Working families 'will be worse off under Labour'

If Tony Blair wins the election pensioners and working parents will lose out financially, a leading think tank warns today.

New research suggests that cuts to the winter fuel allowance next year will cancel out Labour's sweeteners for pensioners.

Gordon Brown's spending plans also threaten to leave thousands of families worse off as money is diverted to single parents.

The findings, by the Institute for Fiscal Studies, threaten to shatter Labour's claim to be the party of choice for the elderly and hard working families.

The research suggest pensioners would be best off under the Liberal Democrats and parents who both work would be better off under the Tories. Economists analysed the impact of the three main parties' spending plans when all the pledges have come into effect in 2009.

In a major boost for the Tories, research shows that all groups stand to benefit financially if they win. The IFS estimates the average household would be ?3.64 a week better off. Single working parents and pensioners would have almost ?8 a week more.

The report says Michael Howard's pledges to raise the stamp duty threshold, increase pensions, discount council tax for pensioners and cancel the revaluation of homes for council tax mean everybody wins. By contrast, under Labour, the IFS believes married pensioners would end up ?3 a week worse off. Single pensioners would get ?2.03 a week less. Benefits for the elderly would be cancelled out by plans to slash the winter fuel allowance from ?200 to ?100.

The report says that parents who both work will end up 13p a week worse off if Labour wins - compared with ?4.09 a week better off under the Conservatives.

According to the IFS, pensioners would be best off under the Liberal Democrats. It says Charles Kennedy's pledges to replace council tax with a local income tax, boost state pensions, and raise the stamp duty threshold would leave single pensioners almost ?11 a week better off with married pensioners getting almost ?17 a week more.