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Rachel Reeves Has warned that if she continues to “veer to the right” on the budget she could alienate Labour’s biggest donors from the party.
A warning comes from a trade union boss as chancellor gave an interview to bloomberg tv Confirming that she is pushing for more spending cuts, including welfare.
Steve Wright, General Secretary of the Fire Brigades Union (FBU) told Independent Labor is at a crossroads with unions like theirs and debating whether they should support the party more financially.
The loss of union donations could cost Labor millions ahead of the next general election. In the first quarter of 2025 alone the party received approximately £1.2 million from trade unions.
But despite the threat the Chancellor has made clear that in turbulent economic times he needs more scope than the £9.9 billion previously promised.
This would mean both significant budget tax rises and cuts, which the Chancellor admits will not be popular with the public, but which many believe could decide the fate of the survival of Keir Starmer’s government.
Ms. Reeves addressed the economic instability caused by the war in Ukraine and Trump’s tariffs, saying bloomberg tv: “Headroom has been low in the past. In the last parliamentary session it was as much as six and a half billion pounds. Obviously, more headroom would be good, but there is always a trade-off, because, of course, to create more headroom, you have to raise taxes further or cut spending further, but we will continue to manage that balancing act.”
She insisted she wanted a “pro-growth budget” and confirmed she was reconsidering welfare cuts despite a mass rebellion by Labor MPs before the summer that derailed previous efforts.
He said: “It’s important to make sure all budgets including the welfare budget are well managed, and we need to see reform in our welfare system. We will continue that reform.”
“We have already made some changes to something called the Universal Credit system to reduce the incentives to get the health elements in place.
“Just a few weeks ago, I announced a Youth Guarantee to help young people deprived of education, employment and training get back into 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 change this with special programs targeted at those young people.”
However, the mention of welfare cuts is fueling a revolt against the government within the trade union movement.
But trade unions – which have been pushing for increased spending financed by a wealth tax on banks, big corporations and the super-rich – were already fearful of government drift after Sir Keir’s last reshuffle, which many saw as a “right-wing coup” within Labour.
added to Further Cabinet revelations against property taxes revealed Influential ministers also privately criticized the abolition of VAT and non-dom status on private independent school fees.
talking to IndependentMr Wright said that although he does not personally support disaffiliation, it has strong support within his FBU union as well as unions such as Unite, the Communication Workers Union (CWU) and Aslef.
He said: “I think most unions are facing calls from our members about wanting to leave [Labour]I think they have different reasons for this. “But in many cases there are people on the left who want us gone because of the failure to implement the wealth tax or the removal of the two-child benefit limit or the cuts to welfare.”
He admitted that union members were eyeing Jeremy Corbyn’s Your Party, while new Green leader Jack Polanski said his party was attracting many former Labor supporters.
Mr Wright said: “The wealth tax is popular with our members. People understand that actually, if you take a little more money from the super rich and invest it in services, that would be good.”
But he warned that Ms Reeves and Sir Keir were “moving to the right” on issues such as the economy as well as immigration.