Pensioners will be £1,700 better off, Rachel Reeves tells winter fuel rebels

Rachel Reeves says pensioners are on course for a £1,700 boost under Labour as she tries to counter a rebellion over winter fuel payment cuts.

Writing for The Telegraph on Monday ahead of a crunch vote on the policy, the Chancellor reveals Treasury estimates for the expected rise in the state pension over the next five years.

The Treasury is telling potential Labour rebels that the rise in the state pension thanks to the triple lock far exceeds the impact of ending winter fuel payments for all pensioners.

But the disquiet among Labour MPs remains, with around 40 said to be considering rebelling by either abstaining on the House of Commons vote on the policy today or voting against.

Trade unions have been lining up behind rebels to raise their concerns, with one union leader comparing Ms Reeves on Monday to the Grinch who stole Christmas.

10 million pensioners to lose payout

In July, Ms Reeves announced that the winter fuel payments of up to £300 will no longer be given to every pensioner.

Instead, it will be means-tested, going to only those on pension credit. It means 10 million of the 11 million who had been receiving the payments will lose out.

The Government has been under fire for removing the payments for pensioners while funding inflation-busting pay deals for public sector workers, including train drivers and junior doctors.

Pensioners are already bracing for the cut, with a new survey suggesting half are planning to heat their homes less this winter.

In her article, Ms Reeves insists that the decision to strip the majority of pensioners of the payments was needed to help fill a £22 billion spending “black hole” this year left by the Tories when they were in government.

Meanwhile a Labour government minister on Monday failed to rule out ending the free bus passes for all pensioners scheme, prompting more speculation of cuts hitting older people.

Ms Reeves writes: “The easiest thing I could have done in my first weeks in office is to have ducked the difficult decisions and walked away. To have done what the Conservatives did time and time again: put short-term interests before the national interest.”

She adds later: “These were not choices I wanted to make nor expected to make, but they were the right choice to deliver our promise of economic stability.

“And with that stability we can deliver a Britain that is better off. That is what drives my politics and the decisions I take in government every single day.

“It is why we are delivering our manifesto promise to protect the triple lock, so we can put more money in pensioners’ pockets each and every year. The Full New State Pension alone will be worth around £1,700 more by the time of the next election.”

No hint of an about-turn

Despite weeks of pressure from disgruntled Labour MPs and old age charities, she offers no hint of an about-turn on the policy.

The £1,700 figure is a new Treasury estimate for how much a pensioner will benefit from the triple lock between now and 2029, when the next general election is due.

The triple lock guarantees the state pension will rise each year by the highest of either inflation, wage increases or 2.5 per cent. It was a Tory policy Labour decided to keep at the election.

On Tuesday the latest wage increase figure is published, meaning pensioners learn how much their state pension will rise next year, since it has proved to be the highest of the three measures currently. The rise is expected to be around £400.

Concern that the threshold for withdrawing the winter fuel payments has been drawn too low is being voiced by a number of Labour MPs.

Only 5pc register for pension credit

The Treasury has been pushing to get the 800,000 people who qualify for pension credit but are not yet signed up to register.

But new figures show that less than 5 per cent of those people have submitted an application in the five weeks since the cut was announced.

Elderly Britons earning just £13,000 who do not qualify for pension credit will lose the payment. Critics have said these people will have to choose between “heating and eating”.

A new analysis by the Resolution Foundation, a think tank influential in Labour circles, found 1.3 million pensioner households living in poverty after housing costs are factored in will lose the payments.

Ms Reeves attempted to win over sceptics when addressing Labour MPs behind closed doors on Monday night.

She said at the meeting of the Parliamentary Labour Party: “There are more difficult decisions to come. I don’t say that because I relish it. I don’t, but it is a reflection of the inheritance that we face. So, when members are looking at where to apportion blame, when pensioners are looking where to apportion blame, I tell you where the blame lies. It lies with the Conservatives and the reckless decisions that they made.”

Meanwhile Sir Keir Starmer will on Tuesday tell the Trades Union Congress that they cannot have pay rises that threaten economic stability after demands for above-inflation increases for all public sector workers.

Sir Keir will say: “I do have to make clear, from a place of respect, that this government will not risk its mandate for economic stability, under any circumstances. And with tough decisions on the horizon, pay will inevitably be shaped by that.”

Mick Lynch, general secretary of the RMT rail union, called for a winter fuel cut reversal on Monday, saying: “The call has got to be on Rachel Reeves and Keir Starmer, because that’s where I think it’s centred… to correct this mistake.

“Why do you want to get off on the wrong foot in the first Budget by appearing to be the Grinch at Christmas?”

Rishi Sunak, the outgoing Conservative leader, said: “Labour MPs know this is indefensible – they must do the right thing and force the Government to come clean about the impact this punishing cut will have.”

Tough decisions today will secure Britain’s long-term prosperity

By Rachel Reeves

The choices facing this new government were never going to be easy. We have inherited an economy that has barely grown in 14 years. The national debt has more than doubled since 2010. Our public services, like the NHS, are broken after 14 years of underfunding and a lack of reform. And families are worse off because successive governments failed to prioritise stability and growth.

Those choices were made even harder in the days after the general election when the Treasury presented me with a £22 billion black hole

in the public finances that had been left by the Conservative Party. That is a £22 billion overspend this year too.
Did the Conservatives disclose this to the government’s spending watchdog? No. Did they disclose it to Parliament? No. And did they disclose it to the British people before the election? No. It is a damning indictment of the Conservatives’ record in power. Party first, country second. They promised responsibility but presided over unimaginable recklessness.
Now the easiest thing I could have done in my first weeks in office is to have ducked the difficult decisions and walked away. To have done what the Conservatives did time and time again: put short-term interests before the national interest. To leave additional borrowing to go unchecked. To give up on economic and financial stability.

I was not – and I am not – prepared to do that because it is the British people who are left paying the price. This Labour Government was elected on a clear mandate of change. That change can only happen by fixing the foundations of our economy. That is why economic stability was the first step in our manifesto, because I know, like every family and business knows, prosperity can only happen on the bedrock of strong public finances.

Delivering that change means difficult decisions, including cancelling road projects that were not properly funded, reviewing the new hospital programme to deliver a realistic plan, and targeting winter fuel payments to the most in need. These were not choices I wanted to make nor expected to make, but they were the right choice to deliver our promise of economic stability. And with that stability we can deliver a Britain that is better off. That is what drives my politics and the decisions I take in government every single day. It is why we are delivering our manifesto promise to protect the triple lock, so we can put more money in pensioners’ pockets each and every year. The full State Pension alone will be worth around £1,700 more by the time of the next election.

It is why we have guaranteed no increase in national insurance contributions, income tax rates or VAT, so we can protect family budgets. It is why we are fixing our broken planning system, so the next generation can realise the dream of home ownership. And it is why we are working with business, so we can invest with confidence and create the growth we need to fund our public services and bring the debt down.

We have had to take difficult decisions – and there will be more to come. But just as Keir Starmer changed the Labour Party for the better, I know we can change Britain for the better. We will fix the foundations, we will rebuild a Britain that is better off. That’s the change we were elected on – and it is the change we will deliver.

Rachel Reeves is the Chancellor of the Exchequer