Rishi Sunak He was moved to shore up Tory support among the older generation today when he declared that state pensions would never be taxed.
Under the 'Triple Lock Plus' policy, the Prime Minister vows to maintain the mechanism that increases payouts by the highest amount. inflationaverage wage growth of 2.5 percent.
But the Conservatives would also ensure that the personal allowance will increase at the same rate for those who have reached retirement age, so that it will always be higher than the state pension.
As clashes intensified ahead of the July 4 elections this morning, Work dismissed the proposals as 'desperate' – but ministers warned that they were Keir Starmer will 'drag millions of pensioners into tax'.
Challenged after giving a speech in Derby this morning, Shadow Chancellor Rachel Reeves said: 'The only reason pensioners want to pay income tax on their basic state pension for the first time is because the Conservatives have lost control of the economy.'
Sunak said Labour's position meant voters had a “clear choice” at the election.
“What I believe is that if you work hard all your life, you can retire with dignity,” the Prime Minister said during a visit to a bowling alley in Leicestershire.
The move comes after a backlash from pensioners after two cuts to national insurance, from which they do not benefit, and as they have been dragged closer to paying income tax by a combination of rising pensions but frozen thresholds.
In other big developments in today's general election battle:
- Nigel Farage has challenged Rishi Sunak to a debate on immigration as he joins the reform campaign;
- Senior Tories have called on colleagues to tie the knot after infighting over National Service policy and early voting.
- Ousted West Mids mayor Andy Street has announced he will not stand as an MP if he wants to slam Mr Sunak;
- Sir Keir faces complaints of a clash with allies set to be dropped into safe seats after a series of late retirements;
- Laura Kuenssberg and Clive Myrie will lead the BBC's election night TV coverage.
Rishi Sunak said the scheme would give retirees 'peace of mind and security during their retirement' as he answered questions at an event in Stoke-On-Trent today.
In a round of interviews, Work and Pensions Secretary Mel Stride told Sky News that Labor would drag millions of pensioners into the tax system.
Mr Sunak said the 'triple lock-plus' would deliver 'a tax cut worth around £100 for millions of pensioners, demonstrating our commitment to them'.
Under Labour, “pensioners will pay tax” and “that's a clear choice,” he said.
Asked whether he was now admitting that freezing personal allowance thresholds was a tax increase, the Prime Minister said the twin challenges of Covid and the war in Ukraine meant “difficult decisions” were being taken to ease debt and borrowing to keep control.
“Now that that plan has worked – inflation has fallen from 11 percent to 2 percent, wages are rising and the economy is growing – we are also able to cut people's taxes.”
In a round of interviews, Work and Pensions Secretary Mel Stride told Sky News: 'Not only will we be increasing interest rates by the treble for the whole of the next Parliament, but we will also be increasing something called the personal allowance. is the amount you can also earn through the triple slot without paying income tax.
'And that will mean that millions of pensioners will eventually receive a tax cut. Now that Labor has rejected that, they say they wouldn't do it, leaving millions of pensioners on the hook for tax.'
He added that the 'triple lock plus' will 'stop millions of pensioners, as will be the case under Labour, from falling into income tax'.
Mr Stride told Times Radio that the Tories could “comfortably” afford the policy.
“£2.4 billion is the cost at the end of Parliament,” he said.
'We can comfortably raise £6 billion by tackling tax avoidance and evasion, and that figure is actually very similar to the kind of figures we have achieved in the past.
“And in fact, the head of the National Audit Office has even stated that that number is achievable and that this is where the fully funded costs will be covered.”
Mr Sunak said the new plan shows the Tories are 'on the side of pensioners'.
The Tories said the proposal would do that equates to a tax cut of around £100 for eight million pensioners next year – rising to £300 over five years.
It will cost the Treasury £2.4 billion a year by 2029/2030 and be funded through a previously announced plan to raise a further £6 billion a year by the end of the next Parliament by tackling tax avoidance.
Under the Triple Lock Plus plan, the personal allowance threshold for UK pensioners would also be rising from the current baseline of £12,570 to £13,040 next year. It would then gradually rise to £14,450 in 2029/2030.
The AOW pension remains taxable, but does not exceed the level of the personal deduction.
Mr Sunak, who visited Chesham United's football ground in Hertfordshire yesterday, said: 'Thanks to the Conservatives' Triple Lock, pensions up by £900 this year and now we will reduce their taxes by around £100 next year.
Chancellor Jeremy Hunt privately admitted he had “a lot of support” from older voters
'This bold action shows that we are on the side of pensioners. The alternative is for Labor to include everyone who receives a full state pension in income tax for the first time in history.”
The Tories expect the state pension to rise by a further £430 to more than £11,970 in April next year; rising from around £1,700 to £13,200 by the end of parliament.
Before 2012, retirees enjoyed more generous tax benefits. But then-Chancellor George Osborne scrapped the policy when he simplified the system, despite facing a 'granny tax' backlash.
The Tories' decision to announce an increase in the personal allowance for pensioners only raises questions about whether they will seek to raise the thresholds for working-age adults. The government has come under fire for continuing to freeze the personal allowance in income tax, which would otherwise have risen in line with inflation.
Shadow Paymaster General Jonathan Ashworth said last night in response to the announcement: 'Why would anyone believe the Tories and Rishi Sunak on tax after they left the country with the highest tax burden in seventy years?
“This is just another desperate move by a chaotic Tory party that is burning down every remaining facade of its claims to economic credibility.”