Could welfare cuts be a defining Clause IV moment for Keir Starmer?

For all the talk about encouraging people back into jobs, you cannot “incentivise” many disabled people who are not capable of work, writes Andrew Grice. Yet this might be an unmistakable signal the public will notice about how Starmer’s party has changed

Keir Starmer has invited every Labour backbencher to a face-to-face meeting over the next few days to discuss plans to cut up to £6bn from the welfare budget. For him to devote many hours to such talks when he is embroiled in the Ukraine peace moves tells us three important things.

Firstly, the government is worried about the inevitable Labour rebellion. There is speculation that 80 MPs might oppose highly controversial cuts to benefits for the sick and disabled and that they could provoke ministerial resignations. Significantly, the excellent Gary Gibbon of Channel 4 News reported that about half the cabinet members who spoke at its meeting yesterday called for a rethink on Rachel Reeves’s fiscal rules, while the chancellor claimed ministers had endorsed them. There could be trouble ahead.

Secondly, Starmer has learnt a very painful lesson from Reeves’s ill-fated decision to announce the means testing of the pensioners’ winter fuel allowance last July without first preparing the ground and making a case to Labour backbenchers.

Thirdly, that the prime minister, rejuvenated by his response to Ukraine and his (so far) successful handling of Donald Trump, is determined to force through savings even though there will be a huge public and political campaign against them.

Crucially, the government will need the Commons and Lords to approve plans to tighten the eligibility for personal independence payments (PIP) to help people with higher living costs due to their disability and freeze the benefit next year while increasing Universal Credit to those looking for jobs.

In targeting the disabled, Starmer is entering a minefield where Tony Blair and even George Osborne, architect of the austerity of the 2010-15 coalition, did not dare tiptoe.

There are strong arguments against reform – not least that, for all the talk about encouraging people back into jobs, you cannot “incentivise” the many disabled people who are not capable of work. My colleague James Moore, who knows what he is talking about from personal experience, powerfully sets out the case against change.

The prime minister will face the wrath of disabled campaigners, who once chained themselves to the gates of Downing Street and smeared them with red paint to symbolise “Blair’s blood”. He was considering similar cuts but backed down.

‘For all the talk about encouraging people back into jobs, you cannot “incentivise” the many disabled people who are not capable of work’ (PA)

Starmer will not be able to do that. He needs the money. Ministers insist they have a “moral duty” to reform an unsustainable system and will do so in line with “Labour values”. Yet I suspect they would be treading more carefully and slowly if Reeves was not set to breach those fiscal rules. She is trying to persuade the Office for Budget Responsibility (OBR) fiscal watchdog to count the projected savings in its spring forecast on 26 March. That is why the welfare cuts will be announced next week and why the government is keen to cut about 10,000 civil service jobs.

Reeves does not want to rewrite her fiscal rules to raise borrowing or increase taxes again. She urgently needs savings after the slim £9bn of headroom she gave herself in her October Budget was wiped out by higher government borrowing costs and lower growth. So cuts are her final option.

There is a strong case for reform. The ballooning cost of sickness and disability benefits – due to rise from £64.7bn in 2023-24 to £100.7bn in 2029-30 – would have to be tackled by any government – especially one that needs to boost spending on defence and the NHS and stop other public services getting even worse.

Ministers report that Labour backbenchers are open to persuasion when shown graphs about the projected hike in welfare spending. They are confident the Commons revolt will be much smaller than the number of potential rebels today. The new intake who entered parliament last year are very loyal – and keen to get a toe on the ministerial ladder. Some independent-minded newbies have been made parliamentary private secretaries to bring them into the tent. Even some loyalists felt queasy as ambitious backbenchers queued up to praise Starmer on Ukraine when he addressed the Parliamentary Labour Party on Monday. “There was an awful lot of fawning,” one Starmer ally told me.

The PM should enjoy the plaudits while they last, because they won’t last long. The welfare battle will be bloody and will leave scars. Starmer's own party, including several ministers, will hate these cuts. Labour could lose some voters to the Liberal Democrats, Greens and SNP. But the voters Starmer wants most – former Tory supporters, including those in the red wall – will approve of the cuts. Starmer will survive the gathering storm and, in the eyes of these voters, could emerge strengthened. Nigel Farage’s Reform UK might have less appeal if voters think the PM is doing the right thing.

Might this even be Starmer’s Clause IV moment when – after all the vague talk about missions, milestones and targets – he sends an unmistakable signal the public will notice about how his party has changed?