Pensioner Fuel Payments: More Help This Winter, But Uncertainty Remains

Labour’s U-turn on fuel payments will happen in time for more pensioners to benefit this winter, it was revealed today – but not all retirees will have the handouts restored.

Chancellor Rachel Reeves this morning said planned changes to the means-testing of winter fuel payments would be in place ahead of the colder months.

‘More people will get winter fuel payment this winter,’ she said, as she was quizzed about Labour’s plans to partially reverse its previous cuts.

But, despite expectations she will provide more details at her spending review next week, Ms Reeves added she could not yet say how the U-turn will be funded.

‘We will set out how everything will be paid for at the Budget in the autumn,’ the Chancellor said, when asked about potential further tax rises.

Ms Reeves spoke shortly after pensions minister Torsten Bell had admitted there was no prospect of returning to a universal winter fuel payment in England and Wales.

He told MPs that ‘most people agree… it’s not a good idea that we have a system paying a few hundreds of pounds to millionaires’.

The payments – worth up to £300 – had previously been available to all pensioners prior to Ms Reeves’ controversial announcement, made last July, that they were being means-tested.

But pensions minister Torsten Bell ruled out winter fuel payments being returned to all pensioners in England and Wales

Sir Keir Starmer last month announced a partial U-turn and said he wants to ensure ‘more pensioners are eligible’ for the payments ‘as the economy improves’

Last July – as she blamed a £22bilion ‘black hole’ in the public finances – the Chancellor said the handouts would be restricted to only those on pension credit or other means-tested benefits.

Her decision to axe fuel payments for around 10 million pensioners – saving an estimated £1.5billion per year – sparked outrage and dire warnings from charities about the impact of the cut. 

Following the fierce backlash, the Prime Minister last month pledged to partially undo the controversial cuts.

Sir Keir Starmer told MPs on 21 May he wants to ensure ‘more pensioners are eligible’ for the payments ‘as the economy improves’.

His announcement of a partial U-turn came after Labour lost the Runcorn and Helsby by-election to Reform UK and suffered a poor set of local election results.

Labour activists said the decision to drastically pare back winter fuel payments came up repeatedly on the doorstep during those contests.

Speaking in Rochdale this morning, Ms Reeves confirmed she would alter the level of means-testing in time for more pensioners to get payments this coming winter.

But Ms Reeves dodged on whether she would announce the full details of Labour’s U-turn at her spending review on 11 June. 

‘I had to make decisions last year to restore sound public finances,’ the Chancellor said, as she defended her intitial cut.

‘And that involved a number of difficult decisions around welfare, taxation and also public spending.

‘Including the decision to means-test winter fuel payments so only the poorest pensioners – those on pension credit – got it.

‘We have now put our public finances on a firmer footing, the economy is in a better shape, but we have also listened to the concerns people had about the level of the means-test.

‘And so we will be making changes to that, they will be in place so pensioners are paid this coming winter.

‘We’ll announce the detail of that and the level of that as soon as we possibly can.

‘But people should be in no doubt the means-test will increase and more people will get winter fuel payment this winter.’

Asked if she would tell the public if she planned to fund her commitments by raising taxes or cutting spending in other parts of Whitehall, the Chancellor said: ‘As we have been clear, on winter fuel we will set out how we will fund that at the next fiscal event.

‘We will set out how everything will be paid for at the Budget in the autumn but it’s important that everything that we do is funded, because that’s how people know that we can afford it.’

Earlier, speaking to the House of Commons’ Work and Pensions Committee, Mr Bell said the Government was still deciding how to make more pensioners eligible for the cash.

But he ruled out winter fuel payments being returned to all retirees. 

‘Directly on your question of is there any prospect of a universal winter fuel payment, the answer is no,’ he said.

‘The principle I think most people, 95 per cent of people agree, that it’s not a good idea that we have a system paying a few hundreds of pounds to millionaires.

‘And so we’re not going to be continuing with that. But we will be looking at making more pensioners eligible.’

Asked what work had been done with HMRC to assess the practicality of recouping payments from higher rate taxpayers, as happens with child benefit, Mr Bell said: ‘We’re looking at all of the policy options for how this eligibility can be extended, and when I’ve got more to tell you about that I absolutely will.’

The pensions minister also insisted there was ‘no differential effects on their health outcomes’ last winter for those particularly affected by the changes to winter fuel payments.

‘No one is asking people to wait for changes to the policy on winter fuel payment for help with energy bills,’ he added.

‘We’ve already been getting on with making sure we’re extending the household support fund, raising the state pension significantly above inflation, getting on with the longer term answers in terms of a warm homes programme.

‘Help is happening all over the Government’s policy agenda but in this particular area we do want to help more pensioners in future.’

Reform leader Nigel Farage recently vowed to fully reverse the winter fuel payment cuts made by Labour.

But, despite campaigning against Labour’s cuts to winter fuel payments, Tory leader Kemi Badenoch has not promised to return it to every retiree. 

‘I’ve always said millionaires should not get the winter fuel payment,’ she said last month.

‘That is not right. But we shouldn’t be taking it away from people who end up below the breadline after it’s gone.

‘So what we need is a system that can make sure that all of those people who do need it get it.’

Responding to Ms Reeves’ comments this morning, Liberal Democrat MP Daisy Cooper – her party’s Treasury spokesperson – said: ‘This whole debacle has caused needless misery for millions of pensioners.

‘We will look at the details of the changes at the spending review next week.

‘In the mean time the Chancellor should apologise to all those pensioners who had to freeze this winter because of this senseless policy.’