Budget 2021: Victoria Scholar discusses announcement
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The Chancellor’s £150 billion spending plans will have shocked those who thought the Government’s finances were in a mess after the pandemic. They will be wondering why he found it necessary to hike taxes in his March Budget and again in September, only to go on a splurge today.
Yesterday Sunak pumped money into the economy, as Victoria Scholar, head of investment at Interactive Investor, explains in our exclusive video (see above).
Yet on closer inspection, one group was left out. Pensioners on fixed incomes who face a surge in food and fuel bills as winter looms and the cost of living crisis bites.
They will feel now feel even more aggrieved by Sunak’s decision to scrap the state pension triple lock.
The State pension will rise by 3.1 percent next April, but with inflation set to top 4 percent, that is a cut in real terms.
Making matters worse, pensioners spend a higher proportion of their income on essentials such as home energy and food, which are rising fastest of all.
They face a hard and cold winter, yet Sunak failed to announce any help for millions struggling to pay surging gas and electricity bills.
The Warm Home Discount electricity rebate for those on pension credit or low incomes remains fixed at £140. It has effectively been wiped out by the £139 rise in October’s energy price cap.
Worse, the energy cap is likely to rise again next April, possibly by as much as £300. The Warm Home Discount won’t.
The Winter Fuel Payment for pensioner households has not changed since 2011. It stays at £200 for those under 80 and £300 for the over 80s.
Yet Sunak somehow managed to find £150 billion yesterday. It’s a shame none of this went towards sparing pensioners a winter shivering at home. Some may not survive.
Prudent-minded pensioners will have another worry. Sunak insisted that “by the end of this Parliament, I want taxes to be going down not up”, but many will be sceptical after yesterday’s spree.
The Chancellor seems addicted to spending taxpayers’ cash.
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He has lined up an awful lot of spending commitments, and the economy must soar if he is to fund them without fresh tax hikes.
The nation’s pension wealth may have escaped yesterday, but it remains a tempting target for the Treasury.
There was no pensions tax raid yesterday, as many feared. The pensions lifetime allowance was not cut again, nor was tax relief on pension contributions reduced.
Reports that the Chancellor might impose inheritance tax on pension wealth also proved wide of the mark.
That may change when the bills from Sunak’s spree start rolling in.
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