UK pensioners left on ‘financial cliff edge’ by cuts to winter fuel payments

Tens of thousands of pensioners are on a financial cliff edge because of the government’s decision to radically restrict winter fuel payments, a new analysis has revealed. The chancellor, Rachel Reeves, opted to introduce a means test for the payments , with only those on pension credit qualifying, stating it was one of the “difficult decisions” she had to make, as she accused the Tories of leaving £22bn in unfunded commitments .

The decision removes the payments from about 10 million pensioners in England and Wales. Officials said this weekend the policy would be among a package of measures “to fix the foundations of the economy”.

Related: Pensioner body calls on Reeves to reverse cut to winter fuel allowance

A new analysis by Policy in Practice, a social policy software and analytics company, suggests about 130,000 people will miss out on winter fuel payments in the UK because they are up to £500 a year over the threshold for receiving pension credit, making them ineligible for the benefit. Experts warned they may end up worse off than some of those qualifying for the payment. An estimated 850,000 older people are also eligible for pension credit in the UK, but not claiming it.

Deven Ghelani, the founder of Policy in Practice and one of the architects of the universal credit system , said: “Cliff edges in the benefit system are a growing problem. It’s great that pension credit can unlock access to housing benefit and council tax support, alongside a growing list including social tariffs, the warm home discount and now winter fuel payments. But it means that about 130,000 pensioners might be better off with a lower income.”

Jan Shortt, general secretary of the National Pensioners Convention, a campaigning organisation for older people in the UK, warned of the risk of higher hospital admissions and more deaths: “The real pain is going to be felt by those just above the entitlement for pension credit. They are on a ledge and some of them will drop off into silent poverty.

“We will get more cold, damp and mouldy homes because people will turn off their heating just to get by.”

Ros Altmann, a former Conservative pensions minister, said the government had made a “real blunder” by scrapping the winter fuel allowance for millions of pensioners.

Lady Altmann said: “It’s made pensioners very angry and I’ve already had loads of emails. The chancellor kept saying: ‘If we can’t afford it, we can’t do it.’ Pensioners might have to say with their heating: ‘If we can’t afford it, we can’t turn it on.’

“This is genuine error where policy wonks don’t realise just how much of a knife edge some pensioners are on. There are so many people just above the threshold who are going to suffer from this.”

The latest Opinium poll for the Observer shows that Reeves’s personal ratings have plummeted in the wake of Monday’s statement in which she announced the cut. They have fallen from +11% when she first became chancellor to -12% last week.

Scrapping winter fuel payments for pensioners who do not receive pension credit or other means-tested benefits appears to have been an unpopular decision. Opinium found that 49% thought it was the wrong course of action, compared with 29% thinking it was the right one.

Labour’s lead on being the best party to handle public services and benefits has also dropped 5 percentage points since Opinium’s last pre-election poll, but it still has a lead on the issue of 23 points.

Heléna Herklots, the older people’s commissioner for Wales, last week urged the government to reconsider the decision on the winter fuel allowance. She said “driving more older people in Wales into poverty” could bring greater costs in the long term.

Greg Fell, president of the Association of Directors of Public Health, said: “Fuel poverty can lead to cold, damp living conditions, which in turn can cause an increase in illnesses, including respiratory disease, cardiovascular disease and mental health problems.“There are a number of ways the government can act to limit fuel poverty and its effects, and all these mitigations, including the winter fuel allowance, should be maximised for those most in need of support.”

A government spokesperson said: “This government is committed to pensioners: protecting the triple lock, keeping energy bills low through our warm homes plan and cutting NHS waiting lists. Given the dire state of the public finances we have inherited, this government must take difficult decisions to fix the foundations of the economy. In these circumstances, it is right that winter fuel payments are targeted at those in most need, and we will work with local authorities to boost uptake of pension credit, reaching the many pensioners who could still benefit from this year’s winter fuel payments.”