Winter Fuel Payment cuts ‘may not lead to Government savings’ | Personal Finance | Finance
Government claims that scrapping the Winter Fuel Payment from pensioners will save £1.4 billion are not accurate, it is claimed.
A former pensions minister argues the figure is likely to be £490 million lower because many of the elderly people involved will need to seek other benefits to help them stay warm.
Chancellor Rachel Reeves has triggered fury over the axing to the Winter Fuel Payment, which is worth up to £300 to help with energy bills.
Charities have warned it could even be a death sentence for some sick and vulnerable elderly people who cannot afford to stay warm.
The Chancellor defended the cut, which was not revealed during the General Election campaign, saying it was the result of a need to fil a black hole in government finances left by the Conservatives.
Currently, all 11.4 million pensioners receive an extra £200 to help heat their homes every winter, with those over 80 receiving a blanket £300 payment.
However, virtually all older people will now lose this payment as it will now be restricted to those receiving Pension Credit or other means-tested benefits.
Charities have warned that as many as 880,000 older people who are entitled to Pension Credit are not receiving it despite being eligible. As a result, they will be refused vital support with their energy bills.
Former Lib-Dem pensions minister, Sir Steve Webb, said that if just one in four of these now put in a claim for Pension Credit, this will cost the government £440 million. As a result, these people would then get £50m in Winter Fuel Payments.
Sir Steve said there was a rush to take up Pension Credit following a decision to in 2019 to restrict free TV licences for the over-75s to those who qualified for the benefit. And he expects something similar due to the new restrictions on access to the Winter Fuel Payment.
Sir Steve said it is “highly likely” that the winter fuel announcement will lead to “a flurry of new claims for pension credit”.
He told the Telegraph: “This is exactly what happened when entitlement to a free TV licence for the over-75s was restricted to those on benefit.
“But a big surge in take-up could slash the savings from this measure. If just one in four of those currently missing out on their entitlement to pension credit now makes a claim, this could cut the Chancellor’s savings by around one third.
“One consequence of this is that additional cuts might be required to make up for the shortfall.”
Baroness Ros Altmann, a Tory peer and leading pensions expert, warned that the rise in the number of older people applying for Pension Credit would amount to an extra cost of “thousands of pounds per person”.
She accused the government of “trying to balance the books off the back of pensioners”.
Simon Francis, of the End Fuel Poverty charity collective, also argued that the savings made by scrapping the universal winter fuel benefit would be eclipsed by added costs for the NHS.
He said: “It’s a false economy because they are cutting back on winter fuel payments but will push elderly people living in cold, damp homes into the arms of the NHS.
“Illnesses linked to cold, damp and dangerous homes already cost the NHS more than £2.5 billion a year, according to UCL’s Institute of Health Equity.
“If you add another two million pensioners into fuel poverty, and millions more struggling with their bills, then this cost could soar. So the minister may save on the winter fuel payments only to see the cost of treating the ill-health caused by the move increase.”
A Government spokesman said: “This Government is committed to pensioners – protecting the triple lock, keeping energy bills low through our Warm Homes Plan, and cutting NHS waiting lists, bringing real stability to people’s lives.
“We said we would be honest with the public and, given the dire state of the public finances we have inherited, this Government must take difficult decisions to fix the foundations of the economy.
“In these circumstances, it is right that winter fuel payments are targeted at those in most need, and we will work with local authorities to boost the uptake of pension credit, reaching the many pensioners who could still benefit from this year’s winter fuel payments.”
