Cut benefits for wealthy pensioners, says Nick Clegg

The Deputy Prime Minister mounted a vigorous defence of the coalition's welfare reforms

The Deputy Prime Minister mounted a vigorous defence of the coalition's welfare reforms (PA)

Nick Clegg today opened a divide within the coalition Government by calling for the means-testing of a range of benefits for pensioners.

The Government is committed to preserving the universal benefits - such as winter fuel allowance and free bus travel, prescriptions and TV licences - until 2015, and Prime Minister David Cameron has so far resisted pressure from Tory backbenchers to signal he will cut them after the general election.

But the Deputy Prime Minister today broke ranks to make clear that Liberal Democrats will "look again" at universal pensioner benefits, arguing that welfare cash "should not be paid to those who do not need it".

"I just don't think it's justifiable, when so many people are tightening their belts, to say multi-millionaire pensioners still receive universal benefits across the board," said the Lib Dem leader.

Asked if Mr Cameron backed Mr Clegg on the issue, the PM's spokesman responded: "The Prime Minister made a commitment to protect those benefits and he believes in keeping his promises."

But there was dissent on the Tory backbenches, as Broxbourne MP Charles Walker said Mr Cameron should be ready to make the universal benefits taxable as income before the election, to show that the older generation are bearing their share of the burden of reducing the deficit.

Mr Walker told BBC Radio 4's PM programme that working people were "pretty sore" at seeing their child benefit and other support withdrawn or reduced, while pensioners' payments are protected.

"Certainly there is going to be inter-generational tension and that tension is going to grow in the months ahead," he said. "I think this is bound to create ill-feeling and it is something I believe the Government needs to look at and address."

In a keynote speech marking his fifth anniversary as Lib Dem leader, Mr Clegg mounted a vigorous defence of the coalition's welfare reforms, insisting the Government had an "absolute duty" to ensure the system was fair to all.

While acknowledging the changes had at times been "painful and controversial", he argued that the Liberal Democrats had ensured they were firmly anchored in the political centre ground. When the Conservatives proposed benefit cuts of £10 billion in the Autumn Statement, the Lib Dems had acted as a moderating force, ensuring they were held to £3.8 billion, he said.

"When two-thirds of people think the benefits system is too generous and discourages work then it has to be changed, or we risk a total collapse in public support for welfare existing at all," Mr Clegg told the CentreForum thinktank.

"We need welfare protection for people who fall on hard times. Of course. But you cannot ask low-income working people to pay through their taxes for people who aren't in work to live more comfortably than they do."

In a swipe at Chancellor George Osborne - who said the Government should be there for the "strivers" and not "shirkers" - Mr Clegg said not everyone who cannot find a job is simply being lazy.

"Of course, there are some on the right who believe that no-one could possibly be out of work unless they're a scrounger," said the Lib Dem leader.

"The siren voices of the Tory right who peddle this myth could have pulled a majority Conservative government in the direction of draconian welfare cuts."

The speech came after a bad weekend for the Liberal Democrats, who slumped into fourth place behind the UK Independence Party on 8%-9% in a series of polls.

Mr Clegg's former director of strategy, Richard Reeves, said the "curtain will probably fall" on the coalition before 2015 if the party fails to boost its support.

"Next year is the year the Lib Dem strategy - deliver then differentiate - will be tested. A more assertive stance in act two of coalition should mean greater support and more votes. If not the curtain will probably fall on the coalition before 2015," wrote Mr Reeves in The Guardian.

Labour's deputy leader Harriet Harman said: "Nick Clegg will try every trick in the book to distance himself from the record of his Government.

"But, as ever with the Lib Dems, they say one thing whilst doing another - resulting in a record of economic failure, trebled tuition fees, nurses cut, police axed and millions paying more while millionaires get a tax cut.

"Bearing this in mind, what we really should be hearing from Nick Clegg today is a proper apology and a declaration that from now on he will actually stick by the promises he makes."

The threat to universal benefits was denounced by some of those campaigning for the elderly.

Ros Altmann, director-general of Saga, said that means-testing "may be a populist headline, but it is absolutely the wrong policy".

"Extending means-testing would be a further major disincentive to those hard-working people who are trying to save for their own future," said Ms Altmann.

"If Nick Clegg's policy is adopted, it would punish those who have tried to be self-reliant and give much more money to those who have not saved for their future.

"And then what's next? Will he tell us that rich pensioners don't need a state pension either? This could be the slippery slope to undermining our whole pension system."

PA