Balls 'to axe rich OAP fuel payout'

Ed BallsLabour would axe winter fuel payments for hundreds of thousands of the UK's richest pensioners, Ed Balls will signal.

Support for better-off OAPs "can no longer be a priority" at a time of harsh public spending cuts, the shadow chancellor will declare. Mr Balls will hail the move to end universality as an example of the Opposition's willingness to show "iron discipline" if it takes power in 2015.

He will urge Chancellor George Osborne to heed warnings about the UK's economic prospects and increase borrowing to boost growth. But he will insist Labour is ready to deal with a "bleak inheritance" if Mr Osborne fails to change course on the coalition's austerity programme.

Universal benefits for pensioners have become a key battleground, with David Cameron under pressure to abandon a pledge to protect them. Tory and Lib Dem colleagues believe they should be means-tested to protect other services from the £11.5 billion of further cuts for 2015/16 being sought by Chancellor George Osborne in a spending review this month.

Under Labour plans, the payments would be stripped from all pensioners with sufficient income to pay higher or top-rate income tax - around 600,000 individuals at present - saving £100 million a year.

Opposition leader Ed Miliband indicated recently that the payments were under review - although a party source insisted afterwards that he continued to believe universality was "part of the bedrock" of the welfare system.

Making a speech in London's Docklands, Mr Balls will say: "With the Chancellor refusing to change course, Labour must start planning now for what will be a very tough inheritance in 2015. It will require us to govern in a very different way with much less money around. We will need an iron discipline and a relentless focus on our priorities.

"And this iron discipline on spending control must go alongside action to deliver a fairer approach to deficit reduction. And that will mean answering big and immediate questions for 2015 in our manifesto. When our NHS and social care system is under such pressure, can it really remain a priority to pay the winter fuel allowance - a vital support for middle and low income pensioners - to the richest 5% of pensioners, those with incomes high enough to pay the higher or top rates of tax?

"Labour believes the winter fuel allowance provides vital support for pensioners on middle and low incomes to combat fuel poverty. That's why we introduced it in the first place. But in tough economic times we have to make difficult choices about priorities for public spending and what the right balance is between universal and targeted support. So at a time when the public services that pensioners and others rely on are under strain, it can no longer be a priority to continue paying the winter fuel allowance to the wealthiest pensioners."

A Labour source said no other universal benefits, such as bus passes, were under review. Mr Balls will say the spending review should be used to "take immediate action to get the economy growing and invest in our long-term future.

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