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Rachel Reeves scrambling to fill hole in public finances after U-turns

UK Politics Live: Labour Government Grapples with U-Turn Accusations Amid Public Finance Turmoil

In a whirlwind day of political developments, the Labour government under Prime Minister Sir Keir Starmer finds itself under intense scrutiny over alleged policy reversals and the dire state of the UK's public finances. As Chancellor Rachel Reeves prepares to deliver her first Budget next month, fresh revelations and opposition attacks have dominated the headlines, painting a picture of a administration struggling to balance fiscal responsibility with public expectations. This live coverage captures the key moments, reactions, and implications as they unfolded.

The day kicked off with mounting pressure on Reeves following her recent admission of a £22 billion "black hole" in the public finances, a figure she attributes to the inheritance from the previous Conservative government. In a speech to the Labour Party conference, Reeves reiterated her commitment to "fix the foundations" of the economy, but critics were quick to pounce on what they perceive as inconsistencies in her approach. "We will not shy away from tough decisions," Reeves declared, emphasizing that her Budget on October 30 would prioritize economic stability over populist measures. However, this stance has fueled accusations of U-turns, particularly on issues like the winter fuel payment and potential tax hikes.

One of the most contentious points revolves around the decision to means-test the winter fuel allowance, a move that would strip the benefit from millions of pensioners not on pension credit. Initially defended as a necessary step to plug the fiscal gap, the policy has sparked backlash from within Labour's own ranks, including from prominent backbenchers and trade unions. Sharon Graham, general secretary of Unite the Union, lambasted the government during a fringe event, calling the cut "a betrayal of working people." She argued that targeting pensioners while avoiding wealth taxes on the rich sends the wrong message. "This isn't change; it's more of the same austerity," Graham said, urging Starmer to reverse course.

Opposition parties wasted no time in capitalizing on the discontent. Conservative leader Kemi Badenoch accused Labour of "flip-flopping" on key promises, pointing to Starmer's pre-election pledges against raising taxes on working people. "They said no to austerity, but here we are with cuts to the vulnerable," Badenoch tweeted, referencing the winter fuel row. The Tories have demanded a full parliamentary debate on the public finances, claiming that Reeves' black hole narrative is exaggerated to justify unpopular decisions. Shadow Chancellor Jeremy Hunt echoed this, stating in a BBC interview: "The books were balanced when we left office. This is Labour's excuse to hike taxes and break promises."

Amid the domestic fray, international dimensions added layers to the day's discourse. Starmer, fresh from meetings with world leaders at the UN General Assembly, faced questions about how global economic pressures—such as inflation and energy costs—might force further policy shifts. Reports emerged of potential delays to major infrastructure projects, including the HS2 rail extension, which Labour had previously committed to reviewing. Insiders suggest that fiscal constraints could lead to scaled-back ambitions, prompting accusations from the SNP and Liberal Democrats that the government is abandoning regional development pledges.

As the afternoon progressed, live updates from Westminster highlighted a series of parliamentary skirmishes. During Prime Minister's Questions, Starmer defended his administration's record, insisting that "difficult choices are necessary to rebuild after 14 years of Tory chaos." He pointed to early wins, such as the establishment of Great British Energy and efforts to tackle NHS waiting lists, but opposition MPs heckled him over the winter fuel U-turn. Labour MP Rosie Duffield, known for her outspoken views, publicly criticized the policy on social media, joining a growing chorus of dissenters who argue it disproportionately affects the elderly in fuel poverty.

Trade unions continued to ramp up pressure, with the TUC congress passing a motion condemning the winter fuel cuts and calling for a wealth tax on the top 1%. Paul Nowak, TUC general secretary, warned that without a reversal, industrial action could escalate. "Workers voted for change, not cuts," he said in a fiery address. This sentiment was echoed by public sector workers protesting outside the conference hall, where banners read "No More Austerity" and "Tax the Rich, Not the Pensioners."

On the fiscal front, new data from the Office for National Statistics (ONS) added fuel to the fire. Figures released today showed public sector borrowing hit £13.7 billion in August, higher than expected, underscoring the challenges Reeves faces. Economists from the Institute for Fiscal Studies (IFS) weighed in, with director Paul Johnson stating that while the £22 billion shortfall is real, the government's response risks alienating key voter bases. "Means-testing winter fuel is a blunt instrument," Johnson noted in an analysis, suggesting alternatives like targeted support could mitigate backlash.

The government's communication strategy came under fire as well. Downing Street sources admitted that the messaging around public finances has been "challenging," with some aides privately conceding that the U-turn label is sticking. Starmer's team has been working overtime to reframe the narrative, emphasizing long-term growth plans. In a leaked memo reported by several outlets, advisors urged ministers to highlight "positive reforms" like workers' rights legislation and green investments to counter the negative headlines.

By evening, attention turned to potential Budget leaks. Speculation is rife that Reeves might introduce a capital gains tax increase or reforms to inheritance tax to raise revenue without directly hitting income tax or VAT, as per Labour's manifesto commitments. However, business leaders expressed concern. CBI chief Rain Newton-Smith called for "stability and predictability," warning that any sudden tax rises could stifle investment. "The government must tread carefully," she said in a statement.

Reactions from the public have been mixed, with polls showing a dip in Labour's approval ratings. A YouGov survey indicated that 55% of voters disapprove of the winter fuel changes, particularly among over-65s. Social media buzzed with #LabourUTurn trending, as users shared stories of affected pensioners. One viral post from a retired nurse read: "I worked my whole life for the NHS, and now I'm choosing between heating and eating. Shame on you, Starmer."

As the day wound down, Starmer addressed party faithful at a reception, vowing to "stay the course" despite the noise. "Change isn't easy, but it's essential," he said, drawing applause from supporters. Yet, with the Budget looming, the coming weeks promise more turbulence. Will Labour hold firm, or will internal and external pressures force more concessions? The political landscape remains fluid, with every update potentially shifting the balance.

In related news, by-election results from several councils showed Labour holding seats but with reduced majorities, signaling potential voter fatigue. Meanwhile, on the international stage, Starmer's push for closer EU ties drew praise from Remainers but criticism from Brexiteers within his party.

This evolving story underscores the precarious tightrope Labour walks: delivering on promises while navigating economic realities. As Reeves finalizes her Budget, the stakes couldn't be higher. Stay tuned for further developments in what promises to be a defining period for the new government.

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[ https://www.express.co.uk/news/politics/2078147/politics-live-u-turns-public-finances ]