Most Labour MPs would not have wanted 1.6m pensioners with disabilities to lose their winter fuel payments because of government cuts. But they didn’t know, because a partial assessment of the measure’s impact was only released on Friday evening, three days after they voted on it in the House of Commons. Last month the chancellor claimed spending cuts were “not the choices I wanted to make or expected to make”. The result has been to suck buoyancy out of a government still less than 100 days old, and to boost the morale of its critics, including the Reform party.
As winter sets in and fuel bills go up, many people will go cold or hungry or both. Opponents of this government, in parliament and the press, will maintain a laser-like focus on pensioners suffering because they’ve lost their fuel allowance. Ministers can expect their expense claims to be scrutinised to see how much they’ve received for heating their homes. It’s a good thing Sir Keir Starmer is reconciled to being unpopular, because his approval ratings are unlikely to pick up much this side of Christmas.
All this pain, personal and political, over just one small benefit. The Treasury estimates that it will claw back £1.4bn this year from the cut, although Rachel Reeves’ attempts to mitigate the harm by driving more households to get pension credit will inevitably reduce the saving she hopes to make. One billion is a huge amount for any household, but small in Westminster terms. More to the point, next month the chancellor will unveil a package of spending cuts and tax rises totalling £22bn. Beyond that, the commitments Labour made in opposition mean that in government it is on the hook to make annual savings of about £20bn. This is the equivalent of closing two modestly sized Whitehall departments every year.
The old saying goes that taxation is about plucking the most feathers from the goose with the least hissing. The same is true about cutting spending; except that one problem for Labour is that 14 years of austerity means even small savings arouse a loud hiss of pain. So, too, will not fixing the mess left behind by the Tories. After all, Labour came to power on a slogan of change.
Already, Sir Keir has been put under pressure to scrap the two-child limit on benefits and has suggested he is waiting on healthier public finances. But binning the two-child limit is cheap and easy compared with fixing the overall benefit cap, abolishing the bedroom tax or lifting the local housing allowance, which determines how much support households can get with accommodation. Then there’s the pressure on public services. Waiting on economic growth to solve this is a gamble, especially after it was confirmed last week that the UK economy is at a standstill.
Carry on like this, and Sir Keir risks losing goodwill both from voters and his own side. Best would be for Labour to relax the fiscal rules it copied from the Tories that limit how much it can borrow. Amending these self-imposed constraints would probably arouse no hissing – it certainly didn’t when the Tory chancellor George Osborne broke his own rules or Gordon Brown bent his. It would not magically fix every ill, but it would allow the government extra cash and political space. Better for Labour to grasp the nettle now and use the opportunity to do what it promised: to change this country for the better.
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