Latest news with #pensioners
The Independent
19 hours ago
- Business
- The Independent
Government climbdown on welfare Bill marks third U-turn this month
Sir Keir Starmer's climbdown on the welfare Bill is the latest in a series of U-turns. Here, the PA news agency looks at three major policy changes this month. – Welfare reforms The Universal Credit and Personal Independence Payment Bill was put in motion to change who could qualify for certain disability and sickness benefits. The package restricted eligibility for Pip, the main disability payment in England, and cut the health-related element of Universal Credit, in a bid to save £5 billion a year by 2030. But a backbench rebellion of more than 120 Labour MPs forced Sir Keir into a U-turn. In an attempt to appease those MPs, planned cuts will now only affect future applications for benefits, rather than existing claimants. – Winter fuel payment The Government scrapped winter fuel payments for pensioners who do not receive pension credits or other means-tested benefits just weeks after it came to power in July. It was described as a 'necessary and responsible' move by Chancellor Rachel Reeves, who argued it would help fill the £22 billion fiscal black hole. The Government said that changing the threshold for the payment would save £1.5 billion each year. But at the start of this month, the Prime Minister announced that the Government would reinstate winter fuel payments for millions of pensioners. The payment, worth up to £300, will be restored to the vast majority of pensioners who previously received it because anyone with an income of under £35,000 a year will now get the payment automatically. The Government said the change will cost £1.25 billion. – Grooming gangs Sir Keir has also U-turned on holding a national inquiry into grooming gangs. In January, the Prime Minister accused those calling for an inquiry of 'jumping on a far-right bandwagon' after tech entrepreneur Elon Musk criticised the UK for its lack of action on the issue. But following the recommendations of a report by Baroness Louise Casey into the scale of group-based child sexual abuse, Sir Keir announced in June that there would be a full national statutory inquiry. The Prime Minister had initially only promised five local inquiries in the most prevalent areas for grooming gangs. Asked about the change, Sir Keir said: 'I've never said we should not look again at any issue.'
Yahoo
21 hours ago
- Business
- Yahoo
What does the UK spend on welfare – and how much will it rise?
Welfare spending is forecast to rise sharply over the next few years, driven by the UK's ageing population and an increase in the number of people receiving health and disability benefits. Here, the PA news agency looks at the latest figures and projections for social security and welfare expenditure. – How much does the UK spend in total? The Government is forecast to have spent £313.0 billion on welfare in 2024/25, according to the Office for Budget Responsibility (OBR). This is the equivalent of 10.9% of UK GDP (gross domestic product, or the total value of the economy). The OBR forecasts annual spending on welfare to reach £373.4 billion in 2029/30. This is up £60.4 billion on the figure for 2024/25 – an increase of nearly a fifth. Welfare spending as a proportion of GDP is forecast to fall slightly to 10.8%, however. – What takes up the biggest share of the welfare budget? Spending on pensioners. Some £150.7 billion was spent on pensioners in 2024/25, accounting for nearly half (48%) of the total welfare budget. Besides the state pension, this spending also includes pensioner housing benefit, pension credit and the winter fuel payment. Spending on pensioners is forecast to reach £181.8 billion by 2029/30, but this would still be just under half (49%) of the full welfare budget. – How does the rest of the welfare budget break down? The next largest chunk of spending goes on Universal Credit, which made up 28% of the 2024/25 budget (£87.8 billion). It was followed by disability benefits at 13% (£41.4 billion) and child benefit at 4% (£13.3 billion), with other types of spending – including social security in Northern Ireland – accounting for 6% (£19.9 billion). – Is spending set to increase for all types of welfare? No. The child benefit budget is forecast to remain largely flat, at £13.6 billion in 2029/30, compared with £13.3 billion in 2024/25. By contrast, spending on disability benefits is forecast to jump to £56.3 billion by 2029/30, up from £41.4 billion in 2024/25. Spending on Universal Credit will reach £99.0 billion, up from £87.8 billion. – Why is welfare spending rising? The OBR identifies two main drivers of the increase. The first is higher spending on pensioners. This is because of the UK's ageing population and the 'triple lock', which guarantees pensions will rise each year by whichever is highest: the annual rate of inflation, average growth in earnings, or 2.5%. Of the forecast £60.4 billion extra spending on welfare in 2029/30, pensioners are responsible for just over half of the amount, at £31.3 billion (51%). The second factor identified by the OBR as driving an increase in welfare spending is the rise in people eligible for health and disability benefits. Spending on disability benefits, which includes disability living allowance and personal independence payments, accounts for £14.9 billion (25%) of the £60.4 billion extra spending on welfare in 2029/30. – How does spending on health and disability benefits break down by age group? The OBR defines health and disability benefits as covering the following entitlements: the standard allowance and health element spending for Universal Credit claimants; employment and support allowance; incapacity benefit; severe disablement allowance; income support for incapacity; disability living allowance; personal independence payment; attendance allowance; spending on the Universal Credit carer's element; carer's allowance, and income support for carers. Spending on all these benefits was estimated to be £75.7 billion in 2024/25, three-quarters of which (75% or £56.9 billion) went to working-age adults. Just under a fifth (19%, or £14.2 billion) went to pensioners, while 6% (£4.5 billion) went to children. Although the amount spent on health and disability benefits is forecast to rise to £97.9 billion in 2029/30, the proportions are expected to remain broadly the same: 74% on working-age adults (£72.3 billion), 19% on pensioners (£18.3 billion) and 7% on children (£7.0 billion). – How does welfare spending compare with other government departments? In 2023/24, actual spending on health and disability benefits was £66.3 billion. This was more than than the total departmental expenditure on defence (£57.6 billion) or transport (£32.6 billion), but well below the figure for education (£127.0 billion) and overall health and social care spending (£196.7 billion), according to the latest Treasury data. Total expenditure by the Department for Work & Pensions stood at £275.1 billion in 2023/24, up from £239.1 billion in 2022/23 and the highest figure among all government departments.
