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Politics latest: Treasury minister challenged over reason for winter fuel U-turn

Rachel Reeves has announced the winter fuel payment will be restored to all pensioners with an income of 拢35,000 or less. The government is claiming an improved economy has allowed for the U-turn.

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That's all for tonight.

Join us again for more politics again in the morning - as we get a day closer to the spending review.

Increase defence spending or start learning Russian, NATO boss tells Britain

The government has spent much of today outlining how it'll be spending more money on pensioners - but lest we forget there's also pressure to spend more on defence.

NATO chief Mark Rutte has been in town today, holding talks with the prime minister in Downing Street and also making a speech at the international affairs thinktank Chatham House.

And he had a rather chilling warning for what might happen if Britain doesn't increase defence spending to upwards of 5% of GDP.

Rutte warned: "If you do not do this [鈥 you can still have the NHS, or in other countries their health systems, the pension system, etc, but you had better learn to speak Russian."

For context: The government has so far only committed to 2.5% by 2027, and 3% during the next parliament.

Rutte told reporters he had a "clear view" on when NATO allies should be spending 5% on defence, but would be making that point in private conversations rather than in public for now.

There is a NATO summit in the Netherlands later this month.

Ex-minister requests meeting with Bangladeshi leader over corruption claims

Former minister Tulip Siddiq has written to the interim leader of Bangladesh requesting a meeting during his visit to the UK to discuss accusations of corruption that have been levelled at her.

In the letter seen by Sky News, Siddiq invited Muhammad Yunus for "lunch or afternoon tea" to "clear up the misunderstanding鈥� that I have questions to answer".

Watch: The Tulip Siddiq accusations explained

The Anti-Corruption Commission in Bangladesh has opened multiple inquiries involving the London MP over alleged links to her aunt's political party in the country.

A former prime minister of Bangladesh, Sheikh Hasina is currently standing trial in absentia in Dhaka over alleged killings during deadly protests that swept the country last summer.

Siddiq resigned as a Treasury minister in January after being named in the corruption inquiries.

Documents showed she lived in several London properties that had links back to the Awami League political party that her aunt still leads.

She referred herself to the prime minister's standards adviser Sir Laurie Magnus, who said he had "not identified evidence of improprieties", but added it was "regrettable" Siddiq had not been more alert to the "potential reputational risks" of the ties to her aunt.

Siddiq said continuing in her role would be "a distraction" for the government but insisted she had done nothing wrong.

'Fantasy investigation'

In her letter to the chief adviser of Bangladesh, Siddiq writes: "[The Anti-Corruption Commission] refuse to engage with my lawyers in London and apparently keep sending correspondence to a random address in Dhaka. 

"Every move in this fantasy investigation is briefed to the media and yet no engagement was facilitated with my legal team."

Muhammad Yunus left Bangladesh for his UK visit on Monday afternoon.

Bangladeshi media reported his spokesperson as saying they had not received the letter.

A source close to Siddiq said she had not received a reply.

Does the winter fuel U-turn raise more questions than it answers

There are considerable problems with the winter fuel payment U-turn, but perhaps the political argument in favour outweighs them all?

First, that Rachel Reeves has executed the plan without working out how to pay for it. This, for an iron chancellor, is a wound opponents won't let her forget. A summer of speculation about tax rises is not a summer anyone looks forward to.

Third, the question immediately becomes what next? Why not PIP and the two child benefit cap. At this stage it would feel like a climb down if they did not back down over those. But then, what will the markets - already policing this closely - make of it and could they punish government.

Fourth, this is aggravating divisions in the parliamentary Labour Party: the soft left Compass group and ministers like Torsten Bell pushing bigger spending arguments. Those MPs in Tory-facing seats who rely on arguments that Labour can be trusted with the public finances are worried.

Fifthly, this has created a firm division between Number 10 and Number 11. Number 10 is now conscious they do not have enough independent advice about the market reaction to economic policies and is seeking to correct. Others, I am told, are just critical of the chancellor's U-turn - for she wobbled first.

So given the litany of arguments against, why has it happened? 

Because the hope is this maxi U-turn lances the boil, removes a significant source of pensioner anger and brings back Labour voters, a price they calculate worth paying whatever the fiscal cost.

We wait to see who is right. 

Some Thames Water bonuses have already been paid - and company isn't trying to get money back

It may seem like a while ago, but there was a fiery exchange last month at the Environment, Food and Rural Affairs Committee as Sir Adrian Montague, the chair of Thames Water, defended the bonus scheme for the company's senior executives.

