Unions warn Reeves they could abandon Labour if she ‘panders to the Right’ with more welfare cuts
Rachel Reeves has warned that Labor’s biggest donors could leave the party if it continues to “lean right” on the Budget.
A union boss’s warning came as the chancellor interviewed him Bloomberg TV He confirmed he was pushing for further spending cuts, including on welfare.
Steve Wright, general secretary of the Fire Brigade Union (FBU), said: Independent He said Labor was at a crossroads as it debated with unions like his whether they should now support the party financially.
The loss of union donations ahead of the next general election will cost Labor millions. In the first quarter of 2025 alone the party received almost £1.2 million from unions.
But despite this threat, the chancellor has made clear that he needs more space than the £9.9bn he had previously given himself in a turbulent economic period.
This will mean both tax increases and very significant budget cuts; The Chancellor admits this will not go down well with the public, but many believe the survival of Keir Starmer’s government will seal its fate.
Ms. Reeves touched on the economic volatility caused by the war in Ukraine and Trump’s tariffs. Bloomberg TV: “The headroom has been lower in the past. It was as low as six and a half billion pounds in the last parliamentary session. Obviously, more headroom would be nice, but there are always trade-offs, because of course to create more headroom you have to raise taxes further or reduce spending further, but we will continue to manage that balancing act.”
He insisted he wanted a “pro-growth budget” and confirmed he was looking at welfare cuts again despite a major revolt from Labor MPs ahead of the summer that derailed previous efforts.
He said: “It’s important to make sure that all budgets that go into the welfare budget are well managed and we need to see reform of our welfare system. And that’s what we’ll continue to do with this reform.”
“We have made some changes to the so-called Universal Credit system to reduce incentives for taking out health-related elements.
“Just a few weeks ago, I announced a youth guarantee that will help young people who are not in education, employment and training to get back to work. Like many countries around the world, especially since the pandemic, we have experienced challenges in terms of youth unemployment and youth inactivity, and we are determined to turn this around with special programs targeted at these young people.”
However, talk of social benefit cuts fuels rebellion against the government within the union movement.
But unions, which have been pressing for increased spending financed by wealth taxes on banks, big business and the super-rich, already feared the government would be dragged down by Sir Keir’s latest reshuffle, which many in Labor see as a “right-wing coup”.
In addition, it emerged that influential ministers had privately criticized the VAT on independent school fees and the abolition of non-dom status, while the cabinet was pressing against further wealth taxes.
To talk IndependentMr Wright said although he did not personally support disaffiliation, it had a lot of support in his own FBU union, as well as unions such as Unite, the Communications Workers Union (CWU) and Aslef.
He said: “I think most unions are facing calls from our members that they want to leave [Labour]. I think there are different reasons for this. “But in many cases there are people on the left who want us to leave because of the lack of wealth taxes, the removal of the two-child benefit cap or the lack of benefit cuts.”
He admitted union members were looking at Jeremy Corbyn’s Your Party, while new Greens leader Zack Polanski said his party had attracted the attention of many former Labor supporters.
Mr Wright said: “Wealth tax is popular with our members. People understand that if you actually take a bit more money from the super-rich and put it into services it will work well.”
But he warned Ms Reeves and Sir Keir were “leaning to the right” on issues such as the economy and immigration.
