Rachel Reeves defends scrapping future fuel payments for millions

Chancellor Rachel Reeves has defended her decision to scrap winter fuel payments for around 10 million pensioners.

He told the BBC that he had discovered a “black hole” in public finances and that “action must be taken” to “fix the mess”.

But the former pensions minister said he was “surprised” by the decision to limit fuel payments.

Ms Reeves has accused the previous government and former Chancellor Jeremy Hunt of hiding a massive shortfall in public money, which Mr Hunt has strongly denied.

Ms Reeves said she was forced to make a “difficult decision” after the government said it had discovered a £22bn hole in the public finances.

One of the decisions he announced there ie if pensioners in England and Wales do not use pension credit or other means-tested benefits they will not get a winter fuel payment of between £100 and £300.

Former Conservative pensions minister Baroness Ros Altmann told the BBC she was “shocked that the chancellor has chosen to take money from some of the poorest people in this country”.

About 850,000 households eligible for pension credit did not claim it, according to figures released by the Department for Work and Pensions last year.

Baroness Altmann said many did not claim because it was “too hard” to do so.

Ms Reeves said pension credit would be combined with housing benefit so more eligible people would claim it, and the government would work with older people’s charities and local authorities to increase it.

Speaking to the BBC’s cost of living correspondent Colletta Smith, one pensioner named Vadney said she relies on her winter fuel payments to ensure she doesn’t miss gas and electricity bills.

“When it arrived, it just made me right again,” he said. “I’m just disappointed, he gave you something and now he’s just taking it away.”

He said he had never claimed benefits, having been told years ago that he was 30p above the poverty line.

He is now reluctant to apply for pension credit. He said: “I had so much to do that I never asked for (it)”.

The move has also been criticized by charities including Age UK, which said on Monday that “of the two million pensioners who need money to stay warm this winter will not receive it and will be in trouble”.

“At the other end of the aging spectrum, older people will not know the difference – a social injustice,” said the charity’s director Caroline Abrahams.

• From the winter of 2024, fuel payments in England and Wales will be limited to those on pension benefits and credit
• The devolved governments in Scotland and Northern Ireland will decide whether to follow the new policy
• Pension credit is a benefit based on income and savings.
• You may be eligible for pension credit if you are of state pension age and have an income of less than £218.15 per week, or less than £332.95 as a joint weekly income with your partner.
• But your savings count too, and that means you’re not eligible even if your income is low.
• People with disabilities, carers, and those with housing expenses may be eligible despite these factors

Who gets the winter fuel payment?

A bitter row between Labor and the Conservatives has broken out over the “black hole” in public finances.

Reeves said he had to make tough decisions because the previous government was “irresponsibly” overspending, and Mr Hunt covered up the true state of public finances during his time as Chancellor.

“It was not a decision I wanted to make, it was not a decision I wanted to make, but when faced with a £22bn black hole, I had to act,” he said.

He said previous governments “made commitments without having the money to pay for them”, including on social care, hospital plans, and road and rail upgrades.

“The previous government did not put money into it. We do not know who is going to the election campaign,” he said.

As well as limiting winter fuel payments, on Monday the chancellor scrapped a planned cap on social care spending and scrapped some transport projects.

But Mr Hunt has disputed Ms Reeves’ comments, and has written to Cabinet Secretary Simon Case to complain about what he sees as contradictory claims by officials about a “black hole” that is dangerously “bringing the civil service into disrepute”.

He said the spending plan before parliament earlier this month was wrong, or the figures announced on Monday.

Mr Hunt told the BBC he had been made “furious” by Labour’s “political exercise”.

“The fact is, there is pressure on public finances, we have a good plan to deal with it: productivity, welfare reform, the Rwandan scheme to prevent illegal migrants.”

He said the new government’s rejection of the plan had actually caused a hole in the finances.

“It was Rachel Reeves’ own decision,” she said.

However, the independent forecaster the Office for Budget Responsibility on Monday launched its own review of the previous government’s spring budget, which was based on a spending plan put together by the Conservatives.

Writing in the Times on Tuesday, Paul Johnson, director of the Institute for Fiscal Studies, also suggested the “staggering” £6bn cost of housing asylum seekers had not been taken into account.