Shakespeare’s Richard III captured the mood of many commentators when the Chancellor, Rachel Reeves, at this week’s conference, defended the Labour government’s intention to restrict eligibility for the Winter Fuel Payment (WFP) in England and Wales to those pensioners in receipt of Pension Credit or specific defined benefits.
The current changes come just as I retire from my full-time academic post – a year prior to state retirement age – giving me additional subjective interest. Recognising what a privileged position I am in, while facing a vertiginous drop in income, it gives me a more personal insight into the hitherto unimaginable situation that those reliant on a state pension, pension credit and other benefits may be up against.
Last year, nearly 11 million pensioners were entitled to WFP – around 7.6 million households. According to the Department for Work and Pensions (DWP) equality impact assessment, the cut is expected to reduce the number of claimants to 1.5 million in 1.3 million households. The DWP also suggested there were approximately 880,000 pensioners who may be eligible but are not claiming Pension Credit.
The intention behind the changes to the WFP was well rehearsed during the early days of this government. The Treasury’s announcement of a budget shortfall of £21.9 billion in 2024/25 presents Labour with an enormous challenge; one which has, perhaps, been milked to allow bad news and ‘tough choices’ to be made somewhat more palatable. However, set within a projected spend of £1,226 billion outlined in the 2024 Spring Budget, the figure doesn’t seem quite as large. Moreover, when the expected savings from restricting the WFP are projected to be around £1.3 billion this winter rising to £1.5 billion in future years, it may be suggested that this policy is something of an ‘own goal’ rather than an easy ‘win’. It is only a small step towards Rachel Reeves’s claims to putting this ‘country on a firmer footing’.
The outrage against these cuts was immediate, cross party and wide ranging. There are many politically and compassionately driven reasons for this opposition. Fifty-two Labour MPs didn’t vote when the changes were put before the House. This seemed to indicate quite a rebellion in a new government. However, while the majority was away for legitimate reasons, many still voiced concern and anger at the decision. Conservative politicians were also quick to leap on the changes and to attack Labour’s approach towards vulnerable people, notwithstanding 14 years of austerity, welfare cuts and increased vulnerability among the population. But what can we say about these changes, what are the impacts, and what will this mean for pensioners in England and Wales?
Pensioners are not a homogeneous group with the same needs. This, of course, represents one of the reasons for targeting benefit payments, the argument being that in times of constraint, monies need to go to those most in need. This seems reasonable but, just as at least three-quarters of a million pensioners may not be claiming the Pension Credit they are entitled to, means testing is notorious for not working, whereas universal benefits reach everyone, at least in theory.
We know many pensioners currently enjoy quite a high standard of living, something frequently capitalised on by those considering the so-called ‘boomer’ generation as particularly privileged. However, we also know that pensioner poverty is, and always has been, rife. Recent research from the Institute for Fiscal Studies indicates that pensioner poverty rose between 2011 and 2022 from 13 per cent to 16 per cent, placing another 300,000 people in poverty. Also, despite the triple lock and complaints about pensioner privilege, pensioners’ incomes have not risen any more than any other group in the same period.
The universal increase in state pensions expected in April 2025 is set to rise by whichever is the highest out of the rate of inflation, average wage growth or 2.5 per cent – the so-called triple lock. So, the argument from the government is that no one will lose out even if they are no longer eligible for WFP. Indeed, forecasts suggest a pension rise of around £460 a year. This is in excess of the current WFP of between £200 and £300. However, this will not be paid until next April after the cold weather itself. Perhaps Labour’s hope is echoed in the words of Shelley’s Ode to the West Wind: ‘O, wind, if winter comes, can spring be far behind?’ While in economic terms the argument can be made, in human and compassionate ones it seems out of touch with the experiences of those in need of that payment. Of course, we have heard from pensioners who say they do not need the payment or that they use it to pay for presents, treats or holidays later in the year. Such statements are unlikely to be made by those silent recipients who do rely on it to prevent their having to make the choice between staying warm and eating.
I wonder if the change represents a case of generational grandstanding and cowardice? Pensioners are not particularly easy targets, but the WFP has had its critics across all political parties and sections of society. Those ‘targets’ that would be more likely to provide greater savings have not yet been identified, at least not publicly. There have been arguments for a progressive taxation system, for a wealth tax, for a more progressive rate of inheritance tax, and even a part-reversal of the National Insurance reforms. Changes to the WFP will yield a small amount in offsetting the ‘black hole’ in the balance of payments. It will put some, although probably not a great number, of pensioners in dire straits, but it will hit the poorest and most vulnerable disproportionately and it ignores human experience. We know that means testing is unpopular and fails to target those most in need; it is a cost-reducer rather than a humane policy approach. This will not be this government’s finest hour.
What is important is that those of us who remain somewhat joyful for the end of 14 years of Tory government and austerity are still able to hold the new government to account and to speak truth to power, recognising that both centre-left and centre-right are capable of forgetting the human element in the desire to balance the books.
Jonathan Parker is Professor Emeritus at Bournemouth University, and Visiting Professor, Health Sciences University, University of Stavanger.
Analysing the History of British Social Welfare by Jonathan Parker is available on the Bristol University Press website. Order here for £27.99.
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