Labour’s civil war looked to be intensifying today amid claims Angela Rayner pushed to strip child benefit from middle-class families.
The Deputy PM suggested the Chancellor should ‘claw back’ the handouts from families where one adult earns over £50,000 a year.
The manoeuvring emerged amid more evidence of tensions within Labour about how to balance the books and prioritise spending.
The PM, who announced an humiliating U-turn on winter fuel allowance earlier this week, is said to be ready to ease the two-child benefit cap amid a massive revolt by MPs.
However, his chief of staff Morgan McSweeney has apparently urged the premier to hold firm, pointing to the £2.5billion cost. Downing Street sources flatly dismissed the Bloomberg report.
It was later revealed that ministers have delayed a flagship plan aimed at driving down child poverty until the autumn.
The child poverty strategy, originally due to be published this spring, was expected to include a recommendation to scrap the two-child benefit cap.
But the plan has now been pushed back until the autumn, it was reported, in order to align it with the next Budget.
Meanwhile, Labour’s Welsh leader Baroness Morgan waded into the winter fuel row, calling for ‘the majority’ of pensioners to get the handouts worth up to £300.
Nine million older people were stripped of the payments by Ms Reeves last year, and it is not yet clear what the new arrangements will be.
The mooted child benefit move would have effectively reversed a more generous Tory policy.
Currently the cash is gradually reduced for earners between £60,000 and £80,000 – when it disappears entirely.
But that would have been rolled back to hit households with incomes from £50,000 to £60,0000.
The document accepted that the change to child benefit rules would be ‘contentious’ but added Labour could argue that the Tories had never properly funded the policy to begin with.
Former chancellor Jeremy Hunt urged Labour not to reverse the policy.
‘This may look like a relatively minor budget measure but was one of the most popular things we did because it helped striving middle-class families struggling with childcare costs,’ he told the Telegraph.
‘Abandoning them would confirm that far from being a New Labour government, this is a traditional anti-aspiration Old Labour government.’
It was floated by Ms Rayner’s office alongside a range of tax hike and spending cut options ahead of the Spring Statement.
A memo to Rachel Reeves proposed targeting pensioners and shares instead of curbing the spiralling benefits bill.
In the end Ms Reeves largely ignored the ideas and went ahead with a package to trim welfare – but dozens of Labour MPs are now threatening to revolt in a looming vote.
Allies of Ms Rayner have insisted memos proposing policy options are routine in government, and are not always signed off by ministers personally.
But some Labour MPs believe that Ms Rayner is ‘on manoeuvres’ to ensure she does not have ‘blood on her hands’ from failed policies.
Lord John Bird, an anti-poverty campaigner and founder of the Big Issue, criticised news of the delay to the child poverty strategy and said the Government had ‘just kicked the issue of child poverty into the long grass’.
He added: ‘The impact of their inaction will be grave. It is shameful that child poverty is forecast to not fall, but rise significantly, to 31.5% of children under this Labour government.
‘We need action now, not in six months or a year’s time. I will relentlessly pursue my intervention of adding child poverty targets to the Children’s Wellbeing and Schools Bill with the vigour that the 4.3 million children living in poverty in our country deserve.’
Dan Paskins, executive director of policy, advocacy and campaigns at Save the Children UK, said: ‘Every month that goes by while Keir Starmer does not scrap the cruel two-child limit means thousands of children are plunged into poverty.
‘We would like to see assurance from No10 that this delay means their child poverty strategy contains bold ideas backed with the finance – starting with scrapping the two-child limit and benefit cap.’
The winter fuel allowance move was seen as a humiliation for Ms Reeves – who is at a G7 meeting in Canada.
Stripping around nine million pensioners of the payments was one of the first announcements the Chancellor made after Labour’s landslide election victory last year.
But it has been widely blamed for the party’s disastrous collapse in support.
Labour campaigners reported it was toxic on doorsteps during May’s local elections, which saw the party lose councillors and the Runcorn and Helsby Parliamentary by-election.
Labour Left-wingers rallied behind Ms Rayner’s push on targeting taxes instead of welfare, prompting the Tories to claim that the Cabinet was in ‘open warfare’.
MPs have been insisting the government must fully reverse the winter fuel allowance cuts, rather than merely extend eligibility.
Many also believe that ministers will be unable to bring in changes in time for this winter, as the PM said plans would not be revealed until the Budget in the Autumn.
Labour ex-premier Gordon Brown underlined demands for the two-child benefit cap to be lifted earlier this week.
Ms Reeves has hinted that the cap is something that will be looked at, with claims it has driven child poverty.
‘I want to lift people out of poverty — particularly I want to lift children out of poverty — and, of course, we’ll set out more plans to do that,’ she told the Guardian in an interview.
Making his winter fuel announcement at PMQs on Wednesday, Sir Keir said he understood ‘that people are still feeling the pressure of the cost-of-living crisis, including pensioners’.
He added: ‘As the economy improves, we want to make sure people feel those improvements in their days as their lives go forward. That is why we want to ensure that, as we go forward, more pensioners are eligible for winter fuel payments.’