Latest news with #winterfuel
The Independent
11 hours ago
- Business
- The Independent
Forcing rich pensioners to pay back winter fuel allowance would be tax ‘nightmare', Reeves warned
Questions have been raised over Rachel Reeves ' winter fuel U-turn after it emerged the government plans to reinstate the payments for all pensioners before attempting to claw it back from millions through higher taxes. The chancellor is expected to set out Labour 's plans to reverse the controversial policy change at Wednesday's spending review, but fresh questions have been raised over how the government will distribute the payments. Reports suggest Ms Reeves will from this autumn restore the grants, worth up to £300, to the 10 million pensioners who had lost out. But only those in the bottom half of average incomes will keep the payments, with the top half of earners forced to repay the grant through higher tax bills over the course of the year. One option for the threshold at which pensioners are eligible is average household disposable income, currently around £37,000, The Times reported. Such a plan would resemble George Osborne's high income child benefit charge, which sees 1 per cent of total child benefit received taxed for every £100 earned over £60,000. It means that, over whatever threshold Ms Reeves sets for the payments, an amount will be clawed back from those on higher incomes. The plans could cost around £700 million, with the chancellor vowing to set out her plans to pay for the change at her autumn Budget. Dennis Reed, of over-60s campaign group Silver Voices, said the plans 'would be an administrative nightmare and would be likely to draw in many more pensioners into the tax system'. He told The Independent: 'The most cost effective solution is to restore the universal benefit and maybe fiddle around with the higher tax threshold in due course to target 'the millionaires'.' Mr Reed accused the government of 'casting around for ways to show it has not made a complete U-turn while gaining the political credit for doing so'. It comes after pensions minister Torsten Bell said there is no prospect of the winter fuel allowance being restored universally. He said: 'The principle I think most people, 95 per cent of people, agree, that it's not a good idea that we have a system paying a few hundreds of pounds to millionaires, and so we're not going to be continuing with that.' Sir Keir Starmer last month announced his intention to give more people access to winter fuel payments, just months after Labour made the previously universal payment means-tested in one of its first acts after taking office. Speaking in Manchester on Wednesday, Ms Reeves said: 'I had to make decisions last year to restore sound public finances, and that involved a number of difficult decisions around welfare, taxation and also public spending, including the decision to means-test winter fuel payments so only the poorest pensioners, those on pension credit, got it. 'But we have now put our public finances on a firmer footing. The economy is in a better shape, but we have also listened to the concerns that people had about the level of the means-test. 'So we will be making changes to that. They will be in place so that pensioners are paid this coming winter, and we'll announce the details of that and the level of that as soon as we possibly can.'
Sky News
a day ago
- Business
- Sky News
More pensioners to get winter fuel payments this year - but confusion remains over who will qualify
Rachel Reeves has confirmed more pensioners will be eligible for winter fuel payments this year - but confusion remains over how the threshold could be changed. Sir Keir Starmer failed to provide clarity on what the new means-test could be during Wednesday's PMQs, which came moments after the chancellor's surprise announcement at a Q&A in Manchester. Following a speech about her upcoming spending review, Ms Reeves said details on the government's winter fuel U-turn will be fleshed out "as soon as we possibly can". She added: "People should be in no doubt, the means test will increase and more people will get winter fuel payment this winter." However the prime minister was unable to say how many pensioners would have the benefit restored when grilled on the matter by Kemi Badenoch in the House of Commons. The Tory leader claimed the chancellor "is rushing her plans because she just realised when winter is". She asked: "On behalf of the pensioners who want to know, can the prime minister be clear with us here and now: how many of the 10 million people who lost their winter fuel payments will get it back?" Sir Keir didn't answer the question, only saying the government will "look again at the eligibility for winter fuel and of course we'll set out how we pay for it". 0:33 Axing universal winter fuel payments was one of the first things Labour did in government. The payment was aimed at helping pensioners pay for higher fuel bills during the colder months, but now only those in receipt of pension credit or other benefits get it. Means-testing it meant the number of pensioners eligible was slashed from 11.4 million to 1.5 million. Labour said it was necessary because of a £22bn blackhole left behind by the Conservatives, which they claimed was larger than they were expecting when they entered government. The change was expected to save around £1.3bn in 2024/25 and £1.5bn in subsequent years. Ministers now say decisions taken to stabilise the economy mean the eligibility can be extended. However, the U-turn is largely seen as a response to the party's drubbing at the local elections, which Labour MPs blamed on the unpopularity of the policy on the door step. 1:22 It wasn't clear until today whether the changes would come into effect before this winter, as the funding is expected to be laid out officially in the autumn statement in November. Pensions minister Torsten Bell today confirmed to the Work and Pensions Committee that there is no prospect of returning to a universal winter fuel payment, saying "most people agree it's not a good idea to have a system of paying a few hundred pounds to millionaires". Last month, former Labour prime minister Gordon Brown said governments should be fair to pensioners but one solution could be excluding only those on the top rate of income tax from winter fuel payments. Universal winter fuel payments were introduced by Mr Brown when he was chancellor in 1997, in the first year of the New Labour government.
