How much could the government still save?published at 17:24 British Summer Time 9 June

17:24 BST 9 June

By Ben Chu

The Treasury estimates that its new system of means testing the winter fuel payment, external will still save the government around £450m in 2025-26, relative to the system it inherited under which the benefit automatically went to all pensioners.

That would be only a third of the £1.5bn of savings this year that the government projected when it imposed its initial means test, external in the summer of 2024.

But some analysts think the overall savings for the government could actually be lower.

Under Labour’s initial 2024 reform, the winter fuel payment was only available to those also in receipt of a separate benefit aimed at low income pensioners called pension credit.

Last year, the government initiated a campaign to encourage the hundreds of thousands of pensioners who are eligible for the pension credit, but who don’t claim it, to start doing so.

The latest data shows, external that around 60,000 more applications for it have come in than would otherwise have been expected, likely because of the campaign.

With an annual pension credit claim costing the government £3,900 a year, the former pensions minister Steve Webb has calculated, external that the total annual cost of those new claims could be around £234m.

That additional cost would offset around half of the £450m savings claimed by the government for its latest change to the rules around claiming winter fuel payment.

As part of Your Voice, Your BBC News, we're continuing to hear from people affected by the government's announcement today.

Gail Impey, a 71-year-old finance manager from Buckinghamshire, earns just over £35,000 - and so narrowly misses out on the winter fuel payment.

She tells us she had intended to retire, but was forced to continue working after her husband died and the payment was removed last year.

“Luckily, at 71, I am fit enough to work but I do not have a good quality of life. It’s just me and the dog. Everything is so expensive, I have to make every penny count," Gail says, adding: "I earn just over the threshold but I’m taxed on that. I have paid in all my life and it seems I am missing out again."

Mike Hodges, 72, from Pembrokeshire, tells us he earns between £35-40,000 and did not miss the payment when it was cut last year.

He argues that the threshold could be brought "a lot lower so money can be spent on much more pressing priorities", listing reducing knife crime, helping people on benefits into work and apprenticeships as examples.

We're going to peel away from the ongoing debate in the Commons now.

If you want to continue following the action there, you can watch it live at the top of this page.

Stay with us for text updates as we continue to pick over the changes to the winter fuel payment, announced this afternoon by Chancellor Rachel Reeves. We'll also bring you a round-up of what we've learned today.

Nearing the end of her remarks, shadow pensions secretary Helen Whately - giving the Tory response to the U-turn in the Commons - grills Labour's Torsten Bell on the specifics of the changes.

She asks him what happens when a pensioner earns over £35,000 a year, but through non-taxable income.

"Are they going to have to for self-assessment and have to fill out a tax return in their 80s or 90s"> As a reminder: It was announced earlier that pensioners in England and Wales with an annual income of £35,000 or below will now be eligible for the payment - that's nine million people in total. You can read the finer details in our earlier post.

Image source, Parliament TV

Next, Whately attacks Reeves's earlier claim that Labour has stabilised the economy since taking office, which is why they're able to make these changes to the winter fuel payment.

She says "every metric" shows that this is not the case.

Inflation is 1.5 percentage points higher and growth forecasts have been slashed in half, she says, accusing the government of having "gone to town with the country's credit card".

Labour made a choice to cut winter fuel payments last winter, Whately says, and are foolish to think anyone believes otherwise.

Helen Whately, shadow work and pensions secretary, is on her feet to respond for the opposition.

She calls the government's U-turn on cuts to the winter fuel payment "the most humiliating climbdown a government has ever faced in its first year in office".

Whately says the Tories have campaigned for this change, but Labour ministers "held the line", including Bell - the junior minister who just delivered the statement to the House - who she says previously told her the government's plan was "on track".

She says the original cut "hurt people" and calls it "cowardly" of the government "not to own up to it".

• As a reminder: Earlier, Whately's boss Kemi Badenoch - the Tory leader - called on the prime minister to apologise for the policy and the subsequent fallout.

Image source, Parliament TV

Torsten Bell begins by talking through how the change to the eligibility criteria for the winter fuel payment will work. You can check out our earlier post for the finer details.

He repeats much of what we've already heard from the chancellor today - including that these changes will be fully funded at the next fiscal event, the autumn Budget.

He also says the government has listened to people's concerns and are taking action.

He spells out that pensioners "do not need to do anything" - the payments will be paid automatically and recovered from those who earn over £35,000, addressing one of the key concerns from pensioners.

