Winter fuel allowance curb to hit rural pensioners hardest

About a month into the general election campaign Sir Keir Starmer declared, in an interview with Good Housekeeping magazine, that inability to afford heating in winter is “an awful position to put a pensioner in.” A little less than a month after Labour’s landslide victory his new Chancellor of the Exchequer, Rachel Reeves, announced that the ‘black hole’ she claimed to have found in the public finances gave her no choice but to means-test the Winter Fuel Allowance. 

From this year, eligibility for the allowance will be limited to pensioners receiving an income-based benefit. For most this will be Pension Credit, but the other benefits conferring eligibility are Universal Credit, Income Support, income-based Jobseeker’s Allowance and income-related Employment and Support Allowance. 

As we argued this week in The Telegraph, this blanket restriction in eligibility for the payment risks hitting rural pensioners hardest. It overlooks the fact that, as the government’s own figures show, rural areas of Britain face both higher rates and levels of fuel poverty. These are exacerbated by a greater reliance on more expensive heat sources than gas, since rural properties are much more likely to lack a connection to the grid. 

Taking England as an example, the latest government figures show that last year, households in rural areas had a higher rate of fuel poverty (15.5%) than semi-rural (12.5%) or urban (12.8%) areas. At £778, they also experienced a far higher fuel poverty gap: that is, the amount of extra income a fuel-poor household would need to bring in each year to escape fuel poverty. Similarly, 20.0% of off-grid households were in fuel poverty compared with 11.8% of households on the gas grid; those fuel-poor off-grid homes faced an average fuel poverty gap of £801.  

Eligibility for the benefits that under the government’s new plans will grant access to the Winter Fuel Allowance, however, is solely determined by an individual’s or couple’s income. It takes no account of where people live, or how the heating costs they face might be affected as a result. 

The Countryside Alliance has long campaigned for government action to tackle the ‘rural premium’: the added costs people face simply for living in the countryside. Withdrawing a benefit intended to help meet heating costs for all pensioners not qualifying for income-related benefits – some of whom will inevitably miss out only marginally – without reference to elevated rural heating costs risks making this problem worse still.

Research around the fuel poverty figures also found continuing problems with energy efficiency in the rural housing stock. The government has pledged to combat poor insulation and offer help, but no firm plans have been set out and no benefit will be felt before the restriction comes into effect. Labour may be thought to have put the cart before the horse. 

If the government is determined to proceed with means testing, there may be a case for selecting an alternative means of withdrawing the payment from genuinely well-off households. Perhaps it might taper the benefit at higher income levels, as is already done with Child Benefit, instead of creating a cliff-edge. Assessing income independently of benefit eligibility could, in theory, make it possible to set higher thresholds for those residing in rural properties, or alternatively for properties off the gas grid, which would go some way to addressing the disparity in heating costs. As it stands, it is hard to escape the conclusion that rural pensioners will disproportionately be left worse off.