The money Rachel Reeves saved on Winter Fuel Payments has been wiped out five times over (Image: Getty)
It was her first big announcement and was designed to show financial markets that she was willing to play hardball with the UK finances, no matter what the political cost.
Treasury calculations suggested that she would save the nation £1.4billion a year. Which sounds a lot but is nothing compared to the sums she has subsequently squandered by her inept handling of the economy.
If she’d made a better fist of things, she’d have been able to retain the without breaking any of her blessed fiscal rules.
By my calculations, she could even have lifted it £1,800 a year.
In practice, Reeves saved less than the £1.4billion originally claimed because at the same time, she urged the poorest pensioners to claim means-tested state benefit Pension Credit.
A successful Pension Credit claim secures the and gives pensioners £3,900 in additional extra state benefits on average as well.
Think tank Policy in Practice reckons there were 158,000 more Pension Credit claims than the Treasury expected, at a cost of £246million.
Which cuts the saving to around £1.15billion.
That pales in comparison to the fortune Reeves wasted by allowing the economy to slither out of her control.
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Scrapping the wasn’t the only mistake she made. I put my thinking cap , and there have been more since.
Talking down the economy, terrifying the nation with Budget tax threats and hitting businesses with £40billion of tax hikes are among the worst.
Reeves also rewrote her own “non-negotiable” fiscal rules to justify borrowing another £30 billion, leaving the nation’s finances on a knife edge.
She left herself with “fiscal headroom” of just £10billion. That’s now been wiped out by the surge in gilt yields, as bond investors demand more to borrow from the UK because .
Sanjay Raja, chief UK economist at Deutsche Bank, said the rise in gilt yields could add £10billion a year to cost of paying interest on the UK’s annual debt.
That money comes from our taxes, remember.
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In its original form, the cost the UK around £2billion a year. If Reeves hadn’t squandered that £10billion she could have raised it sixfold and still broken even.
That would have been enough to increase the to £1,200 a year, up from £200 today.
And she could have increased the higher rate for the over 80s from £300 to £1,800.
I’m not saying Reeves would or should have done that. But it shows how the relatively tiny savings from the have been thrown away many times over.
Which won’t please the estimated two million low income pensioners shivering at home because their annual income is just above the Pension Credit claims cut-off.
Nor does it justify the extra , according to Labour’s own calculations.
Reeves destroyed Labour’s early popularity for tiny gain. Her subsequent errors have cost us a lot, lot more. And there are plenty more to come.