London, 26 May 2025 — Chancellor Rachel Reeves is facing mounting pressure from within her own party to ease the burden of welfare cuts, amid growing calls to restore the winter fuel payment in full, scrap the two-child benefit cap, and rethink sweeping welfare reforms designed to reduce the benefits bill.
Reeves is preparing for a crucial spending review next month, expected to set the tone for Labour’s fiscal approach for the next five years. With £113 billion pledged towards capital investment in housing, transport, and infrastructure, the Chancellor now faces demands to redirect funds towards social support measures that could potentially cost billions more.
Labour MPs are urging her to reverse the previous government’s decision to limit winter fuel payments to lower-income pensioners. Prime Minister Sir Keir Starmer recently signalled his intention to reinstate the payment universally, a policy hailed by Health Minister Karin Smyth as “a sign of a government that listens”.
Speaking to BBC Radio 5 Live, Smyth emphasised the importance of reviewing policy impacts: “The Treasury will have to weigh these decisions carefully, balancing the need for economic stability with real support for those who need it.”
Another major area of concern is the controversial two-child benefit cap. The policy, introduced by the Conservative government, prevents families from claiming benefits for more than two children unless under exceptional circumstances. Campaigning Labour MP Stella Creasy has called for its urgent removal, stating it would “lift 350,000 children out of poverty overnight”.
Creasy added, “It’s shocking that 60% of those affected are in households where at least one parent works. We have a responsibility to tackle working poverty – this is an obvious place to start.”
The Government’s long-anticipated child poverty strategy, initially expected in spring, has now been delayed until autumn to align with the spending review. Labour insiders insist that no single measure will solve child poverty, but pressure continues to mount for a decisive shift in welfare policy.
Meanwhile, Reeves is grappling with potential rebellion on the backbenches over planned welfare reforms. Measures to tighten eligibility for the Personal Independence Payment (PIP), a benefit designed for those with disabilities, have provoked significant unease.
Peter Lamb, Labour MP for Crawley, told BBC Radio 4’s Westminster Hour: “I’ll be voting against anything that makes access to PIP more restrictive than it already is. Many of my colleagues, from all wings of the party, are deeply uncomfortable with the current direction.”
Reports suggest over 100 Labour MPs could oppose the reforms unless softened. Proposals to give claimants longer transitional periods or increased support are being considered as a compromise.
The debate is further complicated by political positioning. Reform UK leader Nigel Farage is expected this week to announce his party’s support for fully reinstating the winter fuel payment and scrapping the two-child limit — a clear attempt to outflank Labour and appeal to disaffected working-class voters.
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Despite the pressure, Reeves remains focused on her broader economic agenda. She told The Guardian: “I want every pound of public money to build British jobs, apprenticeships, and strong supply chains. We’re investing £113 billion more in capital than the Tories planned. That’s a serious down payment on Britain’s future.”
Yet, fiscal conservatives warn Labour’s shifting stance could widen the deficit. Shadow Chancellor Sir Mel Stride accused Labour of abandoning economic discipline. “Labour has already lost control of the public finances,” he said. “Their welfare pledges could add another £5 billion to an already stretched budget.”
As internal and external pressures mount, Rachel Reeves faces a defining test in balancing social justice and fiscal responsibility. With decisions on child poverty, pensioner support, and disability benefits looming, the Chancellor must navigate a delicate political tightrope — one that could shape the public’s trust in Labour’s economic leadership.
