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Daily Mail
5 days ago
- Business
- Daily Mail
Pension credit 'cliff edge' that penalises people just over income cut-off should be looked at, say MPs
The Government should look at overhauling pension credit to get rid of the current 'cliff edge' and make it fairer, according to MPs. Pension credit tops up weekly income to a minimum of £227.10 for single people and £346.60 for couples, and is worth £4,000 on average a year to those eligible. But it also opens the door to thousands of pounds of extra help with household bills, from housing costs to TV licences, which people lose if they are just over the income threshold. The case for a 'taper' to mitigate the impact on older people who just miss out on these benefits should be considered, says the cross-party work and pensions committee in a new report on pensioner poverty. Not qualifying for 'passported benefits' potentially makes people worse off than those with slightly lower incomes, the MPs point out. 'The fairness of the pensions credit eligibility criteria where if you are a penny above the threshold, you miss out on thousands of pounds, also needs to be looked at,' said committee chair Debbie Abrahams MP. Her committee also asked the Government to investigate the effect of the 'mixed age' rule, which bars couples with one younger member from pension age benefits, on those with health conditions and caring responsibilities. The work and pensions committee called on the government to launch a national strategy to tackle pensioner poverty, and to decide on and provide for a minimum level of income that provides dignity in retirement. Once set, it should create a plan for everyone to reach that level, including a review of those on the old pre-2016 state pension, say MPs. They note the old system, which involved earnings-related top-ups, disadvantaged women and that 2.1million people receive less than the old basic state pension, currently worth £9,200 a year. The report says the number of pensioners below the minimum needed for a 'socially acceptable standard of living' almost doubled to 2.8million in the 15 years to 2023. Meanwhile, experts who gave evidence informed MPs that poverty caused accelerated ageing, and there was an 18-year healthy life expectancy gap between poorer areas and wealthier ones. 'A survey of hard-up retirees by the committee painted a sense of unfairness and sometimes helplessness, with one respondent stating they had only enough for 'basic survival', while another answered that they felt they were 'shrinking' as an individual with no hope for change,' said the committee. A plan to tackle pensioner poverty The need to improve take-up of pension credit was thrown into 'sharp relief' by the decision last summer to link it to Winter Fuel Payment eligibility , said the committee. The Government has since U-turned and announced all pensioners with an income of up to £35,000 should receive the Winter Fuel payment this year. But it told MPs on the committee that overall there had been an additional 60,000 pension credit awards compared with the previous year. The report said: 'Long experience and extensive research demonstrate that the main barriers to claiming relate to pride, not wanting to ask for help and a feeling that "benefits are not for people like me".' It welcomed the Government's commitment to increase take-up but said it should put in place the resources needed to process claims in an 'efficient and timely manner', and helpline advisers able to help people with more complex cases. MPs also urged the Government to look at a change that would help carers, who are currently required to apply for carer's allowance even when they don't qualify for the payments in order to get higher pension credit. They noted Government plans to merge housing benefit and pension credit, and bring this move forward to April 2026, two years earlier than planned. Other topics explored in the report included the link between poverty and ill health and its impact on the NHS and social care services, and the trend towards more people renting in the private sector in old age rather than owning their home. Committee chair Debbie Abrahams said: 'Poverty is insidious. It isolates, damages health, and strips you of dignity. After decades of contributing to society dignity in retirement is the least you deserve. 'To boost incomes, the Government needs to come up with a strategy to increase pension credit take-up. It's a scandal that so many have missed out for so many years, often through an aversion to claiming benefits altogether, or lack of support. 'Ultimately, the Government should decide what it thinks is enough for a dignified retirement, and then work to ensure that all pensioners are on at least that level. 