Interesting. It's clearly ideological rather than driven by cost-cutting. Quote from IDS's speech : "Can there be not be a limit to the fact you need to cut your cloth in accordance with what capabilities and finances you have?" (in other words, people do different things with their own money vs what they do with free handouts - this is the age-old problem with handouts).
Which, in principle, I'm ok with. Underlying this type of discussion is the principle that "if you earn it, you earn the right to do as you wish within the law. If it isn't earned, the benefactor has a right to exercise control over the use of the money." I think as a principle that's quite sound because nothing should be totally free (reciprocity underpins all human interaction so it's important from a societal cohesion perspective).
The problem comes from the nature and extent of the control exercised, since obviously at one extreme it means total dictatorial control over someone else's life and that's clearly unreasonable because it undermines people's right to exercise free will and lead their own life. But where do you draw the line?
I'm very wary of any state control over reproduction - slippery slope (maybe I'm influenced by reading the Handmaid's Tale recently!). On the other hand I can see how someone who is struggling could spend longer out of the workforce if they had 3, 4, 5 + children, so it does have wider ramifications. And I don't for a moment think children are a "right" - we waited a long time to have kids because we didn't feel financially secure enough and I know we're not the only ones. It's difficult.
Overall, I think this smacks too much of something like China's one child policy (and the state control that implies) for it to be a "good" idea, but I can see where the government is trying to go with it. It's an important debate to have, in any case, because of the principles it implies.