No 10
rethinking winter fuel payment cut after Labour slump in local elections
Exclusive:
government fears further electoral losses from unpopular policy as well as from
planned £5bn of benefits cuts
Pippa Crerar
and Jessica Elgot
Mon 5 May
2025 19.17 BST
Downing
Street is rethinking its controversial winter fuel payment cut amid growing
anxiety at the top of government that the policy could wreak serious electoral
damage, the Guardian has been told.
Keir
Starmer’s senior team has been discussing for several weeks how to handle
public anger over the policy, which bubbled over in last Thursday’s local
elections, when the party lost two-thirds of the council seats it was
defending.
While a full
reversal of the cut is not expected, No 10 sources said they were considering
whether to increase the £11,500 threshold over which pensioners are no longer
eligible for the allowance.
Labour MPs
have been piling pressure on the government to change its mind over the winter
fuel payment, as well as its plans for £5bn benefit cuts, before a vote on
“stage one” of its welfare plans in early June.
The
government is planning to come back for “stage two” this autumn, the Guardian
has been told, although there are concerns that further cuts would risk
inflaming tensions even further with angry Labour MPs.
Labour party
activists say the subject of benefits was raised repeatedly on the doorstep in
the local elections across England and were a key factor in the party’s loss to
Nigel Farage’s Reform UK at the Runcorn and Helsby parliamentary byelection.
Multiple
ministers and senior officials have told the Guardian they believe the
government’s decision last July to cut the winter fuel allowance from all but
the poorest pensioners has been a disaster.
A cabinet
minister said: “It comes up on the doorstep all the time. Winter fuel will lose
us the next election, it was a terrible mistake. But it’s probably too late for
a U-turn now.”
On Tuesday
the Welsh first minister, Eluned Morgan, will give a major speech that will
criticise the welfare cuts, setting out a clear dividing line with Welsh
Labour, which she will position on the left of the UK party.
Downing
Street figures acknowledge the concern that exists over the policy at all
levels of the party – and among voters – and said there had been many
conversations over the issue in recent weeks. However, they stressed this was
not a formal review.
“People are
saying we haven’t done enough for them on the cost of living, and winter fuel
is an example of it going in the wrong direction,” one source said.
Another
added: “The winter fuel cut has become totemic and talks to us being on the
wrong side of working people. We need to show that’s not the case.”
However,
they cautioned there would be no kneejerk response to the election results, and
any change to the policy was unlikely before autumn, and would be announced in
the context of a broader financial package.
The
proportion of Labour voters going to Reform – about 8% – was roughly unchanged
since September, they added.
“We’ve got
to make sure our response to the elections is the right one and not just
overreacting to hot takes. Of course Labour MPs all heard stuff about winter
fuel during the elections and are feeling bruised by that,” one No 10 insider
said.
Pressure
from MPs for a major rethink of economic strategy is likely to mount in the
coming days. “It might not be too late,” one MP said of a winter fuel U-turn.
“I don’t think we would get credit for doing it but we might neutralise it as a
major attack line.”
“The mood in
the PLP [parliamentary Labour party] is hardening on cuts,” another said. “It’s
far beyond the usual suspects who are angry about this.”
In No 10
there are concerns that any tweak to the policy could be damaging for Rachel
Reeves, who removed the payment of up to £300 from 10 million pensioners within
weeks of taking office, saying the money was needed to fill a budget black hole
left by the Tories.
One senior
figure said the strength of feeling about the winter fuel cut was likely to
have an impact on their broader plans for welfare reform, as previously loyal
backbenchers were threatening to rebel in a vote on £5bn of cuts expected in
early June.
“It’s
unfortunate that the vote is coming after the local elections as lots of MPs
now feel that Downing Street doesn’t get it and that they don’t owe us
anything,” they added.
Dozens of
MPs are understood to have sent private letters to Starmer urging him to change
course on welfare cuts or to pause the cuts until after the summer when fuller
details of investment in back-to-work programmes will be known.
Concerned
MPs have been holding fortnightly briefings with disability charities to
understand the breadth of the impact of the cuts.
Ministers
have sketched out tentative plans for a second round of tough welfare reforms
this autumn, though that could now be contingent on how large the rebellion is
in June.
Insiders
argue further reforms would make the system more fair overall, and that there
is public support for reining in the bill for health and disability benefits,
which is set to reach £70bn by the end of the parliament.
“We didn’t
go big enough the first time round. The costs are unsustainable,” one No 10
source said. “It’s a fairness issue but also a fiscal one – how can we spend
money on the public’s priorities, like schools and hospitals, if all the money
is going on welfare?”
A second
government source said: “We should’ve done it all in one hit – we didn’t go far
enough. We’ve had all the political pain for very little fiscal gain.”
Department
for Work and Pensions (DWP) officials believe the government would need to cut
a total of £15bn from the benefits bill to make an impact on the rate of
growth.
Any
mitigation of the winter fuel allowance cut alongside further cuts to
disability benefits would be likely to spark further criticism from the party’s
left.
A cabinet
minister warned: “The second tranche will be even more painful.”
With the
bulk of future savings set to come once again from cuts to disability benefits,
including a freeze to personal independence payments, the government is bracing
itself for more internal dissent.
A reshuffle
of cabinet ministers as well as the junior ranks could come as soon as the
summer – in part because the prospect of junior ministerial roles becoming
vacant might be a useful tool to persuade wavering MPs not to rebel on welfare
cuts.
But sources
have told the Guardian that Starmer himself has become more conscious of a need
for a reshuffle in his top team after becoming frustrated with the pace of
delivery and a feeling that some ministers have become “institutionalised” in
their departments.
The prime
minister complained at a recent cabinet meeting that ministers were seeking too
many “write-rounds” – a process for seeking high-level cover for difficult
decisions.
Among those
who are tipped to be moved are the education secretary, Bridget Phillipson, and
the culture secretary, Lisa Nandy.
Peter Kyle,
the science and technology secretary, is tipped for a move to education, having
come under fire from MPs for a perceived closeness to big tech.
Darren
Jones, the chief secretary to the Treasury who is Rachel Reeves’s de facto
deputy, could be his replacement.
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