There's some commentary now from Paul Johnson, director of the economic research group Institute for Fiscal Studies (IFS), who's been posting on social media - specifically about how the government will fund these newly-announced changes to the winter fuel payment.

As we've reported already, the chancellor has not said where the money will come from - only that further details will follow in her autumn Budget. The government did, however, specify that the changes would not lead to "permanent additional borrowing".

In a post on X, Johnson says this comment suggests the changes will "lead to permanent additional taxes" or permanent cuts to other sections of welfare. He also breaks down some of the logistics behind future payments, writing:

"WFP [winter fuel payment] will now be paid at £100 to each member of a couple. So rich pensioner couples, where one has say £100k and the other £30k, will still get £100. If both members of the couple have £36k then they get nothing. Messy."

Scottish government mulls what these changes mean for thempublished at 14:54 British Summer Time

14:54 BST

David Wallace Lockhart
BBC Scotland political correspondent

The Scottish government now has a decision to make.

They had announced a devolved benefit for this winter which meant every pensioner household would get a minimum of £100 this winter.

This new UK government announcement means that households in England and Wales, where someone’s income is £35,000 or less, are due a payment of £200 (or £300 if someone is over 80).

It’s important to note that the Scottish payment is universal. The English and Welsh one is not.

But, all of a sudden, a cohort of Scottish pensioners - who don’t get pension credit, but whose income is below that £35k threshold - are getting less than their English and Welsh equivalents.

That puts some pressure on Scottish ministers. Do they have to change what they’re planning to pay out?

After some conversations with people in the government here, it seems they’re still digesting the implications of all this.

But it looks like they’ll get extra money off the back of today’s announcement (known as Barnett consequentials, external). There are already calls for that all to be used to make their payment more generous.

• As a reminder: Northern Ireland also took devolved action following the announcement last year about winter fuel cuts. Communities Minister Gordon Lyons said affected pensioners would receive of one-off payment of £100 to help with heating costs.

Tory leader Kemi Badenoch earlier demanded that the prime minister apologise for cutting the winter fuel payment in the first place - calling his U-turn on the policy "humiliating".

Here's some more political reaction we've since had:

• Liberal Democrat leader Ed Davey says the government has "finally realised how disastrous this policy was", adding that the "misery it has caused cannot be overstated"
• Shadow work and pensions secretary Helen Whately says ministers "need to answer all the questions this rushed reversal raises", adding: "This is a crisis made in Downing Street"
• Green Party co-leader Carla Denyer calls the U-turn a "huge relief", and calls on the government to also reverse the two-child benefit cap and planned cuts to personal independence payments (Pips)

How much will the change in winter fuel payment cost?published at 14:08 British Summer Time

14:08 BST

By Anthony Reuben

We will not have the costings of this policy change checked by the independent forecaster, the Office for Budget Responsibility (OBR), until the Budget is delivered later this year.

The government says changing the threshold for getting the payment to £35,000 will cost £1.25bn and will be about £450m cheaper than giving the £200 or £300 payment to all pensioner households.

There may also be some administrative costs to making the change.

The government has said that there will not be “permanent additional borrowing” as a result of this change.

That could imply a £1.25bn cut to spending or the government perhaps raising more through taxation to pay for it.

Kevin Peachey
Cost of living correspondent

The new system of clawing back a benefit through the tax system does have a precedent.

It already happens in a similar way for some higher-earning parents who receive child benefit and have to pay it back.

This will put pressure on HM Revenue and Customs (HMRC) - the UK’s tax authority will need to set up its systems to deal with the new rules.

Bosses said they would be prepared for such an eventuality when they gave evidence to MPs last week.

Labour says the economy is better - but it's telling that we don't yet know where this money's coming frompublished at 13:56 British Summer Time

13:56 BST

Faisal Islam
Economics editor

Essentially the winter fuel payment will be paid out to every pensioner again, and then clawed back from two million pensioners with incomes over £35,000 through the tax system.

It means that the overall policy will save £450m versus the universal system. In other words, £1.25bn of the £1.7bn projected saving when this policy was announced is gone. That's a massive U-turn.

While it’s for the politicos to determine whether the political damage was worth it, it is interesting to go back to the original rationale for the policy nearly a year ago.