Reuters
a day ago
- Business
- Reuters
UK's Reeves says more pensioners will receive winter fuel payments this year
LONDON, June 4 (Reuters) - British finance minister Rachel Reeves said on Wednesday more pensioners will receive winter fuel payments this winter, following the government's U-turn on the widely criticised cuts in the payments to the elderly. "People should be in no doubt that ... more people will get winter fuel payment this winter," Reeves told a press conference in northwest England.
The Guardian
27-05-2025
- Business
- The Guardian
Half of ‘red wall' voters disapprove of Labour's handing of benefits, says poll
Nearly half of all 'red wall' voters disapprove of the way Keir Starmer's government has dealt with benefits-related policy, a poll has found, as ministers faced continued pressure over winter fuel and disability payments, and the two-child benefit cap. According to the survey across 42 traditionally Labour seats won by the Conservatives in 2019, 48% of all voters had a somewhat or strongly negative view of the government's handling of the policies, against 25% who approved. Even with people who said they voted Labour in last year's election, opinion was evenly split, with a 38% rating for both approval and disapproval in the poll, carried out by Merlin Strategy. In another apparent sign of the cut-through of the decision to limit the annual winter fuel payment to just the poorest pensioner households, disapproval over benefits policy was most vehement in older people, with 12% of those aged 65 and over believing ministers had done well and 60% taking the other view. The poll more widely makes for gloomy reading in Downing Street, with red wall voters also taking a net negative view of the government's record so far on the economy, health, taxation, immigration, housing, the environment, defence, crime and foreign affairs. Asked which party would be best placed to handle particular issues, those surveyed ranked Labour top for health and housing, but placed the most faith in Reform UK on a series of subjects, including immigration, defence and crime, as well as benefits. Nigel Farage, the Reform leader, is expected to use a press conference on Tuesday to promise that if his party won an election it would restore the winter fuel payment to all pensioners, and scrap the rule which prevents parents claiming child tax credit or universal credit for more than two children. While a number of Labour MPs would agree with this, Starmer's party is likely to use Farage's decision to try to place renewed focus on the cost of Reform's taxation and spending plans, which some economists have said would create a fiscal gap far larger than in Liz Truss's disastrous mini budget of September 2023. Last week, Starmer confirmed that his government would aim to ease the £11,500 threshold over which pensioners are no longer eligible for the winter fuel payment, while giving no details about how this will be done. He is also facing disquiet from many Labour MPs over the continued two-child cap, seen as a leading driver of child poverty, and could face a major rebellion over plans to tighten eligibility for the personal independence payment, which goes to those with long-term physical or mental needs, and is intended to help get more people into jobs. Sign up to Headlines UK Get the day's headlines and highlights emailed direct to you every morning after newsletter promotion Speaking on Monday morning, the junior health minister, Karin Smyth, described the shift on winter fuel payments as 'the sign of a government that is listening'. Also on Monday, Labour backbencher Stella Creasy reiterated her call for the two-child limit to end, saying it would take '350,000 children out of poverty overnight'. She said: 'It's worth reflecting on the fact that 60% of those kids are in households where somebody is in work.'
