Consequences

Grappling with farmers over inheritance tax is one thing, but the real downside of Labour's budget is its impact on pensioners and parents. The latter because of the failure to abolish the two-child benefit cap, the former because of the abolition of the winter fuel paymemnt as a universal benefit.

The Guardian reports on analysis which shows that 50,000 more people will be in relative fuel poverty next year – and another 50,000 by 2030 as a result of this cut.

The paper says that the government's own analysis has found that cuts to the winter fuel allowance could force 100,000 pensioners in England and Wales into relative fuel poverty, as ministers come under mounting pressure over measures in last month’s budget.

They add that the figures, which are rounded to the nearest 50,000, take into account the impact of housing costs, but not of thousands more people claiming pension credit since a government campaign earlier this year. The analysis was published in a letter from Liz Kendall, the work and pensions secretary, on Tuesday, just as temperatures plunged and parts of the UK experienced their first snowfall of the year:

Downing Street admitted in September it had not done an impact assessment before making the change, although Labour said in opposition that such a move would lead to the deaths of 4,000 people. Kendall’s letter on Tuesday marks the government’s first attempt to quantify how many pensioners will be seriously affected.

The analysis shows that by 2030, 1% of those who have lost their allowance are likely to be pushed into relative poverty – defined as households with less than 60% of that year’s median income. This will have the effect of putting up the relative pensioner poverty rate by 0.6 percentage points.

Only half that number will be force into absolute poverty, however, defined as households with less than 60% of the median income of 2010/11.

The cuts to winter fuel allowance are unpopular with Labour MPs and supporters. One MP defied Labour whips to vote against the cut in September, while another 12 missed the vote without permission. Later that month, party members voted for a motion calling on ministers to reverse it.

The Scottish Labour leader, Anas Sarwar, pledged to reinstate payments in Scotland should his party win the 2026 Holyrood election, saying it would mean a “fairer system” for Scotland and show the public that “we have listened”.

The pledge comes days before another set of council byelections in Glasgow and after polling suggesting the unpopularity of UK government policies is harming Scottish Labour’s vote. At the general election Scottish Labour was well ahead of the SNP, but that lead has collapsed.

Sarwar said he had been “clear from the outset” that he thought Reeve’s pension credit threshold was too low and that he planned to reintroduce a universal payment for all pensioners, but tapered like child benefit is so that wealthier people receive less.

Caroline Abrahams, charity director at Age UK, said: “This government announcement confirms what we always knew: brutally rationing winter fuel payment, as ministers made the choice to do, will swell the numbers of pensioners already living below the poverty line – this year and into the future.”

Along with inheritance tax and employers national insurance contributions this is going to be one of the main political battlegrounds over the coming winter.