Huge rise in Pension Credit claims set to wipe out Winter Fuel Payment savings

A boost in Pension Credit claims will mean hundreds of thousands of older people are no longer living in poverty, analysts say

A huge rise in Pension Credit claims looks set to wipe out the savings from cuts to the Winter Fuel Payment by the middle of next month, analysts have said. Chancellor Rachel Reeves announced that the pension-age fuel allowance would now be restricted to those who are receiving Pension Credit and some other means-tested benefits.

The Department for Work and Pensions has been running campaigns to encourage the take-up of Pension Credit as it's thought 880,000 older people are eligible but not claiming. Other organisations are also making efforts to boost numbers, including staff at Octopus Energy who are offering free benefit checks for any customers they think may be eligible to put in a claim.

Claims for Pension Credit have already risen by 152 per cent in the eight weeks since the Winter Fuel Payment changes were announced and this trend is expected to continue. It could end up cancelling out the £1.4 billion that's expected to be saved from the cuts, analysts now estimate.

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People have until December 21 to put in a claim for Pension Credit that would mean they re-qualify for the Winter Fuel Payment under its new rules. Policy in Practice, which is working with local authorities across the country to let eligible residents know that they can claim, says savings from the cuts are expected to be cancelled out much earlier than expected.

Labour has projected it will save £1.4 billion per year from its new restrictions on who gets the winter fuel cash, taking into account an anticipated £370 million increase in Pension Credit expenditure. The Government's calculations are based on an assumption of 95,000 additional Pension Credit applications, with each person receiving an average of £3,900 a year.

Policy in Practice says if applications continue at the current rate, the predicted 95,000 additional claims will be hit by mid-November. In addition, targeted take-up campaigns and the government's promise to honour Winter Fuel Payments for claims made until December 21 could mean the target will be "well and truly exceeded."

It said: "If the current trend continues, the total cost of Pension Credit and other benefits will far exceed budgets, potentially erasing all of the Winter Fuel Payment savings. The £1.4 billion in savings would be entirely wiped out if Pension Credit take-up rises by 259,000 additional claimants."

Deven Ghelani, director of Policy in Practice, says this won't be a false economy but is welcome news for older people who are struggling in poverty. He explained: "It's great news that more pensioners are getting the financial support they need. The increased income for some of the country's poorest elderly citizens can have wider benefits, providing much-needed relief during a cost of living crisis.

"Policy in Practice has seen unprecedented demand, with one in five local authorities looking to run Pension Credit take-up campaigns in the lead-up to Christmas. Policy in Practice's targeted take-up campaigns are using Housing Benefit and Council Tax Support data to drive an increase in take-up.

"While this means the change is unlikely to save the Treasury as much money as it hoped, it has meant a life-changing boost in income for hundreds of thousands of pensioners living in poverty."

Policy in Practice also points out that when factoring in other help that's available to people on Pension Credit - including Housing Benefit, Council Tax Support and the Winter Fuel Payment - the total average value of a claim could be as high as £7,223 per year. This then means just 51,300 additional claims will use up the £370 million spending forecast, compared with the Treasury's 95,000 estimate.

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