How will the coalition justify cuts to winter fuel allowance?

In an embarrassing revelation for the Conservatives, Vince Cable has confirmed that the benefit is u

The most important detail in Vince Cable's taped indiscretion is arguably not that he sees walking out of the coalition as his "nuclear option" – that much we knew – but the confirmation that the winter fuel allowance is under threat.

Talking to two reporters posing as constituents, the Business Secretary referred to the "cack-handed" way in which the scrapping of child benefit for higher earners had been handled, and said: "They haven't yet done the winter fuel payments, but that's coming, I think."

Winter fuel payments last surfaced as a political hot potato in August, when the Financial Times reported that the Work and Pensions Secretary, Iain Duncan Smith, wanted to pare back some of the £2.7bn spent on winter fuel payments, a universal benefit paid to the over-sixties.

Yet retaining the benefit was a Conservative manifesto pledge, defended by David Cameron in the strongest terms during the televised debates:

We will keep the winter fuel allowance . . . These statements by Labour [that the Conservatives would cut the winter fuel allowance] are quite simply lies. I don't use the word "lie" very often, but I am using it today because they are lies.

The coalition agreement promises to "protect key benefits for older people", which is not the same as ring-fencing and does not preclude the possibility of restricting the number of people who qualify for them, as with child benefit.

While the coalition agreement has already shown itself to be flexible, such a U-turn on winter fuel allowance would be intensely embarrassing for the Conservatives.

It will be interesting to watch Downing Street's response to this latest claim: an outright denial that the benefit is under threat could come back to bite them, yet vagueness will also be seen as a climbdown from their previously unequivocal position.

As Britain faces the coldest winter on record and the news agenda is dominated by the "big freeze", this will be difficult to justify. We can be certain that the issue will not go away.

On a separate point, Cable's comparison of working with the coalition to "fighting a war" and his confidence that he could "bring the government down" raise questions over his future as a member of the cabinet. If he is pushed out or walks out and is replaced by David Laws, it would immeasurably tip the balance of power away from left-wing Liberal Democrats. His "nuclear" option might not have quite the desired effect.

UPDATE, 2.40pm: At a joint press conference this afternoon, the Prime Minister refused to rule out any further changes to the winter fuel allowance, saying only that the government has made its choice on the winter fuel allowance and that this won't be changing.

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.