There are 12.6 million pensioners in the UK.
Fewer than 1.4 million of them claim pension credit.
It is thought that maybe 800,000 people do not claim this benefit but are entitled to do so.
One reason for such low levels of claim is that it is a nightmare to claim and the conditions are tight.
And, if they qualify, a single person has their income top up to just over £11,300 a year by pension credit, which is less than the state old age pension I get a year.
And this is now the level of income required to get a winter fuel allowance. The figure in question is just 54% of the national minimum wage for a 35 hour week. That is how bad it is.
So, millions of pensioners are going to suffer as a result of yesterday's utterly misguided winter fuel benefit withdrawal from more than 11 million pensioners by Rachel Reeves.
I won't, I admit, suffer hardship as a result. But millions will, and to ensure I lose she is willing to create massive real hardship.
It takes a very warped mentality to work out a justification for that when the sum saved (maybe £3 billion) could so easily been raised by charging capital gains tax at income tax rates, with the entire cost of the still quite miserly pay settlements in the public sector also being capable of being funded at the same time by that one, simple, change in the law.
It seems, though, as if Reeves wishes to cast herself as the unreformed Scrooge. She is most unwise to do so.
I hope she can live with the fact that some old people will die as a result of her decision. I could not.
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I wonder if any journalist will be brave enough to ask Reeves how many pensioners will die of hypothermia in a cold winter as a result of her decision.
Perhaps Reeves is hoping for a mild winter – in much the same way that the summer has been very poor (breaking a run of very hot summers in northern lattitudes). But given the instability of the climate, at some point there will be a bitterly cold event. At which point, chickens (or in this case frozen grannies) start to pile up, LINO panicks and emergency financial measures are introed – oh look there is money. Day to day managerialism.
The idea of any minister basing outcomes om the weather is as scary as anything the tories threw at the beleaguered UK public!
If they are dying of hypothermia they won’t be around to vote anything but Labour In Name Only in 2029. Probably what she is counting on – and on persuading more of us pensioners to end our lives voluntarily so that the “useful feeders” will get tax cuts in the build up to the next GE.
The BBC quoted a measly 1.3 bn as the “saving” this morning, by the way.
If the decision is fully costed she should already know how many people she is proposing to kill.
The Winter Fuel Payment is a nonsense and should be completely abolished. The “triple lock” (which Labour has retained) is also a nonsense
If pensioners can’t afford to heat their homes then the State Pension should be raised.
I also note that the Fuel payment is tax free… why? If it were taxable then a chunk would be clawed back from wealthier pensioners.
More generally, non-means tested benefits create solidarity and redistribution is better tackled through taxation rather than restricting benefits. So, raise the state pension to “living pension” and tax it like earned income (ie. include NI or equivalent)
Agreed
Why a Winter Fuel Allowance (WFA), and not a bigger pension? Because WFA stands alone, and once applied is easier to change or cut than if it was part of the pension. Try cutting the pension. And the proof is what Reeves did yesterday. It was cut, but whatever the consequences, it looks as if it stands alone. WFA was very beneficial to the poorest, because it is tax free. As for taxation, I agree; progressive taxation should manage that automatically; you can provide a universal benefit (much more effective than means tested benefits), and cheaper because you can claw it back from those who do not need it, through taxation (I thought i made this point somewhere last night, butdon’t know what happened to it).
I agree with Clive, pensions should be liveable on and taxable. We have accrued all the little extras, WFA, bus passes, Christmas bonus, free TV licence etc on the back of ‘pensioner poverty’. Not all pensioners are poor by any means, but those who are suffer.
But something would need to be done about personal tax allowances as well. It would be pointless to raise pension to a ‘liveable’ amount and then claw back some because it exceeds the personal allowance. We’d be back to square one.
I make no special pleas for pensioners, I think this applies to people in receipt of a minimum living wage as well. No point in tipping them back into poverty by taxing away part of the increase.
It seems to me that the personal allowance should always be AT LEAST equal to the “living pension”. If it is, indeed, the minimum one can live reasonably on then then it is absurd that the State should take some away.
Any bolt-on of this type is simply a gimmick, a pretence by government, that it has a caring face.
Yes, it would be better incorporated into a single OAP.
However, the suggestion we have our entire post retirement income subject to NI and taxed, given the existing low personal tax thresholds, and fiscal drag from the failure to index these until 2029 fills me with horror.
