The consumer champion Martin Lewis has called on the government to rethink plans to limit the winter fuel allowance, saying the criteria for pensioner support are “far too narrow”.
Lewis said that while he generally supported the idea of dropping universal payments, the government had gone too far by providing financial subsidies to only the “absolute poorest pensioners on the very lowest income”.
The UK chancellor, Rachel Reeves, revealed plans last month to introduce a means test for the winter fuel payment, where only those on pensions benefits would qualify, as part of a push to plug what she said was a £22bn black hole in the public finances left by the previous Conservative administration.
While the decision would save the government about £1.4bn this financial year, it would drastically reduce the number of pensioners receiving the payment from 11.4 million to 1.5 million.
Lewis said it would leave far too many pensioners without much-needed support. “Pension credit is a payment for those on an income of less than £12,600 – that’s very, very low,” he told BBC Radio 4’s Today programme. “So while I actually agree, there’s a very strong argument for getting rid of a universal winter fuel payment, I think the eligibility criteria is far too narrow.”
Instead, the MoneySavingExpert founder said the government should base support on council tax bands, which are linked to the value of properties. His proposals would limit the winter fuel allowance to those in the A to D bands, which apply to the least valuable homes. “That would raise eligibility above just those who are on pension credit,” Lewis said.
“I have to say it is an imperfect solution, but it is a workable, quick solution, and I’m due to be meeting Rachel Reeves in a couple of weeks on various issues, and I will certainly be pushing that idea to them.”
Reeves’s ending of universal winter fuel allowance applied only to England and Wales, but Scotland has followed suit and also limited the payments.
Rachael Maskell, the Labour MP for York Central and the chair of the all-party parliamentary group on ageing and older people, also called for a review of the policy, noting that 4,950 people died because of cold homes last year.
She is pushing for a social tariff on energy, which would mean lower bills for poorer households. “We’ve got to protect the most vulnerable in society. I’m deeply concerned that some of that protection is being removed,” she told Today.
Lewis’s proposal comes as the energy regulator for Great Britain, Ofgem, raised its cap on energy prices from October, in a move that will increase the average annual energy bill to £1,717 a year for gas and electricity. That is up £149 from its current level of £1,568, which has been in place since July.
The price cap is set every quarter by Ofgem and imposes a maximum on how much suppliers can charge their 29 million household customers per unit of gas and electricity.
Ofgem said it remained concerned about energy affordability, particularly for vulnerable customers, after household debt reached a record high of £3.3bn earlier this summer.
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The regulator is due to release data next month outlining how far behind some customers are on their energy bill payments, as well as potential ways that officials could intervene and provide support.
Lewis said a reversal in energy prices was highly unlikely. “I’m afraid to say that it’s currently predicted that on 1 January, it will rise again, although only slightly at that point. And by this time next year, we are still likely to be paying more on the energy price cap than we are right now,” he said.
“So these price rises – unless there’s a radical change – are here to stay.”
The Department for Work and Pensions said it was committed to supporting pensioners, “but given the dire state of the public finances we have inherited, it’s right that we target support to those who need it most”.
A spokesperson said: “Over a million pensioners will continue to receive the winter fuel payment and eligible pensioners will also be able to benefit from the £150 warm home discount scheme from October to help with their energy bills over winter. We are urging pensioners to come forward and check their eligibility for pension credit to ensure as many people in need as possible have access to this support.”