Over to the House of Commons now, where Torsten Bell, the minister for pensions, is giving a statement on the changes announced to winter fuel payments.

We'll bring you any new lines in our next few posts, but a lot of what's being said will already have been laid out by the chancellor.

You can watch the statement and response from MPs live at the top of the page. Stick with us.

Alex Emery & Kris Bramwell
BBC News

Since Rachel Reeves released her statement, we've been hearing from pensioners what they think about the government's decision to row back on their cuts to the winter fuel payment. Here's a selection of some who've been in touch.

Bob Pritchard, 78, from Bath, tells us that he earns £19,500 a year and believes he will now have his allowance reinstated.

Bob, who lives in a residential care home and pays rent and energy bills, says the removal of the payment "without warning" has had "a lot of impact", and caused "grief and heartache". He says the government's U-turn "will make a lot of difference".

Meanwhile, Alice George, 71, from Watford, calls the decision "appalling".

“A huge amount of young people earn less than £30,000 yet are expected to pay extortionate rent and travel expenses," she says.

“Look at care worker wages or shop workers who don’t earn this amount. This money should be used in the NHS or housing.”

Kevin Peachey
Cost of living correspondent

Image source, Getty Images

The fear among some pensioners is this change will leave them facing a mountain of tax paperwork.

In theory, that shouldn’t be the case. The payment should be made automatically. For the majority of higher-earning pensioners, the money should also be clawed back automatically.

However, there will be a need for some to be alert to their tax , although, this will not happen immediately.

And, sadly, any change in the tax system is likely to be accompanied by fraudsters pretending to be HMRC and trying to steal personal details.

So, if you receive an unsolicited message or call, it needs to be treated with extreme caution.

There's some commentary now from Paul Johnson, director of the economic research group Institute for Fiscal Studies (IFS), who's been posting on social media - specifically about how the government will fund these newly-announced changes to the winter fuel payment.

As we've reported already, the chancellor has not said where the money will come from - only that further details will follow in her autumn Budget. The government did, however, specify that the changes would not lead to "permanent additional borrowing".

In a post on X, Johnson says this comment suggests the changes will "lead to permanent additional taxes" or permanent cuts to other sections of welfare. He also breaks down some of the logistics behind future payments, writing:

"WFP [winter fuel payment] will now be paid at £100 to each member of a couple. So rich pensioner couples, where one has say £100k and the other £30k, will still get £100. If both of the couple have £36k then they get nothing. Messy."

Scottish government mulls what these changes mean for thempublished at 14:54 British Summer Time 9 June

14:54 BST 9 June

David Wallace Lockhart
BBC Scotland political correspondent

The Scottish government now has a decision to make.

They had announced a devolved benefit for this winter which meant every pensioner household would get a minimum of £100 this winter.

This new UK government announcement means that households in England and Wales, where someone’s income is £35,000 or less, are due a payment of £200 (or £300 if someone is over 80).

It’s important to note that the Scottish payment is universal. The English and Welsh one is not.

But, all of a sudden, a cohort of Scottish pensioners - who don’t get pension credit, but whose income is below that £35k threshold - are getting less than their English and Welsh equivalents.

That puts some pressure on Scottish ministers. Do they have to change what they’re planning to pay out?

After some conversations with people in the government here, it seems they’re still digesting the implications of all this.

But it looks like they’ll get extra money off the back of today’s announcement (known as Barnett consequentials, external). There are already calls for that all to be used to make their payment more generous.

• As a reminder: Northern Ireland also took devolved action following the announcement last year about winter fuel cuts. Communities Minister Gordon Lyons said affected pensioners would receive of one-off payment of £100 to help with heating costs.

Tory leader Kemi Badenoch earlier demanded that the prime minister apologise for cutting the winter fuel payment in the first place - calling his U-turn on the policy "humiliating".

Here's some more political reaction we've since had:

• Liberal Democrat leader Ed Davey says the government has "finally realised how disastrous this policy was", adding that the "misery it has caused cannot be overstated"
• Shadow work and pensions secretary Helen Whately says ministers "need to answer all the questions this rushed reversal raises", adding: "This is a crisis made in Downing Street"
• Green Party co-leader Carla Denyer calls the U-turn a "huge relief", and calls on the government to also reverse the two-child benefit cap and planned cuts to personal independence payments (Pips)

How much will the change in winter fuel payment cost?published at 14:08 British Summer Time 9 June

14:08 BST 9 June

By Anthony Reuben

We will not have the costings of this policy change checked by the independent forecaster, the Office for Budget Responsibility (OBR), until the Budget is delivered later this year.

