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The Conservatives have promised a £2.4bn tax cut for pensioners as they battle Labour for older voters.
Chancellor of the Exchequer Rishi Sunak has outlined plans to ensure that tax-free allowances for pensioners are increased every year, in line with the current “triple lock” system.
This means that the state pension and tax-free allowance for retirees – currently £12,570 – will increase in line with inflation, average earnings or 2.5% – whichever is higher.
The Conservatives said the policy, called “triple lock plus”, would cost around £2.4 billion a year by 2030.
Labour attacked the policy for not having cost estimates and accused the Conservatives of announcing pointless spending.
But the Conservatives say the money will be funded by plans to crack down on tax evasion and avoidance, which the party estimates could generate £6 billion a year in revenue by 2030.
Of the £6 billion, £1 billion has already been set aside to help pay for the new national service model announced by the Conservative government during the election.
It is unclear how much the first year of pensioner tax cuts would cost if Mr Sunak’s party forms the next government.
The Conservatives say the policy will give eight million pensioners a tax cut of around £100 next year, rising to nearly £300 a year by the end of this parliament.
The Bill will also ensure in law that pensioners’ personal allowances will always be above the level of the new state pension, which rose to £11,502 a year in April.
“This bold action shows we are on the side of pensioners – otherwise Labour would be making every full state pensioner subject to income tax for the first time in history,” Mr Sunak said.
This comes with a commitment to continue increasing state pensions every year in line with the triple lock.
Labour has also committed to keeping the triple lock in place, despite concerns about ballooning costs.
State pensions are expected to cost the government £124 billion in 2023-24, according to the budget watchdog.
Last month, Labour launched an advertising campaign targeted at pensioners who support the Conservative Party.
The announcement comes after senior party figures raised concerns that the Conservative government’s plans to abolish National Insurance contributions could have an impact on pensions and the NHS.
Recent polls show that the over-65 age group is currently the only age group in which the Conservatives lead Labour.
Labour’s shadow budget chancellor Jonathan Ashworth said the announcement was “nothing more than another desperate ploy by a confused Conservative party to burn away any remaining semblance of economic credibility”.
He added: “Labour will protect the triple lock, but Rishi Sunak will reward the loyalty of Britain’s pensioners with betrayal, just as he did with Boris Johnson and his own MPs.”