For the Prime Minister, who is clearly guaranteed work until the next election, Rachel Reeves’ position is under more pressure than ever.
Keir Starmer’s U-turn raised questions about her first big decision as Prime Minister of Reeves – the discarding of winter fuel payments for 10mn pensioners – and whether she was weakened.
Downing Street claimed in January that the prime minister had stood in his statement that Reeves would remain in the Treasury until at least the next election, but one Labour MP said, “Graduate is cruel. It’s safe until no one is.”
This was not an old U-turn. Reeves’ decision to test the means of winter fuel payments was portrayed in July 2024, weeks after the workers’ election victory.
On Wednesday, Starmer’s confirmation that the cut will be partially reversed raises questions about whether Reeves will be considered the prime minister who can pressure him to retreat the next unpopular decision.
There has been public protest against the disposal of winter fuel payments for 10mn pensioners ©Tejas Sandhu/sopa/alamy
There could be a lot to come. On June 11, she released the results of a tough public spending review, forcing the minister to cut to stay within Reeves’ tough fiscal plans. Major welfare reductions are in the pipeline.
And in the fall, there is an enviable prospect that the Prime Minister will have to present his budget in a fiscal restraint jacket, further cuts in welfare and announce more tax increases.
Labour lawmakers who put heavy pressure on Reeves and prioritized priorities to abandon their winter fuel payment plans are mobilizing the prime minister to retreat welfare cuts.
“The Prime Minister has been repeatedly warned not to make this decision on winter fuel payments. The U-turn will lead her lawmakers and the market to challenge her in other areas,” said John Glenn, a former conservative minister of finance.
But former worker Shadow Prime Minister and now an independent MP John McDonnell argued that Reeves and Sanmi should consider “how we were caught up in this mess” and ask “whether the lessons learned about reducing disability benefits.”
Labour lawmakers are surprised by the public’s opposition to cutting fuel payments in the winter. This contributed to the party’s tough performance in the UK local elections earlier this month, when it lost 187 seats.
“Voters think Rachel is a really mean guy with a hard nose,” said one Labour MP. “I don’t know if that’s completely true or not, but that’s what they say at the door.”
Workers’ figures close to Starme say Reeves is more willing to retreat on the issue than the prime minister, who feared the government would appear weaker. No. 10 claimed that “the Prime Minister and the Prime Minister are at Rockstep.”
The U-Turn has been debated since the outcome of the local elections and the torrent of angry feedback from Labour lawmakers, knocking down councillors. However, Starmer’s announcement on Wednesday still caused a surprise.
Some Labour lawmakers believed the prime minister confirmed a partial setback planned to distract Prime Minister Angela Rayner’s departmental memo seen in the Daily Telegraph, and urged Reeves to increase taxes.
One Labour MP said there is a policy being put into place on the hoof. “How do partial U-turns help?” MP asked. “It’s all tactics and reactive management.”
British deputy prime minister Angela Rayner sent a memo to the prime minister in March.
Rayner’s memo sent in March suggested that Reeves should increase by up to £4 billion to mostly wealthy people as an alternative to cuts. After a winter fuel payment retreat, tax increases may appear to be less politically risky than further welfare cuts.
One Veterans Treasury Secretary said Reeves might gain some credit with Labour lawmakers based on the winter fuel issue. “If it helps you benefit from a disability, it’s not catastrophic,” the former official said. “But if that just paves the way for further defeat? Time to acquire a new prime minister.”
Reeves received a boost from first-quarter growth figures, which showed an unexpected increase of 0.7%, but official figures do not suggest that this is doing much to strengthen fiscal health.
Public sector net borrowing was £151.9 billion for the 2024-25 fiscal year, roughly £20.7 billion from the previous year, surpassing OBR’s March forecast by £14.6 billion.
“I think the prime minister’s financial hardship will only get worse later this year,” Ruth Gregory told Capital Economics.
Labour MPs hope that winter fuel U-turns will gain weight from the government. “It was our original sin. It was the moment when people made moral judgments on us,” the newly elected MP said.
But was that a sign of weakness for Reeves, who promised to become “the Prime Minister of the Iron”? Her allies argue that it is not the case. “The government has never made a U-turn before and has not won the election,” he said.
