Robbing your pension to pay for your health: Philip Hammond’s latest attack on working people

Philip Hammond: It’s such a giggle paying for your failed economic policies with other people’s pensions, isn’t it?

You know a Tory policy idea is pants when even the right-wing papers are panning it – and both the Express and the Daily Mail have pummelled this one.

It’s also yet another indication of the devastating failure of Tory austerity policies.

I’ll explain:

Tory Chancellor Philip Hammond needs to find £20 billion by 2024, in order to meet a pledge by his government to increase funding for the National Health Service.

He can’t use normal tax receipts to pay for it because there isn’t enough in the annual tax take – that’s the failure of Tory austerity policies. They said they would reduce the national debt but instead they have doubled it, meaning significant amounts of government tax income are diverted into interest payments.

The government currently pays £48 billion per year servicing the national debt – more than twice as much as Mr Hammond needs. The money simply isn’t available to him if he continues to pursue austerity policies – and he has insisted that this is what he will do.

So he wants to raid the future pensions of every working-age man and woman in the United Kingdom instead.

In order to encourage everyone to pay into a pension pot, the government offers tax relief on the amount people set aside for their retirement. It uses the rate of Income Tax you pay to calculate how much tax relief you get.

This means that, if you want to pay £100 and are paying 20 per cent Income Tax, you only need to pay £80 and the government pays the rest. If you’re paying the higher rate of 40 per cent, you only need to pay £60.

This only applies to payments of up to £40,000 every year. There’s no tax relief on sums paid above that amount.

Mr Hammond is considering either cutting the rate of pension tax relief, or cutting the tax-free annual allowance.

Either way, if you’re a working-age citizen of the UK, you’ll have less money in your pension fund by the time you want to start drawing it out.

Hammond will probably present it as a fait accompli – if you want the NHS to continue functioning (and remember, that service has only fallen into difficulties after the Tories allowed private companies to cherry-pick profitable services for them to provide at a high cost to the taxpayer) then you must accept poverty in retirement.

It isn’t true, though.

He could try expansionist economic policies that would build up the tax take – or he could close down the tax havens that currently hold more than £498.2 billion, according to recent research.

But he’s not going to. Why not?

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4 thoughts on “Robbing your pension to pay for your health: Philip Hammond’s latest attack on working people

  1. Simon Cohen

    Indeed. We need a return to Keynseian economics where ‘spending creates income.’

    Austerity can’t work because it is logically flawed and in reality designed to prop up vested interests (banking and asset bubbles).

    The reality is the Government cannot be short of money because it can always issue bonds which are a form of money and a financial asset. We are different from the Eurozone countries because we have our own currency and can issue it so there is no real financial constraint except real resources and inflation.

    It is private debt that is the real issue, not Government debt but they won’t tell you that because it’s not good for their mates in the financial sector. The Central bank cannot run out of money because it issues it. If anyone is in doubt about this watch these two short video clips where Alan greenspan ( a righ winger) the ex Fed head and even Mario Draghi (ECB chief also neo-liberal) both admit that there cannot be a shortage of money if you are a currency issuer:

    The Government could put billions into the economy at present with zero inflation risk – they won’t because it messes up all their vested interests.

  2. Christine Bergin

    Given the amount of tax given as tax breaks to businesses and the already wealthy I am certain there is plenty of scope to rescind some of those instead of filching from the already barely managing. Just use some imagination.

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