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The energy price cap hike coincides with the Government’s decision to withdraw winter fuel payments for approximately 10 million pensioners. The Government declared in July that payments would only be made to those receiving pension credit or certain other means-tested benefits, including universal credit.
This year, around 10 million individuals are expected to lose this allowance. Introduced in 1997, the annual tax-free payment ranging from £100 to £300 was designed to assist eligible pensioners with their winter heating costs.
Last winter, the number of recipients increased by 214,000 from the 11.4 million in 2022-23, and it has consistently risen from 11.1 million in 2020-21, according to statistics provided by the Department for Work and Pensions (DWP).
In light of the rising energy price cap as households enter the colder months, the Government is being urged to reconsider its plans to means test the payment. Charities are calling for a U-turn, both the Conservatives and the Greens are advocating for all pensioners to receive the payments this winter, while delegates at Labour’s annual conference supported a union motion to reverse the cut – although the vote does not bind the Government and ministers have stated that the policy will remain unchanged.
Caroline Abrahams, charity director at Age UK, has criticised the decision to limit winter fuel payments to those on pension credit as “reckless and wrong”, stating it “spells disaster for pensioners on low and modest incomes”. The move to means test the winter fuel payment is projected to save the Government £1.4 billion this year, a measure Labour claims is necessary to bridge the gap between the previous government’s spending plans and the funds available.
Labour has also taken aim at the previous government for its lack of investment in energy efficiency and renewable power. However, the Government maintains that over one million pensioners will still be eligible for the winter fuel payment and encourages any pensioner concerned about rising bills to check their eligibility for pension credit.
Various charities and campaign groups have proposed alternative solutions to alleviate the impact of escalating energy bills. Citizens Advice has suggested “targeted bill support”, while the End Fuel Poverty Coalition advocates for the expansion of other support funds and a decrease in standing charges.
Andy Manning, head of energy policy at Citizens Advice, expressed his concern: “This price rise means bills are now around two-thirds higher than before the energy crisis. With record levels of energy debt, the removal of previous support and changes to the eligibility of the Winter Fuel Payment, people are in desperate need. The Government must urgently introduce targeted bill support that reflects the realities of people’s energy needs.”
Simon Francis, co-ordinator of the End Fuel Poverty Coalition, voiced his worries: “We’re now heading into the fourth winter of sky-high energy prices. After October 1, bills will be 65% higher than in 2020/21, meaning the average household will have paid more than £2,500 extra for their energy than had we not been so exposed to volatile energy markets.
“For older people who previously received the Winter Fuel Payment, but will no longer do so under the Chancellor’s new rules, the situation is even worse. For many pensioners, this winter will feel like the most expensive on record. What’s worse, there are more price increases on the horizon.
“We welcome the Government’s long-term plans to boost home energy efficiency to bring down bills and to improve energy security to stabilise prices, but these reforms will take time to take effect and will be cold comfort to those struggling this winter.
“That’s why it is so vital the ministers bring in more support for vulnerable households this winter, reductions in standing charges and a social tariff. The energy industry has made more than £457 billion in profit since the start of the crisis – so there is plenty of money in the system to be able to ensure everyone stays warm this winter and next.”