Amber Rudd will announce a partial rollback to the two-child limit on universal credit payments on Friday but faces claims that she could create “two classes of family” by scrapping it for some claimants but not others.

Labour also said that the partial reverse on the two-child limit for families claiming universal credit, to be announced by Amber Rudd, the work and pensions secretary, did not go far enough.

In the speech in London, Rudd is expected to promise a more careful approach to the rollout of universal credit. A key announcement is scrapping the plan for universal credit payments to only be made for a family’s first two children, which was due to start next month. The wider two-child limit for benefits came into effect in 2017, as part of efforts to curb spending.

The misery, despair and pain of universal credit | Letters Read more

Opponents, led by the SNP MP Alison Thewliss, have condemned the limit, in particular the so-called rape clause, which decrees that mothers can gain exemptions to the limit if they are able to show a third child was born due to rape.

At the speech on Friday, at a job centre in south London, Rudd was to say the two-child limit for people on universal credit, and the new working-age integrated payment which replaces a series of existing benefits, would not happen, but only for children born before April 2017.

Quick guide What is universal credit and what are the problems? Show Hide What is universal credit? Universal credit (UC) is the supposed flagship reform of the benefits system, rolling together six benefits into one, online-only system. The theoretical aim, for which there was general support across the political spectrum, was to simplify the system and increase the incentives for people to move off benefits into work. About 2 million people are currently in receipt of UC. More than 6 million will be on the benefit by the time it is fully rolled out. How long has it been around? The project was legislated for in 2011 under the auspices of its most vocal champion, Conservative MP Iain Duncan Smith. The plan was to roll it out by 2017. However, a series of management failures, expensive IT blunders and design faults mean it is now seven years behind schedule, and rollout will not be complete until 2024. The government admitted that the delay was caused in part by claimants being too scared to sign up to the new benefit. What is the biggest problem? The original design set out a minimum 42-day wait for a first payment to claimants when they moved to UC (in practice this is often up to 60 days). After sustained pressure, the government announced in the autumn 2017 budget that the wait would be reduced to 35 days from February 2018. This will partially mitigate the impact on many claimants of having no income for six weeks. The wait has led to rent arrears and evictions, hunger (food banks in UC areas report notable increases in referrals), use of expensive credit and mental distress. Ministers have expanded the availability of hardship loans (now repayable over a year) to help new claimants while they wait for payment. Housing benefit will now continue for an extra two weeks after the start of a UC claim. However, critics say the five-week wait is still too long and want it reduced to two or three weeks. Are there other problems? Plenty. Multibillion-pound cuts to work allowances imposed by the former chancellor George Osborne mean UC is far less generous than originally envisaged. According to the Resolution Foundation thinktank, about 2.5m low-income working households will be more than £1,000 a year worse off when they move to UC, reducing work incentives.

Landlords are worried that the level of rent arrears accrued by tenants on UC could lead to a rise in evictions. It's also not very user-friendly: claimants complain the system is complex, unreliable and difficult to manage, particularly if you have no internet access.

And there is concern that UC cannot deliver key promises: a critical study found it does not deliver savings, cannot prove it gets more people into work, and has plunged vulnerable claimants into hardship.

Rudd was to argue that it would be unfair to penalise parents who made financial decisions before the wider limit came into force, and it will still apply to children born later.

Thewliss said that while she was pleased the government “has finally agreed that the two-child policy is unjustifiable”, she warned against the dual approach.

“The risk with what the UK government [is] now proposing is that two classes of family emerge,” she said.

“Those born after the 6 April 2017 will still be subject to the pernicious rape clause, and forced to fight for exemptions to feed their kids. This will cause confusion and perpetuate unfairness. The two-child limit will still exist and still continue to push many families into poverty in the future.”

Amber Rudd warns of further delays to universal credit Read more

Labour’s shadow work and pensions secretary, Margaret Greenwood, said: “This partial U-turn does not go far enough. Labour has long called for the government to abandon the two-child limit in its entirety.”

Since taking on the role after Esther McVey resigned in November, Rudd has tried to take a more cautious approach to the extension of universal credit, which has prompted concern about confusion, and delayed payments pushing claimants into debt.

The government had been due to hold a vote on the so-called migration of universal credit – shifting existing benefits claimants onto the new system. But Rudd has announced that instead there will be a test of this process involving 10,000 people.

“This will begin, as planned, from July 2019 and the next six months will be a period of careful preparation,” she was to say in the speech.

“The lessons from the pilot will inform our next steps, but there will be no overall delay. Universal credit migration will be completed, as planned, by 2023. However I will consider carefully the results of the pilot, and its implications for scaling-up migration.”