We’re joined by Labour MP Meg Hillier, who has previously been Chair of the Public Accounts Committee.

Cathy Newman: Would Rachel Reeves be right to implement the full 5.5 per cent pay rises apparently being recommended by the independent pay review body, despite the fact that it would cost up to £10 billion?

Meg Hillier: This is an example of the very many difficult choices she faces. She’s in a very tricky hot seat now, having to make those judgements with colleagues across government. Let’s be clear, the reason that this is so-called above inflation is it actually reflects, of course, the inflation under Liz Truss. And that is why the pay review body has come up with what is currently higher than inflation. So it’s another problem left by the Tories.

Cathy Newman: Okay, put the blame on the Tories, I knew you would. But despite that you’ve got to find the money. So when you look at all the things she’s ruled out in terms of various taxes that she won’t raise, she doesn’t want to raise borrowing to fund this, it leaves wealth taxes, for example, hiking capital gains tax. Given the state of the finances, would you back that kind of move?

Meg Hillier: I’m not going to randomly back an individual tax policy here today in the studio, because what Rachel Reeves is doing, quite rightly, is going through the books in detail with the Treasury. The King’s Speech has laid out our legislative programme that is costed, but she will be doing a budget in, we think, the autumn and then a spending review. Those are the two places where we’ll see more detail on what of these difficult choices will be made. And of course, we’ve got various reviews going on in government to look in detail at some of those things. Remember, in opposition, you just don’t have the same resources. Now all of Whitehall is at the chancellor’s and the government’s disposal to help make the decisions.

Cathy Newman: But she’s lifted the lid on that whole process today. There’s a clear hint that there will be inflation busting pay rises for teachers and other public sector workers. You presumably endorse that, and all I’m saying is there aren’t that many options to pay for it. So the least worst option could be to raise wealth taxes?

Meg Hillier: There’s a whole suite of taxes that could be looked at. But she’s been very clear and we’ve been very clear as a party through the election what we won’t raise. She will obviously be looking at things long term, or medium to long term, we won’t see the growth that we need. But there will also be decisions to be made in individual departments. And those secretaries of state are already looking through the books and…

Cathy Newman: So you think spending cuts to fund some of these pay rises?

Meg Hillier: They will be looking through everything that their department is doing and just making judgements about what’s most important, about maybe rephasing things. I looked, on the Public Accounts Committee, repeatedly at many cheap promises that were made and then not delivered, and it’s really important that they are thought through and sustainable. One of the key things here is that any decision that’s made needs to be something that the British public, businesses, others, need to know will be for the parliament at least, and that there is certainty about that direction of travel.

Cathy Newman: You talk about rephasing, that’s code for spending cuts in the education department to fund teachers’ pay rises…

Meg Hillier: No, you’re putting words into my mouth.

Cathy Newman: ‘Departmental rephasing’, you said. I’m just wondering, if you end up doing that, what’s the difference between you and the Tories?

Meg Hillier: Let’s be clear, I was not suggesting for a moment that there would be cuts in the education department to pay for this. What I’m saying is, across Whitehall, in a spending review every department – and I’ve looked at these a lot over the years I was chair for nine years, on the committee for 13 – each department has to bid in on what it’s going to do and prove to the Treasury that it’s going to do a good job of delivering that. Then there will be decisions made about how that is prioritised, and that is a completely normal approach. But what we’re going to be focusing on is tackling child poverty, dealing with the issues around pay and work, which are clear priorities for us as a government.

Cathy Newman: Let’s come to child poverty because there was a hint on public sector pay rises. There was no such hint on ending the two child benefit cap. Your colleague Rosie Duffield calls it ‘heinous, sinister and overtly sexist’. How would you describe it?

Meg Hillier: I have been on record saying that I want to see the four out of ten children here in my constituency living in poverty lifted out of poverty, and this is one way that could be done quite quickly. But if you look at child benefit and how it’s been changed over the years, remember not that long ago, it was a universal benefit. Then the pay cap was brought in, but very unfairly so that people with the same household income, some got it and some didn’t. Then the two child limit was brought in, which I didn’t agree with. But even then there were some very unfortunate approaches and sorts of extensions that could be given, but very humiliating for particularly the women…

Cathy Newman: Like the rape clause.

Meg Hillier: The rape clause, exactly. If you’re having to have workarounds like that, you can tell the policy’s not working. So that needs to be looked at in the round. I’m very clear that you can’t just pick one element and change it. What I’m really heartened by is this review of child poverty led by two excellent secretaries of state, at DWP and education, who both have a very strong mission. The clear thing there is that they’re leading it through their departments, is not something being outsourced to another body that will take two years to present. They are in the moment and will make recommendations.

Cathy Newman: Are you clear that that two child benefit cap should not be intact, that Rachel Reeves will do everything she can to ditch it in the budget, for example?

Meg Hillier: I’ll be one of the people lobbying, when this child poverty review comes up, to look at that very closely. Because it’s a quick way of getting a lot of my constituents, with children who are my constituents, out of poverty.

Cathy Newman: You’ll amend the King’s Speech?

Meg Hillier: No, the King’s Speech is not the place for this. We’ve laid out 40 bills in the King’s Speech. This is something for down the line. But also, I’m really clear about the other things that are taking place. The breakfast clubs, the changes to the school uniform policy, the changes to work and pay. These are all things that also can help lift children out of poverty.

Cathy Newman: So you will bide your time but it’s got to go.

Meg Hillier: I’m biding time and I’m very confident the two secretaries of state who are leading this review, their capability and their willingness to really embrace this issue and tackle child poverty. We took half a million children out of child poverty when we were last in government. It’s gone up by 700,000 under the Tories.