Rachel Reeves’s winter fuel raid will raise just £250 million, experts have claimed, saying, “The amount raised looks tiny relative to the political damage which the whole episode has caused to the Government.” The Telegraph has more.
The Treasury previously estimated the controversial decision to axe universal winter fuel payments would raise £1.5 billion this year. However, experts on Monday said the real figure would be just £250 million, leaving the Chancellor in a £1.25 billion deficit.
Ms Reeves announced she would reinstate the benefit for 75% of pensioners amid mounting pressure from Labour MPs and following the party’s abysmal local election performance.
Under than changes, retirees whose annual income is below £35,000 will be entitled to a payment of up to £300.
Revised figures from the Treasury state the policy would still raise £450 million, but Sir Steve Webb, a partner at pension consultant LCP, said it had ignored the additional £200 million it has spent following a surge in pension credit applications.
There were 57,000 additional claims for pension credit following Labour’s decision to revoke winter fuel payments from 10 million pensioners last July, according to the Department for Work and Pensions.
Sir Steve said: “These changes wipe out most of the extra revenue which the Government was expecting to get from the winter fuel payment policy.
“Not only has the Government knocked more than £1 billion off the expected revenue, but it has also had to find more than £200 million per year extra because of the surge in pension credit claims.
“Overall, the amount raised looks tiny relative to the political damage which the whole episode has caused to the Government.”
Worth reading in full.
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