Chancellor Rachel Reeves has announced that pensioners with an income of £35,000 or below in England and Wales will receive vital winter fuel payments this year
More than three-quarters of pensioners will receive winter fuel payments this year as Rachel Reeves unveils crucial details of the Government’s U-turn.
OAPs with an income of £35,000 or below in England and Wales will receive the benefit this winter. It is a major uplift from the current £11,500 cut-off point.
It means nine million pensioners will now be eligible for the winter support. Around two million pensioners whose income is above £35,000 will have the payment automatically recovered or can opt out from receiving it.
Keir Starmer last month announced he wanted more pensioners to be eligible for the help, which is worth up to £300. The PM faced a damaging backlash after last year introducing a means-tested system for the winter fuel allowance, which had previously been a universal benefit. Around 10 million pensioners lost the support last winter.
The changes announced today will cost around £1.25billion. The Treasury said the new means-testing system is expected to save around £450million, compared to the universal system.
How will the changes work?
No pensioner will need to take any action as they will automatically receive the payment this winter. Payments of £200 per household, or £300 per household where there is someone over 80, will be made.
OAPS with incomes above the £35,000 threshold will have the full amount of the winter fuel payment they received automatically collected via PAYE, or via their Self-Assessment return. Pensioners who want to opt out and not receive the payment at all will be able to do so. DWP is developing a simple system to enable OAPs to opt out if they wish.
HMRC will not try to recover winter fuel payments from people who have died, Downing Street confirmed. The Prime Minister’s official spokesman said: “HMRC will not ask for repayment from a deceased PAYE (pay as you earn) customer if the only money owed was from a winter fuel payment.” Was Labour right to U-turn on winter fuel payments? Vote in our poll HERE to have your say.
What has Rachel Reeves said?
Ms Reeves, the Chancellor, said: “Targeting Winter Fuel Payments was a tough decision, but the right decision because of the inheritance we had been left by the previous government. It is also right that we continue to means-test this payment so that it is targeted and fair, rather than restoring eligibility to everyone including the wealthiest.
“But we have now acted to expand the eligibility of the Winter Fuel Payment so no pensioner on a lower income will miss out. This will mean over three quarters of pensioners receiving the payment in England and Wales later this winter.”
When challenged this morning, she would not say where the money would come from to pay for the U-turn. The Chancellor said there was still “work to do to ensure the sums always add up”, but added: “We will set out in the normal way, in the budget, how everything is funded, but no-one should be in any doubt about my commitment to the fiscal rules to ensure that the sums always add up.”
Why has the U-turn happened?
At PMQs last month, the PM said with the economy showing signs of improvement he wants to ensure “more pensioners are eligible for winter fuel payments”. The surprise announcement came amid mounting pressure to roll-back the decision to strip the payment from all but the very poorest pensioners – those who receive Pension Credit.
Tensions have been rising in Labour ranks after Reform UK made sweeping gains in the English local elections in May and also won a by-election in the Labour stronghold of Runcorn and Helsby by six votes.
At the time, Ros Jones, who held on as Doncaster mayor by a majority of less than 700, said the Government needs to listen to the public as she hit out over winter fuel and benefit cuts. In a furious message after her narrow victory at the mayoral elections, she said the winter fuel cuts were “wrong”.
What has been the reaction to the U-turn?
Dennis Reed, director of pensioners campaign group Silver Voices, said today’s announcement is “fantastic news for older people in the UK”. He added: “The most important aspect of the U-turn is that the payment will be sent automatically to all pensioners, without the need to put in a claim, making sure it will reach everyone who struggled last winter.”
Caroline Abrahams, Charity Director at Age UK, said today is “a good day for older people”. She said: “The decision to restore the Winter Fuel Payment to 9 million pensioners – all but those on the highest incomes who should be able to pay their heating bills without it – is the right thing to do and something that will bring some much-needed reassurance for older people and their families.”
Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “Finally the Chancellor has seen sense. Axing the Winter Fuel Payment for so many pensioners was a cruel cut to make.”
He called for a full investment in the Warm Home Plans to improve energy costs, adding: “While the changes will provide some relief to these households, there will still be pensioners unable to afford the high cost of energy and living in cold damp homes.”
Independent Age Chief Executive Joanna Elson CBE said she was “pleased” with the news. But she added: “While the changes to the Winter Fuel Payment are positive, they are not a silver bullet that will end pensioner poverty. Around 2 million older people still live in poverty, and measures must be taken to ensure the long-term financial security of all people in later life. There needs to be a cross-party consensus on the adequate income needed in later life to avoid financial hardship.”