Labour’s hypocrisy on the ‘Granny Tax’

The response from Labour and the tabloids to yesterday’s Budget have majored on the patronisingly termed ‘Granny Tax’.

However Ed Balls and colleagues must be delighted that so far everyone seems to have missed that the last Government froze the Age Allowance between 2009-11 – or as Shadow Chief Secretary to the Treasury Rachel Reeves would term it Labour imposed ‘an enormous stealth tax for older people’.

* Sara Bedford is a local councillor on Three Rivers District Council and a member of the Lib Dem Voice editorial team.

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31 Comments

  • Nick (not Clegg) 22nd Mar '12 - 3:22pm

    As is evident from the responses to other posts on this topic, and from today’s newspaper headlines, you’re in a hole on this one. If I were you, I’d stop digging

  • When a pupil in one of my classes misbehaves i never accept ‘well they did it first ‘ as a defence. I tell them to take responsibility for their own actions. Labour may well be hypocrites but it doesn’t get you off the hook… 100 lines please ‘pointing at the faults of others doesn’t absolve me of responsibility’.

  • Nick (not Clegg) 22nd Mar '12 - 3:42pm

    “I’m … just pointing out that Labour are in no position to criticise.”

    Ah but they are, and they will. It’s called being in Opposition

  • Foregone Conclusion 22nd Mar '12 - 3:50pm

    I think we should defend this, vigorously, as part of intergenerational fairness. Nobody has yet made me a convincing argument as to why older people need an extra tax allowance. Indeed, if one bears in mind the various freebees they get, the fact that the state pension has increased with inflation, an increaser greater than most people’s wages, and the fact that they are less likely to have a mortgage or rent to pay or children to look after, it becomes increasingly perplexing why they are singled out by the tax system, other than for the cynical reason that they are more likely to vote. Furtheremore, the money for this is going largely to fund tax cuts for low and middle earners under 65, which is by far the biggest spending item in this budget, dwarfing the cuts to corporation tax and the top rate of income tax. Add to this the fact that poorer pensioners are unaffected and that, if we have our way, the allowance will increase further for everyone anyway, and I think that this is a sensible measure, albeit one that sounds very, very bad.

  • It is not just Tabloid newspapers that have led with this story, All the newspapers lead, in one way or another, on the ‘cut’ in allowances for Pensioners.

  • So presumably you expressed your support when Labour did not increase the allowance in one budget and are therefore completely consistent in your support for scrapping the allowances altogether, after all, a one off freeze and abolition is the same thing isn’t it?

    The quote you ascribe to Rachel Reeves, in your link, as evidence of Labour hypocrisy is actually one given by Ros Altmann, economist and director general of SAGA.

    Maybe it is tribalism that is not only clouding your judgement of what truly represents hypocrisy but also your ability to read.

  • Will Millinship 22nd Mar '12 - 4:02pm

    Whenever I see a comment that reads “when in a hole, stop digging” (or similar) without addressing the issue at hand, I often feel compelled to do the opposite, however there really is nothing more to add.

    Labour are acting as the worst types of hypocritical opportunists on this issue.

  • FC – “Indeed, if one bears in mind the various freebees they get, the fact that the state pension has increased with inflation, an increaser greater than most people’s wages, and the fact that they are less likely to have a mortgage or rent to pay or children to look after, it becomes increasingly perplexing why they are singled out by the tax system, other than for the cynical reason that they are more likely to vote.”

    And in the case of the boomers, jobs for life, full employment, massive house-price windfalls, index-linked final salary pension schemes, full maintenance grants and grammar schools; so I don’t think they’ve done too badly.

  • @Foregone Conclusion. Your opinion that your are not convinced that older people deserve a higher tax allowance is interesting, and perhaps has merit. I have never though, heard anyone from any political party question pensioners’ higher tax allowance before today. However, the most important point you make, politically speaking, is that the pensioner tax change “sounds very, very bad”. And so it does. All of today’s newspaper bear testament to this. I suspect that “intergenerational fairness” will not be an slogan that will attract many voters – from any age group.

  • Ummm, it would be politically prudent to paint this as an Osborne budget, particularly given it’s reception across the media spectrum. It’s a rare political disaster indeed that unites The Guardian, The Independent, The Telegraph and the Daily Mail, but Osborne has managed it.

    Best not to focus on so-called Labour hypocrisy lest somebody point to the beam in your own eye over the 50p rate and the utter lack of anything resembling a mansion or tycoon tax.

    FWIW, the ‘granny tax’ shouldn’t be particularly controversial as it makes a great deal of sense, unlike the cuts to tax for the rich, while the poor get a benefits cut. Frankly, you should be glad people aren’t (yet) focusing on that.

  • toryboysnevergrowup 22nd Mar '12 - 4:40pm

    Perhaps you should note that Labour froze everyones personal allowance, whatever their age, between 2009/10 and 2010/11 – and act that was then endorsed by the current regime in their first budget. Labour also put the tax rate up for the higher paid in 2010/11. I would have thought that is nearer to what most people would consider as us all being in it together – and people paying taxes according to their ability to do so. Please compare and contrast with the current budget where the winners are the well off who are given a tax cut, because of their efforts in avoiding/evading the 50p rate while pensioners are made to contribute more.

