UK Pensioners will now be Gutted and Savers asked to bail out Government and finance a spending spree

By Rowena Mason: Coalition under pressure to cut benefits for middle-class pensioners - David Cameron is coming under pressure from senior Cabinet colleagues to scrap free television licences, bus passes and winter fuel payments for middle-class pensioners.

David Cameron is coming under pressure from senior Cabinet colleagues to scrap free television licences, bus passes and winter fuel payments for middle-class pensioners.

The Prime Minister promised to protect benefits for older people in the Coalition agreement.

But he is now facing demands from Iain Duncan-Smith, the Work and Pensions Secretary, to scale back the £100 billion a year cost of welfare for pensioners.

Mr Duncan-Smith has described benefits available to rich middle-class people as “an expensive way of giving a bribe”.

“I don’t agree with those who say, ‘Unless the middle classes are in the welfare system we’re not all in this together," he said earlier this year.

"The welfare system is there to support you in times of need and when you get clear of it you should be clear of it. It’s rather daft to take tax off the middle classes and pay them a little bit back."

He has particularly criticised the winter fuel payment, which hands a £200 cheque to people over the age of 60.

“If you honestly think it’s going to pay for your holiday then give it back, because it’s not what it was meant to do,” he said in the interview.

The benefit is automatically sent to every pensioner, regardless of their wealth, and does not have to be spent on gas and electricity.

Some senior Liberal Democrat ministers and Conservative MPs also believe the payments should be means-tested.

Robert Halfon, Conservative MP for Harlow, yesterday publicly called on the Government to re-consider universal benefits for pensioners.

"I want more money to go to poorer pensioners," he told the BBC.

However, Downing Street yesterday promised the winter fuel allowance will not be reduced for at least another three years, because keeping benefits for pensioners is part of the party’s election promises.

The Prime Minister's official spokesman said: "He stands by what is in the Coalition Agreement".

A spokesman for the Department for Work and Pensions said the Coalition would "continue to support winter fuel payments as they make an important contribution to fuel costs".

However, benefits for pensioners could be overhauled when the Coalition agreement expires in 2015, making the subject a key battleground for the next election.

Pensioners have been the main group to escape swingeing cuts to their benefits since the Coalition came to power.

Ministers have so far slashed benefits by up to £18 billion by reforming housing, disability and employment allowances targeting people of working age.

But George Osborne, the Chancellor, has indicated that the welfare budget should be cut even more deeply between 2015 and 2017.

Last month, the Prime Minister was presented with proposals to cut spending on benefits by an extra £25 billion by Steve Hilton, the former Number Ten strategy chief.

The plans involved a new crackdown on housing benefit and more efforts to push people off benefits back into full-time, rather than part-time, work. There was also a range of measures to encourage more women, particularly single mothers, to return to work.

However, officials at the Department of Work and Pensions believe such a high level of cuts is unachievable.

Source

Also:

Osborne to re-hash World War Two plan by getting savers to hand over their billions and help force the UK out of recession

• The Chancellor is said to be planning Government 'growth bonds' that offer savers attractive interest rates
• This cash would be used to build bridges, toll roads and houses
• Experts believe this type of spending would help kick-start the failing economy
• By MARTIN ROBINSON
  Hard-pressed Britons may be asked to bail out the Government and help finance a spending spree to pull the UK out of the economic doldrums, it was claimed today.
  Britain's 'cash rich' savers could soon be encouraged by the Chancellor to transfer billions of their own money into the Coalition's coffers to help force the UK out of recession.
  Using a ploy used during the Second World War, George Osborne wants the Treasury to offer new 'growth bonds' that will persuade people to move savings out of their bank and building society accounts.
  The billions this would raise would be spent on new toll roads, green energy schemes and building new houses, sources say, and help boost Britain's faltering economy.
  In return savers would get attractive interest rates and potentially tax-free profits. 
  In 1940, as Britain struggled to cope with the crippling cost of fighting Germany, savings certificates as they were known, paid for Spitfires, tanks and warships, as well as keeping the country running.
  Now it appears that the Government wants to use the nation's savers in the same way, building new tube lines, toll roads along Britain's busiest routes and new housing with their money.

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  'While a lot of families are struggling and have no disposable income, there are others who are quite cash rich but have nowhere secure to put their money with a decent return,' a senior Government source told The Independent.
  
  

  Cash rich: The Treasury believes that although there are many hard-up families many others have savings they are desperate to invest into a scheme like this one, it was claimed
  'Because interest rates are as low as they are, there is the potential to tap into this money and get it invested in infrastructure, which will have a dramatic effect on Britain's long-term growth.
  'Not only will it provide a welcome kick-start to the economy at a time when it is sluggish, but infrastructure  improvement will will also help Britain's long-term competitiveness and encourage investment from overseas. It is a win-win.' 
  Mr Osborne's key bargaining chip is believed to be offering savers more of the tax-free returns given to those who have ISAs. And having their money in the Treasury would give savers added security as they would not lose their money.
  
  

  Old idea: In World War Two a similar scheme was used to raise money to pay for Britain's Spitfires and Lancaster Bombers as the economy struggled with the cost of war
  ISAs alone hold more than £385 billion worth of cash and a lack of other decent investment opportunities may open the door for these growth bonds.
  Since taking power the Coalition has promised to spend big on infrastructure improvements like a new Dartford Crossing or Northern Line tube extension in London, as well as £20 billion from its balances to support small business borrowing.
  Nick Clegg and David Cameron have sought investment from all over the world, including from South Korean pension funds and Gulf countries like Qatar, who have enormous sovereign wealth funds.
  But a move to get British pension funds to bankroll some of the proposed improvements have so far not come to fruition, prompting the growth bond plan that could be up and running by the autumn.
  A Treasury source told the MailOnline said today the claims were 'speculative', with an official spokesman adding: 'As the Prime Minister said last month, the Government is looking at ways to use the UK’s credibility, through the use of its wider balance sheet, to support growth in the economy. Further details on this will be brought forward in due course.'
  
  
  Source