Are Labour’s Policy Decisions Biased Against Those Who Traditionally Don’t Support Them ?

 Editor's note: What a difference 400-odd worried back benchers makes.....

Reeves' almost ecstatic 'reversal' of her July '24 winter fuel payment means-testing change yesterday masks a deep humiliation on the part of the Labour leadership. 

This flagship 'no-nonsense' policy, introduced within days of taking office, was meant to set the scene for 5 years of strong and reforming government, backed by the largest majority in recent history. All it in fact did was to alienate a substantial proportion of the voting electorate, and set the scene for a winter of hardship, and thus for many of those affected a lifelong hatred of the new regime. Was it all worth it, you may ask ?

Let's first take a look at the financial costings.  The cost of WFP in 2023 was £2.2Bn; it reduced to £0.3Bn in 2024 by aggressive means testing, thus saving £1.9Bn that year. However, in response to active encouragement by DWP,  an additional 285,600 people applied for pension credit between July 2024 and May 2025. Of these 168,200 were actually awarded the benefit. Each of these new claimants will be entitled to up to £4000 in benefits every year - recurrent annual cost: £0.672Bn. The estimated cost of the revised benefit on the new means tested regime, involving the estimated 900,000 pensioners who are now elegible under the new rules is £1.5Bn. Taking into account the above figures and working out the overall savings to the exchequer, we get the following:

2023: 0; 2024: £1.22Bn; 2025 onwards: £0.028Bn.

This assumes that no more extra claims for pension credit are received now that WFP has been restored - I suspect there will be plenty more now that the 'genie is out of the bottle' !

Thus, apart from the now infamous winter of 2024-5, when it saved £1.9Bn, DWP can only expect to save a few tens of millions per year on winter fuel, if that. 

And that's not the whole story, either...the new scheme proposes that DWP pays all pensioners £200 (or £300 if they're over 80) and then HMRC claims it back from all those not entitled to it (i.e. earning more than £35k). To do this, HMRC will need to invest time and hard-pressed resources into setting up a new system, just to claw back £200 from each taxpayer (the estimated total recovered from the ca 1M non-entitled pensioners being ca £0.2Bn.).If there is a DWP opt-out scheme as suggested, this will make their lives even more difficult. Given the emphasis Reeves gave to the HMRC initiative on reducing tax avoidance, reportedly amounting to at least £5Bn each year. And all to save a measly £0.2Bn ?- a good example of Starmer's vindictiveness against wealthier pensioners trumping good financial sense.

While we can place a monetary value on the savings to the exchequer (effectively only a years worth at around £1.9Bn), the loss in terms of popularity, support and respect for this government is incalculable.  

Arguably the most serious indictment for this government, and one for which they should be held to account, is that withdrawing the winter fuel payment from the vast majority of pensioners is estimated to have caused 4950 excess deaths in this age group. 

Barring some sort of miraculous economic turnround, this Labour regime is already doomed to a much-troubled and fractious single-term, followed by a thrashing at the hands of Reform, and in all probability will prove to have been responsible for the eclipse of the two-party system. 

Was it all worth it....I'll let the reader, (and their respective back-bench MPs!) decide...and use their votes accordingly ! 

The take home message for all national governments is a clear one....Don't mess with pensioner benefits...if you do, it will always come back to haunt you.... 

And that's not all...Yet another potentially politically suicidal gaffe of Starmer's has surfaced over PIP eligibility and working age benefits generally. Rather than listening to the 120+ 'rebel' MPs threatening to vote against the Benefits Bill on Tuesday 1st July, and postponing until a compromise has been reached, Starmer is hell bent on toughing it out and holding the vote. The media are now quoting Reeves as the main instigator of this rather serious mistake by 'digging her heels in' on the need for the £5Bn the measures are estimated to save by 2030. I suspect this could be the beginning of the end for Starmer. If he loses the vote on an issue of this magnitude, it will confirm his back benchers no longer have confidence in his judgement, and put a confidence vote on the agenda.

I notice Angela 'warming up on the substitutes bench' nicely at PM questions this Wednesday while Starmer was off on his 'world leader's course' (I suspect he does it more to get away from the personal hell of Westminster than anything else) - Angela was obviously revelling in the prospect of the demise of the 'terrible duo', and may yet manage to inherit the poisoned chalice that the leadership of this benighted government will bring her. Be careful what you wish for....you too will face the wrath of your back benchers...sooner or later.

Oops...I spoke too soon - voila 'le climbdown' as our French friends would say...

Starmer has now capitulated on the main sticking point with his rebel back benchers on the Benefits Bill i.e. PIPs. The concession he has agreed (presumably during his 126 overnight phone calls) appears to be that no one currently receiving PIP payments will actually lose them. All new claimants, however, will be subject to the much tougher elegibility criteria originally proposed. Cost to treasury: ca £1.5Bn p.a.; Cost to Starmer: Leadership and judgement credibility - Gone....RIP. Nearly time to get that tracksuit off, Angela.

