21-05-2025
Starmer has made tax rises inevitable
Sir Keir Starmer is no stranger to U-turns. In his time as Labour leader, the Prime Minister has reversed course on nationalisations and tuition fees, among other policies, to howls of outrage from some in his party. Each time, he has emerged with his authority consolidated.
His latest reversal is different. Sir Keir's attempt to cut winter fuel payments has ended in the face of a threatened rebellion from the Left, leaving a hole in his budget, and his authority in tatters. The substance of the U-turn – with details still to be announced – matters less than the symbolism. Having forced their leader to back down once, backbench MPs will smell blood in the water.
What was already shaping up to be a formidable row over benefits reform now has the potential to become unmanageable. The Government is currently planning to impose £4.8 billion in welfare cuts by tightening the rules on disability benefits, and freezing the rates of payment.
That this move is necessary is indisputable. Spending on the Personal Independence Payment has reached £29 billion. On current trends, the bill for working-age people on this benefit will surpass this figure by the end of the decade.
But a move being necessary does not mean that the Government will make it. The cut to the winter fuel payment was a small measure expected to save around £1.5 billion each year. Faced with anger from the backbenches, however, Sir Keir found that, despite his majority, he lacked either the stomach for the fight or the means to win it.
If the Government cannot make even this small change to the welfare system, what chance is there of it making the sweeping changes we so desperately need? Implementing the reforms of the welfare state required to bring people back into work and cut spending on benefits is one of the most important challenges facing Britain.
The Conservatives made gestures in this direction but in the end proved too scared to follow through. Now it appears that Sir Keir, too, is on the run from the welfare lobby, finding it easier to let spending rise than make hard cuts.
The long-run implications are grim. If Britain cannot cut spending, it will need to raise revenue. The idea that Labour's first Budget would be a 'one and done' cash grab was always for the birds, and, indeed, Sir Keir yesterday failed to rule out further tax rises later this year. Angela Rayner's dream list of tax rises now stands a strong possibility of becoming Britain's waking nightmare.
