Some say Starmer has U-turned on the winter fuel allowance (WFA).
I disagree. I prefer the idea put forward by Richard Bergon MP on Channel 4 News last night that he has J-turned. In other words, what he will give back will be much less than what he has taken away. We do not know the details as yet, but I strongly suspect that this will be the case.
So why has he changed his mind?
It is not because the economy is better. It is no better now than it was last July. In many ways, it is worse, with GDP still nearly flat once the reaction to Trump is taken out of account. Inflation is worse. The tariff threat remains. Wars are worse. There is a need for more defence spending. Nothing in the news from that front suggests that there is any more slack than there was last summer, when the WFA was announced by prime ministerial decree, without prior warning, but with disastrous consequences for Labour, most especially in proportion to the £ 1.6 billion it supposedly saves.
So what has changed?
Pubic opinion has.
The voter share of Reform has.
The media have: they know this is a disaster for Labour and push the point.
Labour backbench opinion on the issue has, and they are willing to express it.
And relations between Starmer and Reeves have.
Of all of these, which matters most? In the small-minded world of Starmer and McSweeney, I have no doubt that the last does. Rachel Reeves might be the only woman in the Cabinet that No. 10 has not briefed against, but give it time, and they will.
McSweeney has a problem with women. As a consequence, Starmer has the same problem, since he cannot think for himself. That we know.
But, we also know that, supposedly, Reeves and Starmer were joined at the hip. There was going to be no stress between these two. The age-old No. 10 / No. 11 rivalry that has dominated so many administrations in the history of UK politics was not going to be an issue here. Except it now is.
Starmer messed up on WFA. Now, someone has to be blamed for that fact. Who might that be? Who was the awful influence who let this happen?
Sue Grey (remember her?) could be, but everyone has forgotten her brief period in power in Downing Street.
So, there is only one target available, and much as the whole Starmer team would love that to be Angela Rayner (where do you think that leak to the Telegraph came from, after all?), the reality is that she had nothing to do with this, and Rachel Reeves did.
I sense, very clearly, that Reeves' days are numbered. She won't go just yet, I suspect. But, go she will.
Labour backbenchers are demanding a change in tack.
Balanced budgets are not working on the doorstep.
Nobody gives a damn whether or not borrowing is a few billion up or down, which is all the control Reeves seeks to have over the issue by imposing the form of callous indifference within policy making that Liz Kendall has turned into a sadistic art form.
What matters are people. They are hurting, and will do so even more when the plan to cut personal independence payments really comes to the fore, which is going to make the WFA kickback look like a flash in the pan.
So, there will need to be a sacrificial lamb, and Starmer has one, ready and waiting. When a reshuffle comes, as surely it will, Reeves will be out. So, incidentally, will be Kendall. Starmer will slash and burn to avoid the claim that he was responsible for these mistakes, and there is no doubt that these two ministers do bear a significant share of the blame for what is happening. They are utterly incapable of apparently imagining the consequences for people struggling to make ends meet of what they are doing. So, they need to go.
The problem for Starmer is that the blame will not stick to them.
Nor are their obvious heirs apparent. Yvette Cooper would love to be Chancellor and would do anything to be out of the Home Office (who wouldn't?). But she would, quite probably, be worse than Reeves.
And after her, who might it be? The spineless Darren Jones, putting him in line to be the next leader when Wes Streeting's career crashes and burns with his rejection by the people of Ilford at the next election? I think that most likely. But he has the economic sense of a first-term undergraduate, in history.
Starmer is deep in trouble.
Reeves is in even more trouble.
And nothing gets Starmer out of this mess.
There is good reason for that. He made the decision on WFA. He should have known it was wrong. Nothing will remove his responsibility for destroying his own party's chance of re-election during his first month in Downing Street. He will have to carry the can, and a J-turn will not get him off the hook.
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I am still struggling to find a good reason for cutting the winter fuel allowance. It was not in the manifesto. It is a relatively small amount of money paid as a tax free benefit but it has great salience, particularly in times of high fuel prices.
