On Monday, UK Prime Minister Rishi Sunak announced a tax cut plan for millions of pensioners, thereby raising the importance of the elderly electorate in the forthcoming elections in July.
Rishi Sunak's Tax Cut Proposal in Details
The Conservative party, led by Mr Sunak, has revealed a new age-related allowance which promises a tax cut of around £100 for each of the 8 million pensioners in 2025. This is set to rise to almost £300 a year by the end of the next parliament.
This decisive action demonstrates our commitment to supporting pensioners. In contrast, Labour plans to impose income tax on those receiving the full state pension for the first time in history.
His comments come shortly after the announcement of general elections scheduled for 4 July.
In February 2023, the number of pensioners in Britain had risen by 140,000 to a total of 12.6 million. With nearly 50 million Britons eligible to vote, opinion polls suggest that the election could potentially bring an end to 14 years of Conservative governance.
We will always protect pensioners. https://t.co/GVMJr7sMj8
— Rishi Sunak (@RishiSunak) May 28, 2024
Commitment to the ‘Triple Lock’ policy
The Conservative Party's proposal is a continuation of its support for the ‘triple lock’ policy, which ensures that state pensions rise each year by the greater of wages, inflation and 2.5%. This policy, introduced by a Conservative government in 2011, aims to protect pensioners from poverty.
Labour is also committed to maintaining the triple lock. However, the rising costs of the policy have come under scrutiny, not least because of rising inflation, which added £11 billion to the state pension bill last year.
The new proposal, dubbed ‘triple lock plus’, is expected to cost £2.4 billion a year by 2029/30. This expenditure will be covered by the government's plan to generate an additional £6 billion each year by tackling tax avoidance and evasion.
Responding to the announcement, Labour's shadow Paymaster General, Jonathan Ashworth, has criticised the plan as ‘yet another desperate move by a chaotic Conservative party, undermining any claim to economic credibility’.
The Treasury's Paymaster General is the banker to most government departments, which underlines the importance of Mr Ashworth's remarks in a wider economic context.