What is the two-child benefit cap?

Prime Minister Sir Keir Starmer is receiving more and more demands from members of his own party to eliminate the restriction on benefits for families with more than two children.

What is the rule? And why is it creating so much controversy among Labour members?

Live politics: Starmer aggressively challenges opposition during PMQs about dealing with current issues.

What are the guidelines?

The Conservatives introduced a limit on benefits for families with two children in 2015 as part of the austerity measures implemented by Lord David Cameron and George Osborne.

This meant that while many parents were eligible to receive government payments for their first and second child, they were not able to receive payments for any additional children they had.

The Tories claimed that the changes to the system would create a fairer situation for taxpayers, ensuring that families receiving benefits would have to make similar financial decisions about having children as those who are financially independent through their work.

However, some members of parliament and activists argue that this decision could push more children into poverty and have a negative impact on struggling families.

The new policy started in April 2017, and now parents are able to receive a payment of £287.92 for each of their first two children, with no additional claims allowed.

If one parent makes over £60,000, they can still receive the benefit, but they will need to pay tax on it.

In the past year, more than one million families received the child tax credit, and about 23% of them were employed. However, the cap on the credit affects around 1.6 million children because their families have more than two kids in the household.

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What is Labour's position on this issue?

During the Conservative Party's leadership, it appeared likely that the measure would remain in effect.

However, Labour has consistently condemned it as "cruel" and "atrocious."

There were expectations that if the party won the election, they would eliminate the policy. But in 2023, Sir Keir decided against it because of the country's financial situation. He mentioned that he would need to make difficult choices if he became the Prime Minister.

The Resolution Foundation estimates that eliminating the two-child limit would require the government to spend between £2.5bn and £3.6bn in the year 2024/25.

However, according to the Save the Children organization, the decision is projected to lift around 500,000 children out of poverty.

Following Labour's overwhelming win in the general election, the campaign to eliminate the cap mentioned in the King's Speech carried on. Many Labour members, including MPs, worked hard to push for a new approach.

However, even though cabinet members suggested a possible change in stance, the prime minister remained steadfast in his position. He stated that the state of the public finances inherited from the previous Conservative government was even bleaker than he had initially realized.

Instead of that, the government started a task force focused on child poverty. They mentioned that they will explore all possibilities to assist those in need.

What took place in the House of Commons?

During the last day of discussion on the King's Speech, the SNP proposed a change asking for the cap to be removed.

The proposal was backed by additional opposition parties like the Greens and Plaid Cymru, along with independent Members of Parliament, including former Labour head Jeremy Corbyn.

However, if a Labour MP were to support it, they would have to go against the instructions of their party.

Seven Labour Members of Parliament, including former shadow chancellor John McDonnell, chose to defy the party's stance and instead voted alongside opposition colleagues.

And they experienced the repercussions, as the prime minister decided to temporarily remove their party membership for six months as a form of penalty.

A source from the Labour party informed Sky News that they made the decision to demonstrate their expectation for Labour MPs to back the agenda that they were elected on.