Sir Keir Starmer has said he will “look” at the unpopular winter fuel policy to make more pensioners eligible for the payments.
The prime minister was asked by one of his own MPs what he was doing to protect the savings of older people who were struggling with the rising cost of living.
Speaking during prime minister’s questions, Sir Keir confirmed that he would reassess the policy, which has caused anger among Labour MPs and has been blamed for the party’s poor showing at this month’s local elections.
He told MPs: “I recognise that people are still feeling the pressure of the cost of living crisis, including pensioners.
“As the economy improves, we want to make sure people feel those improvements in their days as their lives go forward.
“And that is why we want to ensure that as we go forward, more pensioners are eligible for winter fuel payment.”
He added: “As you would expect, Mr Speaker, we would only make decisions we can afford. That is why we will look at that as part of our fiscal event.”
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Labour MPs have been agitating for a change to the winter fuel policy, which means-tested the payment to allow only the poorest pensioners to receive it.
Overall, the number of pensioners eligible for the payment – which can reach up to £300 – was slashed from 11.4 million to 1.5 million.
Sir Keir and Rachel Reeves, the chancellor, both defended the policy, arguing it would save £1.5bn each year and “put our finances back in order after the last government lost control”.
However, in the aftermath of the May local elections – which saw Labour lose 189 council seats – more high-profile party figures began speaking out against the policy.
Last month Welsh first minister Eluned Morgan called for the cuts to winter fuel allowance to be reviewed in a landmark speech, saying the policy had come up “time and again”.
Labour MPs have also signed letters to the government in recent weeks in which they called for the policy to be reversed alongside a number of changes to the welfare system.
Tory leader Kemi Badenoch welcomed Sir Keir’s change in approach but branded him “desperate”.
She accused Labour MPs of “cheering when this inevitable U-turn on winter fuel comes” and added: “What will he say to the 348 MPs who went over the top and voted for the winter fuel cut last September.
“Just like the British public, how can any of them ever trust him again?”
She added: “He promised to protect pensioners, but his winter fuel cut has driven thousands into hardship. His MPs hate this. He can’t see them, but they all look sick just hearing what it is he’s going to do. They’re laughing.”
