What does Starmer’s U-turn on child benefit mean for Labour?

The opposition leader has found himself at odds with his own ministers after saying he would not reverse Tory cuts to child benefit, writes Sean O’Grady

The Labour Party appears to be divided over the removal of the two-child benefit cap (AFP via Getty)

Keir Starmer has ignited a minor civil war in his party by promising to keep the Conservatives’ “austerity” policy of limiting child benefit to the first two offspring. Labour MPs are reported to be furious, while the Tories say it simply proves that the Labour leader is a man without principle. Politically, though, things aren’t quite as simple as that...

Has Starmer flip-flopped?

It does very much look that way. In February 2020, admittedly before the pandemic and Brexit inflicted their damage on the British economy, Starmer, the shadow Brexit secretary, tweeted: “We must scrap the inhuman Work Capability Assessments and private provision of disability assessments (eg ATOS), scrap punitive sanctions, two-child limit and benefits cap.”

If something was “inhuman” in 2020, it is difficult to say it ain’t now. Starmer might argue, with justification, that the economic situation means that Labour can’t do everything it wishes to, but why not focus on eliminating the “inhuman” stuff?

In any case, Starmer used his interview with Laura Kuenssberg over the weekend to state quite bluntly that he would not be reversing the cuts to child benefit signalled by George Osborne a decade ago and introduced by Amber Rudd as secretary of state for work and pensions in Theresa May’s administration back in 2017.

How much would it cost to give child benefit to every eligible family (ie those earning less than about £50,000 a year)?

The Institute for Fiscal Studies (IFS) tells The Independent that it is a surprisingly small amount – around £2bn to £2.5bn – so quite a bit less than the £7bn it would cost to scrap inheritance tax, an idea that was recently floated by the Tories in an attempt to woo wannabe inheritees in London and the South East. Even in the straitened circumstances in which the nation finds itself, £2.5bn is relatively modest. For the left, it makes it all the more frustrating that Starmer has ruled it out.

In objective terms, the IFS said a few years ago that the cuts “would increase child poverty (on the government’s official measures, and after deducting housing costs) by roughly 300,000 ... a sizeable effect for a policy saving £2bn ... the affected families (and bigger families more generally) are relatively likely to be close to the poverty line”. It added that “the impact on the number of children in poverty is large relative to the number of families affected”.

Is the U-turn a surprise?

Starmer’s colleagues certainly didn’t have much warning. Ten days ago, on a visit to Hamilton, the shadow chancellor, Rachel Reeves, only went as far as to say that she could not promise to get rid of the two-child cap because the party’s policies must be “fully costed and fully funded”.

Prior to that, and entirely in line with Labour policy since the Corbyn era (and Starmer’s previous pronouncements), senior figures in the party had made no secret of their loathing for the Tory policy. Deputy leader Angela Rayner has called it “obscene and inhumane”, and only last month, shadow work and pensions secretary Jonathan Ashworth said the cap was “heinous” and “absolutely keeping children in poverty”. Ashworth didn’t actually pledge to reverse the cuts, but it was implied.

There is now certainly “unhappiness” in Labour, according to one anonymous shadow cabinet minister, and one anonymous left winger promised trouble: “What is the point of Labour? If we are not going to prioritise the poorest children in this country, who have been victimised by one of austerity’s cruellest policies, then what is the point of us? It is shocking, and the opponents of this will not be the usual suspects, it will be the straw that broke the camel’s back for many.”

Others on Starmer’s team remain loyal. Yvette Cooper, for example, pleaded that Labour had a duty to “make sure that the proposals we put forward are fully costed and funded so that we can actually deliver them”.

What does it tell us about Starmer?

It tends to confirm the view, particularly on the left, that he’s just a Tory (or “Blairite”, same thing to them) in disguise, and thus something of a class traitor. On the right, his critics actually support the child benefit policy, but argue that his change of mind proves that he doesn’t stand for anything, will say anything to get elected, and is a little bit vacuous.

Unhelpfully for Starmer, this tends to feed into his image of being a bit grey, uncharismatic and wooden, which in turn has been a factor in his remarkably poor personal ratings – that is, poor compared to those of his party, and of Tony Blair in the high noon of New Labour three decades ago.

That said, Starmer is now more highly rated than Rishi Sunak for “doing a good job” as leader – and kicking the left of the party around might convince some that Starmer is the kind of strong leader that they quite like in No 10, as with Thatcher, Blair and, for a time, Boris Johnson.

So are the criticisms fair?

Yes and no. For Starmer, nothing matters more than getting a Labour government elected, and for it to be a success. What, he might ask, is wrong with that? In post-Brexit, post-pandemic, highly indebted Britain, it is difficult to make spending promises you can keep – hence the extreme caution usually exercised by Starmer, Reeves and the rest of the team, which even extends to a refusal to guarantee that they would implement the recommendations of independent pay review bodies.

There is also some polling evidence to suggest that the two-child policy is fairly popular with the voters.

What will the electoral impact be?

It might be marginally positive if it tends to give the impression of fiscal responsibility, and of a Labour Party that is united, serious and disciplined enough to be honest with the electorate about the economic crisis (and won’t make the kind of unbankable promises that, arguably, Jeremy Corbyn and Boris Johnson used to make). Boris Boosterism and Corbynite socialism are both fairly out of fashion right now.