Labour Party leader Ed Miliband has indicated his party is reviewing the future of universal benefits for pensioners as he seeks to demonstrate his credibility on the economy ahead of Thursday’s local elections in England and Wales.
Mr Miliband said he wanted a “recovery made by the many” and there was a “different way forward for the economy” in contrast to the government’s austerity agenda.
But pressed on his spending plans and commitment to welfare reform, Mr Miliband said Labour’s policy review would examine the issue of benefits such as the winter fuel allowance which go to all pensioners, including the rich.
Work and Pensions Secretary Iain Duncan Smith has encouraged wealthy elderly people to hand back the payments and forego other perks such as free TV licences.
In a BBC interview Mr Miliband said: “We are supporters of the winter fuel allowance and those other benefits, we introduced them when we were in government.”
But he added: “Of course in our policy review we will look at all these issues.”
Asked whether the payments could be taxed under Labour, Mr Miliband said: “I’m not saying that – we are supporters of the winter fuel allowance, we think it’s an important benefit, we think it’s actually made a big difference – but of course we look at all these issues.”
The Labour leader acknowledged “the welfare system has got to change” but said his party’s “compulsory jobs guarantee” would help tackle unemployment, a major driver of benefits spending.
He insisted Labour’s policies would result in lower government borrowing “in the medium term” and said his plan for a temporary VAT cut “for about a year” – which would cost the Exchequer £12 billion – would boost growth and result in increased revenues.
“What I’m saying is that we would have that temporary VAT cut – that would contribute to growth and that would get borrowing down,” he said.
“The whole point about a VAT cut is it will get growth moving, and if you get growth moving, you get more tax revenues in, and therefore you get borrowing down.”
On a campaign visit to Staffordshire, Mr Miliband set out the economic legislation that would be in a Labour Queen’s Speech next week.
The plans included the compulsory jobs guarantee, the return of the 10p income tax rate and measures to tackle “rip-off” energy bills and train fares.
Following the interview a senior Labour source said Mr Miliband still believed universality was “part of the bedrock” of the benefits system.
Conservative Party chairman Grant Shapps said: “Ed Miliband is too weak to admit what his shadow chancellor Ed Balls has already said – that Labour’s plans mean more spending, more borrowing and more debt, exactly how Labour got us into this mess in the first place.”