Reeves Faces New £35 Billion Black Hole – Guido Fawkes

Labour U-Turns Costed: Reeves Faces New £35 Billion Black Hole

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There is almost no detail on Labour’s upcoming spending U-turns. Chaotic briefing sessions after the winter fuel U-turn at PMQs and yesterday’s two-child benefit cap signalling have left hacks exasperated. The costs will make Treasury officials and taxpayers more so…

Analysis commissioned by the Institute of Economic Affairs and given to Guido shows Reeves is facing the possibility of a reverse black hole larger than her original ‘£22 billion’ gap.  Experts currently speculate that raising the pension credit threshold, currently at £11,800 a year, would be Labour’s most likely path to extending winter fuel.

• A £1,000 increase would cost £1.6 billion in the first year with a total cost of £7.3 billion in the 2025-29 period.
• A £3,000 increase would cost £4.8 billion in the first year with a total cost of £23 billion in the 2025-29 period.

A standalone abolition of the two-child benefit cap is also estimated to cost a total of £10.2 billion to the taxpayer in the 2025-29 period. A third of the cost of the Chagos surrender…

Downing Street has additionally signalled that it is examining ways of reducing the £3.4 billion PIP benefit cuts by lengthening a “transitional period” or otherwise watering them down. In that case Reeves is looking at a new reverse black hole worth up to circa £35 billion…

The Chancellor gave herself £9.9 billion of ‘fiscal headroom’ at the budget – most of which is already being obliterated by steadily rising borrowing costs. As Guido reported Downing Street’s succession of panicked U-turns has aggravated Reeves. If those fiscal rules change – which Downing Street did not categorically rule out yesterday – Labour’s promise of economic credibility will be entirely shot…