Balls 'to axe rich OAP fuel payment'

Source BBC News@ tienganhvui.com

2 June 2013 Last updated at 18:17 ET

Ed Balls is due to promise an "iron discipline on spending"

Labour would cut winter fuel payments for the UK's richest pensioners as part of a "fairer approach to deficit reduction", Ed Balls is due to say.

The shadow chancellor is expected to announce the move in a speech promising an "iron discipline on spending" should Labour return to power in 2015.

It would currently affect about 600,000 pensioners who pay higher and top rates of income tax - saving about £100m.

But a Treasury source described the pledge as "utterly meaningless".

'Difficult inheritance'

Mr Balls is due to tell an audience at Thompson Reuters headquarters in London that Chancellor George Osborne's economic policies have "failed catastrophically", on growth, jobs and deficit reduction.

He will say the policies will leave a future Labour government with "a very difficult inheritance", and will promise "tough deficit reduction plan", coupled with more action to strengthen the economy.

"The situation we will inherit will require a very different kind of Labour government to those which have gone before," he is due to say.

"We will inherit a substantial deficit. We will have to govern with much less money around. We will need to show an iron discipline.

"This is the hard reality. The last Labour government was able to plan its 1997 manifesto on the basis of rising departmental spending in the first years after the election. The next Labour government will have to plan on the basis of falling departmental spending."

Mr Balls will also urge the government to heed the advice of the International Monetary Fund (IMF) which says the UK should increase infrastructure spending in the near term to boost growth.

The winter fuel allowance has proved a controversial measure because it is paid to all state pensioners, regardless of income.

A Treasury source told the BBC that the pledge would save just 0.5% of the welfare budget.

"Ed Balls has just confirmed he wants to borrow and spend even more now - exactly what got us into this mess in the first place," the source said.

The BBC's political editor Nick Robinson says that although the saving from the winter fuel allowance pledge is small, it is meant as a symbol of his acceptance that day to day Whitehall spending will continue to fall under Labour.

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