Change, Change, Change

The electorate voted for 'Change', not for penny pinching loose change. Doom and gloom surrounds Britain only a couple of months after Britain declared: "no more!" Keir Starmer and Rachel Reeves preach non-stop the need for hard choices, austere government, and what a precarious inheritance they inherited. Britons want answers not excuses, yet excuses are all that Labour offers for making deeply unpopular choices like cutting the Winter Fuel Allowance.

There is a sense Labour is testing the waters of how far they can go in the upcoming October budget. How much political capital can they expend? The answer is not as much as they'd liked. Labour's winter fuel allowance debacle shows an insecurity in governing and an appalling understanding of what good politics is about. Labour's omens aren't promising on this evidence.

Blighty wants realistic optimism. We want a path forward. Tough decisions are expected no doubt, but the same old same old now aimed at pensioners is not what the doctor ordered. Labour must learn that tough choices needn't mean austere choices.

The government has seen a big collapse in support without doing anything major. Since getting elected into office, Labour has led the country adrift after an exuberant start. The Budget will be the first showpiece event aimed at fixing the foundations of the British economy. Yet we must wait another month and a half before we finally see what the government is about, what these tough choices are about. The wait is totally unacceptable. Labour should have moved it forwards so that it was done by early to mid September at the latest.

Why cut the Winter Fuel Allowance? Labour's excuse is the £22bn blackhole in the nation's finances. Considering the cut would only 'save' £1.4bn, the political cost of this cut is huge while attaining small financial gains. No matter your views on public finances, this cut makes little sense by itself. Politically it doesn't make sense either. Labour is creating enemies for what exactly? This cut doesn't make them look credible but callous. Red Tories certainly rings true.

Cutting the winter fuel allowance for budgetary reasons outside of the Budget makes no sense whatsoever. People are sick of hearing about deficits and financial black holes when they see public services rotting away, infrastructure decaying, long waiting times in the NHS, and stagnating economic performance as seen in the latest growth figure. Results are what the public want and Labour must deliver if it wants more than a five-year term in power.

Labour's biggest problem is its rigid adherence to fiscal conservatism as expressed in its fiscal rules that it included in its manifesto. As the New Realist highlighted during the election campaign, Labour's fiscal rules constrain its ambitions and now are an excuse for being politically incompetent. The mission-focused government was the true asset in Labour's arsenal, yet its mission on addressing the public finances is plain wrong. Sort out the foundations that are hindering economic growth and the public finances will sort themselves out.

Rather than cutting investment projects at the news of a black hole, the government should focus its efforts on making the blackhole as productive as possible. A £22bn black hole that adds 2-3% growth to the economy is a highly efficient and effective budget deficit. The government is running a deficit equivalent of 1% GDP so that the economy can grow by 2-3% of GDP. Smart government seeks those efficiencies and surpluses where the opportunities lie in tackling climate change. Neither is this suggestion radical. It's moderate while challenging the economically illiterate norms that surround economic discourse in the UK.

Should Labour have cut the winter fuel allowance? For the reasons it gave, absolutely not. Instead, Labour should have argued for making the cut so that it offers more support for poor and impoverished pensioners. Expanding pension credit is a more noble goal than keeping the Winter Fuel Allowance. Demographic pressures entail created wealth will be distributed to elder generations putting ever more pressure on working families. Unless growth expands rapidly, it is unsustainable expecting workers make ever more concessions without asking any from well-to-do and wealthy pensioners. Rich pensioners making sacrifices so poor pensioners get the help they need without straining workers is an easier sell. Helping poor pensioners is noble, while remaining a tough choice overall. Given this cut occurred outside the Budget, its jaw dropping that Labour isn't making this argument. It's sheer incompetence.

Of course, even that will be unpopular but at least it's defensible. Making a £1.4bn cut which doesn't even eat into 5% of the 'black hole' while imposing hardship on the most vulnerable who won't get the support they need is disgusting and indefensible. Energy bills are still extremely high for most people and too many will needlessly choose between staying warm and keeping their bills affordable. For some, this choice may well be between living and dying. This callous disregard for those that slip through the cracks typified Tory rule under Cameron, May, Johnson, Truss, and Sunak. Why does Keir Starmer want to carry on that tradition which goes against the values that Labour supposedly stands for?

Not cutting the Winter Fuel Payment and expanding support for poor pensioners is another option, though Labour may feel such moves will show it cannot make tough choices, so we remain financially prudent. Electricity and gas are the main contributors to inflation suggesting there is room for non-inflationary investment decisions. Politics is not always about doing what is financially prudent or economically literate but signifying to voters the economy is in good hands. Such decisions are rinsed in symbolism. Masterful politicians know how to be effective while retaining the symbolism of their actions in one go. Starmer is not a masterful politician.