Labour targets pensions tax relief to fund welfare reform
Labour plans to cut pensions tax relief for those earning more than £150,000 to fund the centrepiece of its new welfare plans, the Compulsory Jobs Guarantee, according to reports.
The Sunday Telegraph reported that people earning more than £150,000 would only get 20% tax relief on their pension contributions, rather than the 45% they currently receive, under the party’s plans.
According to the paper Labour would raise some of the money necessary for its welfare reform from a tax on bankers’ bonuses as well as cutting tax relief on pensions contributions, in a move which could cost high earners around £1 billion a year.
Labour sources told the Telegraph that the move would only impact around 300,000 of the richest people in Britain.
The money would be used to fund a scheme whereby every young person who has been jobless for more than 12 months would be given a ‘starter job’ for six months with the governments funding pay and employers’ national insurance contributions for 25 hours at minimum wage.
Shadow chancellor Ed Balls is set to unveil more detail of scheme later today when he reveals Labour’s manifesto.