
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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Times
32 minutes ago
- Times
Fact check: how accurate are Rachel Reeves's spending figures?
'The chancellor's speech was full of numbers, few of them useful,' said Paul Johnson, the head of the Institute for Fiscal Studies. Reeves's speech was political to the core — and that extended to her use of statistics. The chancellor appears to have used whichever numbers best suited her position, predominantly to inflate the scale of the government's spending plans. She used bigger, cumulative figures to highlight the scale of investments, rather than annual numbers, and cash increases stripped of their context. She also used Tory spending plans from before the election, which never came to pass, as the baseline for the biggest numbers in her speech. When it did not suit her she ignored the Tory spending plans. While none of the figures are technically inaccurate, economists argue that they are a statistical sleight of hand and that Reeves would be better off being consistent in her use of numbers. Spending going up The claim: The first number in Reeves's speech — bar her obligatory reference to the £22 billion 'black hole' she claims to have been left by the Tories — was the boast that 'in this spending review, total departmental budgets will grow by 2.3 per cent per year in real terms'. The reality: This figure includes spending announced at the budget last year, where there were some of the biggest increases. Over the next three years, total spending — combining day-to-day and investment — will increase by 1.5 per cent. Day-to-day spending will rise by 1.2 per cent a year for the rest of the parliament, about half the rate it rose this year. • More for public services The claim: Reeves promised to add '£190 billion more to the day-to-day running of our public services' as well as an extra £113 billion to public investment. The reality: This is a comparison with previous Conservative plans — dismissed as 'essentially fictitious' by Johnson — drawn up before the election to set a trap for Labour and allow Rishi Sunak to promise tax cuts. The Tory plans envisioned day-to-day spending rising by only about 1 per cent a year, and big cuts in capital spending. Reeves reversed these by changing her fiscal rules to allow more borrowing and is increasing infrastructure spending. But on an annual basis, capital spending will be £151.9 billion in 2029-30, £20.6 billion more in cash terms than it is now. Day-to-day spending will rise by £50.7 billion by 2028-29. More for schools The claim: Reeves said she was providing a 'cash uplift' of more than £4.5 billion for schools by the end of the spending review period. The reality: Context is everything. The Treasury concedes in the small print that the core budget for schools will rise by 0.4 per cent over the next three years. It says that when the cost of expanding free school meals is stripped out of the figures 'you get a real-terms freeze in the budget'. • Rachel Reeves is testing voters' patience … she needs results Backing innovation The claim: Reeves declared that the government was 'backing [Britain's] innovators, researchers and entrepreneurs' with research and development funding rising to a 'record high of £22 billion per year by the end of the spending review'. In a press release the government said that spending on research and development was £86 billion. The reality: Despite the rhetoric, this spending pledge represents a significant scaling back of the government's investment ambitions in research and development. The previous government pledged to hit the £22 billion target by this year and then delayed it until 2027. This target has now been put back even further to 2029. 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NHS spending The claim: With health the big winner, Reeves boasted of 'an extra £29 billion per year for the day-to-day running of the health service' along with a 50 per cent boost in the NHS technology budget. The reality: The £29 billion figure is for NHS England specifically, and its budget will rise by 3 per cent a year in real terms, within a 2.8 per cent per year overall Department of Health rise. Capital budgets were increased last year but will be held flat for the rest of this parliament. Increasing technology spending further will therefore come at the cost of crumbling buildings or modern scanners and other kit. NHS leaders are already saying they will find it harder to shift to more modern, efficient treatments without extra equipment and buildings. Efficiency savings The claim: Reeves said the government had carried out a zero-based review of all government spending that would make public services 'more efficient and more productive' and, according to the Treasury, save £13 billion a year by 2029. The reality: These savings are, to put it charitably, extremely hypothetical and in some cases seem wildly optimistic. The NHS, the government thinks, will save nearly £9 billion from higher productivity — despite the fact that the health service has got less rather than more productive since Covid. And the culture department thinks it will save £9 million from 'digital reform' — despite the fact that the MoD, which is a much larger organisation, only thinks it can save £11 million. Overall the savings appear, at best, to be highly aspirational. But if they are not met, it will have a real-world impact on the amount of money the government has for public services.


