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Chancellor Rachel Reeves on Monday pleaded for Labour unity as she attempted to quell a party rebellion over her decision to axe £1.5bn in winter fuel payments for 10mn pensioners.
Reeves insisted at a packed private meeting with Labour MPs and peers that her “difficult decision” would help repair the public finances and create the conditions for investment and growth.
“We stand, we lead and we govern together,” she said, as she tried to limit a Labour rebellion when MPs vote on Tuesday in the House of Commons on her plan to scale back winter fuel payments to pensioners.
But one former Labour cabinet minister reflected the scale of the unhappiness in the party when he compared Reeves’s plan to former Tory chancellor George Osborne’s tax on hot food. “This is mad — this is Labour’s pasty tax,” said the ex-minister.
Most of Labour’s 404 MPs will support Reeves’s policy — many through gritted teeth — while the rebellion is largely expected to be expressed by parliamentarians abstaining rather than voting against the government.
Between 15 and 30 abstentions are anticipated, with recalcitrant MPs given permission to skip the Commons. Only a handful of MPs are expected to vote against the plan.
“The whips are taking a fairly relaxed view on abstentions,” said one senior Labour MP, referring to the government’s parliamentary enforcers. “But they will come down very hard on anyone who votes against.”
Reeves told Monday’s meeting, which was so packed that some MPs and peers had to sit in an overspill room, that economic stability would spawn growth, adding: “With growth comes stability.”
Downing Street said there were no proposals for new measures to mitigate the impact of Reeves’s policy to means-test winter fuel payments, which are currently universal.
The policy impacts especially hard on people on low incomes but who are not eligible for pension credit. Winter fuel payments are worth up to £300 a year depending on individual circumstances.
Number 10 said ministers were focused on ensuring poorer pensioners claimed pension credit, with estimates that up to 880,000 people who were entitled to the welfare benefit were not taking it up.
It added there had been 38,500 applications for pension credit in the five weeks since Reeves announced her policy in July, compared with 17,900 in the previous five weeks.
One Labour MP said they were surprised by the level of support for Reeves and the government during Monday’s meeting, with several backbenchers having spoken up in support of the chancellor’s policy and of maintaining party unity.
A few MPs had suggested trying to adapt the means-testing mechanism to ensure poorer pensioners that do not receive welfare benefits did not suffer.
Josh Simons, the former head of the Labour Together think-tank and a new MP, said he supported Reeves’s plan.
But 17 Labour MPs have signed a parliamentary early day motion calling for Reeves’s plan to be delayed, arguing it has not undergone a proper impact assessment.
Downing Street said there was no dissent among ministers about the policy at a meeting of the cabinet on Monday, nor any discussion of any retreat on the plan.
The tensions at Westminster came as Prime Minister Sir Keir Starmer prepares to address the Trades Union Congress on Tuesday in Brighton.
Sharon Graham, leader of Unite the Union, said Starmer had made an “error” by overseeing the removal of winter fuel payments to all but the poorest pensioners.
“They should change their decision,” Graham told the BBC. “And he needs to be big enough and brave enough to say ‘Look I’ve made an error here’. People make errors. Leadership is about choices, and knowing when you’ve done something wrong.”
She led a TUC motion calling on the organisation to campaign for looser fiscal rules and higher wealth taxes, saying Labour did not need to “pit pensioners against workers” as it “can and must make different choices”.
Reeves has signalled that taxes on wealth will rise in her October Budget.
Mick Lynch, general secretary of the RMT transport workers’ union, said Reeves needed to correct the “mistake” Labour had made by retaining the previous government’s fiscal rules, to avoid “getting off on the wrong foot in her first Budget by appearing to be the Grinch”.
