Finance (No. 4) Bill

Debate between Rachel Reeves and Baroness Clark of Kilwinning

Thursday 19th April 2012 Commons Chamber

[Rachel Reeves]

I thank the hon. Gentleman. His constituents have had a hard time in the past few days. Older people will be hit by the changes to pensioners’ tax allowances, and of course the pasty industry in Cornwall and the south-west will be hit hard, so there is a double hit for his region.

We need to remember the situation that most pensioners face. They do not have ways of making up for a loss of income by going out and finding work. That is what it means to be retired. They are therefore particularly vulnerable to rises in the cost of living and to unanticipated changes in their financial circumstances. The Office of Tax Simplification report notes that the current age-related allowance was

“introduced to reflect potentially higher costs of living of older people.”

That was why Winston Churchill introduced it in 1925. As the OTS has stated:

“Older people can struggle to meet living costs. They are often on a fixed income once they have retired, or perhaps on a declining income in real terms where flat annuities have been purchased”.

[Katy Clark (North Ayrshire and Arran) (Lab)]

I understand that one reason why the age-related allowance was originally introduced was the higher cost of heating when people are older. Does my hon. Friend agree that that is particularly important now given the rising cost of fuel, and even more so in parts of the country where the weather is worse, such as the north and Scotland?

[Rachel Reeves]

It has been pretty cold in my constituency in Leeds this winter, as well. My hon. Friend is right to make that point, because people face many extra costs as they get older, such as in heating their home.