Analysis: Rachel Reeves Has Been Left Humiliated By Winter Fuel U-Turn

The chancellor explained her decision on Sky News.She tried to put a brave face on it, but there is no doubt that the U-turn on her decision to remove winter fuel payments from 10 million pensioners is a humiliation for Rachel Reeves.The chancellor confirmed today that she was raising the income threshold to qualify for the benefit, meaning millions more old folk will qualify for it this year.Her climbdown followed a furious public backlash to the policy – and mounting anger among Labour MPs.Reeves’ reputation as an “iron chancellor” has taken a battering from which it may never recover.What’s more, her explanation for why she has junked one of her signature policies does not stand up to a moment’s scrutiny.She told Sky News: “I had to make urgent decisions last year to put the public finances back on a firm footing. We inherited a £22 billion in-year black hole in the public finances.“I was always clear that the number one priority of this government was to return stability to the economy.“We did that with a number of difficult decisions, but because of those decisions our public finances are now in a better position, which means that this year we’re able to pay the winter fuel payment to more pensioners.”But it is misleading in the extreme to suggest that, after 11 months of a Labour government, everything in the Treasury garden is now rosy.Both the Office for Budget Responsibility and the OECD have downgraded their forecasts for the UK economy, not least because the impact of Donald Trump’s tariffs have yet to take effect.The idea that there is suddenly a load of spare cash to pay the £1.5 billion the winter fuel U-turn will cost is simply not true.Indeed, Downing Street has admitted that we’ll need to wait until the autumn Budget to find out how it will be paid for. How’s that for a fiscal black hole?If the Treasury’s calculations are to be believed, the new set-up will save the government £450 million. That doesn’t sound like an awful lot of money for all of the political pain the chancellor has had to endure.On Wednesday, Reeves will announce how much money each government department will have to spend over the next three years as she unveils the result of her spending review.She was already under huge pressure to explain how she plans to make the government’s sums add up. The winter fuel shambles means she has even less room for manoeuvre.Related...Revealed: Which Pensioners Will Get Winter Fuel Payments Again After Labour U-TurnRachel Reeves Confirms More Pensioners Will Get Their Winter Fuel Payments This Year'Cack-Handed': Laura Kuenssberg Slams Labour's U-Turn Over Winter Fuel Payments

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