Rachel Reeven plans to scrap two-child child benefit in this month’s budget, in a move that could cost more than £3bn but leave 350,000 children out of poverty.
The Chancellor is understood to be preparing to fix the opening of the conservative content, which is initially looking at ways to use it for more families or more.
The Reeves acted after the prime minister, Keir Starmer, insisted that the effort should go to the next election reducing child poverty. But the Chancellor also hopes to remove the cap, which is popular with voters but unpopular with changes to the tax rate consequences.
The Chancellor told BBC Radio 5 live on Monday:
He added: “In many cases you can have a mum and dad who both work, but maybe one of them develops a chronic illness or one of them dies.
“There are many reasons why people make decisions to have three, four children, but then find themselves in difficult times.
“I don’t think it’s right that a child is punished because they are in a bigger family, for no fault of their own.”
The Chancellor’s allies said his words should be taken as a signal of intent that he wants to step down instead.
Reeves’ comments show how far he has come since the last election, when he and Starmer decided not to include a promise to remove the cap from the Party in the Party’s manifesto, arguing that they could not afford “unbreakable promises”. The Foundation Foundation estimated that lifting the cap in full would cost around £3.5bn by 2029-30.
Starmer continued to defend that position after entering the government, even suspending seven MPs last year for voting for a Scottish National Party motion to treat seeking an end to the cap.
At the end of that rebellion, Starmer suggested the Home Secretary, Bridget Phillipson, to lead a task force to tackle child poverty.
Phillipson is due to publish his findings at the time of the budget, and is understood to have concluded that the complete elimination of the cap of children from poverty.
The Prime Minister’s allies insist that he will always step down as soon as possible. One said: “Keir has always said he wants to bring child poverty into government. It will reduce him if it’s on his watch.
“He knew it would come down to what Blair is doing to reduce child poverty in the government. He’s been saying for years that if you have more children you’ll get out of poverty.”
Alison Garnham, the chief executive of the child deprivation group, said: “The two strings drive a heavy child to do. All children who have a heavy way to do a good children have better children better start in life.”
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Reeves made his comments on Monday after receiving the penultimate set of pre-budget estimates from the office of Chancellor Gordon Brown, one of the strongest proponents of keeping the cap.
Now he has more than two weeks to finalize his announcement, which is likely to be dominated by a decision to scrap the manifesto and raise taxes.
The Chancellor gave a clear indication on Monday that he plans to take such a decision, despite the likely political backlash, which the BBC told the press is to launch the economy.
“Of course it is possible to continue with the manifesto commitments, but it will require things like deep cuts in capital spending,” he said.
“The reason why our productivity and our growth has not been very good for some years is because governments always make the quick choice to cut investment in railway projects and in energy projects and [in] digital infrastructure. And as a result, we have not hindered our productivity to where it was before the financial crisis. “
Reeves is considering a plan that would drop 2P income tax rates and cut 2P national insurance – a move that would boost workers and landlords.
Suggested TopicsHowever, he thinks limiting National Insurance Cuts to those earning around £50,000 would mean less tax increases for the top 10% of earners.