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The direction of travel indicated by the new Labour government’s policy decisions since July has left a significant question in the minds of many of us:

“Are they based solely on a desire to get the country moving again after a period of stagnation, or is there a large element of vindictiveness against those who traditionally have not supported Labour ?”

Firstly, why is this question important, given that Labour is unlikely to be challenged in a General Election again before 2029 ?

It’s because the answer will determine whether we do actually manage to dig ourselves out of the slippery economic and social ‘pit’ we’ve fallen into, or just keep slipping back down the sides, again and again….it’s also precisely because the new government is so unchallengeable from a parliamentary point of view that we need to know the true nature of their motives. This may help us to predict what is to come.

Let’s look at the evidence we have so far.

The principal decisions made since taking office that have attracted most controversy, together with their introduction and implementation dates,  have been:

1)       * Abolition of the Pensioner Universal Winter Fuel Payment (July 24-immediate)

2)       * Major increase in Employer NI contributions (Budget-immediate)

3)       * Abolition of Agricultural IHT exemption and imposition of new 20% tax on all assets over £1M (Budget-from Apr 26).

4)       * Imposition of VAT on private school fees (budget-from Jan 25).

The justification given for each of these measures has always been that they are needed to fill the so-called ‘Tory Black Hole’, which seems to have varied between £9M and £40M since July (see previous blog for a closer examination of the various claims). 

Reeves and Starmer have both been careful to wave aside the many accusations of bias and vindictiveness that have already been made against them. The fact remains that all 4 measures have been directed primarily against groups of electors who traditionally don’t support Labour. One or two might be ascribed to coincidence, but all four…?

The problem that the leadership now have is that in alienating pensioners, aspiring middle class parents, private industry and farmers in one fell swoop, they have destroyed their popularity with the bulk of the electorate, and have also created major divisions within their own party. 

The Unite union were studiously ignored when they managed to pass a Conference resolution to reinstate the Winter Fuel payment, and are still smarting from the indignity. The farming community are up in arms about the threat to their livelihoods from IHT imposition and are making their MPs well aware of it. They even went as far as driving their tractors to Downing Street in protest last weekend, and they will never forget Starmer's 'treachery' as they see it in reneging on his pre-election promise to them. 

Many small businesses, especially within the hospitality sector are in despair about their financial viability following the NI increase and the rise in the minimum wage. The CBI have condemned Reeves’ strategy and quite rightly point out that Labour has effectively ‘shot itself in the foot’ regarding its own flagship growth strategy, by forcing businesses to put a hold on new recruitment and investment. Their ‘stony silent’ reception of Reeves’ address to them yesterday speaks volumes; her assertion that this budget would never be repeated will have been taken with the ‘large pinch of salt’ it deserved. There are reports of splits within the Labour party and even in the cabinet on the wisdom of all 4 decisions (particularly since many of the new Labour MP intake will have elderly relatives and will no doubt be quietly sending their offspring to private schools !).

Given all this, we have to ask the question “Do the leadership really know what they're doing, or is this just a political and economic ‘revenge fest’ they are taking the opportunity to indulge in…while they still can ?”. Either way, things don’t look good for the UK economy or our social cohesiveness.

To answer the competence question, we need to look at what each of the 4 measures above is actually likely to achieve from a revenue generating point of view.

Winter Fuel: Means testing the Winter Fuel payment was initially estimated to save DWP ca £2Bn. However, minimal assessment of its potential consequences was made before introduction, and this has already generated numerous petitions to re-instate universality and a legal challenge in the courts. 

Not long after the inital furore erupted in July, we heard that DWP had estimated that 880,000 potential recipients of Pension credit had not yet claimed, and were being actively encouraged to do so. This was a clear knee-jerk attempt at mitigation, but failed miserably. It also emerged that each successful claimant could expect up to £4000 p.a. in extra untaxed income. Some simple arithmetic should be sufficient to convince us that even if only half of the potential claimants actually claimed successfully, the total extra bill to the treasury would be £1.76Bn, thus negating the bulk of the revenue gain. Result: 10 million pensioners (i.e. ca 20% of the electorate) alienated…for peanuts. 

Age Concern’s own impact survey identified ca 50,000 pensioners who would be catapulted into fuel poverty by the move and DWP themselves now admit 20,000 may have to make the choice between heating and eating this winter. If the courts rule against in the New Year, Reeves may yet be forced to reinstate the universal payment, with the Pension Credit bill increase remaining in place. Result: loss of up to £2Bn. 

An own goal if ever there was one….(Score: Starmer, 0; Others United, 1)

NI increase: Putting exact figures on the financial loss to the treasury from a loss in tax revenue from inhibition of business sector growth is complex, but the loss of tax and NI revenue alone from workers who are not employed as a result of the NI and minimum wage increases will be substantial. The benefits bill will also rise as a result of increased unemployment, just at a time when we really do need people back at work following the Covid exodus. Starmer’s well-publicised initiatives to ‘get people back to work’ will look particularly hollow if there are no jobs to get them into….

