Labour was branded “desperate” after claiming it axed winter fuel payments for 10 million pensioners to stop a run on the pound.

Lucy Powell defended taking the allowance off retirees despite prices rising again, insisting there was no alternative and the government was “really sorry”.

The Commons Leaders suggested there would be a run on the pound if the government had not found ways to save cash to deal this year to fill a shortfall in finances.

“If we hadn’t had done so we would have all but likely seen the markets losing confidence in this country, the cost of borrowing going up, a run on the pound possibly and the pound crashing,” she said.

Ms Powell was asked if she could foresee any scenario where the decision could be reversed and replied: “I don’t.”

Within days of taking office Chancellor Rachel Reeves announced she was axing the universal winter fuel allowance, which is £200 for pensioners under 80 and £300 for those over, with immediate effect to save £1.5 billion.

Shadow Treasury Minister Laura Trott said the claims made by Ms Powell were not believable.

She said: “This simply shows how desperate the new Labour government is to run from responsibility for the tax rises they always planned but hid from the public during the election.

“After handing billions in inflation-busting pay rises to their union paymasters, no one believes Labour’s chicken little strategy.

“They should stop trying to deceive the public with ridiculous fantasies and instead have the courage to let parliament debate cuts to Winter Fuel Payments for the sake of those pensioners who will lose out thanks to the decisions of this government.”

Labour was accused of “disliking” pensioners as it doubled down on the plans to strip them of cash.

Former Conservative leader Sir Iain Duncan Smith warned the government intends to “hit hard” those who have saved and looked after their families when it imposes higher taxes next month.

But the senior Tory also hit out at his own party’s “shambolic” election campaign that had let Sir Keir Starmer “off the hook”.

Sir Iain told GB News: “You know realise to what degree they were not cross examined enough during the course of a long period in opposition because we became such a shambolic mess, arguing among ourselves, that the biggest problem was Labour got off the hook.

“Their manifesto said nothing. They talked about vaguely not raising taxes but now what do we realise?

“We realise actually they actually had an agenda of who they dislike most of all, pensioners, and people who they say aren’t workers because they have actually worked hard, saved and put into investments.”

Tax hikes are planned for the October budget, although the government has refused to say so far which ones will be raised.

Sir Iain said Labour was planning to “hit very hard” people who had worked hard and looked after their families instead of relying on the state.

The ex-Cabinet minister urged Rishi Sunak to properly scrutinise the Labour government even though he only remains leader until a successor is chosen.

He said: “There are questions to be asked. You have an opposition with people shadowing ministers and an opposition leader”, he said.

“I would say to them now, you have a job to do. You can’t just quit the stage and wait for the leaders’ debate to take place.”