Five million pensioners still will not get to keep winter fuel allowance this year despite Labour’s humiliating climbdown, it was claimed today.
A complicated solution being mooted to defuse fury at Labour slashing the benefit – worth up to £300 – would see it handed to all the older generation this season.
However, around half – with incomes over around £37,000 – would see the money ‘clawed back’ later through higher tax bills.
The idea has been condemned by unions amid fears bereaved families could be hit with unexpected demands for cash. Labour insiders have voiced alarm at the ‘optics’ of trying to recoup the allowance from the estates of those who died after getting it.
Introducing a tough means test on winter fuel allowance was one of the first announcements Rachel Reeves made after entering No11, and has been blamed for triggering the dramatic slump in Labour’s popularity.
Only those on the lowest incomes, receiving pensioner credit, have been entitled to the handout.
Keir Starmer dramatically announced a U-turn last month, without saying what exactly was being proposed or when it would take effect.
The winter fuel allowance cut was one of the first announcements Rachel Reeves made after entering No11, and has been blamed for triggering the dramatic slump in Labour’s popularity
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Yesterday the Chancellor confirmed confirmed the changes would be in place ‘this winter’ – but was still unable to say who will qualify.
She also said the Government will not set out how the reinstated payments will be funded until the Autumn Budget.
Designing a cost-effective means test for the benefit – which ministers are adamant should not be paid to ‘millionaires’ – has been causing major headaches for officials.
According to the Times, the Treasury has drawn up an option that would hand winter fuel payments to all 10million pensioners this season.
But there would then be an equivalent tax charge for those with incomes above a threshold.
That could be set at the average household disposable income of £37,000.
In that case around half of pensioners would end up paying back the allowance to the Treasury later.
There is speculation the government would end up chasing repayments from the families of pensioners who die after receiving the handouts, but before the tax settlement.
The PM’s official spokesman insisted there is a ‘well-established process’ for settling someone’s tax affairs after they die.
One Labour source told the Guardian: ‘We should never have scrapped the winter fuel allowance in the first place, but the whole process of reinstating it has been completely chaotic.
‘The optics of us demanding the money back from grieving families are dire.’
Unite general secretary Sharon Graham said: ‘Most people now recognise that the winter fuel cut was a massive mistake.
‘Unite has been calling on the government to scrap the cut from day one and I was pleased when the PM finally acknowledged this.
‘This government needs to learn that when you are in a hole, you should stop digging. You can’t leave pensioners in limbo while you work out plans for taxing the families of the deceased – just reverse it now.
‘We are the sixth richest economy in the world, and we need to stop picking the pockets of pensioners and bring in a wealth tax.’
Pensions minister Torset Bell is facing an angry backlash after he claimed that scrapping the winter fuel allowance had ‘no effect’ on the health of older people.
Pensions minister Torset Bell is facing an angry backlash after he claimed that scrapping the winter fuel allowance had ‘no effect’ on the health of older people
Mr Bell told MPs that among those who had been hit by the cuts ‘we see no differential effects on their health’.
Dennis Reed, of over-60s campaign group Silver Voices, said: ‘It is a ridiculous thing to say.
‘We know from our own members that a lot of people have been shivering in their homes with their overcoats on last winter because they were too afraid to put the heating on.
‘Many conditions, such as arthritis and respiratory conditions, are made worse by the cold – how can he possibly claim it’s had no effect?’
