Pensioner perks under threat after next election, David Cameron admits

The Prime Minister is contemplating removing universal benefits from better-off pensioners if the Conservatives win the next General Election, he has indicated.

David Cameron refused to rule out withdrawing “pensioner perks” in the next Parliament, although Downing Street sources later insisted he was “minded” to retain such benefits as the winter fuel allowance after 2015.

The Prime Minister raised a question mark over their future on Sunday as he announced plans to protect the value of the basic state pension.

George Osborne, the Chancellor, will warn on Monday that 2014 will be a year of “hard truths”, with more spending cuts to come, and will repeat his determination to cut the size of the state permanently.

Mr Cameron began setting out key policies for the Tories’ 2015 general election manifesto with a commitment to retain the so-called “triple lock” which would guarantee that pensions would rise by at least 2.5 per cent annually between 2015 and 2020.

He told BBC1’s Andrew Marr Show: “I think it is fair because I think you should be protecting pensions because of the dignity and security people deserve.”

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But he twice sidestepped questions over whether he would repeat his pre-election promise in 2010 to protect pensioners’ benefits such as winter fuel payments, free bus travel and free television licences for the over-75s. Mr Cameron said: “We will set our plans at the next election in our manifesto.”

Labour has said it would remove winter fuel payments from the richest 5 per cent of current recipients, while the Liberal Democrats have also said the best-off pensioners should lose the benefits.

Last year, Mr Osborne said he needed to be certain that spending on pensioner benefits was “sustainable” and senior Tory figures are known to back means-testing.

The Prime Minister said yesterday it had been possible to protect the value of the basic state pension because of “difficult decisions” such as plans to raise the retirement age.

Under the existing triple lock, pensions rise each year by whichever is the highest of inflation, average earnings or a minimum of 2.5 per cent.

Both Labour and the Liberal Democrats indicated that they would match the commitment.

Mr Cameron defended the Government’s decision to reduce the top rate of income tax from 50p to 45p, but suggested any future tax cuts would be aimed at the bottom of the income scale.

“If I had some money in the coffers I would target that money at the lowest paid, at those who work hard, who want to get on. Those are the ones that need our help,” he said.

Mr Osborne will fire the opening shots on Monday of an attempt by the Coalition to turn the spotlight on growing signs of economic recovery.

The Chancellor will say borrowing and deficit is down by one-third because of “painful cuts” since 2010.

“That’s the good news. The bad news is there’s still a long way to go,” he will say in a speech in the Midlands.

“We’re borrowing around £100bn a year and paying half that money a year in interest just to service our debts. We’ve got to make more cuts.”

Mr Osborne will describe 2014 as a “year of hard truths” with Britain facing a choice between returning to “our bad habits of borrowing and spending and living beyond our means” or continuing work to fix the “big underlying problems” in the economy.

The Chancellor will argue that the way to cut taxes permanently is to cut state spending permanently.

Ed Miliband, the Labour leader, accused Mr Cameron of plotting another “tax cut for millionaires” after the Prime Minister declined to rule out a further cut in the top rate of income tax.

“He wants further tax cuts for the richest in society at a time when ordinary families are facing a cost of living crisis,” Mr Miliband said.

Chris Leslie, the shadow Chief Secretary to the Treasury, said: “George Osborne should admit his policies have failed. The reason more spending cuts are needed after 2015 is because his failure on growth and living standards has led to his failure to balance the books.”