Plan to scrap two-child profit cap ‘dead in the water’ after welfare U-turn | EUROtoday

Sir Keir Starmer is not going to scrap the two-child profit cap after his U-turn on welfare cuts left a £5bn gap in Labour’s spending plans.

Senior Labour figures have reportedly warned that tax hikes are on the horizon after the advantages climbdown, with a change within the controversial cap, launched when George Osborne was chancellor, now considered off the desk.

“My assessment is that is now dead in the water,” a No 10 supply informed The Sunday Times.

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A supply near the chancellor added: “MPs will need to acknowledge that there is a financial cost to not approving the welfare changes, whether that’s tax rises or not scrapping the two-child benefit cap. They need to understand the trade-offs.”

The prospect of Labour retaining the two-child profit cap in place will provoke contemporary unrest amongst Labour backbenchers, who’ve a style for rise up after forcing Sir Keir’s hand on cuts to the non-public independence fee (Pip), the principle incapacity profit.

Sir Keir is believed to have informed his cupboard he desires to scrap the two-child cap – first imposed by Osborne in 2015.

Critics of the coverage, which restricts mother and father from claiming sure advantages for greater than two of their youngsters, say it pushes youngsters into poverty. Charities ceaselessly cite the £3.4bn transfer as some of the value efficient methods of assuaging little one poverty.

Asked on Thursday whether or not he nonetheless needed to scrap the two-child cap, Sir Keir mentioned: “The last Labour government drove down child poverty and it’s one of the proudest things that we did.

“Sadly, the last government allowed child poverty to go back up again.

“I’m determined that this government will drive it down, just as the last Labour government did.

“We’ve got a strategy and a task force working on this and will lay out the details of that. I personally don’t think there’s a silver bullet that if you do this one thing, it will deal with child poverty.” Labour’s Child Poverty Taskforce, headed by work and pensions secretary Liz Kendall and training secretary Bridget Phillipson, was resulting from report within the spring however was delayed till the autumn.

Pressure on the PM over the two-child profit cap will seemingly enhance within the run as much as this autumn’s Budget, during which Rachel Reeves has been warned she should elevate taxes or put Labour’s agenda in danger.

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Jim O’Neill, a former Goldman Sachs chief turned Treasury minister who give up the Conservatives and later suggested Ms Reeves, mentioned she faces no alternative however to desert key elements of her financial coverage – together with her dedication to not elevate revenue tax, nationwide insurance coverage contributions for workers or VAT.

“Without changing some of the big taxes, welfare and pensions, they [Labour] can’t commit to things like Northern Powerhouse Rail, small modular nuclear reactors, and various other things that will make an investment and growth difference,” he informed The Independent.