How might Starmer make more pensioners eligible for the winter fuel payment?
21 May 2025, 23:36
Sir Keir Starmer wants to widen eligibility for winter fuel payment after he restricted the number of pensioners who could claim it last year.
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However, Sir Keir Starmer has not set out how the change to who is entitled to the payments worth up to £300 will look.
There are several options for how the Government could go about it.
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% and saved around £1.5 billion a year, the Institute for Fiscal Studies 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
Creating a new threshold and means test would allow households not on pension credit to apply directly for winter fuel payments.
Raising it 20% above the pension credit threshold would cost around £100 million and see winter fuelpayments 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.
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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.
This would be more complicated to put in place in Scotland, where disability benefit is 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 money 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 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 fuelpayment.
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.
This comes as the Prime Minister said that “as the economy improves” he wanted to look at widening eligibility for the payments worth up to £300.
But officials were unable to say how many more pensioners would be eligible or if the policy would be altered in time for this winter.
The decision to means-test the previously universal payment was one of the first announcements by Chancellor Rachel Reeves after Labour’s landslide election victory last year and has been widely blamed for the party’s collapse in support.
It was an issue which Labour campaigners were challenged about on the doorsteps during May’s elections which saw the party lose councillors and the Runcorn and Helsby parliamentary by-election.
The Government insisted the policy was necessary to help stabilise the public finances, allowing the improvements in the economic picture which Sir Keir said could result in the partial reversal of the measure.
He said he understood the financial pressures on pensioners as he made the announcement at Prime Minister’s Questions.
“I recognise that people are still feeling the pressure of the cost-of-living crisis, including pensioners,” Sir Keir told the Commons.
“As the economy improves, we want to make sure people feel those improvements in their days as their lives go forward. That is why we want to ensure that, as we go forward, more pensioners are eligible for winter fuel payments.”
