Reeves Defends Controversial Cut to UK Winter Fuel Payments
(Bloomberg) -- Chancellor of the Exchequer Rachel Reeves defended her controversial decision to cut the winter fuel allowance for most pensioners, saying it was needed to help restore order to the UK’s public finances.
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Reeves in late July scrapped the payments to about 10 million elderly people, retaining them for the poorest pensioners only, in a move designed to save the Treasury £1.4 billion ($1.8 billion) this winter. The measure — announced just before the Parliamentary recess — was criticized by opposition parties as well as some within the governing Labour Party.
Questioned by Members of Parliament on Tuesday about the move to slash the payments, worth as much as £300 per person, Reeves told the House of Commons the decision was “tough” but “right” in the face of difficult financial conditions.
The new Labour government — in office for just two months — is seeking to pin the blame for the spending cut on the outgoing Tory administration, which Reeves says bequeathed her a £22 billion black hole in the public finances, partly due to unfunded spending commitments. But ministers are also trying to stave off accusations they’re being overly gloomy about the British economy.
Reeves said the government was taking action to encourage the uptake of pension credit by the most low-income pensioners, meaning they would still be eligible for the winter fuel payments. Around 800,000 pensioners who were eligible for the benefit were not claiming it during the last Parliament, she said.
But the chancellor faced early opposition from members of her own party, as well as the Conservatives. Neil Duncan-Jordan, a new Labour MP, tabled a non-binding so-called Early Day Motion giving colleagues the chance to support his concerns that the cut is “being introduced without prior consultation” and “fails to take account of the modest incomes” of those who are just above the entitlement threshold for pension credit. EDMs are typically used by MPs to register opinions or dissent and rarely get formally debated.
Rachael Maskell, a longer-standing Labour lawmaker who served in former leader Jeremy Corbyn’s top team, said rents had risen considerably in her constituency, and the cut to winter fuel payments meant “pensioners are frightened about how they’re going to keep warm this winter.” Paula Barker, a third Labour MP who was a shadow minister in Keir Starmer’s team while in opposition, said some elderly people could miss out on the payments due to having only a “tiny occupational pension.”
The criticism stretched across the Commons, as members of the Liberal Democrat party, which gained seats in July’s election, presented a united front in their concern about pensioners who were not well-off but would not be eligible for pension credit.
The government is expected to grant MPs a vote on the changes to the winter fuel allowance next week, a person familiar said. That could see Labour face an early rebellion within its own ranks.
Reeves pointed out that the UK energy regulator’s cap on fuel prices is lower than it was last winter, and that the state pension would be £900 higher, helping pensioners absorb the lost benefit. She added that the Government was committed for the duration of this Parliament to the so-called triple-lock — whereby the state pension rises in line with the change in average wages, inflation or 2.5%, whichever is greatest.
(Updates with comments from MPs starting in sixth paragraph.)
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