James Heale James Heale

Reeves cannot afford more episodes like the winter fuel U-turn

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This afternoon Rachel Reeves finally completed the longest U-turn in British politics. Ahead of her spending review on Wednesday, the Chancellor confirmed she intends to reverse most of the cuts to winter fuel that she announced last summer. In July, she removed the benefit from ten million pensioners; today she admitted she will restore it to nine million of them.

All those with an income of less that £35,000 will have their payments of between £200 to £300 restored this winter. Roughly two million pensioners with an income above £35,000 will lose it via PAYE or self-assessment. Cutting winter fuel was forecast to save £1.25 billion; today’s U-turn whittles that sum saved down to around £450 million. Reeves will have to make up the shortfall in her next Budget this Autumn – raising fears that she will hike taxes yet again.

Strikingly, the Chancellor is still defending her initial decision to cut the state benefit.

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