Labour Party savings from abolishing winter fuel payments could potentially come to an end with an unintended £4 billion payments bill, The Telegraph reported.
The policy change, which aims to restrict payments to those claiming means-tested benefits, is expected to save the Treasury £1.4 billion annually, according to the Chancellor Rachel Reeves. She now hopes that this initiative will save the government £1.4 billion and help address the £22 billion “black hole” left by the Conservatives.
Currently, around 850,000 pensioners who are eligible for pension credit are not claiming it, according to official statistics. If hundreds of thousands of pensioners rush to apply for pension credit in order to qualify for winter fuel payments, this could result in a £3.8 billion cost to taxpayers, as highlighted in a report by the research organisation Policy in Practice.
Pension credit benefits include assistance with council tax, housing benefits, and free television licences. While some payments, such as the warm home discount and the new winter fuel payment, are issued automatically, others require an application. In the past, all 11.4 million pensioners received £200 each winter to help heat their homes, and those aged over 80 received a one-off payment of £300.
If just a quarter of the 800k+ qualifying pensioners not claiming pension credit now do, then cost is £440m plus £50m in winter fuel payments, half a billion of the supposed savings wiped out in a one-er. This increases when you add the attached benefits. It’s economic illiteracy against a backdrop of winter misery for thousands who are just outside of eligibility and holding on by their fingertips, according to Dame Caroline Dinenage, MP for Gosport, Hampshire.
Policy in Practice, the organisation that analyses data and has worked with previous governments on benefit reforms, reports that approximately £23 billion in benefits go unclaimed each year, with £6.1 billion specifically allocated to pensioners.
Moreover, the organisation indicates that just under half of those entitled to pension credit, which amounts to 434,790 individuals, do not apply for housing benefit, despite being eligible. Consequently, pensioners entitled to this support have missed out on over £1.8 billion in housing benefits alone.
The End Fuel Poverty Coalition, a campaign group, states that the removal of winter fuel payments means pensioners will be the only age group facing increased electricity bills compared to last year.
When the Chancellor harshly took away the winter fuel payment from millions of pensioners, she promised to assist households eligible for the benefit. However, since then, we have heard nothing further about plans to promote the uptake of pension credit, and we find ourselves in a situation where hundreds of thousands of homes will miss out entirely, according to Simon Francis.
Shirley-Anne Somerville, the Secretary for Social Justice, announced the winter heating payment for pensioners, commonly referred to in Scotland, will be based on a means test. According to her, accessing pension credit may help people “lead healthier lives for longer, and save money by lowering social care costs while acting as a boost to the local economy.”
Reeves committed to collaborating with the Department for Work and Pensions (DWP) “to maximise the uptake of pension credit” by streamlining administration processes and partnering with charities to raise awareness among households that are not currently claiming it.
