What is the DWP two-child benefit cap and who introduced it?

It was introduced by the Conservatives and came into place in April 2017. It only applies to children who were born after 6 April 2017.

Rachel Reeves has signalled that she is open to scrapping the controversial cap, saying she does not think children should be “penalised” for being part of large families.

The Chancellor’s comments came after Labour grandee Gordon Brown said he was “confident” the Government would make changes to the limit at the upcoming Budget.

Ms Reeves was asked how she would justify hiking taxes for some while increasing benefits for others, amid speculation over the actions she will unveil at her November 26 statement.

She told BBC 5Live’s Matt Chorley it was important not to let the “costs to our economy in allowing child poverty to go unchecked”.

She added: “In the end, a child should not be penalised because their parents don’t have very much money.

“Now, in many cases you might have a mum and a dad who were both in work, but perhaps one of them has developed a chronic illness, perhaps one of them has passed away.

“There are plenty of reasons why people make decisions to have three, four children, but then find themselves in difficult times.”

How much would it cost to scrap the two-child benefit cap?

Estimates by the Institute for Fiscal Studies suggest that a full reversal would cost around £3.6 billion and lift some 630,000 children out of poverty.

Exempting working families from the limit would reduce the bill to £2.6 billion and reduce child poverty by 410,000.

A compromise of a payment for third and subsequent children at half the rate paid for the first two would cost around £1.8 billion.

Who introduced the two-child benefit cap?

The measure was brought in by then-chancellor George Osborne in 2017. The Conservatives said the measures were designed to encourage benefit recipients “to make the same choices as those supporting themselves solely through work”.

Labour has faced increasing pressure to scrap the cap from within the party, including from former prime minister and chancellor Mr Brown.

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Mr Brown told Sky News: “I am confident that the two-child rule will be addressed.

“We’re waiting for Rachel Reeves’s budget, which I think will mention this.

“Keir Starmer, I know is personally concerned and interested in this.

“So I’m hopeful that in the next few weeks we’ll see the kind of action that we’ve been talking about.”

Campaigners from the Child Poverty Action Group argue that 109 children across the UK are pulled into poverty by the policy every day.

But, the boss of electricals retailer AO World has called plans to scrap the two-child benefit cap as “madness”.

He said: “Business is a force for good in the economy.

“It gets demonised in this Government and all it’s seen as is a source of more and more tax that they can then blow on the welfare budget.”

AO World reported a 10% rise in pre-tax profits to £18 million for the six months to September 30 and said annual profits would be around the top end of recently upgraded guidance, for pre-tax profits of between £45 million and £50 million.