500,000 more pensioners at risk of losing winter fuel payments under Labour

Telegraph

10-06-2025

An extra half a million pensioners could lose their winter fuel payments by the end of the decade, new analysis suggests.
Rachel Reeves was forced into a humiliating about-turn on Monday after announcing pensioners with incomes of less than £35,000 a year would be eligible for the benefit.
It means an extra 7.5 million pensioners will receive the payment, worth up to £300, this year. But experts point out 500,000 of these will lose the payment by 2030, as rising incomes collide with the payment.
Officials at the Department of Work and Pensions (DWP) refused to comment on Monday on whether the threshold would be increased in line with inflation or the so-called 'triple lock' each year.
Government sources told The Telegraph that no more detail would be provided until the next Budget, when the measure will be evaluated by the Office for Budget Responsibility (OBR).
If the threshold remained the same, more pensioners would become ineligible each year as their annual incomes increased.
Sir Steve Webb, former pensions minister and partner at pension consultants LCP, said: 'The Government's own figures clearly suggest that they expect the number of losers from the new policy to rise each year.
'With around two million pensioners currently over the £35,000 threshold, this number could easily rise by another half a million by 2030.
'This could end up being another way in which governments use inflation to quietly raise additional revenue year-by-year.'
This is not the only form of fiscal drag faced by taxpayers. The income tax thresholds have been frozen until 2027-2028, which will drag more than one million taxpayers into paying additional rate tax.
This phenomenon, known as 'fiscal drag', represents a huge stealth tax raid.
Income tax thresholds have been frozen since 2021-22, dragging millions of taxpayers into the income tax net for the first time, or into higher brackets. The additional rate threshold was initially frozen at £150,000 before being reduced to £125,140 in 2023.
HM Revenue & Customs (HMRC) data via a Freedom of Information request showed that the number of people aged 65 and over paying the top rate of tax more than tripled from 44,000 in 2021-22 to an estimated 137,000 in 2025-26.
Sir Steve also questioned the Government's numbers on how much the changed policy would save the Exchequer.
He said: 'Our analysis also suggests that the new policy will raise less money next year than the headline figure quoted of £450m.
'Assuming an initial yield of around £350m, roughly two thirds of this will be wiped out by higher pension credit costs. The net revenue from the policy is likely to end up barely a tenth of the amount banked by the Chancellor when she presented her last Budget.'
While the Government said that the policy measure would save £450m, it also said that it expected to spend £1.25bn on the payments.
Adding the figures together, this would have meant a total saving of £1.7bn if the Chancellor had not reversed the policy.
But figures published in last year's Budget suggest that the first time the policy came close to raising £1.7bn was in 2029-2030.
In the House of Commons on Monday, shadow secretary for work and pensions, Helen Whatley, said that the policy would save as little as £50m.
She added: 'After all this, the savings for the Treasury this coming year may be as little as £50m.'
Ms Whatley described the about-turn as 'the most humiliating climbdown a Government has ever faced in its first year in office'.