Labour has weapons in its arsenal to cushion the poorest from Iran war economic fallout | Heather Stewart

"It's massive, says Alex Clegg, an economist at the Resolution Foundation thinktank. The amounts of money for families with four or five children, it's life-changing: it's thousands of pounds a year, for people right at the bottom of the income distribution."

"Having a strong safety net is really important for these families to be able to manage shocks ensuring that they can still put food on the table for their kids, says Sam Tims, lead analyst at the Joseph Rowntree Foundation."

"Resolution's latest projections, drawn up after Rachel Reeves's Spring forecast, suggested 480,000 children should be lifted out of poverty in 2026, as a result of these changes."

Labour's removal of the two-child benefit limit represents a significant policy shift to protect low-income families from economic shocks, particularly amid potential price increases from geopolitical tensions. Families with three or more children claiming universal credit will receive approximately £440 extra monthly starting April, with amounts reaching thousands annually for larger families. Combined with a 6.2% above-inflation increase in universal credit's standard allowance, these measures are projected to lift 480,000 children from poverty by 2026. While critics note that war-fuelled inflation may reduce the purchasing power of this additional support, economists emphasize the policy's critical timing in providing financial stability for vulnerable households facing potential commodity price spikes.

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