Changes to Winter Fuel Payment eligibility rules

On 29 July 2024, the Chancellor of the Exchequer, Rachel Reeves, announced that from winter 2024/2025 households in England and Wales would no longer be entitled to the Winter Fuel Payment unless they receive Pension Credit or certain other means-tested benefits.

10.8 million pensioners in 7.6 million households in England and Wales received the Winter Fuel Payment for winter 2023/2024. Following the 2024/25 changes, The Department for Work and Pensions (DWP) estimated that 1.5 million individuals in 1.3 million households in England and Wales would receive a payment.

Winter Fuel Payment changes were part of a package of measures announced by the Labour government, aimed at making immediate savings following an audit of public spending. It was expected to save around £1.3 billion in 2024/25 and £1.5 billion in subsequent years.

What is the Winter Fuel Payment?

The Winter Fuel Payment is an annual, tax-free lump sum payment intended to give older people reassurance they can afford to heat their homes in winter. It is paid to people who have reached State Pension age on or before the end of the qualifying week (the week beginning the third Monday of September each year) and meet certain other entitlement conditions, such as not being in receipt of free treatment in hospital for more than a year. Before winter 2024/25 it was a universal benefit without any means-test.

First introduced in 1997, the Winter Fuel Payment amounts have varied, but in most years the amount has been £200 for households where the oldest person is under 80, and £300 for households with someone aged 80 or over. In some years, extra amounts have been paid on top of the standard payments. For the winters 2022/2023 and 2023/2024, households received an additional Pensioner Cost of Living Payment worth £300 along with their Winter Fuel Payment. These payments are not being repeated for winter 2024/2025.

Around 11.6 million people in just over 8 million households in Great Britain were expected to receive a Winter Fuel Payment for winter 2023/2024, at a total cost of £2.0 billion. Pensioner Cost of Living Payments totalled a further £2.6 billion.

Commentary and debate on the Winter Fuel Payment before July 2024

The main criticism of the Winter Fuel Payment since its introduction has been that, if viewed as a measure to reduce fuel poverty, it is poorly targeted. Different options for reforming the Winter Fuel Payment have been suggested, including means-testing the payment, linking the payment to existing means-tested benefits such as Pension Credit, introducing a mechanism for withdrawing it from higher income pensioners, or making it taxable.

Others argue that paying the Winter Fuel Payment as a universal benefit ensures that all those needing help with energy bills get support. Means-testing the Winter Fuel Payment would mean that those just above the threshold for benefits who might otherwise struggle to pay their bills would lose support. Campaigners also point out that many older people on very low incomes do not claim the means-tested benefits they are entitled to. The DWP estimated that up to 760,000 households eligible for Pension Credit were not claiming it in 2022/23.

Encouraging low-income households to claim Pension Credit

Alongside the Winter Fuel Payment announcement, the government said it would work with older people’s charities and local authorities to identify households eligible for Pension Credit but not claiming it. On 20 August 2024, the DWP announced a ‘Pension Credit awareness drive’ to encourage eligible households not receiving the benefit to apply for it by 21 December 2024. This would allow more eligible households to receive backdated payments and qualify for the Winter Fuel Payment for winter 2024/2025.

The government also intends to bring forward to 2026 plans to introduce a housing element in Pension Credit, to replace Housing Benefit for people above State Pension age.

How were the changes implemented?

Regulations to restrict eligibility for the Winter Fuel Payment in England and Wales were laid before Parliament on 22 August 2024, and came into force on 16 September 2024. The regulations were subject to the negative procedure. A negative Statutory Instrument (SI) becomes law unless either the House of Commons or the House of Lords passes a motion within a specified period to annul (stop) it.

The DWP did not prepared a full impact assessment for the regulations because it said the changes would have “no significant new impact on business, charities or voluntary bodies.”

However, it published a ‘high level equality analysis’ of the changes on 13 September 2024, exploring the proportions of people who would retain or lose entitlement to Winter Fuel Payment in different groups.

Why has the government made these changes?

The government stated that the Winter Fuel payment changes, together with the other measures it announced in July 2024, were a necessary response to substantial pressures facing the public finances in 2024/25 and 2025/26. It said the changes, while making the necessary Exchequer savings, would allow pensioner households on the lowest incomes to retain support.

The Chancellor of the Exchequer, Rachel Reeves, said it was a “tough choice”, and not one she “wanted to make, or expected to make”. But, she argued, it would help put the public finances on a “firmer footing”. The government has also committed to retain the State Pension ‘triple lock’ for the duration of this parliament.

Response to the government’s announcement

Some commentators and pressure groups opposed outright the government’s decision to end the universal Winter Fuel Payment, highlighting continuing cost of living pressures on pensioners and the increase in the energy price cap from 1 October 2024. Withdrawing the Winter Fuel Payment from most pensioners would, they said, leave many facing a ‘heat or eat’ choice.

Others questioned the mechanism the government has chosen to restrict eligibility for the Winter Fuel Payment. Basing eligibility on receipt of means-tested benefits creates a ‘cliff edge’ where people who just miss out on benefits lose support completely. Pensioners eligible for, but not claiming, Pension Credit would also lose the Winter Fuel Payment.

Welfare rights organisations questioned whether the DWP had sufficient staff to process an increase in claims resulting from its Pension Credit awareness campaign. They argued that the Winter Fuel Payment changes should be put on hold to allow time to consult on them, and that no changes should be made until Pension Credit take-up rates have increased significantly.

Some commentators argue the government should consider other options for reforming the Winter Fuel Payment. Suggestions include limiting payments to households on lower Council Tax bands, making the payment taxable, or only paying it to older pensioners. However, other options could be complex to administer, and save significantly less money than the government’s proposal.

The House of Lords Secondary Legislation Scrutiny Committee said it was “unconvinced” by the government’s reasons for the urgency attached to laying the regulations. It said it seemed the policy was being introduced at a pace that prevented appropriate scrutiny, particularly as the DWP’s explanatory memorandum lacked information about the expected impact of the policy change, and because the Social Security Advisory Committee (SSAC) was not pre-consulted.

Although not pre-consulted, SSAC did consider the regulations, and the Chair then wrote to the Secretary of State for Work and Pensions setting out observations and recommendations. The Secretary of State responded on 12 November 2024. Topics discussed in this exchange included uncertainties about forecast increases in Pension Credit uptake, the DWP’s capacity to handle additional Pension Credit claims, and what further could be done to understand the impact of eligibility changes.

What is the situation in Scotland and Northern Ireland?

Winter Fuel Payments are devolved in Scotland and Northern Ireland.

The Scottish Government was to have introduced a new benefit – the Pension Age Winter Heating Payment (PAWHP) – to replace the UK Government’s Winter Fuel Payment on a “like for like” basis, starting from winter 2024/2025. Following the Chancellor’s announcement, the Scottish Government said that the resulting cut to its funding had left it with “no choice” and that it would follow the UK Government’s decision to restrict payments.

However, from winter 2025/26, the Scottish Government is planning to introduce a universal £100 PAWHP payment for households not receiving a qualifying benefit.

The Northern Ireland Executive said that, despite its “deep concerns” about the Chancellor’s decision, it would also make equivalent changes to the Winter Fuel Payment in Northern Ireland. Executive ministers said diverging from the UK Government would require significant cuts to other public services. However, the Northern Ireland Executive is providing a one-off payment of £100