Philip Hammond refuses to rule out return of the £1300-a-year Universal Credit payments to help poorer households

PHILIP Hammond has opened the door to a major reversal of George Osborne’s benefits cuts to help struggling workers.

When quizzed yesterday, the Chancellor refused to rule out returning £1,300 a year in Universal Credit to poorer households from next year.

Mr Osborne was forced to U-turn on controversial cuts to tax credits after a bitter defeat in the House of Lords last year.

But the sharp reduction was kept on the all-encompassing new handout system when Universal Credit replaces tax credits from next year.

The Chancellor told BBC1’s Andrew Marr Show: “We don’t want to make anybody worse off.

“We’ve got to make sure that the prosperity that comes from seizing opportunities ahead is shared across the country and across the income distribution.”

Fears are growing among senior Tories over the squeeze on the poorest workers’ living standards.

Inflation is spiralling again and benefits rises are capped at 1% until 2020, on top of the cuts to Universal Credit.

Former Tory leader and Work and Pensions Secretary Iain Duncan Smith is one of a growing number who have called for the cuts to be reversed.

The government faces losing another vote in the Commons or the Lords if the Universal Credit cuts continue.

Shadow Chancellor John McDonnell told Mr Hammond yesterday he would have Labour’s backing for the U-turn.