Labour's botched U-turn on winter fuel allowance questions its purpose in power

The Guardian

25-05-2025

The lady is, it seems, for turning: one of Rachel Reeves's first decisions as chancellor was to strip winter fuel allowance from the vast majority of pensioners. Keir Starmer now says more of them should be eligible.
Pressure to shift had become intense after local elections where Labour councillors swept out of power by Reform repeatedly cited voter concern over winter fuel.
But last week's botched half U-turn leaves Labour in an embarrassing political mess – and raises fresh questions about its purpose in power.
Dropping an unpopular policy is not problematic in itself, and this is an extremely unpopular one. But U-turns are best carried out swiftly and comprehensively. Here, by contrast, Labour have left themselves unable to say how many of the 10 million people who lost out on the payment will get it back.
Crucially, they are also unable to say how it will be paid for – which is problematic, given that Reeves painted the decision at the time as essential to repairing the public finances.
Complete reversal of the policy would cost £1.5bn a year. Reeves's team say they are still committed to the principle of means-testing the allowance – but intend not to say where the new threshold will fall, until the autumn budget. That opens the way to months of debilitating speculation.
The personal politics of the U-turn also look brutal. Reeves's team insist she and Keir Starmer made the decision jointly; but the original winter fuel announcement was the centrepiece of her tough-talking July statement, which was meant to demonstrate that she was ready to take unpopular decisions, to repair the tattered public finances.
At the time, Reeves described scrapping the allowance for the vast majority of pensioners as a 'necessary and urgent decision' and 'the responsible thing to do.'
Yet here was the prime minister last week, saying it would have to be reversed – a message that raised questions about the chancellor's political judgment, and her grip on fiscal policy.
Labour have not given a satisfactory answer either, to the question of why they're making the change – which adds to the sense of a government driven by tactics, not values.
Meanwhile, as Starmer was promising to direct more resources to pensioners, charities were being told they must now wait until the autumn, before the government's child poverty strategy is unveiled – including what will inevitably be its centrepiece: the decision about whether to scrap the unconscionable two-child limit.
Starmer is apparently learning towards scrapping the limit – despite his chief of staff Morgan McSweeney's reported concern about the 'fairness' argument against doing so. The prime minister is right to override him: there is nothing fair about cutting off financial support for children, on the basis of how large a family they happen to be born into.
And campaigners and sector experts are united in arguing that scrapping the two-child limit is by far the most cost-effective way to boost the incomes of the poorest families, lifting an estimated 470,000 children out of poverty for an annual investment of £3.5bn.
Affecting one in nine children already, the limit, which means families receive no additional universal credit for third and subsequent children, has been the big driver of rising child poverty.
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A recent Save the Children briefing, prepared on the basis of evidence sessions with families affected by the limit, said, 'many spoke about the impact on their wellbeing of not being able to afford food, clothes and in many cases rent'.
Ruth Curtice, director of the Resolution Foundation thinktank, put it bluntly last week: 'Breaking the link between the number of mouths a family has to feed and the support it receives is simply inconsistent with real ambition on child poverty.'
Some campaigners had already judged the fact the child poverty strategy will come alongside the budget as an optimistic sign. They had fretted about the lack of Treasury input into the long-running review process, notwithstanding the sincerity of the cabinet ministers most closely involved, including Liz Kendall and Bridget Phillipson.
But they also lament the fact that by the autumn it will have taken Labour well over a year since coming to power, to set out how it plans to tackle a problem that its manifesto committed it to confronting.
Given Reeves's reluctance to repeat last year's bumper tax-raising budget, there was also a risk that the decision to restore (some of) the winter fuel allowance, had come at the expense of more radical action against child poverty.
That would have been a mistake. As Curtice pointed out, pensioner households are on average £900 a year better off since 2010, as the triple lock has put a floor under the value of the state pension; families claiming benefits are £1,500 a year worse off.
And Gordon Brown last week swept aside any claim that scrapping what he called the 'cruel' two-child limit is unaffordable, setting out a menu of tax options for funding its abolition – starting with a £2.4bn increase in taxation of the gambling industry, which inflicts so much harm on vulnerable consumers – as my colleague Rob Davies has powerfully reported.
The politics of grand moral causes sits uneasily with Starmer's governing style, which is to lay out the 'options on the table', as he likes to put it, and make a choice. But voters across the political spectrum seem to sense – and resent – this Labour government's lack of a guiding project. It is not too late to embrace one, in the urgent challenge of improving the lives of hundreds of thousands of the UK's poorest kids.