Rachel Reeves makes statement after reversing Winter Fuel Payment cut
Rachel Reeves makes statement after reversing Winter Fuel Payment cut
Reeves said there was still 'work to do to ensure the sums always add up'
Chancellor of the Exchequer, Rachel Reeves
Chancellor Rachel Reeves has made a statement after it was announced the cuit to the Winter Fuel Payment would be cut, meaning nine million pensioners will qualify this year. Rachel Reeves insisted she had 'listened to people's concerns' as she announced changes to the threshold for winter fuel payments.
The Chancellor told broadcasters: '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.
'Because of changes we've made and the stability we've brought back to the economy, we are able to increase that amount. 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.'
Reeves said there was still 'work to do to ensure the sums always add up'.
The Chancellor told Sky News: 'The Office for Budget Responsibility increased the growth forecast for every other year in the forecast, they said that our reforms to the planning system would make the economy £6.8 billion bigger, bringing in additional tax revenue as well.
'And in the first quarter of this year, we were the fastest growing economy in the G7. There's still work to do to ensure that the sums always add up, but because of the decisions that we've made, because of the stability we've returned to the economy, we are now able to pay the winter fuel payment to more pensioners.
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'We're not going back to the universal system. 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.'
Downing Street said an improved economy was the reason it could raise the threshold for winter fuel payments. The Prime Minister's press secretary said: 'We are confirming the changes now to give people certainty and ensure the payments can be received in time for winter.
'No pensioner will need to take any action as they will automatically receive the payment this winter. Targeting winter fuel payments was a tough decision, but it was the right decision. We inherited a £22 billion black hole from the Tories who lost control of the economy, leaving working people paying the price.
'We had to stabilise the economy with tough decisions and it's because of those tough decisions that the economy is beginning to improve. We've had the highest growth in the G7, four interest rate cuts in a row and real wage levels have risen by more since July 2024 than over the first 10 years of the previous Tory government.'
She added: 'As the economy improves, we want to make sure that more people feel those improvements in their everyday lives. That's why we are acting to ensure that more pensioners are eligible for winter fuel payments going forward.'
Some nine million pensioners in England and Wales will receive the winter fuel payment this winter, the Chancellor has announced. 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.
Those with an income above this 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 announced 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. Reeves said: 'Targeting winter fuel payments was a tough decision but the right decision because of the inheritance we had been left by the previous government.
'It is also right that we continue to means test this payment so that it is targeted and fair, rather than restoring eligibility to everyone including the wealthiest. But we have now acted to expand the eligibility of the winter fuel payment so no pensioner on a lower income will miss out.
'This will mean over three-quarters of pensioners receiving the payment in England and Wales later this winter.'
Some two million pensioners who earn more than £35,000 will see their winter fuel payments clawed back via the taxman, the Treasury estimates. 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.'
Independent Age Chief Executive Joanna Elson CBE said: 'We are pleased that the UK Government has listened to the voices of older people on a low income and reconsidered what was an incredibly damaging change to the Winter Fuel Payment. By widening the eligibility criteria, more older people in financial hardship will now receive this vital lifeline in time for winter.
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'Our helpline receives thousands of calls from older people making drastic cutbacks just to get by and the changes to the Winter Fuel Payment made this worse. For millions living on low incomes, the entitlement supports them to turn their heating on and stock up on food during the colder months.
'While the changes to the Winter Fuel Payment are positive, they are not a silver bullet that will end pensioner poverty. Around 2 million older people still live in poverty, and measures must be taken to ensure the long-term financial security of all people in later life. There needs to be a cross-party consensus on the adequate income needed in later life to avoid financial hardship. Once this is established, every older person should be supported to receive this amount. Nobody should have to live in poverty as they age.'
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