Millions of pensioners will miss out on winter fuel payments under the changes (Image: GETTY)
Stripping millions of pensioners of winter fuel payments could save a third less than claimed, according to a former pensions minister.
The Government has said that restricting the previously universal payments to older people will save ￡14 billion in the first year in a move that has sparked a major backlash.
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But Sir Steve Webb said the savings could be cut by ￡490 million as more retirees take up pension credit.
The latest statistics suggest that between 720,000 and 880,000 people are eligible for the benefit but do not currently claim it.
Sir Steve estimated that a third of the Treasury's expected savings could be wiped out if one in four of those pensioners put in a claim.
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The ex-pensions minister said it was “highly likely” that the winter fuel announcement would lead to “a flurry of new claims for pension credit”.
He told The Telegraph: “This is exactly what happened when entitlement to a free TV licence for the over-75s was restricted to those on benefit.
“But a big surge in take-up could slash the savings from this measure. If just one in four of those currently missing out on their entitlement to pension credit now makes a claim, this could cut the Chancellor’s savings by around one third.
"One consequence of this is that additional cuts might be required to make up for the shortfall.”
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Pension credit is referred to as a "gateway benefit" as claimants also gain access to other discounts such as council tax reduction.
Winter fuel payments of up to ￡300 a year have previously been available to everyone above state pension age, but from this winter only those who receive pension credit will be eligible.
Chancellor Rachel Reeves blamed the move, which means just under 10 million pensioners will miss out on the payments, on the state of the public finances.
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A Government spokesman said: “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.”