The Chancellor’s Budget announcement of the lifting of the two-child benefit cap has been welcomed by both North East campaigners and regional business leaders, while most other Budget measures have also been welcomed by business
Since its introduction in April 2017, the two-child limit has meant that almost all families having a third or subsequent child – both in and out of work – are no longer entitled to receive support for those children through Universal Credit, said the North East Child Poverty Commission (NECPC).
Its analysis of government data showed that at April this year the two-child limit affected around 70,000 children in low income families across the North East region – a figure which, it said, will already have risen as more babies have been born, and would have continued to grow until the policy had been fully rolled out in 2035.
Cruel limit
Beth Farhat, Chair of the NECPC, said: “Scrapping the cruel two-child limit, in full and from next April, truly is a vital step in the right direction in bringing down the numbers of children held back by poverty both here in the North East and across the country.
“This will deliver a profound boost to the living standards and opportunities of babies, children and young people growing up across our region, lifting tens of thousands out of poverty and reducing the level of hardship experienced by tens of thousands more.
“Every child growing up in the North East should have the opportunity to thrive and achieve their potential – yet, as a direct result of this failed policy, we have seen growing numbers living in families struggling to even provide the bare essentials. This has placed huge strain on overstretched public services and voluntary and community groups right across the North East who’ve been working tirelessly to support families, including growing numbers in work.
“We still await the new national child poverty strategy, but today’s announcement represents a clear signal of intent on this issue – and we are really grateful to every organisation across the region who has worked with us to collectively call for the two-child limit to be scrapped.”
Business reaction
The North East Chamber of Commerce gave a broad welcome to measures in the Budget, including a new science centre in Darlington and the confirmation of other investments previously announced. The Chancellor, Rachel Reeves, had said: “As part of our commitment to spread opportunity across the country, the government will provide £16mn to establish a new science centre in Darlington. This investment will support innovation and regeneration in the North East, creating new opportunities for research and skills development.”
Together with projects in Scotland, Wales and Northern Ireland, she said, this demonstrated the government’s determination to back every part of Britain with the tools to grow and succeed.
Rhiannon Bearne, deputy chief executive at the North East Chamber of Commerce said: “The Chancellor has attempted a delicate balancing act today, using a series of measures to stabilise the public finances.
“While many of our members will welcome the decision not to introduce further taxes on business, the capping of salary sacrifice on pensions will increase costs for some employers. There will also be understandable caution about the significant tax burden now placed on households and consumers. This shift risks weakening confidence, dampening demand and slowing growth in the months ahead.
“The Chancellor is right to scrap the two-child benefit cap. Our members have long argued that this is one of the most powerful levers available to tackle the unacceptable rates of child poverty across our region and to support more parents into sustained and meaningful employment.
Guarded optimism
“Confirmation of the £13bn of flexible funding devolved for skills, infrastructure and business support to seven mayoral strategic authorities, including the North East Combined Authority (NECA), directly delivers our call for devolution to unlock North East growth and productivity.
“We welcome the announcement of £16mn for a new STEM (science, technology, engineering and mathematics) Centre in Darlington, funded through the Growth Mission programme. Confirmation of the Creative Places Growth Fund, an AI Growth Zone, and access to a Revolving Growth Fund to improve finance for business within the NECA area are all positive developments. Alongside the launch of Local Growth Funding for both Tees Valley and NECA, the government has clearly listened to our long-standing calls for deeper devolution to support locally-led growth. We also welcome further commitments on planning and development, including funding for the Forth Banks development in Newcastle.
“The government’s recognition of capacity issues within the planning system, and the commitment of £48mn to address them, represents a significant win for the Chamber. We identified this issue in the Tees Valley Local Skills Improvement Plan in 2023, and today’s announcement shows that evidence-based, business-led insight can shape national policy.
“On education and skills, employers will welcome the full funding of apprenticeships for under-25s, which should help create more entry points into the labour market and support long-term workforce development across the region.
“Finally, the commitment to consolidate the fiscal rule assessment into a single annual event is a welcome move towards one of our most ambitious asks: for fiscal rules to be applied more flexibly and sensibly. Less speculation about fiscal headroom and more focus on delivery will begin to offer the policy certainty our members need to invest, create jobs and plan for the future with confidence.
“There is cause for guarded optimism, but what matters now is how today’s measures play out in practice. The Chamber will continue to champion the interests of North East businesses as the implications become clear.”
Budget “falls short” – MP
Andy McDonald, Labour MP for Middlesbrough & Thornaby East, also welcomed the abolition of the two-child benefit cap but added that the Budget did not go far enough in creating a fairer society. He said:
“Today’s Budget offers glimpses of the fairer country we could build. Ending the Conservative two-child limit will lift thousands of children in Middlesbrough, Thornaby East and across the Tees Valley out of hardship, and I welcome it as the most immediate, cost-effective step to cut child poverty. The rise in the minimum wage and protection of the state pension will also put money back into local economies after years of falling living standards.
“But this Budget still falls short of the transformation people deserve. Too much revenue comes from taxes on workers with the freeze on the tax free allowance being maintained and extended, while fairer options—like fully equalising capital gains with income tax or a modest wealth levy—are ignored, despite overwhelming public support.
“Without fair taxation, proper public-sector pay, and real investment in services, Britain’s renewal will be stalled. These are small and positive steps in the right direction but we need a more comprehensive revision of our tax system to bring about the changes that our communities are crying out for. I’ll continue to make those arguments.”
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