That an Humble Address be presented to His Majesty praying that the Social Fund Winter Fuel Payment Regulations 2024 (SI 2024/869), laid before the House on 22 August, be annulled because they would significantly reduce state support for pensioners without sufficient warning and without a proper impact assessment, and because they present a significant risk to the health and wellbeing of many pensioners on low incomes.
Relevant document:2nd Report by the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)
My Lords, I would like to say from the start that I believe the noble Baroness opposite is a very, very good woman and I hope that the House will forgive me in some way for bringing this before your Lordships. But I have spent my life trying to stand up for people who have no voice and trying to do what I believe is right. On this particular occasion, with a heavy heart, I believe I must do so.
Let me read some of the words of those people from whom we are taking away £200 or £300 this winter. These are the poorest pensioners. We will hear that the Government is protecting the poorest. It is simply not the case. I apologise, but that is the reality. “I do not qualify for pension credit. I live on my state pension and one small occupational pension that pays me the cost of a couple of bags of carrots and potatoes a month in an annuity. I receive just a little over the qualifying limit and fall into that group of pensioners who are in limbo. I am 75 years old and not in great health. I will be trying very hard not to turn my heating on this winter. I have only a few pounds a week for food, toiletries, insurance or any other repairs. Why is this being done? I always turn off the lights and am very careful, but I don’t know how I will get through the cold weather this year. I have arthritis and COPD and need to keep warm for my health.”
Another says, “I am 82 years of age and live alone. I am on £220 a week state pension and therefore £2.85 a week over the pension credit limit. Since the cost of living crisis, I have not been able to afford any central heating for the last two winters. I did not put on my gas central heating and I will not be putting it on again this year. My welcome winter fuel payment went towards my electricity bill, which increased due to the single room heater I used. I work on the ‘heat the person not the room’ principle. I fall into that group of pensioners who do not qualify for pension credit, and I am not sure how I can economise further”.
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I do not need the money. I have long said that the payment does not make sense. When I was director-general of Saga, I arranged a scheme whereby any of our Saga customers who did not want or need the money could donate it to the Surviving Winter charity appeal to help poorer households survive through the winter, or perhaps to help them with a new boiler. The charity does different kinds of work, not just for pensioners; it would be across the piece. That so many people donated this money was a demonstration of the fact that it was not well targeted. I do that myself, and I declare an interest in that my measure would retain money that I get that I do not need, and of course many noble Lords around the House do not need it, but that is not the point.
We all have a choice. This is a choice—to take money from the poorest pensioners in our country just as winter is approaching and energy bills are increasing, to save a paltry, in global terms, £1.4 billion this year. I cannot think of a sufficient justification for us to approve this measure today. I have not seen any case that stands up to scrutiny being made by the Government to justify it, such as the idea that not saving £1.4 billion this year would somehow crash the economy or undo the national finances. I urge the Government to think again. I am happy to work with them on the mitigation measures that could and should be put in place to carry out this policy, with which I agree overall, if it is done in the right way. I do not get the urgency.
Adding insult to injury, the fact that pensioners in Spain, Sweden and elsewhere in EU will still receive this money has been mentioned by a few of those writing to or messaging me. On rational, logical, compassionate grounds, I urge noble Lords to think carefully about what we could be doing, which is protecting the poorest pensioners through the winter who are otherwise going to be left at risk. I beg to move.
My Lords, this is the first opportunity I have had to congratulate the noble Baroness, Lady Sherlock, on her appointment as a Minister. I genuinely wish her well in that capacity and look forward to working with her on areas where we can.
The Government’s decision to end the winter fuel payment for all pensioners except those in receipt of relevant benefits will be a real blow to millions of older people across the country this winter. Reducing financial support for older people before the colder months will harm many who rely on their winter fuel payment. This is a betrayal on a shocking scale. The Opposition are critical of this policy for three primary reasons: it will leave millions of vulnerable pensioners worse off this winter; the Government are wrong to prioritise above-inflation pay rises for public sector workers over the interests of vulnerable older people; and the Government were not straight with the British people about their plans during the general election this year. The Government should listen to the concerns of noble Lords and take time to consider how they can make the savings they need without punishing older people. That said, it is not the place of this House to override the decision of the elected House, and that is why the Opposition have tabled a regret Motion today.
