This article appears as part of the Unspun: Scottish Politics newsletter.

Rachel Reeves has left the Scottish Government with a £100 million dilemma.

At the time of writing, ministers and mandarins in St Andrew’s House are still mulling over the impact of the Chancellor’s plan to tackle the £22 billion black hole in the public finances.

What they do know is that the decision to means test the Winter Fuel Payment – only those on pension credit or certain other benefits will get the annual payment – means less money for ministers in Edinburgh. A lot less money.

Winter Fuel Payments were devolved as part of the Scotland Act 2016 following the post-indyref Smith Commission. 

This year will be the first time that the Scottish Government’s Pension Age Winter Heating Payment (PAWHP) is paid out. 

Back in 2019, the plan was to keep it like-for-like, with all those above state pension age eligible for a single annual payment of between £100 and £300 for individuals.

Given that there are more than a million pensioners in Scotland, that new benefit was forecast to cost around £180m, with much of the money coming from block grant adjustments. 

To give you some scale of the task here, it is the “biggest transfer of cases from the Department of Work and Pensions since the inception of Social Security Scotland.”

So what now? 

Well, already ministers in Scotland are suggesting they may have little choice but to look again at who gets the payments. They say the difference in block grant adjustments could be as much as £100m. 

On Tuesday, Public Finance Minister Ivan McKee told BBC Radio's Good Morning Scotland the SNP government would need to “look at the numbers very, very closely”.

“We think there'll be at least £100m come out of that that we need to find from somewhere else if we want to continue to pay that Winter Fuel Payment, which we absolutely want to do.”

Read more:

Unspun | The Scottish Tories have more urgent problems than their links with the UK party

Asked if the Scottish Government could guarantee that the Winter Fuel Payment would remain universal north of the Border, McKee said: “Of course, the Winter Fuel Payment is now being devolved to Scotland from this September, so we'll have to very closely look at what we can do.

“We would very much like to keep the universal aspect of that benefit, but we need to look at the numbers very, very closely.”

He added that ministers would have to make a "quick decision" ahead of winter.

It's not easy to get your hands on £100m. And that's just for this year. Stick with the same eligibility and it's even more next year and the year after that. The total cost forecast of the PAWHP is set to rise to £188m by winter 2028/29.

Would giving every pensioner a winter fuel payment really be the best use of taxpayer's cash?

Earlier this year, in response to a consultation on the new benefit, the Scottish Fuel Poverty Advisory Panel railed against its universal nature. 

The advisory non-departmental public body said the winter fuel payment simply didn’t work and had “in effect become a tax-free state pension supplement”.

They also pointed out that pensions have increased at a faster rate than other benefits due to the triple lock.

The latest Scottish Government fuel poverty estimates for Scotland, covering the period January to March 2024, are that 840,000 households (34%) are in fuel poverty and 570,000 households (23%) are in extreme fuel poverty. 

Obviously, some pensioners are in fuel poverty and extreme fuel poverty. But many are not.

Maybe, the panel argued, we should be giving those who don’t need the money nothing and those who do, more. 

Get Scotland's top politics newsletter straight to your inbox.


Keeping the benefit universal is "regressive and poorly targeted", they said, and will have "little impact on meeting the statutory targets for reducing fuel poverty", which, by the way, “is the main objective of the PAWHP as stated by the Scottish Government.”

They made the argument that every pound the Scottish Government spends on eradicating fuel poverty should be spent on, well, eradicating fuel poverty. 

To that end, they said the payment should be repurposed as a “benefit delivered in Scotland that meets the objective of stopping those in or at risk of fuel poverty being cold over winter”.

You can help a lot of people with £80m, you just can't help everyone. 

Lines to take for Labour MPs that leaked to The Times tells them the change is a "tough choice but a necessary one".

Will it be a tough but necessary choice for the Scottish Government too? John Swinney and his top team may not have that luxury.