'Faced with a combination of high energy costs, ill-health and ever higher rates of pensioners in more costly privately rented accommodation, tackling pensioner poverty is not simply a Department for Work and Pensions issue. 'So, we're calling for a nationwide, cross-government strategy for an ageing society that should be rooted in equity and wellbeing.' Abrahams welcomed the Pensions Commission launched this week to look at future pensions, but added: 'We are keen to ensure that those reliant right now on a state pension that leaves them short are looked after too.' A Government spokesperson said: 'Supporting pensioners is a top priority, and thanks to our commitment to the triple lock, millions will see their yearly state pension rise by £1,900 this parliament. 'We have also run the biggest-ever campaign to boost pension credit take-up, with nearly 60,000 extra pensioner households being awarded the benefit, worth on average around £4,300 a year.' 'But we know there is a real risk that tomorrow's pensioners will be poorer than today's, which is why we are reviving the Pensions Commission, to tackle the barriers that stop too many people from saving.' 'One woman worked until age 75, but had only £10 a week after bills' Caroline Abrahams, charity director at Age UK, welcomed the 'thoughtful' committee report which she said came closer to proposing workable solutions than anything successive governments have produced in recent years. 'This is to the committee's great credit, but it is also an indictment of the lack of focus from our political leaders in preventing and tackling pensioner poverty, the incidence of which is growing, with the result that approaching three million older people are now on less than is required for a minimum decent standard of living. 'One woman quoted in the report said she had worked to 75 but now had only £10 per week after bills. She said: 'It's not living. I am having to cut down on everything and it is taking its toll on my mental and physical health." 'Many of the individual recommendations in the report are excellent and we would particularly spotlight those relating to the need for a cross-government strategy on an ageing society; an Older People's Commissioner in England; a social tariff for energy; and a comprehensive DWP strategy to promote benefit uptake, including of pension credit, the low take up of which this cross party Committee rightly terms "a scandal". 'The Committee also correctly questions the fairness of the "mixed age couple" benefit rule –– which can mean people in their 70s and beyond still receiving working-age benefits – and the adequacy of financial support for older people who rent their homes.' Independent Age chief executive Joanna Elson said: 'The Work and Pension's Committee has highlighted the urgent truth; the UK needs a strategic approach to tackle pensioner poverty. 'The older people Independent Age speaks to are living on desperately small incomes, forcing them to make drastic cutbacks. They are going to bed in hats and coats, eating one small meal a day and washing less to save on water. This is not right. 'Our own research highlights the importance of people having an adequate income in later life, particularly those reliant on just the state pension and social security system.'
Scottish Sun
22-07-2025
- Business
- Scottish Sun
Labour has wrecked the economy… here's how YOU might be made to pay – from fuel duty to income tax
Find out which tax hikes could be coming — and how likely they are on a scale of 1 to 5 RYAN SABEY Labour has wrecked the economy… here's how YOU might be made to pay – from fuel duty to income tax Click to share on X/Twitter (Opens in new window) Click to share on Facebook (Opens in new window) IF Rachel Reeves was heading into Parliament's summer break with a huge headache, things just got a whole lot worse. The Chancellor woke up yesterday to a storm around Government borrowing hitting £20.7billion last month. Sign up for Scottish Sun newsletter Sign up 5 With soaring debt and past decisions hitting growth, Rachel Reeves is said to be preparing for a tough Budget and likely tax rises Credit: The Mega Agency The figure — higher than the £17.1billion forecast for the period — was fuelled by a rise in the interest charges on government debt. And now, instead of blue skies and sunshine over the summer, Ms Reeves will have to deal with dark clouds gathering over the Treasury. She has said that 'the world has changed' since her previous Budget, with Donald Trump's global tariffs creating uncertainty. But the harsh reality is that a series of decisions this Government made has wrecked what was always going to be a fragile recovery. READ MORE ON TAX RISES TAXING TIMES Keir Starmer opens door to Budget tax raid after inflation jumps to 3.6% The decision to increase NI contributions for employers had a devastating impact on expansion and hiring plans — and wrecked confidence. Anger was also levelled at