David Cameron’s announcement yesterday that the next Conservative Government will abolish income tax on basic-rate taxpayers’ savings and increase pensioners’ personal allowance by £2,000 has met with predictable hostility from Labour. Yvette Cooper, Chief Secretary to the Treasury, appeared on BBC News last night to denounce the policy as one that would not help most pensioners and would take money out of the economy when more spending was needed.
I don’t know how many pensioners Miss Cooper speaks to, but I can say from my own experience that she is entirely wrong. At one of the many church carol services I attended before Christmas, several older people approached me, unprompted, to say how worried they were about getting through the winter, as they watched the return from their savings plummeting. They will undoubtedly be pleased by what David Cameron had to say. Gordon Lishman, director general of Age Concern, has also welcomed the announcement.
As Chancellor, Gordon Brown caused untold damage to the interests of a whole generation of pensioners when he abolished advance corporation tax relief for pension funds. At least £5 billion a year, which should have been applied for the benefit of pensioners, has been diverted by Labour to other, often wasteful, items of public expenditure.
Now pensioners see the value of their taxed savings eroded to the extent that, before long, they will receive virtually no income from them and will have to resort to capital. These people feel betrayed, and with good reason, because they have been.
Cameron is therefore entirely right to promise to help an important section of the community, who take the view, quite rightly, that for all his rhetoric about prudence, Gordon Brown has rewarded theirs with a kick in the teeth.
