Cuts to
welfare. Cuts to international aid. Has Labour lurched too far to the right?
People on
benefits are worried and some MPs are talking of ‘cruelty’. Is Keir Starmer’s
plan to cut public spending a betrayal of his party’s values?
James
Tapper, Toby Helm and Denis Campbell
Sun 16 Mar
2025 05.00 GMT
All the talk
is about benefit cuts at Yum, a community pantry in Armley, one of the poorest
parts of Leeds. It’s in the heart of Rachel Reeves’s constituency and the
chancellor said three years ago that food banks such as Yum and clothing
exchanges such as Bundles, both run by the Armley Action Team, were proof that
rising poverty during the cost of living crisis meant that benefits should
rise.
Now,
however, Reeves is planning to cut them, including money for disabled people.
People
coming to Yum to get a free “milk, bread and spread” package and other
essentials are understandably worried. Two friends, Wendy Halliday and
Jacqueline Parker, have dropped in – both healthcare assistants who worked at
the same nursing home and were forced to give up work after 30 years through
ill health.
Parker, 65,
has fibromyalgia, “like having cramp all over your body 24 hours a day”, while
Halliday is 63 and has a bad back from years of lifting elderly patients
without the help of a hoist. She used to walk miles on the moors; now she needs
a taxi to get to the food bank.
Both get
personal independence payments (Pip), a disability benefit in the sights of
ministers who want to slash the welfare bill by £5bn.
“Pip to me
has been a godsend,” Halliday says. “It gets me out. If you’re stuck in the
house, depression kicks in. It affects your mental health.” Before Pip, she was
living on £300 a month, with £200 going on fuel bills, leaving a mere £100 a
month to cover her council tax, water bill, and shopping. Now she gets an extra
£72 a week.
It’s not
clear if Halliday will lose that – the government will publish more details in
a green paper pencilled in for Tuesday. Reeves said last week that welfare
needed to be reformed to “get people into work so that more people can fulfil
their potential”. But neither Halliday nor Parker say they are in a position to
find a job.
“We didn’t
want to stop work. We’ve been forced into it,” Halliday says. She can’t stand
or sit for too long because of her back and she is only three years from state
pension age. Parker is a year away from retirement and feels vulnerable because
she takes warfarin, a blood thinner, which means a simple cut could turn into
an emergency.
“I just want
to be normal and go out,” Parker says. “I won’t go on my own because I’m
frightened of having a fall and being left on floor.”
Some 200
miles away, at Westminster, the everyday concerns of people like Wendy and
Jacqueline are very much on the minds of Labour MPs this weekend – so much so
that they are threatening to trigger a full-blown party crisis for Keir Starmer
and Reeves as they look to curtail the soaring benefits bill.
The
government’s aim, ministers say, is not just to save money. They are also, they
insist, driven by a “moral” case – to encourage as many people as possible off
state assistance and into work.
But many
Labour MPs cannot believe what is being announced as policy in the name of
their party. Some talk of “cruelty”, others of ministers “betraying Labour
principles and the most vulnerable.” Many fear that in its desperation to raise
money – and being somewhat bedazzled by the pace of disruptive change in the
US, which makes Starmer’s efforts look dull by comparison – the party is moving
alarmingly far to the right to find answers.
Last
Wednesday, as he was approaching the Houses of Parliament for a meeting, a
senior Labour figure who has worked at high levels inside the governments of
Tony Blair and Gordon Brown, described what Keir Starmer’s administration was
doing as “awful” and lacking in any Labour “values”.
He went on
to describe Starmer as “a passenger in his own government”, meaning that he
seemed to have been captured by rightwingers in Downing Street who were now
running the domestic agenda.
While this
senior figure – and others high up in the party – admit the benefits system
badly needs reform, his view was that these plans seemed to have been foisted
on the country, and the most needy, in a great rush. Vulnerable people, he
feared, were being targeted because Reeves had “boxed herself in with her
fiscal rules and promises not to raise taxes”.
At cabinet
last Tuesday, several ministers raised their concerns, Ed Miliband and Angela
Rayner among them.
Since Keir
Starmer visited Donald Trump in the White House just over a fortnight ago, his
poll ratings have been rising steadily. On that front, he is doing well
politically. The PM’s handling of the Ukraine crisis has been applauded across
the House of Commons. But the paradox is that within the Labour party itself,
and certainly among its MPs and peers in the Lords, there is more unrest, more
anxiety, about the direction of travel at home than at any time since the
general election last July.
A few weeks
ago it was difficult to find Labour parliamentarians, other than on the hard
left, who were willing to seriously differ with Starmer, even in private. Now
it is difficult to avoid them.
The prime
minister’s decision to increase defence spending as Trump threatened to leave
Europe to defend itself against Russia met with little dissent. But what has
caused disquiet on a grand scale has been the succession of measures announced
or floated since then to pay for it, and, more broadly, put the public finances
back in order before Reeves’s spring statement later this month. One senior MP
told the Observer: “Over recent weeks, I have begun to wonder: what is left?
What is left of what we campaigned on less than nine months ago?”