her and Sir Keir Starmer for talking the country down when Labour first came to power, as they painted a gloomy economic outlook for Britain. This is all before businesses face the roll-out of the workers' rights package over the next two years, which will hit firms for £5billion, according to the Government's own impact assessment. And better prospects for working people appear doomed as wealth creators flee the country due to the high-tax environment, with around 16,500 expected to leave this year. Self-inflicted misery And this self-inflicted misery could be compounded further in the Budget this autumn as Ms Reeves tries to solve her spending shortfall. The financial black hole has only been made worse by this month's £5billion welfare reform U-turn and the £1.5billion she will now have to find after the partial retreat on Winter Fuel payments. Rachel Reeves FINALLY addresses Commons tears after she and Keir Starmer put on awkward show of unity Economists have already said that the Chancellor may have to fund a £30billion shortfall to meet her fiscal rules, and higher taxes are a near-certainty because Whitehall departments have already faced brutal cuts. Ms Reeves insisted yesterday that UK productivity was the problem. She said low investment levels compared to other G7 countries had led to UK output not keeping pace with our competitors. Reeves said it would be easy to cut capital spending, but these would be 'short-sighted, wrong decisions'. Here, we weigh up the Chancellor's options as she battles to balance the books, along with our likelihood rating of the moves being adopted later this year. 1. Wealth tax REEVES will fend off pressure from Labour MPs to bring in a wealth tax after being warned the well-off will flee the country. The Chancellor is set to reject calls for levies on property, investments and savings after Lord Kinnock called for a two per cent surcharge on assets worth more than £10million. But a host of other countries have already tried wealth taxes and they haven't raised the money needed to cover the public finances. Recent research shows that the UK has seen 18 billionaires quit these shores in the past two years alone. 1/5 2. Income tax threshold freeze IN one of the positives from last autumn's Budget, the Chancellor said there would be 'no extension' of the freeze in income tax and National Insurance thresholds. She said such a move would hurt working people and take more money from their payslips. But a freeze on income tax thresholds for the next two years would help Ministers raise around £8billion to fill the Budget black hole. The move would mean that even more people would be brought into the higher rate of tax, with the freeze due to come to an end in 2028. 4/5 3. Fuel duty on petrol & diesel 5 Keeping the duty frozen and maintaining the 5p cut brought in back in 2022 will cost around £5billion a year Credit: Alamy COST-of-living demands on households will pile the pressure on to freeze fuel duty at its current level for another year, rather than opting for a much-needed cut. Keeping the duty frozen and maintaining the 5p cut brought in back in 2022 will cost around £5billion a year. The Sun's successful Keep It Down campaign has saved motorists around £100billion since our battle with the Treasury started in 2011. The headline tax rate on petrol and diesel is currently 52.95p per litre. Back in October, Reeves said raising fuel duty would be the 'wrong choice for working people'. 2/5 4. Capital Gains Tax PROFITS made from sales on shares, investments and property could fall into play for raising funds for Treasury coffers. Reeves raised the top rate of CGT by four per cent at the last Budget, but experts say if it goes up again the move could backfire. Higher rate taxpayers pay 24 per cent CGT on the profits from sales, which contrasts with 40 per cent if it was earned income. Nimesh Shah, from accountancy firm Blick Rothenberg, said: 'People may choose to hold on to things like houses so as not to crystallise the tax bill — or they may simply leave the UK and crystallise the gains abroad.' 2/5 5. Tourist tax on hotel rooms 5 Deputy Prime Minister Angela Rayner is pushing for councils to have new powers to tax tourists, but there are worries this could hurt already struggling hospitality businesses Credit: AP DEPUTY Prime Minister Angela Rayner is pushing for councils to be given new powers to bring in a tax on tourists. The Labour number two is facing opposition from Reeves to bring in a surcharge similar to those other countries impose on hotel rooms. But the Treasury is understood to be concerned that it would just hit struggling hospitality businesses that have already been badly bruised by the National Insurance raid. 4/5 6. Income tax, VAT and NI pledge LABOUR promised at the last election to protect 'working people' from tax hikes, but uncertainty has arisen about who could be protected. A key pledge was not to hike the main revenue raisers of income tax, VAT or National Insurance when the party came to power. Treasury minister Darren Jones has insisted anyone who gets a payslip is a 'working person'. It comes after Cabinet colleague Heidi Alexander said those on 'modest incomes' would be protected. 