Labour’s civil war heated up this morning as deputy leadership candidate Lucy Powell called for the scrapping of the two-child benefit cap and accused the Prime Minister of “unforced errors.” Her benefits proposal would cost an estimated £3.5 billion and is opposed by Prime Minister Sir Keir Starmer as well as Rachel Reeves, the Chancellor. Last year Sir Keir suspended seven Labour MPs who voted for an SNP amendment to end the cap, which stops parents from claiming some benefits for more than two children.
Asked on Radio 4 whether the cap should be scrapped, Ms Powell said: “I think we need to be clearer because this is absolutely to the core of what we’re about. Is that this Labour Government, like any Labour Government, wants to reduce child poverty, and it’s very, very clear from all the evidence the two-child benefit cap would be the single biggest policy we could do to address child poverty.
“So I think being in favour of the principle and that being an objective I think is really important. The question is the how and the when.”
Ms Powell was sacked as Leader of the Commons in Sir Keir’s Cabinet reshuffle earlier this month. She is standing to replace Angela Rayner as Labour’s new deputy leader, and her opponent is Bridget Phillipson, the Education Secretary, Ms Phillipson is seen as the candidate favoured by Sir Keir but one poll suggested Labour members are more likely to vote for Ms Powell, in a sign that activists have concerns about the current direction of the party.
A study by think tank the Resolution Foundation found that ending the cap would cost £3.5 billion in 2029-30.
Chairman of the Conservative Party, Kevin Hollinrake, said: “As the Prime Minister is distracted by scandals of his own making, inflation has nearly doubled and growth has flatlined. Meanwhile, the chaos of scandal means the Deputy Leadership race has descended into a race to the bottom for unlimited welfare spending.
“Be in no doubt, Labour is the Party of fiscal irresponsibility. Only the Conservatives will stop this irresponsible behaviour and the higher taxes that come with it.”
Labour’s “mistakes” have given the impression that it is “not on the side of ordinary people”, Ms Powell has said. She praised the Government’s “many achievements”, but said people had “lost sense” of Labour’s values and “on whose side we are governing”.
Ms Powell told the Political Thinking podcast: “Some of the mistakes that we’ve made, or some of the unforced errors, have given a sense that we’re not on the side of ordinary people.”
In her interview, she said she would not want to return to the Cabinet, and would instead act as a “conduit” between the wider party and the Labour leadership.
But while Ms Powell said Sir Keir had not given a specific reason for sacking her, she believed it may have been due to the “feedback” she gave the Cabinet from Labour MPs on issues such as welfare reform.
She said: “I thought I was doing the job I was supposed to be doing, but maybe that wasn’t feedback people wanted to hear.”
Freed from Cabinet collective responsibility, Ms Powell urged the Government to be “clearer” about wanting to scrap the two-child benefit cap – a significant issue for many Labour backbenchers.
Acknowledging that abolishing the cap may not be achievable immediately, she said the Government should still be “working towards” it as “the single biggest policy we could do to address child poverty”.
Asked whether Labour was trying to “out-Reform Reform”, she urged her party to provide a “common vision” that could use the economy to “unite that progressive voter coalition” rather than “tacking one way or tacking the other”.
She said: “They might not say it like that, but a fairer economy that works in the interests of the many and not the few, and having a story to tell about whose side we’re on, whose interests we’re serving, unites that voter coalition.”