Sir Keir Starmer: Cutting winter fuel payments will stabilise the economy

Published

2 months ago

September 2, 2024

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Sir Keir Starmer has defended cutting the winter fuel allowance for 10 million pensioners as he faces pressure to rethink the move.

The government announced last month the universal payment to pensioners, worth between £100 and £300 a year, would be restricted to just those who receive pension credit.

Sir Keir and Chancellor Rachel Reeves have been heavily criticised for the move, including by some Labour MPs and Age UK.

But the prime minister said on Monday: “We have found a £22bn black hole in the economy. And we’ve got to fix it.

“What we’re not going to do is pretend it isn’t there or paper over it. That’s what the last government did, and it made it worse. That means we’ve got to make tough choices.

“I don’t want to cut the winter fuel allowance. I don’t think anybody in the government wants to do that. But we’ve got to fix the foundations of our economy.”

He said after fixing the foundations of the economy “we can build a build a better future that pensioners and so many other people voted for in this election”.

“This is a tough decision, not a decision I want to make, but I’m absolutely determined will stabilise the economy and fix the foundations,” he added.

Labour MP Jessica Asato, newly elected in July, wrote to Work and Pensions Secretary Liz Kendall last week calling for changes to the policy, specifically to increase the number of people who can claim it.

The Conservatives and Lib Dems have hit out at the plan, with Lib Dem leader Sir Ed Davey calling it the government’s “first big mistake”.

Both parties had called for a vote on axing the payments but the government has refused to hold one.

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The UK’s leading charity for older people, Age UK, has written to Ms Reeves with a detailed plan suggesting the allowance should be paid to two million more pensioners who are on other benefits, including housing benefits, council tax support, attendance allowance and carers’ allowance.

On Sunday, Commons leader Lucy Powell told Sky News’ Sunday Morning With Trevor Phillips the move was necessary as the economy could have crashed if the government had not found the savings.

Politics

NY Supreme Court allows Greenidge to keep mining, but challenges remain

Published

2 hours ago

November 15, 2024

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NY Supreme Court allows Greenidge to keep mining, but challenges remain

The state Department of Environmental Conservation botched the permitting process, but it still gets a do-over.

Politics

UK economy grows by 0.1% between July and September – slower than expected

Published

2 hours ago

November 15, 2024

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UK economy grows by 0.1% between July and September - slower than expected

The UK economy grew by 0.1% between July and September, according to the Office for National Statistics (ONS).

However, despite the small positive GDP growth recorded in the third quarter, the economy shrank by 0.1% in September, dragging down overall growth for the three month period.

The growth was also slower than what had been expected by experts and a drop from the 0.5% growth between April and June, the ONS said.

Economists polled by Reuters and the Bank of England had forecast an expansion of 0.2%, slowing from the rapid growth seen over the first half of 2024 when the economy was rebounding from last year’s shallow recession.

And the metric that Labour has said it is most focused on – the GDP per capita, or the economic output divided by the number of people in the country – also fell by 0.1%.

Reacting to the figures, Chancellor of the Exchequer Rachel Reeves said: “Am I satisfied with the numbers published today? Of course not. I want growth to be stronger, to come sooner, and also to be felt by families right across the country.”

“It’s why in my Mansion House speech last night, I announced some of the biggest reforms of our pension system in a generation to unlock long term patient capital, up to £80bn to help invest in small businesses and scale up businesses and in the infrastructure needs,” Ms Reeves later told Sky News in an interview.

“We’re four months into this government. There’s a lot more to do to turn around the growth performance of the last decade or so.”

New economy data tests chancellor’s growth plan

The sluggish services sector – which makes up the bulk of the British economy – was a particular drag on growth over the past three months. It expanded by 0.1%, cancelling out the 0.8% growth in the construction sector.

The UK’s GDP for the most recent quarter is lower than the 0.7% growth in the US and 0.4% in the Eurozone.

The figures have pushed the UK towards the bottom of the G7 growth table for the third quarter of the year.

It was expected to meet the same 0.2% growth figures reported in Germany and Japan – but fell below that after a slow September.

The pound remained stable following the news, hovering around $1.267. The FTSE 100, meanwhile, opened the day down by 0.4%.

The Bank of England last week predicted that Ms Reeves’s first budget as chancellor will increase inflation by up to half a percentage point over the next two years, contributing to a slower decline in interest rates than previously thought.

Announcing a widely anticipated 0.25 percentage point cut in the base rate to 4.75%, the Bank’s Monetary Policy Committee (MPC) forecast that inflation will return “sustainably” to its target of 2% in the first half of 2027, a year later than at its last meeting.

The Bank’s quarterly report found Ms Reeves’s £70bn package of tax and borrowing measures will place upward pressure on prices, as well as delivering a three-quarter point increase to GDP next year.