28 May 2024

Rishi Sunak proposes tax cuts for pensioners in new UK election pledge

12:07 pm on 28 May 2024
Britain's Prime Minister Rishi Sunak speaks with students' parents during a visit at the Haughton Academy in Darlington, north east England, on January 29, 2024 to outline plans for the banning of single use vapes. The UK will introduce legislation to ban disposable e-cigarettes in order to tackle a rise in youth vaping, announced Britain's Prime Minister Rishi Sunak on January 29, 2024 during a visit to a school in Darlington. Health experts welcomed the proposal, with Chief Medical Officer Chris Whitty saying the legislation would have "a major public health impact across many future generations". (Photo by Ian Forsyth / POOL / AFP)

Rishi Sunak. Photo: IAN FORSYTH

British Prime Minister Rishi Sunak on Monday proposed tax cuts for millions of pensioners in his latest campaign pledge, highlighting the importance of older voters in the upcoming July election.

Sunak's Conservative Party said it would introduce a new age-related allowance and deliver a tax cut of around £100 (NZ$207) for each of 8 million pensioners in 2025, rising to almost £300 a year by the end of the next Parliament.

"This bold action demonstrates we are on the side of pensioners. The alternative is Labour dragging everyone in receipt of the full state pension into income tax for the first time in history," Sunak, who last week called a general election for 4 July, said in the statement.

The number of pensioners in Britain rose by 140,000 to 12.6 million in the year to February 2023. Close to 50 million Britons will be eligible to vote in the election, which opinion polls predict is likely to end 14 years of Conservative rule in the country.

The Conservative Party said the proposal comes alongside its commitment to the so-called triple lock, which guarantees increases to publicly funded pensions by the level of earnings, inflation or 2.5 percent, whichever is highest.

Labour has also committed to retain the policy, which was introduced by a Conservative government in 2011 to prevent pensioners from falling into poverty.

However, costs associated with it have come under increased scrutiny in recent years after British inflation soared, pushing up the government bill for state pensions by an additional £11 billion (NZ$22.7b) last year.

The new proposal, which the party termed "triple lock plus", will cost £2.4b (NZ$5b) a year by 2029/30 and be funded through the government's previously announced plan to raise an extra £6b (NZ$12.4b) a year by clamping down on tax avoidance and evasion, the party said.

"This is just another desperate move from a chaotic Tory party torching any remaining facade of its claims to economic credibility," Labour shadow paymaster general Jonathan Ashworth said in a statement on the plans.

The paymaster general falls under the Treasury and acts as a banker for most government departments.

- Reuters

Get the RNZ app

for ad-free news and current affairs