In an embarrassing defeat for the new Labour Government, delegates at the Labour Party conference have backed a motion calling for it to reverse its decision to means-test the winter fuel payment.

The motion, moved by Unite General Secretary Sharon Graham,  also called for an end to fiscal rules, the introduction of a wealth tax on the top one percent, an excess profits tax and to equalise capital gains tax with income tax.

She said: “I do not understand how our new Labour government can cut the winter fuel allowance for pensioners and leave the super-rich untouched. This is not what people voted for. It is the wrong decision and needs to be reversed. We are the sixth richest economy in the world. We have the money.

“Britain needs investment, not austerity mark two. We won’t get any gold badge for shaving peanuts off our debt. Let’s hold up our heads and be proud to be Labour. Let’s put our arms round the working class and make lasting change.”

In justifying the cut, Chancellor Rachel Reeves had earlier this month claimed that unless Labour made the cut, financial markets would be destabilised by the scale of public debt. In fact, investors were more spooked by Keir Starmer’s gloomy broadcast about the dismal state of the nation inherited from the Tories, which could under market confidence.

After the vote, Sharon Graham told the BBC it reflected the feeling “in the real world”. She’s right: a recent poll showed only 26% of respondents support means-testing the winter fuel payment.

Graham said Rachel Reeves should now U-turn adding: “Leadership is also about acknowledging when you’ve made a mis-step.”

Apsana Begum MP supported her call, tweeting: “Along with our Conference, I call on our government to reverse cuts to the Winter Fuel allowance, impose a wealth tax and revise fiscal rules.”

Nadia Whittome MP agreed, saying: “The super-rich, not vulnerable pensioners, should shoulder the burden of the Tories’ mess.  I hope our leadership listens to our conference and reverses the cut.”

Ian Byrne MP tweeted: “I voted against this cut in Parliament and I’m pleased that Conference supports my decision. The Government should withdraw this plan.”

Around ten million pensioners will lose their entitlement to the benefit after the allowance was restricted to those receiving pensions credit. That includes an estimated  1.6m pensioners already living below the poverty line, many of whom will be deterred from applying by the hundreds of questions asked on the application form. Earlier this month, Parliament passed the benefit cut, with dozens of Labour MPs abstaining and several voting against.

A Momentum spokesperson said: “A vote to reverse cuts to winter fuel payments is a huge victory for trade unionists, anti-poverty campaigners and all Labour members who supported it. An estimated 2 million pensioners could be plunged into poverty this winter. This is a political choice. The Government must change course immediately.”

The decision earlier by Party fixers to postpone the vote on the winter fuel payments cut until after the Leader’s speech yesterday may well have backfired. As former Jeremy Corbyn top advisor Andrew Fisher tweeted,” It’s now THE story coming out of conference.”

He added: “The vote should have been held on Monday. But instead it was shunted to ‘the graveyard shift’ of Wednesday… This gave Sharon Graham a media platform on Monday to say they’d been stitched up, and made the leadership look like they were running scared.”