Winter Fuel Payment: Poorest pensioners will lose benefit

Research released on Wednesday by former pensions minister Steve Webb shows only 300,000 people on pension credit will retain their WFP.

The analysis found 1.9 million pensioners are living below 60% of median income – a commonly used definition of poverty – which means 84% of pensioners in poverty are set to lose winter payments.

The findings may increase the chance of a Labour rebellion next week when there will likely be a Commons vote on the subject.

An Early Day Motion calling for a rethink on the cut to the WHP has already been signed by 15 MPs including eight from Labour.

READ MORE: Labour MP challenges Government over Winter Fuel Payment

The motion has also been backed by several MPs who were recently suspended from Labour because of rebelling over the two-child benefit cap with John McDonnell, Ian Byrne, Zarah Sultana and Apsana Begum all offering their backing as independents.

Chancellor Rachel Reeves (below) has been told that it is “practically ­impossible” to raise big sums from means-testing the winter fuel allowance without including hundreds of thousands of the poorest pensioners.

She insisted yesterday that most pensioners would be able to absorb the loss of up to £300 as a result of lower energy bills and higher pensions because of the triple lock, blaming the Conservative legacy for forcing her into the change.

Webb, a partner at the consultancy LCP, found that other ways of limiting the benefit would cover far more of the poorest pensioners, but result in much smaller savings to the Treasury.

(Image: House of Commons/UK Parliament/PA Wire)

Limiting payments to those in houses in council tax band D and below, proposed by the personal finance campaigner Martin Lewis, would mean 84% of the poorest pensioners keeping the payments, but reduce the savings to £500 million.

Taxing the payment would protect almost all of the poorest, but cut savings to £300m.

“Limiting payments only to those on pension credit will leave the vast majority of pensioners below the poverty line losing out,” Webb said.

“Our analysis shows that raising very significant sums from winter fuel payments whilst protecting the most vulnerable is practically impossible. Ministers will have to make a call between accepting the harm likely to be caused to well over a million of the poorest pensioners or scaling back the substantial savings already scored for this measure.”

Ministers are organising a campaign to encourage more eligible pensioners to sign up for pension credit, but Webb said previous such drives had met with little success.

Reeves insisted it was a “travesty” that 800,000 eligible pensioners were not claiming the benefit, as she fended off questions from Labour MPs with reservations about the policy by insisting: “We will ensure that ­pensioners entitled to support get it.”

She said she had “inherited a £22 billion black hole from the previous government” and had to make “very difficult decisions to put the public finances on a sustainable footing”.

READ MORE: John Swinney 'optimistic' about tackling child poverty despite cuts

However, the chancellor also argued that pensioners were better placed to pay fuel bills than they were last year.

“The state pension is worth £900 more than it was a year ago and energy bills are lower this winter than they were last winter,” she said.

Rachael Maskell, Labour MP for York Central, urged the Government to go into “listening mode” and do more to mitigate the effect of the policy. 

She told Times Radio on Wednesday: “There are people who are just above the thresholds for pension credit who absolutely are going to experience hardship this winter.”

 “This is bigger than a vote. For me, this is about people’s lives.”