11 June 2025 - 7:00am
Journalists and biographers alike are captivated by great figures — politicians who seem preternaturally gifted at what they do. But for most of us, it’s enough to focus on getting the basics right. One of the basic rules in politics, as in life, is Don’t do stupid things. When the Labour Party said last year that it would means-test winter fuel payments for pensioners, it did a very stupid thing.
The amount of money that restricting the payments to all but the least well-off pensioners saved was tiny in the grander scheme of things: £1.4 billion in 2024-25, and £1.5 billion in 2025-26. But means-testing the payment was hugely unpopular, and divided Labour internally. It was a direct contributor to the polling slide that the party has seen since it was elected almost a year ago. This week, Rachel Reeves decided to mostly reverse it.
Pensioners on an income of £35,000 or less a year, which includes almost all pensioners in the UK, will now be eligible. Now the Government says that the scheme will save £450 million a year. This is an amount of money so small that one wonders what the point was of bothering to keep any means-testing on the scheme in the first place. The U-turn also came at the last minute, so the Office for Budget Responsibility (OBR) hasn’t certified that yet either.
It would not be surprising if Reeves faces further battles over relatively trivial savings that have caused internal strife and political ill will. One of the most egregious is the two-child benefits cap, where families do not receive additional child benefit for more than their first two offspring. Scrapping this would cost £3.3 billion, according to estimates from the Institute for Fiscal Studies last year. Again, this isn’t much when considered as part of the £1.2 trillion the Government spends per year. But keeping the cap in place, which affects 38% of children in the bottom fifth of the UK’s income distribution, is unpopular amongst a number of Labour MPs.
Fearing that voters think of Labour as the party of big government spending, Reeves seems almost determined to choose the most politically difficult cuts there are. She is trying to show that she is committed to fiscal strictures, no matter the cost.
But this is just governing by a series of PR exercises — ones which are costly in terms of political capital. Most voters will care less about how you look when you run the country than what you actually do with the responsibility. Passing a bunch of measures, in some cases intentionally, which upset your party’s MPs limits your room for manoeuvre later on.
In practical terms, that also means that Labour has less of a chance of addressing the UK’s biggest issue: a lack of growth. A government’s fiscal balance has both a numerator (how much debt you have) and a denominator (the GDP). The UK’s problem since the global financial crisis has been the denominator, which has not grown much at all over the period. It has also compromised successive prime ministers, since real wage stagnation tends to be bad for popularity.
Addressing that requires a series of reforms which would upset a lot of MPs, many of whom already have to deal with anger from their constituents about everything else. A case in point is planning reform. Simplifying the UK’s sclerotic planning system is one of the most impactful things this government could do, but it will provoke a backlash within the parliamentary party. The Guardian reported last week that ministers are already contemplating amendments to try and appease backbench MPs who are unhappy with the reform’s impact on environmental rules. Delivering growth means using political capital on these difficult but effective things, not focusing on performative stunts like scrapping winter fuel payments.
This is an edited version of an article originally published in the Eurointelligence newsletter.
