Why Osborne’s "granny tax" makes sense

It is right for older people to contribute to deficit reduction.

Today's newspapers are full of predictable criticism for George Osborne's only Budget surprise - removing the higher tax allowances enjoyed by people aged 65 and over. The Chancellor has bungled this announcement, slipping it into the budget statement as a 'simplification' when it is clearly a tax rise of around £200 a year for millions of pensioners. But is it really such as a bad idea?

Older people have been relatively protected from the spending cuts imposed by the coalition. The young have taken the brunt of the pain, seeing an end to their educational maintenance allowances and the scrapping of the Future Jobs Fund. Youth unemployment has topped 1 million, the highest since records began. Working families have already seen their budgets stretched as tax credits for low earners are frozen and support for childcare reduced. Many older people enjoyed windfall gains from the house price boom that has priced many younger families out of the market.

This is not a crude argument that pits young against old. But as the population continues to age, putting extra pressure on public services, parties on all sides will have to make tough choices about tax and spend. Asking older people to contribute to tackling the deficit and shoring up the country's tax base in the long-term is not unreasonable. This is particularly true if we bear in mind that only a fifth of pensioners are poor - retirement no longer means the life of poverty that it might have a hundred years ago when the higher allowances were introduced.

"Granny tax": which pensioners lose out?


Removing the age-related allowances also makes sense because, on average, it takes much more from better off pensioners. It is true that the wealthiest fifth of pensioners do not lose much. They are not entitled to the higher allowances, which are reduced as income rises above £24,000. But IPPR analysis shows that the poorest fifth also lose very little. Most have incomes below the allowance so will not be affected by the freeze. The chart above shows that the biggest losses will be felt by the second richest fifth of pensioner households (those in the 4th income quintile). They are more likely to have two pensioners with incomes above the allowance but below the income limit.

Osborne's pleas of simplification have not played well, but he is right that age-related allowances add huge complexity to the tax system. This is important because it means that many pensioners do not even claim the higher allowance they are entitled to. An official report in 2009 estimated that 3.2 million older people failed to claim the extra allowance they were entitled to, which is over half of all older taxpayers. There are simpler and better targeted ways of supporting pensioners struggling on low incomes, that do not rely on people claiming complex allowances.

Kayte Lawton is a Senior Research Fellow at IPPR

Kayte Lawton is senior research fellow at IPPR.

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When will the government take action to tackle the plight of circus animals?

Britain is lagging behind the rest of the world - and innocent animals are paying the price. 

It has been more than a year since the Prime Minister reiterated his commitment to passing legislation to impose a ban on the suffering of circus animals in England and Wales. How long does it take to get something done in Parliament?

I was an MP for more than two decades, so that’s a rhetorical question. I’m well aware that important issues like this one can drag on, but the continued lack of action to help stop the suffering of animals in circuses is indefensible.

Although the vast majority of the British public doesn’t want wild animals used in circuses (a public consultation on the issue found that more than 94 per cent of the public wanted to see a ban implemented and the Prime Minister promised to prohibit the practice by January 2015, no government bill on this issue was introduced during the last parliament.

A private member’s bill, introduced in 2013, was repeatedly blocked in the House of Commons by three MPs, so it needs a government bill to be laid if we are to have any hope of seeing this practice banned.

This colossal waste of time shames Britain, while all around the world, governments have been taking decisive action to stop the abuse of wild animals in circuses. Just last month, Catalonia’s Parliament overwhelmingly voted to ban it. While our own lawmakers dragged their feet, the Netherlands approved a ban that comes into effect later this year, as did Malta and Mexico. Ringling Bros. and Barnum & Bailey Circus, North America’s longest-running circus, has pledged to retire all the elephants it uses by 2018. Even in Iran, a country with precious few animal-welfare laws, 14 states have banned this archaic form of entertainment. Are we really lagging behind Iran?

The writing has long been on the wall. Only two English circuses are still clinging to this antiquated tradition of using wild animals, so implementing a ban would have very little bearing on businesses operating in England and Wales. But it would have a very positive impact on the animals still being exploited.

Every day that this legislation is delayed is another one of misery for the large wild animals, including tigers, being hauled around the country in circus wagons. Existing in cramped cages and denied everything that gives their lives meaning, animals become lethargic and depressed. Their spirits broken, many develop neurotic and abnormal behaviour, such as biting the bars of their cages and constantly pacing. It’s little wonder that such tormented creatures die far short of their natural life spans.

Watching a tiger jump through a fiery hoop may be entertaining to some, but we should all be aware of what it entails for the animal. UK laws require that animals be provided with a good quality of life, but the cruelty inherent in confining big, wild animals, who would roam miles in the wild, to small, cramped spaces and forcing them to engage in unnatural and confusing spectacles makes that impossible in circuses.

Those who agree with me can join PETA’s campaign to urge government to listen to the public and give such animals a chance to live as nature intended.


The Right Honourable Ann Widdecombe was an MP for 23 years and served as Shadow Home Secretary. She is a novelist, documentary maker and newspaper columnist.