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Politics latest: Chancellor performs 'huge, huge U-turn' on winter fuel - and PM told to apologise

Rachel Reeves has announced the winter fuel payment will be restored to all pensioners with a household income of 拢35,000 or less. Millions more people will now get the benefit, despite ministers ruling out a U-turn for months.

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Never mind the spending review coming up on Wednesday, the government has already delivered a big headline for the week with its winter fuel payments U-turn.

Here are the main things you need to know:

  • Millions more people will get the winter fuel payment this year, after the criteria was expanded to all pensioners in England and Wales with a household income of 拢35,000 or less;
  • It'll be 拢200 for most, 拢300 for homes with someone over 80, and all pensioners will get it automatically - those above the threshold will then have the cash recovered by HMRC;
  • The change will see the number of people who get the payment rise from approximately 1.5 million last year to nine million;
  • Rachel Reeves claimed an improving economic picture meant she could expand the benefit, but the specifics on how it'll be paid for won't be made clear until the budget later this year.
  • Tory leader Kemi Badenoch said the prime minister should apologise to pensioners who lost out last year, while Lib Dem chief Ed Davey said the initial cuts had been "disastrous";
  • The U-turn has also been welcomed by Reform's Nigel Farage, the SNP, and charities like Age UK;
  • But our deputy political editor Sam Coates said it had caused damage to the chancellor's credibility, and our political correspondent Liz Bates said the change represented a "huge, huge U-turn".

We'll have more reaction and analysis following the winter fuel announcement throughout the afternoon - and you can watch a Commons statement on the changes from around 4.30pm.

Politics Hub With Sophy Ridge will no doubt be dominated by the changes - you can watch live at 7pm.

Away from winter fuel, we'll bring you any updates from the prime minister's meeting with the boss of NATO, more comments from Reform's Nigel Farage, and much more. Stay with us!

SNP calls on Reeves to reverse other 'punitive' policies following fuel U-turn

The SNP has said Labour must learn lessons from the "damaging mess鈥� caused by robbing pensioners", following the government's U-turn today. 

The party, which has no little stake in the argument as the Scottish Parliament can issue its own winter fuel payments independently, has used the afternoon to criticise Rachel Reeves anyway.

It says her U-turn was "inevitable" and the government must go further, including scrapping "punitive" welfare policies like its planned disability cuts and the Tory era two-child benefit cap.

"At the spending review on Wednesday, the Labour government must end its austerity cuts for good - and not impose even more cuts to families and public services," he added.

This morning, ministers pledged there would be no return to austerity - saying that period is "over".

And the government has repeatedly refused to rule out reversing the two-child benefit cap.

Sir Keir Starmer has also faced a lot of flak from some of his backbenchers over proposed cuts to personal independence payments (PIP), which are received by people living with a disability.

Resolution Foundation criticises chancellor for rewarding 'the richest half of the population'

The government has faced plenty of criticism for taking too long to U-turn on cuts to winter fuel payments.

But the chancellor has now also been slated for taking the U-turn at all - with one group saying she is giving the benefit to too many rich pensioners, again.

The Resolution Foundation, a left-wing think tank, has said the changes announced today will create "new complexity in the tax system".

Alex Clegg, an economist at the organisation, said an income of 拢35,000 (the new limit on who gets the payment) had become a "cliff-edge".

He added: "The reported savings of 拢450m will be reduced further by the cost of increased pension credit take-up as a result of the original policy, and the cost of administering the new means-test.

"The real question is why it is now a priority to pay winter fuel payments to over three quarters of pensioners, with almost half of the new beneficiaries in the richest half of the population, when previously it was judged that only one in 10 needed support."

For context: This think tank is a broadly pro-Labour group whose ex-CEO Torsten Bell was elected as a Labour MP at the last election.

Rachel Reeves must be feeling like she can't win.

'Starmer should apologise': How party leaders responded to winter fuel U-turn

Here's a round-up of how party leaders have responded to the news that millions more pensioners will get the winter-fuel payment this year.

Kemi Badenoch branded the change "humiliating", given the prime minister had repeatedly "arrogantly dismissed" her calls for a U-turn.

"Pensioners were forced to choose between heating and eating last winter," said the Tory leader. "Starmer should apologise to them."

Sir Ed Davey, the Liberal Democrat leader, said the decision to restrict winter fuel payments only to the poorest pensioners was "disastrous".

He said his party would study the proposed changes closely "to make sure those would need support actually get that support", adding: "The pain they went through this winter cannot be for nothing."

Nigel Farage said Reform could claim "some credit" for the U-turn, with his party having vowed to restore the payment to all pensioners should it ever enter government.

Although a glance at his voting record shows he didn't actually vote against the cuts when they were put to parliament last year.

What about Scotland and Northern Ireland?

Today's announcement from the Treasury only pertains to pensioners in England and Wales.

Those in Scotland and Northern Ireland are at the mercy of the devolved governments there.

In the former, the SNP administration had already announced plans for winter fuel payments of either 拢100, 拢200 or 拢300 for this year.

Those on some benefits, like pension credit, would get one of the higher amounts and everyone else would get 拢100.

In Northern Ireland, the Stormont administration initially said it would match the UK government's initial means-testing policy.

