UK faced economic crash if winter fuel payment was not axed, Powell says
The UK could have faced a run on the pound and an economic crash if Rachel Reeves had not axed winter fuel payments for millions of pensioners to fill a black hole in the public finances, Commons Leader Lucy Powell said.
Ms Reeves and Sir Keir Starmer have faced criticism from opponents, campaigners and some of their own MPs over the decision to means-test the payments worth up to £300.
But Ms Powell said there was “no alternative” and the decision was needed to avoid an economic catastrophe.
“This is one of those very difficult decisions we had to take,” she told Times Radio.
“But we have faced this huge additional black hole for this current financial year, borrowing higher than anybody understood.
“If we hadn’t taken some of these tough decisions we could have seen a run on the pound, interest rates going up and crashing the economy.
“It’s something we were left with no alternative but to do.”
On LBC Radio she insisted Labour’s approach was not the same as George Osborne-style austerity.
She said it was a “very different” approach to former Tory chancellor Mr Osborne’s decision “to dramatically reduce the size and the reach of the state, the welfare state”.
Ms Powell said: “What we’ve been left with is a huge legacy of overspend.
“They’ve overspent on the asylum system to the tune of nearly £7 billion, they knew that the public sector pay deals that were sitting on their desk before the election would be honoured by them or any incoming government, and they hadn’t set aside any money.
“The reserves have gone to nothing, so we’re having to add up the current year that we’re in and the forthcoming years, that is very different from making a big choice to reduce the size of the state by billions and billions of pounds as that previous government did.”
From this winter, the fuel payments will be restricted to the poorest pensioners, those who are on pension credit. The Government has launched a campaign to encourage those eligible for the benefit to claim it.
Chancellor calculations
According to the Department for Work and Pensions (DWP) around 880,000 eligible pensioners are missing out on pension credit, which on average amounts to £3,900 a year.
Ms Reeves said: “The £22 billion black hole inherited from the previous governments means we are having to take tough decisions now to fix the foundations of our economy – including making the winter fuel payments available to those most at need.
“(A total of) 1.3 million pensioners are already going to get help with fuel bills this year because they’re claiming pension credit – but thousands more are eligible.
“So, if you know someone who could get pension credit and help with their fuel bills, now is the time to help them apply for pension credit.”
Pensioners whose weekly income is below £218.15 for a single person or £332.95 for a couple are being urged to use the DWP’s online calculator to determine their eligibility for payments.
People with a severe disability, carers and those who are responsible for a child or a young person who lives with them could receive additional money, the Government said.
Pension credit can also include extra amounts for certain housing costs, such as ground rent or service charges.
Fantasies
The Tories accused Labour ministers of peddling “ridiculous fantasies” about the state of the finances.
Shadow Treasury chief secretary Laura Trott said: “This simply shows how desperate the new Labour government is to run from responsibility for the tax rises they always planned but hid from the public during the election.
“After handing billions in inflation-busting pay rises to their union paymasters, no-one believes Labour’s chicken little strategy.
“They should stop trying to deceive the public with ridiculous fantasies and instead have the courage to let parliament debate cuts to winter fuel payments for the sake of those pensioners who will lose out thanks to the decisions of this government.”
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Really?
Add the pensions saved by taking one for the team…
Double bubble with the Fat Shanks Effect…
Same as the non-doctors, they pay for themselves every day of the week…
Starmer has his entire front rank of ministers lying flat out almost every time they open their mouths. All scripted and pre rehearsed. Their corporate backers must be jolly satisfied with performance thus far.
This targeting of a certain group may partially fill the black hole calling off the wolves at the moment but in the long term major changes are needed. Starting with a major tax reform. People on lower incomes and our communities have taken a hit for far too long – it must end now. Other forms of income must be found and the government knows this perfectly well. Besides, if the current trend continues i.e. – austerity measure, they’ll be booted out in five years time. Potentially replaced by extreme populism – and we all know who’s waiting to pounce,… Read more »
But happy to send 11.5 billion overseas instead of looking after the people of the uk. Sorry but can’t believe a word you say!!!
Overseas aid is not the problem. The extremely wealthy who do not pay taxes are. The so called ‘Black Hole’ could easily be filled and much more left over to invest in what ordinary people need, such as hospitals, schools, skills training etc if the government was brave enough to properly tax the obscenely rich and the global corporations that get away with paying very little tax. Simply stopping the approximately £55 billion in corporate welfare that for-profit companies receive would close that hole and leave plenty over for lots of other things.
Supporting xenophobic policies won’t change a thing.
..and that’s just what they declare. What about all the other loot taken by globalist corporations via overpriced contracts ? The military industrial complex and its web of dodgy deals ?
Is there no limit to the depths that this government will sink in their efforts to gaslight the people of the UK? It’s utter b******s to suggest that the entire economy would collapse should state pensioners continue to receive the Winter Fuel Allowance. The estimated savings are £1.4 billion, so pretty much chicken feed in the order of things. Much, much more could be raised should the new Labour administration have the conviction to start taxing the very rich properly, and at a rate that generates the finance the country needs.None of the obscenely rich will even so much as… Read more »
Apparently, it is thought that the more the Labour-Tory neo-libs repeat this nonsense, more people will believe it. On the basis of the comments above and elsewhere, that doesn’t seem to be working. I wonder what they’ll dream up next to persuade us. I don’t know about you, but I’m not for turning! It beggars belief to think that £1.4 would cause the catastrophe Lucy Powell fantasises about. Utterly risible. Note that the Tories are seeking to protect the well-off from tax rises, not focusing on the needs of hungry children and cold pensioners. DisemPowell joins Madame GuilloTINA and Der… Read more »
Er, that should be £1.4b (but still chickenfeed). Apologies.
The “black hole” is more likely Sir K’s unfunded war chest down payment.
It was Labour who introduced the handout in the first place so it’s a bit strange to see the Cons trying to defend it. Let’s hope Labour manage to strike the right balance between guaranteeing a minimum standard of living for pensioners without funding one more holiday for millionaires, and without resorting to Liz Truss’s plan to raise the retirement age to 80.
“it was a political decision”says Labour about the Conservative government. Was it not a political decision by Labour to give above inflation pay rises to public sector workers?
From 2010 under the tory party mps pay rose by £25,000 which is a ridiculous amount especially as there was no money apparently.