Columnist ANDREW FISHER on Rachel Reeves, the £20bn ‘black hole’ in government finances and why cutting winter fuel allowance for pensioners is such a bad first move by the new government
That the Tories left the country and our public services in a dire state is no surprise. In October last year, former shadow Chancellor John McDonnell MP wrote a report on exactly that: What’s in the in-tray of an incoming Labour Government?
We set out our concerns that to get public services, from the NHS to social care, from education to local councils, back on a functioning basis would require somewhere in the order of £70billion a year.
But on top of huge under-funding of public services for more than a decade, the staff shortages and the massive backlogs, including in the law courts and asylum system, as well as the NHS, the Tories had also left billions of pounds of unfunded spending commitments for the current financial year.
This is not just partisan politicking. The independent Office for Budget Responsibility, established by George Osborne when he was in No11, has this week initiated a review into Jeremy Hunt’s Spring Statement, highlighting concerns over “the transparency and credibility” of the figures supplied by the Conservative Government.
To respond to this state of affairs, the new Chancellor, Rachel Reeves, made a statement earlier this week on the economic inheritance faced by the Labour Government. In that speech, Reeves announced that the universal Winter Fuel Payment would now be means-tested – taking up to £300 away from more than 10million pensioners. She also said that the Government would not implement the social care cap due to apply from October 2025.
Reeves said she did not want to be making these cuts. But, and you can call me a cynic, I think Labour’s leadership may have been planning these cuts in advance.
In 2015, 2017 and 2019, the Labour election manifestos set out policies on the Winter Fuel Payment and on social care costs. The 2024 manifesto was silent on both.
Fixing the what?: Chancellor Rachel Reeves speaking earlier this week
The Winter Fuel Payment is a £200 payment to pensioners (£300 if over the age of 80) to help with the extra cost of heating homes in winter. It was introduced by the last Labour Government. It remained unchanged through 14 years of Conservative-led governments.
Around 1.6million pensioners who claim Pension Credit will still get the payment, but it is estimated that more than 800,000 pensioners on low incomes who are eligible for Pension Credit do not claim it, and so will also lose their Winter Fuel Payment.
Age UK has started a petition to keep the Winter Fuel Payment universal. In just two days, 75,000 people had signed the petition.
It says: “We believe as many as 2million pensioners who find paying their energy bills a real stretch will be seriously hit by this cut: those on low incomes who just miss out on Pension Credit, those with high energy needs because of disability or illness, the 800,000 who don’t receive the Pension Credit for which they are eligible.”
There are around 50,000 pensioners living in Croydon, the majority of whom – possibly more than 40,000 – are likely now to lose their Winter Fuel Payment. That will remove around £9million a year from the local Croydon economy.
The decision to attack universal pensioner benefits is causing some backlash and embarrassment for the new government. Darren Jones MP, Chief Secretary to the Treasury and effectively Reeves’ No2, has already met with concerned backbench Labour MPs to try to allay their concerns.
Money-saving expert: Martin Lewis has criticised the government’s heating payment decision
The influential financie broadcaster, Martin Lewis, has also condemned the move, saying “the Energy Price Cap is likely to rise 10% this October and stay high across the winter, leaving most energy bills nearly double those pre-crisis, at levels unaffordable for millions”.
If we have a particularly cold winter, and a spike in cold-related deaths, this could do long-term damage to this Labour Government.
It’s a very strange choice not to tax the rich (some of whom may be the wealthier pensioners) rather than remove a universal benefit from pensioners, some of whom are barely existing on around £200 a week (far less than full-time income on the minimum wage).
It’s also embarrassing for Labour. In November last year, Darren Jones wrote to the Conservatives, following rumours the Winter Fuel Payment might be cut, saying, “Pensioners mustn’t be forced to bear the brunt of Tory economic failure.”
And even Keir Starmer has tweeted a declaration: “My Labour Party will always be on the side of pensioners let down by the Tories”, specifically raising the case of a pensioner struggling to keep warm in winter.
You can watch the Good Housekeeping interview here:
And at Prime Minister’s Questions in May, Starmer, as the then Leader of the Opposition, challenged Prime Minister Rishi Sunak: “Last year the Prime Minister was apparently drawing up plans to remove the winter fuel allowance from pensioners… will he now rule out taking pensioners’ winter fuel payments off them?”
Another cut announced by Reeves this week was to scrap the social care cost cap, which would have capped people’s lifetime liabilities for their personal care.
In the election campaign, Wes Streeting, now the Secretary of State for Health and Social Care, said: “One of the things we have committed to is the cap on care costs.”
This pledge has now been abandoned. It means those requiring care due to conditions such as dementia will continue to face potentially catastrophic care costs.