It was later announced that those pensioners impacted by the change would receive a one-off 拢100 payment to help with bills.

Senior Tory predicts taxes will go up to help pay for winter fuel

The government's change to cuts to winter fuel payments is "deeply embarrassing", a senior Tory has said.

Alex Burghart has (unsurprisingly) tried to paint Labour in the worst possible light, comparing them to "watching a baby giraffe on an ice rink [because] the government is all over the shop".

"Under pressure, they buckle," the shadow Cabinet Office minister said.

"[The chancellor] said she wasn't going to do this, she said she had to [cut the benefit] otherwise the economy would collapse, and now because she's become very unpopular, she's changed her mind."

Tax hikes would be 'incredibly embarrassing'

Asked what the Conservatives would have done, Burghart evaded the question and refused to say what threshold he would like to see. 

The Tories, for all their opposition to the initial cut, have never said they would actually have reinstated the payments.

But he pointed out Rachel Reeves has not said how the 拢1.25bn U-turn will be paid for, and said there will likely be tax hikes in the next budget.

He explained: "And that will be incredibly embarrassing for her because she promised us that there would be no more tax raids after her disastrous budget last year."

How Labour U-turned on winter fuel - and who'll get the payment now

Rachel Reeves has confirmed the details of the government's long awaited winter fuel payments U-turn after months of backlash, political pressure and some bruising election results.

Who will get it?

From this coming winter, everyone above the state pension age in England and Wales with a household income of 拢35,000 or less will receive the winter fuel payment.

For most households, it'll be a payment of 拢200. It'll be 拢300 for those with someone older than 80 in the house.

Pensioners do not need to do anything - everyone will get it, and then those who aren't eligible will have the cash automatically recovered by HMRC.

How has this changed from before?

Labour had limited the allowance to people over state pension age who are receiving pension credit or a limited number of other benefits.

They were income support; income-based jobseeker's allowance; income-related employment and support allowance; universal credit.

The number of people eligible dropped from 11.4 million when it was a universal benefit, to 1.5 million last year. It's now back up to around nine million people, the government says.

What were the rules before Labour came in?

The payments were available to everyone above state pension age.

Most people got the winter fuel payment automatically.

The chancellor has reiterated her view that richer pensioners should not receive the benefit. Sorry Mick Jagger, you're out of luck.

How will the change be paid for?

That we don't know - the chancellor has pointed vaguely towards an improving economic picture, but specific details seemingly won't be forthcoming until the autumn budget.

The initial cut was of course designed to help fill that infamous 拢22bn "black hole" Reeves said she discovered in the public finances when Labour entered government last summer.

'A good day for older people': Age UK welcomes winter fuel U-turn

Age UK has said the government's U-turn on cuts to winter fuel payments is "the right thing to do" and will "bring some much-needed reassurance for older people and their families".

Caroline Abrahams, the charity's director, called it a "good day for older people".

She said: "We have always said what really matters is that the estimated 2.5 million older people who lost their winter fuel payment when they couldn't afford it get the money back, by one means or another. 

"This new policy will help all these people by restoring their winter fuel payment, and we welcome it as a result."

Government should 'build on' change

Abrahams added Age UK "would much have preferred" this change to happen last summer. 

She said there's much more to do to tackle fuel poverty, adding: "Today rights a wrong and marks a start. 

"We hope the government will build on it."

A blow to the chancellor's credibilty

Our deputy political editor Sam Coates has been speaking to the chancellor following the announcement of who'll get the winter fuel payment this year - marking a big U-turn on one of her first big policies.

Sam says Rachel Reeves "looked nervous" having been "bounced into making the decision by her own Labour MPs" after the local elections.

Caving all over the place

Having been firm on her reasons for the winter fuel cuts last year, and repeatedly ruled out a U-turn, Sam says there's now an "incoherence" to what the chancellor's doing.

"She said she had to do it to stabilise the markets because there was a black hole left by her predecessors - now she is prepared to U-turn on it without spelling out how she'll pay for it," he says.

Reeves "seems to be caving all over the place", Sam adds - pointing to softened welfare cuts and potentially scrapping the two-child benefit cap later this year too.

It may not be a good sign to the markets that she can hold the fiscal line.

And for Labour colleagues, a sign that her political judgement is flawed.

The U-turn proves the government knows the cuts were a mistake, so how and why did she make it? "It's a blow to her credibility," Sam says.

Reeves: Winter fuel payments restored because economy 'in a better position'

Rachel Reeves has said the government has reversed cuts to winter fuel payments today because the UK economy is "now in a better position".

The chancellor told Sky News the Office for Budget Responsibility (OBR) has "increased the growth forecasts for every other year in the forecast".

She explained: "They said that our reforms to the planning system would make the economy 拢6.8bn bigger, bringing in additional tax revenue.

"And in the first quarter of this year, we were the fastest growing economy in the G7."

'Not right' for richest pensioners to get help

She said there's "still work to do to ensure that the sums always add up", but that because of the decisions the government has made "we are now able to pay the winter fuel payment to more pensioners".

"We're not going back to the universal system. I don't think it is right that the very richest pensioners have their fuel bills subsidised," she added.

"But this year, nine million pensioners will get the winter fuel payment."