Keir Starmer's government avoided a parliamentary defeat regarding a welfare bill by eliminating a central element, affecting public finances. Changes to the personal independence payment (Pip) previously aimed at saving 5 billion a year are now projected to yield no savings within five years, leaving a significant financial gap. Additionally, restoring the winter fuel allowance incurs a cost of 1.25 billion. These reversals consume a large part of the 10 billion headroom created against fiscal rules, raising concerns about compliance with budget plans amid potentially downgraded growth forecasts.
After stripping the Pip changes out of the bill completely on Tuesday, the Resolution Foundation estimates there will be no savings in five years' time, leaving a 5bn hole in the chancellor's plans.
Reeves also faces a 1.25bn cost from her decision to restore the winter fuel allowance to most pensioners having stripped it away last year.
These U-turns will swallow most of the 10bn headroom the chancellor created for herself against her fiscal rules at her spring statement.
There are already fears in the Treasury that the summer stocktake of forecasts the OBR is now undertaking, would result in a downgrade to growth expectations.
Collection
[
|
...
]