Labour speaks out on new Winter Fuel Payment proposal linked to council tax

Suggestions to stop the means-testing measures going ahead and instead base eligibility on the lowest council tax bands have been put forward

Alternative proposals to restrict the Winter Fuel Payment to pensioner households in lower council tax bands have been addressed by the Labour government. The rethink was suggested after Chancellor Rachel Reeves announced that the allowance would be available only to people on Pension Credit and some other means-tested benefits.

The new policy is expected to reduce the number of recipients by 10 million, from 11.4 million to 1.5 million, saving around £1.4 billion this year. Around 71 per cent of pensioners with a disability and 83 per cent of those aged 80 or over will now miss out on the payment.

An idea to scrap the tough new rules and link the allowance to council tax banding was put forward. The suggestion came from several finance specialists and advisors including MoneySavingExpert founder Martin Lewis and Sir Steve Webb, a partner at Lane, Clark & Peacock (LCP) who is a former pensions minister. They called on the Government to restrict the fuel allowance to pensioner households in bands A to D instead so that it would include older people likely to be on a lower income.

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A written question on the proposal has also been put forward by Labour MP Rachael Maskell (York Central) who asked for an "assessment of the potential merits of providing a Winter Fuel Payment for older people based on council tax band and as a payment liable to tax."

However, Pensions Minister Emma Reynolds (Wycombe) says she doesn't think the idea is feasible. She explained: "It would not be possible to pay Winter Fuel Payments to pensioners according to their council tax band as my department does not hold data on people's council tax banding. Additionally, council tax band is not always an accurate reflection of someone's income.

"Matters of taxation are for His Majesty's Treasury. The tax treatment of social security benefits is based on the type of payment and why it is provided. In general, benefits that are designed to replace income are taxable, including the State Pension. Benefits that meet specific costs, such as Winter Fuel Payments, are not taxable."

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Ms Maskell also asked ministers whether they would assess "the potential merits of establishing a fuel poverty prescription that can be given by GPs." Some local authorities have previously run such schemes, including in Nottinghamshire where a Warm Homes on Prescription project "aims to help low income residents with cold-sensitive, long-term, health conditions to achieve affordable warmth."

Ms Reynolds replied: "This Government takes fuel poverty extremely seriously. The Government will invest an extra £6.6 billion over this Parliament in clean heat and energy efficiency through the Warm Homes Plan, upgrading five million homes through solutions like low carbon heating and improved insulation to reduce emissions and cut bills."

The Labour minister added that the Household Support Fund had been extended to March 31 2025, with an additional £500 million "aimed at anyone who's vulnerable or cannot pay for essentials" over the winter period.

Ms Reynolds has vowed to "work with external partners, local authorities and the devolved governments to boost the take-up of Pension Credit" so that more people are eligible for the Winter Fuel Payment under its new rules.

In response to a further written question from Democratic Unionist Party MP Gregory Campbell (East Londonderry) about whether the Government had any specific numbers in mind, she wrote: "No targets have been set. The Government wants everyone eligible for Pension Credit, but not currently claiming it, to receive the benefits they are entitled to. DWP launched the Pension Credit Week of Action on September 2, joining forces with national charities, broadcasters and local authorities to encourage pensioners to check their eligibility and make a claim.

"From September 16, we will be running a national marketing campaign on a range of channels. The campaign will target potential pension-age customers, as well as friends and family who can encourage and support them to apply.

"Our future campaign messaging will also focus on encouraging pensioners to apply for pension credit before December 21 2024, which is the last date for making a successful backdated claim for Pension Credit in order to receive a Winter Fuel Payment."

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