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Rachel Reeves advocates scrapping winter fuel payments for millions
Article information
- Author, Tom Espiner
- Role, BBC Business Reporter
- 30 July 2024, 08:40 BST
Updated 2 hours ago
Chancellor Rachel Reeves has defended her decision to scrap winter fuel payments for around 10 million pensioners.
She told the BBC she had found a “black hole” in the public finances and “had to act” to “fix the mess”.
But a former pensions minister said she was “shocked” by the decision to restrict fuel payments.
Ms Reeves accused the previous government and former Chancellor Jeremy Hunt of hiding a huge public money shortfall, which Mr Hunt vehemently denied.
Ms Reeves said she had been forced to make “difficult decisions” after the Government said it had discovered a £22 billion hole in the public finances.
One of the decisions she announced on monday was that pensioners in England and Wales who do not receive pension credit or other means-tested benefits will no longer receive winter fuel payments worth between £100 and £300.
Former Conservative pensions minister Baroness Ros Altmann told the BBC she was “appalled that the Chancellor has chosen to take money from some of the poorest people in this country”.
Around 850,000 families who are entitled to receive pension credit are not claiming it, according to figures released by the Department for Work and Pensions last year.
Baroness Altmann said many do not claim because they are “too proud” to do so.
Ms Reeves said pension credit would be merged with housing benefit so more people entitled to it could claim it, and the government would work with older people’s charities and local government to increase take-up.
But the move has also been criticised by charities including Age UK, which said on Monday that “around two million pensioners who urgently need the money to stay warm this winter will not receive it and will be left in trouble as a result”.
“At the other end of the spectrum, older, more affluent people will hardly notice the difference – a social injustice,” said the charity’s director, Caroline Abrahams.
What is changing with winter fuel payments?
- From winter 2024, fuel payments in England and Wales will be restricted to those receiving benefits and pension credit
- The devolved governments of Scotland and Northern Ireland will make a decision on whether to follow the new policy
- Pension credit is a benefit based on income and savings.
- You may be eligible for pension credit if you are over state pension age and have an income of less than £218.15 a week, or less than £332.95 as a joint weekly income with your partner.
- But your savings are also taken into account, which means you may not be eligible even if your income is low.
- People with disabilities, those who care for someone, and those with housing costs may be eligible despite these factors.
A bitter row between Labour and the Conservatives has emerged over the “black hole” in the public finances.
Ms Reeves said she had had to make difficult decisions because of the previous government’s “deeply irresponsible” overspending, and that Mr Hunt had covered up the true state of the public finances when he was chancellor.
“These weren’t decisions I wanted to make, they weren’t decisions I expected to make, but when I was faced with a £22 billion black hole I had to act,” she told the BBC, adding that she needed to “fix the mess left by the previous government”.
She said the previous government had “made commitments without having the money to pay for them”, including social care, plans for hospitals and improvements to roads and railways.
“The previous government did not invest money in these things. We did not know that when we entered the election campaign,” she said.
As well as restricting winter fuel payments, the Chancellor on Monday also scrapped a planned cap on welfare costs and cancelled several rail and road projects, including a tunnel near Stonehenge.
‘Angry’ hunting
But Mr Hunt disputed Ms Reeves’ comments and wrote to Cabinet Secretary Simon Case to complain about what he saw as conflicting claims made by officials about the “black hole” which risked “bringing the public service into disrepute”.
He said either the spending plans presented to parliament earlier this month were wrong, or the figures announced on Monday were.
After being accused of “debauchery” by Labour in the House of Commons on Monday, Mr Hunt told the BBC he was “angry” at Labour’s “political exercise”.
“The fact is that there are pressures on public finances. We had good plans to deal with them: productivity, pension reform, the Rwanda scheme to detain illegal immigrants.”
He said the new government’s abandonment of these plans was what actually caused the financial shortfall.
“It was a decision that Rachel Reeves made herself,” he said.
However, the independent think tank Office for Budget Responsibility on Monday launched a review of its own report on the previous government’s spring budget because it was based on spending plans drawn up by the Conservatives.
There were also accusations that the previous government had failed to budget significant amounts of money.
Writing in the Times on Tuesday, Paul Johnson, director of the Institute for Fiscal Studies, said a “staggering” £6bn cost of housing asylum seekers had not been taken into account.
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