Tweet I've never been entirely convinced about the winter fuel allowance. It was good politics at the time, but always looked like a bit of a gimmick. If the government felt that pensions were inadequate to cover fuel costs, why not simply increase the level of pensions, instead of introducing a stand-alone, separately administered benefit?
There's also something rather patronising about the assumption that most or all pensioners are unable to manage their budgets to cover higher winter fuel costs, and therefore the government has to do the managing for them by paying the allowance at the time it is needed. Whilst there are some pensioners who could do with help in financial management, there are many more who are perfectly capable of budgeting for the expenditure, and who would prefer not to have the government micro-managing their income to match their costs.
The status of the allowance as a non-taxable addition to income also marks it out as a target – it means that it gets paid to millionaires and paupers alike, but with no clawback through the tax system for the better-off. It encourages those politicians who've never really been convinced about the idea of the welfare state (and, surprisingly, there seem to be some of those in all parties) to see it as an extra, a bonus, rather than as an integral part of the pension.
It's a soft target for those like Lib Dem MP Paul Burstow who want to roll back the benefits system and impose means testing, and it's a hard benefit to defend in terms of cold hard logic, despite being rather popular amongst its recipients (which is why it was such good politics).
But my preference would be to reduce the number of add-on benefits like this, and simply pay a proper, higher pension in the first place, and let the tax system take care of the fact that some people don't 'need' the whole payment. Those who need it most would still effectively receive it tax-free anyway; and those who need help budgeting could be provided that help in line with their needs. I suspect that there are plenty who understand the logic, but are too afraid of the political fallout to follow through.
Spinning the Silk web – the IWA podcast - Catch up with the week's analysis on the Silk Commission - including the new IWA Podcast
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