The winter fuel payment for state pensioners could be scrapped altogether, according to the Institute for Fiscal Studies (IFS).<\/p>\n
Following Prime Minister Sir Keir Starmer<\/a>\u2019s announcement that the government is going to re-examine the thresholds for the \u00a3200 to \u00a3300 payments for state pensioners, the IFS has looked at the options it says are available to the government, from widening eligibility to scrapping the benefit altogether.<\/p>\n The \u00a3200 benefit, or \u00a3300 for over-80s, was first introduced by Labour in 1997 but was scaled back by Rachel Reeves last year, so that it is now only available to those who claim income support benefit Pension Credit, instead of being paid to all pensioners automatically.<\/p>\n Following months of uproar about the means tested changes, Starmer has now pledged to look at the thresholds for the winter fuel allowance but no further details have yet been given for how much the threshold could change by. The IFS has issued a report, Expanding winter fuel payment<\/a> Eligibility, which outlines the options available.<\/p>\n Among its suggestions, it says that the \u2018simple option\u2019 would be to reverse the changes and give WFP back to all pensioners at a cost of about \u00a31.5Bn.<\/p>\n Or, a new means tested system could allow households not claiming Pension Credit to claim WFP, the IFS says, although this could be expensive to implement and some still may not claim.<\/p>\n Third, the government could make Pension Credit \u2018more generous\u2019 by withdrawing Pension Credit more slowly when a pensioner receives income, instead of by \u00a31 for every \u00a31 of income as it is currently.<\/p>\n Other options include making WFP an individual payment rather than a household one, or expanding to other benefits instead of just Pension Credit, such as disability benefits. Or, the IFS argues, the model proposed by Martin Lewis<\/a> could be implemented, which bases eligibility on council tax bands A to C.<\/p>\n But the IFS concludes that there is no easy solution and all options are complex, and instead, it may be simpler \u2018not to have WFP at all\u2019.<\/p>\n The report says: \u201cIf the government wants to expand WFP eligibility \u2013 without returning to the old universal system \u2013 there are no particularly easy answers to increase eligibility substantially.<\/p>\n \u201cExpanding eligibility to those on housing benefit (and\/or disability benefits) would increase the numbers receiving winter fuel payment<\/a> but still leave the vast majority of pensioners ineligible.<\/p>\n \u201cGoing further would either involve creating a new means-test or basing eligibility on other characteristics of the household. It is fair to say that all of these are imperfect solutions \u2013 they do not expand eligibility much, or are not closely targeted towards poorer households, or impose large administrative or fiscal costs.<\/p>\n \u201cIn light of this, it is worth stepping back and asking what role the government wants WFP to play. One option would be not to have WFP at all.\u201d<\/p>\n It adds: \u201cWhile it is labelled as being about fuel, it is ultimately just a cash payment (though some evidence suggests the labelling does increase fuel consumption).<\/p>\n \u201cInsofar as the goal is to help people on low incomes, a more straightforward option is to increase Pension Credit; if the goal is to increase pensioners\u2019 incomes more generally, one could simply raise the state pension<\/a> generosity (though this would imply redistribution from singles to couples, and the government might rather avoid that). Perhaps before it tries to tweak eligibility awkwardly, the government should consider what question WFP is the answer to.\u201d<\/p>\n