Tories go on the attack after Balls says Labour's welfare cap would include pensions

The shadow chancellor's latest display of fiscal responsibility is a major political gamble.

When Ed Miliband announced that Labour would introduce a cap on structural welfare spending, the assumption was that it would not include spending on pensioners. But on The Sunday Politics, Ed Balls revealed that the cap would include this area. He said: "George Osborne is going to announce his cap in two weeks' time. I don't know whether he will include pensioner spending or exclude it. At the moment our plan is to include it."

This is sensible policy; pensioners currently account for 42 per cent (£85bn) of all welfare spending, a total that will rise significantly as the population ages and as the economy recovers (reducing cyclical benefit spending). If Balls and Miliband are serious about reducing the social security bill, they cannot afford to exclude them from the cap.

But the politics are difficult for Labour. The Tories, who have previously signalled that the state pension will not be included in George Osborne's cap on annually managed expenditure, will now challenge Balls and Miliband to say how they would reduce spending on the elderly. Would they abandon the coalition's commitment to "triple lock" the state pension, so that it rises by the rate of inflation, average earnings or 2.5 per cent (whichever is highest)? The Tory Treasury Twitter account has already gone on the attack.

On the programme, Balls refused to rule out cutting spending on pensioners in order to avoid breaching the cap but also said that, while means-testing the winter fuel allowance (which would save just £100m), Labour would protect other universal benefits such as free bus passes, free prescriptions and free TV licences (the administrative costs of means-testing the latter would outweigh the savings, Balls suggested). But unless Labour is willing to make reductions elsewhere, the Tories will dismiss the cap as meaningless, while highlighting the £21bn of cuts they have announced to working age benefits.

Since the over-65s are more likely to vote than any other age group (76 per cent did in 2010 compared to 65 per cent of the total population), the Tories clearly believe that there are few votes to be won in running on a platform of lower spending on the elderly. But expect Cameron to now come under pressure from fiscal conservatives to match Labour's direction of travel on pensioner benefits.

Update: Unsurprisingly, Labour has quickly rebutted the Tory line that it "would cut pensions", but has said it would be "peverse" to exclude spending on pensioners from the cap. At present, however, it can only point to increases in the retirement age and means-testing the winter fuel allowance as examples of how it would restrain spending. A source told me:

Labour supports the triple lock on the state pension. But as Ed Balls said, it would be perverse to exclude overall spending on pensioners and the impact of an ageing society from any sensible and long-term fiscal plan to monitor and control structural social security spending. That's why we have supported increases in the retirement age as people live longer and why we have also said we would not pay the winter allowance to the richest 5 per cent of pensioners. We will look at the details of the government's cap when it is announced in the spending review as we develop the details of our own.

Ed Miliband and Ed Balls at last year's Labour conference in Manchester. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty Images/Carl Court
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Nigel Farage: welcoming refugees will lead to "migrant tide" of jihadists

Ukip's leader Nigel Farage claims that housing refugees will allow Isis to smuggle in "jihadists".

Nigel Farage has warned that granting sanctuary to refugees could result in Britain being influenced by Isis. 

In remarks that were immediately condemned online, the Ukip leader said "When ISIS say they will flood the migrant tide with 500,000 of their own jihadists, we'd better listen", before saying that Angela Merkel, the German Chancellor, had done something "very dangerous" in attempting to host refugees, saying that she was "compounding the pull factors" that lead migrants to attempt the treacherous Mediterranean crossing.

Farage, who has four children, said that as a father, he was "horrified" by the photographs of small children drowned on a European beach, but said housing more refugees would simply make the problem worse. 

The Ukip leader, who failed for the fifth successive occassion to be elected as an MP in May, said he welcomed the prospect of a Jeremy Corbyn victory, describing it as a "good result". Corbyn is more sceptical about the European Union than his rivals for the Labour leadership, which Farage believes will provide the nascent Out campaign with a boost. 

 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.