Downing Street ready to revisit Cameron's pledge to wealthier pensioners in order to fund welfare reform

By Tim Montgomerie

The Daily Mail and Times (£) are among the newspapers to confirm last week's story that Downing Street has decided to revisit David Cameron's election time pledge to protect all pensioner benefits such as the Winter Fuel Allowance. The Mail reports:

"David Cameron’s official spokesman warned yesterday that pensioner benefits such as the winter fuel allowance are facing cuts – undermining the Prime Minister’s election pledge to preserve the handouts. The admission that middle-class benefits are facing the chop will anger many elderly voters, who thought they had an assurance from the Tory leader that their benefits would be safe."

Four quick observations:

This is a big potatoes moment. It is about the balance of power in the Coalition. It is a clear signal that welfare reform is becoming likelier by the day. As Burning Our Money blogs, welfare and schools reform should be the Coalition's biggest two legacies. It could become a major political controversy given the pledges on pensioner benefits Cameron made during the election campaign.

This will be a victory for Clegg and IDS. The Independent argues that it is the Liberal Democrat leader and his ministers who "appear to be winning their battle to curb welfare handouts to the better off in order to protect the most vulnerable in society". This redistribution must be exactly the kind of issue in Ian Birrell's mind when in today's FT (£) he urges Clegg to "[find] issues that he and his party can proclaim as their own". It is not, of course, just Clegg's win. IDS has wanted to trim poorly-targeted benefits like the WFA in order to help fund his benefits revolution that will incentivise the low-paid. As Harry Benson has argued on ConservativeHome, the marginal tax rates facing the low-paid are much worse than anything facing the better off.

Fleet Street will be divided on this. The Mail is likely to defend its readers' benefits but because of its general sympathy for IDS' plans I predict it won't go hell-for-leather on the issue. The Sun is supportive this morning:

"With money so tight, and the Government conducting a benefits purge, why give freebies to the wealthy? Top-rate taxpayers will complain they already bear a heavy burden. And David Cameron promised not to scrap universal benefits. True. But can we afford the same payments for everyone?"

The U-turn needs to be handled honestly. Labour will see a huge opportunity in Cameron revisiting his pledge on pensioner and other benefits. The Prime Minister can play this in one of two ways:

• He can say that he hasn't changed his position. I fear that this will be difficult to defend although it is likely that most benefits will be protected.
• Alternatively he can say that he has had to change his position and is doing so for the great moral purpose of helping the low paid into work and to ensure better targeting of scarce resources on the very neediest, including poor pensioners. When we see the whole package of reforms they may be hard to attack. Is Labour really going to be the party that defends benefits for the wealthy?

Ultimately it is about delivering on the high ground pledge that Cameron made at last year's Tory Conference. It was a moment that made me proud to be a Conservative. Here it is again: