Labour Chancellor Rachel Reeves’ decision to limit winter fuel payments to £300 for 10 million pensioners has sparked a controversial reaction from charities and criticism of the current government.
Age UK, the country’s charity for older people, has written to the Chancellor with a proposal that would be fairer and prevent around two million pensioners from losing payments they desperately need, according to it. The charity has proposed that winter fuel payments should not be restricted to those with pension credit, but should go to a further two million pensioners who receive a range of other benefits including Housing Benefit, council tax support, Carer’s Allowance and Carer’s Allowance.
Caroline Abrahams, charity director at Age UK, said:
Age UK has written to the chancellor, explaining why we oppose the means-testing of winter fuel payment and asking her to take action to safeguard the estimated two million pensioners who, as things stand, are set to lose it and who will experience severe hardship as a result.
On 29 July, Reeves accused the Conservative government of hiding another £22 billion deficit in this year’s finances, saying tough decisions had to be made to tackle the problem that had surfaced. As a result, she has capped the flat-rate payment to all pensioners who have pension credit or other benefits.
This equates to just over a million of the more than 11 million people receiving payments – those with an annual income of £12,600 or less. But the plan, according to Reeves, is part of an effort to plug what she says is a £22 billion black hole in the public finances.
Reeves, in an Observer article today, said that when she entered the Finance Ministry, officials informed her of the alarming state of public overspending and told her that drastic measures required to keep the economy stable. She consequently found herself compelled to make difficult decisions, including cancelling road projects, reviewing a new hospital programme and asking government departments to find savings, as well as limiting winter payments to all but the poorest pensioners. She said:
That first month it was made clear to me that, unless I acted urgently, market confidence in the UK’s fiscal position could be seriously undermined. That would have meant higher debt, higher mortgages, and higher prices in the shops. I was not prepared to let that happen. I know these are tough choices, especially on winter fuel. They were not the choices I wanted to make or expected to make, but they were the right choices to put our country on a firmer footing. Because by taking the tough decisions now to protect the public finances we can begin the process of change.
The criticism here does not just go to the Finance Minister either, but to Labour Party leader Keir Starmer and the government, which favours working people while the majority of pensioners, especially the oldest, are out of work. The government prefers to allocate funds to keep the trains running and the NHS waiting lists shorter – mainly to benefit the labour force it relies on to deliver growth, according to Sky News.
David Willetts, who heads the Resolution Foundation, says the difficulty for Labour lies in the fact that comparisons between generations are relative. Indeed, the relative poverty of pensioners has actually risen from 13 per cent in 2011-2012 to 16 per cent in 2022-2023. The Chancellor has added fuel to the fire by restricting winter fuel payments for those whose income is £230 a week.
Apart, complexities also arise in that this winter it will be even more challenging for pensioners in particular as energy regulator Ofgem has approved a 10% increase in the energy price cap, which on average means an annual increase in bills of £500.
A Government spokesperson, in turn, responding to the charity’s application and its request for approval of the submitted plan, said: “We are absolutely committed to supporting pensioners and giving them the dignity and security they deserve in retirement. That’s why, through our commitment to protect the triple lock, over 12 million pensioners will see their state pensions increase by almost £1,000 over the next five years. But given the dire state of the public finances we have inherited, it’s right that we target support to those who need it most while we take the difficult decisions needed to fix the foundations of our economy. Over a million pensioners will continue to receive the winter fuel payment and eligible pensioners will also be able to benefit from the £150 warm home discount scheme from October to help with their energy bills over winter,” The Guardian reported.
