21-05-2025
Starmer's winter fuel U-turn is the surest sign yet of more tax rises
It was the only way to plug the 'black hole' left behind by the last government. It was vital to stop a run on the pound, and it would finally start addressing generational inequalities. We have heard lots of explanations from ministers over the last nine months about why the winter fuel allowance for pensioners had to be abolished. And yet, now it seems that none of it matters.
Whether or not the Prime Minister was right to reverse the deeply unpopular policy is almost irrelevant. What matters now is how backbenchers – already smelling weakness under Starmer's miserable leadership – will react. If Left-wing doyenne Zarah Sultana's response is any indication, Labour's plans for welfare reform are now in tatters. Each faction within the party will now feel empowered to demand their own concessions from No. 10, each more expensive to the taxpayer than the last.
With a voice that sounds like a Dalek with a bad cold, it is hard to feel much sympathy with the Chancellor Rachel Reeves. Even so, she has a task that few of us will envy. At the next fiscal event she will have to reveal concessions on the winter fuel allowance, a flagship policy that she announced within weeks of taking office. It will be a humiliating experience, and one that will leave her with little remaining credibility either with the markets or the voters.
But it is not Reeves's personal discomfort that matters. It will make it impossible for the government to make any further reforms of the welfare system. After all, scrapping the winter fuel allowance was the easiest possible cut to make. Many pensioners are very well off, with more than three million with a net worth of more than £1 million. They can afford to pay for heating without extra help.
Even so, Labour's backbenches found it impossible to accept. How will the government force through cuts to Personal Independence Payments given that it may cause some people real problems? How will it scale back escalating disability benefits? Or limit social housing for asylum seekers? And as for the triple lock on pensions, it will be sacrosanct for many more years. We can forget about savings. They won't happen now.
And yet, welfare spending is running out of control. The bill is expected to hit £300 billion next year, and even with taxes at record highs it can't be afforded. Britain needs to bring its welfare system under control. The winter fuel allowance was at least a start. After today's U-turn, further reforms will prove impossible – at least until after the country has been bankrupted.