More importantly, perhaps, holding back the economy will also deter inward investment in UK plc, and discouragement of UK business investment in new tech will likely also make us less competitive with the rest of the world. Another substantial ‘own goal’ for Labour, then. (Score: Starmer, 0; Others United, 2)

Private School fees & VAT: Although this measure will bring in quite a bit of extra revenue in the short term, and some of the smaller schools may go to the wall, like the other measure discussed,  it will stimulate the inventiveness of the 'victims' - in this case parents and school managers alike. No doubt alternative ways of allowing money to change hands will be found, and an under-resourced HMRC will be kept busy trying to identify and shut down any perceived loopholes. The British public, and particularly the better off section of it, are quite adept at hanging on to their cash, especially when their offspring’s education is at stake. Starmer will find that the ‘wrath of middle England’ is likely to catch up with him over this…and sooner rather than later. Last but not least, no extra provision seems to have been made to expand the state school sector, with its crumbling real estate and overcrowded classrooms, to take in all those ‘private school refugees’. (Starmer, 0; Others United, 3)

And what about IHT and the farmers ?

Despite Reeves’ protests to the contrary, this new tax will affect many of our smaller farms, given the rapid increase in land values in recent years and the fact that many of them are ‘asset rich and income poor’. It will probably be the last straw for many of our small family farms where the owner is nearing retirement age (or indeed beyond it); many will probably take the easy option and sell up altogether. Some of the land released may be absorbed by larger agricultural ventures and continue to be productive,  but a large proportion of it is likely to go out of production, either end up as re-wilding projects or, worse still, as solar farms or under concrete as housing estates. This is at a time when it even more crucial for UK to aim for food self-sufficiency. Why is this important ?

We live in a geo-political climate which has rarely been more febrile and uncertain. Food ‘shocks’ leading to cost of living crises of the type caused by Ukraine can be expected at any time, and the last thing we need now is to become totally dependent on food imports. Labour seem to be obsessed with green energy introduction, but doing so without that all-important fossil fuel ‘buffer’ that we'll need for when the ‘sun doesn’t shine and the wind doesn’t blow’ is folly. This combination of policy errors probably represents the biggest ‘own goal’ of the lot, and the combined effects could be disastrous. Add to it our outdated IT infrastructure, which is subject to incessant Russian and Chinese cyber-warfare, and you have a serious recipe for the breakdown of order….

Another less well appreciated consequence of Reeves’ agricultural IHT decision is that it may well push those with substantial wealth who are not farmers to seek alternative strategies for IHT avoidance, including removing their money from UK jurisdiction altogether. The amount netted by the treasury from 40% on all estates valued at above £325k is much more substantial, thus the actual extra revenue generated by the removal of the current agricultural IHT exemption may well be substantially exceeded by the loss of IHT from large estates who take more aggressive steps to avoid the tax. (Final score: Starmer, 0; Others United, 4).

Conclusion: Although we await further developments to see if the trend continues, there’s little doubt in my mind that a) Labour’s policies are biased against those who don’t support them and b) their inexperience and lack of foresight is leading them to make some ill-thought out and often downright risky policy decisions, which may adversely affect us all….

It’s not hard to see where all this is coming from. Starmer’s current dominance over party policy no doubt stems from his own personal biases, and a desperation to show himself as a strong leader. He was extensively ridiculed as weak and vacillating as opposition leader in the media and this will be an important driver. Although his close acolytes still remain loyal, his cabinet already appears split on many issues, as is the party, although no one has yet plucked up the courage to present a direct challenge to his authority. His old enemy, Momentum, are still waiting in the wings, though, and will no doubt strike whenever they feel the time is right.

The only real beneficiaries from the budget measures would seem to be the public sector, whose workers will be substantially better off. Will this benefit the economy ? Sadly, probably not. However much you 'beef-up' public sector provision, you cannot generate the increased wealth our economy needs to prosper in a capitalist world from the public sector alone, since its role is essentially to help keep things running - private industry and enterprise is essential for development and expansion, as is inward investment.

Electors in substantial numbers are obviously already getting worried at the course of events, and a petition calling for a new general election has emerged and has already chalked up nearly 3 million signatures. Starmer appears remarkably unconcerned, and was almost derisive about it in his comments to the press yesterday, saying he “wasn’t surprised”. He obviously thinks his ‘super majority’ makes him immune from any adverse fallout….time will tell whether this is actually the case. Even if he does last the full 5 years, on present performance, I would rate his chances of a second term as virtually nil. The party will realise eventually that he is a liability, and will probably emulate the Conservative’s own ‘leadership management strategy’ and topple him, probably well before 2029.

I would recommend anyone who is concerned about the medium and long term future of UK plc, as I am, to sign the petition – it’s currently the only effective avenue we have to register our views. Even if Starmer isn’t listening, his party and his new MPs will be.....

First published 26.11.24

Revised 10.6.25