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Call to scrap benefits for pensioners

Pensioners should lose a series of benefits, including free TV licences and the winter fuel allowance, to ease the financial squeeze on younger people, according to a think-tank.

The Institute of Economic Affairs (IEA) calculates the moves could save taxpayers’ £16 billion a year.

But charities and elderly groups condemned the recommendations, warning they risked unfairly targeting older people and could even prove deadly.

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Chancellor George Osborne has set out plans to shave £15bn a year from Britain’s £192bn welfare bill in the next four years.

But the IEA claims older people have been relatively insulated from the Tory-LibDem Coalition’s cuts and are currently in a “privileged” position.

Senior citizens receive favourable treatment in the tax system, the IEA claims, with higher personal allowances than younger people and even a marriage allowance if one partner is older than 75.

Ministers have also vowed to raise the basic state pensions under the so-called “triple” lock, which ensures payments will rise in line with prices, earnings, or by 2.5%, whichever is highest.

By contrast, younger people are having to bear the brunt of the cuts and reduced public services, the think-tank warns.

The IAE recommends cuts including scrapping the “triple lock” guarantee from 2011, and raising the state pension age to 66 by 2015.

The organisation also wants to abolish free TV licences, free bus travel and the winter fuel allowance, which gives households £250, or £400 if one member is older than 80, a year.

In total the recommendations would save almost £16bn a year by 2015/2016.

Philip Booth, from the IAE said the Government had imposed “many new burdens on the younger generation”.

“They have let older people remain largely insulated from much of the cuts,” he added.

“It’s time this changed.

“These proposals should be part of a more radical review of Government spending than the one on which the Government has embarked.”

But pensioners’ organisations warned cutting benefits could have disastrous consequences.

Elinor McKenzie, chair of the Scottish Pensioners’ Forum, said: “Every year around 3000 older people in Scotland die over the winter months from cold-related illnesses. Although not all of these are related to fuel poverty, many of them are and to suggest removing the winter fuel allowance could be very dangerous.”

She also warned there would be unintended costs associated with scrapping benefits.

“For instance, there are estimates that for every £1 spent on free travel for older people, the NHS saves around 41p,” she said. “This is because free travel helps keep older people mobile and independent in their own homes. To abolish it would save money, yes, but it would cost money elsewhere.”

David Manion, chief executive of Age Scotland, said: “Suggesting that all older people enjoy a ‘privileged’ economic position shows total ignorance of the reality of life for the majority of over-65s. In fact the UK has one of the lowest state pensions in Europe, with 1.8 million pensioners living in poverty and many more surviving just above the breadline.”

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