Andy Burnham may have struck on a vote-winning strategy. And it would benefit pensioners too.
Pensioners should beware Andy Burnham bearing gifts (Image: Getty)
Yesterday, it emerged that the PM and Chancellor John Healey were working on a plan to increase the personal allowance by £3,000 to £15,570. The Tories froze the tax-free allowance at £12,570 from 2022, and thanks to former chancellor Rachel Reeves, it will remain frozen all the way to 2031. Or maybe not. Now there’s a chance that Burnham will be lift the freeze, which is set to drag millions into higher tax brackets, including pensioners. This would be a huge move costing an estimated £20billion – but it would also be massively popular.
Under the plan, put forward by Labour donor Dale Vince, whose £6million in donations Labour happily trousered, the personal allowance wouldn’t just be unfrozen. It would be lifted to roughly what it would have been if the freeze had never been introduced. It would be a massive boost for millions of taxpayers, lifting the income of the poorest fifth of workers by an estimated £600 a year.
Yesterday, I argued that this bold move could sweep Burnham to a snap election victory, possibly as soon as November. Given that Britain now faces a renewed cost-of-living crisis, it makes sense for him to go to the polls early, before his early bounce totally fades. Labour has scant support among pensioners, who have witnessed the damage done by Labour governments over the decades, but increasing the personal allowance would have one massive benefit for them too.
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Next year, the new state pension looks likely to increase by 3.9% under the triple lock, to around £13,036. That would put it roughly £466 above the frozen personal allowance, triggering a £93 tax bill. That will increase for every year the freeze continues while the state pension rises.
It’s daft. So daft that Reeves promised a workaround so pensioners living solely on the state pension won’t have to pay tax. But it would leave anybody who had just £1 of income from other sources, whether a personal pension, savings account or part-time job, facing a cliff edge where their state pension becomes taxable.
So far, Labour hasn’t said how the tax break would work, probably because it doesn’t know. Another Reeves masterstroke. Under Burnham’s plan, that problem disappears, as the new state pension would once again sit comfortably below the personal allowance.
The more I look at this idea, the more cunning it seems. The Tories and Reform will struggle to combat it. They might even copy it. But there are problems, and one in particular could deter pensioners from getting behind it.
The first is that it would be funded partly by increasing capital gains tax, which be bad for jobs and growth by deterring investors and entrepreneurs. What’s the point of building up a UK business if you only get to keep a tiny part of your gains?
Vince reckons hiking CGT will bring in £14billion, but HMRC projections suggest it could cut tax revenues, as people decide to hold onto assets, hoping the hike will one day be reversed. He also wants to stop high street banks earning interest on money they park with the Bank of England. There are issues with that too. But for pensioners, the biggest threat is this. What would happen to the triple lock if Andy Burnham was PM for five more years?
The triple lock is massively popular and has helped hard-up pensioners survive the cost-of-living crisis. But it’s coming under increasing pressure, including from left-wing activists, who want more help for younger people. A higher personal allowance would be a win. But if pensioners lost the triple lock, the loss could be much, much bigger.
Burnham could give with one hand, and grab back something more valuable with both of them. So let’s watch this carefully. Very carefully.
Migrants just received £11.9bn of Universal Credit – that’s not even most shocking thing
Migrant households have been handed more than £10bn in Universal Credit, Aaron Newbury reveals how Andy Burnham could turn that to his advantage.
Andy Burnham (Image: Getty)
How long can a state last when the number of those financially dependent on it exceeds the number contributing to its coffers? Such a question surely must not be far from the minds of our political leaders. After all, the data from the Office of National Statistics (ONS) reports make it seem as if the cliff’s edge is fast approaching.
Earlier this year, the scale of the benefits crisis was laid bare when statistics revealed that about 53.3% of the population take away more than they pay in. Yet as ever, it appears misery begets misery, and for the boffins of Whitehall, the latest development in that miserable state of affairs only deepens the challenges they must overcome.
Now, Daily Express readers are faced with the stark reality that the amount of British taxpayers’ cash handed out to foreign nationals in Universal Credit has broken £10billion. That means around one in every six households that received the handout are foreign nationals, which has predictably sparked fury from the Conservative benches, and sent Reform UK’s contingent into a tizzy.
If those on the Labour side cannot fathom why this might be, they might want to head to their constituencies and ask their voters what they make of it. Those Britons might make note of the fact that the bill has soared by some £4.4bn in just two years – something which leaves many questions yet to be answered. It’s shocking.
Even as rumours swirl in Westminster that the Treasury is greedily eyeing further ways to improve its finances at the expense of our own, we are being told that billions are being spent on those born on other shores.
Few in the UK believe a safety net for the unfortunate should be removed. But many will baulk at the idea that those born overseas should benefit from the work and taxation of working Britons.
We are hardly a country that can boast of a vastly productive economy, coffers overflowing with rivulets of wealth, and all the domestic ills put soundly to bed. Speak to anyone, and they can tell you of lacklustre transport, underfunded local services and an NHS ever hungry for further investment. That’s not to mention the black hole in the national defence budget, which has led to alarm bells from former defence chiefs warning that the country is defenceless.
Before contemplating which other taxes to increase, Andy Burnham and his newly minted Chancellor, John Healey, would do well to take even a cursory look at the excessive abuse of the benefits system. While that goes against the natural instinct of the socialist, who are ever loath to suggest that the instruments of government may well be out of tune with the rest of us, it would serve them well.
Yes, a broader sweep through the ruinously expensive welfare state, the seeds of which were planted and watered by successive Labour governments, is needed. But I fear it would be foolish to think Eyelashes Andy is the man to do it.
His own particular brand of popularity, which, like most socialist operators, consists of taking from the productive to fund ever-growing handouts, prohibits a more constructive look at the system. He still has an easy win before him.
At the stroke of a pen, Mr Burnham could command that foreign nationals cannot receive Universal Credit. Undoubtedly, this would agitate the London lawyers, who would swiftly tut and huff dissapointedly, but it would be well received by the millions of hard-working Britons who struggle with the question: Why should my taxes be handed to foreign recipients?