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Cuts to pensioner winter fuel payments will save hundreds of millions less than anticipated, Rachel Reeves has been warned.
The chancellor announced the controversial cuts in a bid to attempt to improve Britain’s finances, with the Labour government claiming that they had inherited a £22bn “blackhole”.
The move is expected to remove payments from millions of pensioners across England and Wales, with only those receiving pension credit entitled to the payment.
New analysis from the Observer however has thrown her projected £1.4bn savings in doubt, given that there had been a 152 per cent surge in claims for pension credit over the last eight weeks.
Official government data suggests there has already been an additional 45,000 extra claims, which means that any savings could be significantly lower than the Treasury expected.
Work and Pensions Secretary Liz Kendall has previously urged pensioners to check if they are eligible for the benefit, which would unlock winter fuel payments of up to £300.
The Labour Government scaled back the previously universal cash packages so only claimants of certain benefits, including pension credit and universal credit, will receive them.
Research from Policy in Practice, a consultancy working with local authorities that helps alert eligible pensioners of financial support accessible to them, has suggested there could be an additional 158,000 more claims than predicted by the pension credit deadline in late December.
This could cost an additional £246m and open up another range of claim options for those who receive the pension credit, which could reach up to £700m in costs.
It comes amid reports that the chancellor is re-examining plans to crack down on non-dom tax status, over concerns it will not raise enough money and will ward off investment in the UK.
Ahead of the October budget, speculations have risen that the Treasury will potentially target loopholes in inheritance tax and capping business relief rates, while Reeves has been clear income tax, national insurance and VAT would not be affected.
Alan Tate, of the Communication Workers Union (CWU), said the winter fuel payment cut had “overshadowed” the work of the new Labour Government.
He said: “The CWU has been inundated with emails and calls from our retired members worried about choosing between heating and eating.”
Prime Minister Sir Keir Starmer responded in a Channel 4 News interview after the motion: “I do understand how, you know, colleagues in the Labour movement feel about this.
“This is clearly a difficult decision but a motion at conference doesn’t dictate Government policy.”
A government spokesperson said: “We want people to get the benefits they are entitled to, which is why the government is working hard to drive up pension credit uptake. We are committed to supporting pensioners – with millions set to see their state pension rise by £1,700 this parliament through our commitment to the triple lock.
“However, given the dire state of the public finances we have inherited, it’s right that we target support to those who need it most.”