Millions of families will see their child benefit scrapped and younger pensioners lose winter fuel payments under drastic Government proposals.
The coalition is considering reducing from 19 to 16 the age at which child benefit is available, a move that would save taxpayers up to £3billion a year, according to official sources.
The age threshold for the winter fuel allowance, meanwhile, could be raised from 60 to 70.
Ministers are understood to be reluctant to make the benefits system even more complicated by introducing means-testing for universal benefits.
Changes to age limits, however, would be simple to implement and would save billions of pounds as the coalition battles to plug the massive black hole in the public finances left behind by Labour.
They are likely to be condemned by the Opposition, which has set its face against almost all the deficit reduction measures outlined by the Government.
David Cameron yesterday told Cabinet colleagues that it was time to take on the claims of lobby groups and ‘vested interests’ who were portraying the ‘worst case scenario’ of spending cuts.
A defiant Prime Minister ordered ministers to mount more robust challenges to union leaders and police chiefs who are claiming that cuts will have a catastrophic effect on Britain.
Treasury sources insisted that ‘no decisions whatsoever’ had been taken as the Government works on a comprehensive review of public spending to be unveiled next month.
But senior ministers are understood to be arguing that child benefit, which costs the taxpayer £11 billion a year, should no longer be made available for older teenagers.
Currently, it is paid to every family until a child is 19 if he or she is in full-time education.
Even the wealthiest parents get the £20.30 a week for their first child and £13.40 for all further children.
Poorer parents are eligible for payments worth up to £100,000 in both child benefit and tax credits by the time a child is 19.
Stopping payments when children reach 16 would save around £3 billion from the £11 billion annual child allowance bill.
The Institute for Fiscal Studies says removing child benefit for older children could prove a disincentive to staying on at school, since it is only paid for 16- to 19-year-olds for those in full-time education.
Cuts to winter fuel payments will prove even more controversial, since David Cameron promised to maintain them during the general election campaign.
The coalition agreement between the Tories and the Lib Dems pledges the benefits will be ‘protected’, but does not explain what that means.
Currently anyone over 60 is eligible for a winter fuel payment of £250. Pensioners aged over 80 can claim £400 per household. The scheme costs taxpayers about £2.7bn.
The age at which the winter fuel allowance can be claimed is already due to rise from 60 to 65 by 2020.
But ministers are now considering bringing that date forward, and a higher age threshold.
One source said: ‘Changes to thresholds for child benefit and winter fuel allowance have to be considered very seriously.
‘We must ask ourselves whether someone is a child at 19. If this is a benefit that is meant for children, at this time when we are having to sort out the mess in the public finances we have inherited from Labour we have to consider the age at which people become adults.
‘Means-testing is not completely off the table but it would be horribly complicated. In terms of winter fuel payments, we said we would protect them for the elderly in the coalition agreement and we absolutely intend to do that.
‘It’s a fact of life that pensioners need help with their fuel bills. But right now, they get them at the age of 60 even if they don’t retire until 65 or 70.
‘Labour had already decided to increase the age threshold in line with increases to the state pension age, and we may need to go further.’
Dot Gibson, general secretary of the National Pensioners Convention, warned against changing the winter fuel allowance system.
She said: ‘Last winter over 36,700 pensioners died of cold-related illnesses – a staggering 13 pensioners every hour.
‘Yet the government is now considering taking the winter fuel allowance away from millions of households which will only make matters worse.’
Former Conservative Euro MP Richard Balfe, appointed as the Prime Minister’s envoy to the trades unions, last night urged the Government to keep ‘listening and empathising’ with people as it embarked on spending reductions.
‘I’m saying that in delivering the policies we have to be as humane as we can and understanding as we can,’ he said.
Mr Balfe said cuts to public sector pensions, which are being drawn up for the coalition by former Labour minister John Hutton, could provide the flashpoint for the first major backlash against deficit reduction measures.
‘If you attack someone’s standard of living in retirement it is far more fundamental, it really hits and hurts and the government, I believe, has to handle the pensions reform very carefully,’ he said.
‘People spend 30 years of their life building up pensions – it is a terribly sensitive issue.’ – Dailymail