Government can extend Winter Fuel Payment to 1.3 million more pensioners at a cost of £300 million – but u-turn on pensioners cannot cover for inaction on child poverty

The Government’s U-turn on Winter Fuel Payments (WFPs) can take a number of possible routes. But action to assuage pensioner anger cannot be used as an excuse to duck sensible changes to its health and disability benefit reforms, or limit its ambition on tackling child poverty, the Resolution Foundation said today (Wednesday).

At Prime Minister’s Questions, Sir Keir Starmer announced a partial U-turn on the decision last summer to restrict eligibility for WFPs, saying he would ensure that “more pensioners are eligible for winter fuel payments.” However, there are currently no details on how this would be achieved.

One option cited would be to ‘raise the threshold’ for WFP eligibility, which is currently given to everyone entitled to Pension Credit (PC). However, the most straightforward option of raising the PC threshold by 10 per cent would cost £2.5 billion – more than the original policy saved.

Alternatively, creating a new threshold and test for WFP, and raising by 20 per cent above the existing PC threshold, would cost around £100 million, and help around 400,000 more families. However, there are huge doubts whether creating this new test is even possible, as it would further complicate an already complex system beset with low take-up rates.

A far more effective way to ensure more people receive WFP is to extend to eligibility to those receiving Housing Benefit and disability benefits, as well as Pension Credit. Doing so would extend support to 1.3 million more pensioner families, at a cost of £300 million a year.

The Foundation said that today’s U-turn should be seen in the context of the Government’s wider welfare plans and the cost-of-living squeeze. It notes that pensioner poverty is already due to fall over the course of the Parliament, while child poverty is set to rise to a record high.

Ruth Curtice, Chief Executive of the Resolution Foundation, said:

“The Government’s partial U-turn on Winter Fuel Payments may be welcomed by pensioners but it leaves huge questions about how support can be extended, and who will get it. A sensible way forward would be to extend support to pensioners receiving housing and disability benefits, as well as Pension Credit. This is affordable at £300 million and would benefit more than a million families.

“But today’s announcement must be seen in the context of the Government’s wider welfare trilemma as it also steers through controversial health and disability benefit reforms and prepares a new child poverty strategy.

“This U-turn underlines the need for more ambition on tackling child poverty. Removing the two-child limit on support would allow the Government to show it is committed to raising living standards for all generations, and not just those beyond working age.”