Suppose some S⊆V′ with ∣S∣≤k leaves a modest graph when removed. Build a cover of G from it.
Replace leaves by their vertices. Define
U=(S∩V) ∪ {v ∣ ℓv∈S}.
Each leaf in S is swapped for the original vertex it hangs from. Then U⊆V and ∣U∣≤∣S∣≤k (the map does not grow: each element of S contributes at most one).
U covers G. Let uv∈E and suppose for contradiction u∈/U and v∈/U. By the definition of U,
u∈/S,ℓu∈/S,v∈/S,ℓv∈/S.
So all four vertices u,ℓu,v,ℓv survived, and so did the edges {u,ℓu}, {v,ℓv} and {u,v} (an edge survives when both endpoints do). Then the degree of u in the remainder is at least 2 — neighbours ℓu and v — contradicting modesty.
Hence u∈U or v∈U, i.e. U is a vertex cover of G of size ≤k, so ⟨G,k⟩∈VC.