Inside the vote that shook Starmer's grip on power
The government narrowly avoided defeat in the vote last night, but the cost may be far greater than any lost vote. Dozens of MPs defied the whip, disability campaigners condemned the reforms, and what was once a central policy platform now lies in ruins.
Critics say Starmer has looked weak, indecisive – even irrelevant – in the face of pressure from within.
In this episode of The Fourcast, Matt Frei speaks to our social affairs editor Jackie Long and Channel 4 News' Senior Political Correspondent Paul McNamara about the significance of what has just happened and what comes next. Has this bruising vote done lasting damage to Starmer's premiership? and what will Rachel Reeves do now as another last minute U-turn has blown an even bigger black hole into the government's finances?
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A wealth tax will only make the Chancellor's problems worse
Rachel Reeves's tears during Prime Minister's Questions pushed up the 10-year UK gilt yield from 4.51pc to 4.66pc in a matter of minutes. Whatever the explanation for the Chancellor's House of Commons meltdown, global investors weren't impressed – imposing a £1bn-plus increase in the annual interest bill on the UK's £2.6 trillion stock of national debt Ahead of Wednesday's parliamentary snuffles, there had clearly been tensions between Reeves and Prime Minister Keir Starmer. The Chancellor and Welfare Secretary Liz Kendall have spent weeks trying to sell reforms to Labour MPs, designed to save around £5bn a year in sickness and disability welfare payments by 2030. No one was talking about actually cutting the welfare bill under this heading. Spending on sickness and disability benefits was set to rise from £65bn in 2023-24 to £101bn by 2029-30, according to the Office for Budget Responsibility (OBR). This huge 55pc increase is driven by an expected surge in Personal Independence Payments (Pip) to some 4.2m working-age adults, around one in eight of the work force. The Labour leadership's attempts to tighten benefit eligibility rules were designed to lower that annual bill to £96bn by 2030 – still a huge 48pc increase from when Labour took office last July. But Starmer bottled even these feeble reforms. Faced with Labour backbenchers outraged at any slowdown in the growth of state largesse, the Prime Minister caved – blowing another £5bn hole in Reeves's budget. Labour insiders now admit the party's attempted welfare reform will save 'more or less no money'.
Telegraph
2 hours ago
- Telegraph
Few of us know about Starmer's worst policy, but it's cost £1.5bn
When Sir Keir Starmer looks back at his first year in office this weekend, he may be wondering how he has moved so swiftly from winning a 411-seat landslide victory to being, by some measure, the most unpopular prime minister since records began. Labour's management of our money has been a near masterclass in how not to do it. The job-destroying employers' National Insurance hike, the aspiration-wrecking VAT on school fees, or the wealth-destroying scrapping of non-dom status – there are plenty of candidates for the Government's worst economic policy. But there is one much less-noticed bailout that does neatly sum up what has gone wrong. Energy and climate change secretary, Ed Miliband, is splurging at least £1.5bn of taxpayers' money on righting a wrong that is simply a chimera. It displays Labour's mawkish sentimentality about workers at its worst. Miliband has an almost religious commitment to decarbonising the economy by 2050 – although there are signs he is wavering in his opposition to new North Sea exploration as the reality of Britain's economic plight dawns. The opening of Britain's first new coal mine for 30 years at Woodhouse in Cumbria was blocked last autumn on environmental considerations, after having been approved two years previously by Michael Gove under the Tories. But while Miliband doesn't want there to be a new generation of British miners, like much of the Left, he seems to romanticise the struggles of the miners of the past – especially those fighting Margaret Thatcher in Arthur Scargill's Great Strike of 1984-85. And that is where the £1.5bn comes in. When the coal mines were taken into state ownership on January 1 1947, this was celebrated by Clement Attlee's Labour government as a glorious step on Britain's irreversible road to socialism. In 1952, the defined benefit Mineworkers' Pension Scheme (MPS) was established. Until 1975, members paid no more than 20p per week into the fund, and pensions were thus very modest. But then contributions and benefits were linked to miners' pay – they are still not vast, averaging £84 per week in 2019 – and the fund showed a stellar investment performance in the 1970s and 1980s. Under nationalisation, British Coal or the National Coal Board as it was until 1987, guaranteed that if the scheme's funds were insufficient to meet its commitments, it would cover them. When John Major's government decided to privatise the coal industry, this guarantee would make that plan impossible. Even then, there were far more retired miners than men still toiling down the pits, and that is truer still today. In 2023, there were more than 100,000 members in the scheme – and not one working miner. No private enterprise would take on the risk, even though the scheme was in healthy surplus. The solution, which allowed the industry to be privatised in 1994, was that the scheme would be