Chancellor Rachel Reeves is set to remove Winter Fuel Payments for millions of pensioners from this year, following a damning speech in parliament (29 July) which exposed a £22bn hole in public finances left behind by the Conservatives.
Reeves said she has been forced to make difficult decisions to find £5.5 billion of savings this year and £8.1bn next year in a bid to plug the funding mess - and one difficult move is to restrict who can get Winter Fuel Payments.
Removing Winter Fuel Payments is estimated to save the government around £1.5 billion, according to Labour.
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While this speech was not a Budget, Reeves still made a number of announcements to immediately tackle UK's mounting debt Labour has inherited.
“This is not the statement I wanted to give today, and these are not the decisions I wanted to make. But they are the right decisions in difficult circumstances,” Reeves said in her speech which took place in parliament this afternoon, where she accused the Conservatives of converting the true state of the UK’s debt.
Labour’s decision has been met with concern with charities, suggesting those most vulnerable would be affected - especially as energy prices still continue to sting household budgets and are expected to rise by around 10% in October when the latest energy price cap kicks in.
The Winter Fuel Payments are worth around £200 - or £300 for those on Pension Credit - and are usually paid in November and December to around £13 million eligible pensioners.
Starting this year, this payment will be removed for millions of pensioners - are you affected?
Who is affected by Labour's decision on Winter Fuel Payments?
If you are a pensioner on the standard state pension and not on benefits, you are set to lose up to £300 in winter fuel payments.
Those on Pension Credit or means-tested benefits will still receive it. So, households with someone aged over state pension age receiving Pension Credit, Universal Credit, Income Support, income-based Jobseeker’s Allowance and income-related Employment and Support Allowance will continue to receive Winter Fuel Payments.
Steve Webb, partner at consulting firm LCP and a former pensions minister, argues that the proposal to remove entitlement to Winter Fuel Payments from those not receiving certain means-tested benefits could create a ‘cliff edge’ where those just a few pounds above pension credit levels could lose up to £300.
“In particular, the standard rate of the new state pension is £221.20 per week whilst the standard rate of pension credit for a single person is currently £218.15 per week. This means people on the standard new state pension will be just over £3 per week over the limit and will lose all of their Winter Fuel Payment.”
Webb added that this could also make some people rethink topping up their state pension if this might lead to them losing entitlement to a Winter Fuel Payment.
Age UK dubbed the move as a "social injustice". Caroline Abrahams, charity director at Age UK said: "We strongly oppose the means-testing of Winter Fuel Payment
because our initial estimate is that as many as two million pensioners who badly need the money to stay warm this winter will not receive it and will be in trouble as a result – yet at the other end of the spectrum well-off older people will scarcely notice the difference – a social injustice."
Can you get Pension Credit?
It is estimated that over 880,000 households are missing out on Pension Credit. Figures published in June 2023 show that £1.7 billion went unclaimed.
Reeves said the government will work with the Work and Pensions Secretary and older people’ charities to ensure as many people as possible take up Pension Credit to obtain the Winter Fuel Payment worth up to £300.
It is usually paid to those over the state pension age and on low income. While the benefits may not be much, Pension Credit unlocks other benefits such as help with NHS costs or council tax reduction.
Pension Credit tops up a pensioner’s weekly income to £218.15 if they are single (or £11,344 a year) in the current tax year. For those with a partner, the joint weekly income is topped up to £332.95 per couple (£17,313 a year).
The eligibility criteria is complex, so it is worth checking if you are eligible via the government website - you may be surprised.
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