The list of
measures dropped, compromised or abandoned grows all the time. Only weeks ago,
Labour MPs were stunned by a decision to water down the party’s central green
mission by approving a third runway at Heathrow – a plan suddenly taken off the
shelf and re-sold by Reeves as essential to promoting economic growth.
Then, in
tandem with the move to raise defence spending, came an announcement that the
overseas aid budget would be slashed to 0.3% of GDP to pay for the extra cost
of defence – a move which triggered the resignation of Starmer loyalist
Anneliese Dodds and protests from dozens of Labour colleagues.
As talk of
huge pending welfare cuts caused acute unease on the Labour backbenches,
Starmer and his health secretary, Wes Streeting, then came forward with plans
to axe 10,000 jobs in the NHS with the closure of NHS England. Among those who
will be at the heart of Streeting’s changes to the new-look NHS will be a
former health secretary under Blair, Alan Milburn – installed on the
Department of Health and Social Care board despite concerns about conflicts of
interest, given his links to the private health sector – and Paul Corrigan, a
former health adviser to Blair and Milburn.
Speaking at
a meeting of Labour MPs last Monday night about his plans to cut the benefits
bill, Starmer said: “We’ve found ourselves in a worst-of-all-worlds situation –
with the wrong incentives discouraging people from working, the taxpayer
funding a spiralling bill.
“A wasted
generation, one in eight young people not in education, employment or training,
and the people who really need that safety net still not always getting the
dignity they deserve.
“That’s
unsustainable, it’s indefensible, and it is unfair: people feel that in their
bones.”
Plenty of
new-intake Labour MPs declare themselves happy with what Starmer is proposing.
They are the handpicked ones, the new Starmer generation. But strains with the
old-guard soft left are emerging.
On his
Political Currency podcast with George Osborne, the former Labour shadow
chancellor Ed Balls, who is married to the home secretary, Yvette Cooper, took
issue with the current Labour government.
“It’s one
thing to say the economy is not doing well and we’ve got a fiscal challenge,
but the context we’re now in is that we are having to increase defence spending
and, two weeks ago, it was announced we’re going to cut international aid. But
cutting the benefits of the most vulnerable in our society, who can’t work, to
pay for that is not going to work. And it’s not a Labour thing to do … It’s not
what they’re for.”
Nor, in the
view of Robert Ford, professor of political science at Manchester University,
will it work politically, with local elections just weeks away. “On welfare,
Labour have an understandable desire to be seen as credible and taking tough
decisions, but they are perhaps underestimating the risks of being perceived as
cruel or heartless.
“For
example, the winter fuel allowance cut ended up dominating discussion of Labour
in a way that wasn’t helpful – it did not make Labour look more credible, but
did make them look heartless, even though the sums involved were small, and
more than offset by triple-lock pension rises.
“To end up
being seen by many voters as indifferent to the fate of impoverished pensioners
when your actual policy choices leave impoverished pensioners all better off
is a serious communications failure. And this was not an accident but a product
of the choices Labour chose to focus on.”
Ford added
that Labour’s approach to welfare came with electoral risks. “Labour are
understandably concerned about the rise of Reform in the polls, but in a
fragmented political context this is not the only credible electoral
competition they face, while for many MPs the most credible local threat comes
on the left flank. Scottish Labour MPs face competition from the SNP, while in
many city centre seats the Greens are Labour’s strongest opponent.”
Any move to
freeze or change the Pip payment regime for disabled people would require
legislation, which has increased the concerns inside Downing Street. Even
Starmer and Reeves are now, in the words of one Labour peer, “very worried” –
“I know because I have spoken to both of them.”
Labour whips
are already trying to limit a rebellion that they fear could get out of
control. On Saturday, there were rumours that ministers were so concerned about
the backlash that they might pull key elements of the benefits plans.
Rachael
Maskell, the Labour MP for York Central, said: “Labour really does need to set
out what the narrative is. I never thought that the Labour party was supposed
to be about making life more difficult for the most vulnerable in society. Many
of my constituents are very, very worried.”
Another
reason – apart from sheer accusations of cruelty – why campaigners and Labour
MPs object to cutting disability benefits and Pip is that research shows
cutting benefits does not encourage people into work – it just makes them
poorer.
A report
last week by the National Institute of Economic and Social Research found that
the UK now has some of the least generous welfare spending of any developed
country, standing in the bottom third of the 38 countries in the Organisation
for Economic Co-operation and Development for welfare payments as a percentage
of average wages.
Anna
Stevenson, a benefits expert at Turn2us, a disability charity, said: “Pip
allows people to work. It helps them get to their jobs. People are using Pip to
fill gaps in social care, gaps in health services. They’re using it to cover
the additional costs of living with disability. When you push households
further and further into crisis, that creates more demand for urgent frontline
services because there isn’t other help available to them.”
Back at Yum
in Leeds, Wendy Halliday agrees. “It’s ridiculously hard to apply for benefits.
I’d like [Reeves] to make it easier for people.”
Her good
friend Jacqueline Parker says Reeves helped her get housed when she was made
homeless several years ago. “She’s been good for me in the past. I hope she
doesn’t mess up.”
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