Torsten Bell

I apologise to the right hon. Member for underselling him, but I think that he is also underselling the work that this Government are doing. Changes to the flawed welfare system that we inherited are already taking place. In April, we reduced the financial incentive put in place by a previous Conservative Prime Minister that provided people with a strong incentive to label themselves as too sick to work and therefore did not provide them with any employment support whatsoever. We are bringing forward other measures month by month. Members will see progress in the next few months, in terms of offering people support if they hire young, unemployed people. Changes are happening right now. I have discussed the choices on the welfare side. Given the nature of the petition, I want to come on to how those choices include tax, because those who made the effort to sign the petition deserve to know where we stand. Not a single Member set out their views on the petition’s proposal clearly, but we owe some honesty about that for the quality of the debate. The reality is that no political party will deliver a doubling of the personal allowance for pensioners. If any Member disagrees with that, now is the moment for them to stand up and set out their support for the petition, but I suspect all Opposition Members will agree. Why is that? It would come at a very substantial fiscal cost of several billion pounds each year. That is inconsistent with the priorities I have set out, including on the state pension and the NHS, which I think most hon. Members share. Too often, debates on this topic do pensioners an injustice by pretending that most of them are not already paying income tax. The hon. Member for Bognor Regis and Littlehampton (Alison Griffiths) said a little about that, but the hon. Member for Wyre Forest (Mark Garnier) explained the situation exactly: the system, as it was set up, has always been that state and private pensions are taxable. The vast majority of pensioners are already paying income tax; over 80% of pensioners were doing so by the end of the previous Conservative Government. The question is whether we can keep the contribution that is asked of pensioners—and workers, for that matter—down by making other changes to our tax system. That is what the last Budget focused on: making the system fairer by asking those who can afford to contribute more to do so, not least by taxes on those with the most valuable properties. As he has done in many of our interactions, the hon. Member for Wyre Forest opposed some of the changes that we set out on inheritance tax, salary sacrifice and the rest, but that would mean less money for the NHS or higher tax rates on pensioners, workers and others—there are consequences to our choices. It is true that we have extended the personal allowance freeze that was put in place by the previous Government. That reflects the need to protect the state pension, rescue our NHS and make sure that public finances are put on a sustainable footing. I am not hiding from the consequences of that policy decision, but the UK has one of the most generous personal tax allowances in the OECD and the G7. It is important to note that our income tax system is progressive; it is not about just who comes into tax but how much tax people pay. Those who have more contribute more, which is exactly as it should be. The impact of the freeze is that higher rate taxpayers, on average, will contribute roughly three times as much as a basic rate taxpayer; the majority of pensioners who pay tax do so at the basic rate or not at all. Although I have been honest that doubling the personal allowance for any particular group is not a remotely realistic prospect, our tax system recognises pensioners. The hon. Member for Berwickshire, Roxburgh and Selkirk mentioned the 2010 Government’s record on the triple lock, but he slightly missed the abolition of the age-related personal allowance, a very generous version of which the petition calls to have brought back. The hon. Member for Witney (Charlie Maynard) praised the coalition Government but somehow also forgot to mention the abolition of the age-related personal allowance. Our tax system recognises pensioners in other ways, not just by that position, which was abolished under the coalition Government. As the hon. Member for Wyre Forest set out, those over the state pension age pay no national insurance. Older generations also tend to benefit most from the multiple tax allowances, not least the £1,000 savings allowance for basic rate taxpayers. The personal allowance will continue to exceed the basic state pension and the full new state pension this year, but, as several hon. Members have set out, the Chancellor has also promised that we will ease the administrative burden for pensioners so that they do not have to pay small amounts of tax via simple assessment from 2027-28. I have heard hon. Members’ requests for more detail on that in the near future, and the direct answer to the question from the hon. Member for Wyre Forest is that those changes will be included in the forthcoming Finance Bill. I recognise the substantial support for the petition, which is as it should be. Pensioners who have worked hard all their lives deserve a decent retirement. The best way to deliver that is for this Government to continue their work to rescue the NHS and increase the state pension throughout the course of this Parliament, and, as we look to future generations of pensioners, to put in place a stronger private pensions system. That is what the Pensions Commission is looking at right now, which I think has cross-party support, because we want to know that tomorrow’s generations of pensioners will also look forward to the retirement we all want to see them enjoy.