Axing winter fuel payments for 10million pensioners may save as little as half the amount Rachel Reeves thought it would, according to new analysis.
The Chancellor announced the controversial move to means-test cold weather payments shortly after Labour won the election, sparking accusations the party deceived voters because it was not included in the manifesto.
The cut, initially projected to save £1.4billion a year, was necessary to help fill a £22billion black hole in the public finances left by the Tories, Ms Reeves has claimed.
But new analysis suggests less than half the savings could be realised due to a surge in the number of people expected to start claiming pension credit.
Under the overhaul, only people who qualify for pension credit can continue receiving the subsidy – worth up to £300 on energy bills – from this winter.
The Chancellor (pictured) announced the controversial move to means-test cold weather payments shortly after Labour won the election
The cut, initially projected to save £1.4billion a year, was necessary to help fill a £22billion black hole in the public finances left by the Tories , Ms Reeves has claimed
It means all but the country’s poorest pensioners will no longer receive it.. However, this includes pensioners on incomes as low as £14,000 a year.
Analysis by consultancy Policy in Practice found that, on current trends, as many as 158,000 more claims for pension credit than anticipated may be lodged by December because of the announcement.
Analysis based on official government data suggests there have already been 45,000 extra claims.
However, because claiming pension credit allows access to a string of other benefits, the analysis, reported by The Observer, found that total costs could be up to £700million more than expected.Â
This suggests as little as half the savings projected may be realised.A Treasury source claimed it did not recognise the figures.
The winter fuel payments move has sparked widespread fury among voters on both the Left and Right of the political spectrum.
Last week Prime Minister Sir Keir Starmer was left humiliated as unions and Labour members demanded he halts the cut.
In an embarrassing revolt at the party’s annual conference in Liverpool, delegates backed a union motion calling for a U-turn on the plan.
However, Ms Reeves doubled down, saying during her conference speech that she would not duck tough decisions in order to repair the public finances.
Baroness Altmann, a former pensions minister in David Cameron’s government who is calling for a re-think, said: ‘It is simply not the case that those pensioners most in need will continue to get it.
The winter fuel payments move has sparked widespread fury among voters on both the Left and Right of the political spectrum
‘The Winter Fuel Payments are not being targeted to ensure the poorest pensioners will not lose the money they need for winter heating. Millions of the lowest income pensioners do not get Pension Credit.
‘The majority of MPs know this decision is wrong because of the timing and lack of protection for the poorest.’When governments make this kind of inadvertent but potentially dangerous policy error, there should be no shame in reconsidering.’
Ploughing ahead on the basis of false assurances and inadequate analysis is the wrong choice.
‘Insisting on defending the indefensible to show ministers are tough is equally wrong.
‘Delaying it to next year would give an opportunity to plan proper protections to mitigate the danger of pensioners being unable to afford their heating and putting their health at risk.’
A government spokesperson said: ‘We want people to get the benefits they are entitled to, which is why the government is working hard to drive up pension credit uptake.
‘We are committed to supporting pensioners – with millions set to see their state pension rise by £1,700 this parliament through our commitment to the triple lock.
‘However, given the dire state of the public finances we have inherited, it’s right that we target support to those who need it most.’
