Winter fuel payments could be taxed 'to help fuel poor'

Times Online
June 10, 2009
Tax on the £400 benefit should be used to help the most vulnerable households, according to a Government committee
Lauren Thompson

The winter fuel payment should be made taxable and stopped altogether for 200,000 pensioners who pay higher-rate tax, a government committee said yesterday.
The measure would save £250 million a year, which could be spent on better-targeted energy efficiency programmes to help the five million households living in fuel poverty, according to the Environment & Rural Affairs Select Committee .
Around 2.9 million pensioners receive winter fuel payments, currently worth £250 for over 60s or £400 for over 80s. However, only 12 per cent of recipients are in fuel poverty – where one tenth or more of income goes on fuel bills.
Michael Jack MP, chairman of the Environment and Rural Affairs Select Committee says: “The Government should instigate an action plan as a matter of urgency to help the millions of UK households who remain in fuel poverty as a result of fuel price rises.

“Taxing the winter fuel payment would fund a larger programme of practical energy saving improvements. This should be aimed in the first instance at the fuel poor, but then also at other vulnerable households, such as the disabled, with unusually high personal energy needs.”
However, consumer groups say that if the fuel payments become means-tested, this will deter millions of pensioners from applying and could leave some of the most vulnerable households worse-off.
Emma Hayes, of Consumer Focus, which campaigns for a fair deal for conusmers, says: ‘Winter fuel payments should remain universal to ensure that the much-needed cash reaches all pensioners who need it.
“However, the payment could be taxed for those on the highest tax-rate, and the funds raised invested in energy efficiency schemes.”
The committee also criticised the Government’s piecemeal approach to reducing fuel poverty, and recommended that the range of current energy efficiency programmes should be consolidated into one comprehensive programme to upgrade all homes, delivered by local authorities.