Ed Balls: Labour would axe wealthy pensioners' fuel cash

 

Shadow chancellor Ed Balls: "In tough economic times we have to make difficult choices about priorities"

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Labour would cut winter fuel payments for the UK's richer older people if they won the next general election, shadow chancellor Ed Balls has said.

It would affect about 600,000 people over 61 who pay higher and top income tax rates - saving about £100m.

Labour may also curb new free schools and police commissioners to save money.

Mr Balls said it would be "completely irresponsible" for Labour to pledge higher spending in 2015-6, given the likely "bleak" state of the finances.

Chancellor George Osborne will announce the details of future spending plans for 2015-6 - the period immediately before and after the expected date of the next election - later this month and Labour has been under pressure to do the same.

Mr Balls told an audience at the headquarters of Thomson Reuters in London that he could not predict what the financial situation would be in two years.

But he said he would show an "iron discipline" and, at this stage, expected to "work within" the coalition's current spending forecasts for the period in question.

'Symbolic'

He said the coalition's current policies would leave a future Labour government with "a bleak inheritance", and promised a "tough deficit reduction plan", coupled with more action to strengthen the economy.

"We will inherit a substantial deficit. We will have to govern with much less money around. We will need to show an iron discipline.

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On Budget Day in just two years' time the man holding the red box outside No 11 may be Labour's Ed Balls. That will only happen if he can restore Labour's economic credibility”

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"The last Labour government was able to plan its 1997 manifesto on the basis of rising departmental spending in the first years after the election. The next Labour government will have to plan on the basis of falling departmental spending."

While not spelling out spending commitments in detail, he insisted the party's manifesto at the next election would include "tough fiscal rules" and his colleagues would be expected to focus on "re-prioritising money within and between budgets" rather than additional spending.

Mr Balls said the winter fuel allowance was a "vital" source of help for pensioners on low and middle incomes but in the current climate Labour had to strike the right balance between "universal and targeted support".

"So at a time when the public services that pensioners and others rely on are under strain, it can no longer be a priority to continue paying the winter fuel allowance to the wealthiest pensioners," he said.

Important symbol

The BBC's political editor Nick Robinson says that although the saving from the winter fuel allowance pledge is small, it is meant as a symbol of his acceptance that day to day Whitehall spending will continue to fall under Labour.

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The problem with Labour cutting winter fuel for rich is where does the attack on universalism stop”

End Quote Peter Hain Former Labour minister

The winter fuel allowance has proved a controversial measure because it is paid regardless of income.

Prime Minister David Cameron pledged during the last general election campaign not to cut welfare measures directed at pensioners.

But the Conservatives have come under pressure from their Liberal Democrat coalition partners, who want to see benefits for wealthy older people addressed before deeper cuts to the wider welfare budget can be considered.

Treasury minister Sajid Javid said the government had made clear there would be no change to the winter allowance and other pensioner benefits in this Parliament but insisted "a lot of other tough decisions" had been made on welfare.

Labour's overall economic policy was essentially "unchanged", he added, and would lead to "more borrowing, more spending and more debt".

Benefits shake-up

Dot Gibson, from the National Pensioners' Convention, said the move could set a "very dangerous" precedent and call into question other historic entitlements such as free bus passes for pensioners and even universal access to the NHS.

And, writing in the Guardian, former Labour minister Peter Hain said the "problem with Labour cutting winter fuel for rich is where does the attack on universalism stop?"

Mr Balls also said Labour's 2015 manifesto would ask tough questions about spending in a range of areas.

"With primary school places in short supply in many parts of the country, and parents struggling to get their children into a local school, can it really be a priority to open more free schools in 2015 and 2016 in areas with excess secondary school places," he said.

"When we are losing thousands of police officers and police staff, how have we ended up spending more on police commissioners than the old police authorities, with more elections currently timetabled for 2016?

 

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  • rate this
    0

    Comment number 1667.

    In principle I agree with Balls' proposal, but given that the payment is £200 per household of two with one qualifying pensioner, or £100 each if both householders qualify, how will he organise it if one pensioner is above the tax threshhold and the other not? Has this been thought through? I suspect not, a bit like the rest of Labour's fiscal policies!

  • rate this
    +6

    Comment number 1551.

    i am not wealthy.i will not be a wealthy pensioner, but i don't have a problem with anyone who has paid into the system,probably over many years,getting what they are entitled to,wealthy or not.it's called a contract mr balls.someone pays in and,in return,gets back what they are entitled to.leave it to the individual to decide on whether or not they accept it.that's called democracy mr balls

  • rate this
    +1

    Comment number 1548.

    Taxes in the UK are far too high, if we didn't tax everyone so heavily we could all save money, not just for our old age but for a 'rainy' day which unfortunately does happen. It's time to rethink our welfare state as there are some who leave school go on benefits and stay on benefits until they die

  • rate this
    +5

    Comment number 1525.

    Part of the problem with this means testing of benefits is it is the higher rate tax payers that are funding most of these benefits in the first place. What happens if they suddenly decide that Labour's idea of fairness - that higher tax payers fund benefits but do not receive them - is not fair and stop paying?

  • rate this
    -6

    Comment number 1514.

    Getting there but not going far enough. ALL benefits must be means tested and apart from disability payments they should be 'in kind' via food vouchers and meeting essential bills such as electricity and water rates.

 

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