Downing Street vs the Treasury: David Cameron and George Osborne clash over pensioners’ perks

A rare display of disunity after Prime Minister’s public proclamation in favour of OAP ‘extras’

Tensions between the Treasury and Downing Street have surfaced over David Cameron’s pledge to maintain pensioners’ perks such as winter fuel allowances, bus passes and free TV licences.

In a rare disagreement between the two men, George Osborne is said to be unhappy that the Prime Minister rushed out a statement last weekend saying he is “minded to keep” the benefits, issued in an attempt to head off media reports that they could be axed by the Conservatives after next year’s general election.

Withdrawing the perks from rich pensioners would deliver a relatively small part of the £12bn of welfare cuts Mr Osborne is seeking in 2015-17. But he believes that curbing them would make it easier for him to impose other social security cuts, such as his plan to restrict housing benefit for under-25s. One Tory Cabinet minister who shares the Chancellor’s view said: “It’s about fairness, not the revenue. How can you justify a £300 fuel allowance to a millionaire pensioner when you are making sensitive cuts in other parts of the welfare budget?” One Whitehall source told The Independent: “George Osborne is not convinced by David Cameron’s policy. He sees the politics of keeping them [the perks] until 2015 but does not want the policy to continue after that.”

Mr Cameron feels hamstrung by a pledge he made during the 2010 election campaign, when he denied Labour claims that the fuel allowances, free bus passes and TV licences would be at risk. He believes that breaking his promise would be his equivalent of Nick Clegg’s spectacular U-turn over university tuition fees. The Liberal Democrat leader supported their abolition in 2010 but then agreed that the Coalition should raise them to a maximum £9,000 a year.

Mr Osborne wanted the pledge to be limited to the current five-year parliament and signalled last summer that the benefits could be withdrawn from wealthy pensioners after next year’s election.

He said then: “All those pensioner benefits – not the basic state pension – all those other pensioner benefits, yes of course we have got to look at how we can afford them.”

Iain Duncan Smith, the Work and Pensions Secretary, is prepared to consider withdrawing the extra benefits from better off pensioners.

“He thinks you need to look at everything, that you can’t ring-fence pensioners’ benefits,” said one ally.

Mr Clegg has refused to sanction more welfare cuts by the Coalition before the election unless the Conservatives agree to review the perks for the elderly. Labour has pledged to axe fuel allowances for wealthy pensioners.

Today Downing Street and the Treasury denied there was any disagreement over pensioners’ perks. One Osborne ally said: “We are at one with the PM on this. There is no discord.”

Aides say the Prime Minister and Chancellor agree that, while scrapping fuel allowances, free bus passes and TV licences could save £4bn, taking them away from poor pensioners would provoke outrage, while ending them for the rich would save only tens of millions of pounds. There is also criticism of the way Downing Street handled the issue. Before a TV interview last Sunday, Mr Cameron announced the Conservatives would maintain the “triple lock” under which the basic state pension rises each year in line with prices, earnings or 2.5 per cent, whichever is highest. But critics claim Number 10 was slow to realise he would also be asked about his pledge on other benefits for the elderly. “What genius in Downing Street dreamt up this strategy?” a Cabinet minister asked.

On the BBC’s Andrew Marr Show, Mr Cameron left open the question of whether the perks would be retained after 2015. When the media began reporting they were under threat, he authorised a statement saying he was minded to keep them. The next morning, Mr Osborne was asked five times on BBC Radio 4’s Today whether the benefits would be kept. He did not go as far as Mr Cameron’s statement, saying he could not write the Tory manifesto for 2015 now. But he did say that the Tories’ values had not changed since the pledge was made.

When Number 10 and the Treasury fell out

Blair vs Brown

Although the prime minister is also first lord of the Treasury, a power struggle was inevitable since Gordon Brown was overlord of Labour’s domestic policy after giving Tony Blair a free run at the party leadership in 1994.

During Blair’s 10 years at Number 10, Brown demanded to know when his turn would come and MPs close to him destabilised Blair to force him to name his departure date.

Although their aides repeatedly denied they were at loggerheads, the depth of the hostility between the two men has since been confirmed in books written about the period. But the huge tensions did not stop Labour winning three general elections.

Thatcher vs Lawson

Margaret Thatcher was one of the most powerful prime ministers of modern times but her fraught relations with Cabinet colleagues ultimately led to her downfall.

Her once-strong relationship with her second Chancellor, Nigel Lawson, broke down in 1989. When Sir Alan Walters, her personal economic adviser, wrote a newspaper article clashing with Lawson’s views, the Chancellor demanded she sack him.

Thatcher refused; Lawson resigned but then Walters quit too. Although the PM survived,  the writing was on the wall and the following year she was forced out by her Cabinet and MPs.

