Sir Keir Starmer is encountering renewed pressure from his Labour MPs to overturn cuts to the winter fuel allowance following the government’s welfare decisions being partly blamed for the party’s setbacks in Thursday’s local elections.

The elimination of the winter fuel subsidy from 10 million pensioners was a significant reason voters expressed to Labour activists their reluctance to support the party in the lead-up to last week’s elections, according to MPs and party figures.

The policy, which limits the up to £300-a-year benefit to only the poorest pensioners, was announced just weeks after Labour took power last year.

Labour MPs and party figures stated that this move, along with a more recent decision to cut disability benefits, contributed to the party losing ground in some of its traditional strongholds to Nigel Farage’s Reform UK.

Some have privately predicted that Starmer will be forced into a partial U-turn on the winter fuel cuts before the end of the year.

One moderate Labour MP said the party had won a “cost of living election” last July but then had failed to improve the situation for people’s cost of living, while actively making it worse for the elderly and disabled.

“That would be a very tough sell anyway but when coupled with countless millions the government can find to house young men arriving on boats every day, it is unsustainable to say we just can’t afford the winter fuel payment or Pip,” he said, referring to personal independence payments, a form of benefit for the sick and disabled.

“Reinstating winter fuel and revisiting Pip changes are the minimum that must be done if we want to prevent a Reform wipeout,” he added.

Another Labour MP who is seen as a supporter of Starmer said: “I’m sure the government is reflecting on the issues that contributed to the losses last week, including winter fuel payments and disability and health benefits.”

Louise Haigh, who was transport secretary until November, urged Starmer to reconsider his “self-imposed tax rules” that prevent the government raising income tax, VAT or national insurance.

“Welfare reforms and the loss of the winter fuel allowance were the primary examples offered as to why the Labour government simply did not look like it understood their priorities,” she wrote in The Times on Monday.

“The government’s response on Friday was alarming. It failed to acknowledge any need to change course but simply committed itself to double down on the plan.”

Labour lost its former stronghold of Runcorn and Helsby to Reform in a by-election while also losing Doncaster council to Farage’s rightwing populist party. Reform also came close to toppling Labour in the North Tyneside mayoralty race. 

Starmer has tacked right in recent months in an attempt to counter the rise of Reform, including slashing the overseas aid budget and introducing measures against illegal immigration.

But many Labour campaigners said benefit cuts were a more potent issue in the local elections in the so-called “Red Wall”, the former Labour heartlands of the Midlands and northern England.

Over the weekend some MPs have been sharing research suggesting the proposed changes to Pip could have a “devastating” effect on some of the most deprived communities in England. 

The report from Health Equity North, a group of academics, said the cuts would fall hardest on the north-east and north-west of England. “The 10 worst-hit constituencies are all Labour-held, and in ‘Red Wall’ areas,” it said. 

Labour MP Stella Creasy said on Saturday the party should be careful of “mimicking” Reform.

“Every new Reform councillor is a warning, not a way forward. A warning that mimicking their plans to divide the British public and echo their rhetoric neither delivers votes at the ballot box nor better outcomes for anyone,” she said on Instagram.

Instead, she called for urgent measures to tackle the cost of living crisis, including ending the two-child cap on benefits and ending the cuts to Pip.

Ros Jones, re-elected Labour mayor for Doncaster last week on a sharply reduced majority, warned after her victory about the damage done by Starmer’s cuts to benefits such as Pip and the winter fuel allowance.

One Labour party figure said he expected a partial U-turn over the winter fuel cuts before Christmas with the autumn Budget being the most likely moment. 

“Nobody in Downing Street now thinks this was a good idea. They all realise it was a mistake. Every single one of them. For now, they’re saying they won’t do anything about it but it feels like ‘not yet’ rather than ‘never’,” they said.

One option would be to raise the bar for eligibility so that only the richest are excluded, they said. At the moment the subsidy is restricted to pensioners who receive pension credit or other benefits.

Another government aide said it was still “early days” but he predicted that Labour would be unable to “hold the line” on the policy by the end of the year.

But asked if Starmer would U-turn on the policy, a Downing Street official said on Sunday: “I’m not aware of any plans to do that, although people look at stuff all the time.” The Treasury did not immediately respond to a request for comment.

Chancellor Rachel Reeves cut the winter fuel allowance last July after the election to bolster the public finances, claiming the previous Conservative government had overspent.

“It was something the Treasury had been trying to get away with for ages,” said a former senior government figure.

They said Morgan McSweeney, then Starmer’s head of political strategy but now chief of staff, “pretty much hung his head in his hands” when he learned of the decision “because he knew what it meant politically”.