Sir Keir Starmer could decide to lift the two-child benefit cap in the autumn budget, amid further pressure from Nigel Farage to appeal to traditional Labour voters.
The Reform leader will use a speech this week to commit his party to scrapping the two-child cap, as well as reinstating winter fuel payments in full.
The prime minister – who took Westminster by surprise at PMQs by revealing his intention to row back on the winter fuel cut – has previously said he would like to lift the two-child cap if the government could afford it.
There are now mounting suggestions an easing of the controversial benefit restriction may be unveiled when the chancellor delivers the budget later this year.
According to The Observer, Sir Keir told cabinet ministers he wanted to axe the measure – and asked the Treasury to look for ways to fund the move.
It comes after the government delayed the release of its child poverty strategy, which is expected to recommend the divisive cap – introduced by former Tory chancellor George Osborne – is scrapped.
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Why did Labour delay their child poverty strategy?
Ministers have already said any changes to winter fuel payments, triggered by mounting political pressure, would only be made when the government’s next fiscal event rolls round.
The Financial Times reported it may be done by restoring the benefit to all pensioners, with the cash needed being clawed back from the wealthy through the tax system.
The payment was taken from more than 10 million pensioners this winter after it became means-tested, and its unpopularity was a big factor in Labour’s battering at recent elections.
Before Wednesday’s PMQs, the prime minister and chancellor had insisted there would be no U-turn.
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Will winter fuel U-turn happen?
Many Labour MPs have called for the government to do more to help the poorest in society, amid mounting concern over the impact of wider benefit reforms.
Former prime minister Gordon Brown this week told Sky News the two-child cap was “pretty discriminatory” and could be scrapped by raising money through a tax on the gambling industry.
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Brown questioned over winter fuel U-turn
Mr Farage, who believes Reform UK can win the next election, will this week accuse Sir Keir of being “out of touch with working people”.
In a speech first reported by The Sunday Telegraph, he is expected to say: “It’s going to be these very same working people that will vote Reform at the next election and kick Labour out of government.”
