Handouts for pensioners under fresh scrutiny from Coalition


Senior Coalition figures are being forced for the first time to ponder trimming hand-outs to the over-65s.

Pensioners' entitlements to benefits such as the winter fuel allowance, bus passes and free prescriptions are coming under fresh scrutiny as ministers seek new ways to cut spending once the current budgets expire in 2014-15.

Downing Street was forced to issue a firm pledge yesterday that all such allowances were safe until the next election, expected in 2015.

Its intervention was prompted by a report that Iain Duncan Smith, the Work and Pensions Secretary, believes that such benefits should be means-tested after that date.

Nick Clegg, the Deputy Prime Minister, remarked recently: "I believe ... we should be asking millionaire pensioners to perhaps make a little sacrifice on their free TV licence or their free bus passes."

A government source acknowledged that the next budget round – on which both Coalition parties would have to fight the next election – would be even tougher than the plans set out by George Osborne in 2010.

He told i: "All the easy money and fat will have gone by 2015 so we will need to get savings by making more fundamental and structural changes."

That will mean re-examining £5bn in benefits paid to 11 million pensioners – a cost that will rise as the population ages. Currently, everyone aged over 60 qualifies for a winter fuel payment of £200 a year, increasing to £300 for the over-80s. Other universal benefits include free bus passes, prescriptions and eye tests, as well as free television licences for the over-75s.

Mr Cameron vowed before the election that such allowances would be safe if he became Prime Minister. Asked whether he remained committed to keeping such benefits universal, a Downing Street spokeswoman said yesterday: "He stands by what is in the coalition agreement."

But yesterday a source close to Mr Duncan Smith was reported as saying: "The PM is refusing all logic on this because he has boxed himself into a political corner and doesn't have the courage to stand up to Labour's attack."

He appears to be backed by senior sources in the Treasury, who believe benefits for the elderly cannot be inviolable when other sections of society have felt the pain of spending cuts.