Will winter fuel payments be remembered as Labour’s ‘tuition fees’ moment?

Starmer’s raid on pensioners has left a nasty taste for MPs on the government benches, especially among the new intake – those with small majorities are already wondering whether it will rob them of their seats at the next election, says Andrew Grice

The PM’s allies say the political pain was not worth the paltry financial gain of £1.4bn (Gareth Fuller/PA)

Although the government won the Commons vote, its decision to scrap the winter fuel allowance for 10 million pensioners has left scars that won’t heal easily.

Keir Starmer’s majority of 120 is misleading. He can take little comfort from just one Labour MP, Jon Trickett, voting against the controversial cut because 52 others abstained. While Labour sources insist only 12 of these were not given permission to be absent, the real figure is probably at least 20. It seems potential rebels were quietly encouraged to stay away and not blot their copybook by announcing it was an act of protest.

The episode has left a nasty taste for many Labour MPs, notably among the newbies, who have had little time to savour their victories at July’s election. Many have only small majorities and are wondering whether this early decision will still haunt them at the next election.

The story is not over. Rachel Reeves will now come under intense pressure from Labour MPs to soften the impact for pensioners just above the cut-off point for pension credit in her Budget next month. Today, she insisted the policy will not be watered down. But I suspect she will find a way to provide more help for vulnerable people in all age groups towards their heating bills – while avoiding any U-turn on the policy.

Here’s an interesting question: if Reeves and Starmer had possessed a crystal ball which told them how damaging this cut would be, would they have gone ahead? For Reeves, the answer is probably yes – she wanted to illustrate the tough choices Labour faces to bolster its attempt to blame the Conservatives for the £22bn “black hole” in the current financial year she claims they left behind.

But Starmer? Probably a no. Some of his allies tell me the political pain was not worth the paltry financial gain of £1.4bn. “This is for peanuts,” one grumbled.

There could have been other, less sensitive targets. It’s not the case, as some Reeves allies claim, that the financial markets would have punished the government if this cut had not been made. But it is true the markets would have reacted badly if the policy, once announced, had been ditched. Reeves could not afford to fail her first, self-imposed test; that is why Starmer backed her.

One lesson is that the prime minister needs to keep a closer eye on his chancellor. Perhaps he should hire a seasoned economic adviser. Aides insist he has well-qualified people in his Downing Street policy unit, plus a private secretary from the Treasury. Yet it seems his principal adviser is... Reeves. His relationship with his chancellor is strong, so having more expertise in No 10 wouldn’t necessarily be a recipe for discord with No 11.

The timing of the cut was poor, ensuring many damaging headlines from its announcement in July to the Budget in October. This has left space for scare stories that the basic state pension will be means-tested, or that free travel passes for pensioners will be axed. They won’t be.

Another lesson is to prepare the ground for such a difficult decision. No one saw it coming, as it wasn’t in the Labour manifesto. If it were too sensitive to announce in opposition, then it would surely be controversial to do it in government.

Unintentionally, it looked vindictive to single out pensioners. The case for a new settlement between the generations is strong, but ministers didn’t really make it in public. The problem is that they can’t argue all pensioners are comfortably off because they are not.

The Blair and Brown governments hoped they had abolished pensioner poverty, but today some 1.3 million pensioner families in relative poverty do not receive pension credit (and therefore the winter fuel allowance), according to the Resolution Foundation think tank.

There’s no shortage of pensioners ready to tell TV news bulletins they can’t afford to heat their homes, with many more to come this winter. Without further help from Reeves, will this decision become emblematic, one the voters never forgive, or forget – like Nick Clegg’s U-turn on university tuition fees?

The other lesson is that Starmer and Reeves need to choose their targets for spending cuts and tax rises more carefully and think through the likely reaction. The Budget and government-wide spending review will be a pivotal moment that defines the Starmer administration’s first term and might well decide whether it gets a second.

The PM should realise he has only so much political capital – with both the voters and his MPs. He needs to take both with him on a journey. If he doesn’t, he will become dangerously isolated. The Budget must tell us much more about the destination, so Starmer and Reeves can persuade the public the gain will be worth the pain.