Winter Fuel Allowance: Rachel Reeves relents on a policy Labour should never have done in the first place

05/07/2024. London, United Kingdom. Rachel Reeves, Chancellor of the Exchequer poses for a photograph following her appointment to Cabinet by Prime Minister Sir Keir Starmer in 10 Downing Street. Picture by Lauren Hurley / No 10 Downing Street

Last year the biggest hit on this blog was when I condemned the decision by Sir Keir Starmer and Rachel Reeves to abolish the winter fuel allowance for all pensioners except the poorest on pension credit. The blog went viral and currently stands at 188,400 with 129 comments.

The decision – one of the first by an incoming Labour government – was inept, stupid, ill thought out, and rushed – and showed that the Labour government was completely out of touch with its base and its reputation for helping the poorest.

There was a decent case for restricting the payment to the wealthiest members of society who did not need help with their fuel bills. But by setting the figure so low as £11,300 to get it and trying to get people to claim pension credit – which has been a policy failure for years – this was a serious own goal.

The decision to use regulations to do this was attacked by the House of Lords statutory instruments committee – when they examined the detail – and ministers by passed their own benefits advisory committee, the Social Security Advisory Committee, on the flimsiest excuse that they didn’t have time to do this to make sure it could be implemented as an emergency. The committee itself when it finally got to discuss the regulations pointed out it was perfectly capable to look at it at an emergency session. It did this when the last government introduced massive social security changes to cope with lockdown during the pandemic.

The optics also looked bad for any politician. Claiming they had found a huge black hole in government finances it looked as though the first people who would plug the gap were pensioners, many of them surviving on incomes less than £20,000 a year. Pensioners also need warm homes in winter probably more than any other people and the government’s claim it was implementing the triple lock to raise pensions was no use in the winter. It would not be paid until the spring when temperatures begin to rise and some would be scrimping and saving to try and keep warm before receiving an extra penny.

The result came back to bite Labour in the spring council elections and Parliamentary by-election in Runcorn, when voters dumped Labour in droves turning to Reform, the Greens and the Liberal Democrats instead.

Labour MPs and activists found this was one of the most cited reasons why people turned against them during the election. As a result Reform could capitalise by gaining control of a swarth of county councils and some mayoralties. The Conservatives were still not trusted by people after their 14 years in government, but to be fair to them they never proposed to cut the winter fuel allowance in the first place.

Luckily for Labour it is four years to the next general election so there is a chance it might be forgotten how stupid they were after four winters. And the mechanism they have proposed to pay the allowance back to nine million pensioners is fair with those earning £35,000 or more having to pay back the money in their annual tax return. The big question is why they didn’t do this in the first place.

The overall policy will still save £450m versus the universal system. But £1.25bn of the £1.7bn projected saving when this policy was announced is gone. Rachel Reeves, the chancellor, was claiming she couldn’t have done this when the government came into power because of the state of the finances, but can now because the situation has improved. She will have to explain this big change in her statement to MPs this week.

In my view the government overall has lost a lot of support by targeting pensioners not only in this way but also in the way it has treated 50swomen who had to wait six years for their pension by completely rejecting any compensation for them and ruling out mediation. I am sceptical that the WASPI campaign will get anywhere by going to court to try and revive the now rejected Parliamentary Ombudsman’s report on partial maladministration.

The issue was always discrimination as well as maladministration and the Ombudsman’s report was a very tepid solution for those who lost tens of thousands of pounds.

And ministers are being dilatory in paying out money to HIV contaminated blood victims and those swindled by the Post Office computer scam. All these affect many in the same age group.

The government has got a lot to do to regain popularity to get a second term in office, but this U turn on the winter fuel allowance is only a start.

Make a one-time donation

Your contribution is appreciated.

Donate

Make a monthly donation

Your contribution is appreciated.

Donate monthly

Make a yearly donation

Your contribution is appreciated.

Donate yearly

Please donate to Westminster Confidential

£10.00

Click here to purchase.