Pensioners should be stripped of free bus travel as part of a £15 billion of immediate extra savings to boost the economy, a think tank said.

The Social Market Foundation said extra austerity measures projected for 2016/17 should be brought forward and the money ploughed into infrastructure.

It said carefully targeting where the axe fell would boost growth without increasing borrowing or damaging investor confidence - despite the "polarised and simplified" political debate.

The £1 billion estimated annual cost of OAP travel passes was one low-priority item of spending that did nothing to improve the economy and should be scrapped, it said in a report.

Another £1 billion could be found by barring savers from keeping any more than £15,000 in tax-free ISA savings accounts and £2.4 billion from means testing child benefit payments.

Almost half of the £15 billion could be raised by halving higher rate pension tax relief and the rest from taking away winter fuel payments and free television licences from better-off pensioners.

SMF director Ian Mulheirn, who wrote the report. said: "The political debate on the economy has become unhelpfully polarised, with the future strategy presented as a choice between sticking to the status quo or borrowing more in pursuit of growth.

"But the OBR's game-changing assessment last November that there will have to be a further £15bn of cuts by 2016-17 creates the opportunity for a potent growth strategy within the existing borrowing plans.

"By changing the composition of Government taxation and spending, rather than altering the size and speed of cuts, the Chancellor can make his existing plan much more growth-friendly".

"Our plan would unambiguously strengthen the Government's deficit cutting credibility and increase economic output without borrowing a penny more. That would go a long way towards reassuring the holders of UK Government debt as well as potentially taking tens if not hundreds of thousands of people out of unemployment. By refreshing our infrastructure, this plan would also lay the sorely needed foundations of the new economy that must emerge from the crash."