Balls refuses to rule out cap on pension spending

The Shadow Chancellor said the “clear large bulk” of social security expenditure went to those aged over 60. Those costs should be included in an overall limit on the welfare bill, Mr Balls insisted

Aides to Chancellor George Osborne immediately seized on the comments, pointing out that basic pension spending will be excluded from the welfare cap he is due to unveil later this month.

The Tory Treasury on Twitter said: “Ed Balls has revealed what Labour really mean when they talk about controlling the welfare bill – cutting the state pension.”

The move marks a dramatic broadening of the battle between Labour and the Tories over benefits, which has seen the Opposition attempting to show it will take tough action on budgets.

In an interview on the BBC’s Sunday Politics, Mr Balls was pushed on whether the state pension would be covered by his proposed cap on large sections of the social security budget.

“We have said last week we certainly think it (the cap) should exclude the welfare spending which depends on the ups and downs of the economic cycle, which would be around the spending on unemployment,” he said.

“As for pensions, I think this is a real question. George Osborne is going to announce his cap in two weeks’ time. I do not know whether he would exclude pension spending or include it. At the moment our plan is to include it.”

He added: “For the cap to work vigorously we have got to be looking ahead and I have got to be saying to these spending ministers, look three years ahead, you are going off track, do what needs to be done now.

Asked if he was prepared to limit pension rises if spending was in danger of breaching the cap, Mr Balls replied: “That is not our intention at all.” But he insisted it was “important that you are looking across all welfare spending”.

He added: “I think many people watching your programme will not realise that actually today the clear large bulk, most welfare spending is in fact going to people over 60. That is the truth.”