As many of you may have known already, the Labour government has made a controversial decision to scrap winter fuel payments, leaving millions of people without money to pay for heating. This caused a huge stir in the pensioners’ community, with many protesting for it to be reversed. However, here I will assess the stigma around this subject and how the Labour conference has voted to reverse the cut.
Rachel Reeves speaking at the House of Commons clearing the path for Labours finances
First, why are the winter fuel payments being cut? Well, according to Labour leader Sir Keir Starmer, this is ‘necessary’ to cover a £22 billion budget shortfall which is said to be left by the previous Conservative government. This change results in over 10 million pensioners not receiving £200-300 annually to cover the costs of heat and food for the coming winter. Instead, only people with low incomes could receive these benefits. According to Rachel Reeves, the chancellor appointed two months ago, insists that the blame should be on the Conservatives, saying that ‘reckless decisions’ were leading to a £22 billion ‘black hole’ in public finances, and that October’s budget would be ‘painful.’ Ex-chancellor Jeremy Hunt said that the shortfall was ‘spurious’, and that public finances are not what Rachel Reeves claims to be, accusing her of a ‘shameless attempt to lay the grounds for tax rises.’ In a recent interview, Keir Starmer says that they will have to make ‘unpopular decisions’ to bring back the UK economy and fix the damages the previous government has left them.
However, some pensioners who may have low incomes still haven’t been able to receive these benefits, due to them not claiming pension credit. Since the cut, there have been 75,000 applications reported for pension credit in the last two months since Chancellor Rachel Reeves first announced the cuts.
Pensioneers are urged to make final checks before coping with not getting paid
Recently, a Scottish couple has attempted to sue governments over the winter fuel payment scraps, not just for them but for all pensioners. They claim that ‘both are guilty through action and inaction, of damaging the welfare of pensioners.’
Some say that they could only get through last year’s winter because of the government’s help with winter fuel payments. The cut means that for some it has resulted in an ‘eat or heat’ situation, with people having to consider spending their money on paying for their fuel and heating or eating dinner. This contrasts with what the Prime Minister said a few days ago, that people must ‘accept short-term pain for long-term good’.
For some, it is clear what Labour government is doing this at the worst possible time and affecting the poorest the most, whilst the wealthy are least affected by this. Sir Ed Davey says that there are other ways to cover up the debt, such as getting the ‘very wealthiest in our country to pay more' to help investment in public services. But the Conservatives, who oppose the scrapping of winter fuel payments, have called for using non-renewable energy resources for this winter to assist struggling households this winter, rather than net-zero targets.
However, are there other ways to get out of this ‘mess’ that the Labour government has inherited from the Conservatives? As this is essentially a debt, the government can issue bonds to borrow money from investors. Government bonds are a debt security that are given by the government to support them in spending. People can buy these, resulting in the government raising money. Those that are backing the government are considered low risk, so it is attractive to people, as the income you receive is predictable and safe. However, although issuing debt can boost economic growth, but may not be effective in reducing long-term government debt. Another somewhat controversial way is to tax the wealthy, as some protest that it is worse to cut payments on poor pensioners, and taxing the wealthy people is better due to the minimal impact on poor pensioners.
In summary, whilst winter fuel payments can reduce the fiscal hole in the government and stability, it has a large impact on varying pensioners, some even tackling the incomprehensible decision of whether to eat or pay for heating. Another way could be to issue debt and sell bonds to raise money, but that may not help in the long term, where the Labour government aims to kick-start economic growth and deliver economic stability, therefore, selling bonds would not help in this way.
By Gowrthan Pirahalathan, Year