Chancellor Rachel Reeves has confirmed that all pensioners in the UK earning £35,000 or less will receive the maximum Winter Fuel Payment this year, following weeks of political pressure and public backlash over its previous restriction.
The payment, designed to help older people cover soaring energy bills in winter, will once again be applied automatically as a universal benefit.
However, higher-income pensioners will be asked to repay the sum through the tax system, mirroring a mechanism previously used to limit child benefit.
Over 9 Million Pensioners to Benefit After Policy U-turn
This policy reversal means an estimated 9 million pensioners across England and Wales will now receive up to £300 this winter—compared to just 1.5 million who qualified under last year’s scaled-back criteria.
The change comes after the benefit was controversially limited, cutting eligible recipients by nearly 10 million.
The original move to restrict the Winter Fuel Payment was one of the first fiscal decisions by Reeves after Labour’s landslide 2024 general election victory.
However, it quickly became one of the government’s most criticised policies, blamed for a noticeable drop in Labour’s public support and cited frequently during local election campaigns.
Treasury: Fairer System Balancing Cost and Support
The Treasury now says that pensioners with taxable incomes above £35,000—approximately 2 million people—will still receive the payment but will be expected to repay it via their annual self-assessment tax returns.
This income threshold has been described as “well above the poverty line” and “in line with average earnings”, aiming to strike a balance between fairness and fiscal responsibility.
The restored payments will cost around £1.25 billion, though officials say the government still saves £450 million compared with restoring the payment to all pensioners, regardless of income.
Reeves: “No Low-Income Pensioner Will Miss Out”
Speaking ahead of the upcoming spending review, Reeves said: “We’ve acted to expand eligibility for the Winter Fuel Payment so that no pensioner on a lower income is left out in the cold. Over three-quarters of pensioners in England and Wales will benefit this winter.”
She defended the initial decision to target the payment, citing the financial difficulties inherited from the previous Conservative government, but acknowledged the need for a more compassionate and balanced approach.
Pressure Mounts Over Wider Welfare Reform
The U-turn has emboldened Labour MPs and campaigners, many of whom are now urging the government to review other welfare policies, such as the two-child benefit cap, which critics argue is keeping hundreds of thousands of children in poverty.
Meanwhile, concerns remain over the administrative complexity of reclaiming funds from wealthier pensioners, especially in cases involving the recently deceased, whose families could face tax recovery efforts.
Pensioners Can Opt Out; Scotland and NI to Receive Funding Boost
Pensioners will have the option to opt out of receiving the Winter Fuel Payment if they choose. The Scottish Government and Northern Ireland Executive will also receive additional funding due to the changes implemented in England and Wales.
Age UK Welcomes Decision as a Relief for Older People
Caroline Abrahams, director of Age UK, welcomed the announcement: “Restoring the Winter Fuel Payment to pensioners on modest incomes is absolutely the right thing to do. It offers much-needed reassurance to older people and their families during what remains a challenging time for household budgets.”