The government says changing the threshold for getting the payment to £35,000 will cost £1.25bn and will be about £450m cheaper than giving the £200 or £300 payment to all pensioner households.

There may also be some istrative costs to making the change.

The government has said that there will not be “permanent additional borrowing” as a result of this change.

That could imply a £1.25bn cut to spending or the government perhaps raising more through taxation to pay for it.

Kevin Peachey
Cost of living correspondent

The new system of clawing back a benefit through the tax system does have a precedent.

It already happens in a similar way for some higher-earning parents who receive child benefit and have to pay it back.

This will put pressure on HM Revenue and Customs (HMRC) - the UK’s tax authority will need to set up its systems to deal with the new rules.

Bosses said they would be prepared for such an eventuality when they gave evidence to MPs last week.

Labour says the economy is better - but it's telling that we don't yet know where this money's coming frompublished at 13:56 British Summer Time 9 June

13:56 BST 9 June

Faisal Islam
Economics editor

Essentially the winter fuel payment will be paid out to every pensioner again, and then clawed back from two million pensioners with incomes over £35,000 through the tax system.

It means that the overall policy will save £450m versus the universal system. In other words, £1.25bn of the £1.7bn projected saving when this policy was announced is gone. That's a massive U-turn.

While it’s for the politicos to determine whether the political damage was worth it, it is interesting to go back to the original rationale for the policy nearly a year ago.

The Treasury said it was looking for "in-year" savings within the same fiscal year, to make up for some shortfalls in the public finances. In technical , it was one of the easier options to save money quickly, and communicate to the markets a willingness to take tough unpopular decisions, when the general thrust of policy was to spend, tax and borrow more.

Chancellor Rachel Reeves and Prime Minister Keir Starmer have tried to make an argument that the economy is now doing better, and so there is enough space to give back these payments.

While economic growth was better than expected in the first quarter of the year, it is right now a little early to assume that this will sustain. It’s a volatile time. The Office for Budget Responsibility (OBR) - which monitors the UK government's spending plans and performance - will also consider other factors such as rising government borrowing costs.

Ultimately, a £1.25bn giveaway is relatively modest in of overall government spending - and falls well below the threshold at which the OBR could initiate its own immediate costing.

It is telling, however, that the chancellor has chosen not to identify exactly how this will be paid for just yet. While this will have to come by the time of the Budget, there are many other pressures on the public finances.

Now for a round-up of reaction from some UK charities, sharing with us their responses to the government's winter fuel payment U-turn:

• Independent Age boss Joanna Elson welcomes the change to what she describes as an "incredibly damaging" policy. But while the changes are positive, she adds, they are not "a silver bullet" - calling on the government to take steps to "ensure the long-term financial security of all people in later life"
• End Fuel Poverty Coalition coordinator Simon Francis says Reeves has "seen sense", but urges ministers to "focus on how it s all households in fuel poverty"
• The Centre for Ageing Better chief Dr Carole Easton says the government was "right" to review the cuts, but says a longer-term solution is needed to eventually "reduce or remove the need for such payments"

A little earlier, we brought you a snippet of a Q&A between the chancellor and some reporters. Among the huddle was the BBC's political editor Chris Mason.

He asks Rachel Reeves if the government should've implemented the system announced today - to make pensioners in England and Wales with an annual income of £35,000, or below, eligible for the winter fuel payment - in the first place.

She says she had to make "urgent decisions" last year to fix the public's finances - and that Labour has, because of these decisions, "returned stability to the economy".

The government has "listened" to what the public said about the changes to winter fuel payments, she goes on, which is why these new changes have been implemented.

But where will the money come from to pay for this? Reeves says more details will be announced in the autumn Budget, but insists this "will be paid for within the fiscal rules".

Are you a pensioner who earns more than £35,000? What do you think about today's announcement?

You can get in touch in the following ways:  

• Email: [email protected], external 
• WhatsApp: +44 7756 165803 , external 
• your pictures and video  

Please read our  & conditions and   

In some cases a selection of your comments and questions will be published, displaying your name and location as you provide it unless you state otherwise. Your details will never be published.