Child poverty is set to increase under a Labour government for the first time in history and an “alternative path” is needed to stop the rise of Reform UK, Sir Keir Starmer has been warned.
A joint statement signed by former Labour leader Jeremy Corbyn and other cross-party MPs calls for a wealth tax on those with assets over £10m “so we can rebuild our schools and hospitals”.
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The letter, in response to Rachel Reeves’s spring statement, says the chancellor has made a “choice” to push more disabled people and children into poverty by announcing departmental spending cuts while increasing money invested into defence.
“This isn’t about scarcity, it’s about priorities”, it said, adding: “This is set to be the first Labour government in history under which child poverty increases.
“Labour’s failure has paved the way for Reform. We need an alternative path.
“Parroting the rhetoric of Reform UK on migrants, minorities and Muslims just endorses their scapegoating and makes society worse for us all.”
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As well as Mr Corbyn, who is now an independent MP, the statement was signed by suspended Labour MPs Sarah Zultana and Apsana Begum, Green MPs, independents and other figures calling for “progressive politics”.
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It comes ahead of the launch of Reform UK’s local election campaign on Friday, with the party hoping to make gains in May after overtaking Labour in multiple polls.
The letter describes the “alternative path” as one where the richest in society and multinational companies face higher taxes, rent controls are brought in, water and energy are nationalised and money is invested “in welfare, not warfare”.
These measures have previously been ruled out by Ms Reeves, but she is coming under pressure following her spring statement on Wednesday.
Spring statement takeaways
The economic update included a £2.2bn increase in defence spending over the next year to help the government reach its goal of spending 2.5% of GDP on defence by 2027.
The chancellor also deepened previously announced welfare cuts alongside further departmental spending reductions to make up for £10bn in lost fiscal headroom since her October budget, caused by poor growth and global instability.
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The government’s own impact assessment estimates another 250,000 people – including 50,000 children – could be pushed into relative poverty by 2030 because of the measures.
However Ms Reeves said that assessment did not take into account steps the government was taking to get people back into work. She has also rejected a separate analysis that suggests the average family could be £1,400 a year worse off by the end of the decade.
Labour MPs unhappy
Several Labour MPs have spoken out against the cuts and some have said they will vote against them. However Ms Reeves is believed to have staved off a full-scale rebellion for now, as most trust she is serious about getting the nation’s finances back on track.
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The chancellor is determined to stick to her self-imposed fiscal rules, including using tax receipts rather than borrowing to account for day-to-day spending.
However she may come under pressure to change course if global factors like Donald Trump’s trade war eat into her fiscal headroom again by the time of the next budget in October – meaning she would have to raise taxes or announce further spending cuts in order to balance the books.
The Institute for Fiscal Studies has warned tax rises are likely in the autumn as Ms Reeves has left herself vulnerable to forecast changes, speculating that pensioners and the wealthiest could be targeted in the raid.
Earlier this week, a YouGov poll found three quarters of the British public would support tax rises on the very richest over expected cuts to public spending, including a 2% wealth tax on net assets worth more than £10m.
