Work and Pensions Secretary Iain Duncan Smith provokes ministers' revolt as he tells wealthy pensioners: 'hand back your benefits'

IDS says it is an 'anomaly' that all pensioners receive universal benefits, no matter how well-off they are

Iain Duncan Smith suffered a backlash from Cabinet colleagues today when he suggested that wealthy pensioners should voluntarily repay their universal benefit payments to the state.

The Work and Pensions Secretary’s comments caused confusion within own department, which stressed he was not making a policy announcement, and surprise among other senior ministers.

His remarks were also seen as a swipe at David Cameron’s commitment not to trim back pensioners’ benefits for the lifetime of this Parliament, which runs until 2015. They include the winter fuel allowance, free bus travel and free television licences for the over-75s.

Ministers are due on Tuesday to submit their final bids to the Treasury ahead of the next spending review in June and Mr Duncan Smith is under pressure to identify more savings from his budget.

He said today there were “no plans” to alter the universal benefits paid to pensioners, but urged them to return the cash if they did not need it.

He told the Sunday Telegraph: “It is up to them, if they don’t want it, to hand it back. I would encourage everybody who reads the Telegraph and doesn’t need it to hand it back.”

Nick Clegg, the Deputy Prime Minister, said it was right that “very wealthy, maybe multimillionaire, pensioners” should make sacrifices, but he scornfully rejected the suggestion of creating a system of repayments to the Treasury.

“I think the idea of saying that in the meantime you give people benefits and you say ‘oh by the way can you please give them back’, I don’t think that makes sense,” the Liberal Democrat leader told the BBC.

The senior Conservative Kenneth Clarke, the minister without portfolio, who is 72, delivered a similarly scathing verdict.

“You can’t hand it back to the Government. I don’t think it is a system for doing that,” he told Sky News. “Every pensioner and retired person like myself has to make up their own mind about whether they really need it and whether they are going to give it to some worthwhile cause.”

The Department for Work and Pensions insisted Mr Duncan Smith was not announcing fresh policy, but simply reminded pensioners of the possibility of repaying cash.

A spokeswoman said he was simply referring to the winter fuel payment and not to other universal benefits received by older people.

The row came on the eve of tomorrow’s launch of Mr Duncan Smith’s flagship welfare reform, the Universal Credit, which brings six different benefits and tax credits together into one payment designed to ensure work always pays.

It will begin on trial “pathfinder” basis in Ashton-under-Lyne, Greater Manchester, before being rolled out to other locations in the North-West of England and then the rest of the country by 2017. The Government says it will be introduced in a “slow and safe” manner to ensure the details of a complex reform are got right.

Mr Duncan Smith said: “Universal Credit is nothing less than the start of a fundamental cultural shift of the welfare system. This will revolutionise the way people experience the welfare state. It will make it easier for people claim what they are entitled to, but more importantly, it will make it easier for people to move off benefits and into work.”

Labour said it backed the proposal, but claimed that its launch was in crisis.

Liam Byrne, the shadow Work and Pensions Secretary, said: “The pathfinder is a pathetic joke, limited to a tiny number of people the scheme can handle. The truth is the scheme is late, over budget, the IT system appears to be falling apart and even DWP Ministers admit they haven’t got a clue what is going on.

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