The Guardian
25-05-2025
- Business
- The Guardian
Labour's botched U-turn on winter fuel allowance questions its purpose in power
The lady is, it seems, for turning: one of Rachel Reeves's first decisions as chancellor was to strip winter fuel allowance from the vast majority of pensioners. Keir Starmer now says more of them should be eligible. Pressure to shift had become intense after local elections where Labour councillors swept out of power by Reform repeatedly cited voter concern over winter fuel. But last week's botched half U-turn leaves Labour in an embarrassing political mess – and raises fresh questions about its purpose in power. Dropping an unpopular policy is not problematic in itself, and this is an extremely unpopular one. But U-turns are best carried out swiftly and comprehensively. Here, by contrast, Labour have left themselves unable to say how many of the 10 million people who lost out on the payment will get it back. Crucially, they are also unable to say how it will be paid for – which is problematic, given that Reeves painted the decision at the time as essential to repairing the public finances. Complete reversal of the policy would cost £1.5bn a year. Reeves's team say they are still committed to the principle of means-testing the allowance – but intend not to say where the new threshold will fall, until the autumn budget. That opens the way to months of debilitating speculation. The personal politics of the U-turn also look brutal. Reeves's team insist she and Keir Starmer made the decision jointly; but the original winter fuel announcement was the centrepiece of her tough-talking July statement, which was meant to demonstrate that she was ready to take unpopular decisions, to repair the tattered public finances. At the time, Reeves described scrapping the allowance for the vast majority of pensioners as a 'necessary and urgent decision' and 'the responsible thing to do.' Yet here was the prime minister last week, saying it would have to be reversed – a message that raised questions about the chancellor's political judgment, and her grip on fiscal policy. Labour have not given a satisfactory answer either, to the question of why they're making the change – which adds to the sense of a government driven by tactics, not values. Meanwhile, as Starmer was promising to direct more resources to pensioners, charities were being told they must now wait until the autumn, before the government's child poverty strategy is unveiled – including what will inevitably be its centrepiece: the decision about whether to scrap the unconscionable two-child limit. Starmer is apparently learning towards scrapping the limit – despite his chief of staff Morgan McSweeney's reported concern about the 'fairness' argument against doing so. The prime minister is right to override him: there is nothing fair about cutting off financial support for children, on the basis of how large a family they happen to be born into. And campaigners and sector experts are united in arguing that scrapping the two-child limit is by far the most cost-effective way to boost the incomes of the poorest families, lifting an estimated 470,000 children out of poverty for an annual investment of £3.5bn. Affecting one in nine children already, the limit, which means families receive no additional universal credit for third and subsequent children, has been the big driver of rising child poverty. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion A recent Save the Children briefing, prepared on the basis of evidence sessions with families affected by the limit, said, 'many spoke about the impact on their wellbeing of not being able to afford food, clothes and in many cases rent'. Ruth Curtice, director of the Resolution Foundation thinktank, put it bluntly last week: 'Breaking the link between the number of mouths a family has to feed and the support it receives is simply inconsistent with real ambition on child poverty.' Some campaigners had already judged the fact the child poverty strategy will come alongside the budget as an optimistic sign. They had fretted about the lack of Treasury input into the long-running review process, notwithstanding the sincerity of the cabinet ministers most closely involved, including Liz Kendall and Bridget Phillipson. But they also lament the fact that by the autumn it will have taken Labour well over a year since coming to power, to set out how it plans to tackle a problem that its manifesto committed it to confronting. Given Reeves's reluctance to repeat last year's bumper tax-raising budget, there was also a risk that the decision to restore (some of) the winter fuel allowance, had come at the expense of more radical action against child poverty. That would have been a mistake. As Curtice pointed out, pensioner households are on average £900 a year better off since 2010, as the triple lock has put a floor under the value of the state pension; families claiming benefits are £1,500 a year worse off. And Gordon Brown last week swept aside any claim that scrapping what he called the 'cruel' two-child limit is unaffordable, setting out a menu of tax options for funding its abolition – starting with a £2.4bn increase in taxation of the gambling industry, which inflicts so much harm on vulnerable consumers – as my colleague Rob Davies has powerfully reported. The politics of grand moral causes sits uneasily with Starmer's governing style, which is to lay out the 'options on the table', as he likes to put it, and make a choice. But voters across the political spectrum seem to sense – and resent – this Labour government's lack of a guiding project. It is not too late to embrace one, in the urgent challenge of improving the lives of hundreds of thousands of the UK's poorest kids.
