Keir Starmer’s U-turn on means testing the winter fuel payment came after opposition from the Treasury was overcome, The i Paper has been told.
Chancellor Rachel Reeves hinted on Tuesday that the unpopular measure would be partially-reversed, and it comes after The i Paper exclusively revealed on Saturday that Starmer was poised to annoucne a U-turn.
The Treasury categorically denied that Reeves had in anyway been overruled by Starmer, or had resisted pressure to make the change.
It is understood agreement to back track was made some weeks ago with discussions centering on whether to scrap the policy completely, or finesse it to ensure more pensioners would be able to claim the payment.
The decision to means-test the previously universal payment – by making it dependent on receipt of Pension Credit – was one of the first announcements by Reeves after Labour’s general election victory last year after she discovered what she claimed was a £22bn hole in the nation’s finances.
However, the policy has been hugely unpopular and was widely blamed for the party’s collapse in support in the local elections earlier this month.
Starmer announced the partial U-turn at Prime Minister’s Questions on Wednesday when the Chancellor was out of the country attending a meeting of G7 finance ministers in Canada.
“I recognise that people are still feeling the pressure of the cost-of-living crisis, including pensioners,” he said.
“As the economy improves, we want to make sure people feel those improvements in their days as their lives go forward. That is why we want to ensure that, as we go forward, more pensioners are eligible for winter fuel payments.”
He said the Government will “only make decisions we can afford” and would therefore look at this as part of a “fiscal event” – signalling that a change will be announced either at the spending review in June, or the Budget in the autumn.
It is likely the change will come in the form of lowering the income threshold at which pensioners will be able to claim the payment, of £200 or £300 in a household with a member aged over 80.
Former Prime Minister Gordon Brown said the change should be made as soon as possible.
A Labour source told The i Paper that Number 10 had been “unhappy” about winter fuel “for a long while” but Reeves had “dug in”.
A second source also said that Downing Street had been “unhappy for a while” and that Reeves had come round to the need to change course “a few weeks ago”.
Reeves defended means-testing the payment earlier this month, insisting to media that the “policy stands” and that it was “necessary to put the public finances on a firm footing”.
She hinted at a shift in thinking on Monday when she said she was “listening” to concerns “about the level at which the winter fuel payment is removed”.
Rachel Reeves, UK chancellor of the exchequer, during a business reception on the sidelines of the UK-EU summit, at Downing Street on Monday. Photographer: Tolga Akmen/EPA/Bloomberg via Getty ImagesAsked on Wednesday why Starmer was announcing the U-turn when Reeves had unveiled the original policy, the Prime Minister’s Official Spokesman said: “It’s perfectly reasonable for the Prime Minister to update the House on this.”
The Spokesman reiterated a previous commitment that Reeves will remain Chancellor until the end of the Parliament.
There are fears in the government and wider Labour Party that the partial U-turn will not go far enough.
A government source said that unless Starmer did a “full 180” by completely reinstating the payments, it would just “dredge up” the controversy without satisfying people’s concerns.
Labour MPs call for full reinstatement
Left-wing Labour MPs also said that the Government should restore the payments in full.
Jon Trickett, the MP for Normanton and Hemsworth, said: “The Winter Fuel cuts were a major error. They ought to be reversed in total now”, while Clive Lewis, the MP for Norwich South, said the partial U-turn would not “atone politically for the original decision, and I still want to see the principle of universality restored”.
Others questioned the decision to change course at all. A minister said: “I think we’ve already gone through the pain on this. Why U-turn?”
It is not clear what mechanism the Government will use to reverse the decision, where the new eligibility will be set or even whether it will be in place for this winter.
Asked if the changes would be in place by winter, the PM’s Spokesman said: “We obviously want to deliver this as quickly as possible, but the Prime Minister was very clear in the House that this has to be done in an affordable way, in a funded way, and that’s why those decisions will be taken at a future fiscal event.”
The Treasury has been approached for comment.
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