Portrait of Keir Starmer
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Keir Starmer on Cost of Living

Economic Stabilizer (strong)

Keir Starmer's approach to the Cost of Living crisis as Prime Minister is framed within a broader mission of economic growth and stabilization.

His government inherited an economic situation it described as requiring 'tough decisions to stabilise the economy,' leading to policy actions like increasing the National Minimum Wage and agreeing to pay deals for public sector workers to ease financial pressure.

However, this was tempered by highly controversial decisions, such as scrapping certain Winter Fuel Payments for pensioners, which Starmer defended as necessary for economic stability despite public backlash.

Timeline

  1. As Leader of the Opposition, Starmer criticized the incumbent government over the cost of living crisis and industrial disputes.
  2. As Prime Minister, announced the scrapping of Winter Fuel Payments, citing the need to stabilize the economy despite immediate criticism.
  3. The government's October budget included a 6.7 per cent increase to the National Minimum Wage and increased day-to-day health budget.
  4. Announced the abolition of the two-child benefit cap after initially defending its retention, addressing poverty.

Actions Taken

  1. Wage negotiation/settlement
    Agreed to pay deals with trade unions for NHS and railway workers, increasing public-sector worker pay by 5 to 7 per cent to help with living costs.
  2. Fiscal policy/Benefit change
    Announced the scrapping of certain Winter Fuel Payments for around 10 million pensioners as a 'tough decision' to stabilize the economy.
  3. Legislation/Workers' rights
    Introduced the Employment Rights Bill, which includes a planned 6.7 per cent increase in the National Minimum Wage to £12.21 per hour.
  4. Benefit reform
    His government eventually reversed its initial stance and abolished the two-child benefit cap in the November fiscal budget, a move that directly addresses child poverty.

Related Positions

  • Workers' Rights The introduction of the Employment Rights Bill, raising the minimum wage, is a direct measure to improve the financial standing of workers facing high costs.
  • Pensions and Benefits The initial defense of the two-child benefit cap and subsequent abolition, alongside the scrapping of Winter Fuel Payments, directly impacts low-income households and pensioners.
  • Economic Policy Starmer's overall focus on 'economic growth' and 'modern supply-side economics' underpins his response to the affordability crisis.

Criticism

SNP Westminster leader Stephen Flynn

Challenged the Labour government's retention of the two-child benefit cap, arguing its scrapping would immediately lift 300,000 children out of poverty.

Labour MPs (including McDonnell, Long-Bailey)

Challenged Starmer's policy on the two-child benefit cap, leading to seven Labour MPs having the whip withdrawn after supporting an SNP amendment to scrap it.

Comparison

Starmer's administration contrasts with the previous Conservative government, which he criticized for its handling of the economic crisis.

His government has prioritized immediate wage increases and negotiated settlements to industrial disputes, contrasting with the preceding period of strikes and high inflation.

His decision to scrap Winter Fuel Payments was seen by some as a sharp departure from traditional Labour support for pensioner benefits, despite the later reversal on the two-child benefit cap.