  • toryboysnevergrowup 22nd Mar '12 - 4:46pm

    I look forward to Sara’s condemnation of the reduction in the rate of tax to be applied to many bank bonuses from 50% to 45%
    http://www.libdemvoice.org/oakeshott-new-tax-only-way-to-end-bank-bonus-culture-21489.html

  • I don’t see why an older person on exactly the same income should receive a larger allowance. My parents (who aren’t grandparents despite the patronising nickname of this) own their house, pay no mortgage and have large savings. I pay rent and have no savings. Why their age alone should mean they would pay less than me our incomes were the same is beyond me. What’s more, if they *were* grandparents, I’d have a lot of child-rearing costs to fork out… I can see a case for helping poorer pensioners but I can see a case for helping poorer middle-aged people too – I don’t see why age makes a difference rather than just income.

  • Liberal Neil 22nd Mar '12 - 4:56pm

    For the record, the coalition raised the age related tax allowance by £450 last year and then by £560 this year. So at the point the freeze kicks in next year pensioners are already £200 a year better off in reduced tax on top of two good increases in the basic pension. Overall pensioners have done pretty well.

    There is a very good argument for equalisation of allowances in the long term, and the level will be higher than the age related allowance has traditionally been. The new, higher basic pension will be an improvement too.

  • Nick (not Clegg) 22nd Mar '12 - 5:05pm

    @ Orangepan

    “Sure, but there’s a difference between being in the profession of criticism and being credibile on the validity of those criticisms.”

    Great. A LibDem talking about “credibility” and validity”.: best joke of the day

  • My FT op-ed on why we should launch an assault on unjustifiable age-specific tax loopholes that go to people when they are wealthier than at any other stage of their lives: http://www.ft.com/cms/s/0/d49cd624-7414-11e1-bcec-00144feab49a.html#axzz1pt1OV44m. (Free, although you may have to register)

  • Malcolm Todd 22nd Mar '12 - 10:58pm

    What g said: “FWIW, the ‘granny tax’ shouldn’t be particularly controversial as it makes a great deal of sense, unlike the cuts to tax for the rich, while the poor get a benefits cut. Frankly, you should be glad people aren’t (yet) focusing on that.”

    Quite. We ain’t seen nothing yet.

  • It is difficult not to be infuriated with the manner in which the stealth granny tax was introduced and patronizing way it was explained. It is also sad to watch those trying to defend the indefensible as though we cannot distinguish between a right and an annual increment that may be marginally higher in some years. I can assure Mr Osborne that older people are no longer the passive fodder they were. Many are still working hard and they are unlikely to forget by the next election.

  • Kevin White 23rd Mar '12 - 8:34am

    As a Grandad, may I say how pleased I am that the “tax” is on Grannies.

  • Labour froze the Age Related Allowance but at the same time they made the super rich pay 50pence for every pound they earned over £150,000. Pensioners, in a time of austerity, perceived that as fair and so no-one made a fuss about it. The Tories and Liberal Democrats froze the Age Related Allowance and gave hundreds of millionaires a forty thousand pound tax handout. The Tories and Liberal democrats have also put three hundred thousand people onto higher rates of tax.That’s why you are in a hole and why you should stop digging. The Liberal Democrats are in government now. They should grow up and take responsibility for their actions. The Liberal Democrats should stop using Labour as an excuse for for the terrible things that they are doing to the people of this country.

  • Poorer pensioners are better off. Pensioners as a group are sitting on more wealth than ever before. #grannytax is overblown.

    I’m more interested in the general drift downwards of the threshold of the 40% rate.

    Personally I think that the 50p rate is a sideshow, the 40p threshold will affect far more individuals.

  • Malcolm Todd 23rd Mar '12 - 9:36am

    MacK “The Tories and Liberal democrats have also put three hundred thousand people onto higher rates of tax.”

    Hilarious. If Osborne just put up the personal allowance and left the higher-rate threshold untouched he’d be attacked (quite reasonably) on the grounds that the cut was worth more to higher-rate taxpayers than everyone else. Because he reduces the threshold to cancel out (or in the latest change, just to reduce) the benefit for higher-rate payers, he’s accused of putting thousands of people onto higher rates of tax. Can’t really win then, huh?

  • MacK (Not a Lib Dem) 23rd Mar '12 - 10:04am

    @Malcolm Todd

    Of course Osborne could have avoide obloquy,Malcolm, if he’d been honest with those 300.000 people who thought that they were about to gain a couple of hundred from the raising of the basic tax threshold and suddenly found they weren’t because he’d shifted the goalposts on them yet had given the hugely rich shedloads of cash. Those people who earn just over £40,000 are not well off but they are intelligent and they can see when they’ve been had. This Tory/Liberal Democrat budget is characterised by deviousness and dishonesty. And Nowehere is this more apparent than the Granny Tax to pay for a £40.000 handout on every million earned by the super rich, which is perceived by the British public as grossly unfair. Is it a coincidence that the latest You Gov puts the Tories at 34%, Liberal Democrats at 9% and Labour at 42%. ?

  • If the budget was intended to take out an unfair advantage enjoyed by pensioners then why was it sold as a ‘simplification’? If Osborne had stood up and explained it like this he may have taken some flack and you cannot deny there was an attempt to hide it. He managed to make a defendable policy the main headline of the budget.

    The arguments for the 50p have been made and I utterly unconvinced by the analysis

    Glenn comes it up for me – the whinging of ‘unfairness’ is becoming a bit tiresome. It is not the Labour Party who is causing these problems, it is your leadership and Coalition partners who have created this issue – not Labour. Of course the LP are opportunists but what do you expect? – remember the ‘pledge’?

  • While both Labour and the media did end up “majoring” on it, it’s notable they only did so after #grannytax became the trop trending term on twitter.

  • Before accusing Labour of hypocrisy you need to put things in context and tell the whole story. They froze tax allowances for everyone in 2010/11 but in 2008/09 the Age Related Tax Allowance was increased by a massive 19.6% – the biggest increase ever that more than compensates for the later freeze!

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