Winter fuel payment: Scottish pensioners could be worse off than those in England and Wales after U-turn

The Chancellor announced on Monday the payment, worth up to £300, will be restored to the vast majority of pensioners who previously received it as anyone with an income of under £35,000 a year will now get the payment automatically.

However, Scotland has already created a devolved benefit of £100 for all pensioner households, which is less generous than the UK government version, potentially leaving hundreds of thousands of Scots worse off than their English and Welsh counterparts.

The decision will result in more money being sent to the devolved administration at Holyrood. The Treasury has said the extra amount for the Scottish government will total £250m, delivered in the usual autumn budget.

Scottish Labour has now urged the Government to increase its payments.

Scottish Labour MSP Paul O’Kane said: “The winter fuel payment is a devolved payment in Scotland and Scottish Labour has long been clear that we want to see it reinstated for the majority of pensioners up here. But despite their loud spin, the SNP voted against our attempts to do so.

“The SNP must not go ahead with plans that would rob poorer pensioners in order to fund payments for millionaires.

“The SNP must re-examine their own proposals in light of this game-changing announcement, ensure payments reach those most in need, and give a cast-iron guarantee that no struggling Scottish pensioners will be left out of pocket under their plans.”

Rachel Reeves had announced the cut in the first first weeks of the Labour government last summer, prompting an immediate backlash and forcing the Scottish Government to delay the implementation of its own devolved benefit.

John Swinney’s administration later announced a similar payment for pensioners which would be tapered and see those on the highest incomes receiving £100, compared to £305.10 for those on the least.

Scotland’s Social Justice Secretary Shirley-Anne Somerville said the U-turn decision was “a betrayal” of pensioners.

She said: “I welcome any extension of eligibility by the UK government, but this is a U-turn the Chancellor should have made a long time ago. But there is still no detail about how the Chancellor intends to go about that. Unfortunately, it still sounds as if many pensioners will miss out.”

Ms Somerville said the Scottish Government had not been consulted on the decision and urged UK ministers to “ensure the Scottish Government is fully appraised of the proposed changes as soon as possible”.

“The Cabinet Secretary for Finance and Local Government wrote to the Chief Secretary to the Treasury last week to urge the UK government to share its plans with us as quickly as possible, so that we can understand any implications for our own programmes and, crucially, our budget,” she said.

The Scottish Government’s plans were initially to provide a universal payment to pensioners, but the proposals were scuppered by the Chancellor’s announcement of the cut last summer, forcing ministers to create a different system for this winter.

Ms Reeves said the UK government had “listened to people’s concerns” about the decision to limit the payment to the poorest pensioners last winter, and was now able to widen eligibility because Labour had restored “stability” to the economy.

Ministers have insisted no additional government borrowing will be needed to cover the costs of the reversal, prompting warnings of tax rises on the horizon. Those with an income above the £35,000 threshold will also receive the payment, but it will then be reclaimed from them in tax.

To be eligible for the winter fuel allowance, a person will need to have reached state pension age by the week starting September 15 this year. Pensioners who do not want to receive the payment will be able to opt out, according to the Treasury.

Writing on social media site X, Paul Johnson of the Institute for Fiscal Studies said: “The corollary of ‘this will not lead to permanent additional borrowing’ is that it will lead to permanent additional taxes (or just possibly permanent cuts to other bits of welfare).”

No.10 insisted the UK government’s manifesto commitment to not raise VAT, income tax or National Insurance remained in place. “It will be for the Chancellor to set out how this is funded at the Budget”, the Prime Minister’s official spokesman added.

Scottish Greens social security spokesperson Maggie Chapman said: “There is no doubt that the damage has already been done. Families will have lost loved ones and illnesses will have been caused over the winter months because of the brutal decision by Rachel Reeves and the Labour government.

"The reinstatement of the winter fuel payment for some is a welcome move, but we must go further. The Labour government must end the two-child benefit cap. which hits working-class families the hardest, and they must reverse their cruel austerity policies.

“Poverty isn't inevitable; it’s a political policy, a policy which Rachel Reeves has forced upon hundreds of thousands of people across the UK. If Keir Starmer has any shame, he would finally call an end to her disastrous time as Chancellor.”

Kemi Badenoch, leader of the Opposition, claimed the Prime Minister had “scrambled to clear up a mess of his own making”.

The Conservative leader said: “I repeatedly challenged him to reverse his callous decision to withdraw winter fuel payments, and every time Starmer arrogantly dismissed my criticisms. This humiliating U-turn will come as scant comfort to the pensioners forced to choose between heating and eating last winter.

“The Prime Minister should now apologise for his terrible judgment.”

Liberal Democrat Leader Sir Ed Davey said: “Finally the Chancellor has listened to the Liberal Democrats and the tireless campaigners in realising how disastrous this policy was, but the misery it has caused cannot be overstated.

“Countless pensioners were forced to choose between heating and eating all whilst the Government buried its head in the sand for months on end, ignoring those who were really suffering.

“We will now study the detail of this proposal closely to make sure those who need support actually get that support. The pain they went through this winter cannot be for nothing.”