Pensioners' benefits under scrutiny for more cuts

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Pensioners' entitlement to benefits such as the winter fuel allowance, bus passes and free prescriptions are coming under fresh scrutiny as ministers hunt for new ways of cutting spending.

Current government budgets last until 2014-15, but work is already under way on identifying savings beyond that date. It is forcing senior Coalition figures to start thinking what was previously viewed as politically impossible – trimming handouts to the over-65s. Downing Street was yesterday forced to issue a firm promise 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 has also made no secret of his belief that some allowances can no longer be justified for "millionaire pensioners" after 2015.

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 Chancellor George Osborne in 2010. He told The Independent: "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."

For ministers of both parties, that will mean re-examining £5bn in benefits paid to 11 million pensioners. Currently, everyone aged over 60 qualifies for a winter fuel allowance payment of £200 a year, increasing to £300 for the over-80s. Other universal benefits include free bus passes, prescriptions and eye tests.

David Cameron guaranteed before the election that such allowances would be safe if he became Prime Minister. Asked if he remained committed to retaining the entitlements as universal benefits, a Downing Street spokeswoman said: "He stands by what is in the Coalition agreement." But she made clear the promises in the agreement related only to the current Parliament and did not tie the hands of the coalition partners after the next election.