Starmer hints at MORE tax rises to fund U-Turn on winter fuel allowance – as jubilant Left order him to soak the ‘wealthy’
Keir Starmer dramatically announced a climbdown on winter fuel allowance today – but hinted at more tax hikes to foot the bill.
Taking PMQs, Sir Keir defended the decision to strip nine million older people of the payments soon after taking power.
But he said ‘as the economy improves’ the government will lower the threshold for receiving the cash – worth up to £300.
The premier suggested the detail will only be announced at ‘a future fiscal event’ – with the next one the Autumn Budget. That typically happens in November or even December, raising doubts about whether the shift will happen for this winter.
Sir Keir dodged on whether taxes will have to rise again to fund the volte face, after it emerged Angela Rayner previously proposed adding to the burden on savers and higher earners.
Labour MPs and unions immediately demanded ministers go further by reversing the winter fuel cuts altogether, as well as ditching efforts to bring the spiralling benefits spending under control. They insisted the ‘wealthy’ can be made to pay more to balance the government’s books.
Since last year only those on pensioner credit are entitled to winter fuel handouts, with the measure partly blamed for the disastrous crash in the government’s popularity.
A poll today showed Reform eight points ahead of Labour in the wake of their local elections surge.
Taking PMQs, Keir Starmer defended the decision to strip nine million older people of the payments soon after taking power – but said the policy would now be partly reversed
Before the winter fuel cuts more than 11million pensioners were receiving winter fuel allowance
Sir Keir has been facing the threat of a revolt over the winter fuel policy, as well as curbs to working age benefits.
There has been growing speculation that the leadership is looking for a way out, potentially by scaling back the cuts.
But it is thought there are practical difficulties with lowering the threshold for receiving winter fuel allowance, with IT systems struggling to differentiate between income levels.
The premier had been teed up for his change in position by a question from Labour MP Sarah Owen.
‘Whilst the economy is showing signs of improving, many pensioners are still impacted by the cost-of-living crisis,’ she asked.
‘People in Luton who have worked hard all their lives seeing their precious savings slip away, so can the Prime Minister tell us what measures he will take to help struggling pensions in towns like mine?’
Sir Keir replied: ‘I recognise that people are still feeling the pressure of the cost-of-living crisis including pensioners. As the economy improves, we want to make sure people feel those improvements in their days as their lives go forward. That is why we want to ensure that as we go forward more pensioners are eligible for winter fuel payments.
‘As you would expect Mr Speaker, we will only make decisions we can afford, that is why we will look at that as part of a fiscal event.’
MPs urged Sir Keir to go even further and reverse the winter fuel allowance cuts altogether
Kemi Badenoch swiped that the U-turn had been ‘inevitable’ and branded Sir Keir ‘desperate’, warning that taxes must not rise to fund the change.
‘What will he say to the 348 MPs who went over the top and voted for the winter fuel cut last September. Just like the British public, how can any of them ever trust him again?’ she said.
Asked by Lib Dem leader Ed Davey whether he was reversing the policy ‘in full’, Sir Keir replied: ‘The economy is beginning to improve, people are still feeling the pressure, that’s why we’re taking the measures that we are, that’s why we’re striking the trade deals that we are striking.
‘As that improves I do want people to feel the benefit of the measures that we’re taking and that is why I want to ensure that more pensioners are eligible for winter fuel. It is important that, as you’d expect, that we are clear we can afford the decisions we’re making and that’s why it’ll now be looked at at a fiscal event.’
Downing Street was unable to say how many more pensioners would receive winter fuel payments or whether the reforms would be in place this winter.
The PM’s official spokesman said Sir Keir wanted the changes to be introduced ‘as quickly as possible’.
The changes will only be set out at a ‘fiscal event’ – with Rachel Reeves’ autumn budget the first such opportunity unless the Government breaks with its schedule.
Asked if the changes would be in place this coming winter, the spokesman said: ‘We obviously want to deliver this as quickly as possible, but the Prime Minister was very clear in the House that this has to be done in an affordable way, in a funded way, and that’s why those decisions will be taken at a future fiscal event.’
Officials insisted the pledge to change course was based on the Government’s stewardship of the economy and the public finances.
Asked how markets could have confidence in the Government if it performed a U-turn whenever Labour suffered an electoral setback, Sir Keir’s press secretary said: ‘We will only make decisions when we can say where the money is coming from, how we’re going to pay for it and that it’s affordable. And that’s what you’ve heard from the Prime Minister today.’
On Ms Rayner’s intervention over tax policy, No10 said: ‘We’ve always said those with the broadest shoulders carry the greatest burden.
‘You can see from the choices this Government has taken – whether it’s closing loopholes in the non-dom tax regime, while ensuring that working families don’t face higher tax rates in their pay slips – that we will always ensure that those with the broadest shoulders pay the highest burden and that we protect working families.
‘But the best way to strengthen the public finances is to grow the economy. You saw from the OBR at the Spring Statement that our planning reforms are delivering higher public revenue to be reinvested into our public services and that’s the approach the Government is taking.’
Labour MP Neil Duncan Jordan posted on X: ‘Proposed disability support cuts will hit 3million people.
‘We must pause: withdraw the cuts, consult disabled people, & redesign the system with their consent. There’s no need for cuts – taxing the wealthiest is the way forward, not slashing support for the most vulnerable.’
Unite general secretary Sharon Graham said: ‘Whilst this announcement on winter fuel looks like a first step in the right direction, pensioners’ minds need to be put at rest now – rather than dangling a promise to make a move in the autumn.
‘Unite has always been clear that any and all cuts to winter fuel are simply picking the pockets of pensioners while the richest in society keep getting wealthier.
Outside the Commons, Ms Badenoch has said it was a ‘joke’ for Sir Keir to credit economic improvement for his U-turn on winter fuel payments.
‘That’s a joke. We just had inflation figures this morning. It shows that inflation has doubled since they took office from the Conservatives. He is not running the economy well,’ she said.
She said she would like to see a change that means pensioners getting £11,000 to £15,000 a year getting winter fuel payments.
She said it will be ‘too late’ if Sir Keir waits until the autumn budget to set out the details.
‘If he’s waiting until the budget it means that people are going to lose their winter fuel payment for another year,’ she said.
Rachel Reeves has been dropping heavy hints about movement on winter fuel.
Speaking on the BBC’s Newscast earlier this week, the Chancellor said she would ‘continue to listen to understand the concerns that people have raised’.
‘I do understand the concerns that people have,’ she said.
She added: ‘We are a government that listens.
‘But we would always need to show where the money is going to come from if we’re going to make any policy changes. That would be part of the normal process.’
Leaked proposals from Ms Rayner revealed she has been pushing to increase the burden on Brits further instead of trimming spending and benefits.
The memo – sent by the Deputy PM’s office to Rachel Reeves before the Spring Statement – suggested eight different tax rises that would raise billions of pounds in revenue.
Although the Chancellor ignored the lobbying at that stage, she is struggling to find a way of balancing the books as the economy stalls ahead of the Spending Review and Autumn Budget.
The details, first obtained by the Telegraph, suggest serious tensions at the heart of the government over its approach – although insiders argued that such papers can be drawn up without ministerial sign-off.
The measures floated by Ms Rayner included reinstating the pensions lifetime allowance, changes to dividend taxes, a raid on a million people who pay additional rate income tax and a higher corporation tax level for banks.