The state pension is paid to all, with a minimum level of NIC contributions (or credits). It is taxable income so those with other income get some taxed back. It would have been relatively simple and I expect not too controversial to say that the winter fuel allowance will from next year be treated as taxable income, just like the pension, clawing up to 45% back from those with highest incomes who are probably filing annual tax returns anyway.
It was always totally baffling
It was meant to be symbolic, and was, of utter inability to comprehend
Is it perhaps that they really believe in “the undeserving poor “?
I fear so.
It would have made more sense to raise the basic tax threshold and setting pension credit income limit at the same figure. It would have softened the cliff edge cut off point.
‘………………..But he has the economic sense of a first-term undergraduate, in history.’
OOH you are awful!
Harsh but fair
Thank you.
I quyite enjoyed writing that one.
It just fell off the fingertips.
I’m sure that us oldies who benefit from a decent occupational pension would be happy to pay income tax on WFA, if that helps to ensure that everyone who needs it gets it. That would reduce the cost to the Treasury of restoring the payment to all by about £200M I think.
Agreed
Limiting WFA to those on Pension Credit – income limit £11809 per year – means those with income between that and below the income tax threshold of £12570 are likely to be some of the hardest hit.
“Balanced budgets are not working on the doorstep.”.
They never will because they imply austerity.
Money in the economy needs, on average, to increase to allow for inflation and growth, say 4% of GDP per annum. With GDP of £2.85 trillion, we need a budget deficit of about £114 billion.
There also needs to be an increase to allow for the money people save which therefore becomes inactive (i.e. no longer circulates). From the figures I can find this seems to be small relative to inflation and growth. But it raises the intriguing possibility that politicians could, temporarily, have a balanced budget if they reduced net savings. They could do this by taxing those with most savings, that is the wealthy. Again, this points to the need for a truly progressive tax system.
I have got into several “debates” on line over the WFP and whether or not it should be paid to “the rich”/millionaires. I argue for Universal Benefits as opposed to any form of means testing, which is an expensive process but more importantly very demeaning for those who feel guilty about claiming anything which is controversial. There are many proud pensioners out there. Pay the millionaire his £200/300 but tax him £10,000 (e.g.) for the privilege.
I really don’t think anything more than ordinary tax would be worth the hassle
Interesting analysis. I do hope Starmer does sack Reeves ( terrible tin eared Chancellor) and Kendall ( way out of her depth as a Cabinet minister).
The trouble is he would likely replace them with like-thinkers, yes people, who would not make the changes of direction in economic policy needed.
Here is a prediction.
Whatever hack they come up with to ‘reverse’ this, will somehow be worse and less popular than withdrawing it completely.
Agreed
“McSweeney has a problem with women”
Is that the same problem that Edgar J Hoover had? 🙂
As for the alternatives to Reeves – what an utter bunch of never-weres (because functionally they could not be has-beens).
The Starmer-MsSweeney axis is now reaping what it sowed – defenestrate the Labour party, turn it into LINO and ta-da!
Given the damage McSweeney & his team have caused, Putin must be pissing himself with laughter (whilst fart-rage rubs his hands with glee & mentally measures the No 10 carpets). Weak, weak,weak,weak, weak, weak. A 10 year old could do better.
I was totally gobsmacked when Labour made this their first cut. I understand that the Conservatives had looked at cutting the WFA in 2017 but the impact assessment showed that it could result in around 4000 excess deaths so it was dropped. Then Labour to show how tough they would be make it their mission to kill old people, seriously you could not make this up. I was a Labour Party member and wrote to my local MP, McSweeney’s Wife but got a standard reply not answering any of the detailed points that I had raised. Needless to say I am no longer a member. I live in Scotland where we really value the Common Good and the idea of community. Now that Labour have totally lost all sense of value I will be voting SNP in future where hopefully in future we will be able build a more caring society.
What do they imagine they are doing persistently going after the disabled, the poor and disadvantaged, I cannot comprehend what is going on in their heads?
All just so distressing in many ways!
Thanks
‘What matters are people,’ and ‘They are hurting’.
RM’s simple, clear words express a profound truth, which triggered gratitude in me.
I don’t know, but perhaps this is at the heart of FtF mission. To stop the hurt.
Our body politic is enthralled to powerful elites’ and their neoliberal dogma, where people don’t matter, and their pain doesn’t matter.
