Nick Clegg has been hit by a Liberal Democrat grassroots backlash for approving below-inflation rises in most state benefits without winning a “wealth tax” from the Conservatives in return.
Liberal Democrat activists claimed their party leader had been outgunned in negotiations on George Osborne’s mini-budget. They said the next £10bn round of spending cuts to which the Liberal Democrats have signed up should abolish winter fuel allowances, bus passes and free television licences for wealthy pensioners.
Mr Clegg is prepared to argue for better-off pensioners to lose such benefits in a government-wide spending review next year. The cuts would not take effect until the 2015-16 financial year, which starts just before the May 2015 election. But David Cameron is unlikely to target pensioners, fearing that would be seen as a breach of his 2010 election pledge to maintain their benefits.
The Liberal Democrats are likely to propose taking away the benefits in their manifesto for the 2015 election.
Clegg allies rejected the criticism from party members, saying he had pared down the Tories’ demands for £10bn of welfare cuts in the autumn statement to £3.7bn and blocked their plans for a freeze in most benefits, an end to housing benefit for under-25s and for state handouts for children to be limited to the first two in a family.
But some Liberal Democrat peers may oppose the legislation to keep the benefit rises below inflation for the next three years. David Hall-Matthews, chairman of the Social Liberal Forum, said the Tory elements of the Autumn Statement had “overwhelmed the Lib-Dem bits”.
He said it was “very disappointing” that the Liberal Democrats had lost the argument for a wealth tax but still agreed to curb benefits to the working poor. Although he blamed the Tories more than Liberal Democrat leaders, he said the result of the negotiations was “not great”.
The Liberal Reform group welcomed some measures in the statement but said: “We would much rather have seen the welfare bill reduced by stopping the numerous unnecessary payments made to those on high incomes.”