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Labour keen to axe winter fuel payments for wealthy pensioners

By Katie Anderson on June 5, 2013

Shadow Chancellor of the Exchequer Ed Balls has caused a stir by promising to cut the winter fuel allowance for the UK’s most wealthy senior citizens should Labour win the next general election.

The move would save approximately £100 million a year, affecting around 600,000 people aged 61 or over who pay the two highest rates of income tax. Although Labour perhaps ought to be commended for finding a way to save money that affects the richest members of society rather than the poorest, would limiting winter fuel payments in this way be fair?

Addressing journalists at Thomson Reuters’ headquarters in London, Mr Balls expressed his desire to curb public spending for the foreseeable future. But unlike the current government, which seems intent on insulating the wealthiest members of society from the effects of the downturn, Labour plans to distribute more help to struggling households and it aims to achieve this in part by depriving high-earners of their entitlement to winter fuel payments.

Mr Balls suggested that a Britain in economic crisis cannot be expected to subsidise people who are not reliant on state benefits. But has Mr Balls missed the point?

In any democratic system, not least one that is founded on capitalism, members of society pay into a system that provides universal rewards such as healthcare, education and welfare. Some people rely more on state support than others, but all should have the same entitlement. Targeted support already exists insofar as income tax rates are concerned, but should richer older people be excluded from a benefit that they have paid into for many years? A benefit that will be available to people who have contributed very little to the scheme?

Peter Hain, a former Labour minister, urged the party to end its “attack on universalism”. But Mr Balls seems intent on shifting the balance of power from universal support to targeted support.

How the move might affect pensioners in the UK is difficult to predict. The National Pensioners’ Convention (NPC) is concerned that cutting winter fuel payments could be the tipping point for a more extensive attack on universalism. But in terms of helping people afford the cost of central heating during the winter months, the move should make little or no difference to those at the top.