This is dangerous, because it’s not wealth that is trickling down from the top, it’s barbarism.
Whatever it is that keeps you going RM, nourish it. As very few have your knowledge, skills, courage and moral drive to stand up to this Goliath of barbarism.
I will keep going
Thank you, Richard.
As I read your post, I kept thinking about appearances on French tv and CNN by Dominique de Villepin yesterday, leadership that stood out (rebalancing the economy towards the public at large and an active government and, with regard to Palestine, a total EU boycott of Israel (especially as the EU is Israel’s biggest trading partner) and the marching of its political, civil service and military leadership, not just Netanyahu and a handful of ministers, to the Hague).
He has it right
This is how we get Farage as PM. Reform, incidentally, have removed Ukrainian flags from Durham County Council offices, a clear example of judge me by what I do, not what I say.
My difficulty is understanding why Rachel Reeves has gone along with hitting the poor in our country rather than the rich. She is not stupid, a 2i in PPE at Oxford tells you that, and while she gilded the lily when referring to her experience at the Bank of England and then HBOS, that isn’t unknown for politicians either. Even allowing for the manifesto pledges not to change income tax, national insurance and VAT rates and thresholds, she still had the freedom to cut income tax relief on pension contributions to the basic rate and limit tax relief on contributions to charities to the same rate. It is almost as if someone in the Treasury has compromising information on her and will release it if she strays from Treasury doctrine as she seems to be so totally wedded to what they tell her she can and cannot do.
I disagree.
She believes in what she is doing.
History suggests that stupid people can still get a 2:1 in PPE at Oxord.
If forced to choose between evil and stupid, I think there is ample evidence for a verdict of evil.
But I think her career path (the real one, not the PR version) suggests that her talents are very limited in economics, and politics and banking and consumer relations but she may have a future in creative writing.
She does however know enough to realise that what she is doing in the Treasury, is NOT going to make the world a better place, for vulnerable people, but is perpetuating an unjust status quo, that benefits her sponsors, and, most importantly, benefits HER.
Just a glance at her freebies tells me all I need to know.
Apparently there are SOME politicians who manage without freebies, huge expense claims and massive corporate donations. They are apparently so dangerous that the entire system unites to destroy them.
Rachel Reeves is not one of them. So she survives as Chancellor, and the vulnerable suffer.
Richard, you mention Reeves’ attack on PIP. This worries me a lot as someone who receives PIP. While I get top rate for both components I worry about losing my car. I spent 2 years without a Motability car when a woman in DWP actually lied about me in her report after she interviewed me. It took 2 years to reach Tribunal, who gave me back all that woman took away from me.
This is just my personal story, of course. But I really worry for all the other people who have PIP, at whatever rate. It really makes a huge difference to have that extra to be able to afford stuff that otherwise you couldn’t. For many people that will be being able to afford to have extra heating in their home – and I’m one who needs that too.
For some people it may enable them to have private physiotherapists – waiting lists are so long on NHS. Such help is better early than late. And I’m sure there are other therapies that I can’t think of right now.
But Reeves cares nothing for anything like that. After all, she’s fit and healthy… If she gets sick or disabled she’ll understand (too late!). And once she’s old she’ll probably begin to know better what it’s like to be frail.
Anyway, I’ve been subscribed to Benefits and Work for many years (got to be more than 20 I reckon) now. I’ve always used their help when filling in the dreaded forms. I thought you might find their take on Reeves & Kendall’s stuff on PIP interesting.
https://www.benefitsandwork.co.uk/news/work-on-combined-pip-assessment-has-begun
So the new PIP assessment will be introduced in 2028… By which time I’ll either be 80 or dead. But what is worrying me is what will happen to my younger (mainly on internet) friends who will have to go through it. As well as the rest of really disabled people in UK who may lose this source of help.
I share all your concerns, Maggie. I have friends who are very worried.
Go well….
Some speculation in the Guardian today that the leak of the memo may have been designed to be favourable to Rayner by showing difference between her and present policies. However, her supporters denied leaking it, saying if they were going to leak the memo, it wouldn’t have been to the Telegraph.