Winter fuel payment latest: Rachel Reeves warns tougher choices ahead after allocation to plug ‘£22bn black hole’

British pensioners will be hit hardest by a series of brutal cuts announced by new Chancellor Rachel Reeves to plug a £22bn black hole in the country’s finances.

To cheers from MPs, Ms Reeves announced she would scrap the pensioner’s winter heating allowance for almost 7 million households who currently receive it.

The bold winter fuel allowance measure – a benefit first introduced by Labour’s Tony Blair in 1997 – is similar to a policy proposed by Theresa May in 2017, when the outcry over the proposal nearly derailed the Conservatives’ election campaign. The plan was not included in Labour’s election manifesto this year and has apparently come as a shock to MPs.

Our political editor David Maddox tells us the full story:

Jeremy Hunt has said people will “smell the rat” over Rachel Reeves’ comments on the state of public spending.

The shadow chancellor told the BBC: “I think what’s going to make most people stink this morning is that on the one hand Rachel Reeves says there’s a big black hole and on the other hand she finds 22%, which is 10 times inflation, to pay junior doctors, which is almost three times inflation for everyone else in the public sector, without asking for any productivity improvements in return.”

The Labour government has “let down another generation of families” by cancelling a raft of planned social care reforms, the architect of the plans has warned.

Rachel Reeves announced on Monday the cancellation of the Dilnot reforms, along with a series of other spending cuts to plug a black hole in public finances left by the previous Conservative government.

Sir Andrew Dilnot, whose government-backed commission proposed capping social care costs, called the changes a “tragedy”.

Our political correspondent Millie Cooke tells the full story:

Robert Jenrick delivered a series of “hard truths” to the Conservatives in a leadership campaign video released this morning.

He said: “The even harsher truth is that the severity of these challenges now threatens our future.”

Mr Jenrick said the Conservatives were the country’s “best hope” but had “a mountain to climb and real choices to make”.

The Newark MP added: “We will not win back people’s trust with platitudes. I believe our people and our Parliament must be sovereign. I believe that anyone who arrives here illegally must be deported within days. I believe that ending mass immigration will not be easy. But we must do it.”

Scottish Finance Minister Ivan McKee said Chancellor Rachel Reeves “absolutely should have known” that cuts were needed when the new Labour government came to power.

The SNP Holyrood minister told BBC Scotland’s Good Morning Scotland programme: “The Labour Party should have been aware of this situation. They were either incompetent in not checking the figures, which were readily available during the election campaign, or they were very misleading about the process that took place here.”

Asked whether the cuts amounted to austerity, he said the Chancellor had “been very clear that there will be further cuts on top of what has already been done with the winter fuel payments, which is very worrying, so it is absolutely austerity and there is no doubt about it.”

He said the Scottish Government now had “difficult decisions to make” and refused to commit to maintaining the universal aspect of the winter fuel payment allowance, adding that it still needed to review the figures surrounding it because “we were only informed about it 90 minutes before it was announced”.

He also took aim at Scottish Labour politicians who he said had ruled out a return to austerity: “During the election campaign Ian Murray said it was ‘bullshit’ that Labour’s austerity cuts would be the consequence of a Labour government being elected, so when you have him in your manifesto maybe make him swallow that ‘bullshit’ because he has been absolutely proven wrong.”

Sir Keir Starmer could visit the community reeling from the Southport stabbing on Tuesday, the Chancellor has suggested.

Asked whether the Prime Minister would be in the north-western seaside town, Rachel Reeves told Sky News: “I’m sure he’ll be there and I know the Home Secretary is already there.”

Responding to the attack, she said: “What is happening in Southport is every parent’s worst nightmare. And my thoughts and prayers are with all the families affected.”

“I also pay tribute to the emergency services, particularly Alder Hey Hospital, who are caring for the children and families who have been affected by what happened yesterday.

“Nothing can prepare you for something like this. And I think everyone in our country is thinking about this community and these families today.”

Jeremy Hunt has said Rachel Reeves’ claims that the Conservatives have left a £22bn deficit in the public finances have left him “angry”.

The shadow chancellor yesterday described Ms Reeves’ statement in the House of Commons as a “political exercise” aimed at damaging the Conservative Party.

He told BBC Radio 4’s Today programme that there were “serious pressures on the public finances” but that his party had a plan to boost productivity to tackle them.

The Chancellor was pressed on whether she had chosen to scrap the winter fuel payment for pensioners in order to favour public sector workers.

Ms Reeves replied: “Their wages have fallen relative to the private sector over the last decade. This is the first time in ten years that they’ve had a real pay rise. And I think that’s right.”

She added: “We had to make some tough decisions yesterday. And the changes to the winter fuel payment to limit it to pensioners on Pension Credit was a tough decision. But it is a decision that will save the public purse £1.5 million a year.”

The minister insisted that she was not “targeting any group” and that “more difficult choices await us in the autumn”.

Rachel Reeves said the cost of the junior doctors’ pay rise was £350m, on top of the £9.4bn earmarked for pay rises for the rest of the public sector.

Asked about the cost of cutting junior doctors’ pay, the Chancellor told Times Radio: “It’s £350 million.”

She said it was a “drop in the ocean” compared to the £1.7bn cost of industrial action to the economy last year.

Chancellor Rachel Reeves has warned that the government has made “difficult decisions” to plug the £22bn black hole that Labour says the Conservatives left in the public finances.

She told Sky News: “There are difficult decisions to make but that’s part of government. I accept those decisions even if they’re not the ones I would have wanted to make.”

But she said the move was about “being able to make a deeply rewarding change and being able to grow our economy and get us out of the mess that we inherited.”

She added: “I’m proud of our record over the last three and a half weeks. And this is just the beginning.”