversing the measure to protect herself, after more than 100 Labour MPs called on her to lift the cap in September. And just weeks after last year’s election, Labour suspended the whip from seven MPs who backed a demand to scrap the cap.
The threat of a Commons defeat in June also forced ministers to abandon planned £5billion cuts to the welfare bill.
In her response to the Budget speech, Kemi Badenoch said: ‘Not only will working people have their tax thresholds frozen while benefits go up in line with inflation, and not only has Labour abandoned reforms that would have saved the taxpayer £5billion after pressure from its own backbenchers, but today Labour has added another £3billion to the bill by scrapping the two-child benefit cap.
‘We introduced that cap, because it means that people on benefits have to make the same decisions about having children as everyone else.
‘Even Labour voters know that it strikes the right balance between supporting people who are struggling and protecting taxpayers who are struggling themselves.’
She went on: ‘Just this summer, the Chancellor admitted that lifting the two-child benefit cap was not affordable, but that was before the Prime Minister accidentally fired the starting gun on the race to replace him.
‘Now he and the Chancellor are buying the votes of their own MPs with taxpayers’ money.’
But John McDonnell, Shadow Chancellor under Jeremy Corbyn, said: ‘I want to pay tribute to all those who stood firm in the campaign to scrap this appalling policy, including all those of my colleagues who faced disciplinary action in the Labour Party but never wavered. We’ve won.’
