The squeeze on winter fuel payments will force 100,000 pensioners into poverty in 2026, according to the Government’s own estimates.
Chancellor Rachel Reeves limited access to the benefit, worth up to £300 in a cost-saving measure as she sought to repair the nation’s finances.
The payment is being restricted to only those claiming pension credit from this winter, with the aim of saving the public purse £1.5 billion a year.
The move has been criticised by campaigners and opposition parties, while Sir Keir Starmer’s colleagues in Scottish Labour have set out plans to partially reverse it.
Despite the official modelling, Sir Keir insisted elderly Britons would still be “better off” due to the increase in the state pension.
Work and Pensions Secretary Liz Kendall revealed the Government’s assessment of the impact in a letter to MPs, but stressed the figures did not take into account plans to increase the numbers on pension credit.
She told the Work and Pensions Committee: “The latest modelling shows that compared to the numbers that would have been in poverty without this policy, it is estimated that in each year in question there will be an additional 50,000 pensioners in relative poverty after housing costs in 2024-25, 2025-26 and 2027-28, instead.
“The modelling also shows that an additional 100,000 pensioners are estimated to be in relative poverty after housing costs in 2026-27, 2028-29 and 2029-30.”
Households in relative poverty have less than 60% of average (median) income in the current year.
The number of additional pensioners in absolute poverty – compared to the median in 2010/11 – is estimated to be 50,000 in each year.
Ms Kendall said the Labour Government had been “forced” to limit the payment due to the “£22 billion black hole” it blamed the Conservatives for leaving behind.
In her letter, she wrote: “Means-testing winter fuel payments was not a decision this Government wanted or expected to take. However, we were forced to take difficult decisions to balance the books in light of the £22 billion black hole we inherited.
“Given the dire state of the public finances, it’s right that we target support to those who need it most while we continue our work to fix the foundations and stabilise the economy – which is the best way to support pensioners in the long term and is what has allowed us to deliver our commitment to the triple lock.”
She said the “modelling does not take into account any impacts of the measures we are taking to increase pension credit take-up and to ensure pensioners get the benefits to which they are entitled”.
Your turn now Sir Keir… https://t.co/h2Zd5O67rO
— Helen Whately MP (@Helen_Whately) November 19, 2024
Sir Keir, speaking at the G20 Summit in Rio de Janeiro, said the figures also failed to take account of the household support fund and warm home discount scheme.
“And of course, on top of that, as we now know, the figure for the increase in state pensions for next year under the triple lock, because we’ve stabilised the economy, is about £470,” he added.
“And therefore pensioners will be better off because we’ve stabilised the economy.”
Debbie Abrahams, the Labour chairwoman of the Work and Pensions Committee, said: “While we’re grateful for the Government’s transparency on this, there are some outstanding issues on the specific impact on older or disabled pensioners, and the figures say nothing of those floating just above the poverty line.
“We remain concerned by the impact that restricting winter fuel payments might have on poorer pensioners. We’ll be watching the issue closely.”
Shadow work and pensions secretary Helen Whately said: “Finally the dam breaks and we get to see what Labour have known all along.
“Their winter fuel payment cuts are going to plunge 100,000 pensioners into poverty in the next few years.
“Clearly Keir Starmer feels like that’s a price worth paying to make a political point. But I don’t think those pensioners would agree with him.”
Liberal Democrat Treasury spokeswoman Daisy Cooper said: “Faced with these shocking figures, the Government must step up and do the right thing: finally reverse the winter fuel payment cut.”
Unease about the policy has led Scottish Labour to pledge to reinstate the payment for thousands more pensioners if they win the 2026 Holyrood election.
Under the plans, all pensioners would receive the payment initially, but it would be tapered over the years to reflect the income of recipients, with those who are better off receiving less in the longer term.
Party leader Anas Sarwar said: “Scottish Labour will take back this devolved power from the DWP, reinstate the winter fuel payment, and deliver a fairer system to ensure that everyone who needs support gets it.”
Sir Keir said it was a “one of the features of devolution” that there could be different policies in parts of the UK.
Age UK said the Government had confirmed “what we always knew”, that “brutally rationing winter fuel payment, as ministers made the choice to do, will swell the numbers of pensioners already living below the poverty line – this year and into the future”.
Caroline Abrahams, Age UK’s charity director, added: “Of course, we must all continue to do everything we can to encourage any older person on a low or modest income to claim pension credit, the main qualifying benefit to retain winter fuel payment, before December 21, but we know and the Government knows that this will not be enough to turn these numbers around.
“At Age UK this leaves us asking how on earth has this been allowed to happen and, more importantly, will the Government, even now, take decisive action to protect older people in need?”
Independent Age said the estimates were “extremely alarming” and insisted the Government must reverse its decision on means-testing.
Morgan Vine, director of policy and influencing at the charity, said: “The UK Government’s own analysis has now revealed the extent of the devastating impact of limiting the payment to just those on Pension Credit.
“With this information now in the open, it is essential ministers put a stop to this policy change right away.”
The charity said it had heard “harrowing stories” of older people wearing hats and coats in bed in a bid to stay warm, adding: “We can already see the terrible impact this policy decision is having, the older people living on a low income that we speak to feel forced into making drastic cutbacks”.
