Robert Peston has posted a brilliant summary of the Winter Fuel Payment fiasco.
The government’s attempt to demonstrate its fiscal soundness by abolishing universal entitlement to the winter fuel payment has been a fine old mess from start to finish.
The chancellor’s new rule would see those pensioners on incomes up to £35,000 - roughly the average household level - receiving the energy subsidy, which is £200 or £300 depending on age.
It means more than 9m pensioners will receive it, this coming winter, according to the Treasury, compared with nearer 1.5m who were eligible this past winter.
And the u-turn will cost the Treasury £1.25bn in England and Wales alone.
That is the price tag the chancellor and PM are agreeing to pay to placate the hundreds of thousands of voters who turned against Labour in the recent Runcorn election and the local elections.
But as of this moment, it is an unfunded promise. Reeves says she will spell out how she will pay for it in the autumn budget.
So the u-turn only goes to prove the utter pointlessness of the original abolition last summer of the universal entitlement to it.
This initial £1.6bn saving - revised down to £1.3bn by the OBR - was supposedly essential to placate lenders to the British government, bond investors, who Reeves believed needed reassurance that she would fill the hole in the public finances she said she inherited from the previous Tory government.
But it was always a drop in the ocean of the government’s borrowing needs - and remains so, even after the £40bn of tax rises that she imposed in last autumn’s budget.
Or to put it another way, most economic forecasters believe today she is likely to need tax rises this coming autumn, just as they did a year ago. Yet a year ago, Reeves argued any unfunded spending commitment would be fiscal suicide, whereas today such an unfunded commitment is tickety boo.
In other words, she and the Treasury have achieved a rare - though not unique - distinction of alienating vast numbers of British voters for next-to-zero fiscal or economic benefit.
https://twitter.com/Peston/status/1932034927182188805
