Tax on pensioners' perks seen as way to save billions

Lib Dems float their alternative to cutting free TV licences, bus passes and winter fuel

Better off pensioners may have to pay tax on perks such as their winter fuel allowance or lose them completely under a plan to be considered during the Government's spending review.

Liberal Democrat ministers say that taxing or means-testing the special benefits for older people would not breach David Cameron’s pledge at the 2010 general election to maintain their winter fuel allowance, free TV licences and bus passes. Taxing winter fuel payments and TV licences would save about £250m a year and affect 1.5 million old people, while restricting them to poor pensioners who qualify for the pension credit top-up would save £1.4bn a year.

Nick Clegg has previously threatened to block another raid on the welfare budget as George Osborne seeks an extra £11.5bn of cuts in 2015-16 in a spending review to be completed in June. But senior Lib Dems do not want to be portrayed as being “soft” on welfare by the Conservatives, who have already branded Labour “the benefits party” for not being tough enough. One Lib Dem minister said: “Taxing or means-testing the pensioners’ benefits would not mean getting rid of them. So, David Cameron would not be breaking any promises.”

Iain Duncan Smith, the Work and Pensions Secretary, is thought to be prepared to curb some pensioner perks but Downing Street has repeatedly said Mr Cameron is sticking to his previous pledge. It is not yet clear whether the Prime Minister is open to the formula being suggested by the Lib Dems. “He does not want this to be his tuition fees,” said one Tory minister, referring to Mr Clegg’s damaging U-turn over his 2010 promise to abolish university fees, which the Coalition raised to a maximum £9,000.

A Whitehall source said: “These issues are not currently under discussion in the spending review. That does not mean that they won’t be.”

Last night, pensioners attacked the proposal. Dot Gibson, general secretary of the National Pensioners Convention, said: “Any attempt to tax the bus pass or the winter fuel allowance would cause a major fightback by pensioners. It would be a personal betrayal by the Prime Minister who has previously said that these benefits were protected until the next election. Any suggestion that those with incomes of £11,000 a year are well off and can therefore pay additional tax are absolutely ridiculous – especially at a time when those on £150,000 are getting a tax cut.

“The real reason why we have these additional benefits for older people is because our state pension system is among the worst in Europe. If the Government starts to break this arrangement it will have to brace itself for the backlash that will follow.”

So far, older people have been relatively unscathed by Coalition cuts, leading to pressure for handouts to better-off pensioners to be targeted. The basic state pension has been protected by a “triple lock” which sees it rise each year in line with earnings, the consumer prices index or 2.5 per cent, whichever is higher. It is exempt from the 1 per cent cap on benefit rises for the next three years.

The Treasury has ordered Whitehall departments to draw up savings of 10 per cent outside the protected areas of health, schools, overseas aid and defence procurement. Ministers in other departments complain that this will mean deep, unacceptable cuts in their budgets even though they have already been hit. Several argue for more welfare cuts to relieve pressure on their departments, including Theresa May, the Home Secretary; Philip Hammond, the Defence Secretary and Chris Grayling, the Justice Secretary. Welfare and tax credits cost almost £200bn a year, nearly a third of public spending.i

Miliband is told by union boss to ‘sack all Blairites’

Ed Miliband should consider sacking all the Blairites in his Shadow Cabinet if he doesn’t want to be “cast into the dustbin of history”, the head of Labour’s biggest union donor, Unite, suggests.

In inflammatory remarks Len McCluskey, whose members account for 28 per of all Labour funding, attacked the party’s former leader Tony Blair and urged Mr Miliband to consider removing all his supporters from the front bench. He singled out Shadow Foreign Secretary Douglas Alexander, Shadow Defence Secretary Jim Murphy and Shadow Work and Pensions Secretary Liam Byrne for particular criticism.

And he hinted that Unite might reduce or withdraw financial support for Labour if the party did not go in the direction the union movement wanted.

Mr McCluskey’s comments, in an interview with the New Statesman, are unwelcome for Miliband – and come just two weeks after he was attacked from the right by Mr Blair.

However, they highlight the increasingly bitter and damaging fight over the direction of the party in the run up to 2015 and will be seized on by the Tories ahead of next week’s local elections.

A spokesman for Mr Miliband immediately slapped down the Mr McCluskey comments as “wrong”.

