Rayner’s leaked letter and winter fuel u-turn: ‘There is an alternative inside Labour’
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Keir Starmer has backtracked on his winter fuel cuts, raising the threshold for eligibility of those who can receive it, on the same day a fracturing within his government emerged with the leak of a document sent from Angela Rayner to Rachel Reeves. What does all this mean for Labour?
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In brief…
- The Prime Minister says a change in rules around winter fuel cuts are due to an improving economy, and his change of heart (which he says is not a u-turn) has been welcomed among many Labour MPs.
- The News Agents say this could open the door to groups affected by other unpopular Labour policies – such as farmers and employers – to push the government to rethink more of its key actions since coming to power.
- This all happened the same day as a leaked document from Angela Rayner to Rachel Reeves was made public, which called for tax rises, despite campaign promises.
What’s the story?
After Labour’s decisive and victorious win at the 2024 election, which many saw as a vote for change and a swing to the left after 14 years of Tory rule, many people were confused when it introduced its first policy as government.
Less than a month after Labour came to power, chancellor Rachel Reeves announced that 10 million pensioners would lose winter fuel payments, blaming the decision on a £22 billion black hole inherited from the Tories, with money only to be given to people with income of less than £11,500 per year.
"It really pissed a lot of the party off straight away, and left many complaining that this wasn't the Labour Party they just voted into power," says Emily Maitlis.
It did not go down well – and neither did further Labour actions, such as keeping the two-child benefit cap, increasing National Insurance contributions for employers, imposing a minor inheritance tax on farmers, or a £5 billion cut in Personal Independence Payments to disabled people.
"Winter fuel payments had been about £300 or so since they were introduced," says Lewis Goodall.
"It wasn't being upgraded with inflation, so we're not talking about a huge part of the welfare state, but it was important for some people, and it has taken on this outsized, almosttalismanic importance for the Labour Party."
Today, 21 May 2025, Keir Starmer has announced a change in winter fuel cuts, telling the House of Commons that the £11,500 threshold would be increased – but denying it was any sort of u-turn.
Starmer claims the increase is because of an improved economy, due to his government of course.
His u-turn (which is definitely not a u-turn) comes at the same time as a leaked document, titled 'alternative proposals for raising revenue' show deputy leader Angela Rayner urged Reeves to increase taxes in the Spring Statement, including corporation tax on super-wealthy businesses such as banks, to help the government plug its deficit.
"It outlines something which has actually been completely lacking from the Labour government these last few months, which is an alternative economic strategy," Lewis says.
"She's suggesting billions of pounds worth of increases in tax rises – largely on the wealthy, although not exclusively – also on lots of savings rates and other things.
"This has been obviously ignored by Rachel Reeves and the Chancellor, but nonetheless it’s interesting that this letter should emerge now."
Labour MP admits 'first 10 months in government has not been good enough'
What are the implications of the winter fuel u-turn?
While Starmer claims any changes made to winter fuel eligibility are due to an improving economy, some will see his moving the goalposts as a sign his government could change their mind on some of their other unpopular legislation.
And there's no group louder, or more likely to block the street of London with tractors, than the farmers.
"This opens the door for the farmers to say: 'Oh, I'm so pleased that you're looking at winter fuel. Could you now come back and look at our inheritance tax?' Emily says.
"It opens the door clearly for disability and welfare to be looked at.
"It may even open the door for businesses to start talking about NI contributions, which I think we now recognise are pushing up inflation."
When will Labour's winter fuel u-turn come into effect?
What do Labour MPs think of Starmer's change of heart?
Scottish Labour MP Brian Leishman tells The News Agents he welcomes the change in winter fuel eligibility, describing it as "the right thing to do".
He advocates for total reinstatement of winter fuel payments, even for very wealthy pensioners, saying it's the only way to ensure those most at need are getting the £300.
"What we're doing, or what we're proposing to do, is completely wrong," Leishman says.
"It's the opposite of Labour Party values and its exact opposite of that caring and compassionate UK that we really should be striving to build."
Leishman has campaigned for a wealth tax since winning his Alloa and Grangemouth seat in July last year, and says the super-rich in the UK must "pay their share and more".
He wants to introduce a wealth tax of 2% on anyone with assets of more than £10 million, which he says would generate around £24 billion a year for the government.
This, he estimates, would affect around 20,000 people in the UK, many of whom he claims already want to contribute more, and says this relatively small number means the risk of Capital Flight (where the rich leave a country due to increased taxation) would be slim.
He is also supportive of Angela Rayner's proposals leaked to the press.
What's The News Agents' take?
Lewis Goodall describes the events as a "day of firsts" for the Labour government.
Not only did it mark Starmer's first u-turn (which is still not a u-turn), but it also suggested to Labour voters that there may be an "alternative economic prospectus" within the cabinet, with Rayner's leaked letter potentially offering a more left-wing vision for this centre-left government.
"Labour has been pretty iron-clad in terms of their will on all of these matters, but now it opens up a suite of questions on potential other U turns," Lewis says.
"Most notably around personal independence payments, because that vote will be coming up in June, and disability benefits."
And while the Rayner-leak was no power grab from the government's deputy leader, it certainly won't harm her chances in the future if she sets out her vision early.
"Rayner will be widely fancied to take over as prime minister," adds Lewis.
"She's clearly flying a kite. What she's saying – or someone on her team is saying – is, maybe there is an alternative here.”
Listen to the latest episode of The News Agents.
