22 May 2025
U-turn if you want to – a sensible culture of government allows politicians to reverse their mistakes. But also U-turn with care. With too many swerves, leaders lose their grip on the wheel. Ultimately, you have to know where you are heading or you will get lost.
The Labour Government is simultaneously under pressure to retreat on all three of its biggest decisions on benefits. The first two concern actions – means-testing pensioners’ winter-fuel payments and cutting disability payments – while the third concerns inaction: the failure to axe George Osborne’s two-child limit. Reversing all three would cost close to £10 billion and risk a real sense the Government cannot deliver the hard decisions needed to prudently manage the public finances. Amid straitened public finances, even more than usual, to govern is to choose. Unfortunately, the Prime Minister gave a first clear sign of where he intends to buckle on Wednesday – and seems set on the wrong choice.
The noise and the pressure on the three issues is in inverse proportion to their impact on living standards. The panic has been most frenzied on winter fuel payments, and this is where the PM has now sounded a partial retreat. But the case for restoring universal payments is weak. When Gordon Brown introduced them in 1997, three-in-ten pensioners were in poverty. Since then, pensioner poverty has halved, and seniors are today less likely to be in poverty than the wider population and half as likely as children. This is a remarkable achievement, and a success that recent Governments of all political persuasions can take credit for. We should celebrate, but also wake up to the very different social policy challenges that flow from this success.
Since 2010, ongoing increases in the state pension have helped senior households gain £900 annually, while working-age families claiming benefits have been hit for £1,500. Even over this last year, when the pension rise was partly offset by the restricted fuel payments, seniors still came out net winners. The upshot is that working-age households are today almost twice as likely to be living in fuel stress than those of pensionable age.
That’s not to say that all pensioners can easily absorb the loss of Winter Fuel Payments. Indeed, some poor pensioners are missing out because they don’t claim Pension Credit. This should inform how the Government delivers its U-turn – targeting the additional payments at those in receipt of other benefits – such as Housing Benefit and disability benefits. This would benefit around 1.3 million families, at a cost of around £300 million.
Read the full article on the Resolution Foundation website
