Martin Lewis has described the decision to axe the £300 winter fuel payment for around 10 million state pensioners as creating a ‘potentially life-threatening’ situation as the needy won’t be able to claim gateway benefit pensions credit in time.

Ahead of Rachel Reeves’ budget announcement, personal finance expert Martin Lewis has revealed his six key hopes for the fiscal update. In a candid interview with The Times, Mr. Lewis disclosed that he had not only met with the chancellor but also penned an open letter detailing the essential changes he believes are necessary.

Amidst growing speculation about potential tax increases across several sectors including employers’ National Insurance and public sector pensions, as well as possible adjustments to inheritance tax and heightened taxes on gambling, Mr Lewis stresses that more must be done to assist the most impoverished in the wake of the winter fuel payment being scrapped.

Highlighting a significant gap left by the axed benefit, now only the most financially disadvantaged pensioners, those with an annual income under £11,400, are eligible for the £300 payment, effectively leaving around 10 million previous recipients out in the cold.

Given that only those on Pensions Credit qualify, there’s considerable worry that individuals with scant financial resources will struggle to keep their homes warm. “We are looking at perhaps one of the tightest budgets we have seen in a long time, but none of the things I am suggesting are pipe dreams. They are realistic asks and many do not require much expenditure,” Lewis asserted.

“A large number of things within the consumer finance world are simply poorly designed. We need a fair system that works well.”

Taxpayers across the nation, already weathering months of economic uncertainty, are steeling themselves for some stringent measures. However, financial expert Lewis is optimistic that the Chancellor will chart a course towards brighter days post-austerity: “People don’t mind short-term pain if they can see what the end game is.”

He outlined six key reforms he’s eager to see implemented.

1. Winter fuel payment.

The government has now introduced means-testing for the winter fuel payment, restricting these annual grants of up to £300 to only those pensioners who receive pension credit—a benefit designed to supplement weekly income to £218.15 for singles or £332.95 for couples. With the full state pension currently at £221.20 a week, Lewis commented on the policy shift: “This was a strange way for a new government to plant its flag and I’m not sure they quite realised the impact it would have,” adding, “I have no objection to the principle of means-testing the payments – there is no need for millionaires and billionaires to get them. But I do have a problem with both the level of the means test, because £11,300 a year is too low, and the mechanism, because basing it on a critically underclaimed benefit was a poor choice.”

About 800,000 of those who are eligible for pension credit do not claim it, and so will not get the winter fuel payment. It means that people the government believes should get the payment, including many of the poorest and most vulnerable, are missing out because they haven’t completed the complex claim form. That is wrong, worrying and potentially life-threatening,” Lewis said. “One solution, which is imperfect but workable, would be to broaden the eligibility criteria so that pensioners who get pension credit or are in council tax bands A to C qualify. This has precedence from prior energy crisis payments, so is easy to implement and would cover the vast majority of the most vulnerable pensioner households.”

2: CHild Benefit

In his final budget as chancellor in March, Jeremy Hunt addressed some of the issues with the child benefit system, yet there remains more to be done. Child benefit stands at £25.60 a week for the first child and £16.95 a week for additional children.

Since April, parents earning below £60,000 have been eligible for the full benefit (up from a previous limit of £50,000) but have to pay back 1 per cent of the benefit for every £200 earned above that limit. Once one parent earns £80,000, the family are entitled to nothing.

“The benefit is still based on individual rather than household income, which makes it incredibly unfair,” Lewis stated. He explained that a household where two parents each earn £59,999 – a combined £119,998 – would receive the full benefit, but a household where one parent earns £80,000 would get nothing.”

A household where two parents each earn £59,999 – a combined £119,998 – would get the full benefit, but a household where one parent earns £80,000 would get nothing. Raising the threshold means that fewer people are affected by the means test, but the core unfairness remains and it needs to be addressed.

“There are real problems in changing the way this works because our tax system is based on individual not household earnings. Hunt promised to shift to a system based on household rather than individual income by April 2026, and I want a commitment from this chancellor to continue with that.”

3. Tax-free childcare

“This perk for parents is critically underclaimed and that is because it is badly named – it is instantly confusing and off-putting,” said Lewis.

