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The Independent UK
The Independent UK
Archie Mitchell

With a £5bn hole to fill, the true battle on Keir Starmer’s hands is only just beginning

Sir Keir Starmer forced the tattered remnants of his welfare reforms through the Commons on Tuesday night, staving off what would have been an embarrassing defeat.

But the prime minister can barely say he won the battle, and may have lit the touchpaper on a wider war for the future of the Labour Party.

The unedifying spectacle of a leader with a huge majority after just a year in Downing Street chopping and changing one of his flagship bills to buy off backbench rebels has badly damaged his authority.

Worse, a bill that was once set to save the taxpayer £5bn will now end up costing £100m by the end of the decade, leaving Chancellor Rachel Reeves with a gaping hole to fill ahead of the Budget this autumn. The director of the influential Institute for Fiscal Studies (IFS) said the passage of the bill through its second reading was “not a triumph”.

Paul Johnson said it looked like the initial attempt to save £5bn had been first cut in half, then watered down further to the point it “will now save nothing... and could even end up costing a few tens of millions”.

Cabinet Office minister Pat McFadden was sent out on the airwaves on Wednesday to deal with the fallout from the night before, but only added to the questions facing the government. There will be “financial consequences”, he said, but he refused to speculate where tax hikes would be targeted and stressed that “our Budget has lots of moving parts”.

But, having guaranteed she will keep her job, he set the stage for an almighty tussle over the coming months between Ms Reeves and the rest of the cabinet as she searches across Whitehall for at least £5bn of savings - on top of any shortfalls resulting from slower than expected economic growth and the fallout of Donald Trump’s trade war.

The welfare farce comes after a series of chaotic U-turns by Sir Keir, which have all followed a seemingly similar pattern: taking an unpopular step, doubling down, ploughing on amid mounting criticism - squandering massive amounts of political capital and goodwill among MPs - before eventually bowing down.

It has happened before, and there is no reason it will not happen again.

There has been little consequence for previous missteps over issues like the cutting of winter fuel payments for millions of pensioners, which were eventually reinstated for.

So voters would be forgiven for having little faith this chaotic U-turn will be Sir Keir’s last.

Senior figures in the party are losing faith in the operation inside Downing Street, as has become clear amid repeated briefings against the PM’s chief of staff Morgan McSweeney.

Labour figures have rounded on Morgan McSweeney (Tayfun Salci/ZUMA Press Wire/Shutterstock)

The PM defended his right-hand man in Tuesday’s cabinet meeting, according to a leak to The Times, urging ministers not to turn on colleagues ahead of the anniversary of Labour’s election win.

But the fact Labour’s welfare bill got as far down the tracks as it did, only to be forced over the line with a last-minute capitulation, shows how badly the PM and his staff judged the mood among MPs.

Another problem for the PM is rebellious backbenchers now have the taste for blood. They know that by going public with concerns in sufficient numbers, they can again force the PM’s hand if unpopular policies pop up in the future. With decisions over issues including the two-child benefit cap looming, future rebellions look inevitable.

On top of it all, the PM’s agenda until at least the autumn will now be overshadowed by one issue, the chancellor’s Budget.

The concessions pose a problem for Chancellor Rachel Reeves (PA)

Tax rises, or a fresh round of deep spending cuts, appear inevitable if Ms Reeves is to meet her self-imposed fiscal rules.

The government has promised to set out how it plans to pay for its multi-billion pound U-turn spree “in the usual way”.

But one thing was clear from MPs in the Commons on Tuesday night. For a prime minister who won a 174-seat majority just under a year ago, Sir Keir is governing in a way that is very far from usual.

He desperately needs a reset to regain control of the narrative and get his government back on course. Whether he picks a reshuffle of his cabinet or a reshuffle in Downing Street will become clear in the coming weeks.

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