Scrapping the payment, worth £200 a year or £300 for the over 80s, is tightening the screw on already hard-pressed pensioner households. Two million pensioners whose incomes are just above the threshold for claiming the winter fuel payment now face a desperate winter, according to Age UK.
That choice has been thrown into stark relief by today’s consumer price inflation (CPI) data, covering the 12 months to July.
Inflation crept up from 2% in June to 2.2% in the first increase this year.
As Laura Suter, director of personal finance at AJ Bell, put it: “Anyone who was hoping that the inflation genie is back in the bottle will be disappointed.”
They certainly will be, and none more so than struggling pensioners because as Suter made clear: “Energy prices are largely to blame.”
Reeves faces mounting pressure to reverse her winter fuel payment cut. On August 5, more than 50 charities and organisations led by the End Fuel Poverty Coalition wrote to the chancellor asking her to change course.
They warned her decision “to remove the payment to all but a small minority of pensioners will see millions more older people face the prospect of spending this winter in cold damp homes”.
It said this could create a public health emergency. “The impact of living in cold damp homes is particularly harsh on those older people with a disability, a long-term health condition or with poor mental health.”
Reeves might have got away with it if our gas and electricity bills were plunging back to pre-energy crisis levels, but that’s not happening.
While energy prices fell slightly the drop was far smaller than the one in July last year.
As that big fall drops out of the annual figures, energy price inflation has actually risen. The energy crisis far from over.
Electricity prices are still 45% higher than they were in March 2021. Gas prices are a staggering 68% higher.
And Reeves has chosen this moment to axe support for all but the very poorest.
Worse, almost a million pensioners who should get it won’t, because they wrongly fail to claim means-tested state pension top-up Pension Credit, which is the trigger for getting the winter fuel payment.
As I wrote earlier today, some could be missing out on support worth a staggering £8,000 in total.
Reeves has pledged to boost Pension Credit uptake but governments have been saying that for years to little effect.
Time is not on her side. Britain may be sweating in a heatwave today, but colder months are coming.
It gets worse.
From October, Ofgem’s energy price cap is set to rise, driving up gas and electricity bills at the worst time of the year.
Today’s cap, which covers the three months from July 1 to September 30, is set at £1,568 a year for a typical duel-fuel household that pays by direct debit.
Respective forecaster Cornwall Insight predicts this will jump to £1,723 when the new cap comes into force on October 1.
That’s an inflation-busting 9.88% increase, adding £155 to energy bills. When that lands, it will surely be time for the End Fuel Poverty Coalition to write another letter to Reeves.
Her decision to axe the winter fuel payment while claiming only the wealthy got it looks harsher by the day.
It will look even worse when pensioners have to turn the heating back on. As I’ve said before, if the Tories had done this, there’d have been uproar. Former Conservative chancellor Jeremy Hunt would never have dared. Reeves did. Now she needs to think again.
