Jeremy Hunt’s pension reforms ‘essential to keep officers fighting crime’

The Chancellor on Budget day with his red briefcase - Dan Kitwood/Getty Images
The Chancellor on Budget day with his red briefcase - Dan Kitwood/Getty Images

Jeremy Hunt’s pension reforms are a “game changer” which will keep officers fighting crime, the country’s most senior police commissioner said on Friday night – as Labour came under pressure not to reverse the Chancellor’s plans.

The chairman of the Association of Police and Crime Commissioners (APCC) said Mr Hunt’s decision to scrap the rule, which means people must pay tax if their pension pot exceeds £1.07 million, is “essential” to persuading senior officers not to take early retirement.

And he warned that the previous system – to which Sir Keir Starmer has pledged to return – would “disincentivise officers from working longer”.

It came as senior business leaders pleaded with the Labour leader not to go forward with his plans to reinstate the lifetime pensions allowance if he wins the next election – with advertising boss Sir Martin Sorrell saying the party was making a “mistake”.

Teachers’ leaders are demanding an exemption to ensure their pension pots are not taxed under Labour’s plans, while the union representing nuclear inspectors, chief fire officers, air-traffic controllers and electrical engineers warned the party to think again.

Sir Keir also came under pressure from his own grassroots, after two polls showed that even Labour supporters back scrapping of the lifetime allowance.

A survey by Omnisis found that 60 per cent support abolition of the lifetime allowance, including 58 per cent of Labour supporters.

Another, by BMG for the i newspaper, found that lifting the cap on tax-free pension savings was backed by 38 per cent of the public, with 20 per cent against and the rest “don’t know” or neutral.

Sir John Curtice, the elections expert, said: “Voters seem to support the one proposal to which Labour has objected – increasing the amount people can save in their pension pots without incurring a tax bill.

“The decision to attack this change may not resonate as strongly with voters as Labour assumes.”

On Wednesday, Jeremy Hunt announced in his Budget that he would get rid of the current system under which people are charged tax if their pension pot exceeds £1.07 million.

A day later, Labour pledged to reverse the policy if they win the next election, saying it only benefited the top “1 per cent”.

Marc Jones, the chairman of the APCC and the Tory police and crime commissioner for Lincolnshire, wrote to the Chancellor on Friday to say the scrapping of the allowance would “assist forces up and down the country to retain the best and most experienced police officers and staff and therefore protect the public”.

“From the many conversations I have had with experienced police officers around the country, removing the cap on pensions by abolishing the Lifetime Allowance and increasing the Annual Allowance of tax-relieved pensions savings from £40,000 to £60,000 will be a game changer for thousands who love their jobs and do not want to retire,” he wrote.

“Unquestionably, these plans are a step forward from the previous system that disincentivised officers from working longer and I would welcome their swift implementation.”

Labour has pledged to introduce a separate scheme for doctors, to ensure they do not retire early due to taxes charged on their pension pots.

Jacques Szemalikowski of the Association of School and College Leaders said senior teachers would need a similar carve-out.

“We would wish to discuss how exactly the same impact, on school and college leaders could be similarly addressed,” he said. “It is in the national interest to ensure that it does not act as a disincentive for both the future pipeline of headteachers and retention in service.”

Garry Graham, of the union Prospect, which represents a range of public sector workers, said: “It would be wrong for Labour to implement a piecemeal solution. It would just lead to further calls for other groups to be treated the same way and it does nothing to address the real underlying problems that affect workforces across the public and private sector.”

On Friday, Labour stood firm on the decision, with Sir Keir posting on Twitter:

A Labour spokesman said: “With levels of inactivity for reasons of sickness at record levels and a million young people in neither education and employment, Jonathan [Ashworth, the shadow work and pensions secretary], has led the debate setting out welfare reforms to get Britain back to work.

“Instead of a serious plan the Tories have just given a billion pound tax break to some of the wealthiest in society.”