There are, as Rachel Reeves keeps telling us, some tough choices to be made. Whether she is personally tough enough to make them is another matter. It seems as if the government is already retreating on proposed plans to freeze Personal Independence Payments (PIP) in the Spring statement in ten days’ time. A putative backbench rebellion has grown in size to a level at which even a government with a majority of 160 cannot be sure of success. There were also rumoured threats of ministerial resignations.
It shouldn’t really come as a surprise. Many Labour MPs have it in their heads that they were elected to protect the poor and needy from heartless Tory cuts. They were hardly going to take kindly to a Labour Chancellor metaphorically kicking away the crutches of the disabled. Even the Conservatives pulled back from cutting PIP, the bill for which has consequently been allowed to grow unchecked to £18 billion a year – and is projected to reach £34 billion by 2029-30.
Yet freezing it would be the right thing to do – a necessary measure on a very long road to bring the public finances back into balance. There is also a great need to curtail the expansion of PIP – to make it harder to qualify, in other words. Why? Because the British state is heading for bankruptcy. The government is already borrowed to the hilt. It is spending £100 billion a year servicing its debts – and that is with interest rates at relatively favourable levels. We have seen what happens when a chancellor seeks to increase debt, as Kwasi Kwarteng did in 2022 and Reeves herself did last October: markets start to fret at the UK government’s ability to service and repay that debt. They demand higher interest rates to lend to the government, putting the public finances under yet more strain.
The idea that this can be addressed purely by piling yet more tax on the ‘broadest shoulders’ is bunk. Those shoulders are either giving out or barging their way to the departures lounge at Heathrow. If the government is going to close the chronic gap between income and outgoings everyone is going to have to share the burden. To repeat the Conservatives’ campaign slogan from 2010, when it was electorally very popular to kept public debt under control, ‘we are all in this together’.
Reeves’ plans was pretty modest for recipients of PIP. They weren’t going to suffer a cut, only a one-year freeze. All taxpayers, by contrast, have had their personal tax allowance frozen for several years, while higher rate taxpayers have seen big hikes in their bills, through the lowering of the 45 per cent threshold from £150,000 to £125,000.
Reeves’ plans was pretty modest for recipients of PIP
I have an interest to declare in that my daughter – who has severe learning difficulties – is in receipt of PIP. In spite of that, or perhaps even because of it, I reject the assertion that anyone who qualifies as disabled should be immune from any requirement to be careful with public money. Like every other area of public spending there is waste, and there are economies which can and should be made – without, in many cases, impinging on the quality of people’s lives. But there is a lot of emotional resistance on the part on many in society to recognise this.
Freezing PIP for a year is not a lot to ask, not when everyone is having to pay for years of the UK state living beyond its means. If Rachel Reeves cannot bring herself to effect that change it does not bode well for her ability to bringing public spending under control. The ‘Iron Chancellor’ is showing signs of severe corrosion.
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