Telegraph
32 minutes ago
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Planet Normal: ‘The numbers don't add up' in Rachel Reeves' spending review
Mr Lyons wasn't convinced by the numbers, ' Early in her speech the Chancellor said, is the plan credible, and the answer unfortunately is, no.' 'T he starting position is debt is very high, and I think we're in the early stages of Britain going into a debt crisis. If you're looking for good news, it might be that we're not the only country facing this problem; but today the Chancellor gave a speech that I think lacked a lot of the detail.' Allison is not convinced by the claims the economy is stabilising, ' We know it is not true, and we are already starting to see the impact on employment and on businesses. We know payrolls have fallen, that employment's fallen by over 250,000 since Rachel Reeves' budget. This is not an economy where you should be taking the gambles that she's taking. Where is the growth going to come from?'


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32 minutes ago
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Reeves has folded like the Tin Foil Chancellor she is
Rachel Reeves confirmed on Wednesday that she is a ' spend today, tax tomorrow ' Chancellor. Her spending spree on the country's credit card has set us on a collision course with the autumn when more tax rises will hit working families' pockets hard. After a year of chaos, how can anyone take this Government seriously? Rather than using the spending review as an opportunity to deliver secure public finances, the Chancellor is instead lurching from one disaster to the next. The cruel cuts to winter fuel payments, the £30 billion Chagos Islands surrender and the billions in no-strings-attached union handouts are all chickens that have come home to roost. When the pressure is on, the self-styled 'Iron Chancellor' folds like the 'Tin Foil Chancellor' she really is. She promised to get borrowing down, but the deficit is up by 70 per cent on her watch. She pledged no new taxes rises, yet more are on their way. She pledged not to change pensioner benefits, then U-turned. Then U-turned again. The only consistent thing about her is her inconsistency. Her own MPs, Cabinet ministers and Labour's trade union paymasters smell weakness. They know she's vulnerable and they will demand more money – and get it if they shout loud enough. The Chancellor has boxed herself into a corner. We face an extra £200 billion of borrowing this Parliament compared with the last Conservative Budget, with £80 billion more in interest payments alone. We are almost a year in but no economic plan is forthcoming. Our country is exposed. We have no room left to respond to shocks in global markets. Interest rates and mortgages are staying higher for longer because of her choices, as the OBR has said. She trumpets the hundreds of billions in extra spending she has announced while on the other hand claiming to have fixed the public finances. It simply doesn't make sense. She claims there is 'still work to do to ensure the sums add up'. That's not stability, it's uncertainty – the very last thing markets want to hear. It is not just markets. Her abject failure means British families have seen inflation almost double, unemployment rise, growth stalling, debt interest soar and pensioners sacrificed. The country is worse off because of her choices. What of the winter fuel U-turn? Last summer, pensioners were left out in the cold to avoid 'a run on the pound', as Labour's Lucy Powell put it. Now they claim they can afford to reverse it because they have fixed the economy and the finances – but economists are saying both are in a worse state since Labour came to office. Nothing's changed except the Government's credibility, which is vanishing. Rock bottom confidence There was nothing in her review restore rock bottom business confidence. Payrolls fell by over 100,000 last month alone. Unemployment is up 10 per cent since Labour took office. Only businesses create growth and jobs. But our Chancellor has not yet learnt that basic lesson of economics, her fingers planted firmly in her ears whilst the alarm bells are ringing. Similarly, the first and most important duty of any Prime Minister is keeping the country safe. But even as the world is becoming more dangerous and a new axis of evils draws their battle lines, there was no further progress towards spending 3 per cent of GDP on defence, which Labour claim to be committed to. They stood firm on the Chagos surrender, which is paying for tax cuts for Mauritians while we suffer, costing our country £30 billion to lease back our own land. There is no urgency on the issues of the day. The Home Office budget too has been significantly hit by asylum costs, while illegal crossings soar. Rather than point the finger at everyone else, the Chancellor should take responsibility and fix the problems she has created. Instead, the socialist's lazy embrace of high spending, more borrowing and higher taxes beckons – leaving our public finances dangerously vulnerable. If we were in charge, we would take a different approach. We wouldn't kill growth with tax rises and red tape. We'd restore confidence, focus on efficiency and productivity, and reform welfare to get people off benefits and into work. At the end of the day, it's working people and businesses who will pay – with higher taxes, higher costs, and fewer opportunities. This Spending Review is unaffordable, and so is this Chancellor.