Social Security Advisory Committee Says - Winter Fuel Raid Rushed And Ill-conceived

18th October 2024

A letter from Social Security Advisory Committee to The Rt Hon Liz Kendall MP Secretary of State for Work and Pension was published yesterday 17 October 2024. It exposes how rushing the cut to Winter Fuel Allowance has many consequences and will not make the savings that chancellor Rachel Reeves hopes to get. The need to employ an extra 450 staff to deal with pension credit claims seems like an own goal

The letter -
he Social Fund Winter Fuel Payments Regulations 2024
At its meeting on 11 September 2024, the Social Security Advisory Committee undertook its statutory scrutiny of the above regulations which make provision for the means-testing of Winter Fuel Payments in England and Wales from Winter 2024-25, and the European Economic Area and Switzerland for winter 2024-25.

This policy change was announced by the Chancellor of the Exchequer on 29 July, forming part of the Fixing the foundations: public spending audit 2024-25 policy paper which set out the Government's plans to alleviate pressures faced by the
public finances this year. The move to restrict Winter Fuel Payments only to pensioners on Pension Credit or other prescribed means-tested benefits1 would reduce the number of people who receive a Winter Fuel Payment in England and Wales from 10.8 million to 1.5 million, living in 1.3 million households, yielding estimated savings of £1.3 billion for 2024-25 and £1.5 billion in subsequent years.
In delivering this change for the coming Winter, we were advised it would be necessary for the above statutory instrument to come into force by the start of the qualifying week (16 September). In light of this, the Government decided that it would be inexpedient to bring the proposals to this Committee for statutory scrutiny
before they were laid on 22 August 2024 and, as a consequence, the urgency provision was invoked.

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1 Where there is someone over State Pension age and the household is in receipt of Universal Credit,
income-based Jobseeker's Allowance, income-related Employment and Support Allowance, Income Support or Tax Credits.

2 The Social Security Administration Act 1992, Section 173(1)(a)
Social Security Advisory Committee
Caxton House
Tothill Street
London, SW1H 9NA

On the point of ‘urgency', the Committee accepts that there will be occasions where, due to the urgency of the proposals, it will be inexpedient to consult the Committee in advance of regulations being laid. Indeed, we have supported that approach on a
number of occasions where successive governments have been required to respond at pace to emerging crises and risks (for example responding to rapidly emerging challenges from the Covid-19 pandemic, and the need to respond to humanitarian crises). However, as I trust you will agree, there are considerable benefits in draft legislation being presented to us for statutory scrutiny before being laid, and that ‘urgency’ should be used only in exceptional circumstances. This Committee has a strong track record of supporting successive Secretaries of State respond at pace to
emerging crises and risks. We have often arranged additional meetings to enable scrutiny to take place at short notice, in an attempt to avoid the need for invoking the urgency procedure. While this may not always be possible, we remain committed to support you and your ministerial team avoid the need for the ‘urgency’ provision to be invoked wherever practicable.

Turning to the proposals themselves, I can confirm that following careful consideration of the available evidence, the Committee has decided that, under the powers conferred by Section 173(1)(b) of the Social Security Administration Act 1992, it does not intend to take these regulations on formal reference. Given that the
regulations have already been laid, the Committee considered it more expeditious to appraise you of the results of its scrutiny, rather than engage in further enquiries before reverting.

In summary, we consider it essential that the Department takes every reasonable step to ensure that all those eligible for a Winter Fuel Payment are supported in accessing it in a timely manner, and we would welcome your urgent response to our following observations and recommendations.

Policy intent
The Committee’s starting point for its scrutiny of all regulations is to assess the extent to which the material impact of regulations delivers against the stated policy intent.
The stated trigger for the change in eligibility for Winter Fuel Payments is to yield savings that would help alleviate substantial pressures faced by the public finances. In the case of these proposals, the direct savings from the significantly reduced eligibility for Winter Fuel Payments are partially offset by the cost of the
rise in the number of claims to Pension Credit and the additional resources being deployed to process them. We note that the £1.5bn savings is net of the costs of Social Security an assumed five percentage point increase in Pension Credit take-up from 63 per
cent to 68 per cent - representing a little over 100,000 additional households. We have not been presented with any rationale for such a central case estimate (corresponding to a closing by just 14 per cent of eligible non-recipients).

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Given the significant effort underway to increase Pension Credit take-up, alongside the media attention that the policy change to Winter Fuel Payments is attracting, the number of additional successful claims could be significantly higher. The Committee would welcome the Government’s assessment of the degree to which the proposals are likely to achieve the targeted savings, under different plausible Pension Credit take-up scenarios. We expect that the Office for Budget Responsibility will agree estimates of the fiscal impact at the time of the Budget, but this is no substitute for the Department’s timely analysis in support of its own proposals disconnected from the Budget process.

We recommend that the DWP publishes the value of the direct savings from the reduction in eligibility of Winter Fuel Payments and separately the offsetting cost of different levels of additional Pension Credit take-up. This would provide a better explanation of how the costs and savings balance out and enable a clearer assessment of whether the stated policy intent is likely to be achieved.

Pension Credit: take-up campaign
We welcome the proactive take-up campaign being undertaken by your Department, and note that recent data published by your Department indicates a more than doubling of the number of weekly Pension Credit claims (an increase of around 115%) following the Chancellor of the Exchequer’s announcement in July.

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However, it is not clear how the tension between the two goals of fiscal savings and increased take-up of Pension Credit is resolved within the plans for these regulations.

Capacity to process claims
We also welcome your announcement to Parliament on 10 September 2024 to commit an additional 450 staff to processing Pension Credit claims.

read the letter with links to references HERe