Keir Starmer has confirmed that he wants more pensioners to be eligible for winter fuel payments after a backlash against one of the most unpopular policies of the Labour government.
The prime minister indicated in the Commons that he would look again at the £11,500 threshold over which pensioners are no longer eligible for the allowance, as he tries to win back public support and quell a growing Labour backbench rebellion over benefit cuts.
However, No 10 was unable to confirm whether the winter fuel U-turn would come into effect by this winter if announced in the autumn budget – or how many of the approximately 10 million pensioners who lost it would have it restored.
The reversal comes despite Downing Street ruling out making changes to winter fuel payments after the Guardian revealed that it was rethinking the cut amid anxiety at the top of government that the policy could wreak serious electoral damage.
The decision to means test the previously universal payment was one of the first announcements by the chancellor, Rachel Reeves, after Labour’s landslide election victory last year and has been widely blamed for the party’s collapse in public support.
Party activists said the decision to axe £1.5bn in winter fuel payments last July, limiting them to either £200 or £300 a year to pensioners in England and Wales who receive means-tested pensions credit, came up repeatedly on the doorstep during this month’s local elections.
Anxious Labour MPs had been piling pressure on Starmer to change his mind over the cut. No 10 officials feared the strength of feeling could have an impact on their broader plans for welfare reform with previously loyal backbenchers threatening to rebel in a crunch vote in June.
At prime minister’s questions on Wednesday, Starmer told MPs: “I recognise that people are still feeling the pressure of the cost of living crisis, including pensioners, as the economy improves.
“We want to make sure people feel those improvements as their lives go forward. That is why we want to ensure that as we go forward, more pensioners are eligible for winter fuel payments.”
The government has insisted the policy was necessary to help stabilise the public finances, allowing the improvements in the economic picture which Starmer said could result in the partial reversal of the measure.
“Because of those decisions, the economy is beginning to improve,” he said, citing growth figures and interest rate cuts, plus the hoped-for impact of recent trade arrangements with India, the US and EU.
“As the economy improves, we want to take measures that will impact on people’s lives, and therefore we will look at the threshold, but that will have to be part of the fiscal event,” he added.
Numerous ministers and Labour MPs have described the winter fuel decision as a policy disaster that has created huge ill-feeling among voters, prompting the re-examination of the policy.
However, finding a mechanism to widen eligibility for the payment will cause headaches in Whitehall after the decision to link it to the pension credit threshold. Officials fear that simply increasing the pension credit threshold would increase take-up of that benefit, wiping out any potential savings.
Age UK’s charity director, Caroline Abrahams, welcomed the prime minister’s commitment to change the winter fuel policy but said “the devil is always in the detail and we postpone judgment until we hear more”.
Meanwhile, Liz Kendall, the welfare and pensions secretary, said efforts to cut the welfare bill, that have caused deep unease across the Labour benches, were a key tool in the fight against Reform UK.
Kendall told an audience at the IPPR that the controversial policies, which include tightening eligibility for the personal independence payment benefit, were “crucial to fighting the rise in populist politics”.
She said: “The truth is welfare reform is never easy and it is rarely popular, perhaps especially for Labour governments. But no Labour government can resign from taking decisions because they are too difficult, because this is not good enough for the people we came into politics to serve.”
Reflecting on Labour’s fight against Reform UK, Kendall said the government’s policies would “ help ensure our welfare state is sustainable for the future”. She also said they were “crucial to fighting the rise in populist politics, which offers easy but empty solutions to the people we came into politics to serve”.
It comes after 100 Labour MPs, more than a quarter of Labour’s parliamentary party, signed a letter urging ministers to scale back welfare cuts under consideration.
Despite this, Kendall said she was “listening carefully” to the concerns raised by Labour MPs about the measures, although she indicated she would not back down from the proposals.
