Winter fuel climbdown exposes big problem plaguing UK politics

Good morning. Rachel Reeves has announced the details of her winter fuel U-turn. A big moment for the government but also for the country, as I set out in today’s note.

Be afraid of the old, they’ll inherit your head(room)

Rachel Reeves has clarified the exact extent of her retreat over the winter fuel allowance: instead of restricting eligibility to the poorest pensioners, she will now be handing it out to all but the richest.

All but 2mn pensioners — those with incomes of more than £35,000 a year — will receive the allowance gratis. The remaining group will still get the fuel payment but that money will be clawed back through the tax system.

It leaves the chancellor with a £1.25bn hole in the public finances. More importantly, it calls into further question whether any of the tight spending settlements she will announce in tomorrow’s spending review can be held to.

The difficult truth for the government is this: this was a means test applied largely to voters who did not back the Labour party at the last election and aren’t part of its route to re-election either. If Labour couldn’t, with four years to the next election, carry through this change to winter fuel allowance, does the party really have what it takes to deliver any of the cuts that fall upon its own voters? The answer is obviously “no”.

But there are bigger implications for British politics. Labour has a landside majority and its electoral coalition is almost wholly drawn from the working-age population. One significant long-term challenge for the country’s public finances is our ageing population and with it, a worsening care-dependency ratio. If Labour can’t push through this kind of change to spending on people over the state pension age, who can? Will it be Nigel Farage, whose path to Downing Street relies largely on older voters? Of course not.

To the extent that she is relevant, neither will Kemi Badenoch, a self-described small state Conservative who now echoes 2010s Labour talking points about how the winter fuel allowance cuts forced a choice “between heating and eating”. Could the Liberal Democrats, who opposed the change from the beginning?

Like many old democracies, the UK is grappling with a wonderful problem: as we live longer, we cost more and there are fewer working taxpayers to support that. Part of breaking the UK’s “doom loop” of ever-higher taxes just for public services to stand still is increasing economic growth. But part of it has to be a willingness to at least look seriously at reducing benefits whose usefulness has since passed. That none of the political parties that might govern the UK, whether alone or in coalition, feel able to do so is worrying in the extreme.

Now try this

This week, I mostly listened to Dalia’s Mixtape, Dalia Stasevska’s recording of modern classical music with the BBC Symphony Orchestra, while writing my column.

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