An Ed Balls up on benefits for rich pensioners

I am used to David Cameron shooting from the hip with knee jerk, ill thought out policies to respond to public opinion but I thought that Ed Balls would be cleverer than that.

Ed Balls 2

David Hencke is a British investigative journalist and writer

I am used to David Cameron shooting from the hip with knee jerk, ill thought out policies to respond to public opinion but I thought that Ed Balls would be cleverer than that.

Evidently not. His latest pronouncement promises to save £100m by withdrawing winter fuel payments from pensioners who pay higher rates of tax. Labour expected this to show they are being tough on the rich and offering savings. Actually it will do neither.

As a punter and pensioner who pays higher rate tax because my freelance earnings top up my pension I expected to be one of the people targeted by Ed Balls. In fact it will have zilch effect, a load of old Balls if you like.

Let me explain why. The fuel allowance is currently paid to individual pensioners with a cap of £200 per household. So for a start I only receive £100 of fuel benefit. The other £100 goes to my wife, also a pensioner, who is a standard rate taxpayer. So his planned saving will be halved anyway in my case.

But it is actually worse than that. My wife became a pensioner before me and was entitled to the full household fuel allowance in her own right. So when I was on The Guardian, our household was receiving then a £250 fuel subsidy for a short time. What will happen under the Balls changes is that my wife will get back the full benefit of £200 – so we will still continue to receive exactly the same subsidy.

I suspect I am not alone. I know of many people around me in the shires, where in traditional families of that generation the main earner is the male who may well pay high rates of tax. His spouse who brought up the children, and did part-time work instead, would be a standard rate taxpayer. These wealthy households will continue to get the subsidy.

Now Ed Balls could get round this by imposing a household cap equivalent to the income level set by the higher rate of tax. But if he does this he will run into fresh problems.

The text of his speech reads:

“Can it really remain a priority to pay the Winter Fuel Allowance – a vital support for middle and low-income pensioners – to the richest 5 per cent of pensioners, those with incomes high enough to pay the higher or top rates of tax?

“We believe the winter fuel allowance provides vital support for pensioners on middle and low incomes to combat fuel poverty. That’s why we introduced it in the first place.”

If he does this he will have misled people in this speech because this would mean that two pensioners with say a combined income of £44,000 will lose the allowance – extending the cuts  right into the middle-income group – the so-called “squeezed middle”. Millions more people will be hit than Labour claims. Or he could change the entire tax system going back to household not personal incomes, which would be enormously costly.

This proposal seems typical of a metropolitan political elite. Ed Balls and Yvette Cooper are both high rate taxpayers – just like David and Sam Cameron – and would expect to be hit when they reach retirement age – probably 75 by then. But the rest of the country is nothing like that.

So Ed you have a choice. Unless you have a genuine breakdown of where you will get this £100m – perhaps the Revenue gave you access to their tax returns – you have got this wrong. Either it will raise much less than you think or you will have to remove the fuel benefit from far more people than you have said.

Back to the drawing board I think.

5 Responses to “An Ed Balls up on benefits for rich pensioners”

  1. JezC

    This is committing the cardinal sin of extrapolating from your own experience to society at large. Do you have all the figures you need to back up your argument?

  2. Mason Dixon, Autistic

    No, he’s using his own experience to explain a simple fact of math. The relevant details are right there and easy to understand.

  3. JezC

    Can he produce data to support his arrogant assertion that Ball’s 100M figure is wrong? He assumes that Ball’s’ didn’t take circumstance like his own into account when coming to the total of 100M. There.is no relevant maths in the article.

  4. Mason Dixon, Autistic

    The figure is not Balls’, it was calculated by the Civil Service, hence the Conservatives already had the same figure ready in their response at the beginning of the week. But they appear to have been simply asked to do this equation: WFA expenditure / 5%.

    The forecast expenditure for 2015/16 is around £2 billion, 5% of that is…£100 million.

    So unless by sheer coincidence proper calculations render the exact same figure as the ‘back-of-a-fag-packet’ ones, they probably are from the back of a fag packet.

  5. David Hencke

    JezC, Mason Dixon, Autistic seeing your exchange. here are the facts direct from the Revenue press office. They have an estimate of the number of higher rate taxpayers who are pensioners.. My additional question was: . Do HMRC have figures of how many higher rate taxpayer pensioners are married and whether you know how many higher rate pensioner taxpayers are married to standard rate taxpayers or how many higher rate taxpayer pensioners are couples?.
    Their answer is that they do not collate figures to that level.
    So there are no maths because the government doesn’t collate the maths. This makes it pretty clear that Ed Balls can only have used the overall Revenue figure of the number of higher rate taxpayers who are pensioners. It is then certain -as I have also checked with Department of Work and Pensions who don’t have figures either- that the savings is a guessimate and does not take account of people in my position. Unless of course Ed Balls has access to every pensioners tax return – which I very much doubt.

Leave a Reply