The Government’s Chagos Islands deal has never made sense. Giving away a strategically important territory would be unwise in a changing world. Giving it away to Mauritius, which is 1500 miles from the Chagos Islands, has no historic claim to the territory and whose Government is currently cosying up to Russia and China, is positively reckless.
It doesn’t stop there. Doing all this without asking the Chagossians, who have been forced to make their disapproval clear in public and in the courts, having not been properly consulted in private, is visibly unjust. And then paying – paying – Mauritius what is believed to be between £9 billion and £18 billion for the pleasure of this strategically unwise, democratically unjust giveaway is beyond belief.
These are all good reasons to shelve the deal, but none of them, I suspect, is the reason why the deal was shelved over the weekend.
In a logical and sensible world, this dog’s dinner of an agreement would never have got off the ground. But politics is not always either logical or sensible.
As it is, the reason for this postponement lies not thousands of miles away in the sun of the Indian Ocean, nor even in Washington DC, Beijing or Moscow. It’s much closer to home: Labour’s backbenchers are feeling the squeeze.
It would be an understatement to say that the local elections set off alarm bells for many MPs. Hordes of them can see Reform gaining ground in their constituencies, including among those voters directly switching away from Labour.
square HUGO GYE Labour is defiant against public anger – but we can't go on like this
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The cuts to the winter fuel payment, which seemed painful enough politically at the time, are now seen to have set the scene for this rebellion. Those who lost out directly are angry, but so are many others, particularly those who now argue that the Labour Party is retreating on what it previously touted as one of its core competencies: the provision of welfare.
Nigel Farage has further weaponised the issue by comparing the savings made to the amounts spent on housing illegal immigrants, including in hotels. The message is simple: Brits are suffering the cost of cuts while the Government squanders money elsewhere.
Now, Rachel Reeves is back for more. Next month, welfare reforms that the Government says are intended to save £4.3bn are set to come up for a Commons vote. The measures include restrictions on personal independence payments (PIP) and restricting welfare access for under-22s.
This is not what newly elected Labour MPs believed they were standing in order to do. While they wore the winter fuel cuts, the experience of last summer, combined with the local election drubbing, has stiffened their resolve not to go along quietly this time. Over 130 Labour MPs are reported to have signed a letter to the chief whip declaring that they won’t support the measures.
Yes, the Government has lots of MPs, and they’d likely win the vote despite it, but that’s a huge potential rebellion for an electorally dominant Prime Minister to face less than a year after his landslide victory. The experience of the coalition years teaches that backbench discontent about difficult austerity decisions only ever grows, it doesn’t get better with time, so Downing Street must act to try to draw some of the sting from the issue.
At least some of the rebels may be reassured by some sort of watering down of Reeves’ changes, though the Chancellor will be reluctant to pass up a rare saving. But it inevitably also means that the Government is under growing pressure to eliminate other, more egregious, items of expenditure which are visibly wasteful – and particularly those which offer Farage and other opponents a readymade comparison to point to.
The line writes itself: they took winter fuel payments from pensioners to save £1.4 billion, while spending £5 billion accommodating illegal immigrants. Now they’re taking PIP from disabled people and saving £4 billion, while handing Mauritius billions to take the Chagos Islands. (Even writing that, I can hear it in Farage’s voice).
In other words, it isn’t just that Keir Starmer’s own parliamentarians and party instinctively hate the prospect of further welfare cuts; it’s that they fear them, too.
A sizeable boost to growth, as the Labour manifesto promised, is still the only surefire way out of the fiscal fix the Chancellor is grappling with, but with taxes up, productivity still stuck in the mire and Trump taking a wrecking ball to global trade, that seems a long way off.
So MPs can also be pretty sure that they will be asked to swallow plenty more bitter pills on spending and tax in the months and years to come. Evidently, a lot of them have already decided that enough is enough, and savings must be found elsewhere instead.
As a result, the Chagos deal is paused, perhaps indefinitely – the right outcome, if not for the right reasons.
That’s only the beginning of what I hope will become a backbench campaign to identify and press for better savings elsewhere in our gigantic state. For example, I expect we will soon hear Labour MPs asking why the Treasury and DWP aren’t doing more to cut the estimated £6.5 billion annual cost of benefits fraud, rather than cutting payments to honest claimants.
It’s a good question – soon we’ll find out if ministers have a coherent answer.
Mark Wallace is the chief executive of the Total Politics Group
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