If the Labour party were a cinema, then it would currently be showing a double billing: Groundhog Day and Knives Out. For older heads, the Welfare Bill has echoes of the 2015 vote on Universal Credit; newbies MPs are now experiencing what it is like to be in a full-on government briefing war. Plenty of fall-guys are cited in today’s newspapers: from Alan Campbell and the whips’ office to Morgan McSweeney and the political operation in No. 10.
The most immediate loser from the welfare U-turn is Rachel Reeves. Both politically and fiscally, the Chancellor is now in a tight spot
The most immediate loser from the welfare U-turn is Rachel Reeves. Both politically and fiscally, the Chancellor is now in a tight spot. The climb downs on Personal Independence Payments, Universal Credit and winter fuel will cost a combined £4.5 billion, according to the Resolution Foundation. That is money that will have to be found elsewhere. The government spending deficit reached £17.7 billion in May, despite a sharp increase in tax receipts. With the OBR likely to revise growth downwards, steeper tax rises now look inevitable. Capital Economics suggest that could be somewhere in the region of £20 billion, even before last night’s U-turn. This, for a Chancellor who promised she would not ‘be coming back with more tax rises.’
But Keir Starmer is badly damaged too. It was he who turned welfare reform into an issue of political virility, likening it to ridding his party of Corbynism. It was he who chose to raise the stakes on Wednesday, suggesting that the 126 Labour rebels were little more than ‘noises off.’ It was he who personally tried, and failed, to win MPs round yesterday, having approved a political strategy which applied Treasury abacus economics to core Labour shibboleths.
A fraught and difficult weekend now lies ahead for him and his team, ahead of the Welfare Bill’s Second Reading on Tuesday. It is a sub-optimal way to mark the upcoming anniversary of Labour coming to power; an occasion which Sir Keir has today marked with a lengthy Observer interview in which he renounces his ‘island of strangers’ speech. That is effectively his fourth climbdown in four weeks, coming off the back of the grooming gangs inquiry, the winter fuel reversal and now his welfare concessions.
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