Labour's initial plans would have seen certain pensioners miss out on the Winter Fuel Payment (Image: Getty Images)
An announcement may be on the horizon for pensioners eagerly awaiting news on the reinstatement of Winter Fuel Payments, which could potentially surface as early as next week. Angela Rayner, the deputy prime minister, hinted that Chancellor Rachel Reeves could provide updates during the Spending Review scheduled for June 11.
Labour's initial austerity measures included restricting the annual Winter Fuel Payment, which pays up to ￡300. This would have hit recipients of certain means-tested benefits such as Pension Credit or Universal Credit for partners of differing ages. The action was framed by the government as an essential response to address the ￡22bn 'black hole' in public finances attributed to the previous Conservative government.
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Sir Keir Starmer backtracked on his Winter Fuel Payment proposals (Image: Getty)
At a recent Prime Minister's Questions session, Sir Keir Starmer said the government was now looking at extending the Winter Fuel Payments to "more pensioners" due to the nation's economic recovery, suggesting the next "fiscal event" might be the right time for such a development.
This point prompted speculation about the Autumn Budget as the likely period for this policy to kick in.
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However, Ms Rayner's comments during her interview on Sunday Morning With Trevor Phillips on Sky News pointed to a potential earlier release, reports the Daily Record.
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"I think that we've got the upcoming Spending Review, and I'm sure that the Chancellor will set it out when we've got the opportunity, at the first opportunity, she will set out what we'll be able to do," she said.
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Angela Rayner claimed updates on the Winter Fuel Payment could come as early as next week (Image: Getty)
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When probed on whether the Winter Fuel Payment update is confirmed for the Spending Review, the deputy prime minister replied: "I don't know, but I hope so. I mean, the Prime Minister has announced it, so logically to me that indicates that the Prime Minister wants to do something in this area.
"And if the Prime Minister wants to do that, I'm sure the Chancellor is going to look at how we can achieve that."
The Sunday Times reported that ministers are mulling over the reinstatement of the payment for all but the wealthiest pensioners, although they cautioned that bureaucratic delays may impede its implementation this winter due to outdated computer systems.
When appearing on BBC's Sunday With Laura Kuenssberg on May 25, Tory leader Kemi Badenoch called for the immediate return of the Winter Fuel Payment, declaring: "We need to restore it right now. We would never have taken the winter fuel [payment] away. We kept it for 14 years – we brought in the Triple Lock – we look after pensioners."
Tory leader Kemi Badenoch is pushing for the benefit to be restored (Image: Getty)
In contrast, the Scottish Government announced earlier in the year its decision to grant every pensioner north of the border a minimum of ￡100 this winter.
Last month John Swinney, the First Minister, confirmed to the Daily Record that payments ranging from ￡100, ￡203, or ￡305 would be made by November 30 – St Andrew's Day.
Options to reintroduce Winter Fuel Payments
Full reversal
To bring back Winter Fuel Payments, fully reversing the decision that stripped millions of pension recipients of the benefit is one potential course of action.
The Institute for Fiscal Studies (IFS) has estimated that restricting the benefit solely to those on Pension Credit last year led to a nearly 90 per cent drop in claimants, saving roughly ￡1.5bn a year.
Reversing the policy change from last year would make an additional 11 million households eligible, effectively erasing the ￡1.5 billion saved.
Restoring the benefit could take shape in one of four ways (Image: Getty)
Create a specific threshold for Winter Fuel Payments
Introducing a specific income threshold for Winter Fuel Payments could be a solution, allowing those not on Pension Credit to apply.
If the threshold were set 20 per cent higher than the Pension Credit limit, it would cost about ￡100m and benefit roughly 400,000 more families, according to the Resolution Foundation.
A potential model, akin to Child Benefit, would allow all pensioner households to claim the payment but require high-income recipients to repay some through a self-assessment tax return, as noted by the IFS.
However, Tom Waters, associate director at the IFS, cautioned against implementing "a clunky bureaucratic mechanism for what is, ultimately, a relatively small payment".
Extending the Winter Fuel Payment to those on certain benefits could provide help to millions (Image: Getty)
Expand entitlement to those who get disability or housing benefits
Broadening eligibility to include those receiving disability or housing benefits could mean an extra 1.8 million households receive the Winter Fuel Payment, with an annual cost of around ￡500m, according to IFS calculations.
Yet this expansion could face complexities in Scotland due to the devolution of disability benefits.
The Resolution Foundation has calculated that extending eligibility to include those on housing and disability benefits could provide aid to an additional 1.3 million pensioner families, at a cost of ￡300m per year.
Ruth Curtice, the chief executive, described this as an "affordable" and "sensible way forward".
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Pay Winter Fuel Payments to individuals, not households
Currently, the Winter Fuel Payment is allocated to households, not individuals, which presents challenges in distribution.
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A shift to individual allocation would enable Westminster to conduct means testing on a personal level, utilising existing income tax data.
This change would allow low-income pensioners with wealthier partners to receive the winter fuel payment.
However, it might result in couples receiving double the amount compared to single pensioners, whereas currently a single person receives the same as a couple living together.