Finance (No. 4) Bill

Debate between Margot James and Graeme Morrice

Thursday 19th April 2012 Commons Chamber

[Margot James]

I am sorry, but I will not take any more interventions.

As a result of that Government pledge, there will be no cash losers from this allowance freeze. We have protected universal benefits, with the single exception of not renewing the temporary increase of £100 in the winter fuel payments. We have protected all the other universal benefits, however, as we promised to do. Some 600,000 of the poorest pensioners have received a warm home discount of £120 extra to help with their fuel bills. We have also frozen council tax for two years running. Council tax has been a bone of contention among older people, many of whom have been hit hard by increases in it over the past decade. We have also protected, and increased slightly, the budget for the NHS. As we all know, older people account for more of that expenditure than any other group and they will benefit disproportionately from the NHS budget increase.

I have already made the point that freezing this allowance will entail a cost of, on average, £84 a year. I accept that that is not a derisory amount for someone living on an income of just over £10,000 a year. However, 5 million pensioners will not be affected by this measure. In fact, the Joseph Rowntree Foundation, an organisation that Labour Members sometimes cite, has said that the media coverage has lost all perspective on this matter, stating that

“you would think it’s doomsday for older people…I’m not sure. I think we’re losing perspective on phasing out the Age-Related Allowances”.

It makes a number of good arguments as to why it takes that view.

In conclusion, I must say that I have received very few critical letters on this subject from pensioners. The vast majority of older people in my constituency are more concerned with the prospects for their grandchildren; the average age of a new home buyer is now 38. They might not have read “The Pinch” by my right hon. Friend the Minister for Universities and Science, which was published two years ago, but he pointed out, among many other things, that those in the generation born after 1970 are the first not to be able to look forward to a better standard of living than their parents. That point is felt keenly by many older people in my constituency. Although they cannot easily increase their income, they accept that their grandchildren are facing a different future from the one they faced. Unlike the Labour party, they know that the alternative to facing down this deficit, with everyone making a contribution to that strategy, is the further impoverishment of their grandchildren, and that is not a price that they are willing to pay.

[Graeme Morrice]

I am conscious of the time, Mr Bone, so I will keep my speech short. May I start by congratulating my hon. Friend the Member for Leeds West (Rachel Reeves) on her excellent introductory speech? What she said clearly reflects the views of Labour Members.

The Chancellor’s granny tax is certainly the aspect of the Budget that has caused the most anger among my constituents. As we now know, the Chancellor’s plans, which were buried in the Budget smallprint and described as a “tax simplification”, will mean that 4.4 million pensioners who pay income tax will lose an average of £83 per year next April, with people who turn 65 next year set to lose the most, at up to £322. This measure will affect pensioners on modest incomes of between £10,500 and nearly £30,000, with pensioners on incomes above the higher threshold being unaffected by the change. The pensioners in my constituency I have spoken to about the granny tax are really angry about the Chancellor’s decision to hit them in this way. It seems obvious to them that it cannot be right that while putting up taxes for pensioners, the Government are giving the rich a tax cut. My constituents simply cannot understand why, after they have worked hard all their lives, the Chancellor is now targeting those on low and middle incomes in retirement in order to fund a tax cut for millionaires. As one constituent put it to me recently,

“I sincerely hope you and your colleagues do not support this granny tax and you fight for all our pensioners who worked all our lives to help this country. I am 71 years old and thought I had seen it all, but this is the pits, so do your job and kick this out.”