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Davey takes aim at the winter fuel payment

27 June 2012

4:30 PM

27 June 2012

4:30 PM

On Monday, David Cameron reiterated his opposition to scrapping the winter fuel payment as a universal benefit. During his speech on welfare, the Prime Minister said: ‘There is also a debate about some of the extra benefits that pensioners can receive – and whether they should be means-tested. On this I want to be very clear: two years ago I made a promise to the elderly of this country and I am keeping it.’

Even though means-testing winter fuel payments might be off the table, I understand that work is still going on within Whitehall to alter the benefit. This time it’s not in the Work and Pensions department, which has overall responsibility for administering the benefit, but in the Energy and Climate Change department. Well-placed sources both inside the department and advising it tell me that Energy Secretary Ed Davey is working on plans to offer three years’ worth of the payment in a lump sum to pensioners for them to spend on energy efficiency measures for their home.

This benefit costs £2bn a year, but Britain’s housing stock is currently so leaky that much of the heating that it funds simply escapes through uninsulated lofts and windows. Sources tell me that the scheme, which would operate on an opt-in basis, thus neatly allaying any of the PM’s fears  that his pledge to keep it universal is being challenged – is affordable for the department, and the only factor that could hold it back would be whether there are enough suppliers of double-glazing and external insulation to go around.

This could still be a way of challenging the universal nature of the payment, though. Presumably once a fuel-poor household has gained a less leaky home, they may not need the money when they become eligible for it at the end of the three year period. Conveniently, that would be within the next Parliament, rather than this one, with would make it far more palatable for politicians to propose means-testing without breaking any 2010 pledges. This is what one source described to me as a ‘personal’ interest of Davey’s, but it is also something the civil service seems on board with, too: the Audit Commission published a report criticising the payment as poorly targeted back in 2009.

DECC says ministers ‘continue to explore a range of levers to generate demand for the Green Deal and energy efficiency measures, and tackle fuel poverty’. That sounds promising. The spokesperson adds: ‘We have always said that the winter fuel payment is an important benefit to help older people keep warm in winter. The Coalition Agreement made clear that we will protect key benefits for older people such as the winter fuel payment.’

Davey has been rather busy picking up the work of his predecessor on the green deal and electricity market reform to look at this in detail, but the big question is whether the PM panics at any attempt at all to touch the payment in this Parliament, or sees it as a useful way of making it a little more efficient.

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