Report warns that many pensioners living below the poverty line may lose their winter fuel payments.
The Commons will vote next week on the government’s plans to limit fuel payment aid only to pensioners on benefits, affecting about 10 million people.
Approximately 1.6 million pensioners living below the poverty line and who do not receive Pension Credit are set to lose out due to the government’s decision to means test the Winter Fuel Payments. This information was revealed in a report by former pensions minister Sir Steve Webb, who is now a partner at pension consultancy firm Lane Clark & Peacock (LCP). According to the analysis of Department for Work and Pensions (DWP) data, in 2022/2023, there were 1.9 million people over the state pension age living below the poverty line, with only 300,000 estimated to be receiving Pension Credit.
The new Labour government announced that Winter Fuel Payments would be restricted to those receiving Pension Credit or other benefits, leaving around five out of six retirees living below the poverty line without assistance in paying their winter fuel bills.
Pensioners Losing Out
Webb expressed, “There is a range of ways in which the Government could target spending on Winter Fuel Payments, but our analysis shows that limiting payments only to those on pension credit will leave the vast majority of pensioners below the poverty line losing out.”
The former pensions minister suggested redirecting payments to those in lower-value properties to protect most poorer pensioners, although this would significantly reduce savings for the Chancellor.
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“It is ultimately a matter for politicians to decide on the balance between raising revenue and protecting the vulnerable, but it is clear that continuing payments only to those on pension credit will mean large numbers of already low-income pensioners losing out,” he added.
Shouts of ‘Shame!’
The analysis follows Ofgem’s announcement of an increase in the energy price cap from October, resulting in an average fuel bill rise of £149 per year.
The modification in accessing the winter fuel allowance, which is valued at up to £300 this year, will lower the number of claimants from 11.4 million pensioners to an estimated 1.5 million, saving the Treasury approximately £1.4 billion annually. The government justifies the changes to help address a £22 billion deficit in public finances.
During the Commons session on Wednesday, Prime Minister Sir Keir Starmer faced jeers and cries of “shame!” as he defended the cut. Chancellor Rishi Sunak defended the decision, noting that the previous Conservative government had offered winter fuel allowance and cost of living support to low-income pensioners, both of which were now eliminated by Starmer.
“Age UK have said cutting the winter fuel allowance is the wrong policy and, only this morning, we have learned that the vast majority of the poorest pensioners, pensioners in poverty, are going to see that vital support removed,” Sunak stated.
Starmer responded, “No prime minister wants to do what we have to do in relation to the winter fuel allowance, but we have to take the tough decision to stabilize our economy, to ensure that we can grow it for the future.”
In response to Webb’s findings, a government spokesperson remarked, “We are absolutely committed to supporting pensioners and giving them the dignity and security they deserve in retirement. That’s why, through our commitment to protect the triple lock, over 12 million pensioners could see their state pension increase by almost a thousand pounds over the next five years.”
“But given the dire state of the public finances we have inherited, it’s right that we target support to those who need it most while we take the difficult decisions needed to fix the foundations of our economy. Over a million pensioners will continue to receive the winter fuel payment and eligible pensioners will also be able to benefit from the £150 warm home discount scheme from October to help with their energy bills over winter,” the spokesman added.
The government is encouraging pensioners to check their eligibility for pension credit.
The House of Commons is scheduled to vote on the government’s plans to means test Winter Fuel Payments next week.
PA Media contributed to this report.
