Chancellor announces changes will be in place ‘this coming winter’ after massive backlash forced Labour climbdown – as she unveils £15.6bn transport bonanza for the North
Rachel Reeves today confirmed a major U-turn on winter fuel payments that will see millions more pensioners receive the cash handout this winter – but warned the benefit will never return to being universal.
The embattled Chancellor admitted the Government had “listened to concerns” about stripping 10 million pensioners of the up-to-£300 payment and promised changes would be implemented in time for this winter’s cold snap.
But in a stark warning to wealthy retirees, Pensions Minister Torsten Bell told MPs there was “no prospect” of returning to universal payments, insisting 95% of people agreed it was wrong to hand “a few hundreds of pounds to millionaires.”
‘More people will get winter fuel payment’
Speaking after unveiling a massive £15.6billion transport investment package in Manchester, Reeves finally bowed to pressure from Labour MPs, charities and millions of angry pensioners.
“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,” the Chancellor announced.
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 winter fuel payment this winter.
Millionaires still frozen out
However, any hopes of a complete reversal were dashed when Pensions Minister Torsten Bell appeared before the Work and Pensions Committee just hours earlier.
Asked directly whether there was any prospect of returning to universal winter fuel payments, Bell was unequivocal: “The answer is no.
He told MPs: “The principle I think most people, 95% 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.”
Priority for ‘lower incomes who missed out’
Bell revealed the Government’s priority would be helping poorer pensioners who lost out when the payment was restricted to those on Pension Credit last year.
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,” he admitted.
“And so we’d like to see wider eligibility. You can then take from that, that my priority is those who are on lower incomes but have missed out.”
The minister refused to provide specific details about which groups would benefit or how many more pensioners would receive payments, saying announcements would be made “to the House” when ready.
From 11.4 million to 1.5 million – and back up again?
The dramatic climbdown comes after one of Labour’s first acts in government – announced on July 29, 2024 – saw winter fuel payments restricted to only those receiving Pension Credit or other means-tested benefits.
This slashed the number of recipients from 11.4 million to just 1.5 million pensioners, saving the Treasury around £1.5billion annually.
The policy has been widely blamed for Labour’s collapse in the polls, with the party’s support plummeting from their landslide election victory to trailing behind Reform UK in some surveys.
Critics warned the cuts could lead to 4,000 excess winter deaths – citing Labour’s own 2017 analysis when they opposed similar Conservative proposals.
£15.6bn transport bonanza
The winter fuel U-turn was announced as Reeves unveiled a massive transport investment package worth £15.6billion over five years for regions outside London.
Greater Manchester will receive £2.5billion for tram extensions to Stockport and new stops in Bury, Manchester and Oldham, while the West Midlands gets £2.4billion for metro extensions.
Other major beneficiaries include:
- West Yorkshire: £2.1billion for long-delayed mass transit system
- South Yorkshire: £1.5billion including £530million for tram renewal
- East Midlands: £2billion for Derby-Nottingham mass transit
- Liverpool City Region: £1.6billion for buses, trains and trams
- Tyne and Wear: Funding for metro extensions
- West of England: £800million for Bristol-Bath transit links
Treasury rules torn up
In a significant move, Reeves is also scrapping controversial Treasury “Green Book” rules that have been accused of favouring London and the South East when deciding which projects receive funding.
“A Britain that is better off cannot rely on a handful of places forging ahead of the rest of the country,” she declared in Manchester.
Transport Secretary Heidi Alexander called it a “watershed moment” that would open up jobs and drive economic growth across the North and Midlands.
Spending review pressure
The announcements come ahead of next Wednesday’s crucial spending review on June 11, where Reeves faces what the Institute for Fiscal Studies calls “unavoidably tough decisions.
With demands for increased NHS and defence spending, other departments face potential cuts – making today’s transport announcement and winter fuel climbdown all the more significant.
Labour insiders believe visible improvements to voters’ lives are essential to reverse their polling slide, with Reform UK continuing to gain ground under Nigel Farage’s leadership.
What happens next?
Officials remain tight-lipped about exactly how many more pensioners will benefit from the expanded winter fuel payment eligibility or what the new income thresholds will be.
The changes must be implemented quickly to ensure payments reach pensioners before next winter, with announcements expected “as soon as possible.
For now, millions of pensioners who lost out last winter can hope they’ll receive support when the cold weather returns – though Reeves’ “millionaire” pensioners will remain out in the cold.
Image credit: Reeves speech 29 July 2024 by HM Treasury, licensed under CC BY 2.0.
