Haldane: winter fuel payment cut will hit 'financially frail'

Labour's decision to stop the winter fuel payment for thousands of pensioners will hammer the 'financially frail', a former top economist warned today. 

Andy Haldane said that the plan to means-test the handout to save money was 'not at all unreasonable' in principle.

But the former Bank of England chief economist said the change had been handled badly, and could have been done in a more fair way, though it would have saved less money for the Treasury. 

Speaking to LBC Mr Haldane, who was a member for Tory chancellor Jeremy Hunt's economic advisory group, said the change 'didn't fit with the narrative of the broadest shoulders bearing the burden'. 

'I can't see on any definition that a pensioner on £14,000 has the broadest shoulders. They're financially frail. So it felt to me that it was bad politics and probably bad economics as well,' he said.

He added: 'The principle of means testing benefits is not at all unreasonable. For millionaire pensioners it's entirely reasonable. 

'So ultimately, this is a failure of design rather than of principle, and they could have changed the design while retaining the principle. It would have raised less money, but it would have got them out of the hole, but I think they've kept on digging.'

He is the latest public figure to question the cut passed by the Commons earlier this month.

Sir Keir Starmer was humiliated yesterday as unions and Labour members demanded he halt cuts to winter fuel payments for millions of pensioners.

In an embarrassing revolt as the party's annual conference in Liverpool came to a close, delegates backed a union motion calling for a U-turn on the plan.

All but the country's poorest pensioners will no longer receive the subsidy – worth up to £300 on energy bills – from this winter.

A motion tabled by Unite and the Communication Workers Union (CWU) demanded a reversal of the start of means-testing.

Unite general secretary Sharon Graham won rapturous applause as she made a powerful plea for the allowance to be restored.

'People simply do not understand, I do not understand, how our new Labour ­government can cut the winter fuel allowance for ­pensioners and leave the super-rich untouched,' she said.

'This is not what people voted for. It is the wrong decision and needs to be reversed. We are the sixth-richest economy in the world. We have the money.'

She added: 'Yes, Britain is broken. Yes, the Tories have left a mess and yes, they are to blame. But Labour is now in government, and we can't keep making everyday people pay.'

Alan Tate, of the CWU, said the winter fuel payment cut had 'overshadowed' the work of the new Labour government.

But during a brief debate, Labour member ­Maggie Cosin said she did not need the winter fuel payment and the money should be used to help children and others in need.

The motion was carried by a show of hands in a rowdy hall. The vote is not binding on the Government and ministers have made it clear the policy will remain despite the backlash.

Earlier, Work and Pensions Secretary Liz Kendall defended the cuts by claiming the Government had 'done more to help the poorest pensioners in the last two months than the Tories did in 14 years'.

She said: 'The biggest-ever drive to get pensioners on pension credit, backed by our commitment to the pensions triple lock. This will increase the state pension by an estimated £1,700 this parliament, with an extra £6 billion of funding forecast next year.'