Winter fuel payments are in the news yet again. I have lost count of the number of reports and media articles I have read about why these should be reformed and how the money could be better used to cut the deficit or transform our failing system of care or solve some other crisis. And please don’t tell me again that millionaires don’t need a winter fuel payment or a bus pass. Of course not – but let’s make policy changes based on the position of majority of older people not the small minority who are very rich. (when the Deputy Prime Minister pointed out last year that Alan Sugar didn’t need a bus pass Lord Sugar tweeted in no uncertain terms that he doesn’t have one!).
So should we be looking at restricting universal payments to the less well off? It has been suggested that they should just go to people receiving Pension Credit. However that would mean that up to 1.6 million of the poorest older people would miss out because they are not claiming the Pension Credit they are entitled to. The big advantage of universal payments is that they reach everyone including those do not take up means-tested benefits. They also provide some extra help to the ‘not rich but not poor’ group who can feel because they made sacrifices during their working lives they miss out on benefits and are penalised for having saved.
An alternative option suggested by an article in the Times (9 January) is that the money is consolidated into the state pension so that the better off would pay tax on it. In some ways this makes sense and would simplify the system but it would penalise many people on low incomes receiving Pension Credit. As the state pension is taken into account for means-tested benefits they could end up with a higher state pension only to lose the same amount of Pension Credit. And taxing the Winter Fuel Payment is only likely to save around £230 million – that is before any additional administrative costs.
So overall it is easy to criticise universal support such as the winter fuel payment but hard to reform or limit it without increasing complexity or risking some of those most in need missing out. Now if you were starting to design a system from scratch you wouldn’t have a range of different payments and concessions – some means-tested, others based on age 80, 75, 65, 60, or as in the case of winter fuel payments (linked to women’s state pension age) somewhere in between.
Instead you would probably have a simple state pension that meets essential living costs without the need for means-tested top ups, opportunities to save into decent private pensions throughout our working lives, not to mention a programme to ensure all our homes are well insulated and energy efficient with energy bills affordable for all.
Maybe we will get there one day, but we have a long way to go. And with a cold spell on the way the annual payment of £200 or £300 remains a very welcome boost in income for many older people that helps reduce worries about meeting the rising cost of energy bills.
Find out more about Age UK’s Spread the Warmth campaign and why we need to protect the health of older people in winter at www.spreadthewarmth.org.uk