Nine million pensioners to receive winter fuel payment this year, Reeves says

Some nine million pensioners in England and Wales will receive the winter fuel payment this winter, the Chancellor has announced in a £1.25 billion u-turn of Government plans.

The payment, worth up to £300, will be restored to the vast majority of pensioners who previously received it because anyone with an income of under £35,000 a year will now get the payment automatically.

Confirming the u-turn, Rachel Reeves said the Government had “listened to people’s concerns” about the decision to limit the payment to the poorest pensioners last winter, and was now able to widen eligibility because Labour had restored “stability” to the economy.

Plaid Cymru’s Westminster Leader, Liz Saville Roberts said that while the U-turn was “welcome”, it was “clear that it was driven by polling, not principle”.

Leader of the Welsh Conservatives, Darren Millar MS called the U-turn “humiliating” and said it was indicative of “a party in turmoil”.

Ministers have insisted no additional Government borrowing will be needed to cover the costs of the reversal, prompting warnings of tax rises on the horizon.

Reclaimed

Those with an income above the £35,000 threshold will also receive the payment, but it will then be reclaimed from them in tax.

To be eligible for the winter fuel allowance, a person will need to have reached state pension age by the week starting September 15 this year.

Devolved authorities in Scotland and Northern Ireland will each receive a funding uplift so they too can meet the new threshold.

Pensioners who do not want to receive the payment will be able to opt out, according to the Treasury.

The decision to limit the winter fuel payment to only those who claimed pension credit was one of Labour’s first acts in Government, aimed at balancing what was described as a £22 billion “black hole” in the public finances.

This meant the number of pensioners receiving the payment was reduced by around 10 million, from 11.4 million to 1.5 million.

But Sir Keir Starmer signalled there would be a partial U-turn on the policy in May, after it was thought to have contributed to Labour’s drubbing in the local elections.

The Treasury claims the new arrangement will cost £1.25 billion in England and Wales, while means-testing winter fuel will save the taxpayer £450 million.

Speaking during visit to north London, the Chancellor said: “From this winter, nine million pensioners will now receive winter fuel payments.

“It will be still means-tested, but at a higher level, we’ve listened to people’s concerns around the level of the means test.”

Stability

Ms Reeves suggest that the “stability we’ve brought back to the economy” meant the Government was able to change the eligibility threshold for winter fuel payments.

She added: “We will set out in the normal way, in the budget, how everything is funded, but no-one should be in any doubt about my commitment to the fiscal rules to ensure that the sums always add up.”

The Chancellor told Sky News there was “still work to do to ensure that the sums always add up”, and also insisted the reversal did not mean the Government was “going back to the universal system” it had scrapped.

Ms Reeves added: “I don’t think it is right that the very richest pensioners have their fuel bills subsidised, but this year nine million pensioners will get the winter fuel payments.”

Some two million pensioners who earn more than £35,000 will see their winter fuel payments clawed back via the taxman, the Treasury estimates.

Costs of the u-turn will be accounted for at the autumn budget, the Treasury said, but the plan will not require extra borrowing, according to the Government department.

Writing on social media site X, Paul Johnson of the Institute for Fiscal Studies responded by saying: “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).”

No 10 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 added.

Mess

Kemi Badenoch, leader of the Opposition, claimed the Prime Minister had “scrambled to clear up a mess of his own making”.

The Conservative leader added: “I repeatedly challenged him to reverse his callous decision to withdraw winter fuel payments, and every time Starmer arrogantly dismissed my criticisms.

“This humiliating U-turn will come as scant comfort to the pensioners forced to choose between heating and eating last winter.

“The Prime Minister should now apologise for his terrible judgment.”

Liberal Democrat Leader Sir Ed Davey said: “Finally the Chancellor has listened to the Liberal Democrats and the tireless campaigners in realising how disastrous this policy was, but the misery it has caused cannot be overstated.

“Countless pensioners were forced to choose between heating and eating all whilst the Government buried its head in the sand for months on end, ignoring those who were really suffering.

“We will now study the detail of this proposal closely to make sure those who need support actually get that support.

“The pain they went through this winter cannot be for nothing.”

Reactions

In response to the Chancellor’s U-turn on the cuts to the Winter Fuel Payment, Plaid Cymru’s Westminster Leader, Liz Saville Roberts MP said: “Targeting the most vulnerable is never the right approach. Labour’s decision to cut Winter Fuel Payments last year left millions of pensioners facing real hardship and uncertainty. These are people who deserve security, not neglect.

“While Reeves’ U-turn is welcome, it’s clear that it was driven by polling, not principle. If the most vulnerable people were a true priority for Labour, they wouldn’t need public pressure to act and these cuts would never have been made in the first place.

“If this UK Government wants to deliver its promise of change, it must also go further and reverse the cruel cuts to welfare, including to PIP payments. Anything less will show this Government is more interested in headlines than helping those who need it most.”

Older People’s Commissioner for Wales, Rhian Bowen-Davies, said: “While details are still somewhat limited, I welcome the Chancellor’s announcement that the Winter Fuel Payment will be restored to older people with incomes of less than £35,000, following widespread calls to reinstate this crucial form of financial support.

“This was an issue that caused significant concern and continued to be raised with me by older people across Wales. People have told me about the extent to which they were forced to cut back on fuel and other essentials last winter as a result of the changes last year, putting their health and well-being at risk.

“So it is positive that the changes announced today will be in place for the coming winter.

“According to the UK Government, around 75% of older people will now receive the payment, a figure that is likely to be higher in Wales as older people’s incomes here tend to be lower than other parts of the UK.

“I also welcome that the payment will be made to all older people above the qualifying age, and that those with incomes above the threshold will have the option to opt out or to repay what they receive through a form of taxation. This will mean that there will not be a means tested claims process as such, something that often results in eligible individuals missing out, as well as adding significant costs in terms of administration.

“However, it is crucial that clear communication is quickly shared to provide full details about how the new system will work in practice to prevent potential concerns or anxiety amongst older people about whether they will be eligible for the payment and what they might be liable to ‘pay back’ if their incomes are above the threshold. This will enable people to properly plan and make any preparations they need to ahead of the winter.”

Commenting, Leader of the Welsh Conservatives, Darren Millar MS, said: “Labour’s latest humiliating U-turn highlights a party in turmoil, scrambling to clear up a mess of their own making.

“The Conservatives repeatedly warned the Prime Minister that this cruel decision to withdraw winter fuel payments from pensioners would have a devastating impact on the most vulnerable. Yet, despite these warnings, he pressed ahead.

“Last winter, pensioners were forced to choose between heating and eating. The Prime Minister should apologise and so should the First Minister for standing by the shameful decision.”