Winter fuel changes 'sensible' but damaged UK Government reputation, IFS director says

Paul Johnson claimed the policy had a "much bigger" reputational effect than the Government had anticipated, and meant they were known around the world for "taking money away" from pensioners.

Speaking on Times Radio, Mr Johnson explained the fiscal impact was “small” but the reputational damage severe.

He said: "I was talking to the head of an international insurance company recently who said that the one thing everyone around the world knows about this government is that it's taking money away from helping the cost of fuel for pensioners. So it's one of those things which actually from a sort of fiscal point of view is pretty small but has turned out I think to be much bigger from a political and reputational point of view than the government expected. And it's clearly, my view is it's a perfectly sensible thing to do.

“A lot of that money, most of that money given that it's still available on a mean sensitive basis went to people who are perfectly well off but of course there are some people on modest incomes who lost as a result of that. The two child limit, my understanding is the polling on that is that the two child limit is actually pretty popular. Again we're talking relatively small amounts of money but a small number of billions so it's not completely trivial amount of money. And the problem with the two child limit is that it really does affect some of the very poorest families."

His comments come a day after Sir Keir Starmer’s former transport secretary urged him to stage an “economic reset” and rip up tax rules to get voters onside after Reform UK’s success in the local elections.

MP Louise Haigh, who resigned as a Cabinet minister in November, said welfare reforms and the loss of winter fuel payments were “totemic” for many voters.

She called for a strategy that is “confident in our values, sets the terms of the debate and takes the fight to Reform, rather than letting the fight come to us”.

Ms Haigh added: “I believe the only way to achieve that is through an economic reset, through ripping up our self-imposed tax rules and by a serious programme of investment and reindustrialisation.”

Labour and the Conservatives are under pressure to reverse their parties’ fortunes after Reform picked up 10 councils and more than 600 seats in Thursday’s polls.

However, Mr Johnson claimed raising taxes would be problematic.

He said: "It may not be such a good political idea increasing income taxes or VAT or whatever specifically she has in mind. But yes if the government really wants to significantly increase spending then it's going to need to increase taxes to do it. It's the obvious point we always make. It is worth saying in this context of course that it's Reform that has won big through this election and if you look at their manifesto from last year they were looking at massive tax cuts and massive spending cuts."

Responding, SNP MP Dave Doogan said: "It seems the Labour Party now has an international reputation for robbing pensioners of their winter fuel payment and rightly so - it was a disgraceful decision and is a perfect example of the depths the UK Government is willing to plunge in broken, Brexit Britain.

"The Labour Party keep telling us the world has changed, but their words have fallen well short of the actions they need to take in the face of a global economic storm.

"It's plain as day that Sir Keir Starmer must ditch the fiscal rules to invest in growth and public services with the results of last week's English local elections demonstrating the Labour Party's failure to use the opportunity of leadership to change lives for the better.”