Could it be a full U-turn on heating payments, higher income thresholds or means-testing individuals and not households.
Keir Starmer reveals partial U-turn on Winter Fuel Payment cut
Sir Keir Starmer announced on Wednesday that he wants to widen eligibility for Winter Fuel Payments, nearly a year after the Labour Government restricted the number of pensioners who would be entitled to the annual payment of up to £300.
Chancellor Rachel Reeves announced in July that the payment would no longer be universally paid to all pensioners, but instead only issued to those on a qualifying means-tested benefit such as Pension Credit. The change saw more than 9 million people over State Pension age miss out on heating help last winter.
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In contrast, the Scottish Government announced earlier this year that all 1.1 million pensioners living north of the border would receive at least £100 this winter. First Minister John Swinney confirmed to the Daily Record earlier this week payments of either £100, £203 or £305 would be issued by St Andrew’s Day on November 30.
The Prime Minister did not set out how the eligibility change would look and Downing Street was unable to say how many more pensioners would receive Winter Fuel Payments or whether the reforms would be in place this winter.
The Prime Minister’s official spokesman said Sir Keir wanted the changes to be introduced “as quickly as possible”.
The changes will only be set out at a “fiscal event” – with Rachel Reeves’ Autumn Budget the first such opportunity unless the UK Government breaks with its schedule.
Asked if the changes would be in place this coming winter, the spokesman told the PA news agency: “We obviously want to deliver this as quickly as possible, but the Prime Minister was very clear in the House that this has to be done in an affordable way, in a funded way, and that’s why those decisions will be taken at a future fiscal event.”
Kemi Badenoch has written to the Prime Minister asking whether changes will be made in time for this winter. The Conservative leader criticised Sir Keir Starmer for suggesting that further detail may come at the Budget, writing: “But, the next budget may not be until November – six months away.”
She added: “Pensioners are typically living on fixed incomes. They need to be able to plan ahead. We have heard from many who have suffered through the past winter as a result of your Government’s callous decision to remove their winter fuel payments. Some have had to choose between heating and eating.”
In a series of questions to the Prime Minister, the Tory leader asked if changes to the Winter Fuel Payment would “come into effect in time for payments to be made for this winter”, adding: “If not, will the changes be backdated?”
She also asked: “How many more pensioners does your Government estimate will become eligible once your changes are made?
“Can you commit that no currently eligible pensioner will lose their entitlement under your revised scheme?”
Liberal Democrats leader Sir Ed Davey pressed Prime Minister Sir Keir Starmer to reverse his cuts in full. He told the Commons during Prime Minister’s Questions: “The Prime Minister has rightly said that his new trade deals will give a much-needed boost to economic growth and thus to the public finances. So will the Prime Minister make sure that struggling families and pensioners see the benefits of the growth?
“He teased the House with his first answer to (Labour MP Sarah Owen), so will he commit now to reversing his cuts to the Winter Fuel Payment in full?”
Sir Keir replied: “The economy is beginning to improve, people are still feeling the pressure, that’s why we’re taking the measures that we are, that’s why we’re striking the trade deals that we are striking.
“As that improves I do want people to feel the benefit of the measures that we’re taking and that is why I want to ensure that more pensioners are eligible for Winter Fuel Payments. It is important that, as you’d expect, that we are clear we can afford the decisions we’re making and that’s why it’ll now be looked at at a fiscal event.”
Sir Ed added: “I think I welcome what the Prime Minister has said, but we will look at the details.”
Age UK also said the “devil is always in the detail” as it cautiously welcomed the announcement. Caroline Abrahams, charity director, said: “We will judge the success of any new policy proposals the Government brings forward by the extent to which they help vulnerable older people and those on low and modest incomes to be able to heat their homes adequately next winter.
“A social tariff for energy may be a big part of the longer term answer but in the short term, the Government must act quickly to support pensioners next winter – which may feel a long way off but is really only six months away.
“As always, Age UK stands ready to help and to advise ministers, drawing on what we hear from older people and from our community-based local Age UKs, and on our own analysis of what would make the most difference.”
Options to reintroduce Winter Fuel Payments
Full reversal
One option would be a full reversal of the decision to strip the benefit from millions of pensioners.
The decision to make it available only to those who claim pension credit last year meant those claiming Winter Fuel Payment fell by almost 90 per cent and saved around £1.5 billion a year, the Institute for Fiscal Studies (IFS) estimates.
Undoing last year’s policy change would make some 11 million more households eligible and of course wipe out the £1.5 billion in savings.
Create a specific threshold for Winter Fuel Payments
Creating a new threshold and means test would allow households not on Pension Credit to apply directly for Winter Fuel Payments.
Raising it 20 per cent above the Pension Credit threshold would cost around £100 million and see payments go to around 400,000 more families, according to the Resolution Foundation.
One option would be to model this on Child Benefit by allowing all pensioner households to claim but then require those above a certain income level to pay some back via a self assessment tax return, the IFS notes.
But there is a risk to adopting “a clunky bureaucratic mechanism for what is, ultimately, a relatively small payment”, IFS associate director Tom Waters warned.
Expand entitlement to those who get disability or housing benefits
Some 1.8 million more households could get Winter Fuel Payment at a cost of around £500 million per year if entitlement is extended to those on disability benefits, the IFS estimates.
However, this would be more complicated to put in place in Scotland, where disability benefits are devolved.
Extending eligibility to include those on housing and disability benefits would give support to 1.3 million more pensioner families at a cost of £300 million a year, the Resolution Foundation estimates.
This would be an “affordable” and “sensible way forward”, chief executive Ruth Curtice said.
Pay Winter Fuel Payments to individuals, not households
One difficulty in allocating the Winter Fuel Payment is that it currently goes to households rather than individuals.
Changing this would mean the UK Government could do a means test on an individual basis and use information that it already records for income tax purposes.
It would see pensioners with a low income but with a high-income spouse get the winter fuel payment.
However, it could also see couples get twice as much winter fuel payment as single people, where at the moment a single person would get the same amount as a couple sharing a household.
