Rachel Reeves has signalled she is going to break her manifesto tax pledges at the budget – and has given her strongest indication yet she will lift the two-child benefit cap.
The chancellor said the world has changed in the year since the last budget, when she reiterated Labour’s manifesto promise not to raise national insurance, VAT or income tax on “working people”.
“It would, of course, be possible to stick with the manifesto commitments, but that would require things like deep cuts in capital spending,” she told BBC 5Live.
“I have been very clear that we are looking at both taxes and spending,” she added.
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The chancellor also gave her strongest indication yet she will lift the two-child benefit cap at the budget on 26 November, saying it is not right a child is “penalised because they are in a bigger family”.
Ms Reeves blamed poor productivity and growth over the last few years on the previous government “always taking the easy option to cut investment in rail and road projects, in energy projects and digital infrastructure”.
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She said she promised during the election campaign to “bring stability back to our economy”.
‘I’ll always do what’s right for UK’
“What I can promise now is I will always do what I think is right for our country, not the easy choice, but the thing that I think is necessary,” she added.
The chancellor blamed the UK’s lack of growth under her tenure on global conflicts, trade and tariffs over the past year.
In a dig at Donald Trump, who has imposed wide-ranging tariffs on countries around the world, she said: “The tariffs. I don’t think anyone could have foreseen when this government was elected last year that we were going to see these big increases in global tariffs and barriers to trade.
“And I have to be chancellor in the world as it is not necessarily the world as I would like it to be. But I have to respond to those challenges, and that’s the responsible thing to do.”
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What tax rises and spending cuts will Reeves announce at budget?
Gordon Brown ‘confident’ of two-child benefit cap change
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‘Children should not be penalised’
The government has, so far, resisted lifting the two-child benefit cap, which means a family can only claim child benefits for the first two children.
But, it is a contentious subject within Labour, with seven of its MPs suspended two weeks after the election for voting to scrap it, while others are aware it will cost £2.8bn to do so.
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Former Labour prime minister and chancellor Gordon Brown has been pushing for Ms Reeves, who says he is her hero, to lift it.
She said she saw Mr Brown at Remembrance Sunday, where they “had a good chat and we’ve emailed each other just today”, as she revealed they speak regularly.
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Ms Reeves added Mr Brown and Sir Tony Blair were big heroes of hers because they did so much to lift children out of poverty – the reason she went into politics.
Pushed on whether she would lift the cap, she said: “I don’t think that it’s right that a child is penalised because they are in a bigger family, through no fault of their own. So we will take action on child poverty.”
Mr Brown earlier told Sky News’ Mornings with Ridge and Frost he was “confident” of a two-child benefit cap change at the budget.
The latest YouGov polling found 59% of the public are in favour of keeping the cap in place, and only 26% thought it should be abolished.
Shadow chancellor Sir Mel Stride said: “Rachel Reeves has borrowed, spent and taxed like there’s no tomorrow – and she’s coming back for more because she doesn’t have a plan or the strength to stand up to Labour’s backbenchers, who are now calling the shots.
“My message is clear: if Rachel Reeves reduces government spending – including the welfare bill, she doesn’t need to raise taxes again. “
