Labour Under Pressure to Reverse Winter Fuel Allowance Cuts
Labour leader Sir Keir Starmer is facing mounting pressure from his MPs to reverse cuts to the winter fuel allowance, following the party’s disappointing performance in recent local elections. According to sources close to the party, the removal of the winter fuel subsidy from 10 million pensioners was a key factor in voters’ decision to withhold support for Labour in the run-up to last week’s elections.
The policy, which limits the up to £300-a-year benefit to only the poorest pensioners, was announced just weeks after Labour took power last year. Labour MPs and party figures have told The Financial Times that the move, along with a more recent decision to cut disability benefits, contributed to the party losing in some of its traditional heartlands to Nigel Farage’s Reform UK. As one moderate Labour MP noted, "That would be a very tough sell anyway but when coupled with countless millions the government can find to house young men arriving on boats every day, it is unsustainable to say we just can’t afford the winter fuel payment or Pip."
The MP, who wished to remain anonymous, added that reinstating winter fuel and revisiting Pip changes are the minimum that must be done if Labour wants to prevent a "Reform wipeout". Another Labour MP, who is seen as a supporter of Starmer, said: "I’m sure the government is reflecting on the issues that contributed to the losses last week, including winter fuel payments and disability and health benefits." According to The Financial Times, Labour lost its former stronghold of Runcorn and Helsby to Reform in a by-election, while also losing Doncaster council to Farage’s right-wing populist party.
Starmer has attempted to counter the rise of Reform by tacking right in recent months, including slashing the overseas aid budget and introducing measures against illegal immigration. However, many Labour campaigners said benefit cuts were a more potent issue in the local elections in the so-called "Red Wall", the former Labour heartlands of the Midlands and northern England. Research shared by some MPs over the weekend suggested that the proposed changes to Pip could have a "devastating" effect on some of the most deprived communities in England.
A report from Health Equity North, a group of academics, found that the cuts would fall hardest on the north-east and north-west of England. "The 10 worst-hit constituencies are all Labour-held, and in ‘Red Wall’ areas," it said. Labour MP Stella Creasy said on Saturday that the party should be careful not to "mimick" Reform. "Every new Reform councillor is a warning, not a way forward. A warning that mimicking their plans to divide the British public and echo their rhetoric neither delivers votes at the ballot box nor better outcomes for anyone," she said on Instagram.
Instead, she called for urgent measures to tackle the cost of living crisis, including ending the two-child cap on benefits and ending the cuts to Pip. Ros Jones, re-elected Labour mayor for Doncaster last week on a sharply reduced majority, warned after her victory about the damage done by Starmer’s cuts to benefits such as Pip and the winter fuel allowance. According to The Financial Times, one Labour party figure expected a partial U-turn over the winter fuel cuts before Christmas, with the autumn Budget being the most likely moment.
"Nobody in Downing Street now thinks this was a good idea. They all realise it was a mistake. Every single one of them. For now, they’re saying they won’t do anything about it but it feels like ‘not yet’ rather than ‘never’," they said. One option would be to raise the bar for eligibility so that only the richest are excluded, they said. At the moment, the subsidy is restricted to pensioners who receive pension credit or other benefits. However, a Downing Street official said on Sunday that there were no plans to U-turn on the policy, although people were constantly reviewing the issue.
Chancellor Rachel Reeves cut the winter fuel allowance last July after the election to bolster the public finances, claiming the previous Conservative government had overspent. A former senior government figure told The Financial Times that Reeves’ decision was something the Treasury had been trying to get away with for some time. They said Morgan McSweeney, then Starmer’s head of political strategy but now chief of staff, was deeply concerned about the decision’s potential impact. As the party continues to grapple with the fallout from the local elections, it remains to be seen whether Labour will ultimately reverse its decision on the winter fuel allowance.
The issue has sparked a significant debate within the party, with many MPs and activists calling for a more nuanced approach to welfare reform. While the government has insisted that it is committed to making tough decisions to restore the public finances, the pressure from within the party is likely to continue to grow in the coming weeks and months. According to The Financial Times, the party’s handling of the issue will be closely watched by voters in the lead-up to the next general election.
The news comes as the UK continues to grapple with a cost of living crisis, with many households struggling to make ends meet. The Labour party has been under intense pressure to do more to address the issue, and the debate over the winter fuel allowance is likely to be a key battleground in the coming months.
Reversal of the cuts to the winter fuel allowance would likely be a significant U-turn for the party, and would be seen as a major climbdown by the government. However, with the local election results still fresh in the minds of voters, it is clear that Labour is under significant pressure to rethink its approach to welfare reform.
This article is based on reporting by The Financial Times.