Macmillan vs Lloyd

In 1962, Harold Macmillan sacked his Chancellor Selwyn Lloyd, during a purge dubbed “Night of the Long Knives,” which was widely seen as panic in the face of bad economic news.

Macmillan lost his reputation as Mr Unflappable and his days in Downing Street were numbered.  He resigned the following year.

Start your day with The Independent, sign up for daily news emails
Life and Style
Fans line up at the AVNs, straining to capture a photo of their favourite star
life Tim Walker asks how much longer it can flesh out an existence
Life and Style
Every minute of every day, Twitter is awash with anger as we seek to let these organisations know precisely what we think of them
techWhen it comes to vitriol, no one on attracts our ire more than big businesses offering bad service
Professor David Nutt wants to change the way gravely ill patients are treated in Britain
people Why does a former Government tsar believe that mind-altering drugs have a place on prescription?
Norway’s ‘The Nordland Line – Minute by Minute, Season by Season’ continues the trend of slow TV
Have you tried new the Independent Digital Edition apps?
ebooksA special investigation by Andy McSmith
Arts and Entertainment
Jonny Evans has pleaded not guilty to an FA charge for spitting at Papiss Cisse
Life and Style
Kate Moss will make a cameo appearance in David Walliams' The Boy in the Dress
The image released by the Salvation Army, using 'The Dress'
Liverpool defender Kolo Toure
football Defender could make history in the FA Cup, but African Cup of Nations win means he's already content
2015 General Election

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Ashdown Group: Technical Presales Consultant - London - £65,000 OTE.

£65000 per annum: Ashdown Group: Technical Presales Engineer - central London ...

Recruitment Genius: Physiotherapist / Sports Therapist

£20000 - £50000 per annum: Recruitment Genius: A Physiotherapist / Sports Ther...

Recruitment Genius: Sales Executive / Advisor

£8 - £9 per hour: Recruitment Genius: Sales Executives / Advisors are required...

Recruitment Genius: Warehouse Operative

£14000 - £15000 per annum: Recruitment Genius: An opportunity has arisen for a...

Day In a Page

Homeless Veterans campaign: Donations hit record-breaking £1m target after £300,000 gift from Lloyds Bank

Homeless Veterans campaign

Donations hit record-breaking £1m target after huge gift from Lloyds Bank
Flight MH370 a year on: Lost without a trace – but the search goes on

Lost without a trace

But, a year on, the search continues for Flight MH370
Germany's spymasters left red-faced after thieves break into brand new secret service HQ and steal taps

Germany's spy HQ springs a leak

Thieves break into new €1.5bn complex... to steal taps
International Women's Day 2015: Celebrating the whirlwind wit of Simone de Beauvoir

Whirlwind wit of Simone de Beauvoir

Simone de Beauvoir's seminal feminist polemic, 'The Second Sex', has been published in short-form for International Women's Day
Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Why would I want to employ someone I’d be happy to have as my boss, asks Simon Kelner
Confessions of a planespotter: With three Britons under arrest in the UAE, the perils have never been more apparent

Confessions of a planespotter

With three Britons under arrest in the UAE, the perils have never been more apparent. Sam Masters explains the appeal
Russia's gulag museum 'makes no mention' of Stalin's atrocities

Russia's gulag museum

Ministry of Culture-run site 'makes no mention' of Stalin's atrocities
The big fresh food con: Alarming truth behind the chocolate muffin that won't decay

The big fresh food con

Joanna Blythman reveals the alarming truth behind the chocolate muffin that won't decay
Virginia Ironside was my landlady: What is it like to live with an agony aunt on call 24/7?

Virginia Ironside was my landlady

Tim Willis reveals what it's like to live with an agony aunt on call 24/7
Paris Fashion Week 2015: The wit and wisdom of Manish Arora's exercise in high camp

Paris Fashion Week 2015

The wit and wisdom of Manish Arora's exercise in high camp
8 best workout DVDs

8 best workout DVDs

If your 'New Year new you' regime hasn’t lasted beyond February, why not try working out from home?
Paul Scholes column: I don't believe Jonny Evans was spitting at Papiss Cissé. It was a reflex. But what the Newcastle striker did next was horrible

Paul Scholes column

I don't believe Evans was spitting at Cissé. It was a reflex. But what the Newcastle striker did next was horrible
Miguel Layun interview: From the Azteca to Vicarage Road with a million followers

From the Azteca to Vicarage Road with a million followers

Miguel Layun is a star in Mexico where he was criticised for leaving to join Watford. But he says he sees the bigger picture
Frank Warren column: Amir Khan ready to meet winner of Floyd Mayweather v Manny Pacquiao

Khan ready to meet winner of Mayweather v Pacquiao

The Bolton fighter is unlikely to take on Kell Brook with two superstar opponents on the horizon, says Frank Warren
War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable