Scotland scraps universal winter fuel payments for pensioners

The Scottish government has confirmed it will follow the UK government in no longer providing winter fuel payments to all pensioners.

The benefit will instead be means tested, while the introduction of a replacement Scottish benefit has been delayed.

Social Justice Secretary Shirley-Anne Somerville said she had “no choice” after the chancellor announced cuts south of the border.

It came as Scotland’s finance secretary ordered ministers to “constrain all but essential” spending to help pay for public sector pay deals.

Shona Robison has written to cabinet colleagues advising of stricter rules on discretionary spending, including a recruitment freeze on “all but essential” posts.

She said the government would have to make “difficult” choices to fund pay increases for public sector staff after Chancellor Rachel Reeves signalled cuts in the next UK budget.

“We want to continue to support our public sector workforce, we really value them but this will mean tough decisions,” Ms Robison told BBC Scotland.

She said Barnett consequentials, provided via UK government spending, would not cover the pay rises and that about a third of the total would have to come from departmental cuts.

“It will mean that public bodies have to constrain their spend in a way I wish was not the case but we have no other choice at this point in time,” she said.

The chancellor announced last month that those not on pension credit or other means-tested benefits in England and Wales would no longer get annual winter fuel payments, worth between £100 and £300.

Ms Robison said that following Westminster’s move was “one of the toughest decisions” the SNP government has had to make.

She said ministers had no choice because Treasury funding for a replacement Scottish benefit had been cut by between £140m and £160m.

The spending measures introduced by Ms Robison mean departmental plans will be subject to greater scrutiny and in some cases may need to be signed off by the first minister.

Some projects slated to start but not yet underway may also be cut – with details due to be announced to the Scottish Parliament.

The development came as Gers figures revealed Scotland’s public spending deficit increased by £3.6bn to £22.7bn in 2023-24 due to lower oil and gas revenues.

SNP ministers recently provided additional funds to Cosla to help avert bin strikes. First Minister John Swinney said funding the new offer would mean tough choices ahead for the government.

It comes as NHS staff in Scotland are expected to push for a pay rise in line with increases south of the border.

Responsibility for the winter fuel payment was set to be transferred to the Scottish government in September and replaced with a Holyrood-managed equivalent – the Pension Age Winter Heating Payment (PAWHP).

Ms Somerville said the chancellor’s move had cut nearly 90% of the funding for the PAWHP, which will now not be introduced until winter 2025.

“This has been a very difficult decision and not one we want to, or expected to, be making,” Ms Somerville said.

“However, despite all efforts to review our financial position it is a necessary decision when faced with such a deep cut to the budget and in the most challenging financial circumstances since devolution.”

The Scottish government had estimated that one million pensioners in Scotland who were eligible for the UK payment would receive the PAWHP of between £100 and £300.

Ministers had said the benefit would be non-means tested, with universal entitlement based on reaching state pension age.

It is separate from the winter heating payment which helps people on low income benefits who might have extra heating needs.

The chancellor has said the UK Labour government has had to make “difficult decisions” due to a £22bn hole in public finances due to overspend from the previous Conservative administration.

Age Scotland policy director Adam Stachura accused the Labour administration of rushing into cuts, which he said were too deep.

The charity boss said the decision would mean at least a quarter of a million pensioners in Scotland on the lowest incomes or living in fuel poverty would no longer receive the “vital” financial support, while hundreds of thousands more on modest incomes would struggle more to pay energy bills.

He urged the UK government to reverse the cuts, which he said was impacting “the devolution of social security and the needs of Scottish pensioners who live in some of the coldest homes in the UK”.

Joao Sousa, deputy director and senior economist of the Fraser of Allander Institute, said that while Ms Robison’s spending constraints were partly a result of the UK’s fiscal framework “it would be unfair to blame it all on that”.

Posting on X, he said a “lack of prudent planning” by the Scottish government was a “major part” of the issue.

Mr Sousa highlighted that the government passed its previous budget without a set pay policy, leaving it “at the mercy of labour market conditions and it seems now it set aside little to no contingency for pay increases”.

He added: “Questions must be asked as to why this predictable issue wasn’t foreseen.”

The economist said that the in-year cuts the government now had to make would likely be based on what spending could be halted, rather than on a “considered value for money basis”.