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Peston: Whatever the outcome is on welfare reform, Starmer and Reeves lose

Peston: Whatever the outcome is on welfare reform, Starmer and Reeves lose

ITV News3 days ago

Angela Rayner told MPs today that next week's vote on the Universal Credit and Personal Independence Payment bill will go ahead as planned.
She has been in frontline politics long enough to know that this was a passable imitation of a turkey voting for Christmas.
Because despite her party's humungous majority in the Commons, she and her leader Keir Starmer don't have the votes.
What's gone wrong, and what can Starmer do?
One problem for them is that - less than a year into the life of this parliament - too many of his MPs are tired of being treated like cattle, and are depressed by that they see as Starmer's lack of optimistic purpose. As several said to me, they feel exploited and taken for granted.
Here is how one grumpy MP laid the blame at the PM's door: "He's never here. He never votes. And his team patronise and infantalise us."
So when Labour's party managers threaten uncooperative MPs with being expelled if they vote the wrong way, some say bring it on, that returning to civvy street would be a blessed release.
Then there is the almost primal fact about Labour politicians: their instincts are that benefits are to be increased, not cut, and most especially not for the vulnerable.
So legislating to take £5 billion from disabled people before being able to demonstrate how these vulnerable people would be helped into fulfilling employment was always going to be inflammatory.
Months ago, I put to the Work and Pensions Secretary Liz Kendall on my show that she was making a mistake by putting the welfare-cuts cart before the job-creation horse. In reply, she obfuscated.
The truth is that it was a rushed job, driven by a Chancellor Rachel Reeves who believed she needed the savings to persuade the Office for Budget Responsibility that she wouldn't breach her own fiscal rules.
It is the same misjudgement Reeves made when abolishing universal entitlement to the winter fuel payment: she decided that manifesting her financial prudence to big investors, the buyers of government debt, gilts, was the imperative.
But while it is true that the government's borrowing costs are painfully high, and it would be difficult for her if they were to rise further, it is not obvious that investors would have dumped the pound and sterling assets if she had taken more time over the welfare reforms.
What she could have done was to announce an intention to reform disability benefits in this autumn's budget, when presumably she would have been better placed to show the mechanisms for helping disabled people find and keep paid employment, and when she would also (probably) be able to sweeten the pill by abolishing the two-child limit on universal credit payments.
So given that on the current trajectory, Starmer, Reeves and Kendall are heading for humiliating defeat in just a few days, why not at this late juncture just pull the legislation and roll its material reforms into the autumn budget?
Here is the painful paradox. That staged approach might well have been credible in the spring.
Now such a delay might well say to the nation's creditors that Starmer, Reeves and co are weak and directionless - and that could lead to a painful rise in the interest rate paid by the Treasury.
So presumably what we'll see in coming days is the government amending its legislation to soften the cuts, at the political price of being accused of yet another u-turn and at considerable reputational cost to Starmer, Reeves and Kendall.
And lenders to the government would also be jittery, if not despairing.
There is no painless escape from this for Starmer and Reeves. And there is no ambiguity that this is a mess they made for themselves. For the past 11 months may have been blaming the last Conservative governmnent for all their previous woes, but this debacle is theirs alone.

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