Angela Rayner, Deputy Prime Minister, urged Rachel Reeves, the Chancellor, to revoke child benefit payments for middle-class families (highest earner between ÂŁ50,000-ÂŁ80,000). This would reverse a Conservative policy saving families approximately ÂŁ1,300 annually.
This proposal, part of a leaked memo, reveals a power struggle within the Labour government, with Rayner challenging Reeves' fiscal approach. Left-wing MPs are supporting Rayner, while Conservatives criticize the potential policy shift.
The memo also suggests other tax increases and benefit cuts for recent immigrants. The proposed child benefit change is deemed "contentious" but potentially justifiable by arguing that the Conservatives never fully funded the policy. Jeremy Hunt, the former Conservative chancellor, strongly opposes reversing the measure.
Currently, parents receive ÂŁ1,355 annually for the first child and ÂŁ897 for each subsequent child.
Angela Rayner urged Rachel Reeves to strip middle-class families of child benefit payments, The Telegraph can reveal.
The Deputy Prime Minister pressed the Treasury to “claw back” the benefit from households where the highest earner’s salary was between £50,000 and £80,000.
That would reverse an announcement by the Conservatives in March 2024 that was predicted to save half a million families an average of ÂŁ1,300 a year.
Ms Rayner’s proposal was contained in the same leaked memo, first reported by The Telegraph on Tuesday, in which she suggested eight tax rises and a curb on benefits for recently arrived immigrants.
The latest revelation shows the breadth of economic changes Ms Rayner, the most prominent figure from the Left in the Government, was pushing for in mid-March, in a significant challenge to Ms Reeves, the Chancellor.
Ms Rayner’s proposals went far beyond her brief and are evidence of a power struggle in the Cabinet over using spending cuts rather than tax rises to fill a black hole in the nation’s finances.
The Telegraph is today publishing the memo in full.
Ms Reeves faced a bruising day on Wednesday after details of the leaked document emerged and Sir Keir Starmer announced an about-turn on her abolition of the universal winter fuel payment. She is out of the country at a G7 finance minister meeting in Canada.
Left-wing MPs have leapt on the memo, and are already calling on the Prime Minister to go further, backing Ms Rayner’s call for a tax raid on savers and urging Sir Keir to scrap planned welfare cuts.
The memo admitted that the change to child benefit rules would be “contentious” but said the Government could argue that the Tories had never fully funded the policy in the first place.
Jeremy Hunt, the Conservative chancellor who announced the change in his 2024 Spring Budget, warned Labour against reversing it.
Mr Hunt said: “This may look like a relatively minor budget measure but was one of the most popular things we did because it helped striving middle-class families struggling with childcare costs.
“Abandoning them would finally confirm that far from being a New Labour government, this is a traditional anti-aspiration Old Labour government.”
Parents can currently claim ÂŁ1,355 a year in child benefit for a first child and ÂŁ897 a year for any additional child.
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