Rachel Reeves has ignored calls to reverse her decision to cut winter fuel payments, amid warnings pensioners are “frightened” about how they will keep warm.
The Chancellor defended the move as she repeatedly told MPs that increases to the basic state pension mean that people will be “£900 better off” than a year ago, adding the Labour Government is committed to increasing it further in the coming years.
But she faced warnings from her own MPs and those on the opposition benches about the potential consequences of stopping winter fuel payments for people in England and Wales who are not in receipt of Pension Credit or other means-tested benefits.
The policy is expected to reduce the number of pensioners in receipt of the up to £300 payment by 10 million, from 11.4 million to 1.5 million, saving around £1.4 billion this year.
The new rules are due to come in to force on September 16 although MPs are expected to be given a vote on them next week, paving the way for a potential Labour rebellion.
Speaking at Treasury questions, Ms Reeves said she would not speculate on next month’s Budget after the Conservatives urged her to guarantee that she will not increase taxes on pensions.
She told the Commons: “I understand that members from across the House will have questions on the tax system for me today. I remind them that tax announcements will be made in the Budget on October 30, alongside an independent forecast from the Office of Budget Responsibility.”
The Chancellor blamed the previous Conservative administration for leaving a “£22 billion black hole” due to “unfunded spending commitments” with “no idea how to pay for them”.
We are under no illusion as to the scale of the challenge we have inherited from the Conservatives after more than a decade of low growth and a £22 billion black hole in the public finances.
That’s why we are taking the tough decisions now to fix the foundations of our economy.
— Rachel Reeves (@RachelReevesMP) August 15, 2024
She said: “When I became Chancellor I took an immediate audit of the spending situation to understand the scale of that challenge, and I made difficult decisions to put the public finances on a sustainable footing. They were tough decisions, but they were the right decisions.
“This includes the decision to make the winter fuel payment better targeted so pensioners who need it most will get it alongside pension credits.”
Labour MP Rachael Maskell warned the average rent rise in York of 11.9% exceeded the state pension rise by £380 this year.
She said: “With the loss of the cost-of-living payments and winter fuel payments, an increase in the energy price cap and cost of living, pensioners are frightened about how they’re going to keep warm this winter – as am I.”
The York Central MP asked Ms Reeves how she will protect pensioners who are above the Pension Credit threshold in order to “prevent cold, ill health or worse this winter”.
Ms Reeves replied: “The basic state pension is worth £900 more than it was a year ago and will go up again in April next year because of the triple lock, which we have committed to for the duration of this Parliament.”
She added the Government is working with local authorities to boost the take-up of Pension Credit.
The triple lock guarantees the state pension will rise by inflation, average wage growth or 2.5%.
Labour MP Paula Barker (Liverpool Wavertree) said the charity Age UK reports there are around one million pensioners who “just miss out” on the winter fuel payment, noting: “These are people living on modest incomes within £50 of the poverty line, who will miss out due to a tiny occupational pension – including many in Liverpool Wavertree.”
She asked whether Pension Credit will be backdated, with Ms Reeves confirming it can be for up to three months.
Conservative former minister Dame Harriett Baldwin said Ms Reeves has made a “chilling political choice to balance the books of this country on the very frailest shoulders” by making changes to the winter fuel payment.
Wendy Morton, another Tory former minister, said thousands of pensioners in her Aldridge-Brownhills constituency are “worried at the prospect” of losing their winter fuel payment “on which they rely”.
She asked Ms Reeves: “Will she reconsider and reverse her decision?”
The Chancellor referred to increases to the state pension, adding: “But it is important that we ensure that the 800,000 people who missed out on Pension Credit under the previous Conservative government now get access to that support, because those are the poorest pensioners, and at the moment they are living in poverty because the previous government failed to sign them up to Pension Credit.”
Liberal Democrat MP Steve Darling earlier said 21,000 pensioners will be impacted by the cut in his constituency of Torbay, in Devon.
He said: “Whilst many of us would acknowledge that you were left with a massive financial challenge when coming into this House, one remains extremely concerned for residents who have reached out to myself and many colleagues with their major concerns about being able to make ends meet as we enter into the winter period.
“They have had no time to save for this, and therefore it’s a complete shock to them.
“What assurances can you give us that you’ll be supporting those who are most vulnerable, and if it’s failing to achieve this, what assurances can you give that you will scrap these proposals?”
Ms Reeves referenced the work to improve uptake of Pension Credit in her reply.
