“The Government is preserving key benefits for older and vulnerable people, including Winter Fuel Payments”
Spending Review 2010
Winter Fuel Payments – a thorny issue for David Cameron during the election. Politically it’s a sacred cow for the Prime Minister after his angry outburst in the second leaders’ debate when Gordon Brown pushed him on whether he would keep it.
And so pensioners escaped relatively unscathed from the slashing Spending Review with their universal Winter Fuel Payments intact, although the top-up the last government introduced for two years is still due to come to an end. But is it just the vulnerable that benefit?
Winter fuel payments cost around £2.7bn per year – a not insubstantial amount when George Osborne slashed £7bn a year from welfare payments last week.
They are paid to all pensioners. Currently it’s worth £250 for a household where at least one person is over 60 (£125 each if you are a couple who are both eligible) and £400 for those over 80. The payments are set to go down by £50 and £100 respectively as the Chancellor has not budgeted to keep on the last government’s top-up yet.
Last year (2009/10) the payments went to 12.68 million people, or 9.17 million households. Around 42 per cent of recipients got the lower rate of £125, while 2.54 million people received the higher rate because they were over 80.
But because the payment is a universal benefit, under EU rules it was also paid to more than 65,000 ex-pats living across Europe in 2008/09 – including 31,145 people who headed to the warmer climes of Spain, 1,111 to Greece, 1,114 to Italy and 4,675 to Cyprus. One person even received the tax-free benefit in the tax haven of Liechtenstein.
The total is up from 26,936 payments made to ex-pats in 2004/05, a parliamentary question revealed.
Also among the “older and vulnerable” people who benefit from the payments, according to parliamentary written answers, are around 450,000 higher rate taxpayers (including those paying the 50 per cent tax rate) who are over 60 and so eligible to the Winter Fuel Allowance.
And, the Lib Dem peer Lord Oakeshott says, around two thirds of the members of the House of Lords get the payment.
There are arguments about just how old is old – if the age of eligibility for the Winter Fuel Payments was raised to 70, the government’s coffers would be £770m better off this year.
So, like all universal benefits, it is quite clearly not just the vulnerable who gain from the extra cash.
And with other totem universal benefits, such as the Child Benefit, moving to means testing in the name of deficit reduction, expect the pressure to mount on Mr Cameron to slaughter the sacred cow.