Winter fuel payments: bicycle shed syndrome

The week’s politics have been dominated by the termination of the Winter Fuel Payment. It’s the sort of thing the Tories might have done if they had anything resembling a spine, but the uproar this week shows precisely why no Tory government would ever have the political capital to do it.

The real question, though, is why Labour expended political capital on this. I mean, there’s enough in the kitty, we are told, to fund Miliband’s overseas climate aid boondoggles. There’s £11.6bn for that, it would seem.

This, according to Robert Peston, is Rachel Reeves’s attempt to establish economic credibility and cement her “iron chancellor” reputation among the hard of thinking. It has, however, spectacularly backfired. Virtually nobody thinks this is a good move. This is an own goal particularly because Labour previously warned that four thousand grannies would freeze if the Tories cut the payment.

As it happens, though, the government is not altogether wrong. The winter fuel payment was a universal benefit, meaning it was paid to all pensioners, regardless of their income or wealth. It was a blunt instrument and it should have been means-tested or at least distributed in the form of a council tax rebate on a per household basis. There is a further debate to be had about the sustainability of paying for pensioners to heat homes larger than they actually need.

The point that seems to be lost in all this, however, is that there is no good reason why the Winter Fuel Payment should exist at all. After all, a third of the cost of gas used for electricity generation is carbon taxes. The OBR estimates that UK ETS raises £3.6 billion. This represents 0.3 per cent of all receipts and is equivalent to about £120 per household and 0.1 per cent of national income.

Add to that the billions we’re spending on renewables subsidies and the £60bn we’re spending on pylons to connect useless windmills to the grid and it’s clear that expensive energy is a policy choice. As such, debates about welfare top-ups for pensioners in cold weather is avoiding the much larger question of why energy is expensive in the first place.

Meanwhile, if any government is serious about public finances, we perhaps need to address the fact that councils are set to spend a magnitude more than 40% of their budgets on adult social care in the future, and UK national debt currently stands at around £2.7 trillion, or 99.4% of GDP. Instead we’re only talking about a £22bn black hole which the treasury is refusing to disclose details of.

Keir Starmer says it is the mission of his government to “fix the fundamentals” but that’s unlikely to happen since nobody seems especially interested in debating the fundamental issues. Not least that we can’t afford Net Zero, and that the welfare state is simply unsustainable - especially when the borders are wide open.