Labour’s raid on winter fuel payments has already cost the taxpayer £380m after a surge in benefits claims, analysts have warned, substantially eating into the £1.4 billion saving claimed by Chancellor Rachel Reeves. The Telegraph has the story.
Chancellor Rachel Reeves claimed in July that stripping the winter fuel allowance from some 10 million pensioners would save £1.4 billion a year, citing a £22 billion “black hole” in the public finances.
But analysis suggests a surge in pension credit claims following the Chancellor’s announcement has already wiped out the higher benefits bill budgeted for by the Treasury.
Last year, the Government paid out £5.5 billion in pension credit to 1.35 million households, which Sir Steve Webb, former Pensions Minister, said would make a “dent” in the revenue from the winter fuel raid.
But the furore around Labour’s decision to restrict winter fuel payments to only those in receipt of pension credit spurred thousands of retirees to claim the benefit for the first time.
Mel Stride, the Shadow Chancellor, told the Telegraph: “Labour’s approach to the increased poverty it is creating is to encourage more pensioners to apply for pension credit. But that is substantially eroding the savings.”
Since Ms. Reeves’s announcement in July, claims to the Department for Work and Pensions (DWP) surged to an average of around 9,500 a week, compared to a previous level of 4,000, according to DWP figures.
Sir Steve, now a partner at pension consultants LCP, said the previous level of activity kept the pension credit caseload stable, balanced by an inflow of new claimants and an outflow of pensioners dying.
He added: “There is no doubt that the surge in applications for pension credit will reduce the savings from this policy, potentially costing the Government more than £200 million per year in benefits for pensioners.
“But even allowing for this cost, the Chancellor will still see a meaningful saving from taking winter fuel payments away from around 10 million pensioners”.
The Department for Work and Pensions (DWP) budgeted for an additional 95,000 claims in the financial year, assuming an average annual cost per pensioner of £3,800.
It anticipated a surge in applications triggered by the announcement would cost £370 million a year, but analysts Policy in Practice said Labour had not accounted for so-called ‘passported benefits’ linked to pension credit, such as council tax support and free prescriptions.
The company said the true average cost for a pensioner is likely to be £6,800 a year, and that Labour had therefore already spent £388 million on additional benefits. Any further claims in 2025, it said, would eat into the £1.4 billion of savings claimed by Ms. Reeves.
Worth reading in full.
Stop Press: Twenty Labour councillors have quit the party and formed an independent group, accusing Sir Keir Starmer of “abandoning traditional party values”, citing concerns including the decision to strip 10 million pensioners of their winter fuel payments and proposals that would create new “mega councils”. The decision of the councillors on Broxtowe Borough Council in Nottinghamshire means Labour has lost control of the council, with its number of councillors down to six from 26.
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2024 was a year without a summer. This will have a hugely deleterious effect on the health of an already diseased nation. People won’t go to work regardless of the rewards because they are too debilitated. When did you last hear a politician address this debilitation? You can replace exhauseted stock with overseas immigrants but everything suffers. You imagine an old granny in a care home and not one of the care workers speaks English as a first language. No understanding of cultural references. This is a barren wasteland.
Where there’s Labour strongholds there’s Pakistani rape gangs and cover-ups. Props to this guy in Oldham for being outspoken and calling a spade a spade here ( 10mins );
”Exclusive: Anti-grooming gang campaigner Raja Miah (@recusant_raja
) details how the Labour Party covered up the industrial rape of white working class British girls, in order to secure votes from Muslim communities.
“Labour are at the centre of the grooming gang cover up.”
https://x.com/TPointUK/status/1874765109446524980
Everyone gets their payment and everyone is on the disability but it aint worth diddly no more. Can you not see it is simple economics.
I am sure Labour would prefer grovelling for pension credit rather than heating allowance as of right.
I’m sorry but not giving away fuel “benefits” isn’t a raid.
The raid is the theft of money from ordinary people to redistribute the money to selected people chosen by the state.
I realise it probably sounds incredibly heartless to some, but people should take responsibility for heating their own homes.
Stewart, the WFA was originally introduced because Labour defaulted on a cost of living rise in the early naughties. This was a panic / vote retrieval measure.
In principle, I agree with you that it is the individuals responsibility. However, while the government pursues ruinous energy policies requiring us to spend multiples of other nations energy costs, the pensioners with modest fixed incomes are being squeezed harder than anyone. They were promised WFA, but it was withdrawn, not because it wasn’t needed, but because of some bullshit ‘blackhole’ in our finances. It is yet another poorly thought out piece of policy from the government who seem determined to work by ideology than practicality.
Your argument seems very reasonable and much more humane compared to mine.
Which is why we are completely lost with respect to shrinking the state in any meaningful way.
The vast majority of state expenditures are giveaways to maintain people who in a previous era, prior to the welfare state, would have been responsible for maintaining themselves.
It’s almost impossible now to take any of this away without appearing heartless. Even though it is in effect robbing Peter to pay Paul, whether we like to see it that way or not.
The real solution to this problem is to have cheap and abundant power that everyone could afford, this would also have a deflationary impact on pricing of everything (assuming everything involves using energy during its creation or distribution.), thereby bursting the so called ‘cost of living crisis’. All of these things are interdependent, but thinking doesn’t seem to stretch that far. There is no concept of ‘saving money, or ‘making things cheaper’ in government, only bigger budgets and bigger government. Even with the fictitious ‘black hole’, the first thought is ‘more taxes’ and not where can we make some economies. £20bn isn’t a big sum of money to save, by other standards. I bet if we sat down with a list of Government budgets we could save £100bn a year in half an hour.
If our so-called economist chancellor has “found” (created) a 20 billion pound black hole she would do well to ask Ed Millibrain about that. He’s got lots more black holes in his crazy plans!
Like the derisory 10 pound Christmas bonus the winter fuel allowance had been allowed to be outstripped by inflation. I think it would be around 1000 pounds had it kept pace, which poses the question to which we already know the answer – Where is that extra money being wasted .
Mad government policy has made our electricity the most expensive in the world and it is generally the most expensive way to heat your home. Our state pension is low compared to other countries so this payment offset some of the failure by governments. While it might seem sensible to means test the benefit until you realise that it would cost more to officiate than it would save. No doubt the same will be true as the number of submissions for pension credit soars so the time spent reviewing the forms of 300 odd questions rises along with the payments.