On the Winter Fuel Allowance

I don’t believe it’s possible to discuss the proposed changes to the Winter Fuel Allowance without discussing the wider context of the decision.

The Winter Fuel Allowance was introduced by Labour in 1997, following on from a period of very high relative poverty amongst pensioners. Sustained efforts to increase the state pension (alongside benefits such as the Winter Fuel Allowance, free bus pass and free TV licenses) over the following years meant that by the time Labour left office pensioner poverty had declined significantly.

As a result, since 2004, for the first time in history, those of working-age are more likely to be in relative poverty than pensioners. The triple-lock means that this will always be the case, since it guarantees that no matter what happens to everyone else in the system, pensions will always go up.

So, if all prices remain the same then pensions go up by 2%, if inflation is higher than 2% then pensions rise in-line with inflation (which includes rising energy bills), if wages go up then pensions rise in-line with wages. Whichever figure is highest is the amount which pensions go up by.

This, alongside a growing overall number of pensioners due to longer life spans and the largest generation in history retiring, has meant that from 2010 to 2024 the cost of pensions to the Treasury has grown from £87.3bn to £140.6bn, a period during which every other area of expenditure underwent cuts.

Unlike the Winter Fuel Allowance, the Labour Party made a commitment to retain the triple-lock, so this year the basic state pension will increase by £900.

However, at the same time, the country is facing a £22bn blackhole in the public finances left by the last government and extreme pressures across all public services, particularly in the NHS. To fix this blackhole and find the headroom needed to address the recruitment/retention issues in the NHS—of which pensioners will be the primary beneficiaries—will require a combination of savings, taxes and public service reforms, of which the savings will deliver the most immediate returns needed to address these recruitment/retention issues.

With pensioner poverty now lower than working-age poverty, with the Winter Fuel Allowance no longer making a difference in the overwhelming majority of cases as to whether or not pensioners keep the heating on, with the triple-lock guaranteeing that pensioner incomes will improve every year, and with pensioners set to be the primary beneficiaries of the money saved being used to address capacity issues in the NHS, introducing means-testing of an allowance set for a purpose it in most cases no longer fulfils strikes me as an obvious decision to take.

Where I do share some concerns is whether Pension Credit is too narrow a benefit for determining genuine need and I have encouraged the Treasury team to look at other alternatives for broadening the measure to ensure that no one in genuine need misses out. I support the major efforts of the Government to get all those eligible for Pension Credit registered in advance of the shift to means-testing, and I hope that further steps can be taken to passport over other claimants where the system allows.

I will be voting in favour of introducing means-testing when the vote is called and, I want to be clear, I won’t be doing it because of a whip, I will be doing it because having looked into the detail of the policy I genuinely believe that with the situation facing the country this is the least worst option, ultimately delivering a better outcome for pensioners as a whole.