It’s a cheap summary of the Labour government’s current position. However, cutting the Winter Fuel Payment (WFP), a previously universal payment of £200-£300 to pensioners for energy bills, grimly contrasts with donations to Keir Starmer and his cabinet.
The first significant decision of said ministers is too on-the-nose to ignore. It’s especially revealing of their ideological commitments, or the lucrative incentives that underpin them.
A litany of grim statistics already haunts this cut.
The End Fuel Poverty Coalition estimates pensioners could be £500 worse off than last year. The energy price cap rose to £1,717 on October 1st, and energy bills have increased 131% since the winter of 2020/1.
71% of disabled pensioners could lose out, according to a Department of Work and Pensions analysis; so too could five out of six pensioners below the poverty line, according to ex-Pensions Minister Steve Webb.
Reeves says the problem will be solved by pensioners claiming Pension Credit, which would entitle them to the WFP. However, Webb’s analysis shows an estimated 1.6m low-income pensioners do not claim Pension Credit, and just 880,000 of these are eligible to claim it. 300,000 claim it but are still in poverty.
The Pension Credit is not a supplementary or additional payment for working-class pensioners. It tops up incomes for those with insufficient National Insurance contributions for a full state pension – worth £221.20 a week – to £218.15 a week.
The full state pension is just £3.05 more a week but could exclude people from receiving assistance with energy bills. Despite greater exposure to the benefits system during the pandemic, there is still a great deal of ignorance about the eligibility criteria for these payments.
Reeves’ cut to the WFP is a facsimile of political or fiscal strategy. The reluctance to discuss the potential health costs in much detail is just one indication of this. However, the decision might create longer-term problems by revealing that Labour has done little planning to ease energy costs or redistribute resources across different age groups.
In April, a Labour analysis found 1 million pensioners were deprived – measuring the affordability of basic goods and services including heating, but also things like loneliness.
Labour’s central promise was to reduce energy costs through home insulation and setting up GB Energy. It is still unclear whether the latter can lower costs or is a rather dilapidated investment vehicle.
As Matt Huber points out, GB Energy will, at best, empower a single public company to compete in a market of private producers geared to “de-risk and unlock private sector investment” and “accelerate private sector development”.
The plans look closer to the 1997-2010 Labour government’s disastrous Private Finance Initiatives than a decarbonisation strategy that lowers energy prices.
Meanwhile, energy debt levels have risen 57% over 12 months to £3.3 billion, fuel poverty now affects 3.18m households, and energy generation companies have tripled their profit margins since the pandemic, according to a Unite analysis.
The TUC has called for cohesive energy nationalisation, estimating that nationalised energy could generate enough revenue to save up to £4,400 per household. But it seems unlikely that the Labour government will aim to reduce energy bills this way or by abolishing the standing charge, for example.
Unite and other unions pushed for a reversal of the cuts at the Labour Party Conference in September. They form the only remaining point of dissent within Labour, or rather the only possible point of dissent that requires some placation – for the moment.
With up to £10 billion available from changes to Bank of England bond sales, the assumption is Chancellor Rachel Reeves will be compelled to ease nagging concerns on the Labour backbenches by eliminating the two-child benefit cap on Universal Credit and Child Tax Credit and reversing winter fuel cuts.
But the Labour right mostly believe these cuts are good things.
Well before the election, Labour aides openly briefed they were suddenly going to discover “it’s worse than we feared”. Ministers were probably practising their pained expressions for months, and the libidinal refrain of “tough decisions”, too. In fact, Ms Reeves had been practising it for ten years, given she wanted to cut the WFP back in 2014.
Whether the chancellor objects to the payment is less important than whether she believes cuts are what Labour should be doing.
Treasury officials have previously presented this policy to chancellors as an option for savings. Cuts to universal benefits can be presented as progressive, targeting the richest, without any other argument, and distant from the postwar Labour right’s support for universal benefits to extend support for the welfare state, as Phil Burton-Cartledge notes.
Labour won the general election on a tetchy landslide with its lowest-ever vote share in the most deprived areas and highest-ever vote share in the least deprived areas. Not so much realignment as mass dealignment.
The household budget analogy helps manage expectations. For Starmer and Reeves, it also proves Labour is “sensible” – a cozy euphemism for making such whimsical matters as child or pensioner poverty secondary to market stability. Labour can satiate donors and capital by turning against the interests of their historic base if needed.
Many Labour voters struggle to believe this is true until they directly encounter the zeal of Labour officials who really think Andy Burnham is a Maoist, and that what might be hoped to be cowardice is so often viciousness.
Advisors openly briefed the two-child benefit cap vote in July, leading to seven Labour MPs being suspended, was a virility test – a literal virility test that punishes larger families.
This is synonymous with the streamlined nastiness of the Cameron era rather than the merely pathetic and scattergun cruelty of a Johnson or Truss. It is also crudely reminiscent of former leader Neil Kinnock declaring himself on the “balls-wing” of Labour when asked about his position on gay rights in the 1980s.
Starmer’s base differs from the historical base of the Labour right in critical ways though.
As former director of public prosecutions, the premier is a creature of the state. As David Timoney has observed, what differentiates him from other Labour right characters is he owes no loyalty to their traditional base within Parliament. His politics gesture towards the puritanical, above the party fray.
Cutting the WFP is a perfect proxy: hinting at overindulged pensioners, the need to reduce energy consumption, and the constant comparisons of the national budget and household budgets.
Hence lifestyle headlines about people who spend their allowance at restaurants or on holidays, framing cuts to universal benefits as attacks on wealth rather than on necessities for living.
Economists like David Blanchflower, who denounced Corbyn but readily assumed before the election that Labour had “fine secret planning”, as if Rachel Reeves was scheming a British RAMJAC to monopolise the economy secretly, were betrayed.
A handful of Trussites may be left in the country, and most are in this current Labour cabinet.
Liz Truss’ cuts-fuelled plan for growth was so disastrous that we have no alternative but to pursue a cuts-fuelled plan for growth, Labour ministers tell us with a straight face.
Nor does Reeves’ womanhood confer fealty to women or policies that benefit working-class women. The First Woman Chancellor but not the first Chancellor to send 100k pensioners into poverty.
Photograph courtesy of Alisdare Hickson. Published under a Creative Commons license.
