LDN - Business

UK's Starmer paves the way for reversal of policy that limited fuel subsidies for retirees

[May 22, 2025] By PAN PYLAS

LONDON (AP) — British Prime Minister Keir Starmer suggested Wednesday that a hugely unpopular measure which deprived millions of retirees an annual winter fuel subsidy will be changed, a striking reversal in policy.

Starmer said he wanted to help people with the cost of living and added that he wanted more retirees to be eligible for the so-called winter fuel payments. He spoke during his weekly questioning in the House of Commons after figures were released showing inflation was up at its highest level in over a year.

“As the economy improves, we want to make sure people feel those improvements,” he said. “That is why we want to ensure that as we go forward more pensioners are eligible for winter fuel payments.”

Soon after Labour came to power last July, Treasury chief Rachel Reeves removed the winter fuel allowance, worth between 200 and 300 pounds ($266 and $399) a year, from all but the poorest retirees, arguing that the measure was needed because of the dire state of the public finances left by the previous Conservative government.

The more targeted payment meant that around 11 million retirees, many on limited incomes, lost out and were struggling to make ends meet, especially in a cost-of-living crisis.

Many members of Labour, in and out of parliament, thought the relatively modest 1.5 billion-pound ($2 billion) saving that the policy change reaped was not worth the political cost.

The move arguably contributed to a swift decline in popularity for Starmer's government since it was elected. In local elections in England earlier this month, Labour fared poorly, with many party representatives blaming the removal of the winter fuel payment.

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Britain's Prime Minister Keir Starmer, second right, and Rachel Reeves Chancellor of the Exchequer visit Lidl in London, Tuesday, May 20, 2025, where they shown around the store by CEO Ryan McDonnell CEO. (Ian Vogler/Pool Photo via AP)

Since then, there's been growing speculation that the government will change tack by either scrapping the measure or increasing the level at which the allowance is paid.

Starmer told lawmakers that the decision will be made "as part of a fiscal event.” It appears that whatever change is made will most likely be announced in the next budget in the fall.

During Wednesday’s exchanges in the House of Commons, Kemi Badenoch, leader of the main opposition Conservative Party, asked how the public could “ever trust” Starmer after the “inevitable U-turn” on winter fuel payments.

Starmer appeared to justify the change on economic grounds and said that higher than expected first quarter U.K. growth, lower borrowing costs and trio of trade deals with the European Union, India and the United States give the government room for maneuver.

“It’s only because of the measures we’ve taken that the economy is improving, growth at the highest rate in the G-7, four interest rate cuts, three trade deals because countries want to trade with this country because of the decisions that we’ve made," Starmer said.

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