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David Cameron appeared to ditch pledge that winter fuel allowance and free bus passes for the over-75s would continue for the better off. George Osborne insists promise is based on 'values' that will not change. Mr Cameron has to persuade ministers the pledge should be kept in 2015.
By. Matt Chorley. and Jason Groves. PUBLISHED:. 18:01 EST, 5 January 2014. |. UPDATED:. 04:56 EST, 6 January 2014. David Cameron appearing on the BBC's Andrew Marr Show yesterday. David Cameron is preparing to defy calls from within the Tory party to cut pensioner benefits. The Prime Minister is understood to be 'minded' to protect the winter fuel allowance, free bus passes and TV licences for the over-75s after the 2015 election. Chancellor George Osborne today signalled that the flagship pledge from 2010 could be repeated, insisting 'pensioner benefits is not the place that I would first turn to' when looking for cuts. Labour and the Lib Dems have already said the perks for over-65s should not be off limits from future welfare savings. Mr Cameron yesterday appeared to leave the door open for cuts to pensioner benefits after the next election, insisting his priority was to guarantee rises in income for people who have retired. However No10 moved to stress that the Prime Minister remained personally committed to the policy despite major opposition within his Cabinet. ‘He is minded to repeat the pledge,’ a Downing Street source said. Mr Osborne went further today, insisting the promise to protect pensioner benefits was based on a 'set of values' to the elderly which had not changed. The Chancellor told BBC Radio 4's Today programme: 'If you were going to be looking for savings in welfare, pensioner benefits is not the place that I would first turn to. 'I would look at housing benefit for the under-25s when there are many people listening to this programme who can’t afford to move out of their home but if you’re on benefits you can get housing benefit under the age of 25; there are people, for example, on incomes of £60,000 or £70,000 living in council homes – I’d look at that. 'I’m not writing the Conservative manifesto today. The commitment we made to pensioners was made on a set of values: a belief in the security, dignity of old age. That’s not going to change.' However he will use a speech today to warn of a ‘year of hard choices’ and of the danger of letting the next generation pay the bill for Britain’s economic problems. The Chancellor and Iain Duncan Smith, the work and pensions secretary, accept Mr Cameron must stick to his pledge not to bring in means-testing this Parliament. Chancellor George Osborne. But they had been thought to want the guarantee dropped for next year’s election, arguing it is unfair to help better-off pensioners when younger people are losing benefits. Mr Cameron now faces a battle to persuade his ministers the pledge should be kept in 2015. Speaking on the BBC yesterday, Mr Cameron had refused three times to say whether he would retain pensioner benefits for the wealthy – a key issue at the last election. Healso refused to say if and when tax cuts could move on to the agenda for the middle class: ‘We will set out our plans for the next election in our manifesto.’ He would insist only that – as with the vow to raise foreign aid – it was important to keep ‘very clear public promises’. The row came as Mr Cameron said the ‘triple lock’, which guarantees the value of the £113-a-week basic state pension, would be kept in place until at least 2020 if he won the 2015 election. The lock, introduced by the Coalition, means the payment automatically rises by the level of inflation, or average wages, or 2.5 per cent – whichever is higher. Mr Cameron now faces a battle to persuade ministers the pledge should be kept in 2015. Mr Cameron told the BBC’s Andrew Marr Show it was right to continue it. ‘It’s a choice based on my values, which is that I want people, when they reach retirement, to know that they can have dignity and security in their old age,’ he said. ‘People who’ve worked hard, who’ve done the right thing, who provided for their families. 'They. should then know they’re going to get a decent state pension and they. don’t have to worry about it lagging behind prices or earnings and I. think it’s the right choice for the country.’ Iain Duncan Smith has argued fiercely for the phasing out of pensioner benefits for the better off. Later on, a Number 10 source said Mr Cameron was still ‘attracted’ to the idea of retaining his pledge to better-off pensioners beyond 2015. The source said he avoided commenting in detail on the issue yesterday because he did not want to deflect attention away from the £12billion promise to maintain the triple lock. Behind the scenes, Mr Duncan Smith has argued fiercely for the phasing out of pensioner benefits for the better off. He argues that the perk is also out of step with the wider policy of reducing benefits to the wealthy, such as the controversial scrapping of all child benefit for higher earners. Last year he said it was an anomaly that all pensioners receive the perks regardless of how wealthy they are. Mr Duncan Smith also appeared to suggest the better off should hand the money back. The Liberal Democrats have refused to countenance any further welfare reform unless Mr Cameron agrees to axe the £2billion in benefits to the better off, including the winter fuel allowance, free bus passes and free TV licences. Even Labour has said it will stop winter fuel payments to 600,000 pensioners on higher and top-rate tax. Private polling for Number 10 has revealed that while there is public support for scrapping the benefits for the better off, a significant majority would view it as a personal betrayal by the Prime Minister. Research shows that older people are much more likely to vote than the young, leading to accusations that pensioners have been spared the worst of the cuts because of fears of a backlash at the polls. Mr Cameron yesterday acknowledged that the Government needed to do more to help younger people. The Prime Minister also hinted the next area of spending to be targeted will be the £20billion housing benefit bill, which he said was now ‘far too high’. The benefit will be included in a new welfare cap to be outlined by Mr Osborne. Retired people will be able to switch annuities under government plans. Steve Webb, the pensions minister, pictured right, said too many were trapped until death in poor-value schemes. ‘When you take out a mortgage, in a few years if rates change you can switch your mortgage. But when you take out an annuity, that’s it – for life,’ he said. ‘This could easily be for a quarter of a century. Why shouldn’t you be able to change your annuity provider so a few years later somebody else could offer you a bigger pension?’ Annuity providers have been attacked for profiting from the confusion their products cause among customers. Outlining a number of reforms, Mr Webb said the ‘murky practices’ included hidden extra charges and more transparency was needed. Annuity rates are at an historic low and can differ by up 20 per cent, depending on the provider.