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Labour Government may be unable to afford to reverse ‘lots of bad policies’, MP warns

18 Jul 2023 3 minute read
Labour leader Sir Keir Starmer chairs a meeting with shadow chancellor Rachel Reeves. Photo Stefan Rousseau/PA Wire

Labour may not be able to afford to reverse “lots of bad policies”, a senior MP has warned, amid party divisions over Sir Keir Starmer’s plans to keep the two-child benefit cap in place.

Shadow culture secretary Lucy Powell said on Tuesday that there is “no money left” for the party to roll out all the reforms it would like to if it wins the next general election.

There has been disquiet among Labour MPs after party leader Sir Keir confirmed he would retain the Conservatives’ cap which has been criticised for pushing families into poverty.

The policy, introduced by Tory former chancellor George Osborne during his austerity drive, prevents parents claiming Universal Credit for any third or subsequent child.

Scrapping the cap would lift around 270,000 households with children out of poverty at an estimated cost of £1.4 billion in the first year.

Ms Powell told Sky News: “We’ve opposed this policy, this is not a good policy. We’ve opposed it for many years through Parliament, but we’re now in a very different economic situation.

“As a famous phrase would go, there is no money left, the Government has absolutely tanked the economy.

“I don’t know it is dividing the shadow cabinet.”

Heinous

She was reminded that shadow work and pensions secretary Jonathan Ashworth has previously described the policy as “heinous”.

Ms Powell said: “Both can be true at the same time, that things can be a bad policy, they can be bad politics, but the economic reality is what we’re now faced with.

“There are lots of bad policies… we’re not implementing them, it’s about not reversing…”

Deputy Labour leader Angela Rayner has also described the cap in the past as “obscene and inhumane”.

Ms Powell added on LBC: “Both things can be true at the same time, which is that things can be bad policy and an awful situation but that we can’t immediately afford to do something about them.

“And that is true of a whole range of issues, I’m afraid. After 13 years there is a lot of things that we need to put right and we’ve got action plans to do some of that.”

Ms Rayner had to deal with concerns raised by multiple backbenchers at a meeting of the Parliamentary Labour Party on Monday evening despite defences from senior figures.

Jon Trickett, an MP on Labour’s left, referred to House of Commons Library research from last week suggesting that removing the cap would cost around £1.4 billion this year and £1.7 billion next year.

He said: “The country could, and should, immediately take hundreds of thousands of families out of poverty in an instant by ending the two-child benefit cap.”


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Neil Anderson
Neil Anderson
8 months ago

This is absolute tosh. A sovereign government with its own currency can create money at will. The UK Government has done so on many occasions, lately to pay the extra costs of Covid (albeit disguised under the subterfuge of QE). It is not the economy that cannot afford to lift the cap on two children benefit restrictions, it is politics. It is not the economy that cannot afford to feed hungry people, it is politics. And Starmer’s Labour Party wants to continue these immoral policies. IndyLabour, please get your colleagues over the line and let’s get Cymru out of this… Read more »

Linda Jones
Linda Jones
8 months ago
Reply to  Neil Anderson

Agree. There is also an estimated £38billion a year lost to tax dodging each year. Labour could start clawing some of that back. Or are too many politicians doing same?

Padi Phillips
Padi Phillips
8 months ago
Reply to  Linda Jones

Some reckon that tax evasion loses as much as £120 billion. There are also the huge sums that go to subsidise the insufficient wages paid by corporations, some £35 billion. Then there are the huge bribes paid to corporations so that they ‘inwardly invest’, the Amazons etc, who get access roads and other perks paid for by the public purse. On top of all that, what about taxing wealth? There is far too much emphasis on taxing income, (though that too is important) whilst neglecting the taxation of things like land holding. A land tax would be unavoidable, and effective,… Read more »

hdavies15
hdavies15
8 months ago
Reply to  Padi Phillips

The tax take is reduced by a combination of legitimate schemes and the downright illegal evasion that still takes place among criminals and those not commonly regarded as criminals. Shutting down a lot of those channels that enable legit “mitigation” schemes would be a good start as it would show serious intent and should collect revenue within 12-24 months. Rounding up the criminal elements is well under way although HMRC are painfully slow. That needs a more rigorous direction with pace and resource. The “support” offered to inward investors is a disgrace but its use over the last 40-50 years… Read more »

hdavies15
hdavies15
8 months ago

So what’s the point of Labour ? That is becoming a fair question especially as the Starmer version is a diluted version of the down the pan, morally bankrupt Tory regime. Anyone with a modicum of critical thinking will be looking for a way to disengage from the Westminster mess.

Cathy Jones
Cathy Jones
8 months ago

They could change bad policies if they had the political will to revitalise the tax system whilst closing all the loopholes New Labour and the Tory scum allowed accountants to put into the tax laws over the last twenty-odd years or so….. they could change those laws if they wanted to, but they don’t want to because the way Westminster is run now and the way it governs the country now works for people like Kier Starmer….which is exactly what I and many former Labour supporters have been saying since he lied and backstabbed his way to become the leader… Read more »

Mawkernewek
8 months ago

Well surely we can’t afford to replace Trident at around £205 billion.

hdavies15
hdavies15
8 months ago
Reply to  Mawkernewek

Trident – Yet another vanity project or an old fashioned political virility symbol ? Either way a waste of money at any time.

Steve Woods
Steve Woods
8 months ago

If the post-war Attlee government had had Starmer’s can’t-do attitude, there would have been no NHS, welfare state, etc. at a time when the public finances were in an even more parlous state than after 13 years of austerity.

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