Yahoo
a day ago
- Business
- Yahoo
Government climbdown on welfare Bill marks third U-turn this month
Sir Keir Starmer's climbdown on the welfare Bill is the latest in a series of U-turns. Here, the PA news agency looks at three major policy changes this month. – Welfare reforms The Universal Credit and Personal Independence Payment Bill was put in motion to change who could qualify for certain disability and sickness benefits. The package restricted eligibility for Pip, the main disability payment in England, and cut the health-related element of Universal Credit, in a bid to save £5 billion a year by 2030. But a backbench rebellion of more than 120 Labour MPs forced Sir Keir into a U-turn. In an attempt to appease those MPs, planned cuts will now only affect future applications for benefits, rather than existing claimants. – Winter fuel payment The Government scrapped winter fuel payments for pensioners who do not receive pension credits or other means-tested benefits just weeks after it came to power in July. It was described as a 'necessary and responsible' move by Chancellor Rachel Reeves, who argued it would help fill the £22 billion fiscal black hole. The Government said that changing the threshold for the payment would save £1.5 billion each year. But at the start of this month, the Prime Minister announced that the Government would reinstate winter fuel payments for millions of pensioners. The payment, worth up to £300, will be restored to the vast majority of pensioners who previously received it because anyone with an income of under £35,000 a year will now get the payment automatically. The Government said the change will cost £1.25 billion. – Grooming gangs Sir Keir has also U-turned on holding a national inquiry into grooming gangs. In January, the Prime Minister accused those calling for an inquiry of 'jumping on a far-right bandwagon' after tech entrepreneur Elon Musk criticised the UK for its lack of action on the issue. But following the recommendations of a report by Baroness Louise Casey into the scale of group-based child sexual abuse, Sir Keir announced in June that there would be a full national statutory inquiry. The Prime Minister had initially only promised five local inquiries in the most prevalent areas for grooming gangs. Asked about the change, Sir Keir said: 'I've never said we should not look again at any issue.'