1/5 7. Small business taxes 5 Craig Beaumont of the Federation Of Small Businesses says the Labour Government must prove it supports 'the country's everyday entrepreneurs' Credit: Alamy A MILLION bosses who own small businesses and set up as limited company directors fear being clobbered on their pay. The business community worry the first £500 of dividend income being tax free could be hit in the autumn Budget. Craig Beaumont, of the Federation Of Small Businesses, said: 'The Labour Government must show if it stands behind the country's everyday entrepreneurs'. 2/5 8. Pensions tax relief raid 5 Future pensioners could face cuts to tax relief on pension contributions, with a drop from 40 per cent to 20 per cent for high-rate taxpayers raising around £15 billion Credit: Getty FUTURE pensioners could see the tax relief on pension contributions lowered to help raise funds. Higher-rate taxpayers get 40 per cent tax relief and basic-rate taxpayers get a lower 20 per cent rate. If the rate was brought down to 20 per cent it could mean around £15billion would be raised. The idea appeared to be rejected last year. But it could be back on the table as autumn approaches to bring in necessary funding. 4/5
New Statesman
18-07-2025
- Business
- New Statesman
Pensioners need a Summer Cool Payment
Photo byLondon is hotter than Brazil! And to be factual, London is always hotter than some parts of Brazil, because Brazil has some large mountains and extends thousands of miles into the southern hemisphere (where it is currently winter). But let's not let facts get in the way of a more general truth, which is that Britain is sometimes hotter than Africa! It's also sometimes colder than Moscow! And that is how weather works. But the important point is that when it's colder than Norway (assuming Norway is having a relatively warm spell), some people get free money. Should a similar system not exist for the summer? The Winter Fuel Payment is a tax-free £200 that has been given to all pensioners each winter since 1997. Winter Fuel has a nice ring to it; it suggests a puffing, red-cheeked septuagenarian carrying an armful of logs through the snow, and some bureaucratic Wenceslas stopping to cheer them along with a nice little cheque. It is a benefit some pensioners do sincerely need. But millions of other recipients don't need it, and in a country that is forecast to spend £175bn on pensioners' benefits this year (compared to, for example, £5bn in benefits for children), there is an argument that it might not be the best use of the country's funds. But when the government tried to remove it from all but the poorest pensioners, it met with furious opprobrium from the wood-burning classes and was forced into a U-turn that will cost £1.25 billion a year. Labour's own backbenchers insisted the payment was necessary, having been horrified by the effect that means-testing the payment had on their party's performance in the local elections. But now it's hotter than some parts of Australia, probably, and this suggests a policy idea: having decided that the nation's pensioners – more than three million of whom live in a household with assets over £1,000,000 – really do need an extra £200 in the winter, those who argued for a universal Winter Fuel Payment should now consider whether a summer air-conditioning subsidy is also needed. After all, hot weather is effectively a wealth tax. The employed may spend their days in air-conditioned offices (or the sea, if they're a marine biologist). Where do retirees go when it's baking, and they're not on holiday? Sainsbury's or Waitrose, of course – both are Baltic at this time of year. But the extra time one spends gliding their deliciously cool aisles adds up to a lot more shopping. At home, Victorian houses are notoriously poorly insulated, and the garden must be hosed daily. The cheapest Dyson fan is £250. Fever-Tree is £2.25 a bottle. Why isn't the triple lock taking all these extra expenses into account? It's not much to ask. Pensioners who have paid their way through society, or feel that they have, are surely entitled to a Summer Cool Payment of £200 per household, or £400 if they have to use the Central Line. Just £200 could pay for a month's supply of Evian facial spray, a pair of linen trousers and one of those neck fans that looks like a big pair of headphones. And it's not like the increasingly extreme weather caused by climate change is in any way the fault of today's retirees, is it? [See also: In defence of Lord Hermer] Subscribe to The New Statesman today from only £8.99 per month Subscribe Related