In government, the Conservatives showed a stalwart commitment to pensioners who had paid in all their lives, with the triple lock, pensioner cost of living payments, the warm home discount and winter fuel payments. All these measures were either introduced or maintained by the Conservatives because we on these Benches know what is right for pensioners and that it is patently unfair to put the most vulnerable pensioners in jeopardy as winter approaches. The Conservative Party consistently did what was right for pensioners throughout our time in office, and there are valuable lessons for the Government in that record.
My Lords, I rise to speak to the Motion standing in my name, the third of the Motions on the Order Paper today. In doing so, I must stress sympathy with the sentiments spoken of so well on the Motion from the noble Baroness, Lady Altmann. However, I understand from reading the House that there is not a lot of support in your Lordships’ House for the fatal Motion—although, as I say, I have great sympathy with it.
My Motion calls attention to the most vulnerable pensioners, many of whom will lose support just as energy bills are set to rise again. About 10 million pensioners will lose winter fuel payments of up to £300 because of the decision taken by this Government, after years of Conservative mismanagement that has left the public finances in crisis. But this is the wrong answer to the challenges we face: it is clear that many pensioners rely on a winter fuel payment, which is not a luxury.
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This cut will leave about 2 million people worrying how they will afford their energy bills this winter. I am sure I am not alone in having just received a message from my energy supplier that there will be a significant increase in costs. For many it will be a choice of eating or heating this winter. Age UK has condemned the cut as being introduced
“with virtually no notice and no compensatory measures”.
My personal view is that winter fuel payments could have been kept universal but been taxed. The Government have chosen not to go down that path or to take other measures that would have protected some of our most vulnerable pensioners—so, as the noble Baronesses have said, we are having to focus on pension credit, which goes only to those who have a weekly income of up to £218.15, or £332.95 jointly if they have a partner.
A crucial part of my regret Motion is that the changes rely on take-up rates for pension credit. Around 1 million eligible pensioners do not claim it. The Motion in my name stresses the need to identify and deal with low take-up—I have a feeling that the Minister would agree with that. DWP has made calculations of achieving an increase in take-up but, even assuming its optimism is justified, that will still leave us with about 700,000 eligible pensioners not getting pension credit, and thus with the double whammy of not getting winter fuel payments.
People are asking: why do they not claim? Is it pride or lack of awareness? Is it an inability to cope with the system? How many of those eligible will be deterred by having 140 to 200 questions on the application form? Is an estimated saving of £1.4 billion realistic if the Government are successful in drastically increasing the number of those eligible to claim? We know that pension credit claims can take many months to be processed. My Motion seeks assurances, which I hope the Minister will give, that delays will not contribute to even more pensioners going cold this winter.
My Motion also calls for more support for vulnerable pensioners this winter, not only those who are eligible for pension credit but others who are vulnerable. Policy in Practice has estimated that around 130,000 elderly people miss out on pension credit because they are just £500, or £9.61 per week, over the income threshold to claim the benefit. These are tiny sums and the Government must take action to tackle this unfair cliff edge that they have now created.
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One more example says, “I am 91 years old and my husband and I struggled to keep our home warm enough last winter. The fuel bills rose so much, and even though our home is small we were spending so much on heating that we only had the heating on in the sitting room and our bedroom. He had Parkinson’s and I have had cancer, but we looked after each other. We spent our time in the one room downstairs and used lots of blankets, as well as often having three cardigans on. We went to bed early so we could turn off the heating, and would try to keep the heating off in the bedroom most of the time, but we would cuddle up together to keep warm. My husband passed away a few months ago and I don’t know how I will manage this winter. I don’t have enough money to warm the house more, and my small pension has put me over the limit for pension credit”.
This is the reality of the statutory instrument we are debating. I agree with the Government’s aim of removing a tax-free payment from millions of people who do not need it. Indeed, I have called for that to be done for a long time, or for it at the very least to be taxed: it could perhaps be rolled into a higher state pension but then become taxable.
