Labour’s attempt to blame Tories for Starmer’s pension tax deal backfires

·3-min read
Sir Keir Starmer - UK Parliament/Roger Harris
Sir Keir Starmer - UK Parliament/Roger Harris

The Labour Party’s attempt to blame the Conservatives for Sir Keir Starmer’s gold-plated pension arrangements backfired on Wednesday night after it emerged they were created by Gordon Brown’s government.

The party hit back at claims Sir Keir was a “hypocrite” for holding a pension from his time as Director of Public Prosecutions (DPP) that is exempt from the lifetime tax-free pension cap he would impose on other savers.

The Labour leader had described Jeremy Hunt’s plan to scrap the cap as a “huge giveaway to some of the very wealthiest”, but is thought to hold hundreds of thousands of pounds in a scheme that allows him to save more without paying tax on withdrawals in his retirement.

Steve Reed, the party’s shadow justice secretary, said that Sir Keir had not been in charge of setting up his pension scheme and had accepted an offer from the Government at the time.

“That was set by the Conservative government at the time so if people have problems with it they really need to speak to David Cameron and George Osborne,” he told Sky News.

A Labour spokesman later added that “you’d have to go back and ask, in this case, coalition ministers at the time as to why they made that arrangement, but it wasn’t unique to Keir that that was the case”.

Bespoke arrangements

But annual reports from the Crown Prosecution Service (CPS) after Sir Keir’s appointment in 2008 show that while the pension deal was not finalised until 2012, it was conceived under Gordon Brown’s government.

The CPS’s annual report from 2008-9 says that “pension arrangements are currently being established” that would “provide pension benefits broadly in line with the Judicial Pension Scheme”.

The bespoke arrangements for Sir Keir were then laid before Parliament and came into force in 2012.

The Government passed a statutory instrument, a form of legislation, that mentioned Sir Keir by name on his retirement to ensure his pension payments increased in line with inflation.

The Telegraph revealed on Wednesday that the benefits of the pension scheme he was handed as DPP included exemption from the lifetime allowance system applied to almost all other savers.

It means Sir Keir can save more in his parliamentary pension scheme, and from any future earnings as a minister, without incurring tax charges when he withdraws the money on his retirement.

Usually, pensioners who exceed the lifetime allowance of £1.07m pay 25 per cent tax on any income and 55 per cent on any lump sum.

A spokesman for Sir Keir would not comment on whether he would pay back any tax he has avoided as a result of the pension scheme, describing such a situation as “hypothetical”.

They also declined to answer questions on the size of his pension pots and how much he contributed while serving as DPP.

On Wednesday, Greg Hands, the Conservative Party chairman, attacked the Labour leader over his pension arrangements.

“When it comes to pensions for the better off, it’s literally one law for Sir Keir and a different law for everyone else,” he said.

“Labour and Sir Keir voted last in the Commons for less generous pensions for senior doctors and other workers.”

Anthony Browne, the MP for South Cambridgeshire, said: “Truly shocking: Starmer benefits from a one-rule-for-him pension that means he can avoid the pension tax penalty he is campaigning to impose on everyone else.

“The ultimate hypocrisy. His class war is just political opportunism.”

Mr Hunt’s Budget resolutions passed in Parliament on Tuesday despite opposition from Labour MPs and will mean the lifetime allowance is abolished for all savers.

Labour has pledged to reinstate it if the party wins the next election.