Oliver Wright

News
In 2006, Pluto was reclassified as a 'dwarf planet'
scienceBut will it be reinstated?
Voices
voicesI like surprises - that's why I'm bringing them back to politics, writes Nigel Farage
News
Destructive discourse: Jewish boys look at anti-Semitic graffiti sprayed on to the walls of the synagogue in March 2006, near Tel Aviv
news

As anti-Semitic attacks rise, Grant Feller re-evaluates his identity

Arts and Entertainment
Adam Levine plays a butcher who obsessively stalks a woman in Maroon 5's 'Animals' music video
music'Animals' video 'promotes sexual violence against women'
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
News
people Biographer says cinema’s enduring sex symbol led a secret troubled life
News
newsGlobal index has ranked the quality of life for OAPs - but the UK didn't even make it into the top 10
News
people

Kirstie Allsopp has waded into the female fertility debate again

News
The moon observed in visible light, topography and the GRAIL gravity gradients
science

...and it wasn't caused by an asteroid crash, as first thought

News
people
Life and Style
food and drink

Savoury patisserie is a thing now

News
Researchers say a diet of fatty foods could impede smell abilities
scienceMeasuring the sense may predict a person's lifespan
Sport
footballArsenal 4 Galatasaray 1: Wenger celebrates 18th anniversary in style
News
Gillian Anderson was paid less than her male co-star David Duchovny for three years while she was in the The X-Files until she protested and was given the same salary
people

Gillian Anderson lays into gender disparity in Hollywood

News
peopleStella McCartney apologises over controversial Instagram picture
Life and Style
Laid bare: the Good2Go app ensures people have a chance to make their intentions clear about having sex
techCould Good2Go end disputes about sexual consent - without being a passion-killer?
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs General

Head of IT Change – West Sussex – Up to £60k DOE – Permanent

£55000 - £60000 Per Annum plus excellent benefits: Clearwater People Solutions...

IT Services Team Leader

£35000 - £40000 Per Annum: Clearwater People Solutions Ltd: Our client, a prog...

KS2 Teacher

£90 - £120 per day + tax deductable expenses: Randstad Education Leicester: Ke...

Foundation Teacher

£90 - £120 per day: Randstad Education Leicester: Our client is seeking to app...

Day In a Page

Italian couples fake UK divorce scam on an ‘industrial scale’

Welcome to Maidenhead, the divorce capital of... Italy

A look at the the legal tourists who exploited our liberal dissolution rules
Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

The vintage series has often been criticised for racial stereotyping
An app for the amorous: Could Good2Go end disputes about sexual consent - without being a passion-killer?

An app for the amorous

Could Good2Go end disputes about sexual consent - without being a passion-killer?
Llansanffraid is now Llansantffraid. Welsh town changes its name, but can you spot the difference?

Llansanffraid is now Llansantffraid

Welsh town changes its name, but can you spot the difference?
Charlotte Riley: At the peak of her powers

Charlotte Riley: At the peak of her powers

After a few early missteps with Chekhov, her acting career has taken her to Hollywood. Next up is a role in the BBC’s gangster drama ‘Peaky Blinders’
She's having a laugh: Britain's female comedians have never had it so good

She's having a laugh

Britain's female comedians have never had it so good, says stand-up Natalie Haynes
Sistine Chapel to ‘sing’ with new LED lights designed to bring Michelangelo’s masterpiece out of the shadows

Let there be light

Sistine Chapel to ‘sing’ with new LEDs designed to bring Michelangelo’s masterpiece out of the shadows
Great British Bake Off, semi-final, review: Richard remains the baker to beat

Tensions rise in Bake Off's pastry week

Richard remains the baker to beat as Chetna begins to flake
Paris Fashion Week, spring/summer 2015: Time travel fashion at Louis Vuitton in Paris

A look to the future

It's time travel fashion at Louis Vuitton in Paris
The 10 best bedspreads

The 10 best bedspreads

Before you up the tog count on your duvet, add an extra layer and a room-changing piece to your bed this autumn
Arsenal vs Galatasaray: Five things we learnt from the Emirates

Arsenal vs Galatasaray

Five things we learnt from the Gunners' Champions League victory at the Emirates
Stuart Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

This deal gives England a head-start to prepare for 2019 World Cup, says Chris Hewett
Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

The children orphaned by Ebola...

... then rejected by surviving relatives over fear of infection
Pride: Are censors pandering to homophobia?

Are censors pandering to homophobia?

US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
The magic of roundabouts

Lords of the rings

Just who are the Roundabout Appreciation Society?