The Treasury said it was looking for "in-year" savings within the same fiscal year, to make up for some shortfalls in the public finances. In technical terms, it was one of the easier options to save money quickly, and communicate to the markets a willingness to take tough unpopular decisions, when the general thrust of policy was to spend, tax and borrow more.

Chancellor Rachel Reeves and Prime Minister Keir Starmer have tried to make an argument that the economy is now doing better, and so there is enough space to give back these payments.

While economic growth was better than expected in the first quarter of the year, it is right now a little early to assume that this will sustain. It’s a volatile time. The Office for Budget Responsibility (OBR) - which monitors the UK government's spending plans and performance - will also consider other factors such as rising government borrowing costs.

Ultimately, a £1.25bn giveaway is relatively modest in terms of overall government spending - and falls well below the threshold at which the OBR could initiate its own immediate costing.

It is telling, however, that the chancellor has chosen not to identify exactly how this will be paid for just yet. While this will have to come by the time of the Budget, there are many other pressures on the public finances.

Now for a round-up of reaction from some UK charities, sharing with us their responses to the government's winter fuel payment U-turn:

• Independent Age boss Joanna Elson welcomes the change to what she describes as an "incredibly damaging" policy. But while the changes are positive, she adds, they are not "a silver bullet" - calling on the government to take steps to "ensure the long-term financial security of all people in later life"
• End Fuel Poverty Coalition coordinator Simon Francis says Reeves has "seen sense", but urges ministers to "focus on how it supports all households in fuel poverty"
• The Centre for Ageing Better chief Dr Carole Easton says the government was "right" to review the cuts, but says a longer-term solution is needed to eventually "reduce or remove the need for such payments"

A little earlier, we brought you a snippet of a Q&A between the chancellor and some reporters. Among the huddle was the BBC's political editor Chris Mason.

He asks Rachel Reeves if the government should've implemented the system announced today - to make pensioners in England and Wales with an annual income of £35,000, or below, eligible for the winter fuel payment - in the first place.

She says she had to make "urgent decisions" last year to fix the public's finances - and that Labour has, because of these decisions, "returned stability to the economy".

The government has "listened" to what the public said about the changes to winter fuel payments, she goes on, which is why these new changes have been implemented.

But where will the money come from to pay for this? Reeves says more details will be announced in the autumn Budget, but insists this "will be paid for within the fiscal rules".

Are you a pensioner who earns more than £35,000? What do you think about today's announcement?

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Image source, EPA

We're now hearing the first response from Tory leader Kemi Badenoch.

In a post on X, she calls Keir Starmer's U-turn on the winter fuel policy "humiliating".

She says her party "repeatedly warned" him to "reverse his callous decision... and every time he arrogantly dismissed me".

"Pensioners were forced to choose between heating and eating last winter. Starmer should apologise to them."

Continuing to take questions from various reporters, the chancellor says the winter fuel payment will continue to be means-tested - but the broadening of eligibility criteria means more pensioners will receive it.

"We will not go back to the universal system. I don't think it's right that the very richest pensioners had their fuel bill subsidised," she explains.

• For context: The new rules mean the payment is now available to everyone over the state pension age in England and Wales with an annual income of, or below, £35,000.

We've just seen the chancellor answering questions from reporters, less than half an hour after outlining the government's U-turn on winter fuel payments.

She says the government has listened to people's concerns about the decision last year to means-test the allowance.

The Treasury has been able to widen eligibility due to the "stability" the government has brought to the economy, she says.

Reeves adds that the detail of how the change in policy will be costed will come in the autumn Budget.

Image source, PA Media

• July 2024: Labour announces plans to introduce a means-tested cap to the winter fuel payment - previously paid to all pensioners in England and Wales - meaning millions were no longer eligible for the pension top-up
• September 2024: A Conservative motion attempting to block the cuts was debated in Parliament - but the majority of MPs sided with the government
• Winter 2024: More than 10 million pensioners lost out on the payment, worth up to £300, with some telling the BBC they felt "cast aside" by the government and others taking out credit cards to manage their finances
• 1 May 2025: Labour suffers a number of losses at local elections across England - some MPs and councillors blamed the policy for the party's performance
• 6 May 2025: The government insists it won't reverse cuts to winter fuel payments, despite growing calls within Labour to rethink the policy

• 21 May 2025: Prime Minister Keir Starmer announces plans to ease the cuts but gives no further details, including how many will regain their entitlement or when the changes will take effect
• 9 June 2025: Chancellor Rachel Reeves confirms the changes, with more than three-quarters of pensioners in England and Wales now set to receive the payment - a major U-turn from the cuts she set out last year

Image source, Reuters

Here is the full statement from Chancellor Rachel Reeves, shared with us by the Treasury:

“Targeting winter fuel payments was a tough decision, but the right decision because of the inheritance we had been left by the previous government.

