Winter Fuel Payment update: 1.6m state pensioners 'below poverty line' at risk as £300 energy bill support axed
The Winter Fuel Payment is being means-tested and many Britons are likely to lose out
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Labour's plan to effectively scrap the universal £300 Winter Fuel Payment has sparked concerns for 1.6 million state pensioners who may lose vital energy bill support support.
The proposal, put forward by Chancellor Rachel Reeves, aims to target the payment exclusively to those on means-tested benefits from the Department for Work and Pensions (DWP), including Pension Credit.
Analysts suggest this shift in policy could leave a significant number of older people below the poverty line without assistance.
The Winter Fuel Payment assists pensioners in coping with rising energy costs with consultants LCP (Lane Clark & Peacock) now shedding light on the potential impact of its overhaul.
Sir Steve Webb, a partner at LCP and former pensions minister, has highlighted the potential consequences of this policy change.
According to his analysis, about the majority of low income pensioners are not receiving DWP benefit support.
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The cost of living crisis has pushed energy bills to new heights in recent years GETTY In the 2022/23 period, Webb noted that 1.9 million people over pension age across the UK were living below the breadline.
Of these, only 0.3 million were receiving Pension Credit, leaving 1.6 million at risk of losing their Winter Fuel Payment.
Webb explained: "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."
Webb cited alternative approaches to targeting Winter Fuel Payments. One suggestion involves basing eligibility on property value, which could protect most poorer pensioners while reducing government expenditure.
Another option is to tax the payments, though this would raise less revenue and could be administratively complex.
"It is ultimately a matter for politicians to decide on the balance between raising revenue and protecting the vulnerable," he added.
Robert Salter, a director of Blick Rothenberg, warned that other benefits could be on the chopping block in Labour's upcoming Autumn Budget.
Salter shared: "The reason the Government gave for scrapping Winter Fuel Payment was that the scheme ‘wasn’t particularly well-designed.’
"More than anything, this suggests that this Government doesn’t like universal benefits and may attack more of them.
"It also indicates that the Government has no problem with people suffering an effective tax liability of 100 per cent, as is the case where someone just £1 in excess of the relevant pension credit amount loses all of their Winter Fuel Payment.
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Reeves has outlined plans to means-test the Winter Fuel Payment ahead of next month's Budget
PA"[This] means it is likely that the Government will not be removing any of the numerous flaws and anomalies within the UK tax system such as the child benefit clawback rules in the forthcoming budget."
A Government spokesperson told GB News: "This Government is committed to pensioners: protecting the triple lock, keeping energy bills low through our Warm Homes Plan, and cutting NHS waiting lists – bringing real stability to people’s lives.
"We said we would be honest with the public and, given the dire state of the public finances we have inherited, this Government must take difficult decisions to fix the foundations of the economy.
"In these circumstances it is right that Winter Fuel Payments are targeted at those in most need, and we will work with Local Authorities to boost the uptake of Pension Credit, reaching the many pensioners who could still benefit from this year’s Winter Fuel Payments.”