Ed Balls: Labour would axe wealthy pensioners' fuel cash

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.

"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.

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?