Rachel Reeves announced means-testing of winter fuel payments (Image: Getty)
Rachel Reeves’s cruel cuts to winter fuel payments will save a fraction of the money originally planned, after terrified pensioners scrambled to claim Pension Credit. New official figures suggest the policy will save less than ￡230 million, despite the Treasury originally hoping to save ￡1.5 billion.
It means the Chancellor has gained little from her announcement last year that payments of up to ￡300 would be means-tested, robbing ten million pensioners of a benefit designed to help them keep warm in winter. The policy sparked outrage and was largely abandoned when Ms Reeves announced a partial u-turn in June.
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Her original plan was to link eligibility for Winter Fuel Payments to Pension Credit, and Department for Work and Pensions data shows this spurred tens of thousands of pensioners to apply for the benefit. There were 181,100 successful Pension Credit claims in the year since the original announcement, up by 57,200 compared to the year before.
With the average Pension Credit award worth more than ￡3,900 per annum according to the Government, those additional claims will cost the Treasury ￡223 million.
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But June’s change of policy, which restored Winter Fuel Payments to all pensioners with an income below ￡35,000 per year, cut the savings from means-testing to just ￡450 million per year.
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It means that on balance, Ms Reeves is saving just ￡227 million - around ￡1 for every ￡6 she originally planned.
And the true figure could be even lower, because people receiving Pension Credit can also become eligible for other benefits such as help with council tax.
Critics said Ms Reeves had trashed Labour’s reputation and caused stress to millions of elderly people for nothing. Dennis Reed, Director of campaigners Silver Voices, said: “It’s good that more people are receiving the Pension Credit they were always entitled to. But the winter fuel policy has been an unmitigated disaster in both an economic and political sense.
“When you bring in all the other benefits that Pension Credit gives you entitlement to, the savings will be even smaller and it may even have cost the Treasury money.
“What it’s cost them in the political sense is incalculable. Picking on pensioners at the very start of their term of office set completely the wrong tone, and they are still paying the price of that.”
Polling suggests the bungled attempt to remove winter fuel payments from millions of pensioners is continuing to damage Labour’s reputation. Asked to name something Labour had done since winning power, good or bad, 26% of voters highlighted means-testing winter fuel payments, a higher figure than for any other policy, a survey by Lord Ashcroft found.
The positive achievement voters noticed most has been signing global trade deals, but only three percent of those surveyed highlighted this.
Tax expert Steve Webb, a former pensions minister and partner at pension consultants LCP, said: “It is entirely welcome that more pensioners who are entitled to pension credit are now claiming what they are entitled to. But this surge in claims has put a further dent in the revenue from this ill-fated policy.
“Compared with the original plan to raise ￡1.5 billion by means-testing Winter Fuel Payments, the final saving could be barely one sixth of this amount. The Chancellor must wish she had never started down this path”.
Stephen Lowe, group communications director at retirement specialist Just Group, said: “The take up of Pension Credit has been subject to a harsh spotlight since the Government first limited the Winter Fuel Payments to people who are in receipt of Pension Credit or certain other means-tested benefits.
“There has clearly been a significant boost in Pension Credit take up with nearly 100,000 more applications annually following the Winter Fuel Payment announcement, with over 57,000 of those claims awarded. This will be seen as a notable success in bolstering long-term take up a crucial benefit targeted at lower income pensioners.
“However, it remains a drop in the context of the estimated 700,000 families that are eligible for Pension Credit and not claiming it.”
Charities also warned that too many pensioners are missing out on money they are entitled to.
Independent Age Chief Executive Joanna Elson said: “On average, Pension Credit tops up income by over ￡4,000 a year, and opens the door to a variety of other social security entitlements including free NHS dental treatment, access to the Warm Home Discount and Housing Benefit to help with rent. We will continue to work with the UK Government to raise awareness of Pension Credit as it can be transformative.
“More older people in financial hardship receiving support is positive, but far too many are still missing out.”
A DWP Spokesperson said: "By having an income threshold of ￡35,000 we’re ensuring that pensioners who need support the most receive it, whilst also making significant savings.
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Older Brits urged ‘check now' as thousands missing out on ￡3,900 pension boost
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Triple lock warning as 'pensioners should take into account' this tax change
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DWP benefits and discounts you're entitled to if you become disabled - full list
DWP payment dates for benefits, pensions and cost of living help in September
'Anyone in employment' urged to consider this scheme which can pay out ￡10,000 a month
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Full list of winter fuel payment dates and amounts for pensioner households this year
DWP benefit to be replaced by Universal Credit next spring
Experts slam Rachel Reeves' ‘partisan theatre' as landlords could see ‘punitive' NI tax
The 7 crazy policies backed by the Labour minister writing Rachel Reeves's Budget
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DWP confirms exact date you must be born to get 2025 winter fuel payment
Labour in fresh winter fuel chaos as 600k disabled pensioners to miss out
Triple lock warning as 'pensioners should take into account' this tax change
Rachel Reeves could tax landlords' rental income with new National Insurance levy
Rachel Reeves 'daft new IHT plot' slammed for 'turning grandparents into tax evaders'
DWP benefits and discounts you're entitled to if you become disabled - full list
DWP payment dates for benefits, pensions and cost of living help in September
'Anyone in employment' urged to consider this scheme which can pay out ￡10,000 a month
Rachel Reeves dealt huge blow as Kirstie Allsopp makes brutal comparison
Full list of winter fuel payment dates and amounts for pensioner households this year
DWP benefit to be replaced by Universal Credit next spring
Experts slam Rachel Reeves' ‘partisan theatre' as landlords could see ‘punitive' NI tax
“Amid our biggest ever Pension Credit awareness campaign, between July 2024 and July 2025, 181,000 households were awarded Pension Credit, with awards worth on average ￡82 a week.
“We know that Pension Credit can be a lifeline to those on low incomes, and we are continuing to urge all pensioners who think they might be eligible to apply.”
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