Pensions and a breach of trust

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GEORGE Osborne made a staunch defence of his so-called “granny tax” yesterday following a torrent of criticism, pointing out how pensioners will be better off as a result of other changes.

It is a pity that the Chancellor did not do so in the Budget. Had he been straight with taxpayers about his changes, rather than glossing over the fine-print, the coalition’s credibility would not be under attack – and David Cameron on the defensive while campaigning in the Bradford West by-election.

After all, Messrs Cameron and Osborne led the chorus of criticism when Gordon Brown was guilty of such sleights of hand. And it is the breach of trust that could be more damaging than the actual tax changes which are a recognition – albeit a regrettable one – that no section of society is immune from the crippling deficit bequeathed to the nation by the last government.

Senior citizens have, until now, enjoyed considerable immunity from many of the cuts now being implemented – indeed, the first rule of budgets is for Chancellors not to antagonise pensioners because this age-group remains the most diligent at elections.

Yet, while they will benefit from modest pension increases, these will not offset other rises in the cost of living, hence the anger at the changes to the tax allowances of all those still having to earn in their supposed retirement to make ends meet.

Mr Osborne also needs to recognise that his obfuscation sends out a further signal that savers will not be rewarded – even though far more needs to be done to persuade people to prepare for their retirement.

As many experts concluded, pensions policy is in an even greater mess following the Chancellor’s short-sightedness and failure to seek savings elsewhere, such as from Britain’s unscrutinised overseas aid programme.

That is a far greater oversight than Labour’s demands in the House of Commons for an inquiry into the serial leaking of the Budget. Though regrettable, it was an inevitable consequence of coalition politics, with the Tories and Lib Dems wanting to claim credit for certain policies. At least the Cabinet knew about the Budget in advance – unlike the New Labour era when Tony Blair was invariably kept in the dark by his Chancellor.