Three-quarters of pensioners to get winter fuel payment after U-turn 2 hours ago Michael Race Business reporter, BBC News More than three-quarters of pensioners will receive the winter fuel payment this year after Chancellor Rachel Reeves confirmed a major policy U-turn.
Nine million pensioners in England and Wales with an annual income of £35,000 or less will now be eligible.
The government said the increased winter fuel payment threshold meant “no lower or middle-income pensioners will miss out”.
How much is the winter fuel payment and who will get it?
The confirmation that more people will receive winter fuel payments this winter comes ahead of the government’s spending review, which will be announced on Wednesday.
Winter fuel payments will be given to three-quarters of pensioners following the U-turn.
two hours before.
Michael.
Business reporter for BBC News.
A significant policy U-turn was confirmed by Chancellor Rachel Reeves, ensuring that over three-quarters of pensioners will receive the winter fuel payment this year.
With an annual income of £35,000 or less, nine million pensioners in England and Wales will now qualify.
Only those on pension credit received the £300 payment last year, which helped with energy bills during the coldest months.
The poor local election results for Labour were widely attributed to the policy. Reeves claimed that the government had “listened to people’s concerns,” but Kemi Badenoch, the leader of the Conservative Party, referred to the move as a “humiliating U-turn.”.
The reversal takes place in advance of Wednesday’s announcement of the government’s Spending Review.
As stated by the government, “no lower or middle-income pensioners will miss out” due to the higher winter fuel payment threshold.
“It will still be means-tested, but at a higher level,” Reeves stated.
“We are able to raise that amount because of the adjustments we’ve made and the stability we’ve restored to the economy. “,”.
Who will receive the winter fuel payment and how much is it?
The chancellor promised to adhere to her self-imposed borrowing guidelines while outlining how the £125 billion policy would be funded in the autumn budget.
As the economy improves, the government has argued, it has more room to expand the payments’ eligibility. The policy change, it has stated, will “not lead to permanent additional borrowing.”.
The majority of analysts anticipate that economic growth will slow in the upcoming months, even though it exceeded expectations in the first quarter of this year.
Although the Treasury has stated that the change will not result in permanent additional borrowing, Paul Johnson of the Institute for Fiscal Studies stated that this implied that “it will lead to permanent additional taxes (or just possibly permanent cuts to other bits of welfare)”.
In November or December, eligible households with a person under 80 years old automatically receive £200, while households with a person over 80 receive £300.
If two pensioners reside in the same household, the payments are cut in half. The higher-income pensioner will not receive any payment if one of them makes over £35,000 and the other makes less than £35,000; instead, the lower-income pensioner will receive half of the payment.
The payment will be automatically recovered for pensioners who earn more than £35,000 per year, which the Treasury stated was “broadly in line with average earnings.” Alternatively, they can choose not to receive the payment. Approximately two million people will be affected by this.
Bob Pritchard (78) of Bath told the BBC that he makes £19,500 annually and that he thinks his payment will be restored.
He claims there has been “a lot of impact” and “grief and heartache” as a result of the money loss. The government’s U-turn, he claims, “will make a lot of difference”.
According to estimates, the initial reduction in universal winter fuel payments last year saved £1.07 billion.
However, charities and some Members of Parliament had expressed concerns about the government’s previous policy, specifically regarding pensioners whose income was marginally too high to qualify but who were nevertheless affected by the loss of the payment because energy costs were still high.
Although they applauded the U-turn, charities said more work needed to be done. While Simon Francis, coordinator of the End Fuel Poverty Coalition, acknowledged that Reeves had “seen sense,” he urged ministers to “focus on how it supports all households in fuel poverty.”.
“This humiliating U-turn will be of little consolation to the pensioners who had to choose between heating and eating last winter,” stated Conservative leader Kemi Badenoch.
She went on to say, “Keir Starmer has rushed to clean up a mess of his own making.”. “Now is the time for the prime minister to apologize for his poor decision. “..”.
It is impossible to overestimate the misery this policy has caused, according to Liberal Democrat leader Ed Davey, who claims the government has “finally realised how disastrous this policy was.”.
The spending review was deemed ugly.
The U-turn, according to the Resolution Foundation think tank, would “create new complexity in the tax system, including a cliff-edge for those with around £35,000 of income.”.
Think tank economist Alex Clegg added, “The cost of increased pension credit take-up as a result of the original policy, and the cost of administering the new means-test, will further reduce the reported savings of £450m.”.
Pensioners who wish to opt out will be able to do so through a system that will be developed, the government said, adding that no one would need to register with HMRC or take any additional steps in order to receive payments.
A different policy has already been laid out by ministers in Scotland. The payment would be made as usual to those who qualify for benefits like pension credit, while others would receive £100.
Only one payment per household will be made. The money will be disbursed through a new Scottish Parliament benefit that won’t be available until the end of 2025.
In Northern Ireland, Communities Minister Gordon Lyons stated last year that the Stormont government also had to modify its regulations due to financial limitations.
Later, he stated that impacted pensioners would receive a £100 one-time payment to assist with heating expenses.
Prior to Wednesday’s announcement of the government’s spending review, it was confirmed that more people will receive winter fuel payments this winter.
In the review, departmental daily budgets for the next three years and investment budgets for the next four will be outlined.
The BBC has been informed by Whitehall insiders that they anticipate it to be “ugly.”.
Reeves’ stance against borrowing for daily expenses and against raising taxes once more has stoked intense conjecture that spending cuts will be implemented.
