Unfunded spending commitments are causing a collapse in the economy, a Treasury minister has warned, as he defends maintaining the benefit cap for two children, in what appears to be the Labor government’s first major test.
Speaking on Sky News’ Sunday Morning with Trevor PhillipsJames Murray highlighted the market turmoil triggered by Liz Truss’s 2022 mini-budget in the face of growing pressure at Westminster with backbench demands for abandon controversial politics.
Some rebels Work MPs are prepared to propose an amendment to the King’s Speech calling for the cap to be removed.
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The policy was introduced by Conservatives in 2017 and restricts child tax credit and universal credit to the first two children in most families.
Critics argue that this is contributing to rising levels of child poverty, with larger families unable to claim around £3,200 per year per extra child.
They also point to the Labor Party’s commitment to maintaining the triple lock on state pensions, which ensures that payments increase each year in line with inflation, earnings or by 2.5% – whichever is higher – the which is equivalent to an additional cost of £11 billion per year.
The charity Save the Children estimates that abolishing the cap would lift half a million children out of relative poverty.
Last month, before becoming prime minister, Sir Keir Starmer said he would eliminate the two-child limit “in an ideal world” but insisted that “we don’t have the resources to do that right now.”
Instead, the government announced a task force to develop a child poverty strategy, led by Work and Pensions Secretary Liz Kendall and Education Secretary Bridget Phillipson.
The Resolution Foundation said abolishing the two-child limit would cost the government between £2.5 billion and £3.6 billion in 2024/25, but such costs were “low compared to the damage the politics cause”.
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Additional appeals to the public purse have already emerged under the new government, with a salary increase against inflation being recommended for teachers and around 1.3 million NHS staff.
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Murray said: “We will never make a commitment where we can’t say where the money is coming from.
“Let us be clear that all Labor MPs feel that the life chances of too many children are being undermined by poverty. No child should grow up in poverty, which is why the Prime Minister has set up this working group, which will develop a child poverty strategy immediately.”
He added: “We were very clear in our manifesto that we would only make commitments, that we could say how they would be paid for and where the money would come from.
“And in fact, if you start making unfunded spending commitments, it breaks the economy, we know that, we saw it happen under the last government.
“And if the economy collapses, the economic turmoil this creates will harm all of society, but particularly the most vulnerable, especially children and families.
“This economic responsibility, fiscal responsibility – it’s not a nice thing to have, it’s an absolutely essential part of how we want to govern.”
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