Abandoning the winter fuel allowance for a mere £100 million: why bother?

Ed Balls is currently making a speech in which he will effectively renege on previous Labour Party statements that universality remained a "part of the bedrock" of the welfare state.

Ed Balls made a speech today in which he effectively reneged on previous Labour Party statements that universality remained a “part of the bedrock” of the welfare state.

In the speech at Thomson Reuters, Balls asked:

“When our NHS and social care system is under such pressure, can it really remain a priority to pay the winter fuel allowance – a vital support for middle and low income pensioners – to the richest 5 per cent of pensioners, those with incomes high enough to pay the higher or top rates of tax?

He continued:

“Labour believes the winter fuel allowance provides vital support for pensioners on middle and low incomes to combat fuel poverty. That’s why we introduced it in the first place. But in tough economic times we have to make difficult choices about priorities for public spending and what the right balance is between universal and targeted support. So at a time when the public services that pensioners and others rely on are under strain, it can no longer be a priority to continue paying the winter fuel allowance to the wealthiest pensioners.”

Removing the winter fuel allowance from wealthy pensioners does three things. It will save a prospective Labour government £100 million; it will further erode the principle of universality; and it will take money from a section of the population that is far more likely to vote than any other at the 2015 election.

Understandably the Labour Party is trying to persuade the public that it is capable of making tough and unpopular choices should it win the 2015 election. Voters still don’t trust the party on the economy and no doubt part of the intention here is to combat the idea that Labour will be profligate with public money should it win office.

Yet there are a number of reasons why the move is potentially problematic. The first, as Mark Ferguson asks over at Labour List, is whether the principle of universality is worth abandoning for a measly £100 million. This is a relatively tiny sum in the grand scheme of things, and with it already being a struggle to win over young people to the principles of the welfare state (see this week’s leader in the Economist), is it really wise to embark on the potentially slippery slope of undermining universality among older people too?

It’s also hard to see how this is clever politically. There are of course people who think anything ostensibly “tough” is good politics; but hitting the demographic that is most likely to turn up to the polls in 2015 with a measure that takes money out of their pockets is comparable to confronting the school bully on your first day: it may be “tough” but it’s also very silly. This is one of the reasons David Cameron rejected the move to limit winter fuel payments to poorer pensioners – he believes it would lose him votes at the 2015 election.

People do like firm politicians who “don’t shy away from the difficult decisions”, but this generally requires that politicians are tough with other people and that they make decisions that don’t make them poorer (or in this case less rich). I’m not entirely sure how much people like “iron discipline” when it isn’t reserved solely for someone else.

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