Two-child benefit cap: a litmus test for Keir Starmer?

Keir Starmer is performing a careful balancing act between maintaining his party’s economic credibility and defending a policy that is deeply unpopular among the majority of Labour MPs and supporters.

In an interview on Sunday with Laura Kuenssberg on the BBC, the Labour leader doubled down on his pledge to prioritise economic growth over spending, reiterating his party would show “financial responsibility”.

Yet Starmer has been warned of a revolt among his own MPs if he carries through on a promise to keep the controversial cap introduced by George Osborne limiting parents from claiming child tax credits or universal credit for more than two children.

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What did the papers say?

Starmer had already “come under fire” earlier this month from some of his MPs for failing to state his position on the policy, said The Times. Now his confirmation that he would not introduce any changes to it has “provoked anger” among Labour politicians.

The reason his decision has “created alarm among anti-poverty campaigners and despair in his own party” is twofold, said The Guardian.

First, it is deeply unpopular across the left. Brought in under the Conservative-led coalition government as part of its austerity programme, the cap “upsets the party’s social liberals, its Christian socialists, its feminists and its pro-welfare tendency”, said Stephen Bush in the Financial Times (FT). “Essentially every part of the Labour party hates this policy, which is one reason why almost every major figure in the party is on the record calling the policy ‘immoral’, ‘heinous’ or ‘social engineering’ or some variation thereof”, he added.

Second, the two-child limit has been proven to not address the primary issues it was designed to – namely encouraging parents of larger families to find a job or work more hours. It has affected an estimated 1.5 million children, and a three-year research project – conducted by the universities of York, Oxford and the London School of Economics – published today found no evidence it meets its aims on employment and fertility, and, in some cases, has had the opposite effect, “meaning its main effect is to push families with three or more children further into poverty”.

What next?

Labour may enjoy a 20-point poll lead over the Conservatives, but a year out from the next general election the party is starting to get jittery.

As polling day draws closer, “many around Starmer believe the time for compromise and careful political management has passed and that placating his own party at the potential cost of swing voters’ support is not a risk worth taking”, reported The New Statesman.

Recent YouGov polling on the child-benefit cap, which revealed that 60% of the public think it should be kept compared to just 22% who think it should be scrapped, shows perhaps why Starmer is willing to risk a split over it with his own MPs.

“But a worry about electoral appeal is not the main driving force here,” said The Spectator’s political editor Katy Balls. “Instead, this comes back to money,” she said, “another sign of the grip of the shadow treasury in Rachel Reeves’s fight for fiscal responsibility to come first.”

Scrapping the cap is estimated to cost £1.3 billion and the Labour leadership has made clear the state of the economy means they cannot commit to it at this time.

“It’s another sacrifice on the altar of fiscal discipline,” said Politico.

This is going to be the “big theme of the rest of the parliament”, wrote Bush in the FT: “a Labour leadership that wants to cleave as close to Conservative spending plans as possible this side of the next election is going to face all sorts of pressure and have to drag itself into all sorts of contortions to do so”.

The New Statesman agreed that the “first priority” for Labour is maintaining its poll lead on the economy, but the lengths it goes to to achieve this might make the party look “both shifty and ridiculous”, said Bush.

Over the weekend, Starmer’s MPs have been questioning what the point of a Labour government is if it fails take action on child poverty. This “hints at the problems ahead if Keir Starmer enters No. 10, not least in getting his own party to play ball with the hard choices coming”, said Balls.