Britain’s opposition Labor Party pledged on Thursday to reverse the government’s planned pension changes. He said these were a gift to the top 1% of pension savers at a time when many families were hit by tax hikes and high inflation.
Chancellor of the Exchequer Jeremy Hunt stunned his Conservative Party in a Budget statement on Wednesday when he announced he would no longer tax lifetime pension contributions above a threshold of around £1 million.
Hunt said the reform was part of his bid to keep more older people in work and tackle Britain’s labor shortage.
Labour, which is leading the Conservatives in opinion polls ahead of an election expected in 2024, said the move was “the wrong priority for the wrong people at the wrong time”.
Labor says those with pensions of more than £1.4 million ($1.7 million) will pay around £150,000 less in tax in total, while basic taxpayers face a higher tax bill.
“This Budget was an opportunity for the Government to demonstrate Britain’s promise and potential,” said Labor Chancellor-designate Rachel Reeves. “But the only surprise is that £1 billion of pensions were paid to the 1%, which will widen the cost of living gap.”
Labor said it would provide a more targeted program for doctors.
Some long-serving doctors have cut back their hours as they approach the lifetime pension limit, putting further pressure on the public health system.
The Resolution Foundation, a think tank that focuses on issues facing low- and middle-income families, says the tax change is too regressive and wasteful to prevent early retirement.
Increasing the annual tax-free pension contribution from £40,000 to £60,000 and scrapping the lifetime benefit will cost the government £1.2 billion.
The Resolution Foundation also said it would lead to an increase of 15,000 jobs – but would cost around £80,000 per extra worker.
Even those employment gains may be overstated, the think tank said, because the aid “could induce some people to retire earlier than they otherwise would have.”
The insistence on tax support for the rich is reminiscent of criticism of former prime minister Liz Truss and her finance minister Kwasi Kwarteng’s “mini-budget” in September. They were later forced to revise their plan to scrap the top rate of income tax for Britain’s highest earners.
($1 = 0.8285 pounds)
