Chancellor Rachel Reeves has reportedly halted plans for a huge pensions tax raid after she was warned it would hurt public sector workers including teachers and nurses.
Amid warnings Labour is intent on inflicting further harm on pensioners beyond scrapping the Winter Fuel Allowance, Ms Reeves had hope to raise funds by reducing tax relief on those earning just £50,000 a year.
Ms Reeves’ plans would have hit public sector workers (Image: PA)
However senior Treasury officials told the Chancellor that reducing the current 40 percent level of tax relief would hit those in good jobs who had dedicated their lives to the public sector.
In one example, a nurse earning £50,000 would face an additional tax bill of up to £1,000 a year.
A senior Government source told the Times that such a move would be “madness” given the Treasury has spent the months since the General Election going to great efforts to give public sector workers huge pay rises.
Ms Reeves’ plan would have clobbered doctors and nurse (Image: Getty)
The move comes after Labour dropped plans to reintroduce the pensions lifetime allowance cap in June, after similar warnings it would impact long-serving doctors and public servants, and force many much-needed professionals into early retirement.
The cap was scrapped by Jeremy Hund during the previous government as part of an attempt to bolster NHS staff numbers, with Ms Reeves blasting the move and pledging to bring it back in order to raise £800 million a year.
Steve Webb, a former pensions minister, warned that a pensions tax raid would lead to public sector employees having to pay 20 percent extra tax on the proportion of their salary paid into a pension, costing them hundreds of pounds a year.
He warned: “I don’t think this is something that Reeves will want to do, not least because it will infuriate public sector unions just weeks after the government agreed pay settlements with them.”
Doctors and nurses would have been hit particularly hard just after their pay rises (Image: Getty)
Unions have also been furiously lobbying against the changes, with chair of the BMA pensions committee Vishal Sharma blasting: “Attacking our pensions in this way would completely reverse this progress by once again taking money away from doctors in a different way.
“Not only would this negate the recent hard-won pay rises but it would likely reignite the recent pay disputes that have been seen across the NHS.”
However pensioners can’t afford to breathe a sigh of relief yet.
Some are still suggesting Ms Reeves could fill the disputed £22 billion black hole by reducing the amount of money people are allowed to take out of their pension pots tax-free when they retire.
The amount is currently set at £268,275, and costs the Treasury around £5.5 billion a year.
Yesterday Silver Voices Director Dennis Reed also warned that Keir Starmer is eyeing up pensioners’ free prescriptions and bus passes after taking the decision to cut Winter Fuel Payment.
He wrote for the Express: “If the Government successfully rides out this storm, they will inevitably squeeze senior citizens further, perhaps by means-testing free prescriptions, bus passes and even the state pension itself.
“It is time for older people to fight for our dignity in our remaining years on this planet.”
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Keir Starmer torn apart by rivals as Sue Gray ‘abandons sinking ship’ to escape civil war
Keir Starmer was plunged into a fresh political crisis after his chief of staff resigned following a power battle at the heart of Government.
Sue Gray has resigned as Keir Starmer’s chief of staff (Image: Getty)
Former civil servant Sue Gray said the “commentary” about her position had become a “distraction”.
But Tory leadership candidate Robert Jenrick said it “feels as if she’s fleeing a sinking ship”.
Ms Gray was on Sunday replaced by Sir Keir’s chief strategist, Morgan McSweeney, who is said to have repeatedly clashed with Ms Gray since Labour took power less than 100 days ago.
Keir Starmer is hoping to end months of chaos (Image: Getty)
Mr Jenrick told the Daily Express: “Labour’s government is in chaos. Internally, it is ridden with scandal.
“Starmer has lost or been forced to kick out seven rebellious MPs. Number 10 has been beset by briefings and petty squabbles over who sits where and who controls the Prime Minister’s diary. His special advisors are in open revolt over who gets paid what while Sue Gray banked more than the Prime Minister.
“Her resignation was no surprise. After months of infighting and a series of terrible decisions for the people of Britain, it feels as if she’s fleeing a sinking ship.
“Starmer has no national security advisor. He’s had to replace his private secretary. And the Cabinet Secretary – the country’s most senior civil servant – is rushing out the door. This is free-fall.”
Fellow leadership candidate James Cleverly added: “Labour’s first 100 days have been a disaster, and their civil war continues with the loss of Sue Gray.
“I will waste no time holding this chaotic Labour government to account, making it clear the Conservatives are ready to govern again and set the country back on track.”
Robert Jenrick has criticised Sir Keir’s Government (Image: Getty)
Ms Gray was accused of wielding too much power over Number 10 and was simultaneously blamed for Labour’s failure to avoid controversy over freebies and donations.
She has also been held responsible for Labour’s shambolic start in their first 100 days.
And the former civil servant’s £170,000 salary was leaked after she told other advisers to take a pay cut to serve in Government.
Senior figures even discussed the possibility of offering Ms Gray a peerage in a bid to ease her out of Downing Street.
Highlighting how split Sir Keir’s operation was, Ms Gray only attended her first meeting with the Number 10 political team last week.
And Cabinet ministers are said to have become increasingly frustrated at the chaos at the heart of Government.
Rumours swirled around Westminster on Sunday morning after a Cabinet minister dodged questions over her future.
Asked if Ms Gray would still be in her role in a month’s time, Science and Technology Secretary Peter Kyle said: “All I can say is that Sue Gray is an outstanding public servant and I’m so proud of the work she has done, because I’ve seen it up close.”
Pressed on whether she was still in post at that moment, Mr Kyle added: “I can’t comment on any public servant, because it’s not appropriate for me to comment on public servants who cannot answer for themselves.
“But what I will say is her public service and what she has done for this country and on behalf of this country is something that I and this Government is very proud of.”
Labour ministers and officials had claimed, in the wake of the General Election result, that “the adults are back in the room”.
Ms Gray has been given a new role as the Prime Minister’s envoy for the regions and nations.
In a statement, Ms Gray said: “It has been an honour to take on the role of chief of staff, and to play my part in the delivery of a Labour Government.
“Throughout my career, my first interest has always been public service.
“However, in recent weeks it has become clear to me that intense commentary around my position risked becoming a distraction to the Government’s vital work of change.
“It is for that reason I have chosen to stand aside, and I look forward to continuing to support the Prime Minister in my new role.”
Sir Keir thanked Ms Gray for “all the support she has given me, both in opposition and government, and her work to prepare us for government and get us started on our programme of change”.
“Sue has played a vital role in strengthening our relations with the regions and nations. I am delighted that she will continue to support that work,” he added.
Ms Gray’s departure has triggered a wider reshuffle of the Downing Street operation. She will be replaced as chief of staff by Morgan McSweeney.
James Cleverly says Labour have been in chaos (Image: Getty)
Political director at Number 10 Vidhya Alakeson and director of government relations Jill Cuthbertson have been promoted to deputy chiefs of staff.
Nin Pandit, director of the Downing Street Policy Unit, has been appointed principal private secretary to the Prime Minister, and former journalist James Lyons will join to head up a new strategic communications team, Downing Street said.
The government’s list of planned announcements, known internally as “the grid”, had been under the command of Sue Gray, but will now be under the control of the No10 communications team, where some believe it should always have been.
The Labour psychodrama even prompted fury from some of the party’s own MPs, with John McDonnell posting on X: “We’re facing the potential of a war setting the Middle East alight, already thousands being killed in Lebanon and what is the focus of the boys around Keir Starmer’s office, carving up Sue Gray and grabbing her job and salary.
“Words fail me.”
