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Changes to the Winter Fuel Payment: Insights from Frontline Advice Organisations

In late August 2024, following the Chancellor’s announcement on changes to the Winter Fuel Payment (WFP), the British Gas Energy Trust (the Trust) surveyed its 38 funded organisations for feedback. More than half of the organisations responded, revealing a consensus that while changes are seen as necessary, concerns remain regarding the deadline and the Pension Credit threshold.

Key Survey Findings

 The survey highlighted a strong belief among advice organisations that changes to the WFP are needed, with 85% of respondents agreeing with the Chancellor’s announcement. However, there are significant worries about the implications for vulnerable clients:

 Issues with Pension Credit Eligibility

 While there is support for the changes, 85% of organisations raised some concerns about whether pension credit was the right proxy for eligibility. Many fear this could exclude people who are not in fuel poverty but still require assistance.

One respondent noted: “Removing winter fuel payments from those not in fuel poverty or those who have the means to get by without them makes sense. However, using Pension Credit as the means-testing method is likely to increase fuel poverty among older people.”

Determining exactly how many people in or near poverty will be affected by the changes to the Winter Fuel Payment (WFP) requires understanding how the changes will interact with Pension Credit eligibility.

Evidence suggests a significant number of low-income individuals could be excluded.

Pension Credit and Eligibility Gaps

 Pension Credit is underclaimed: According to the Department for Work and Pensions (DWP), around 880,000 pensioner households entitled to Pension Credit did not claim it in 2022. This suggests that a large group of people eligible for additional financial support through Pension Credit are currently not receiving it, meaning they could also miss out on the Winter Fuel Payment under the new rules.

Many older individuals who are on low incomes just above the Pension Credit threshold may not qualify, even though they still face significant financial challenges.

The Department for Work and Pensions (DWP) has initiated a new awareness campaign aimed at increasing the uptake of Pension Credit, and many third sector organisations including AGE UK and the Trust’s own funded organisations are taking steps to encourage take-up.

Income Thresholds and Poverty

  The Pension Credit threshold is low. As of 2024, Pension credit tops up your weekly income to £218.15 (£11,343.80 annually) if you are single, or £332.95 (£17,313.40 annually) if you have a partner. If your income is higher, you might still be eligible for Pension Credit if you have a disability, you care for someone, you have savings or you have housing costs.

In comparison, the median disposable income of the poorest fifth of UK households was £14,700 in 2022. This suggests that many individuals with incomes just above the Pension Credit threshold are in financial difficulty but may still be excluded from WFP.

An estimated 130,000 older people are missing out on Pension Credit as they are just £500 over the threshold; these people could be financially better off having a lower income and claiming Pension Credit and Winter Fuel Payment.

Rising Costs and Financial Strain

 The rising costs of living have placed many more households under financial stress. According to Age UK, around 1.9 million older households live in fuel poverty, defined as spending over 10% of their income on energy. Many of these households may be on incomes too high for Pension Credit but still face severe financial strain.

Vulnerability of Digitally Excluded and Disabled Populations

 Those who are digitally excluded or have disabilities or chronic illness with associated higher energy needs are likely to be disproportionately affected. Many of these individuals are already on the fringes of Pension Credit eligibility and also face barriers in accessing both Pension Credit and the Winter Fuel Payment.

Further Survey Insights

 Impact on Advice Organisations

 The survey also shed light on the expected impact of these changes on the organisations providing support:

Trust’s Response and Future Steps

 Jessica Taplin, the Trust’s CEO, expressed concern about those just above the Pension Credit threshold and individuals with higher energy costs due to disability or ill health. She noted that the Pension Credit income threshold is low, designed to support those who do not receive the full State Pension, yet it still leaves many at risk. While the DWP has several schemes in place to assist vulnerable groups with their energy costs and the Government has extended the Household Support Fund (distributed via Local Councils), it’s crucial for people to check what help they could be entitled.

While the Trust funds money and energy advice services across Britain, it remains particularly concerned about reaching those who are digitally excluded. These groups, often harder to support, are likely to be disproportionately impacted by the changes.

The Trust is collaborating with partner organisations to ensure support is readily available for older people this winter. In the meantime, its debt write-off grant programme is open, offering eligible households grants of up to £1,700 to help clear energy debts, these grants are open to applications from British Gas & non-British Gas customers.

“While the changes to the Winter Fuel Payment may be necessary, there is understandable concern about the millions of older people who will be affected – particularly those just above the Pension Credit threshold. These individuals, already struggling with rising living costs, may miss out on crucial support this winter and have insufficient time to access the help they need.

Many older people will face heightened financial pressure and will find it increasingly difficult to manage energy bills. Urgent, targeted comprehensive support is needed to help prevent further hardship, this requires collaborative and thoughtful cross sector interventions noting the charity advice sector is already under significant strain.” – Jessica Taplin, CEO, British Gas Energy Trust.

 Conclusion

 The changes to the Winter Fuel Payment are viewed as necessary by many frontline organisations. However, there are widespread concerns about the impact on vulnerable groups, particularly those just above the Pension Credit threshold. As the winter months approach, many organisations expect an increase in demand for their services, as well as heightened financial and emotional pressures on clients.

Further government action, such as extending deadlines and introducing alternative support schemes, may be crucial to ensuring that those most at risk do not fall through the cracks.

Energy debt grants are available from the Trust. To check your eligibility and apply, please click here.