Labour's reasoning for winter fuel cuts never did make sense

The National

19 hours ago

If Labour's by-election candidate had been able to hail a Westminster U-turn on Winter Fuel Payments (WFPs), perhaps he wouldn't have been so camera-shy in the days before the vote in Hamilton, Larkhall and Stonehouse.
That said, it's not immediately clear what the impact of this Westminster decision will be on Scotland's devolved Pension Age Winter Heating Payment, which the Scottish Government last year decided would be £100 for every pensioner household, with means-testing for higher payments.
Will universality be maintained, even if the sums are increased to match the payments in England and Wales to which only some pensioners will be entitled?
READ MORE: Labour 'left us to see winter fuel U-turn on social media', SNP minister says
The Scottish Government received no more notice than any of the rest of us that this U-turn was coming, so will now need to reassess its plans.
The whole situation is a guddle, highlighting once again the limitations on Holyrood making its own decisions that best meet the needs of its people. Given our colder climate, it seems likely the payments will be increased.
But what a lot of wasted energy has been devoted to mitigating the impact of a UK Government policy decision that went down like a lead balloon as soon as it was announced, and has been blamed for the Labour Party's poor showing in the English local elections.
The policy never quite made sense, given that it was trumpeted as a way to save the Government money but it could actually have ended up costing more than the previous universal system.
Chancellor Rachel Reeves has largely U-turned on her Winter Fuel cuts (Image: PA) By linking eligibility for WFPs to receipt of pension credit (and certain other income-related benefits), Labour quite deliberately encouraged more benefit applications.
Nearly 60,000 extra awards of pension credit have been made since the means-testing of WFPs was announced, and at an average value of around £4000 this will have cost an additional £235 million or so. It's a small sum compared to the £1.3 billion Labour hoped to save in the first year of limiting fuel payments, but it's a tiny fraction of the estimated unclaimed pension credit.
The Government believes 880,000 households are missing out, but must have banked on far fewer than half of them making successful claims in response to the ending of WFPs for all. Had 440,000 been spurred into action and made successful claims, the bill could have been in the region of £1.76bn.
This would have been no bad thing – the policy would have redistributed pensioner support from those who possibly didn't need it to those who definitely did. But this was not how Labour sold the policy, and indeed not how it worked out.
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The number-crunchers presumably took into account two important factors: one, that applying for pension credit is not particularly easy to do, and two, that many pensioners are strongly resistant to being perceived as benefit claimants, regardless of how low their incomes may be.
I say 'perceived as', rather than 'being', because they are happy to accept their state pensions, which they do not consider to be benefits because they have 'paid in' for them, but are more reluctant to apply for means-tested top-ups.
I can already hear some of our letter-writers cracking their knuckles ready to scold me for suggesting their pensions are benefits as opposed to simply entitlements.
While pensioner pride is one factor in low benefit take-up, others include lack of knowledge about what is available – including the fact that even a modest pension credit payment acts as a 'gateway' to other benefits including Council Tax reduction, the Warm Home Discount and free TV licences for over-75s.
Worryingly, between last July and this May a whopping 146,000 claims were refused, representing a 99% increase on the year before.
Reporting on the high proportion of such claims in the months following the WFP change, the BBC suggested this could be 'due to people failing to meet the criteria, or failing to submit the 24-page, 223-question form properly'.
Back in November, opposition MPs were critical of the fact that people were waiting 10 weeks for a decision, but appeared less curious to know why so many were being rejected.
Is it plausible that so many of those who applied were actually ineligible, given what we know about low take-up rates? Or is it more likely that the application process is too arduous for many to complete correctly?
Yes, some people may have felt it was worth applying even if they weren't sure they were eligible, but with the form taking an average of 16 minutes to complete it's certainly not a simple case of a few clicks.
Labour will be hoping to move on from this policy disaster, and will stick to their line about desperate measures being required last summer. However, the matter of unclaimed pension credit, and the high number of rejected claims, is arguably far more important.
Is the complexity of the application process a barrier too far? And how likely are proud pensioners to challenge decisions, or resubmit their claims, if they were disinclined to apply in the first place?