Lucy Powell Urges Labour to Honour Tax Pledge and Press Government on Child Benefit Reform

Labour’s new deputy leader Lucy Powell has called on her party to hold firm to its election promise not to raise income tax, national insurance, or VAT, even as debate intensifies within government circles over how to address a significant fiscal shortfall. Her remarks signal a direct appeal for consistency and fiscal credibility at a time when voters are closely watching how Labour will manage the economy.

Speaking in response to reports that the Treasury is considering tax increases to fill a £30 billion budget gap, Powell said Labour must uphold the commitments it made during the campaign. “It is really important we stand by the promises we were elected on and do what we said we would do,” she said, emphasizing that trust in leadership depends on following through with clear and responsible policy.

Powell’s statement underscores growing unease among some within the party about the potential political fallout of revising tax pledges. The decision not to raise major taxes was a cornerstone of Labour’s campaign, aimed at reassuring middle-income earners and businesses that the party could deliver growth without imposing new financial burdens. Analysts note that abandoning that position so soon after an election could risk eroding public confidence in Labour’s economic management.

At the same time, Powell used her remarks to push the government to scrap the two-child benefit cap, which she described as one of the most pressing social policy issues facing low-income families. She called for the restriction to be lifted “urgently and in full,” arguing that the policy has deepened child poverty and runs counter to the principles of fairness that underpin Labour’s platform.

The two-child benefit limit, introduced in 2017, restricts welfare payments to the first two children in most families. Anti-poverty campaigners have long urged both major parties to reverse it, saying it leaves hundreds of thousands of children without adequate support. Powell’s comments reflect growing frustration among Labour MPs and social welfare advocates who see the issue as a key moral test for the new government.

Her dual message, upholding fiscal discipline while prioritizing social justice, captures the delicate balance Labour’s leadership must navigate as it transitions from campaign promises to governance. Powell’s stance aligns with calls from within the party for a strategy that combines economic responsibility with targeted reforms to address inequality and cost-of-living pressures.

Political observers view Powell’s comments as an effort to strengthen Labour’s credibility ahead of the upcoming budget announcement, which is expected to outline measures to stabilize public finances. By reaffirming her commitment to tax stability and social equity, Powell has positioned herself as a pragmatic yet principled voice within the new leadership team one urging the party to deliver on both fiscal trust and compassion in policy.