BudgetMar 16 2023

Starmer: LTA abolition 'huge giveaway' to the wealthy

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Starmer: LTA abolition 'huge giveaway' to the wealthy
(Aaron Chown/PA Wire)

In response to the Spring Budget, Labour leader Sir Keir Starmer said although a fix for doctors was needed, abolishing the lifetime allowance will only benefit the very wealthy.

Speaking in the House of Commons yesterday (March 15), the leader of the opposition party criticised the new pensions and tax changes in the Budget, saying a succession of Conservative governments has left the British economy “the sick man of Europe once again”.

“The Tory cupboard is as bare as the salad aisle in our supermarkets: the lettuce may be out, but the turnips are in,” Starmer told MPs in response to the Spring Budget.

Referring dismissively to last September’s “kamikaze” budget, Starmer said that chancellor Jeremy Hunt’s opening boast boiled down to “things aren’t quite as bad now as they were in October last year”. 

Pensions and tax

Starmer said that Hunt’s announcement to abolish the pension lifetime allowance will benefit only “those with the broadest shoulders”.

“We needed a fix for doctors but the announcement today is a huge giveaway to some of the very wealthiest,” he said.

“The only permanent tax cut in the Budget is for the richest 1 per cent. How can that possibly be a priority for this government?"

And on Hunt's tax changes, Starmer said, “real stability means tax doesn’t go up and down like yo-yos”. 

Claiming that Conservative governments have changed corporation tax 22 times during their long period in power, he warned that businesses will question how long it will take before the wind blows in the other direction again.

Hunt could have used “sensible” taxation policies on non-doms to relieve the tax burden on working people, Starmer said, separately adding that Conservatives had missed the opportunity for a proper windfall tax. 

“Even the former CEO of Shell admitted that they should be paying more,” Starmer said.

The chancellor’s commitments

Yesterday the chancellor scrapped the pension lifetime allowance and uplifted the money purchase annual allowance to encourage people to stay in work longer.

He also increased the pensions annual allowance, changed rules around cryptoasset tax returns, and doubled the tax fraud prison sentence.

The OBR said the UK narrowly avoided a technical recession, signalling a retreat from its gloomy November forecasts, and from Hunt’s admission at the last financial statement that the country’s economy was already in recession.

But debt will fall by “only the narrowest of margins in five years’ time,” the OBR added after the chancellor’s speech 

The near-term downturn is set to be shallower, the OBR said; the budget deficit will be lower but “persistent supply-side challenges remain”. 

Starmer decried what he said had been a year of stagnation, with “non-existent” growth and the worst-performing country in the G7, a figure confirmed by the OBR.

Real wages

Starmer said the government cannot continue blaming its economic woes on the war in Ukraine.

Wages in this country are lower now in real terms than they were 13 years ago, he said, comparing the UK’s average wage unfavourably with France and Germany - countries which “faced the same war”.

“The war didn’t ban onshore wind. The war didn’t scrap our home insulation scheme. The war didn’t run down our gas storage facilities. They did.”

The Institute for Fiscal Studies tweeted that real disposable household income is undergoing its largest fall “in living memory”, set to drop by 3.7 per cent this financial year, and an extra 2 per cent next year.

“Of course more money in the system is obviously a good thing,” Starmer said, responding to Hunt’s promise to provide up to 30 hours a week of free childcare for children as young as nine months, instead of three and four-year-olds under the current policy. 

But he questioned when, and how, the party in power will implement the new policy.

“We’ve seen the Tories expand so-called free hours before. And as parents up and down the country know, there’s no point in free hours if you can’t access them.”

Speaking about energy costs, Starmer said that even with the price guarantee, the average energy bill has "doubled in 18 months".

Hunt extended energy bill support to households for another three months, freezing it at £2,500 a month, but Starmer said there was still “no real ambition on the clean energy that will give us cheaper bills”.

Starmer ended his speech punctuated once more by cries from the chamber: "A country set on a path of managed decline, falling behind our competitors, the sick man of Europe once again.”