LABOUR’S internal battles have burst into the open after deputy leadership contender Bridget Phillipson said scrapping the two-child benefit cap is “on the table”.
It could cost £3.5billion a year and delighted party lefties but piles fresh pressure on Chancellor Rachel Reeves.
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She is scrambling to stick to her fiscal rules as government borrowing surged to £18billion in August — the highest in five years and £5.5billion above forecasts.
That prompted warnings that tax rises in November’s Budget now look “inevitable”.
Debt interest soared to £8.4billion in August and borrowing hit £83.8billion in the first five months of the financial year — up £16.2billion on a year ago.
Pantheon senior economist Elliot Jordan-Doak said the borrowing figures for the year to date were “ugly” and meant the task facing Ms Reeves was now far worse.
He said: “We still expect the Chancellor to fill the fiscal hole with a smorgasbord of stealth and sin tax increases, along with some smaller spending cuts.”
James Murray, chief secretary to the Treasury, said: “This government has a plan to bring down borrowing because taxpayer money should be spent on the country’s priorities, not on debt interest.
“Our focus is on economic stability, fiscal responsibility, ripping up needless red tape, tearing out waste from our public services, driving forward reforms and putting more money in working people’s pockets.”
The Treasury is understood to be considering an overhaul of property taxes, adjustments to inheritance tax, and extending the freeze on several personal tax bands as part of its plans.
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