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Ben Chu, BBC Policy and analysis correspondent, provides insight into the recent reversal of cuts to winter fuel payments made by the government. This decision has sparked discussions regarding the government’s fiscal rules and spending. In light of these changes, BBC Verify has examined the key figures involved in this policy shift.
Initially, the government had planned to reduce the number of individual recipients of winter fuel payments from 10.8 million pensioners to 1.5 million in England and Wales for the 2024-25 period. This decision was driven by the desire to save money, limiting payments to pensioners who were on pension credit. However, following criticism, the government has now opted to extend eligibility to all pensioners starting in 2025-26, albeit with a clawback from individuals earning above £35,000 in the subsequent tax year, making around 9 million pensioners eligible for these payments.
The financial implications of this U-turn have raised concerns among analysts, with some suggesting that the net savings projected by the government may be lower than anticipated. By encouraging more pensioners to claim pension credit through awareness campaigns, the additional cost of these claims could offset a significant portion of the government’s intended savings for winter fuel payments. As former Lib Dem pensions minister Steve Webb estimates, the total annual cost of new claims could reach around £234 million, potentially diminishing the £450 million in projected savings.
With a significant gap expected to arise in the government’s finances due to the revised winter fuel payment policy, the Treasury plans to address this issue in the upcoming Budget. As Chancellor Rachel Reeves had initially highlighted the need for £1.5 billion per year in savings to stabilize public finances, the reduced savings will require alternative measures to account for the shortfall. This adjustment may involve raising additional taxes or cutting spending in other areas to close the approximately £1 billion gap. Nonetheless, this sum is relatively small in the context of overall government spending, indicating the potential for manageable adjustments to accommodate the policy change
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