Pension credit claims double after winter fuel raid

Applications for pension credit – a benefit worth an average of around £9,600 a year to those that receive it – more than doubled in the eight weeks following Rachel Reeves’s announcement on Winter Fuel Allowance, data uncovered by the New European reveals.

In her July statement revealing the extent of the “fiscal black hole” left behind by the Conservatives, the chancellor made the controversial decision to limit the Winter Fuel Allowance (WFA) payment of £200 a year (£300 a year for older pensioners) to those households claiming pension credit. Previously it had gone to every pensioner, regardless of their income.

Limiting the payouts to households receiving pension credit was estimated by the government to save around £1.5 billion a year, and to ensure the money spent was better targeted. Pension credit is a benefit designed to top-up the incomes of poorer pensioners, who have little in the way of savings and a total income of less than £218 a week for those living alone, or £350 for couples.

However, according to the government’s own estimates, around 800,000 households eligible for the benefit do not claim it – meaning they would be set this year to miss out on not just the £200 Winter Fuel Allowance, but that they are also missing out on almost £10,000 year-round to which they are entitled.

The government had said it would try to boost the take up of pension credit to soften the impact of its policy changes. Figures obtained through the Freedom of Information Act suggest that the prominence of the Winter Fuel Allowance issue has been doing just that.

In the eight weeks following Reeves’ announcement, there were 74,400 new applications for pension credit. In the same eight weeks in 2023, there were just 30,200 new applicants for the benefit. That is an increase of 44,200, or 146%, on a year ago – meaning that potentially tens of thousands of low-income households could see sizeable extra income.

The data also suggests that trend is only getting faster: the week beginning July 29 had 7,900 applications (double the week before), but the week beginning September 16 (the latest for which data is available) had 11,800.

However, the surge in applications does mean that the government will have to pay out considerably more. Assuming all of the extra applications were successful (which is unlikely to be the case in reality), the government would pay £400 million extra each year in pension credit to those applicants alone.

The Treasury’s figures had assumed some uptick in pension credit applications in its calculations on restricting Winter Fuel Allowance, but if it is higher than expected the savings to government will not be as large as the £1.5 billion hoped for.

Depending on your point of view, the figures can be spun as either good or bad news for the government. Detractors of the government’s plans would say that the uptick in pension credit claims means that the changes to Winter Fuel Allowance will save less money than expected and could even end up costing the government more – suggesting the change was a bad idea.

Defenders of the government, though, would point out that this money is much better targeted – going entirely to pensioner households on low incomes, who were likely struggling throughout the year. Instead of giving £200 to lots of pensioners that are (on paper at least) millionaires, the government focuses its limited resources on those that need it.

They can also argue, not unreasonably, that raising awareness for people to claim a benefit to which they were always entitled cannot be a bad thing, even if it reduces the government’s savings.

The row over whether this is something to be welcomed or condemned can carry on – but the figures are clear: the changes to Winter Fuel Allowance have sparked a huge surge in pension credit claims. With various awareness campaigns still kicking off as the weather gets colder, that looks set to continue.