Which pensioner benefits payments are set to go up – and down?

James Cheng-Morris
Sir Keir Starmer is dramatically scaling back the winter fuel allowance. (PA)
Sir Keir Starmer is dramatically scaling back the winter fuel payment. (PA) (Joe Giddens/PA Wire)

Sir Keir Starmer has been accused of “picking the pockets of pensioners” while leaving the richest “totally untouched” as the row over the winter fuel payment continues.

Sharon Graham, general secretary of Unite, urged Starmer to “do a U-turn” on the policy, which would see payments scrapped for millions of pensioners in a winter where the average household energy bill is to increase by £149.

She told BBC Radio 4’s Today programme on Monday: “Leadership is about choices. He needs to be big enough and brave enough to do a U-turn on this choice. It’s completely wrong. People do not understand how a Labour government has decided to pick the pocket of pensioners and, at the same time, leave the richest in our society totally untouched. That is wrong and he needs to change course.”

However, the winter fuel payment is not the only benefit that is set to change for pensioners in the coming weeks and months.

Introduced by the last Labour government in 1997, the winter fuel payment scheme - intended to tackle fuel poverty among pensioners - currently offers annual tax-free payments of up to £300 to anyone over the state pension age in England or Wales.

But in July, chancellor Rachel Reeves announced plans to limit the allowance, saying she needed to fill a £22bn “black hole” in the public finances left by the previous government, a claim the Tories have challenged.

Under the change, only those who claim pension credit and other means-tested benefits will receive it. This is expected to reduce the number of pensioners in receipt of the payment by 10 million - from 11.4 million to 1.5 million - which the government says will save £1.4bn this year.

Watch: Government defends winter fuel payment cuts

But Age UK has said two million pensioners who are only just above the income threshold and "badly need the money" will be missing out - and the issue has developed into the first crisis of the Starmer administration.

A motion relating to the changes will be debated in the House of Commons on Tuesday. A backbench rebellion is likely, but given the size of Labour's majority - 158 - it is highly unlikely the vote will not go Starmer's way.

In the winters 2022/2023 and 2023/2024, pensioners received an additional "pensioner cost of living payment", of up to £300, on top of their winter fuel payment.

This was one of the different categories of cost of living payments provided by the previous government.

However, these payments are not being repeated for the upcoming winter. This was confirmed by the Conservative government in November last year, when it said: "There are currently no plans to extend the cost of living payments beyond the spring."

A fund to help struggling households with bills and essentials was set to expire this winter, but was extended last week.

The household support fund, which was due to end at the end of September, will run for another six months with £421m to be provided to councils in England.

How average annual energy bills have changed in the past 18 months. (PA)
How average annual energy bills have changed in the past 18 months. (PA) (PA Wire)

Deputy prime minister Angela Rayner said it will “help people who maybe are not entitled to pension credit, who are just above that threshold [for the winter fuel payment], who may struggle this winter”.

But the End Fuel Poverty Coalition warned: "As the winter fuel payment axe plunges more pensioners into fuel poverty, the fund may prove to be inadequate as more vulnerable older people turn to local authorities for help and assistance.”

Labour has repeatedly cited its commitment to the pension 'triple lock' when defending the winter fuel payment changes.

On Tuesday, it was confirmed the full state pension is set to rise by £460 from next April, according to official wage figures.

While this is the lowest increase for nearly four years, it will mean pensioners who reached state pension age after April 2016 can expect to see their full, flat-rate state pension go up to £11,962.60 a year from next April – a rise of £460.

Under the “triple lock” guarantee, the state pension increases every April in line with whichever is the highest of average total earnings growth in the year from May to July of the previous year, CPI inflation in September of the previous year, or 2.5%.

But the figures are subject to possible revisions in next month’s data and the Government will confirm the planned increase in the autumn.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, cautioned the rise in the state pension will only partially offset the pain for the millions of pensioners who are being stripped of their winter fuel allowance.

She said: “There’s every chance it’s not enough to placate those pensioners still reeling from the loss of the winter fuel payments, especially given how close this is edging to busting the personal allowance.”

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