Reeves is cutting winter fuel payments for 10 million retirees to fund public sector pay increases

Rachel Reeves will scrap winter fuel payments for 10 million pensioners to help fund substantial public sector pay rises.

The Chancellor announced plans to make £5.5 billion in savings this year, tackling the previous government’s £22 billion deficit in the public finances.

The bulk of the savings will fund a £9.4 billion pay scheme for public sector workers, excluding a 22% pay rise for trainee doctors. Major changes include limiting winter fuel payments to those already receiving means-tested benefits, affecting almost 10 million pensioners who will lose them for the first time.

Currently, all 11.4 million pensioners receive an extra £200 to help with winter heating costs, while those over 80 receive £300. The new measures will save £1.4 billion this year and £1.5 billion next year, reducing the number of recipients to just 1.5 million households.

Reeves also mentioned possible tax increases in her upcoming budget on October 30. A Treasury document stressed that the £5.5 billion savings alone would not be enough to balance the books, indicating that further fiscal action is necessary.

The chancellor’s decision has drawn sharp criticism from former chancellor Jeremy Hunt, who described Labour’s plans as the ‘biggest betrayal in history by a new chancellor’. Hunt accused Reeves of using a “fictitious black hole” to justify new tax increases, suggesting this undermines political confidence.

Labor is also expected to promote the introduction of VAT on private school fees from January 1, preventing early deposits to avoid the 20% tax charge.

Reeves stated that Whitehall’s daily budgets are expected to be £21.9 billion higher than previously expected, due to higher costs associated with asylum claims and illegal immigration, which stand at £6.4 billion this year alone. Additional spending on the NHS, financing Ukraine and infrastructure maintenance has put further pressure on public finances.

Labor will also end Rwanda’s asylum program and cancel the Dilnot reforms, which were designed to allow people to keep more of their savings when paying for healthcare costs.