Over the next two months my former department, the DWP, will be putting winter fuel payments into the bank accounts of some 12 million people on the state pension, including mine. The payments – £200 per household or £300 where there is a pensioner in the household over the age of 80 – will cost the taxpayer something over £2bn.
As they have done since they were first introduced in 1997, they will go to virtually every person in this country in receipt of a state retirement pension (though no longer as they once did to those who have retired to the Costas in Spain) – from the poorest to the richest, and totally irrespective of whether they actually need the payments to keep warm during the winter. The payments are neither means-tested nor taxed.
Over the years various reports from think tanks and parliamentary committees have found the Winter Fuel Payment to be a very poorly targeted benefit with the IPPR in 2009, for example, estimating that just 12% of recipients were thought to be “fuel poor”. Such reports have called variously for the payments to be means tested, taxed, withdrawn from higher rate tax paying pensioners or some combination of all three.
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But successive governments have declined to make any such changes though they have kept the rates (apart from the odd pre-election year) frozen for over 15 years. During my many years inside government I met ministers from all parties who, privately, agreed that universal Winter Fuel Payments were a costly and untargeted indulgence which we could ill afford when compared to the many far more pressing needs of both the welfare system and society more generally.
But they were invariably reluctant to bite the bullet for fear of both upsetting the grey vote and, more to their credit, of leaving some pensioners who are in genuine need fearful of heating their homes during the winter.
'Suppose the government were to make it far simpler – by way of a simple click or a single phone call – to say either “thank you but no thank you” or “please pass this money on in my name to a registered charity of my choice”?'
It may be that this is a bullet which the present or some future government will bite but I am not holding my breath. So what might be done? One very simple step could be to enable recipients voluntarily either to decline the payments altogether or alternatively to pass them on to a charity of their choice. The latter is already possible, of course, and I know a number of recipients of winter fuel payments who do just that, but it requires first taking in the money before paying it out.
In theory declining the payment altogether is also possible, though anyone who has ever tried voluntarily foregoing money due to them from a government department will almost certainly have encountered a reaction ranging from bewilderment to incredulity. But does it need to be like that?
Suppose the government were to make it far simpler – by way of a simple click or a single phone call – to say either “thank you but no thank you” or “please pass this money on in my name to a registered charity of my choice”? Would many people do so? The truth is that I don’t know. Nor can anyone else unless we were to try it. But if just 1% of recipients took up one of these options that would lead to some £20m each year remaining with the Exchequer or going to good causes. And I suspect that take up might be a good deal higher than that.
I can, of course, hear even now my former colleagues in the department sucking their teeth at such a proposal and writing papers for ministers pointing out the 101 practical objections to its implementation. But I also remember how good they were at working out how to implement such proposals once ministers had decided to take them forward. I hope that they and ministers might at least think this a proposal worthy of their consideration.