DWP warned 1.2m in poverty would lose winter fuel payment – but made cuts anyway

The Government estimated over a million people in already impoverished households would lose out on the winter fuel allowance if it was means-tested – before going ahead with the policy.

Chancellor Rachel Reeves decided to scrap universal winter fuel payments in July, saving £1.4bn a year as the Labour Government sought to plug a hole in the public finances.

The move meant only the poorest pensioners in receipt of pension credit or other means-tested benefits would be able to claim the allowance, worth between £200 and £300.

However, when the original policy decision was made, modelling conducted for the Department for Work and Pensions (DWP) estimated at least 1.19 million people in absolute and relative poverty including pensioners and their families, would miss out on the allowance if it was means-tested.

Among them were 320,000 people living in absolute poverty – whereby an individuals lack the means to buy basic necessities.

Relative poverty is defined as someone having less than 60 per cent of the median income in 2010/11 when adjusted for inflation

Campaigners have described the findings, obtained by The i Paper through freedom of information laws, as a “shocking revelation” and urged the Labour to take bolder steps to avoid “this disastrous situation next year”.

The data forms part of the modelling which showed an additional 50,000 to 100,000 pensioners would be pushed into poverty between 2024-25 and 2029-30 due to the winter fuel payment cuts – revealed in a letter by Liz Kendall in November.

A Government spokesperson said the modelling was “subject to a range of uncertainties” and does not take into account the uptake in pension credit, which has allowed 120,000 more pensioners to receive the benefit since the end of July.

‘I’m 87 and disabled – I’ve been cold for months after being rejected for winter fuel payment’

Carole, an 87-year-old disabled widow living alone in Bournemouth, told The i Paper she had endured a terrible few months of feeling cold inside her home this winter.

She has badly missed the £300 winter fuel payment that she had previously depended on to be able to turn up her heating in recent years.

“It’s been a rotten winter. It’s been really cold,” said Carole, who has arthritis. “I have a blanket over my knees and I have a hot water bottle – that’s how I try to keep warm.”

Carole, who lives in social housing, said she had to keep her heating off or turned down to keep her energy costs affordable.

Her average monthly electricity bill has tripled from around £30 before Covid and the Ukraine energy crisis to around £90 now.

“I’m housebound because I’m disabled, and it’s hard to keep my circulation going,” she said. “I don’t want to think about what might happen [in future]. I’m just praying for no more cold snaps.”

Carole applied to the DWP for pension credit in a bid to get the winter fuel payment and other support – but was rejected because her income was narrowly over the threshold.

“They told me I was £15 [a week] over the threshold limit, which feels ridiculous – very frustrating,” said the 87-year-old, who has sought advice from Age UK.

Read more about Carole’s story here.

The DWP has also said the data is rounded to the nearest 100,000 individuals, meaning small variations in the estimates can lead to larger changes in the headline figures.

Dennis Reed, director of the Silver Choices charity supporting the elderly, told The i Paper: “These statistics nail the repeated lie from ministers that their winter fuel policy protected the poorest.

“At least 100,000 extra pensioners have been plunged into poverty and about 2 million more, according to the charities, have struggled to pay their energy bills.

“If this impact information had been available before the decision was endorsed by Parliament, the Labour rebellion would have been greater and it was another lie to say that no impact assessment had been carried out.

“The Government should admit that scrapping the universal winter fuel payment scheme has caused hardship to many families on modest incomes and review the decision before next winter.”

Simon Francis, coordinator of the End Fuel Poverty Coalition accused the Government of knowing that cutting “winter fuel payments would condemn people to living in cold damp homes, yet still they continued”.

He added: “Charities were clear in their warning to Ministers that axing winter fuel payments would hurt those already struggling in cold damp homes.

“The Government was warned that older people with disabilities who just miss out on pension credits would also be among those harmed the most by this policy.

“That the Chancellor and Ministers had official advice that this policy would hurt those in poverty further is a shocking revelation.”

The Chancellor announced an an additional 50 per cent reduction to universal credit health top-up payments for new claimants, along with a freeze for those already claiming the benefit, in her Spring Statement on Wednesday.

This will be toppled by cutbacks to personal independence payments (PIP) announced last week, which will save the Government £3.4bn per year.

In response, Mr Francis urged Reeves to “help to those struggling in fuel poverty now, not continue with cuts in vital support to older and disabled people”, after she revealed further reductions in welfare support in her Spring Statement last week.

Caroline Abrahams CBE, charity director at Age UK, said: “As these figures suggest, reducing the eligibility for winter fuel payment was bound to hit hundreds of thousands of pensioners on low and modest incomes really hard, and that’s what we’ve seen play out over the winter.

Labour says the cuts are necessary

When elected, the Labour Government said it would reduce the welfare bill by more than £5bn by 2030 – matching Tory savings from the previous administration – but would bring forward new reforms to make the savings.

The Government has said the measures will be fair and sustainable, whilst protecting vulnerable disabled people who will never be able to work and are designed to tackle the ballooning welfare bill.

Spending on PIP – to help disabled people with day to day support – is projected to almost double to £34bn by 2029-30.

According to the Institute for Fiscal Studies, spending on working-age health-related benefits overall – which includes out of work incapacity benefits – rose from £36bn in 2019-20 to £48bn in 2023-24 – and is projected to rise to even further, to more than £60bn, by 2029.

Meanwhile ministers are under pressure to tackle an increase in the number of economically inactive people, with a recent spike in people not currently working or in education due to a health condition.

One in 10 people of working age are claiming some kind of sickness or disability welfare, according to the Government, and almost three million people are out of work due to a health condition.

Abrahams added: “We have to avoid a recurrence of this disastrous situation next year – the Government must bring forward measures to protect the pensioners who lost their winter fuel payment when they simply could not afford it.”

Morgan Vine, director of policy and influencing at Independent Age, said: “At Independent Age we’ve heard about the terrible impact this policy decision is having.

“Many of the older people living on a low income that we speak to just miss out on the entitlement due to being a few pounds over the threshold.

“We have heard harrowing stories from people in these situations, many are going to bed in hats and coats, washing in cold water, only heating one room and visiting public places to stay warm. This is unacceptable.

“Linking pension credit to the winter fuel payment so hastily was misguided. Almost one million eligible people do not receive pension credit, meaning they lost the winter fuel payment despite living on a low income.

“In addition, those people hovering just above the threshold tell us they do not have enough money to live well. The UK Government must immediately review and widen the eligibility criteria of the winter fuel payment.

“We’re also calling for the Government to initiate a benefits take-up strategy that includes pension credit, so more older people in financial hardship receive the vital support they are entitled to.”

National Energy Action’s chief executive Adam Scorer said: “There was a fair argument that winter fuel payments could, and should, be better targeted on those in greatest need. But that is not what happened.

“Households in or at risk of fuel poverty were excluded from vital support that was supposed to help with the cost of keeping a home warm in winter. They are paying a heavy price.”

A Government spokesperson said: “This modelling was subject to a range of uncertainties and doesn’t take into account the significant uptake in pension credit. Alongside this, we will continue to support pensioners through our commitment to the Triple Lock with the State Pension set to rise by up to £1,900 over this parliament.

“Our drive to boost Pension Credit take up has seen 120,000 more pensioners now receiving the benefit since the end of July.

“Pension Credit is worth on average £4,300 a year and we continue to urge anyone who thinks they might be eligible to check and make a claim.

“Alongside this, we have continued the warm house discount and extended the household support fund in England which can help with the cost of food, heating and bills.”