Ed Balls facing state pension cut claims

ED BALLS is facing claims that he would cut the state pension after suggesting the costs should be included in a cap on welfare spending.

Shadow Chancellor of the Exchequer Ed Balls. Picture: PA

The shadow chancellor triggered a backlash by highlighting that the “large bulk” of the £200 billion spent on social security went to those aged over 60.

That meant any effective cap needed to cover spending on pensions, he argued.

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The Tories immediately seized on the comments, with Treasury minister Sajid Javid saying: “Now we know when Labour say they want to cut welfare, what they actually mean is cut the basic state pension.”

Basic pension spending will be excluded from the coalition’s own welfare cap, which is due to be unveiled this month.

Mr Balls sought to clarify the situation later by stressing that Labour still supported the ‘triple lock’ mechanism - which sees the state pension rise by whichever is highest out of inflation, average earnings, or 2.5%.

“We committed to triple-lock on state pension - got to monitor long-term pension spend - Tory reaction very rattled,” he posted on Twitter.

But an aide added: “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% of pensioners.”

The row could mark a dramatic broadening of the battle between Labour and the Tories over welfare, as the Opposition bids to show it will take tough action to stop abuses and rein in budgets.

Pensioners’ benefits are highly sensitive politically because older people are more likely to vote.

During an interview on the BBC’s Sunday Politics, Mr Balls was pressed on his proposals for a three-year cap covering large parts of welfare spending .

“We have said last week we certainly think it (the cap) should exclude the welfare spending which depends on the ups and downs of the economic cycle, which would be around the spending on unemployment,” he said.

“As for pensions, I think this is a real question. George Osborne is going to announce his cap in two weeks’ time.

“I do not know whether he would exclude pension spending or include it. At the moment our plan is to include it.”

He added: “For the cap to work vigorously we have got to be looking ahead and I have got to be saying to these spending ministers, look three years ahead, you are going off track, do what needs to be done now.

Asked if he was prepared to limit pension rises if spending was in danger of breaching the cap, Mr Balls replied: “That is not our intention at all.”

But he insisted it was “important that you are looking across all welfare spending”.

“Look across the whole welfare state and ask what are the drivers of expenditure,” he went on. “I think many people watching your programme will not realise that actually today the clear large bulk, most welfare spending is in fact going to people over 60. That is the truth. We should look across the piece.”

Tory sources dismissed the idea that Labour was making tough decisions, insisting the coalition had already cut billions of pounds off welfare in order to protect pensioners.