Jeremy Hunt has rejected claims that his Budget isn’t “for the people” after he was accused of handing a £1billion pension tax break to the most wealthy.
The Chancellor was speaking on Thursday, a day after delivering his first Budget, aimed at boosting Britain’s flagging economic growth and getting more people back to work.
But Mr Hunt has faced criticism for scrapping the £1.07million lifetime pensions allowance - a move which Labour said was the “wrong priority”.
The Chancellor insisted on Thursday that the pension changes - which also included raising the annual tax-free allowance from £40,000 to £60,000 - was specifically designed to encourage doctors back into the NHS.
Asked whether the changes were helpful only for the wealthiest 1 per cent in the country, Mr Hunt told BBC Breakfast: “No. This is a change that is primarily driven because we have a big issue in the NHS, which is doctors reducing their hours or retiring early just at the time the NHS needs them the most.
“The Royal College of Surgeons say that 69 per cent of their members have reduced the hours because of the way the pension system works. And we have a backlog of 7 million people in the NHS.”
Put to him on Sky News that his Budget wasn’t “for the people”, he said: “When people are going through difficult periods as they are now with these huge increases in energy bills, of course we want to help people.”
He described as “bizarre” any suggestion that the measure was a tax giveaway for the top 1 per cent of earners.
The Chancellor has said the move is designed to prevent consultants retiring early from the NHS because the current pension rules mean it is not worth them carrying on working.
But critics say the failure to restrict it to doctors mean wealthy workers in other sectors will be able to boost their pension pots without paying tax on their savings.
The Office for Budget Responsibility has estimated that - combined with an - it will increase employment by 15,000 workers.
The Resolution Foundation (RF) think tank said it was “hugely wasteful”, costing around £80,000 per job.
Labour says it will reverse the move if it wins the next election, likely next year.
Shadow chancellor Rachel Reeves added that the party will seek to force a Commons vote next week. She also said a Labour government would reinstate the lifetime allowance and create a targeted scheme for doctors rather than allowing a “free-for-all for the wealthy few”.
“At a time when families across the country face rising bills, higher costs and frozen wages, this gilded giveaway is the wrong priority, at the wrong time, for the wrong people,” she said.