"It is also right that we continue to means-test this payment so that it is targeted and fair, rather than restoring eligibility to everyone including the wealthiest.

“But we have now acted to expand the eligibility of the winter fuel payment so no pensioner on a lower income will miss out.

"This will mean over three quarters of pensioners receiving the payment in England and Wales later this winter.”

Labour moves to rectify what many see as its biggest misstep - but is it too little too late?published at 12:05 British Summer Time

12:05 BST

Chris Mason
Political editor

The final act in this slow motion U-turn has played out.

The arc of this row runs to almost a year. It was late July last year when I was among a bunch of reporters called into the Treasury to question the then new chancellor about her out of blue policy to take the winter fuel payment from millions of pensioners.

Ever since, Labour MPs have grumbled they’ve been taking heat for it.

Two and a half weeks ago the prime minister said the threshold would be moving. Last week the chancellor said the new recipients would get it this coming winter. We now know who will qualify and who will have to pay it back.

A couple of thoughts: could the government have done just this in the first place? Some privately say absolutely. Others say there was genuinely real concern in the Treasury about the state of the books and they felt compelled to do something to reduce so called "in year" costs.

Secondly: once they decided to move, they have moved pretty quickly, albeit announcing the U-turn in iterative steps, one week after another.

We are not being kept waiting until the Budget in the autumn, or even the Spending Review on Wednesday - here we have it, the new threshold.

So, how will the government pay for it? It is projected to cost £1.25bn. Ministers say there won’t be a "permanent" increase in borrowing. So how much borrowing will there be, and for how long? And which other budgets may be squeezed as a result?

For many within Labour, this whole debacle was the single biggest misstep of the party’s first year in office - they will now hope to put it behind them. But it’s one of those things forever likely to remain in the biography of this government, with questions asked of Rachel Reeves about it.

Kevin Peachey
Cost of living correspondent

This latest announcement by the UK government affects pensioners in England and Wales, but as promised in our last post - here's how Scotland and Northern Ireland responded to this policy when it was introduced last year.

The Scottish government has already announced plans for a new winter heating payment "for every single Scottish pensioner" to be introduced ahead of winter 2025.

Pensioners in Scotland in receipt of qualifying benefits, such as Pension Credit, will receive payments of £200 or £300 depending on their age, while other households will receive £100.

Holyrood also announced some extra council funding for welfare, as well as additional money for the Warmer Homes Scotland Scheme, external.

In Northern Ireland, Communities Minister Gordon Lyons previously said funding constraints meant the Stormont government also had to change its rules.

He later said affected pensioners would receive of one-off payment of £100 to help with heating costs.

Rachel Reeves has announced changes to the winter fuel payment - here's the finer detail:

Who’s eligible this winter? Everyone over the state pension age in England and Wales with an income of, or below, £35,000 a year. Scotland and Northern Ireland announced their own updates in light of the government's cuts last year - we'll bring you more on that in our next post.

How many people will benefit? The government puts the figure at nine million - or more than 75% of pensioners across the two countries.

How much will be paid? As before, £200 per household with a pensioner under 80, or £300 per household where there is someone over 80, will be made automatically.

What’s changed? Following cuts last year, the payment was limited to those receiving pension credit or another means-tested benefit, which meant millions of older people missed out.

More than three-quarters of pensioners in England and Wales will now be entitled to the winter fuel payment, Rachel Reeves has just announced, in a major U-turn on one of the government's first - and most controversial - policies.

Last July, Reeves announced cuts to the winter fuel payment - a lump sum of £200 a year for households with a pensioner under 80, or £300 for households with a pensioner over 80 - in a bid to save an estimated £1.4bn.

It drew widespread criticism, including from within Starmer's own party.

We'll have more details, including what the chancellor has said, in our next few posts. Stay with us.