From this winter, chancellor Rachel Reeves told MPs she was going to remove the winter fuel allowance for all pensioners except those claiming pension credits, but would retain the triple lock which sets the percentage increase for the state pension.

This will save the Treasury £1.4bn in 2024-25 tax year, rising to £1.5bn in 2025-26.

The payment is worth £250 to pensioners and is paid out every October or November, as an automatic payment which does not have to be claimed on an individual basis and is not income or earnings related.

In a statement to parliament outlining the government’s audit of the public finances, Reeves said the Treasury team had uncovered a £22bn deficit in government accounts, which she claimed was hidden by the previous Conservative government.

In a surprise move, the Chancellor handed out lavish pay rises to the public sector and junior doctors, but went for pensioners with the abolition of the winter fuel payment.

Reeves said: ‘This level of overspend is not sustainable. The scale of the situation means incredibly tough choices – today I am making the difficult decision that those not in receipt of pension credits will no longer receive the winter fuel payment of £200.’

The abolition will come into force immediately so this winter there will no payments except for the poorest pensioners who claim top-up pension credits and some on specific benefits. These can be claimed by people who only have the state pension as income but do not have any other income, including private pensions, savings or any other income.

The current rate of winter fuel payment ranges between £200 and £300 depending on age of pensioner.

Unfortunately, estimates show that nearly a million poor pensioners who are eligible for pension credits do not know about them and do not claim them, while as with all benefit payments, this is incredibly complex and has to be claimed through a lengthy form running to at least eight to 12 pages long.

Harriet Baldwin, the former chair of the Treasury Committee, said the decision was ‘chilling’.

‘What a chilling political choice to choose to take away the winter fuel allowance from a 90 year old on an income of £10,000 a year and that was a political choice,’ Baldwin said to the Chancellor, but then went on to focus on productivity and what the government would do to improve this across the private and public sector.

Green Party MP Adrian Ramsay, said: ‘Could I tempt the Chancellor to reject the ideological commitment to austerity.’ 

Warnings on the decision were dire with 37% of eligible claimants for pension credits not even taking up or knowing about the extra payment.

Pension credit is a form of financial support which ‘tops-up’ the income of people over state pension age who fall below an income threshold of £218.15 for a single person and £332.95 for a couple. 

Independent Age head of policy Morgan Vine said: ‘The decision to end the winter fuel payment for those not receiving pension credit risks driving hundreds of thousands of older people into further financial hardship.

‘We welcome the Chancellor’s intention to tackle the low uptake of pension credit, but means testing the winter fuel payment now will mean too many older people will fall through the cracks and not get the vital financial support they desperately need, especially when household bills like energy are still extremely high.

‘Pension credit has an unacceptably low uptake at just 63%. This means a staggering 880,000 older people who are eligible could be missing out on money they need to turn their heating on.

‘On top of this, every day we hear from older people who just miss out on pension credit but still struggle to pay their energy bills. They could now be heading into winter without this important lifeline.

‘We understand the UK government needs to make some tough choices, but today’s announcement demonstrates just how important it is for all older people facing financial hardship to receive the money they are entitled to.’