Pensioners trade eating for heating says report

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Pensioners use less than half of their winter fuel payment for heating, while many cut back on food during cold snaps in order to spend more on keeping warm, a report has indicated.

Older people are 14 times more likely to spend money they receive from the winter fuel payment on heating bills than if they had been given the same amount of money through other means, according to the Institute for Fiscal Studies (IFS).

It found that households that received the benefit spent an average of 41% of it on fuel costs, even though there was no obligation for them to do so.

This compared with just 3% of any extra money people received that would go to cover heating bills, if it came from benefits that were not 'labelled' in any way.

The group said this suggested that by naming the benefit the winter fuel payment, £41 of every £100 that was received went towards heating costs, compared with just £3 if the benefit was not named.

Laura Blow, senior research economist at IFS, said "The winter fuel payment was introduced to encourage older households to spend more on heating in the winter.

"Remarkably it appears to have had just that effect. The fact that it is labelled a winter fuel payment appears to mean that much more of it is spent on fuel than would have been the case had no such label been attached.

"This suggests that simply calling a benefit by a particular name can have a real effect on how it is spent. The potential implications for government policy are significant."

But the study also found that in very cold weather, the UK's poorest pensioners tended to reduce spending on food in order to cover the cost of having their heating on for longer, as they faced a 'heat or eat trade-off'.

It found that the poorest quarter of pensioner households increased fuel spending by 7% during cold snaps, in line with other retired households.

However, the poorest households also decreased their food spending by just over 7% during these periods, suggesting they needed to save in other areas in order to cover their higher heating costs.

The IFS said: "The reduction in food expenditure is evident only among the poorest quarter of older households and only when the temperature is substantially lower - more than two degrees Celsius - than would be expected for that time of year.

"This suggests that policies specifically targeted at helping families during cold weather shocks, such as the cold weather payment, in conjunction with the annual winter fuel payment, do not fully protect all older households from the impact of very cold weather."

A Department for Work and Pensions spokeswoman said: "We're committed to doing all we can to ensure that vulnerable older people can keep their homes warm in the winter.

"That's why we protected the winter fuel payments and have permanently increased cold weather payments from £8.50 to £25 a week.

"We've introduced a 'triple guarantee' to provide a more generous state pension, so that the most vulnerable do not have to make a choice between food and heating their homes."