Anger Over UK Benefit Cut Is Sign of Looming Battles for Starmer
(Bloomberg) -- Keir Starmer received a warning shot from his own Labour Party over the difficult battles ahead as he tries to fix Britain’s public finances, after his government suffered a significant display of dissent over his decision to scrap winter fuel payments for most UK pensioners.
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A total of 52 Labour MPs chose to abstain or were allowed to miss a vote in the House of Commons on Tuesday — about 13% of Starmer’s parliamentary party — while one actively opposed the government, reflecting a backlash to the move to means-test what had been a universal benefit to help older Britons with heating costs. The change is expected to see about 10 million people lose out.
Though defeat was not on the cards given Labour’s parliamentary majority of 167, a much smaller winning margin of 120 is likely to put an early dent in Starmer’s authority and points to future flash points as he and Chancellor of the Exchequer Rachel Reeves seek to mend the economy. Weeks after a landslide election victory, Starmer faces criticism that his promise of change and a brighter future is being lost in his warnings about the dire state of the country.
The government’s next big challenge is its first budget statement on Oct. 30, Reeves, who has warned of a £22 billion ($29 billion) fiscal black hole left by the previous Conservative government, is looking at potential tax rises to address the problem, which are widely expected to focus on wealth levies such as capital gains and inheritance taxes. Reeves is also considering other areas where she might reduce public spending, going beyond the winter fuel cut.
Such moves are politically tricky, however, given Labour’s repeated election pledge that it had “no plans” to raise taxes beyond limited changes outlined in its manifesto, and especially its promise that it wouldn’t return to so-called austerity in government spending. The move to limit eligibility for winter fuel payments is expected to save the Treasury about £1.4 billion a year.
The scale of Labour’s election victory means there’s little scope for Labour MPs — or opposition parties — to block budget measures via a vote. That dynamic played out on Tuesday, even as a significant rump of the party was unhappy with a measure many MPs said caused a deluge of complaints in their districts.
“Starmer won’t be worried,” said Anand Menon, director of the UK in a Changing Europe think tank. “They’ve got a majority that’s huge.”
But the counter argument is the speed at which the government appears to be shedding the sense of optimism that followed the July election. Starmer has faced questions over why he and Reeves targeted the winter fuel payments before the budget provided more context for the government’s choices.
The parliamentary show of discontent on Tuesday followed weeks of pressure on Starmer and Reeves, with the Conservatives accusing Labour of picking the pockets of pensioners and some Labour MPs expressing concern about taking welfare payments away from the vulnerable.
One Labour MP, Rachael Maskell, told Sky News she hadn’t supported the government because she had older constituents she wanted to “look in the eye” again. “They need the state to now step in, and wrap its arms around them and keep them warm this winter,” she said.
The question of whether to stick with the plan had become an early test of Starmer’s leadership, but he doubled down and said it was necessary to make difficult choices. Labour aides say Starmer viewed it as a short-term hit to take to give the government space to afford more generous spending in future. It’s also part of the government’s strategy to make unpopular fiscal decisions early on in its term, well before the next general election.
In his keynote speech on Tuesday to the annual conference of the Trades Union Congress — the first by a British leader in 15 years — Starmer said there were more “tough decisions” to come and that his government “will not risk its mandate for economic stability — under any circumstances.”
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