Sir Keir Starmer said his party is having to make “tough decisions” ahead of the next election as he appeared to defend his stance on maintaining the two-child benefit cap.
There has been disquiet among Labour MPs after the party leader confirmed he would retain the Conservative-imposed limit which has been criticised for pushing families into poverty.
The policy, introduced by Tory former chancellor George Osborne during his austerity drive, prevents parents claiming Universal Credit for any third or subsequent child.
Scrapping the cap would lift around 270,000 households with children out of poverty at an estimated cost of £1.4 billion in the first year.
But Sir Keir said the economic situation a future Labour government would be faced with if it wins power would mean it would have to be stringent on spending pledges.
Sir Keir, asked during a conversation with Sir Tony Blair at the Future of Britain conference what he would say to those wanting more spending commitments, said: “My first reaction is we keep saying collectively as a party that we have to make tough decisions.
“And in the abstract, everyone says, ‘That’s right Keir’.
“But then we get into the tough decision, we’ve been in one of those for the last few days, and they say, ‘We don’t like that, can we just not make that one, I’m sure there is another tough decision somewhere else we can make’. But we have to take the tough decisions.”
We have to take the tough decisions
Sir Keir told the central London audience that former prime minister Liz Truss “proved the thesis that if you make unfunded commitments, then the economy is damaged and working people pay the price”.
He added: “For her it was unfunded tax cuts, but it could be unfunded spending.
“That can come from both sides of politics, so it is a fundamental. I will not let the next Labour government get anywhere near the equivalent to what Liz Truss did.”
After Ms Truss, Britain’s shortest serving prime minister, and her chancellor Kwasi Kwarteng’s so-called mini-budget in September, mortgage rates rose and the value of the pound was sent tumbling. She resigned from No 10 shortly after.
Earlier shadow culture secretary Lucy Powell said there is “no money left” for Labour to roll out all the reforms it would like to if it wins the next general election.
Ms Powell told Sky News: “We’ve opposed [the two-child benefit cap], this is not a good policy. We’ve opposed it for many years through Parliament, but we’re now in a very different economic situation.
“As a famous phrase would go, there is no money left, the Government has absolutely tanked the economy.
“I don’t know it is dividing the shadow cabinet.”
She was reminded that shadow work and pensions secretary Jonathan Ashworth has previously described the policy as “heinous”.
Ms Powell said: “Both can be true at the same time, that things can be a bad policy, they can be bad politics, but the economic reality is what we’re now faced with.
“There are lots of bad policies... we’re not implementing them, it’s about not reversing...”
Deputy Labour leader Angela Rayner has also described the cap in the past as “obscene and inhumane”.
Ms Powell added on LBC: “Both things can be true at the same time, which is that things can be bad policy and an awful situation but that we can’t immediately afford to do something about them.
“And that is true of a whole range of issues, I’m afraid. After 13 years there is a lot of things that we need to put right and we’ve got action plans to do some of that.”
Ms Rayner had to deal with concerns raised by multiple backbenchers at a meeting of the Parliamentary Labour Party on Monday evening despite defences from senior figures.
On Tuesday, Labour MP Stella Creasy said the two-child benefit cap that Sir Keir says he will maintain is fuelling child poverty and may cost more than it saves.
The backbencher told BBC Radio 4’s World At One programme: “We can all see in our communities that it is pushing up child poverty, the evidence shows us that.
“The argument that many of us are making is that the evidence in and of itself is this policy is costing us more than it is saving. Might it not be better to deal with policy and also get the savings we can put into investing in the economy?”
Ms Creasy was referring to research led by York University that suggests the limit could have had the “counterproductive” effect of pushing parents away from work.
The study said the “income shock” made it harder to afford the costs of finding a job, such as for training, childcare, interview clothes and transport.
Greater Manchester Mayor Andy Burnham urged Sir Keir to put reversing the policy “at the front of the queue” when finances allow.
The Labour politician told LBC’s Tonight With Andrew Marr that oppositions have to “show what difference they will make”.
“That is why it would be, I think, a good thing to do, to indicate and to develop the position further to say, as and when resources allow, this would be a priority - that would reassure people who want to see this issue addressed,” he added.
“I don’t think you can promise it lightly but I would encourage the shadow cabinet and Keir to keep this under review. As and when there is the headroom to do something, this clearly should be at the front of the queue.”
Jeremy Corbyn, the former Labour leader who is now sitting as an independent MP, said many of the party’s MPs are “seething with anger”.
“Even the Blair government, which Keir Starmer often quotes, did do a great deal to lift children out of poverty by not having a two-child policy,” he told LBC.
Jon Trickett, an MP on Labour’s left, referred to House of Commons Library research from last week suggesting that removing the cap would cost around £1.4 billion this year and £1.7 billion next year.
He said: “The country could, and should, immediately take hundreds of thousands of families out of poverty in an instant by ending the two-child benefit cap.”
Labour frontbencher Jess Phillips argued it would be “crass” for the party to be pledging billions without finding the funding as she said it was “objectionable” that Labour was having to answer for the benefits cap.
Speaking at a Centre for Social Justice event, she said: “This is the Tories’ policy, and it is not something that I wish to defend. It’s not something that I voted for. I certainly didn’t.
“The idea that Keir Starmer doesn’t want to stop children living in poverty is for the birds. Of course he does.
“But we live in the situation where I skin the cat that I’ve been given and I’ve been given a broken, mangy cat by this Government.”
