Rachel Reeves’ announcement that the winter fuel payment would be reinstated for those earning less than £35,000 has been welcomed by campaigners. The policy, introduced in the early days of the Government’s time in office, proved to be a political nightmare, with some Labour MPs citing it as one of the key factors in their poor local election performance last month.

However, despite the reinstatement, there will still be some pensioners who continue not to receive the benefit, which until 2024, had been universal. Alice Haine, Personal Finance Analyst at Bestinvest by Evelyn Partners, the DIY investment platform, said: “Approximately two million pensioners in England and Wales have incomes higher than £35,000. Finding the right level for a threshold increase was never going to please everyone, but the decision to set the threshold at £35,000, which is broadly in line with average earnings, rather than include all basic-rate taxpayers, will be challenging if the Government is looking to appease angry pensions.”

The policy was one of the most controversial of Labour’s time in office thus far (Image: Getty)

The Government claims that the initial decision was necessary due to the financial situation they inherited, with ministers claiming that their action in their first year in office has allowed them to now row back.

That is despite inflation rising and growth forecasts tumbling since the benefit was removed last summer.

Yesterday, the Treasury claimed that the increased threshold means no lower or middle-income pensioners will miss out, with the vast majority – over three quarters – of pensioners in England and Wales receiving the payment.

Rachel Reeves said: “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.

The Chancellor has defended her initial decision to withdraw the benefit (Image: Getty)

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

According to Government figures, 2 million individuals in England and Wales over State Pension age have taxable incomes above £35,000 and are set to continue to miss out on the payment.

Haine added: “Ultimately, for pensioners earning just above the £35,000 threshold, the latest news will be disappointing. Some may even choose to reduce their income from private pensions if it means they can just skim under the threshold to receive the payment.

“Others may have to take it on the chin that they aren’t eligible for the payment.”