By Richard Johnstone | 3 June 2013
A Labour government would consider means testing the winter fuel allowance paid to pensioners and use the savings to fund health and social care, Shadow Chancellor Ed Balls said today.
In a speech setting out the party’s priorities ahead of this month’s government Spending Review, Balls said Labour was likely to ‘inherit plans for further deep cuts to departmental budgets’.
Shadow ministers should prepare for further cuts in the next Parliament, as the party would base its spending plans on those announced by Chancellor George Osborne in the June 26 review, Balls said.
‘We must work together to find efficiency savings and switch resources to Labour's priorities – but you cannot prepare now on any basis other than that you will inherit very tough spending plans from this year’s Spending Review. They will be our starting point,’ he said.
‘We know these plans for current spending in 2015/16 are likely to place a very significant burden on public services.’
Among the areas that would be examined for possible cuts was the Winter Fuel Payment, an annual allowance of between £100 and £300 given to all pensioners to help with the cost of gas and electricity bills.
Such payments may need to means-tested ‘when our NHS and social care system is under such pressure’, Balls added. ‘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% of pensioners, those with incomes high enough to pay the higher or top rates of tax?’
Other areas of spending to be examined for cuts include the Department for Education’s free school programme, which Balls warned could not be a priority when primary school places were in short supply.
The new police and crime commissioners, created following elections last November, could be scrapped if they proved more costly than the police authorities they replaced.
A Labour government would also undertake a root-and-branch review of all government spending, considering a host of public service reforms.
‘The great advantage of this zero-based review is that it can ask basic questions about all aspects of government and spending, big or small,’ the shadow chancellor added.
‘Does it really make sense to have separate costly management and bureaucracy for so many separate government departments, agencies, fire services and police forces – the same number as when this government came into office – all with separate leadership structures and separate specialist teams?’
The review would also look at how, in ‘challenging times’, infrastructure investment should be prioritised.
In preparation for this review, each Labour shadow ministerial team will prepare a Public service reform and redesign report over the next year. These will examine how to spend public money more effectively, including how department budgets can be used to support growth and job creation, and how to boost preventive spending on early intervention projects.
Responding to the speech, economic secretary to the Treasury Sajid Javid said Balls’ promise of spending discipline wasn’t ‘remotely credible’.
He added: ‘Ed Balls is incapable of admitting that Labour spent and borrowed too much in government, he has opposed every single tough decision we've taken to cut the deficit and he's still saying Labour would borrow billions more.’
