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Gordon Brown suggests people on top rate of income tax should be excluded from winter fuel

The former prime minister, who introduced winter fuel as a universal benefit when chancellor, said there is a strong case for it, but suggests society's richest pensioners could be exempt.

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Gordon Brown questioned on winter fuel payment U-turn
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Governments "have to be fair" to pensioners but there is a case for people on the top rate of income tax to be excluded from winter fuel payments, Gordon Brown has said.

The former Labour prime minister told Sky News' Sophy Ridge that he welcomed Sir Keir Starmer's backtrack over his unpopular decision to means-test the allowance, which Mr Brown introduced as a universal benefit when he was chancellor in 1997.

Politics live: Starmer confirms U-turn on winter fuel payments - but No.10 will not say when

Asked if he thought the U-turn was the right move, he said: "Yeah. I think what Keir's saying is the economy has improved and he feels that the country is in a better position, that they can afford to do better by the pensioner community.

"You must be fair to the different communities in your country when they're struggling... and you've got to be fair to pensioners."

Mr Brown added there is "a strong case" for winter fuel payments for pensioners, but suggested the richest in society could be exempt.

"I did bring it in as a universal benefit," he said.

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"I think there is a case, for example, for people on the top rate of tax not receiving it, but that's something the government has got to decide.

"That was in the Labour 2015 manifesto, so I think the government's got decisions to make... but to me, the issue is nobody should be pushed into poverty if they're doing the right thing.

"Nobody who's working hard or nobody who's served the country well over their lifetime should be pushed into poverty if we can avoid it, and I believe that that's what he's [Keir] is really thinking about, a fairness guarantee for pensioners."

Sir Keir announced that he would "look" at making more pensioners eligible during PMQs earlier on Wednesday.

He told MPs: "I recognise that people are still feeling the pressure of the cost of living crisis, including pensioners.

"As the economy improves, we want to make sure people feel those improvements in their days as their lives go forward.

"And that is why we want to ensure that as we go forward, more pensioners are eligible for winter fuel payment."

While it appears a full reversal will not be implemented, the Treasury could raise the threshold at which pensioners can qualify for winter payments, which is currently £11,500.

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What are the options for winter fuel payments?

The Institute for Fiscal Studies has looked into the government's options after Sir Keir Starmer said he is considering changes to the cut to winter fuel payment (WFP).

Winter fuel payments for everyone

The government could make a complete u-turn on removing the payment from pensioners not claiming pension credit so they all receive it again.

A new means-tested system

Households not claiming pension credit could apply directly for the winter fuel payment, reporting their income and other circumstances.

Or, all pensioner households could claim it but those above a certain income level could do a self-assessment tax return to pay some of it back as a higher income tax charge.

This could be like child benefit, where the repayment is based on the higher income member of the household.

More generous pension credit

Instead of reducing pension credit by 拢1 for every 拢1 of income, it could be withdrawn more slowly to entitle more households to it, and therefore WFP.

Make WFP an individual payment

At the moment, WFP is paid to households but if it was paid to individuals the government could means-test each pensioner, rather than their household.

This could be based on an individual's income, which the government already records for tax purposes.

Individuals who have a low income could get the payment, even if their spouse is high income.

This would mean low-income couples getting twice as much, whereas each eligible house currently gets the same.

Those receiving other means-tested benefits get WFP

Instead of just those receiving pension credit getting WFP, the government could extend it to pensioners who claim means-tested welfare for housing or council tax support.

A total of 430,000 renting households would be eligible at a cost of about 拢100m a year.

Disability benefit claimants get WFP

Pensioners not on pension credit but receiving disability credits could get WFP, extending eligibility to 1.8m households in England and Scotland at a cost of about 拢500m a year.

Low council tax band pensioners get WFP

Pensioners living in a band A-C property could be automatically entitled to WFP, affected just over half (6.3m).

The decision follows significant backlash from Labour MPs, who blamed the policy on the party's poor performance at the local elections this month.

Means-testing the winter fuel payments, worth up to £300, was one of the first policies brought in by the Labour government.

Overall, the number of pensioners eligible for the payment was slashed from 11.4 million to 1.5 million.

The government argued it would save £1.5bn each year and put the public finances under control, after claiming the Tories left behind a larger-than-expected fiscal black hole of £22bn.

However, in the aftermath of the May local elections - which saw Labour lose 189 council seats - more high-profile party figures began speaking out against the policy.