The new Labour government has been forced to deny it is implementing austerity

The UK Government is facing fierce criticism from the third sector after announcing controversial plans to cut fuel payments to pensioners, in a move which could leave two million elderly citizens cold at home this winter.

In a statement on what the government described as the “public spending inheritance”, Chancellor Rachel Reeves warned that the previous Tory government had covered-up a £22 billion shortfall in public finances. 

While some criticised Labour for claiming to have “uncovered” the funding gap, despite public finances having been available to Labour prior to this month’s general election, Ms Reeves said "tough decisions" needed to be made as a result.

Charities have raised particular concerns about the Labour government’s move to cut some benefits to pensioners. 

From this autumn, pensioners in England and Wales not on pension credit or other means-tested benefits will no longer get winter fuel payments worth between £100 and £300, with ministers forced to deny that Labour is imposing austerity on the public. 

Responsibility for the winter fuel payment is set to be transferred to Holyrood in September and replaced with a Scottish Government-managed equivalent. 

Concerns have now arisen regarding the roll out of this, with claims the £180 million funding needed to ensure universal coverage the new Pension Age Winter Heating Payment has been cut to just £80m. 

However, Scottish Secretary Ian Murray has said the Scottish Government would receive a “positive balance” in funding through Barnett consequentials. 

Charities in Scotland said the move was a “blow” to pensioners.  

Age Scotland wrote on social media: “The Chancellor's decision to means-test the Winter Fuel Payment will come as a blow to many pensioners in Scotland struggling on low incomes.

“Our helpline can carry out a free benefits check to make sure you're getting all the support you are entitled to.”

This concern was echoed across the UK’s third sector, with the chancellor urged to rethink her decision - which was described as a “death sentence”. 

Gillian Cooper, director of energy policy at Citizens Advice, said: "Millions of households on low incomes face living in a cold home this winter, with many forced to make the impossible choice between heating or eating. 

“The current winter fuel payment is not well targeted and is too low to make a real difference to pensioners who need help most."

Caroline Abrahams, the charity director at Age UK, added: “Our initial estimate is that as many as two million pensioners who badly need the money to stay warm this winter will not receive it and will be in trouble as a result – yet at the other end of the spectrum well-off older people will scarcely notice the difference – a social injustice.

“Means-testing winter fuel payments this winter, with virtually no notice and no compensatory measures to protect poor and vulnerable pensioners, is the wrong policy decision, and one that will potentially jeopardise their health as well as their finances – the last thing they or the NHS needs.”

Matt Copeland, head of policy at National Energy Action, said any funds raised from this policy change should go towards helping low-income and vulnerable energy customers this winter as a priority.”

He added: “Today the Chancellor announced that the Winter Fuel Payment will only be given to pensioners receiving benefits going forward. 

“Although this would make the policy more progressive, it will leave many pensioners in need without support. One third of fuel poor households do not receive benefits. They should not be forgotten. 

“Energy prices remain high and are due to increase again this winter. This creates a significant challenge for low-income households. 

Simon Francis, coordinator of the End Fuel Poverty Coalition, said: "When Rishi Sunak threatened to axe winter fuel payments in September 2023 we said that this could be a death sentence for pensioners who are only just about managing to keep out of fuel poverty. Nothing has changed. 

“Energy prices are still high, people are still struggling with the cost of living and this dangerous decision by the Chancellor could condemn pensioners to living in cold, damp homes this winter.

"Figures for the Warm This Winter campaign suggest that around 41% of over-75s could now see their winter heating budget torn to shreds as they have modest incomes and will not now be eligible for the payment.

“The chancellor must urgently think again and consult with older people's charities on a better way to target this support to a wider group of pensioners."

The chancellor also confirmed in Monday’s statement the Treasury will offer multi-year financial settlements to councils across the country. 

This decision was welcomed by third sector representatives in Scotland, who said this model of funding was “both desirable and possible”. 

Kirsten Hogg, head of policy and research at the Scottish Council for Voluntary Organisations, told TFN: "The voluntary sector is crucial to the delivery of public services in Scotland. We remain concerned at the impact of the public spending pressures outlined by the chancellor on voluntary organisations and the communities they serve.

"The chancellor's announcement of minimum three year funding horizons for government departments and local authorities is a welcome signal that multi-year funding is both desirable and possible.  

"We look forward to working with the Scottish Government to ensure that the increased certainty and stability they will have in relation to their funding settlement from Westminster is reflected in an increase in multi-year funding agreements for voluntary organisations at a local and national level.”