Starmer’s bid to ease welfare cuts piles pressure on Rachel Reeves
Keir Starmer has told his cabinet to jettison the two-child benefit cap, according to reports over the weekend, in a move that piles pressure on the Treasury and chancellor Rachel Reeves.
The cap, which was introduced by the Conservative party a decade ago, prevents low-income families from receiving additional universal credit after the first two children.
It’s understood that Starmer has asked the Treasury to find ways to fund the expanded benefit scheme, which would cost the government £3.5bn a year.
Cabinet bigwigs including Health Secretary Wes Streeting, Deputy PM Angela Rayner, Work and Pensions Secretary Liz Kendall and Education Secretary Bridget Phillipson are understood to be backing the move.
A report published by the Department for Work and Pensions in March found that there were 4.5m children living in a household of relative low income, accounting for nearly a third of all children and the highest level since records began in 2002.
The rethink comes after last week’s announcement of a U-turn on winter fuel payment cuts – costing the government an additional £1.5bn, according to the Telegraph, which also reports that reducing net migration by 100,000 annually will increase borrowing by £7bn a year by 2030.
Starmer is under pressure from his own MPs as well as Reform UK, with Nigel Farage attacking the government from the left on issues such as welfare. On Tuesday, Farage will commit to fully scrapping the two-child benefit cap, as well as a complete reinstatement of the winter fuel payment scheme.
Finding ways to fund these policies will be no easy feat for Reeves, who is facing pressure from all sides; by critics of her Autumn Budget tax hikes, and those in her party pushing for further taxes in the next Budget.
Reeves is reported to be hesitant to make a swift announcement on the two-child benefit cap before she can ascertain where the money is going to come from.
Health minister Karin Smyth said Starmer’s announcement that he wants more pensioners to get winter fuel payments was “the sign of a government that is listening”.
She told BBC Radio 5 Live: “The Chancellor and the Treasury will have to review all of these in light of the key mission, which is to grow the economy and maintain economic stability.
“We know government is hard, and I think listening, looking at policies, how they impact, weighing up those costs and benefits, is exactly the right thing to do.”
U-turns threaten Chancellor’s credibility
Meanwhile, the Tories have criticised the government for an ‘irresponsible’ escalation of public spending.
Shadow chancellor Mel Stride said: “Labour have already lost control of the public finances and abandoned any pretence of fiscal responsibility.
“Now they are looking at loading up billions more in welfare spending, paid for either by higher taxes for working families or through yet more borrowing.
“When added to the likely cost of their panicked climbdown on winter fuel payments, the Chancellor faces a potential £5 billion black hole.
“Rachel Reeves’s credibility is having new holes torn in it by the day,” the shadow chancellor added.