Labour is inching towards scrapping the two-child benefit cap in another spending splurge, despite fears Brits face huge new tax rises at the Budget. Rumours are swirling at Westminster that Keir Starmer could signal a shift on the policy at party conference next week, as he desperately tries to placate mutinous MPs.
Government sources are stressing that no final decisions will be made before the child poverty task force reports - expected in time for the Chancellor Rachel Reeves' package on November 26. Work and Pensions Secretary Pat McFadden said this morning that any announcement on easing the cap would spell out how the £3billion a year cost would be met. Bridget Phillipson - Downing Street's de facto candidate for Labour deputy leader - has said the move is 'on the table'.
It could be particularly controversial as Ms Reeves is said to be drawing up £30billion of tax increases for the Budget. Pensioners, ordinary workers and even chocolate-lovers could be in the crosshairs after insiders admitted the Office for Budget Responsibility is set to downgrade productivity estimates. Together with last year's eye-watering Budget, it means Ms Reeves faces imposing an unprecedented £70billion increase in the tax burden in barely 13 months.
Labour MPs and unions have been clamouring for changes to the two-child cap, which the respected IFS think-tank has estimated could lift 500,000 children out of absolute poverty. Mr McFadden told BBC Breakfast: 'We've already taken some action on this, we have extended free school meals to all families on universal credit... In terms of other policies, like everything else, everything has to be paid for, everything has to be budgeted. We're committed to financial stability.'
The potential boost to benefits came as businesses warned of an increasingly gloomy outlook, with higher costs from Ms Reeves' national insurance raid and more red tape in the pipeline from workers' rights reforms. John Roberts, founder of electricals specialist AO World, told BBC Radio 4 firms must not be 'disadvantaged' by the government, adding: 'Costs walk into businesses on legs. Those legs have got a lot more expensive.'
