Sir Keir Starmer has said he wants more pensioners to be eligible for winter fuel payments, in an apparent U-turn on one of the most unpopular policies of the Labour leader’s premiership.
“We want to ensure that as we go forward more pensioners are eligible for winter fuel payments,” the UK prime minister told MPs on Wednesday. “We will only make decisions we can afford.”
“We will look at that as part of a fiscal event,” he said, adding that he would look specifically at the threshold at which people are eligible for the payments to widen participation. The next Budget will be in the autumn.
Labour received a drubbing at local elections in England this month, with the government’s decision to cut winter fuel payments after winning power last year cited as one of the top frustrations raised by voters.
Starmer’s comments mark a sharp reversal just two weeks after Downing Street ruled out making changes to winter fuel payments.
The prime minister’s spokesman was unable to confirm whether any changes would take place in time for the coming winter.
If the Budget is held in October like last year there would be only a limited window between an official announcement and the start of winter.
The government has faced anger over its decision last July to axe £1.5bn in winter fuel payments for about 10mn pensioners. The benefit is worth either £200 or £300 a year.
The cut limited the payments in England and Wales to pensioners who receive means-tested pensions credit, meaning it was removed from people with incomes over £11,800 a year or £18,000 for a couple.
Chancellor Rachel Reeves announced the deeply unpopular policy shortly after taking office, arguing it was necessary to fill a £22bn black hole in the government’s finances left by the previous Conservative administration.
There were shouts of “U-turn” from the opposition benches as Starmer announced his ambition to water down the policy on Wednesday.
Tory leader Kemi Badenoch described Starmer as a “desperate prime minister”, and asked how the hundreds of Labour MPs who voted for the policy could trust him again.
Badenoch’s spokesperson said it was clearly a “political decision, not a financial one”, despite the government framing the move as necessary to save government money.
Policy analysts said widening the eligibility for winter fuel payments would be a conundrum for officials.
“It’s not easy,” said Stuart Adam, senior economist at the Institute for Fiscal Studies. “One reason they chose this approach is that there aren’t great alternatives.”
Changing the income threshold for pensions credit itself would add extra cost and would be akin to “the tail wagging the dog”, Adam said.
He said another option could be to give the payment to recipients of housing or disability benefits, though the former would apply only to those in rented property, and the latter are not means-tested.
The Resolution Foundation think-tank estimated that the housing and disability benefits approach could help an additional 1.3mn pensioner families at an annual cost of £300mn
Whatever approach ministers take, the fiscal impact is likely to be modest when compared with much bigger cuts elsewhere in the welfare system.
Earlier on Wednesday Liz Kendall, the work and pensions secretary, said the government would press ahead with cuts of £4.8bn to sickness and disability benefits.
Kendall said the current system was “not sustainable or fair”, although she was “listening carefully” to concerns.
The government has also so far resisted pressure to scrap the two-child benefits cap put in place by the previous Conservative administration — a change that would cost £3.5bn a year.
Alison Garnham, chief executive of the Child Poverty Action Group, said the two-child limit was “the elephant in the room” as Kendall delivered her speech, with the policy “pushing child poverty to a new high on this government’s watch”.
