Government U-turn restores winter fuel payments for nine million pensioners

The government announced a major policy reversal that will restore winter fuel payments to nine million pensioners across England and Wales, following months of political pressure and criticism over the original cuts. Chancellor Rachel Reeves confirmed that all pensioners with incomes below £35,000 will now qualify for the £200-£300 annual payment.

The U-turn effectively abandons last year’s controversial decision to restrict payments only to those receiving pension credit, which had limited eligibility to just 1.5 million of the UK’s most financially disadvantaged retirees. The original policy was widely criticised and identified as a factor in Labour’s poor performance in recent local elections.

Reeves stated that the government had “heard the public’s concerns” while maintaining that means-testing remains appropriate to ensure fairness for taxpayers. Pensioners earning above the £35,000 threshold will have payments automatically reclaimed through the tax system or can opt out entirely.

The policy change will cost an estimated £1.25 billion, representing a significant reduction from the £1.4 billion savings initially projected from the cuts. However, the net saving of £450 million is substantially lower than the £1.5 billion target set for the 2025-26 period.

Conservative leader Kemi Badenoch described the reversal as a “humiliating U-turn” by a “failing government”. Critics argue that the change undermines the government’s fiscal credibility and suggests either permanent tax increases or cuts to other welfare areas will be necessary.

The announcement comes ahead of the government’s Spending Review, with Reeves promising to clarify funding arrangements in the autumn budget while maintaining existing borrowing rules. Treasury officials insist the policy will not result in permanent additional borrowing due to improved economic conditions.

Charities welcomed the reversal but emphasised that further action is needed to address fuel poverty more broadly. Age UK and other organisations had campaigned against the original restrictions, arguing they disproportionately affected vulnerable pensioners struggling with high energy costs