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Sir Keir Starmer says the tax could be kept at its current rate with an expanded windfall tax on energy firms.
The move will cut down on the use of private hotels, immigration minister Robert Jenrick says.
Critics of the government say a legacy of asylum mismanagement means problems are stacking up.
Angela Rayner calls on the justice secretary to apologise for the "collapse" in charge rate for rape.
Some Tories are among those who fear jobs could move elsewhere if the government is not ambitious enough.