Criticism has arisen regarding the economic plans announced in Jeremy Hunt's Spring Budget, particularly concerning the detrimental effects on pensioners' finances.
Economists have uncovered a concealed "disgraceful £8 billion pensioner tax bombshell" within the budget's fine print, highlighting significant repercussions for older individuals. Despite the Chancellor's proposal to reduce National Insurance by 2p next month, aimed at bolstering voter support and improving the Tories' poll ratings, experts argue that pensioners will bear the brunt of these measures.
The Resolution Foundation's analysis revealed that approximately 8 million pensioners are set to experience an average tax increase of £1,000 by 2027/28, primarily due to frozen income tax thresholds. Unlike workers who benefit from the Chancellor's tax cuts, pensioners, who do not pay National Insurance, are adversely affected by covert tax adjustments affecting income tax.
Since 2021, income tax thresholds have remained frozen, leading to more individuals being pushed into higher tax brackets due to inflation. Consequently, pensioners, including those reliant on pensions, are subject to taxes on income exceeding the personal allowance. By 2027/28, pensioners in the basic income tax bracket are estimated to be £700 worse off, while the average tax-paying pensioner stands to lose approximately £1,000. Cumulatively, these policy changes are expected to increase taxes for pensioners by a staggering £8 billion.
Torsten Bell, Chief Executive of the Resolution Foundation, underscored the disproportionate impact on pensioners, labeling them as the primary losers, with those aged over 65 and on higher incomes set to suffer the most. Similarly, Paul Johnson, Director of the Institute for Fiscal Studies (IFS), highlighted the significant financial implications for elders, emphasizing the focus on working-age individuals in the Chancellor's budgetary allocations.
Criticism from opposition figures, such as Liberal Democrat Treasury spokesperson Sarah Olney, and Dennis Reed, leader of the Silver Voices campaign group, reflects public concern regarding the lack of support for older citizens facing financial hardship. The Resolution Foundation's findings further highlight a resurgence of austerity measures under the current government, with projected decreases in living standards marking a concerning trend in modern history.
With disposable income expected to decline by 0.9%, concerns are raised about the impending budgetary challenges and the necessity for substantial spending cuts in unprotected sectors. The silence from both the government and opposition regarding public spending after the election has sparked apprehension among economists, who anticipate difficult decisions ahead to address the growing fiscal deficit and safeguard public services. Photo by Marg, Wikimedia commons.