closed to further contributions, and the Government would take over that guarantee. In return, any surplus in the scheme would be divided between the Government and increased pensions for members. As a result, miners' pensions are roughly a third higher than they would be if they were simply receiving their accrued benefits. This arrangement has come under constant attack from the Left on the grounds that the scheme has resolutely remained in surplus, and the guarantee has never been invoked. It has been portrayed as a typical Tory sleight of hand to diddle the workers out of what is rightfully theirs. But how is this the case? If you have never claimed on your household insurance, you cannot then call your underwriter and ask for the past 20 years of premiums back. You would get very short shrift if you made such a request. Yet that is precisely the demand of the Left. As the MPS itself acknowledges, members directly benefited: 'The guarantee has enabled the trustees to adopt an investment strategy that targeted high returns… as a result, the typical member's pension today is around 33pc higher in real terms'. So where is the injustice? Yet last October, Miliband agreed to waive the Government's entitlement to £1.5bn from the scheme's surplus. This may not be the end of the story, as the Treasury has received £4.8bn between 1994 and 2024 from the MPS, and another £3.1bn from the British Coal Staff Superannuation Scheme, a separate pension scheme also for the coal industry, which had a similar arrangement. By Miliband's logic, should these funds not now be returned? Why has a Government which endlessly bangs on about the Tory 'black hole' in the nation's finances decided to forfeit such huge sums when the case for doing so is so weak? It is not because the National Union of Mineworkers is today a powerful organisation. It remains affiliated to Labour, but has only 103 dues-paying members, and contributes around £1,500 annually to party coffers. It may have something more to do with the much larger contributions made by the big unions, who espouse the miners' cause. But much more significant is surely a historic attachment to a Left-wing cause. The miners were at the forefront of the 20th century's industrial battles. They brought down Edward Heath's government in 1974, and did their very best to replicate this coup with the union's attempt to remove Mrs Thatcher. The real injustice is that all of us are now paying over a billion pounds in the service of a Left-wing vision of Britain's post-war history.
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Conservatives will look to amend Government welfare Bill
Kemi Badenoch will pledge that the Tories are 'now the only party committed to serious welfare reform' after Prime Minister Sir Keir Starmer shelved plans to restrict eligibility for Pip in the face of a backbench revolt this week. Ministers have warned there will be costs to their backtracking on the plans, as Downing Street and the Treasury will be looking to cover the spending shortfall left by the decision. The Tories will look to lay amendments to the legislation – set to be renamed the Universal Credit Bill – and party leader Mrs Badenoch is due to deliver a speech on welfare on Thursday. Among the amendments the Conservatives will propose is a requirement for eligibility for Pip to be determined by a face-to-face meeting, rather than virtually. As part of the Government's reforms, the Department for Work and Pensions has proposed a new 'severe conditions criteria' for universal credit. Claimants in this category will be entitled to a higher rate of the benefit, and will not be routinely reassessed to receive money. Another of the Conservatives' amendments would prevent somebody from being classed as having a severe condition for the purpose of universal credit only by having anxiety, mild depression, or ADHD. The third amendment would block the increase in universal credit and restrict Pip for some people who are not British citizens. In her welfare speech, Mrs Badenoch is expected to say that the Conservatives are 'the only party that is prepared to take the tough decisions to get spending under control'. 'I have no doubt that, emboldened by their success in forcing Starmer to U-turn last week, Labour's backbench MPs will now be eyeing up more concessions,' she will say. The original welfare proposals had been part of a package that ministers expected would save up to £5 billion a year, and economists are now warning that tax rises are likely to plug the gap left by the concessions to rebels. On Friday, Chancellor Rachel Reeves admitted that the fallout over the Government's welfare Bill had been 'damaging' and did not rule out tax rises in the autumn budget. Health Secretary Wes Streeting, Chancellor Rachel Reeves and Prime Minister Sir Keir Starmer at the launch of the Government's 10-year health plan (Jack Hill/The Times/PA) It came after images of the Chancellor crying during Prime Minister's Questions on Wednesday spooked the financial markets and led to questions about her future, although a spokesman said she was upset by a personal matter. In an interview with The Guardian, Ms Reeves said it would be 'irresponsible' to rule out the idea of tax rises and warned 'there are costs to what happened' with the welfare Bill. The Sunday Times reported that the two-child benefit cap could be unlikely to be scrapped – as many Labour backbenchers want – as ministers look to balance the finances.
