The 1.6m pensioners who will be worst hit by DWP Winter Fuel cut | Personal Finance | Finance
Pension experts have identified the 1.6 million pensioners who will be worst hit by the decision to axe the Winter Fuel Payment worth up to £300.
Experts at Lane Clark & Peacock (LCP) have calculated that there are some 1.9 million pensioners in the UK who earn less that 60 percent of the national average income, which is commonly used as a benchmark to define poverty.
However, just 300,000 of these are in receipt of help through the Pension Credit system, which also guarantees entitlement to the Winter Fuel Payment – leaving the remaining 1.6 million worried about being able to afford both heating and eating this winter.
Former pensions minister, Sir Steve Webb, who now works with LCP, said: “We’re talking about a group of pensioners who are on the breadline, their standard of living is well below that of most people in the country.
“For this group £200 or £300 is a significant amount of money. For well-off pensioners they can ride out losing that amount. If you are on a very low income this could be the equivalent of two weeks pension it is a very significant loss. What people will do is they will tighten their belts. That could mean heating less of the house, living in fewer rooms and it could mean staying in more because you can’t afford to go out and socialise.”
The Chancellor, Rachel Reeves, say the cut to the Winter Fuel Payment for most of the UK’s 10m pensioners has been forced on the government because the Conservatives left a £22 billion black hole in the nation’s finances this year.
She pointed out that the State Pension rose by £900 a year in April this year and is due to increase again by around £400 a year in April 2025.
Despite this, Age Concern and fuel poverty campaigners have suggested that losing the Winter Fuel Payment could represent a death sentence for some old, sick and vulnerable people who cannot afford to keep warm this winter.
The Conservatives have slammed the axing of the Winter Fuel Payment, but Sir Keir Starmer pointed out at Prime Minister’s Questions this week that the front runner to be the next Tory leader, Kemi Badenoch, has previously supported removing the benefit for wealthier pensioners through a form of means testing.
LCP has suggested a number of different ways for the government to make savings on the Winter Fuell Payment while still ensuring it goes to those most in need.
These include paying the benefit to pensioners living in the lowest Council Tax bands, only paying it to those aged over 80, or making the payment taxable, which would claw the cash back from the wealthiest households.
Limiting the payments to those aged over 80 would save the Treasury some £1.4billion. However, LCP said this would still leave over 1 million poorer pensioners adversely affected.
By contrast, paying the benefit to just those in council tax bands A to D, which is something suggested by the money saving expert Martin Lewis, or treating winter fuel payments as taxable income, would generate between £300m and £400m for the Treasury.
Baroness Ros Altman, a pension expert, told the Telegraph: “Council tax bands are not a perfect way to catch all low income pensioners but certainly better than the current sledgehammer approach. There has been no assessment of the impact and no mitigation measures will happen in time.”
However, a legal note prepared by the Department for Work and Pensions (DWP) said: “A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, public or voluntary sectors is foreseen.”
