Winter fuel payment: ‘We’ve listened’, says Reeves as U

The government “listened to people’s concerns,” according to Chancellor Rachel Reeves, who also confirmed a significant reversal on winter fuel payments.

This year, the payment will now be made to nine million pensioners in England and Wales who earn up to £35,000 annually.

Last year, it was only given to people on pension credit, which meant millions of people who had previously received it when it was universal missed out on up to £300 to help with energy bills during the coldest months.

Before the government’s Spending Review on Wednesday, the policy was nearly completely reversed, which was widely attributed to Labour’s poor local election results.

The government claimed that “no lower or middle-income pensioners will miss out” as a result of the higher eligibility threshold for winter fuel payments.

Under-80-year-old eligible households automatically receive £200 per year in November or December, while over-80-year-old households receive £300.

If two pensioners reside in the same household, the payments are cut in half. The higher-earning 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. About two million people will be affected by this.

It will now cost taxpayers around £1.25 billion annually to implement the policy U-turn, which will ensure that the vast majority of people who missed out on payments last winter receive them.

Last year’s initial reduction in universal winter fuel payments was predicted to save £1.07 billion.

The government’s earlier policy of stopping payments to approximately nine million people had caused some MPs and charities to express concern. This policy was especially concerning for those whose income was just a little too high to qualify but who were still affected by the loss of the payment because energy costs were higher.

The government estimated that the new means-testing requirements would result in a £450 million savings.

The government should keep means-testing winter fuel payments, according to Reeves, because it is “targeted and fair, rather than restoring eligibility to everyone including the wealthiest.”.

She went on to say, “But we have now acted to expand the eligibility of the winter fuel payment so no pensioner on a lower income will miss out.”.

The chancellor stated that she would outline the funding for the £125 billion policy in the autumn budget, but she also stated that “no-one should be in any doubt” that she would adhere to her own borrowing guidelines.

But Conservative leader Kemi Badenoch stated: “The pensioners who had to decide between heating and eating last winter will find little solace in this humiliating U-turn.

Adding, “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. “.”.

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. Others would receive £100, while those who receive qualifying benefits, such as pension credit, would continue to receive their payment.

The money will be disbursed through a new Scottish Parliament benefit that won’t be available until late 2025, and each household will only receive one payment.