Triple lock plus is U-turn on Tory tax policy, think tank says

Under the plans, a pensioner’s income tax allowance would rise in line with either average earnings, inflation or by 2.5 per cent

Alexander Butler
Tuesday 28 May 2024 18:36 BST
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Rishi Sunak’s proposed tax break for pensioners is a U-turn on a tax increase introduced by a previous Conservative government, a think tank said today.

Institute for Fiscal Studies director Paul Johnson said the plan is “simply a reversal” of George Osborne’s policy which was introduced in the 2010s.

Under the plans, a pensioner’s income tax allowance would rise in line with either average earnings, inflation or by 2.5 per cent – whichever is higher – from next April.

Mr Johnson told BBC Radio 4’s Today programme: “Pensioners used to have a bigger personal allowance than people of working age – it was the Conservatives who got rid of it.

“So this is one of many examples, actually, of tax policy that has been reversed by the same government. George Osborne got rid of it in the 2010s when the personal allowance of people under pension age continued to rise.

Rishi Sunak’s proposed tax break for pensioners is a U-turn on a tax increase introduced by a previous Conservative government
Rishi Sunak’s proposed tax break for pensioners is a U-turn on a tax increase introduced by a previous Conservative government (Getty )

“So one of the consequences of that, actually, is that the point at which pensioners currently start to pay tax is below where it was in 2010, whereas the point at which the rest of us start to pay tax is well above where it was in 2010.”

Currently, people can receive £12,570 a year of their pensions before they start paying income tax on them – the same figure as the personal allowance for those who work.

Rishi Sunak said the move “demonstrates we are on the side of pensioners”, and would bring people “peace of mind and security in retirement”.

But Mr Johnson added: “Secondly, it’s worth saying that in part, looking forward, this is simply a reversal of a tax increase that the Conservatives proposed.

“The idea is that the allowance doesn’t rise at all in line with inflation for the next three years. So half of the cost of this is simply not imposing the tax increase that was previously proposed.”

Work and Pensions Secretary Mel Stride has defended the continuation of the triple lock for pensioners (PA)
Work and Pensions Secretary Mel Stride has defended the continuation of the triple lock for pensioners (PA) (PA)

Labour’s shadow paymaster general, Jonathan Ashworth, called it “another desperate move from a chaotic Tory party torching any remaining facade of its claims to economic credibility”.

He added: “Why would anyone believe the Tories and Rishi Sunak on tax after they left the country with the highest tax burden in 70 years?”

The policy will cost £2.4bn a year by 2029-30 and the Conservatives say it would be funded through their previously announced plan to raise an extra £6bn a year by the end of the next parliament by clamping down on tax avoidance and evasion.

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