The government is set to extend a key hardship fund to help struggling households in England, as chancellor Rachel Reeves comes under growing pressure to soften her plan to axe winter fuel payments for millions of pensioners.
Ministers are set to announce in coming weeks that the household support fund will be rolled over beyond September 30, when it is currently due to end, Whitehall officials told the Financial Times.
The move is expected after Sir Keir Starmer uses a keynote speech on Tuesday to warn that “frankly, things will get worse before we get better” as his administration seeks to grip “not just an economic black hole but a societal black hole” he will claim was left behind by the Tories.
In the No 10 rose garden the prime minister will tell an audience of 50 people he met during the election campaign — spanning apprentices, teachers, nurses, small business owners and firefighters — that the Downing Street premises “once used for lockdown breaking parties, are now back in your service”.
Vowing that there will be “no more politics of performance” under his leadership, he will insist that “things are being done differently now”, while seeking to manage expectations over how long it will take to achieve meaningful change in the country.
There has been a rising clamour among Labour parliamentarians for the government to extend the household support fund, which was launched in autumn 2021 with an initial £500mn pot of cash to help people buy winter essentials and has already been extended four times, with more than £2bn additional funding.
English councils use the fund to hand out small payments to help vulnerable families meet daily needs including food, clothing and utilities. It is expected to be extended into 2025, but the exact timetable and funding for the scheme is yet to be finalised.
Labour peer Baroness Ruth Lister, who was co-chair of the all-party parliamentary group on poverty during the last parliament, said: “The household support fund is a sticking plaster that is still crucially needed.”
While an extension will be welcomed by Labour MPs, Reeves is nonetheless set to face increasing pressure from within her party’s ranks when MPs return to Westminster next Monday over her plan to scrap winter fuel payments for millions of pensioners.
Under the changes only the poorest pensioners who are eligible for the pension credit will qualify for the fuel allowance.
One Labour MP warned of an “internal backlash” to the plan, while another told the FT “there is a lot of concern and there will be a lot of pressure for this not to be the end of the matter”, adding: “Rachel will hear that message very strongly.”
The second of the two Labour MPs, who did not want to be named, urged the chancellor to widen pension credit eligibility and introduce a tapering system to avoid a cliff-edge for struggling pensioners just beyond the threshold to receive the benefit.
Fellow Labour MP Rachael Maskell, a former frontbencher who is chair of the all-party parliamentary group on ageing and older people, has not ruled out backing an opposition motion to force the government to debate the proposal.
“Many colleagues . . . are concerned about these measures and certainly we’ve written to the chancellor and have asked for a meeting,” she told Times Radio last week.
Other Labour grandees weighed in over the weekend. Baroness Harriet Harman, former deputy Labour leader, indicated the government may be looking to tweak its plan.
“It might be that they decide to make a different cut-off point, so those discussions might be under way,” she told Times Radio.
However, government insiders indicated that Reeves was unlikely to budge on the issue.
While unveiling the plan last month, she insisted difficult decisions were needed to “fix the mess” and fill the “black hole” in the public finances that she claimed was left by the last Conservative administration.
Her Cabinet colleagues have echoed her argument in recent weeks, with chancellor of the Duchy of Lancaster Pat McFadden warning on Sunday: “We have got a difficult economic inheritance, there is no point in running away from that, and we have a number of challenges.”
Reeves has rolled the pitch for both further spending cuts and tax rises in her first Budget, set to take place on October 30.
Her move to axe the winter fuel payment as a universal benefit for pensioners was read not only as a signal that Labour would show restraint on spending, but also that it would pivot away from focusing help on older voters.
In his speech on Tuesday Starmer will add weight to that interpretation with an emphasis on the working-age population, promising “the decent, hard-working people who make up the backbone of this country” that “this government is for you”.
He will liken his task as prime minister to the communities that rallied round to mitigate the fallout from the riots over the summer.
Starmer will say: “The riots didn’t just betray the sickness, they revealed the cure, found not in the cynical conflict of populism but in the coming together of a country the morning after and cleared up their community.”
He will pledge that his government will do the “hard work” to “root out 14 years of rot” under the Conservatives.
Tory chair Richard Fuller hit back at Starmer’s “performative” speech and said that in fewer than 100 days, Labour had become “engulfed in sleaze, handed out bumper payouts to its union paymasters with ‘no strings’ attached and laid the ground work to harm pensioners and tax working people”.
A government spokesperson said: “We are absolutely committed to supporting pensioners and tackling the scar of poverty, despite the dire state of the public finances we have inherited . . . More details on the household support fund will be set out in due course.”
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