The chancellor has announced new rules that mean around 10 million pensioners will no longer receive winter fuel payments. Until last year, people aged over 66 were paid up to £300 to help towards their energy bills each year. The eligibility criteria will now be tightened to include only those claiming pension credit or other means-tested benefits. Devolved governments in Northern Ireland and Scotland will have the opportunity to continue the previous system within their own budgets.
What is the winter fuel payment?
Winter fuel payments were first introduced in 1997 – announced by the Labour chancellor Gordon Brown – to help those above the State Pension age with the cost of energy bills in the winter. The system has been maintained by successive governments since, meaning everyone born on or before 24 September 1957 was paid the winter fuel allowance last winter. The exact payments have changed over the years, now standing at £200 for those under 80 and £300 for anyone over. The payments were made automatically with no need to apply.
Under the new rules, the payment will require an application at some point. This is because pension credit and other means-tested benefits do need to be applied for, as only those people above State Pension age who are in receipt of these benefits will be eligible for the winter fuel payment in future.
What will the new rules be?
The previous rule that winter fuel payments are only available to those aged over 66 remains, but eligible people must now also be claiming pension credit or other means-tested benefits.
Pension credit is designed to top up pensioner incomes to £218.15 per week if you are single or £332.95 a week if you have a partner. This means that you will need to have income less than those amounts coming in to be eligible. Additionally, if you have more than £10,000 in savings, every £500 over £10,000 counts as an income of £1 a week. As a consequence, you could be receiving less than the minimum income amounts, but still not be eligible for pension credit because of the amount you have in savings. Keep in mind that the calculations will be slightly different if you are disabled, care for someone or have additional housing costs.
Anyone who is already paid pension credit or other means-tested benefits should expect to receive their winter fuel payment as usual this autumn. Anyone who does not claim benefits will need to either apply or budget for potentially higher energy bills this winter without the extra payment.
Why are the changes happening now?
Labour had planned to reform the winter fuel payments as far back as 2015, during Ed Miliband’s leadership. His successor Jeremy Corbyn pledged to keep it, with the current Labour regime claiming there were “no plans” to make changes just a month ago.
However, chancellor Rachel Reeves has decided to row back on this, putting the change of plan – along with cuts to infrastructure projects and social care reforms – down to a “£22bn hole in the public finances”. She claimed the previous government’s “undisclosed” overspending had forced “urgent decisions”. Tightening winter fuel payment eligibility is expected to save £1.5 billion, but this does not include the potential cost of additional pension credit applications.
Shadow chancellor Jeremy Hunt rejected Reeves’s reasoning, describing her claims as “spurious”.
How to get help with your energy bills
The best way to get help with your energy bills is to make sure you are getting all the financial assistance you are eligible for. While winter fuel payments have previously been made automatically, many benefits require you to apply, including pension credit. Age UK has estimated that there are more than 800,000 eligible people not claiming pension credit. This means that they will be surviving on less than £218.25 a week for a single pensioner and less than £332.95 for a couple, but not getting the pension credit they are eligible for. Now, they will also miss out on the winter fuel payment.
Checking what help you are entitled to online is easy, as is applying for benefits by using online calculators such as entitledto or the Turn2us benefits calculator.
Additionally, your energy supplier may be willing to agree to a more affordable payment plan if your energy bills have become overwhelming. It is best to contact them as soon as possible, but you can also follow the tips in our article 'How to save money on your energy bills'.