The tax-free childcare scheme replaced the old childcare vouchers and offers parents up to £2,000 a year towards childcare costs. You set up an account through the Government Gateway system and for every 80p you put in, the government will add 20p.

Parents who earn up to £100,000 can claim up to £500 every three months.

Martin Lewis has highlighted a significant opportunity for working families to benefit from childcare support, but many are missing out. Despite 1.3 million families being eligible for the scheme, around 800,000 are not claiming what they’re entitled to.

Lewis suggests that poor branding and communication are to blame, with the scheme’s name misleadingly suggesting a link to tax returns. “Our research showed that if we changed the name to something like ‘the working parents childcare top-up’, which actually describes what the payment is, then you would massively increase the number of people claiming it,” he explained.

He believes a simple name change by the government could make a huge difference: “This would be very cheap and easy for the government to rename so that more people can benefit.”

4. Lifetime Isa

The Lifetime Isa, introduced in 2017 to assist first-time buyers onto the property ladder, offers a 25% bonus on savings up to £4,000 a year for those aged 18 to 39. However, stringent rules and penalties apply if the funds are used for anything other than purchasing a first home before age 60.

With house prices rising, the £450,000 property value cap for Lifetime Isa purchases, unchanged since 2017, is now excluding many young people from the market. Lewis pointed out this issue, indicating that more young people are finding themselves unable to use the account for its intended purpose due to escalating property prices.

“This is very easy to fix. All you have to do is make it so that if you buy a property above the threshold, you don’t get the bonus, but you also do not pay a fine,” he said. “That effectively reduces the penalty to 20 per cent. It would be good to see the £450,000 threshold rise with average house prices too.”

“It is completely unjust that many of our youngest people have done exactly what the state wanted them to do – use a Lifetime Isa to save for their first property – and they are having to pay the state a fine when they come to do that. It needs to stop.”

5: Energy Bills

The cost of heating and lighting our homes has skyrocketed since 2021, and it’s not just the rate for each unit of gas or electricity that has increased. The standing charge – the daily amount you pay for being connected, even if you use no energy at all – is limited by the energy regulator’s price cap to about 31p a day for gas and 61p for electricity.

This equates to more than £300 a year.

Three years ago, it was only £86. “This means that low-usage households who reduce their usage do not see a benefit. It is particularly unfair to many people who have gas central heating that they turn off for six months of the year,” Lewis stated.

“The problem is that if we reduce standing charges, then unit rates will need to go up to compensate. That means that to make this change we need to simultaneously bring in tariffs that protect vulnerable higher users, such as families with a child who has a disability who perhaps needs a huge amount of energy for a ventilator or to charge an electric wheelchair.

“It’s a fine balance and we need the government and the energy regulator Ofgem to work together on this.”

Smart meters are another issue. Lewis remarked: “These are good in principle; the idea is that you do not have to submit a reading to your energy supplier, that your bills are more accurate and you can instantly see how much energy you are using at home.”

“The problem is that more than 20 per cent of people tell us theirs don’t work, meaning that they don’t feed through readings to the firm. Other issues include incorrect tariffs, broken energy monitors and more. Firms simply don’t allocate enough resources to repairs.”

“Suppliers are fined if they do not meet new installation targets, but we should be targeting based on the number of working smart meters – covering both installations and repairs – and that would help to fix the problem.”

6: Carer’s allowance

This benefit is paid to those who care for someone for at least 35 hours a week and earn less than £151 a week after tax, with the payment set at £81.90 a week – totalling around £4,258 annually. However, earning even a penny over the limit results in losing the entire allowance, with a requirement to repay any funds received mistakenly.

“Often the system does not pick up that people have earned too much, due to a change in minimum wage for example, and they only find out when they are asked to repay,” Lewis explained. “How is someone earning so little expected to pay back a year’s worth of carer’s allowance? The system is devastating the lives of some of our most vulnerable people.”

“We need a change so that if you earn above the threshold, you gradually lose your allowance in a tapered way, rather than it being a cliff edge. Any clawback should only be based on the amount that you earned over the threshold, not the whole payment.”