Sir Adrian told the committee that creditors had insisted on bonuses being paid - something he later confirmed was not the case.

He claimed to have "misspoken", and that it was instead part of a strategy to prevent upheaval at the top of Thames Water.

A letter Sir Alan sent to the EFRA committee has now been published, which gives more details on the bonus agreement.

The bonuses worked out to: "50% of base salary on 30 April 2025; 50% on completion of [Thames Water's] second restructuring plan or, if earlier, December 2025; and a final payment of 200% of base salary in June 2026."

Sir Alan said that he himself, as well as CEO Chris Weston, or CFO Steve Buck, did not get a payout.

The 30 April payment has been meted out already, and the board of Thames Water "does not intend to recover this money".

Any further bonuses have been paused.

EFRA Committee chair Alistair Carmichael MP said bonuses for water company CEOs and CFOs were banned last year - and wants to know if the government will take action on the latest revelation.

He said: "We are also asking whether Defra and Ofwat were aware of these payments and what undertakings they have received from Thames Water about the pausing or withdrawal of the retention plan. 

"Given that the plan includes two further retention payments, including 200% of base salary due to be paid to these 21 individuals in June 2026, it is vital that Thames Water, Defra and Ofwat are clear with us all about what exactly is going on."

Sky News understands the government is not planning to try to recoup the money. 

What happens if I'm not eligible and get the payment?

Legal67eagle:

If I receive a payment for which I am not eligible, will they send me instructions for returning the sum in question?

Everyone who's over the state pension age and earns 拢35,000 or less is eligible for the winter fuel allowance this year.

But everyone who's over state pension age will get it automatically, presumably to avoid too much faffing about with eligibility forms.

Once the payments have been made, anyone who has an income above 拢35,000 will have the money taken back from them by HMRC.

You'll be able to opt out in advance if you'd prefer, the government says.

Will pensioners abroad get the winter fuel payment?

Richard :

How will the chancellor get the winter fuel allowance back from pensioners overseas?

This question was also posed in the Commons earlier, Richard.

And pensions minister Torsten Bell said those pensioners overseas will not get the winter fuel allowance.

As he put it, the payment will "continue not to be exportable [鈥 to those "not resident in the UK".

How much is the winter fuel payment?

Boyd :

How much is the winter fuel payment?

Thanks for the question, Boyd.

People eligible for the winter fuel allowance will get 拢200 - or 拢300 if they're aged over 80.

If it's a household with two pensioners, the payments are halved.

And if one of them earns more than the 拢35,000 threshold, they won't receive anything and the other will get half the payment.

A reminder that this is in England and Wales - the arrangements in Scotland and Northern Ireland are devolved.

'I just don't believe that's the truth': Watch Sophy Ridge challenge minister over winter fuel U-turn

Rachel Reeves has performed a major U-turn on her decision to cut the winter fuel allowance for millions of pensioners - and our Sophy Ridge is not convinced by the government's explanation.

The chancellor and other ministers have claimed an improving economic picture has allowed for the change - rather than the policy being deeply unpopular with voters.

Watch Sophy challenge the Treasury minister below:

No 10 and Treasury trying to clear 'barnacles' with winter fuel U-turn

Luke Sullivan is one of those very powerful people in politics you have probably never heard of.

He worked as Sir Keir Starmer's political director until the party came into government and worked for the Labour Party and Labour MPs for almost 20 years.

Speaking to Sophy Ridge tonight, he tries to explain some of the thinking behind the government's decision to U-turn on winter fuel payments.

'A really, really big moment'

He says the initial decision was taken to show markets Labour were serious - and that it was reversed when it became clear it was a problem on the doorstep during the local elections.

He describes it as clearing "barnacles on the boat" and ensuring the government can focus on "a really, really big moment" for the prime minister and chancellor: Wednesday's spending review, which sets departmental budgets for the coming years.

Sullivan says taking the U-turn now ensures the spending review is the "story of this week".

Is Reeves on the brink?

When a minister is forced to make such a big U-turn, it is not uncommon to think they might get the heave-ho from government.

Sophy asks Sullivan if Chancellor Rachel Reeves might be heading towards the exit after the disastrous saga of the winter fuel payment.

He says: "Ultimately Keir and Rachel have a really strong relationship - not just personally and professionally, also their teams. The individuals who are around them who have worked for Keir, they are a tight team."

He says while it's been "tough going", Number 10 and Number 11 are "aligned closely".

Asked if Reeves made a mistake that the PM has had to rectify, Sullivan concedes Starmer is someone who is a "delegator" - but that doesn't mean he's not across the details or doesn't get involved.