Rachel Reeves claimed she had ‘listened’ and refused to apologise today as she humiliatingly restored winter fuel payments to nine million pensioners.
The Chancellor has announced that more than three-quarters of older people will get the allowance – worth up to £300 – this winter.
But another two million on incomes of more than £35,000 in England and Wales face having the money clawed back in higher tax bills.
That has already sparked alarm at the government having to pursue bereaved relatives – although No10 insisted such cases would not be pursued.
The move is the culmination of a shambolic volte face on the hated policy, which has been blamed for the dramatic plunge in Labour’s popularity.
It wipes out the overwhelming bulk of the savings Ms Reeves had originally pencilled in from slashing the previously universal allowance, so that only the poorest received it last winter. The Treasury will now save just £450million compared to 2023-24.
The Tories demanded Ms Reeves and Keir Starmer say sorry for making vulnerable elderly people choose between ‘heating and eating’. Charities welcomed the shift, but suggested the axe should never have been wielded in the first place.
Extraordinarily, Ms Reeves again argued today that she was right to make the cut.
‘It will be still means-tested, but at a higher level, we’ve listened to people’s concerns around the level of the means test,’ she said.
‘Because of changes we’ve made and the stability we’ve brought back to the economy, we are able to increase that amount.’
Rachel Reeves’ humiliation on winter fuel was confirmed today as she restored the payments to nine million pensioners
Before the winter fuel cuts more than 11million pensioners were receiving winter fuel allowance
‘Targeting Winter Fuel Payments was a tough decision, but the right decision because of the inheritance we had been left by the previous government.
‘It is also right that we continue to means-test this payment so that it is targeted and fair, rather than restoring eligibility to everyone including the wealthiest.
‘But we have now acted to expand the eligibility of the Winter Fuel Payment so no pensioner on a lower income will miss out.
‘This will mean over three quarters of pensioners receiving the payment in England and Wales later this winter.’
All pensioners will automatically be paid winter fuel this season.
But those whose incomes are above the threshold will see it recouped later through PAYE or a Self-Assessment return.
People who wanted to opt out of the payment altogether will be able to do so, with a mechanism to be confirmed.
Ms Reeves will not spell out how she is funding the overhaul until the Budget in the Autumn.
She told broadcasters: ‘We will set out in the normal way, in the Budget, how everything is funded, but no-one should be in any doubt about my commitment to the fiscal rules to ensure that the sums always add up.’
The Chancellor is due to lay out departmental spending allocations running up to 2029 – the likely timetable for the next general election – on Wednesday.
But the generous fiscal envelope set at the Budget last Autumn has been put under massive pressure by the economic slowdown, calls for more defence cash, and Labour revolts on benefits.
Ms Reeves has signalled she will announce real-terms increases to budgets for police as she tries to quell Home Office resistance.
However, that is likely to be offset by cuts to other areas, with the NHS and defence sucking up funding.
The political backdrop to the proposals this week is the Reform surge, with Labour panicking about the challenge from Nigel Farage.
Tory leader Kemi Badenoch said: ‘Keir Starmer has scrambled to clear up a mess of his own making. I repeatedly challenged him to reverse his callous decision to withdraw winter fuel payments, and every time Starmer arrogantly dismissed my criticisms.
‘This humiliating u-turn will come as scant comfort to the pensioners forced to choose between heating and eating last winter. The Prime Minister should now apologise for his terrible judgement.’
Introducing a tough means test on winter fuel allowance was one of the first announcements Ms Reeves made after entering No11, and has been blamed for triggering the headlong 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.
Last week Ms Reeves confirmed confirmed the changes would be in place ‘this winter’ – but was still unable to say who will qualify.
Keir Starmer (pictured) dramatically announced a U-turn last month, without saying what exactly was being proposed or when it would take effect
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.
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.
