Winter Fuel: Labour Pledges Cuts For Rich

Wealthy pensioners would have their winter fuel payments scrapped under a Labour government, Ed Balls has announced.

The shadow chancellor insisted supporting better-off OAPs could "no longer be a priority" at a time of harsh public spending cuts.

Mr Balls hailed the pledge to end universality as an example of the opposition's willingness to show "iron discipline" on spending if it wins back power in 2015.

He also refused to rule out reversing "perverse and unfair" child benefit cuts for high earners brought in by the coalition.

And he signalled that Labour would use the coalition's 2015/16 spending review as a "starting point" if it won the next election, although capital budgets could be higher.

The winter fuel move, unveiled in a keynote speech on the economy, is designed to counter criticism that Labour has few ideas about how to restore Britain to prosperity.

It could also fuel coalition divisions because the Lib Dems want an end to universal benefits for pensioners but David Cameron has vowed they will not change in this parliament.

Winter fuel payments are worth £200 to the over-60s and £300 for those over 80 - with differing amounts for couples and people living in care homes.

Under Labour's plans, the richest pensioners who have enough income to pay higher or top-rate income tax - around 600,000 people at present - would lose the handout.

This would save £100m a year, which would be a tiny fraction of the £120bn annual deficit - making the announcement more of a political symbol than a key economic step.

"Labour believes the winter fuel allowance provides vital support for pensioners on middle and low incomes to combat fuel poverty. That's why we introduced it in the first place," Mr Balls said.

"But in tough economic times we have to make difficult choices about priorities for public spending and what the right balance is between universal and targeted support."

Labour insiders indicated that other benefits, such as TV licences and bus passes, were not under review but the idea still prompted disquiet in party ranks.

Former cabinet minister Peter Hain said it would only raise "peanuts" and asked on Twitter: "Problem with Labour cutting winter fuel for rich is where does attack on universalism stop?"

In April, Mr Hain warned that proposals to means-test pensioner benefits were "simply mendacious, because the savings proposed would be a drop in the ocean compared with the overall welfare budget".

The coalition is due to set out its spending plans for 2015/16 at the end of this month, putting pressure on the opposition about whether it will back them or spend more.

Mr Balls said on Monday that it would be irresponsible to set out detailed plans so far in advance but admitted efficiency savings would have to be made, albeit according to Labour's priorities.

"You cannot prepare now on any basis other than that you will inherit very tough spending plans from this year's Spending Review. They will be our starting point," he said.

The shadow chancellor insisted Labour was ready to deal with a "bleak inheritance" if Chancellor George Osborne sticks to his austerity programme.

"It will require us to govern in a very different way with much less money around," he said.

He added: "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. Ed Miliband and I know that, and my shadow cabinet colleagues know that too."

Conservative Treasury Minister Sajid Javid said: "Ed Balls's promise of discipline on spending isn't remotely credible.

"Ed Balls is incapable of admitting that Labour spent and borrowed too much in government, he has opposed every single tough decision we've taken to cut the deficit and he's still saying Labour would borrow billions more.

"The same old Labour plan for more borrowing and more debt would mean soaring interest rates with hardworking people paying the price."

A new poll shows the Opposition still have a significant mountain to climb when convincing voters they are up to running the economy.

The survey by Survation, commissioned by LabourList, showed the Opposition was not trusted on the economy by a margin of 46.8% to 30.1%.