Reeves to Crack Down on Benefit Fraud While Lifting Two-Child

Published: 24 November 2025. The English Chronicle Desk. The English Chronicle Online.

Chancellor Rachel Reeves is preparing a new crackdown on benefit fraud while simultaneously removing the two-child limit for universal credit, a move expected to cost around £3 billion. Ministers hope the dual approach will balance the government’s welfare commitments with concerns about rising public spending and rising criticism from opposition parties. The decision has sparked debate across political lines, with different groups highlighting economic, social, and fairness implications.

The two-child limit, which restricted universal credit payments for families with more than two children, has long drawn criticism for its role in exacerbating child poverty. Labour MPs welcomed Reeves’ decision, arguing that the policy unfairly penalised larger families and worsened inequality. They emphasised that lifting the cap demonstrates a commitment to supporting vulnerable children while modernising the welfare system.

Conservative and Reform party politicians immediately criticised the plan, claiming that removing the two-child limit will further inflate welfare spending while the government simultaneously raises taxes on working citizens. Conservative leader Kemi Badenoch said the policy reflected a choice to burden taxpayers to fund higher welfare bills, framing it as unfair to ordinary workers. Similarly, the Liberal Democrats warned that freezing tax thresholds would push nine million earners into higher bands by 2030, creating additional financial pressure on ordinary families.

At the same time, Reeves faces scrutiny from the political left, with the Green Party leader Zack Polanski and Unite union general secretary Sharon Graham urging more substantial reforms. They called for a wealth tax targeting the richest rather than relying solely on benefits adjustments or cuts. Graham warned that failure to act boldly could risk undermining Labour’s credibility, while emphasising fairness for disabled and working people who cannot access additional income through employment.

To address concerns over wasteful spending, Reeves plans to recover an estimated £1.2 billion through targeted reviews of incorrect universal credit payments by 2031. A Treasury source emphasised that no taxpayer funds should be misused and stated that every effort would be made to ensure money goes to genuinely eligible recipients. The aim is to safeguard public finances while maintaining support for those in need.

Whitehall sources indicated that further large-scale savings from the welfare bill are unlikely in the upcoming budget. Earlier proposals to cut disability benefits had been scaled back following a strong Labour revolt, reflecting sensitivity to public and parliamentary opinion. Reeves has also explored potential reforms to the Motability scheme, which enables claimants to exchange personal independence payments for vehicles. Disability groups have warned that extensive cuts could have severe consequences for vulnerable individuals.

Reeves has confirmed her commitment to broader welfare reform, though major changes are not expected until the completion of reviews by Labour minister Stephen Timms on disability benefits and former cabinet minister Alan Milburn on young people outside employment. Milburn has suggested that no aspect of the benefits system should be off-limits for reform, highlighting the need for long-term sustainability in public spending.

The upcoming budget, designed to address a £20 billion fiscal gap, will focus on mitigating the cost-of-living crisis and addressing inflation pressures. Measures include an increase in state pensions exceeding £550 per year, more than £120 above inflation-based adjustments, reflecting Labour’s commitment to the triple lock. Officials hope the move will restore trust with older voters after partial reversals on previous winter fuel allowance changes.

Reeves emphasised her dedication to providing security for pensioners and investing in public services. “Whether it’s our commitment to the triple lock or rebuilding the NHS to reduce waiting lists, we are supporting pensioners to ensure a dignified retirement,” she said. Prime Minister Keir Starmer defended Reeves, highlighting that female politicians often face more abuse than their male counterparts. He praised her leadership, stressing that the government values competence and fairness in public office.

The policy package represents a balancing act between supporting vulnerable families, addressing fraud, and maintaining fiscal responsibility. While the removal of the two-child limit signals a commitment to child welfare, the crackdown on benefit fraud aims to reassure taxpayers that public funds will be protected. Reeves’ approach reflects the government’s broader strategy to modernise the welfare system while responding to criticism from both sides of the political spectrum.