New Statesman
20-06-2025
- Business
- New Statesman
Ed Miliband keeps winning
Photo byIt's been a cheery couple of weeks for Ed Miliband. Despite a raft of negative briefings in the weeks prior to the spending review, Miliband's Department for Energy Security and Net Zero ended up being one of Rachel Reeves' biggest winners. Alongside the cancellation of a previously trailed cut to the Warm Homes Plan, DESNZ received a 16 per cent increase in spending power (more than any other department). And now, following a period of internal wrangling with the Number 10 and the Treasury, the former Labour leader has announced the extension of the Warm Homes Discount, a policy which offers a £150 energy bills discount to those on low incomes. Insiders tell me it is something the Energy Secretary has been working on behind the scenes for months. Energy bills – and the government's pledge to cut them by £300 before the end of the parliament – will be a key metric of Labour's success at the next election. Frustration over the slow pace of reduction, alongside fury over the Winter Fuel Payment, were big issues on the doorstep during the locals (it wasn't a good night for Labour). In the wake of voting, one insider close to Miliband pointed to the Warm Homes Discount – which was first introduced in 2011 – and questioned why the government did not make more of it following the decision to cut Winter Fuel. It is, after all, a means-tested benefit intended to support not just elderly people, but millions of households on low incomes to reduce their energy bills. The extension announced on Thursday will see a further 2.7 million households eligible to receive this benefit; over 6 million households will now be able to access the discount. It will be paid for via a deal which the government has struck with the energy regulator, Ofgem. Currently, energy bills include the socialised costs of energy companies' unpaid debts, the government has done a deal to reduce the overall debt burden on energy companies. This accompanies the recent cut to the Energy Price Cap, which comes into effect in July, meaning a double whammy of energy bill reductions. All of this suggests that despite speculation that Keir Starmer might be about to make an about-turn on support for net zero, the Prime Minister is firmly staying put. Not only has Miliband's funding been bolstered, but his department has been responsible for some of the government's most recent positive news: 100,000 new jobs at Sizewell C, solar panels for newbuild homes, schools, and hospitals, and now the extension of the Warm Homes Discount. And Starmer has made clear that, in directly taking on Nigel Farage, he won't look to ape the Reform UK's net zero scepticism but will seek to prove how the green transition can help low-income, marginalised communities, as well as slashing the UK's carbon emissions. That Starmer is staying close to Miliband is unsurprising. The PM has, after all, always been environmentally minded (he is a pescatarian, did you know?). Perhaps his most famous case as a human rights lawyer was representing two Greenpeace Activists against McDonalds in the 1997 McLibel trial. Starmer, who's former Kentish Town home is a short walk from Miliband's ends in Dartmouth Park, was also encouraged to run to be an MP in 2015 by his predecessor as Labour leader. The pair have a shared political history; it's easy to speculate that Starmer feels some loyalty there. Subscribe to The New Statesman today from only £8.99 per month Subscribe Connections aside, it's clear Starmer sees the electoral benefit of his Energy Secretary's clean power drive, particularly after the disastrous Winter Fuel Payment saga and the government's subsequent U-turn. Reducing the UK's reliance on imported natural gas and other fossil fuels will lead to lower energy bills; a result on which Starmer's premiership will be heavily judged (and to some extent, already is). And in this new turbulent international climate – the arguments for energy security remain; Miliband was the first to make them. After months of underestimation from his detractors, the Energy Secretary and his agenda are safe, for the time being. It all now rests on the success of his delivery. Related
Daily Mail
11-06-2025
- Politics
- Daily Mail
DAN HODGES: Rachel Reeves has opted to spend like a drunken sailor on shore leave in the Chagos Islands. It's now a matter of 'when' not 'if' she comes back to pick our pockets with tax rises
Earlier in the week, as the full extent of her humiliating climb-down over Winter Fuel became apparent, Rachel Reeves was asked if she was simply 'cosplaying at being an Iron Chancellor'. After the statement she has just delivered to unveil the Government's Spending Review, it appears she is actually cosplaying at being the new Liz Truss.
