Rachel Reeves winter fuel payments: Chancellor provides update on who will get allowance and when

Chancellor Rachel Reeves has confirmed some fuel payments will be reinstated for pensioners this winter, amid reports a new threshold could be announced as early as next week’s spending review.

The UK government has confirmed more pensioners will receive the allowance, but payments will not be universal.

Chancellor Rachel Reeves has given more detail about the UK government's plans for the winter fuel allowance | PA/The Scotsman

Ms Reeves told reporters on Wednesday that “more people will get winter fuel payment this winter”, adding that further details will be announced “as soon as we possibly can”.

At a speech in Rochdale, she said: “We have listened to the concerns that people had about the level of the means test, and so we will be making changes to that; they will be in place so that pensioners are paid this coming winter.

“We’ll announce the detail of that and the level of that as soon as we possibly can. But people should be in no doubt that the means test will increase and more people will get a winter fuel payment this winter.”

READ MORE: Ministers 'blinded' by financial imperatives in cutting winter fuel payment, argues former SNP MP Jo Cherry

However, UK pensions minister Torsten Bell told MPs that, while more pensioners would be eligible, there was no prospect of returning to universal winter fuel payments.

Speaking to the work and pensions committee, Mr Bell said: “Directly on your question of is there any prospect of a universal winter fuel payment, the answer is no - the principle I think most people, 95 per cent of people, agree, that it’s not a good idea that we have a system paying a few hundreds of pounds to millionaires, and so we’re not going to be continuing with that.

“But we will be looking at making more pensioners eligible.”

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What is happening in Scotland?

The announcement comes after First Minister John Swinney last month said no U-turn could change the fact the UK government chose to remove the winter fuel payment from pensioners.

Getting John Swinney to answer a question can prove frustrating, but he will need to find one for the looming black hole in the Scottish Government's finances (Picture: Jane Barlow/pool) | Getty Images

The payments are devolved in Scotland. The SNP Government has already committed every pensioner household to receiving £100 this winter, while some will receive £200 or £300 depending on their age and means. About one million pensioners are expected to benefit from the policy.

Mr Bell said he did not have “lots to add” to what Prime Minister Sir Keir Starmer had said recently about the allowance. He told the MPs: “Of course the announcement, as and when it’s made, will be made to the House.”

Sir Keir recently signalled a partial U-turn over the government’s decision to strip winter fuel payments from millions of pensioners.

The Prime Minister said “as the economy improves”, he wanted to look at widening eligibility for the payments worth up to £300. But officials have been unable to say how many more pensioners would be eligible.

The initial winter fuel payment cut announcement

The decision to means-test the previously universal payment was one of the first announcements by Chancellor Rachel Reeves after Labour’s landslide election victory last year, and it has been widely blamed for the party’s collapse in support.

Under the previously announced cut, the threshold south of the Border had been set at £11,500 over which pensioners were no longer eligible for the allowance.

The UK government has insisted the policy was necessary to help stabilise the public finances, allowing the improvements in the economic picture that Sir Keir said could result in the partial reversal of the measure.

On July 29, 2024, the government announced that from winter 2024, winter fuel payments would be dependent on receiving another means-tested benefit, as part of measures to fill a “black hole” in the public finances. This meant the number of pensioners receiving the payment was reduced by around ten million, from 11.4 million to 1.5 million.

How will winter fuel payments be restored?

Pension credit is the primary benefit by which pensioners can receive the winter fuel payment. The credit tops up incomes for poorer pensioners and acts as a gateway to additional support, including the winter fuel payment.

Sir Keir Starmer has indicated a partial U-turn on winter fuel payments

Asked what groups who are missing out on winter fuel payments he would like to include again, if possible, Mr Bell told the committee: “We are committed to the principle that there should be some means-testing and that those on the highest incomes shouldn’t be receiving winter fuel payments in the context of wider decisions we have to make – and fairness is an important part of that.

“You can then take from that that my priority is those who are on lower incomes but have missed out.”

He told the MPs: “I’m not getting into anything about the operation of that but just, you know, I think all of us will have heard from people on lower incomes who didn’t receive winter fuel payment this year and I understand the points they’ve raised. And so we’d like to see wider eligibility.”

Put to him that a universal winter fuel payment would be “100 per cent guaranteed” to reach those who needed it, Mr Bell told the committee: “You have to wait for us to set out the policy and we will engage directly with the point you are raising.”

Asked what work had been done with HM Revenue and Customs (HMRC) to assess the practicality of recouping payments from higher rate taxpayers, Mr Bell said: “We’re looking at all of the policy options for how this eligibility can be extended, and when I’ve got more to tell you about that, I absolutely will.”

Commenting on the hearing, Tom Selby, director of public policy at AJ Bell, said the government “now faces a dilemma in determining exactly who should be eligible”.

He suggested that one option could be to award the payment to everyone receiving a state pension, clawing the money back from higher income households, potentially through their tax returns.

Mr Selby said: “This might look something like the process for clawing back child benefit for working households, although that has caused mass confusion among taxpayers bamboozled by the complexity of the rules.”