Winter fuel payment will no longer be given to all pensioners (2024)

More than two million workers including teachers, police and prison officers are set for a pay rise, while Winter Fuel Payment will be cut as a universal benefit for pensioners, new Chancellor Rachel Reeves said.

In her first major speech to the House of Commons after last month’s election, the top Labour politician hit out at her inheritance from the previous government, claiming to be shocked at the scale of their overspend.

Public sector workers may welcome the offer of an average 5.5% more cash, but it was a brief moment of positivity in a grim speech that accused the Tories of ‘covering up’ the true state of public finances, leaving her with a £22 billion hole in funding.

Mrs Reeves said said winter fuel payments would be removed as a universal benefit to all pensioners in England and Wales, and would instead be means tested so only those already receiving other benefits would get it, saving around £1.5 billion per year.

‘The Government will continue to provide winter fuel payments worth £200 to households receiving pension credit or £300 to households in receipt of pension credit with someone over the age of 80,’ she said.

‘Let me be clear, this is not a decision I wanted to make, nor is it the one I expected to make – but these are the necessary and urgent decisions that I must make.’

She said said she would be accepting the recommendations of independent pay review bodies for teachers and NHS staff including nurses.

Questioned later, she said other public sector workers would also get a pay boost. ‘I think that we do owe it to our armed forces, our prison officers, ourpoliceforces, our nurses and our teachers to reward them properly for the work that they do, and that’s what we did today in implementing in full the recommendations of thepayreview bodies,’ she said.

She gave more details on private school tax changes, saying that VAT at 20% will be levied on fees for education and boarding from January 1 2025. This will also apply to any fees for near year prepaid from today, to avoid parents being able to dodge the levy by paying early.

The government will also remove business rates relief for private schools from April next year, which will mean they will no longer be treated as charities for this purpose.

Mrs Reeves confirmed that the government has also reached a new deal on pay for junior doctors, who have been striking since March 2023. The deal agreed with the British Medical Association trade union, thought to be a 22% rise, will now go to a vote of members.

Last night Downing Street said that the country was ‘broke and broken’, claiming the state of public finances is even worse than feared.

Mrs Reeves said of the previous government: ‘They spent like there was no tomorrow because they knew someone else would pick up the bill.’

Major infrastructure plans were also on the chopping board today, with the most high profile scheme the £1.7 billion planned tunnel under Stonehenge, intended to ease traffic pressure on the A303.

This had been controversial to begin with, as protesters said there should not be major roadworks at such an important historic site.

The £500 million Restoring Your Railway Fund and the A27 Arundel bypass are also set to be scrapped, as well removing funding for Boris Johnson’s 40 hospital building projects, and restriction of spending on non-essential consultants.

The government is also expected to try to sell off ‘surplus’ public land and buildings, including sites owned by the NHS, Ministry of Defence, and National Rail, to raise cash – continuing a move introduced by the Conservatives.

Reeves will also launch the Office of Value for Money, a new government agency aimed at reducing waste.

Mrs Reeves said she would seek to find £5.5 billion of savings this year and £8.1 billion next year.

Finalised departmental budgets for this financial year and the next will be confirmed in October, and a multi-year Spending Review will conclude in Spring 2025.

The Chancellor’s speech had echoes of George Osborne’s ‘tough but fair’ speech introducing austerity as Chancellor in 2010, when he blamed Labour for ‘living beyond its means’ with record debt.

Fourteen years of Tory government later, it’smuch the same story as the new government has come in accusing its predecessor of fiscal irresponsibility.

What will junior doctors be offered after a year of strikes?

The Times reported that the British Medical Association (BMA) has recommended the offer to members, which is understood to include a backdated pay rise of 4.05% for 2023/24, on top of an existing increase of between 8.8% and 10.3%.

A further pay rise of 6% for 2024/25 will also be topped up with a consolidated £1,000 payment.

What have the opposition said about the Chancellor’s plans?

Some cast doubt on how surprised she really could have been after taking office, Shadow transport secretary Helen Whately said the Chancellor ‘would have known about the state of the public finances’ while serving in opposition because of the Office for Budget Responsibility.

Ms Whately added: ‘Actually while Labour is going out there and trying to tell everybody that it is all so difficult for them, this is just them setting a narrative for tax rises that they want to bring in later on.’

Responding to her speech, Jeremy Hunt, who previously served as Chancellor, asked her to ‘apologise for the house’ for making misleading statements, saying that the books were open to her before the election to see what the figures on spending were.

‘So far this year we are the fastest growing G7 economy,’ he said, with falling unemployment and inflation figures.

He urged her to ‘stop trash talking’ the economy and stop telling ‘co*ck and bull’ stories about how bad it is.

The ‘fictitious black hole’ was largely due to her giving discretionary pay rises she had a political choice not to do, he said.

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