Sir Keir Starmer will retain the two-child benefit cap after a change in welfare cuts created a £5bn gap in Labour's spending plans. Labour officials suggest potential tax hikes loom as a consequence of keeping the cap, which was introduced under George Osborne. Recent unrest among Labour backbenchers may intensify if the cap remains in place. Starmer indicated to his cabinet that he desires to eliminate the cap, but the financial implications and trade-offs are pressing concerns for MPs.
Sir Keir Starmer will not scrap the two-child benefit cap after his U-turn on welfare cuts left a £5bn hole in Labour's spending plans.
Senior Labour figures have reportedly warned that tax hikes are on the horizon after the benefits climbdown, with a change in the controversial cap now thought to be off the table.
A No 10 source stated, 'My assessment is that is now dead in the water,' regarding the prospect of Labour keeping the cap.
A source close to the chancellor added: 'MPs will need to acknowledge that there is a financial cost to not approving the welfare changes, whether that's tax rises or not scrapping the two-child benefit cap.'
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