I would support this measure if it was dated 2025 instead of 2024, giving time to put in place some mitigation and protection for these poorest pensioners. Those on pension credit are not the poorest as they get extra help—as the Minister herself has said, some get thousands of pounds extra. It is those who are just a few pounds a week above the limit or those who are eligible but do not claim or receive it who are the poorest. Nothing in these regulations will ensure they receive the money they expected, which has been withdrawn from them with no warning or time for them to economise in time for November, when it was due, or for the colder weather this winter.
I believe that the Government do not want to hurt these people. I do not expect that the needs and situation of these very poorest pensioners were really considered when this announcement was made. The aim, which I fully endorse, was to take the winter fuel payment away from the quarter of pensioners who have assets worth £1 million, and from those higher up the income scale, who clearly can manage without it. But that is not the impact that I am concerned about if we pass this measure today.
I am particularly concerned because of the wording in the statutory instrument document itself:
“A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, public or voluntary sector is foreseen”.
If that had been the expectation, since that publication the voices of Age UK, Independent Age, Silver Voices and the trade unions have all warned clearly that what the Government perhaps did not foresee is indeed foreseeable and potentially about to happen.
The Government’s Explanatory Memorandum says:
“No consultation was undertaken ... Whilst making the necessary Exchequer savings, it retains support for pensioner households on the lowest incomes”.
This is simply not correct, and I am trying to help the Government see that what I believe they do not wish to do, they may not need to do. I understand that there are pressures on the public finances, and I completely support the idea that a universal payment to those who do not need it, especially one that is tax-free, should not be made. Why not work out a system whereby they do not receive it, but the consequence of taking it away is not that we also have to take it away from perhaps 3 million of the poorest pensioners in the land?
The Secondary Legislation Scrutiny Committee has brought this issue to the attention of the House:
“We are unconvinced by the reasons given for the urgency attached to laying these regulations and are particularly concerned that this both precludes appropriate scrutiny and creates issues with the practicalities of bringing in the change at short notice”.
That is the problem I have, the short notice. It is not the aim of the policy that I query: there is no time to prepare, no time to increase pension credit—although that is a worthy aim, and I hope a few extra people will claim it. According to the Government’s own figures, more than 800,000 households are eligible but not claiming. The idea that they will receive the money this winter, having gone through the 243 questions on the application form, be approved and start receiving it, is simply fanciful. With the best will in the world—and I believe the Government have the best will to try to increase take-up—even if half the households were to receive it, the savings the Government say are so essential to make will be wiped out. This argument does not make sense. It is not logical to say that we have to take it away from the poorest because we want to take it away from the well-off.
Taking this money from people is, effectively, a 3.4% state pension cut this year. For anyone on the old basic state pension who is over 80, £300 is 3.4% of the money they received from the Government last year. This measure was introduced in 1997 and it has been an essential part of the state pension support package for pensioners ever since. No Government have said it will be removed; indeed, that was suggested and rejected time and again. I believe there could, and will, be a way of dealing with this. For example, to save money, you could tax it rather than axe it; or you could just say that anyone paying higher rate tax will have their tax coding adjusted and the money will be taken back from them. If you pay 40% or 45% tax, of course you do not need it.
The winter fuel payment has been a lifeline for millions of pensioners, with 11.4 million older people receiving it in 2023. Vulnerable pensioners rely on this support, and it is that group about which the Opposition are most concerned. The Government have said that pensioners in receipt of relevant benefits will continue to receive winter fuel payments, but the Government’s own estimates show that approximately 880,000 households are eligible for pension credit but do not currently receive it.
It is important that we remember just what position those 880,000 people are in. To be eligible for pension credit, a single person must have a weekly income of less than £218.15; it is £332.95 for a couple. These are some of the most vulnerable people in our society and I ask the Minister: is she comfortable depriving 880,000 of the most vulnerable pensioners of the winter fuel payment this year?
In April this year, the now Prime Minister, writing in the Daily Express, said:
“I firmly believe that if you spend your lifetime working hard and contributing to society, you deserve a comfortable, secure retirement”.
He went on to say:
“It was that belief that meant the last Labour government introduced winter fuel payments, free bus passes and pension credits”.
Please can the Minister tell us in detail what has changed from that statement?