A person on minimum wage earns £20828pa, a single pensioner £11492, so barely 55% of what is regarded as the minimum income level..
The balance between these incomes, with a high % of those in work entitled to additional benefits already means that the minimum wage is well below the cost of living for many persons.
Pensioners are then cast as a further sub class of third class citizens.
The justification that all pensioners are affluent owner occupiers, with paid off mortgages, and so we can all live well on sums considerably below the legal minimum wage is pure hypocrisy. Housing costs are not zero for most of us.
Losing £500 from our household income is significant.
There can be no doubt that Reeves is targeting the weaker and more vulnerable.
Selecting pensioners for a real terms cut in entitlement is deliberate and is absolutely consistent with LINO neoliberal principles and values.
And these are only her first steps.
Reeves is cultivating the typical Chancellor self image of being an alchemist.
She looks as if she is loving it.
But she is yet another sorcerer’s apprentice in terms of economics.
The Labour Party is now clearly an amoral crusade …. or maybe it really is nothing.
I missed Clive’s point on NI
I think pensioners earning more than median income could be subject to an investment income surcharge – as should evertyone else on much lower levels of unearned income – but I do not suggest NI on state pensions.
That said I see no reason why pensioners should not pay NI on earned income
My personal view is to roll NI into a single tax (Income Tax)… but I am not that fussed. For me, the key point is that tax rates, whether on Capital gains, earned income, investment income (or anything else) should be taxed at the same rate.
We agree
I have a problem with NI integration…
Two lower taxes are often better than one…
Well said Clive.
To be fair to the “triple lock”, if I recall correctly its intention was to raise the real value of state pensions without there being a large jump in government expenditure in a single year. However it lacked any indication of what the level is that was being aimed at, without which it looks like a costly political giveaway. Each year its continuation ends up being discussed: it ought to be clear if it is still needed because real pensions have not yet reached the target.
When I started to receive my state pension I was surprised to find various extra credits to my bank account over the winter. While I am grateful I am not someone who would freeze without them, and they really ought to be targetted at those in need. The problem is that using a means tested benefit as the criterion means missing those who are needy but for some reason have struggled with the benefits application system.
Targetting costs a great deal
A better pension is the aim – and it should be universal and free from NI
Did Reeves mention the £10 Christmas bonus for pensioners, introduced by Ted Heath in the 1970s and never increased since? Time for her to go for the jugular and claw that back, too!!! Scrooge is set around Christmas, so it makes for perfect symmetry.
What Reeves has proposed will reduce absolute pensioner poverty – that’s based on the numbers on incomes below 60% of the median. How could anyone be in favour of increasing poverty.
Seriously, this is a sensible measure by Reeves, and it’s up the Pensions secretary now to sort out the take up rate of Pension Credit. Division of labour being a good thing, even in government
What are you talking about?
How can reducing payments to pensioners reduce pensioner poverty?
Some people just ask to be bannmed for time wasting
The take-up rate is a serious problem. The Chancellor knows this, which is why she made so much about what she was going to do about it. Addressing the take-up rate will cost money; and will not work, because it is tried endlessly, and fails every time. This is well known problem. If you want to fix this problem, Reeves is quite obviously tackling it in entirely the wrong way; but Reeves doesn’t want to fix the poverty problem. She wants to eliminate the deficit; in a crisis. In a crisis, you fix the crisis. not the books. Let me spell this out in simple terms. Nobody went up to Churchill in the middle of WWII and said; stop fighting. We have run out of money. You fix the problem, and fight the war. Then you have a debt/GDP ratio of 250%. Today we have a crisis, but the debt/GDP ratio is 91% (around 67% I think, if we net out QE on consolidation that the Treasury refuses to do).
Fix the crisis. Then fix the books.
This is Westminster. It never learns – anything. Ever.
I keep saying it. The single Transferable Party. Yesterday in Parliament was back to the future. Forget Country before Party. This re-established the fake contest between Labour And Conservative. Reaffirm the two-Party Westminster Cartel. Lots of heat. Lots of outrage. Make it look like a major contest. A heavyweight title.
What are they fighting about? The big issues? The Fiscal Rules? No. Effectively the same? Monetary policy? Effectively the same?
