Unfunded spending commitments crash the economy, a Treasury minister has warned, as he defended keeping the two-child benefit cap in what is shaping up to be the first big test of the Labour government.
Speaking on Sky News’ Sunday Morning With Trevor Phillips, James Murray highlighted the market turmoil triggered by Liz Truss’s 2022 mini-budget in the face of mounting pressure at Westminster with backbench demands to ditch the controversial policy.
Some rebel Labour MPs are poised to move an amendment to the King’s Speech calling for the limit to be scrapped.
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The policy was introduced by the Conservatives in 2017 and and restricts child tax credit and universal credit to the first two children in most households.
Critics argue it is contributing to rising levels of child poverty, with larger families unable to claim about £3,200 a year per extra child.
They also point to the commitment made by Labour to retain the state pension triple lock, which guarantees payments rise each year in line with inflation, earnings or by 2.5% – whichever is higher – which comes at an additional cost of £11bn a year.
The Save the Children charity estimates abolishing the cap would take half a million children out of relative poverty.
Last month, before becoming prime minister, Sir Keir Starmer said he would scrap the two-child limit “in an ideal world” but insisted “we haven’t got the resources to do it at the moment”.
Instead, the government has announced a taskforce to develop a child poverty strategy, led by Work and Pensions Secretary Liz Kendall and Education Secretary Bridget Phillipson.
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‘Fiscal rules are non-negotiable’
The Resolution Foundation has said abolishing the two-child limit would cost the government somewhere between £2.5bn and £3.6bn in 2024/25, but such costs were “low compared to the harm that the policy causes”.
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Additional calls on the public purse have already emerged under the new government, with an inflation-busting pay hike being recommended for teachers and around 1.3 million NHS staff.
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Mr Murray said: “We’re never going to make a commitment where we can’t say where the money is coming from.
“Let’s be clear that all Labour MPs feel that far too many children’s life chances are being scarred by poverty. No child should grow up in poverty, and that’s why the prime minister has set out this taskforce, which is going to develop a child poverty strategy straight away.”
He added: “We were very clear in our manifesto that we would only make commitments, that we can say how they would be paid for and where the money would come from.
“And actually, if you start making unfunded spending commitments, that crashes the economy, we know that, we saw that happened under the last government.
“And if the economy crashes, the economic turbulence that that creates harms all of society, but particularly the most vulnerable, particularly children and families.
“This economic responsibility, fiscal responsibility – it’s not nice to have, it’s an absolutely essential part of how we want to govern.”