I trust noble Lords will forgive me if I pre-empt the Minister’s reply. We will hear, no doubt, that the previous Government left office with a £22 billion black hole in their public finances. This is not a fair statement of facts. When the Chancellor of the Exchequer stood at the Dispatch Box in the other place, setting out the Conservatives’ supposed profligacy, she included in that calculation a total of £9.4 billion of spending on public sector pay awards. The Chancellor claims that these were a result of Conservative decisions, but they are political choices. It is not a fair presentation of the facts to say that the Conservatives are responsible for a £22 billion black hole when almost half of that calculation is made up of public sector pay awards agreed by the Government.
Ministers have also claimed that the public finances were worse than they expected when they took office earlier this year. I need not remind the House that the Office for Budget Responsibility, which was founded under the Conservative Government, audited the public finances just 10 weeks before the general election was called. Indeed, since January this year the then shadow Chancellor, in line with constitutional convention, had privileged access to the Treasury Permanent Secretary. The books were open, yet the now Government did not come clean during this period about their plans to remove the winter fuel payment for most pensioners.
Indeed, if the public finances were as tight as the Chancellor would have us believe, Ministers would be showing pay restraint across the board. In fact, the truth is quite the opposite. Since taking office, the Government have allocated £8.3 billion for GB Energy, £7.3 billion for a national wealth fund and, of course, the £9.4 billion I spoke of a moment ago for vast above-inflation public sector pay awards. It is becoming clearer every day that the Government will prioritise train drivers, junior doctors and civil servants—their own political vanity projects—over the needs of the most vulnerable pensioners in our society.
In addition to these concerns, we must ask the Government whether this policy change will be successful in achieving its stated aim. During Treasury Questions in the other place last week, the Chancellor of the Exchequer confirmed that the Government expect to raise £1.5 billion a year by cancelling the winter fuel payment for the majority of pensioners. This led me to look up the total value of unclaimed pension credit. The latest official statistics show that up to £2.1 billion of available pension credit went unclaimed. If 100% of eligible pensioners claimed their pension credit, the Government would make no saving at all. We can conclude that the fact that 880,000 pensioners who are eligible for pension credit will be deprived of their winter fuel payment by the Government is not an unintended consequence. The savings the Government expect to make are predicated on those people not claiming.
We on these Benches put in a great deal of effort to drive up pension credit when we were in office. In June 2022 the Pensions Minister launched a campaign to urge pensioners to check whether they were eligible. In June 2023 the then Pensions Minister, Laura Trott, launched a further campaign and trialled the Invitation to Claim initiative through which the Department for Work and Pensions wrote directly to potentially eligible households that received housing benefit, encouraging them to apply. In July 2023 the DWP confirmed that these campaigns had been effective, and applications were around 75% higher in the year to May 2023 than in the same period the year before.
We have made progress on this in the past, and the Government’s new campaign is unlikely to succeed in getting every eligible person to claim pension credit. The Government should listen carefully to these concerns and take action to protect this vulnerable group.
While it is unlikely that we in this House will be able to convince the Government to change their chosen course—although I live in hope—I hope that the concerns raised by Members across the House will at least encourage Ministers to work on mitigating measures to ensure that pensioners eligible for pension credit are not left without the support they need.
I know that many noble Lords would want me also to highlight the needs of pensioners who are only just above the pension credit threshold. My friend, the noble Baroness, Lady Altmann, has already done this. Can the Minister confirm whether the Government have considered increasing the pension credit threshold so that pensioners in that group are protected?
Before I conclude, I ask the Minister whether she will commit—I implore her—to meeting concerned Peers to discuss other options to this policy, to suggest ways to make the pension credit uptake campaign more effective and to explore the alternatives. I know that noble Lords would appreciate the opportunity to engage with the Government constructively to protect the most vulnerable pensioners.
In conclusion, it is clear that the Government have the wrong priorities, putting public sector workers and their own vanity projects first while depriving vulnerable pensioners of a lifeline. Indeed, the Prime Minister is damned by his own words earlier this year, when he said he believes pensioners “deserve a comfortable … retirement”. This Government took office on a change theme, which we are so encouraged by, and said they would make money so that everybody would be better off and have a better quality of life. As yet I have not seen too much of the making of money, but I see a lot of taking and I hope it is not a trend that will continue.