Decision to end universal winter fuel payments ‘too narrow’, says Martin Lewis

The Chancellor’s decision to end the previously universal winter fuel payment for pensioners unless they are on benefits has been branded “too narrow with the winter we have coming”.

The payments of up to £300 have been made available to everyone above state pension age.

However, from this winter pensioners will only receive a payment if they are receiving pension credit.

The Treasury said the winter fuel changes would see the number of pensioners receiving the payments fall from 11.4 million to 1.5 million – so just under 10 million would miss out.

Speaking in the Commons, Rachel Reeves said: “The scale of the situation we are dealing with means incredibly tough choices. I repeat, today, the commitment that we made in our manifesto to protect the triple lock.

“But, today, I am making the difficult decision that those not in receipt of pension credit or certain other means-tested benefits will no longer receive the winter fuel payment.

“From this year onwards, the Government will continue to provide winter fuel payments worth £200 for households receiving pension credit, or £300 for households in receipt of pension credit with someone over the age of 80.

“Let me be clear, this is not a decision I wanted to make, nor is it the one that I expected to make, but these are the necessary and urgent decisions that I must make.”

Martin Lewis, founder of MoneySavingExpert, immediately warned the targeting of the payments was “too narrow with the winter we have coming”, adding: “The energy price cap is likely to rise 10% this October and stay high across the winter, leaving most energy bills nearly double those pre-crisis, at levels unaffordable for millions.

“Many pensioners eke out the £100 to £300 winter fuel payments to allow them to keep some heating on through the cold months.

“While there’s an argument for ending its universality due to tight national finances, it’s being squeezed to too narrow a group – just those on benefits and pension credit. Yet again, those just above the thresholds will be hardest hit.”

Mr Lewis added: “Plus, with this announcement, the Government has a huge moral imperative to ensure the 800,000 people eligible for pension credit who don’t get it, are informed, educated and helped through the process.

“It is planning an awareness-raising campaign, but it needs to ensure that reaches every corner – and, if possible, proactively and personally contact people.

“Pension credit is a crucial gateway benefit, giving access to a host of other entitlements, and now with the link to the winter fuel payment, it makes it even more important to ensure fewer miss out.”

Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “When Rishi Sunak threatened to axe winter fuel payments in September 2023 we said that this could be a death sentence for pensioners who are only just about managing to keep out of fuel poverty.

“Nothing has changed. Energy prices are still high, people are still struggling with the cost of living and this dangerous decision by the Chancellor could condemn pensioners to living in cold, damp homes this winter.

“Figures for the Warm This Winter campaign suggest that around 41% of over-75s could now see their winter heating budget torn to shreds as they have modest incomes and will not now be eligible for the payment.

“The Chancellor must urgently think again and consult with older people’s charities on a better way to target this support to a wider group of pensioners.”

The Treasury said about £1.5 billion will be saved per year by targeting winter fuel payments.

Pension credit is often described as a gateway benefit as it can lead to further support – and some people could see their income boosted thousands of pounds by making a successful claim.

Even a small pension credit award can open doors to other benefits, including help with housing costs, council tax and heating bills.

Previous estimates published on the website gov.uk, covering the financial year 2019-20, indicated that up to 850,000 families who were entitled to receive pension credit did not claim the benefit and up to £1.7 billion of available pension credit went unclaimed, averaging about £1,900 per year for each family entitled to receive pension credit who did not claim.

Last year, the Department for Work and Pensions (DWP) sent out “invitation to claim” letters to those likely to be eligible for pension credit, as part of a trial.

Pension credit can be claimed by phone and online, and an online calculator can help pensioners check if they are likely to be eligible and get an estimate of what they may receive.

Gillian Cooper, director of energy policy at Citizens Advice, said: “Millions of households on low incomes face living in a cold home this winter, with many forced to make the impossible choice between heating or eating.

“The current winter fuel payment (WFP) is not well targeted and is too low to make a real difference to pensioners who need help most.”

Caroline Abrahams, charity director at Age UK said the charity strongly opposes the means-testing of the winter fuel payment.

She said: “A big reason for this disastrous outcome is that more than one in three pensioners entitled to pension credit, the qualifying benefit for WFP under this proposal, don’t receive it, a proportion that’s been roughly constant for many years.

“More than 800,000 older people living on very low incomes – under £218.25 a week for single pensioners and under £332.95 for couples – who are already missing out of the pension credit they are entitled to get to boost their incomes, will now lose the WFP that helps them to pay their fuel bills.”

She continued: “It is well established that pensioners tend to do everything possible to avoid going into debt, so if they are worried about their future energy bills, we know their likely response will be to ration their fuel use and economise by reducing their spending on other essentials.

“This proposed policy change is therefore certain to result in more older people experiencing a horrible eating or heating dilemma.

“Means-testing WFP this winter, with virtually no notice and no compensatory measures to protect poor and vulnerable pensioners, is the wrong policy decision, and one that will potentially jeopardise their health as well as their finances – the last thing they or the NHS needs.

“With winter now just over the horizon, the Government should halt their proposed change to WFP and think again.”