Bid to defeat granny tax ends in failure as only one Tory MP rebels

THE government has seen off an attempt to scrap the so-called “granny tax”.

Labour forced a vote, but an expected rebellion by back-bench MPs failed to materialise.

There was known to be some Tory disquiet about the move to freeze pensioner income tax allowances and deny them to those about to retire. Labour had appealed for coalition backbenchers to help derail the plans to end age-related allowances, which it estimates will cost some pensioners on relatively modest incomes up to £323 a year.

But in the end, only Philip Hollobone, the MP for Kettering, rebelled, with the government winning a majority of 63.

Shadow chief secretary Rachel Reeves accused Chancellor George Osborne and Treasury Chief Secretary Danny Alexander of seeing pensioners as a “soft touch” who were “ripe for a sneaky tax grab”.

“This is yet another broken promise from the Conservatives and their Liberal Democrat friends,” she told the Commons.

“It is all too clear why this Chancellor didn’t bother to wait for the final report [from the Office of Tax Simplification]. He wasn’t really interested in simplifying taxation for older people.

“His single-minded focus, his overriding priority, was getting through his millionaires’ tax break and he was willing to fund this by cutting the incomes of pensioners.”

But Exchequer Secretary David Gauke said: “The idea of having the same personal allowance whether you’re 64, 65 or 75 seems to me something that is perfectly sensible.

“The changes made by this clause will help ensure that people get the allowances they are entitled to, pay the right amount of tax and make it more straightforward for government to administer, thereby minimising costs to the taxpayer.”

The “granny tax” is one of a number of measures from last month’s Budget that has attracted a slew of negative headlines and criticism from campaign groups. But instead of the expected rebellion Tory MPs stood up to back the measure.

Nigel Mills, MP for Amber Valley, said: “I think the direction we’re trying to take here is clearly the right one.

“I think clearly it’s not something that any of us would have wanted to do and I feel sympathy for all those pensioners, my parents included, who are going to lose money from this, and it’s one of those issues which I think we don’t just get grief from our constituents – we get grief from our own families.”

Ipswich MP Ben Gummer said: “At some point, someone needs to face up to the fact that we are going to increase spending on old age pensions by almost double between now and 2040.”

The government managed to comfortably see off Labour challenges, including a bid to reverse the cut in the top rate of income tax from 50p to 45p. A move to block the imposition of VAT on hot takeaway snacks – the “pasty tax” – was also defeated.