Labour backtracks on pledge to scrap universal credit which was 'dramatic language'

Labour has rowed back from its pledge to scrap the troubled universal credit benefits shake-up, suggesting it might simply rework it – and change its name.

Shami Chakrabarti, the shadow attorney general, described John McDonnell’s vow to axe the new system – made just one week ago – as “dramatic language” that sounded like “a change of policy”.

“Whether you end up changing the name of a benefit, or changing the structure of a benefit, in the end what’s important is the end of austerity and people having the money they need to live,” she told Sky News.

Asked if universal credit might, therefore, survive under Labour, Ms Chakrabati replied: “I don’t think universal credit in its current form is sustainable and that’s why we’re urging the government to stop the rollout now.”

Since Mr McDonnell’s announcement last Sunday, Labour has also briefed journalists for a disability website that it merely wants “a root-and-branch review of the social security system”.

Yet, on the same Sky News programme a week ago, the shadow chancellor branded universal credit a “shambles” and “iniquitous”, saying: “It will have to go.”

The partial climbdown comes as Conservative rebels are threatening to defeat the government unless huge cuts for people moving onto universal credit are stopped.

Up to 30 backbenchers are ready to act unless the hardest-hit groups – single parents and second earners in families – are given urgent help, one has predicted.

The number is many more than is needed to overturn Theresa May’s fragile majority of just 13, even if she clings onto the support of the Democratic Unionist Party.

Heidi Allen, a leading Tory critic of universal credit, said: “Significant numbers of colleagues on my side of the House are saying this isn't right and are coming together to say the chancellor needs to look at this again.”

The warning comes after Esther McVey, the work and pensions secretary, admitted some claimants will be worse off – piling pressure on the chancellor to change course in this month’s budget.

Crucially, regulations still need to be passed to move millions more people onto the controversial new benefits system, creating a clear opening for a Conservative revolt.

The respected Resolution Foundation think tank has calculated that 3.2 million families will be an average of £2,400 a year worse off than under tax credits – with 600,000 of those, mostly two-parent families, losing all benefit.

Meanwhile, Iain Duncan Smith – blamed by many for universal credit’s deep problems as its architect in government – continued to insist it could be made to work.

He repeated his appeal for £2bn to be pumped back into the system urgently, as the best way to reach the “just about managing” people Ms May promised to help.

“The key thing is the structure works but we need to put the money in,” the former work and pensions secretary said.

“I think this government is listening, I think the chancellor is listening. If we do that, and get the money back to where it should be, the reality is nobody should lose at all.”

Mr Duncan Smith claimed the controversial decision to pay universal credit one month in arrears – blamed for much of the hardship – identified people who could not cope.

He said: “If you are not capable of coping with that then you're going to go into a job and crash out quite quickly.”