Chancellor Rachel Reeves confirmed that millions of pensioners would have the winter fuel allowance restored this year after the Government bowed to pressure to ditch the cut
Rachel Reeves has offered millions of pensioners a cast-iron guarantee that they’ll get the winter fuel allowance for the rest of this Parliament.
All OAPs in England and Wales with an income of less than £35,000 a year will be eligible for the lifeline payment this winter after a massive Government U-turn. It means 7.5 million pensioners – who lost out on payments of up to £300 – will see the benefit restored, taking total recipients to around 9 million.
Asked to give a cast-iron guarantee that the change would be in place for the rest of this Parliament, the Chancellor told the Mirror: “Yes, it will be.”
The decision to strip around 10 million pensioners of the winter fuel allowance last year triggered a huge backlash and has been blamed for Labour’s flagging poll ratings. Keir Starmer bowed to pressure last month and said the Government would expand eligibility but older people were left in the dark on the details.
READ MORE: Major winter fuel payment U-turn revealed as MILLIONS to get up to £300 payment
Today, the Chancellor said the Government had listened to concerns and would restore the winter fuel allowance to around three quarters of OAPs. The payments will be restored automatically to all pensioners but it will be clawed back by the taxman from around 2 million older people whose income exceeds £35,000-a-year.
Speaking to the Mirror at Castlehaven Horticulture Hub in north London, Ms Reeves said she had to take difficult decisions last year to fix the economic mess left by the Tories but added: “We are in a different position now”.
Asked if the winter fuel cut was a mistake, she said: “I had to make a number of difficult decisions last year. We inherited as a government a £22billion black hole in the public finances.”
Ms Reeves added: “Because of those decisions, because of the fiscal rules this Government has set out, our public finances are in a much better place.”
But she refused to set out how the £1.25billion move would be funded until the Budget in the Autumn. The Treasury said it would still save £450million compared to when the winter fuel payment was paid to all pensioners.
It comes ahead of Wednesday’s Spending Review, where Ms Reeves is expected to unveil the funding allocations for vital public services like the NHS, schools and defence over the next three years.
She hit back at criticism over looming cuts to public services, insisting she is not an “austerity Chancellor”. Ms Reeves said: “No, far from it. Under our plans we are going to be spending £303billion more, that’s the envelope I set at the Budget last year and again at the Spring Statement.
“That’s £190billion more in day-to-day spending, £113billion on capital investment. Real terms increases in budgets every single year of this Parliament. That’s possible because of the decisions we’ve made on tax and also the decisions we’ve made to change the fiscal rules to prioritise investment because as a government we’re choosing investment over decline and we’re also choosing stability over chaos.”
A shake-up of borrowing rules will allow her to splash £113billion on big ticket items like homes, transport and energy projects. And last week, Ms Reeves said she would tweak Treasury rules to allow her to pour billions of pounds into big projects outside of London and the South East.
The winter fuel U-turn was welcomed by campaigners, who said it would offer a lifeline to struggling pensioners. But economists questioned how it would be paid for.
Paul Johnson, of the Institute for Fiscal Studies think tank, said tax hikes or further cuts could be needed to plug the gap. He said: “The corollary of ‘this will not lead to permanent additional borrowing’ is that it will lead to permanent additional taxes (or just possibly permanent cuts to other bits of welfare).”
No10 insisted the Government’s manifesto commitment to not raise VAT, income tax, or National Insurance remained in place. “It will be for the Chancellor to set out how this is funded at the Budget”, the Prime Minister’s official spokesman said.
Dennis Reed, director of pensioners campaign group Silver Voices, said it was “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 hailed the news but said it would not end pensioner poverty. She added: “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.”
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