Labour Chancellor of the Exchequer has axed the winter fuel payment for millions of pensioners across the United Kingdom, with a warning that “more difficult choices” are still to come.

Rachel Reeves accused the former Troy government and her predecessor Jeremy Hunt of “knowingly and deliberately” lying to MPs and the public about the state of the UK economy and public spending.

Speaking to Sky News she said:

“Jeremy Hunt covered up from the House of Commons and the country the true state of the public finances. He did that knowingly and deliberately. He lied, and they lied during the election campaign about the state of the public finances.”

Hunt has rejected the claims.

Reeves made the accusations when she revealed the results of the Treasury spending audit she commissioned. A new Office of Value for Money will start work immediately to identify and recommend areas where the government can save money in the current financial year. The office is expected to announce public cuts worth billions to plug the £22 billion gap in the public finances.

Referencing the ‘blackhole’ in the public finances, Reeves scrapped a series of Conservative policies on July 29, 2024, including a long-anticipated cap on social care costs, plans to build 40 hospitals and various road projects. She also cut winter fuel payments.

Winter fuel payments:

What are winter fuel payments?

Winter fuel payments were created in 1997 to help everyone above the state pension age with their winter heating bills. People aged above 66 were eligible for £250-£600 worth of help. The chancellor has announced that winter 2024 will be the first time millions of pensioners in England and Wales will not be eligible for the payment.

Who will be affected?

Labour announced that 10 million wealthier pensioners in the UK will no longer receive the benefit in a move to save £1.5bn in the next financial year. The number of recipients will drop from 11.4 million down to just 1.5 million as a result of the decision to means test a benefit worth up to £300 for households with at least one person aged over 80 years old.

The controversial decision has been criticised by both parties and public organisations, claiming the winter fuel payment is a ‘lifeline’ for many, especially with the continued rising energy costs. Critics argue that removing this support not only undermines the financial security of vulnerable and elderly individuals but also contradicts the government’s commitment to social welfare.

Other announced cuts:

The winter fuel payment is not the only area where the new Labour government are attempting to fill the financial gap left to them. The broader cuts include reductions in public sector spending, which affect a range of services from healthcare to education. Key areas of concern include:

Healthcare: There have been reports of reduced funding for the National Health Service (NHS), leading to longer wait times and potential cuts to essential services. The impact on patient care and overall public health could be significant if these reductions are sustained.

Education: Schools and universities are facing tighter budgets, which could lead to larger class sizes, reduced resources, and potential staff layoffs. The long-term effects on educational outcomes and opportunities for students are a growing concern.

Local Services: Cuts to local government budgets mean fewer resources for community services such as libraries, recreational facilities, and local public transportation. These services are vital for maintaining quality of life and supporting community cohesion.

What Labour has said:

Reeves claims that she had been forced to make “incredibly difficult decisions”.

Speaking on BBC Radio 4, she said:

“What I inherited … is a gap between what the previous government said it was going to spend and what it was actually spending of £22bn so I’m in a position of having to make urgent decisions to restore economic stability and financial stability. I was determined to ensure that we got a grip of these pressures.”

“When I did the audit with Treasury officials of the state of public spending and the public finances we discovered that some of the promises that the previous government made did not have any funding attached to them. Social care was one of those things. New hospital programmes was another. Transport spending was another. The replacement of A-levels was another. Asylum were another.

“There are lots of difficult decisions that I had to make yesterday, decisions that I didn’t want to make, decisions that I never expected to make,” Reeves said. “There are a lot of things that this new Labour government would like to do. But unless you can say where the money is going to come from, you can’t do them.”

What critics have said:

Reacting to the announcement, the founder of MoneySavingExpert, Martin Lewis said:

"The targeting of Winter Fuel Payments is too narrow with the winter we have coming. Pensioners were already due to get less as this will be the first time since winter 2022 they haven’t got the up to £300 extra winter fuel cost of living top-up.

"The Energy Price Cap is likely to rise 10 per cent this October and stay high across the winter, leaving most energy bills nearly double those pre-crisis, at levels unaffordable for millions.

"Many pensioners eke out the £100 to £300 Winter Fuel Payments to allow them to keep some heating on through the cold months. While there's an argument for ending its universality due to tight national finances, it's being squeezed to too narrow a group - just those on benefits and Pension Credit. Yet again, those just above the thresholds will be hardest hit.

"This is often justified as there's a 'lack of household income data' to allow other targeting. However, there's a usable precedent from the emergency energy crisis measures announced in April 2022, which I'd urge the Government to look at.”

Martin explained:

“Then, a payment was made to homes in council tax bands A to D - as an imperfect but workable proxy for lower household incomes. That'd allow an additional group of lower to middle-income pensioners to keep the payments and mitigate bill shocks. Councils' discretionary funds could also be funded as in April 2022, for the limited numbers who still need help but don't qualify.

"Plus, with this announcement, the Government has a huge moral imperative to ensure the 880,000 people eligible for Pension Credit who don't get it, are informed, educated and helped through the process. It is planning an awareness-raising campaign, but it needs to ensure that it reaches every corner - and if possible proactively and personally contact people.

"Pension Credit is a crucial gateway benefit, giving access to a host of other entitlements, and now with the link to the Winter Fuel Payment, it makes it even more important to ensure fewer miss out."