'Huge sigh of relief' as elderly are spared the worst

FEARS that the spending review would mark the end of free bus passes, free prescriptions and the winter fuel allowance proved unfounded as George Osborne tried to shield older people from the worst of the cuts.

The Chancellor announced that winter fuel payments would remain at their current level and revealed that a temporary increase in cold weather payments made last year would be made permanent.

Mr Osborne again defended his decision to axe the previously-universal child benefit for high earners – a move which provoked widespread criticism earlier this month – and resisted the temptation to scrap the scheme for all children over 16.

The Chancellor stressed that, despite speculation to the contrary, child benefit would remain payable until youngsters left education “at the age of 18 or even 19”.

But last night it emerged withdrawing child benefit from higher-rate taxpayers would hit 300,000 more families than the Government previously claimed.

The controversial move will also raise more than double the 1bn David Cameron and George Osborne said it would earlier this month.

The figures were revised as Treasury officials admitted the earlier projections assumed the age limit was to be reduced at the same time from 19 to 16.

But Mr Osborne only decided on that last week, and until then the savings to be made from reducing the age limit had been calculated separately.

He was said to have had a change of heart when he realised that, with the savings made elsewhere in the comprehensive spending review, the further child benefit cut was unnecessary.

The benefit change, which will hit all families with a parent who earns more than 44,000 a year, will come into effect in 2013.

For pensioners the Government also confirmed that the basic state pension would rise each year in line with earnings, prices or 2.5 per cent, whichever is greater.

On the downside, the pension credit will be frozen from April next year for the coming four years at 20.52 a week for a single pensioner and 27.09 for a couple.

Pensions Minister Steve Webb said: “For months there has been speculation that we won’t keep our promises on benefits for pensioners, but today you can see that we have protected winter fuel payments, free TV licences and concessionary bus passes. This comes on top of restoring the earnings link to pensions.”

Paul Russell, secretary of the Yorkshire and Humber Pensioners’ Convention, said: “I think the Government recognised that they would lose the votes of everybody over 60 if they started withdrawing the bus pass, free prescriptions and winter fuel allowances.

“But I am very worried about the cuts that have not appeared. Council budgets are being cut in such a way that it is difficult to see how they are going to maintain even the current level of adult social care provision.”

Age UK’s charity director, Michelle Mitchell, said: “We are delighted that universal entitlements for older people have been protected.

“Benefits such as the winter fuel payment and free bus pass are a lifeline for millions of the poorest older people, who will breathe a huge sigh of relief at this news.

“Only two per cent of pensioners are higher-rate tax payers, so this is a cost-effective way of targeting help to low and mid-income groups.”

Damian Dewhirst, public sector finance specialist at Grant Thornton, said there was good and bad news and the good news included provision of child benefit for 16 to 19-year-olds, or until they left education.

As the controversy of child benefit raged the TUC claimed 830,000 of the families to be affected by the child benefit axe had only one breadwinner.

The benefit is worth 1,055 for the first child and reaches almost 2,500 for families with three children.