Effectively the same. Austerity? Well you can’t say that after withdrawing the Winter Fuel Allowance (WFA), which will hit the poorest pensioners first, and hardest with winter ahead. If you don’t believe in Austerity – you don’t start there. You just don’t.
And what is it all really about? A single issue. Debt must be falling as a share of the economy by the fifth year of the forecast. The Conservatives believe debt must be falling in the final year of a five-year forecast. That is the big dispute. A moving feast, buried in a trifle. Government Debt, June 2024 (excluding BoE) is 91.6%. If it is 91.5% by 2030 both would claim vindication. 0.1% of around £2.8Trn is £2.8Bn, in five years time. The statistical margin of error in any economic forecast is far larger than that. This is the folly of turning single point estimates into policy. That is just a little above the figure Reeves is saving on WFA now. The whole argument is absurd. And for the record Britain, for most of its history, and for most of the period when it was the leading industrial and financial power in the world; its debt was generally 100% plus. The success was built on debt.
If you wish to see failure, and how it is inevitable if you avoid debt, it is in our own history. It is having no debt, and in consequence scarcely an economy; and that eventually makes your country a busted flush in the early modern, and modern world. That was exactly Scotland’s position in 1707, when that predicament – no debt – finally forced Scotland into the Union of Parliaments. And England had to pay Scotland a large sum of money (in specie and bonds), just to take a share of England’s colossal national debt; and England paid for it, by increasing the national debt. Economically, Scotland and England did very well out of that for two hundred years.
We are all being conned by a cheap, spurious Labour-Conservative circus.
I find the WFA a useful part of my income and obviously for many pensioners its crucial. If Rachel Reeves had made it taxable that would have been fairer. But it seems fairness is not part of her remit. As you said pension credit is pretty low and as will all benefits a complete maze. A progressive government would simply replace it with a proper level of state pension – it would save time, money and lives. But probably not an option considered. The other thing is that you will get people saying “Pensioners don’t care about the young.” Which i find insulting. I have always been against policies which cause poverty whether I was in my twenties or sixties. I wonder what David Willetts will say? Mind you I would imagine his earnings are pretty good but most pensioners are not in his position!
It seems a lot of people sleep soundly at night despite the problems they cause for others!
Scotland’s Minister for Finance confirmed this morning that the Scottish Government had expected to receive £180 million, i.e., pocket money from the British state’s Treasury, to cover the cost of the Winter Fuel Allowance which is to be devolved to Scotland from this September. This figure will now, of course, be substantially reduced. He expects to have to mitigate the loss of at least £100 million which Reeves has stripped from our vulnerable pensioners.
This is in addition to other austerity measures which the Scottish Government has mitigated against for years such as the 2-child poverty cap and the bedroom tax. It seems that is all the Scottish Government does – protects Scottish people from the British state’s bad actors a.k.a. Tory and, now, Labour Governments.
He went on to say “we’ve got an energy rich Scotland but we’ve got that fuel poverty exacerbated by the decisions that the UK Labour Chancellor has made”.
Isn’t it just wonderful being in this union of equals!
I hope all thsoe in Scotland who voted Labour take note….
This is a gift to the SNP government
I expect that will be the case. The question is, however, what would the SNP do with such a gift. Perhaps nothing at all which is why 100s of thousands didn’t turn out for the G.E.
The have ignored mandate after mandate in the 10 years since the Independence Referendum.
Mr Bruce,
The mandate isn’t the real problem. The different voting between Holyrood and Westminster is not accidental. The Scottish people have manipulated this dual government inconsistency deftly from their perspective, not by accidental. Nobody is listening. What the SNP haven’t done is fix the currency issue. What do you do about Sterling? Sterling is more important to Scots than the ‘Union’; Sterling is the essence of the Union. Fix that problem and Westminster’s position will quickly collapse. The SNP have not begun to address the problem, or fix it; because it isn’t easy, and the arguments presented ‘do not cut it’. Until they fix it they are best to look for common cause with other Parties in Westminster and push for more powers for Holyrood.
Independence requires you to offer the Scottish people a ‘slam dunk’ on currency and Sterling. Until you do, independence is going nowhere. Abstract theorising will not do. This is about “Trust” of the most basic, raw, unassailable kind.
