I’m NOT sorry! Reeves refuses to apologise for winter fuel shambles despite restoring payments to millions of pensioners… amid fears of tax hikes to fund U-turn
Rachel Reeves claimed she had ‘listened’ and refused to apologise today as she humiliatingly restored winter fuel payments to nine million pensioners.
The Chancellor has announced that more than three-quarters of older people will get the allowance – worth up to £300 – this winter.
But another two million on incomes of more than £35,000 in England and Wales face having the money clawed back in higher tax bills.
The move is the culmination of a shambolic volte face on the hated policy, which has been blamed for the dramatic plunge in Labour’s popularity.
It wipes out the overwhelming bulk of the savings Ms Reeves had originally pencilled in from slashing the previously-universal allowance. Only the poorest received it last winter.
The Treasury is now expected to save just £450million compared to 2023-24 – blowing another £1.25bn hole in Labour’s spending plans.
But Ms Reeves is dodging saying where the funding will be found, amid mounting fears taxes will have to rise again as MPs push for a further U-turn on benefits curbs.
The Tories demanded Ms Reeves and Keir Starmer say sorry for making vulnerable elderly people choose between ‘heating and eating’. Charities welcomed the shift, but suggested the axe should never have been wielded in the first place.
Extraordinarily, Ms Reeves again argued today that she had been right to make the cut.
‘It will be still means-tested, but at a higher level, we’ve listened to people’s concerns around the level of the means test,’ she said.
‘Because of changes we’ve made and the stability we’ve brought back to the economy, we are able to increase that amount.’
Rachel Reeves’ humiliation on winter fuel was confirmed today as she restored the payments to nine million pensioners
Before the winter fuel cuts more than 11million pensioners were receiving winter fuel allowance
‘Targeting Winter Fuel Payments was a tough decision, but the right decision because of the inheritance we had been left by the previous government.
‘It is also right that we continue to means-test this payment so that it is targeted and fair, rather than restoring eligibility to everyone including the wealthiest.
‘But we have now acted to expand the eligibility of the Winter Fuel Payment so no pensioner on a lower income will miss out.
‘This will mean over three quarters of pensioners receiving the payment in England and Wales later this winter.’
All pensioners will automatically be paid winter fuel this season. The level will be £200 per household, or £300 if one person is aged over 80.
But where both incomes are above the threshold it will be recouped later through PAYE or a Self-Assessment return.
The £35,000 cap is per person, so in theory two-pensioner households where one has an income above the level will still get the cash.
People who want to opt out of the payment altogether will be able to do so, with a mechanism to be confirmed.
Ms Reeves will not spell out how she is funding the overhaul until the Budget in the Autumn.
She told broadcasters: ‘We will set out in the normal way, in the Budget, how everything is funded, but no-one should be in any doubt about my commitment to the fiscal rules to ensure that the sums always add up.’
The Chancellor is due to lay out departmental spending allocations running up to 2029 – the likely timetable for the next general election – on Wednesday.
But the generous fiscal envelope set at the Budget last Autumn has been put under massive pressure by the economic slowdown, calls for more defence cash, and Labour revolts on benefits.
Ms Reeves has signalled she will announce real-terms increases to budgets for police as she tries to quell Home Office resistance.
However, that is likely to be offset by cuts to other areas, with the NHS and defence sucking up funding.
The political backdrop to the proposals this week is the Reform surge, with Labour panicking about the challenge from Nigel Farage.
Tory leader Kemi Badenoch said: ‘Keir Starmer has scrambled to clear up a mess of his own making. I repeatedly challenged him to reverse his callous decision to withdraw winter fuel payments, and every time Starmer arrogantly dismissed my criticisms.
‘This humiliating u-turn will come as scant comfort to the pensioners forced to choose between heating and eating last winter. The Prime Minister should now apologise for his terrible judgement.’
Introducing a tough means test on winter fuel allowance was one of the first announcements Ms Reeves made after entering No11, and has been blamed for triggering the headlong slump in Labour’s popularity.
Only those on the lowest incomes, receiving pensioner credit, have been entitled to the handout.
Keir Starmer dramatically announced a U-turn last month, without saying what exactly was being proposed or when it would take effect.
Last week Ms Reeves confirmed confirmed the changes would be in place ‘this winter’ – but was still unable to say who will qualify.
Keir Starmer (pictured) dramatically announced a U-turn last month, without saying what exactly was being proposed or when it would take effect
She also said the Government will not set out how the reinstated payments will be funded until the Autumn Budget.
Designing a cost-effective means test for the benefit – which ministers are adamant should not be paid to ‘millionaires’ – has been causing major headaches for officials.
The idea has been condemned by unions amid fears bereaved families could be hit with unexpected demands for cash.
Labour insiders have voiced alarm at the ‘optics’ of trying to recoup the allowance from the estates of those who died after getting it.
The PM’s official spokesman said: ‘HMRC will not ask for repayment from a deceased PAYE (pay as you earn) customer if the only money owed was from a winter fuel payment.’
Alex Clegg of the Resolution Foundation think-tank – which used to be run by pensions minister Torsten Bell – said: ‘The new scheme for means-testing Winter Fuel Payments means that that the number of pensioners receiving support will rise from 1.3million last winter to around 9million this winter, and not far off the 11.6million who received Winter Fuel Payments two winters ago when they were universal.
‘But this U-turn doesn’t represent a return to the status quo. The new means-test will create new complexity in the tax system, including a cliff-edge for those with around £35,000 of income.
‘The reported savings of £450million will be reduced further by the cost of increased pension credit take-up as a result of the original policy, and the cost of administering the new means-test.’
Caroline Abrahams CBE, charity director at Age UK, said: ‘The Government’s winter fuel payment announcement makes this a good day for older people.
‘The decision to restore the winter fuel payment to nine million pensioners – all but those on the highest incomes who should be able to pay their heating bills without it – is the right thing to do and something that will bring some much-needed reassurance for older people and their families.
‘At Age UK we heard from many through the winter who were so frightened about their bills that they didn’t even try to keep their homes adequately warm.
‘We have always said what really matters is that the estimated 2.5 million older people who lost their winter fuel payment when they couldn’t afford it get the money back, by one means or another. These 2.5 million comprise older people entitled to pension credit but not claiming it; those whose small incomes take them just above the line; and a third group who face extremely high bills because of severe ill health or disability.’
The charity ‘would much have preferred it had the Government taken this approach last summer’, she added.
