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IIt seems a long time ago, but the first hurdle Sir Keir Starmer and Rachel Reeves faced in government came when seven Labor MPs voted against the King’s Speech, 17 days after the election.

They wanted to lift the two-child limit for families receiving benefits and were rewarded by being expelled – sorry, “suspended” – from the parliamentary Labor Party.

It was a show of brutal force from the new Prime Minister, and a warning to new Labor MPs not to think of indulging in the warm glow of voting with their consciences. When Starmer and Reeves said they would have to make tough decisions to save the public finances from Tory irresponsibility, they meant it.

Since then, Labor’s conscience has been further tested. So far, means-testing the winter fuel payment for retirees has been the most difficult challenge for them. But the rise in inheritance tax for farmers has also worried many new MPs from rural constituencies. There are Labor MPs for seats such as Hexham, Bury St Edmunds and Stowmarket, and South West Norfolk – and many of them have little to lose if the party’s radical advance in places where agriculture is important and temporary.

So the more I hear Labor spinners insist that the ‘Iron Chancellor’ is not made to spin, the more likely I think a tactical withdrawal is. A Labor source said Huffington Post yesterday: “If we dodge these tough decisions, we will do exactly what the Conservatives did: party first, country second. »

It’s the kind of briefing designed to prevent journalists and MPs from speculating about what kinds of compromises might be considered. This seems to increase the cost of a U-turn by making it more awkward to perform – but that’s not really the case. If Reeves steps down, people will be more interested in the content of the policy than in a thorough textual analysis of all the times her aides said she wouldn’t do it.

So for obvious reasons, I have no inside information on what Reeves is likely to do. I can only observe the pressures put on her and what chancellors have done in the past in similar situations.

I think it will give up ground on family farms. There are only two pieces of information needed to reach this conclusion. The first is that the inheritance tax changes are due to come into force in April 2026. That’s a year and a half (or two budgets) away. The other is that there are compelling arguments against some people buying farms to avoid inheritance taxes.

So it should be fairly simple to exempt small farms that have been in the same family for generations, while still generating income from people buying farmland for tax benefits. (“Small” being a relative term for a farm that could be worth millions but produces little income.)

Paying for winter fuel is more difficult, but also more urgent. Reeves attempts to suggest that the matter is closed: the legislation has passed; political pain has been borne; she cannot afford to ruin the reputation she has earned by sticking to a financially responsible decision.

But there is still pain to come. The recent cold could be a warning. Some pensioners will freeze to death and the government will need a better course of action than encouraging survivors to claim pension credit.

Again, most of Reeves’ arguments are sound. There is overwhelming support for eliminating this payment for wealthy retirees who do not need it. The problem is pensioners whose income is as low as £12,000 a year and who are not poor enough to qualify for means-tested benefits. It is, we are told, impossible to use HMRC systems to identify this cohort and issue them the winter fuel payment.

But the Treasury’s response to the pandemic has shown that things thought impossible have turned out to be doable – and remarkably quickly. I don’t know how it will be done, but I’m sure Reeves asked for a plan. A proposed winter allowance aimed at retirees just above the Pension Credit level and which preserves the bulk of the savings of wealthier retirees seems likely.

Reeves, Starmer and unnamed Labor sources will continue to insist it will only happen days before. The crudest reason to think this will happen is that Reeves’ chances of succeeding Starmer as Prime Minister depend on it.