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Sir Keir Starmer has expressed a desire to expand eligibility for winter fuel payments to more pensioners, signaling a shift from one of the less popular policies during his tenure as Labour leader. He informed Members of Parliament that any decisions regarding this matter would be financially feasible.
Starmer indicated that the eligibility criteria for these payments would be reviewed during a fiscal event, with the next Budget scheduled for autumn. Labour faced significant challenges in recent local elections in England, where the government’s decision to cut winter fuel payments, initiated after gaining power last year, was a notable point of voter dissatisfaction.
This statement represents a notable reversal just two weeks after a decision by Downing Street to maintain the existing winter fuel payment policy. However, it remains uncertain whether any changes will be implemented before the approaching winter, given the limited time between the potential announcement in October and the start of the season.
The government’s decision in July to reduce £1.5 billion in winter fuel payments impacted approximately 10 million pensioners. Previously, the benefit, valued at either £200 or £300 annually, was limited to pensioners receiving means-tested pensions credit, effectively excluding those with annual incomes exceeding £11,800, or £18,000 for couples.
Chancellor Rachel Reeves had defended the policy as essential for addressing a £22 billion deficit inherited from the previous Conservative administration. During Starmer’s announcement, opposition members reacted by accusing him of a policy reversal.
Kemi Badenoch, the Tory leader, criticized Starmer, questioning the trustworthiness of the Labour MPs who had supported the policy initially. Badenoch’s spokesperson characterized the shift as politically motivated, rather than financially justified.
Policy analysts indicated that broadening eligibility for winter fuel payments presents challenges. Stuart Adam, a senior economist at the Institute for Fiscal Studies, explained that revising the policy is complex due to limited alternatives. Other possible approaches include extending the payment to recipients of housing or disability benefits, although each has limitations.
The Resolution Foundation estimated that such changes could assist an additional 1.3 million pensioner families at an annual cost of £300 million. However, the overall fiscal impact of expanding the payments would be modest compared to larger cuts elsewhere in the welfare system.
Liz Kendall, the Work and Pensions Secretary, noted that the government plans to proceed with £4.8 billion in cuts to sickness and disability benefits, labeling the current system unsustainable. Pressure to eliminate the two-child benefits cap, which costs £3.5 billion annually, has also been resisted by the government.
Alison Garnham, Chief Executive of the Child Poverty Action Group, criticized the two-child limit policy, suggesting it exacerbates child poverty under the current administration.