Sir Andrew Dilnot, the academic who for more than a decade has been pushing for better social care policy, said he was “staggered” by Labour’s choice and found the U-turn “breathtaking” and “extraordinarily disappointing”.
Labour can rightly blame the Tories for the state of the public finances and public services.
But its own choices of how to resolve those crises are theirs to own.
- From 2015 to 2019, Andrew Fisher was the Labour Party’s Director of Policy under Jeremy Corbyn. Fisher is also the author of The Failed Experiment – and how to build an economy that works, and now writes columns for InsideCroydon, the i newspaper and is a regular pundit on BBC and Sky News programmes
Andrew Fisher’s recent columns:
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- ‘Those are my principles, and if you don’t like them… well, I have others!’
- If you have a news story about life in or around Croydon, or want to publicise your residents’ association or business, or if you have a local event to promote, please email us with full details at inside.croydon@btinternet.com
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ROTTEN BOROUGH AWARDS: In January 2024, Croydon was named among the country’s rottenest boroughs for a SEVENTH successive year in the annual round-up of civic cock-ups in Private Eye magazine
I wonder how much it will cost to implement a means test for pensioners receiving the winter fuel allowance?
I also wonder how long it will be before someone thinks about means testing Personal Independence Payments/Disability Living Allowance, Child Benefit and others that are currently not means tested.
My view has been that if it costs more to means test than is got back by a reduction in payments it isn’t worth doing.
The article is quite right to point out how many pensioners don’t get what they should be and for that reason will now lose out and suffer.
PIP/DLA are about physical condition, not financial, but it does raise an interesting issue. If someone is in need of support that would warrent such a benefit, do they actually need it?
Pension Credit is already the “means test” for Pensioners. The government needs to encourage the UK public to make sure Pensioners find out if they are eligable. I think there are a great many “proud” pensioners or those who lack family support, who would, and should qualify, but do not claim. A simple leaflet in the post would raise some awareness. Families of pensioners need to be made aware.
So you could argue that ALL benefits shoudl be means tested to make sure the support goes to those that need it most.
The price of energy to the consumer is still significantly higher than it was a few years ago, that extra of couple of hundred pounds doesn’t even make up the difference. There are millions of elderly just above the cut off point, not eligible for pension credit, just about making ends meet. There’s a reason these payments exist, the elderly are particularly vulnerable to the cold. If we have a particularly cold winter the Chancellor of the Exchequer might have to change her name to The Grim Reever.
To go alongside Sir Kid Starver
Andrew doesn’t like the current Labour administration as he had far much more influence when Jeremy Corbyn was at it’s helm. The problem for Andrew is that like Corbyn he is just not very good at the politics of power and how to massage a political narrative to suit your side rather than the others.
Lets face it Corbyn was completely hopeless at this and whatever merits he did have were unable to be shown as his Labour Party were always on the backfoot and caught in their opponents political narrative and unable to present the clear picture of the complete incompetence of the Conservative administration.
The price of Starmerism is that he is forever trapped in the same policy framework of the preceding Tories and the only chance is to provide this with more judicious judgement and good luck with an ideology that doesn’t match reality.
The next pension increase in September due to the Tories Triple Lock will probably be in the region of 4% and double inflation. A decision had to be made about what to sacrifice to make the State’s commitment to elderly finance tenable in the short to medium term. The triple lock sustainabiity is assurred for the next parliament unless inflation flies out of control again. Andrew just can’t handle the compromises needed to survive in power.
You’ve hit the nail on the head Derek. You’re right about Red Andy and the current incumbent whose name escapes me at the moment. Someone must find a way to make real socialism palatable. Whatever Labour is peddling now is nothing more than centreism, tainted by Bliarism and Mandelsitis.
Why not remove the MP’s expenses……including their fuel expenses………for the good of the Country!! While they are at it I thought Sir Kid Starver was going to abolish the Lords……sitting there all snug in their warm, ermine robes…..being paid £300 or is it £400 per day now, whilst having a yummy, scrumpy, subsidised well cooked ( no charge to cook),meal………for next to nothing…….followed by subsidised brandy………then a quite doze😴they could then donate the cozy robes to the freezing pensioners……much better idea then causing Citizens who have grafted all their lives making the rich, richer hypothermia🤔
As a general principle I’ve always been rather frustrated that pensioners tend to get treated better than working age disabled people. Many disabled people have limited ability to work, will suffer from the cold quite as much as the elderly and yet the pensioners have tended to receive financial support. The cynic in me says this is because pensioners are the most likely to vote and therefore whichever party can win them over will succeed.
The narrative around working age disabled people is far different. Scroungers, lazy, sanctions. Those are some of the words used.
I’m not saying that pensioners don’t need financial support, many do and it is probably cheaper to give the fuel allowance to them all, but let’s have some consistency, disabled people need support to.
There must be other things they can cut that won’t result in people literally freezing to death