Not forgetting that we pay a higher rate for our domestic electricity per kWh, and that our climate is cooler, and winters are longer, so we are further disadvantaged by London-centric government.
As an anti-Scottish decision this needs adding to the list.
I have no doubt Reeves was aware the WFA would be delegated this Autumn, hence the announcement now rather that at budget time.
The reckoning will come later.
I doubt Scotgov can mitigate this cut, as the block grant will be reduced correspondingly.
ScotGow has said it cannot mitigate this
£180m is involved in Scotland
Sick of pointing out to pensioners that their withdrawn fuel allowance is not being carried in a Tesco bag to fund doctors pay. I should estimate that 95% of the people I engage with believe in the household budget myths. Also sick of pointing out that citizens should morally revive equal treatment regardless of status or income. Had one worthy – yes another Labour councillor – argue yesterday that all services should be means tested. I asked “health services too?” Mumble, mumble….
Thye world is full of such idiots..
I don’t know if it can really be said that people voted for ‘change’ in the GE, because precious little was offered, but they surely voted to reject the policies of the last 14 years.
Not a month into a Labour Government they go where even the Tories apparently feared to tread and proclaim more “difficult decisions” to come…
…how far can governments depart from the modest wish of the governed to be able heat their homes and feed themselves before something gives?
In another time with such stresses on households and businesses, there would be a General Strike but that was then and, now, we just grumble for the most part.
“..could so easily been raised by charging capital gains tax at income tax rates”. Wait and see what is in the actual budget.
And BTW, Reeves said on BBC Breakfast that they are planning to merge pension credit with Housing Benefit. More likely they’ll abolish pension credit and pretend to increase housing benefit to compensate. In one case I helped with a few years ago a pensioner got all of 80p a week in PC, but that triggered all sorts of other benefits like HC2, and free prescriptions. Now, presumably, it would also trigger WFA.
Let’s hope there may be an improvement
I admire your optimism
I know that tax and NI isn’t hypothecated, and I get what you have said, Richard, about government spending not being funded by tax receipts. However perhaps there would be a case for splitting NI into a ‘pensions and benefits’ contribution and a ‘health and social care’ contribution – perhaps roughly in proportion to spending under these two headings. What might then follow?
It does seem reasonable that state pension income (where there has been a contributory element) should remain exempt from NI (you’ve already paid your contributions in) and that the tax threshold should not be lower than the state pension. You could also argue that as the state pension is fixed, there is justifcation for a cap on NI contributions under this heading.
The health and social care element, however, will mostly be directly used by those of pension age. Many (clearly not all) will be receipt of occupational pensions and will own their homes outright. So I see no reason why pensioners who can afford to pay should be exempt from this aspect of NI – given that it is a proportion of income above a threshold then those on the basic pension only would pay nothing and those with the highest incomes would pay the most – the progressive principle. You could also remove the cap on NI contributions for those in work on this aspect of NI which would also result in higher tax receipts from working age people earning above average salaries.
Sorry – but to pretend a tax does not work as it actually does is not economically or politcally honest as far as I am concerned.
There’s no money left? That sounds familiar.
On leaving his position as Chief Secretary to the Treasury following the change of British Government in May 2010, (Liam) Byrne left a note to his successor David Laws saying: “Dear Chief Secretary, I’m afraid there is no money. Kind regards – and good luck! Liam”
He’s still a Labour MP and now back in Government. He has quite a track record –
‘He was Shadow Secretary of State for Work and Pensions from January 2011 to October 2013. Byrne was sacked after increasing criticism from Labour members and having “badly lost the confidence of the PLP”, particularly after allegedly describing the Conservative-led coalition’s benefits cap as “too soft”,[37] saying that “Ministers have bodged the rules so the cap won’t affect Britain’s 4,000 largest families and it does nothing to stop people living a life on welfare”‘. – wikipedia
In May 2023, Byrne was found to have misused public expenses. Byrne denied wrongdoing, but the Independent Parliamentary Standards Authority (IPSA) found there was “overwhelming evidence” that a member of Byrne’s staff had worked on his failed mayoral election campaign during office hours, conservatively estimating that at least around 1,000 hours of public-funded time had been spent on the campaign. Byrne stated subsequently he accepted the findings but refused to apologise’. – wikipedia
It’s all a game to far too many politicians. Even worse, they get away with unacceptable actions far too often.