All your questions on the winter fuel allowance U-turn answered: JEFF PRESTRIDGE

Millions of pensioners could now see their winter fuel allowance restored in time for Christmas after an embarrassing climbdown by Rachel Reeves. An announcement confirming the move is expected next week as part of the Chancellor’s much-anticipated spending review. Yet details as to how it will be implemented are embarrassingly scarce on the ground. Here, JEFF PRESTRIDGE answers the pressing questions that still remain over the winter fuel payment U-turn.

Why is Labour making changes to its policy on the winter fuel allowance just a year after saying the universal pensioner payment, worth up to £300, was no longer affordable and had to be means-tested to fill a black hole in the country’s finances?

Politics, nothing else. Don’t be fooled, Labour hasn’t suddenly fallen in love with pensioners again – as evidenced by the insensitive comments of Pensions Minister Torsten Bell on Wednesday. He said last year’s crackdown on winter fuel payments had resulted in ‘no effect’ on the health of retired people. As if the 42-year-old would know.

The U-turn is driven purely by Labour’s poor performance in the recent local elections, with officials laying the blame for the party’s awful showing squarely at the door of Ms Reeves and her ill-judged withdrawal of winter fuel payment from ten million pensioners.

To resist the growing political force of Nigel Farage’s upstart Reform, a winter fuel payment rethink was deemed essential despite Ms Reeves repeatedly stressing that she was not for turning.

So, what is happening?

What we definitely know is that the qualifying criteria for the winter fuel payment will now be relaxed. It will no longer hinge on whether a pensioner (over the state pension age) is in receipt of pension credit, a benefit designed to provide a financial top-up to pensioners on low incomes.

Last winter, the allowance could be claimed by pensioners in ‘receipt’ of pension credit – not those ‘eligible’ for it (a subtle difference).

A pensioner living alone and existing on a weekly income of less than £227.10 (around £11,800 a year) qualified for the credit. A couple on a weekly income of less than £346.60 (£18,000 a year) made them eligible.

But they received the winter fuel payment on top only if they had applied – and got – pension credit. Many pensioners are reticent to apply for benefits (they don’t want to feel like a burden on the state) but as soon as Ms Reeves announced her decision last July to end paying the winter fuel allowance, it triggered a rush of pension credit applications. Some 162,800 claims have since been accepted.

Any more detail?

Well, we also know for certain that a return to a universal winter fuel allowance is a no-go – despite Reform’s Nigel Farage calling for this to happen.

What looks more likely is a payment scheme that only cosseted Treasury officials not living in the real world could have dreamt up.

It involves restoring the allowance to all pensioners, but then taking it away from a slice of them through the tax system. In other words, giving with one hand, and then taking it away with the other.

So, who will receive it – and then lose it?

Various options are being considered as you read this article – more details of which will no doubt surface in the coming days. But one option that has already been given an airing is to give the allowance – and then take it away – from pensioner households with disposable income (that’s income after tax) above £37,000. Those below £37,000 will keep it.

Why £37,000 and how many would receive the allowance and then lose it?

It’s the average disposable income of households in the UK. Five million pensioner households, it is believed, would end up receiving winter fuel payment, compared with the 1.5million who get it now (remember 11million plus received it before Reeves’s overhaul last year).

So around 3.5million ‘winners’ and at least five million plus pensioner households who will receive the allowance, only for it to be snatched away through the tax system (presumably through self-assessment, which will mean filing tax returns each year).

For Labour, this solution will tick many boxes, the main one being that it will stop ‘millionaires’ benefiting from a payment they do not need – and other ‘rich’ people using the allowance to part-fund holidays or gift to children or grandchildren.

What are the drawbacks?

It’s complicated, will draw more pensioners into self-assessment for tax, and make self-assessment more traumatic than it already is.

The time delay…