Times
2 days ago
- Business
- Times
An additional 420,000 pensioners set to pay income tax this year
Hundreds of thousands more pensioners will pay income tax in retirement this year as they fall victim to a deep freeze on tax thresholds. About 420,000 more people over state pension age will pay income tax in 2025-26, bringing the total to 8.7 million, according to data from HM Revenue & Customs. The rise is a result of consecutive increases to the state pension and a long-running freeze on income tax thresholds, which began in 2021 but is set to continue until at least 2028. Millions of pensioners and workers have been dragged into a higher tax bracket as their income rises because of the freeze, a process known as fiscal drag. • Two million to be hit by 'stealth tax bombshell' by end of decade David Brooks, the head of policy at the consultancy firm Broadstone, said: 'While the country's demographic shift naturally increases the number of pensioners liable for income tax, fiscal drag is unequivocally pulling hundreds of thousands more into the income tax bracket each year.' The amount of income you can receive each year before paying tax has been stuck at £12,570 since 2021. The full new state pension has increased from £9,332.20 to £11,973 over the same period. This means that those with other sources of income like dividends, rental payments and cash could easily be tipped into paying tax. The state pension is protected by the so-called 'triple lock', which ensures it rises each year by the highest of average earnings growth, inflation, or 2.5 per cent. It was designed to shield pensioners from the rising cost of living, but its success is somewhat of a double-edged sword — the state pension is on track to soon be enough to exceed the 20 per cent basic-rate tax threshold. • Johanna Noble: Tax is a small price to pay for a good state pension The Office for Budget Responsibility has predicted that by April 2027 the full new state pension will be worth £12,885.50 — £315.50 over the £12,570 personal allowance. Pensioners who had paid national insurance contributions for 35 years to qualify for the full state pension would then have to repay 20 per cent of that £315.50, losing £63, according to Quilter, the wealth manager. Last year, the Conservatives pledged a 'triple lock plus', in which the personal allowance for pensioners would rise in line with the highest of earnings, inflation, or 2.5 per cent, mirroring the protection afforded to the state pension. At the time, Labour dismissed the proposal as lacking credibility. More than seven million people are expected to pay the higher rate of income tax, at 40 per cent, this year, up from just over 5.1 million in the 2022-23 tax year. The number of people paying the top rate of tax, 45 per cent, is expected to hit 1.23 million this year, more than double the 570,000 who paid it three years ago. The number of basic-rate taxpayers has risen from 28.8 million to 30.8 million over the same period. • Is Britain a high-tax nation compared with other countries? Neela Chauhan, a partner at the accountancy firm UHY Hacker Young, said: 'Though it might seem equitable for higher earners to be paying more tax, there are real concerns over the impacts of placing an ever higher tax burden on high earners. 'Increasing the tax burden too high could push these individuals to leave the country or deter talented individuals from moving to this country. There are already concerns of a 'brain drain' in the UK.' The Treasury has been approached for comment.
Telegraph
2 days ago
- Business
- Telegraph
Baby boomers to open up even bigger wealth gap over working families
Baby boomer pensioners are set to get even wealthier under Labour as working families struggle, new analysis shows. Pensioners will be £1,500 better off on average over this parliament, research by the Resolution Foundation shows. The boost to pensioners' disposable incomes after inflation and housing costs means they will fare significantly better than other groups. Families with children will see no improvement to their incomes by 2030, in a blow to Sir Keir Starmer's promise to raise living standards across the country. Sir Keir has made delivering higher living standards a key 'milestone' for this parliament, promising in December to raise 'living standards in every part of the United Kingdom so working people have more money in their pocket'. When looking across all households, the Resolution Foundation said disposable income will only rise marginally by 1pc over five years, a cash boost of £300 that the think tank described as 'bleak'. Adam Corlett, from the Resolution Foundation, said: 'There are winners and losers within this weak outlook. Pensioner incomes [are] set to grow by a healthy 5pc over the rest of the decade, while the poorest half of the population are set to see their incomes fall.' The growing disparity between mainly retired baby boomers and younger families will further inflame a tense political debate about generational inequality. Boomers are the wealthiest generation, with the prospects for millennials and Gen-Zs underwhelming by comparison. It follows a period described by the Resolution Foundation as 'bust and boom' for living standards, with years of no pay growth followed by a sudden spurt last year. Mr Corlett said: 'The living standards story of the decade so far has been bust and boom, with Covid-19 and a cost of living crisis followed by a much-needed recovery last year. But the rest of the decade looks bleak.' He added: 'A stronger economy and the right policy interventions can brighten this outlook. Maintaining strong wage growth and returning to pre-pandemic employment levels would make middle-income Britain far better off, while ending the two-child [benefit] limit can lift living standards for poorer families.' The research found people who own their home outright – typically babyboomers – will be far better off in coming years than those still paying down their mortgage. Their incomes are on average set to rise by 3pc by the end of the decade. Mortgaged homeowners will meanwhile see their disposable incomes fall by 1pc, as they feel the slow burn of much higher interest rates than in the recent past. Improving fortunes for pensioners come after the Prime Minister was forced into a humiliating about-turn on winter fuel payment cuts for the elderly. The Resolution Foundation said Sir Keir could improve living standards for more people by ending the two-child benefit cap, a move that would raise average incomes for the poorest half of the country by £200. The number of children in relative poverty is set to hit a record 4.8m on Sir Keir's watch despite pledges to reduce it, the Resolution Foundation said. The think tank called for Sir Keir to fund the axing of the two-child cap by mounting a stealth raid on workers by extending the freeze on tax brackets. A Treasury spokesman said: 'Since July, real wages have grown more than in the entire first decade of the last government, our commitment to economic stability has helped interest rates to fall four times, we have protected working people's payslips from higher taxes, froze fuel duty, increased the national living and minimum wage and in the latest data, and real household disposable income per person is growing at its fastest pace in two years.'
