State Pensioners: Personal Allowance

I beg to move, That this House has considered e petition 740671 relating to personal allowance for state pensioners.

It is a pleasure to see you in the Chair, Dr Huq. I pay tribute to the petitioner, Tim Mason, and the 120,000 people who have signed the petition, including hundreds in my constituency in the Scottish Borders. I come to this debate with a simple starting principle: those who have worked hard throughout their life should have dignity and security in retirement.

Tim got in touch with me prior to the debate to explain why he created the petition. His story is worth sharing: he receives a pension from the Royal Mail of about £400 per month, but once he receives his state pension, that Royal Mail pension is reduced to about £290 per month. His motivation for starting the petition was that many other pensioners will undoubtedly find themselves in the same position, paying tax on relatively small pensions for which they have worked hard and saved throughout their life.

There are growing concerns that increasing numbers of pensioners are finding themselves liable to pay tax on their pensions. That is because the triple lock has increased the state pension year on year, while personal tax allowances have remained frozen. As a result, some pensioners are required to complete a self assessment tax return, while others receive unexpected tax bills from HM Revenue and Customs. Many pensioners do not have substantial incomes and have limited savings; it can therefore be both distressing and deeply worrying for those hard pressed pensioners to deal with tax demands. As the organisation Silver Voices has highlighted, taxing the state pension risks undermining the very principle of a retirement safety net, which was designed to ensure that people can afford life’s basic necessities in retirement.

Pensioners face many other challenges too, such as higher heating and fuel bills. We cannot forget that it was this Labour Government who so cruelly stripped away the winter fuel allowance two years ago as one of their first acts in government. In Scotland, the SNP Government did the same. Although the partial U turn last year was welcome, many pensioners spent a winter cold in their homes, and some pensioners still do not receive the support on which they had previously relied.

When the Conservatives came into office in 2010, the previous Labour Government had already subjected pensioners to a pension tax raid worth more than £100 billion, and had delivered a paltry 75p per week increase in the state pension. Improving the lives of pensioners had to be a priority, and that is why the triple lock was introduced. It was the right thing to do and, as the Leader of the Opposition has made clear, the Conservative party stands by it. The introduction of the triple lock saw the basic state pension increase by £3,700 between 2010 and 2024. At the last general election, my Conservative colleagues and I stood on a manifesto commitment to introduce a “triple lock plus”, guaranteeing that the state pension and the tax free personal allowance for pensioners would always rise by inflation, earnings growth or 2.5%, whichever was the highest.

A view has evolved among some people, particularly online, that pensioners are all wealthy and that they enjoy multiple holidays, drive expensive cars and own second homes that they rent out to younger generations. That may be true of a very small minority, but it is simply not the reality for the vast majority of pensioners, especially in my constituency in the Scottish Borders.

We should celebrate the fact that one of the landmark achievements of successive Governments over the past 30 years has been the reduction in pensioner poverty. There was a time not so long ago when 28% of pensioners lived in poverty. By 2024, that figure had fallen to just 12% for pensioner couples and 16% for pensioners overall. Poverty among pensioners is now lower than in any other age group in the United Kingdom. Many pensioners still struggle, however, and pensioner poverty is often the result of disadvantages that accumulate over a lifetime, long before retirement.

We can and must do much more to improve the lives of pensioners. These are changes that would benefit many other people in our country. Take stamp duty land tax, or land and buildings transaction tax in Scotland: many pensioners would like to downsize and move into a home that is better suited to their needs, particularly once their children have left home, but those taxes, which can amount to thousands of pounds, are one of the biggest barriers preventing them from moving on. We should therefore scrap stamp duty and LBTT entirely. Doing so would benefit the whole country, help pensioners to move into more suitable homes if they so wish and potentially free up capital and free up family homes for younger people seeking to get on the housing ladder.

Heating is one of the highest costs that pensioners face, and older people are often more exposed to rising energy costs. This Labour Government came to office promising to cut energy bills by £300, but household energy bills have risen by £294. We need to bring energy bills down, and we can do so by scrapping renewable energy subsidies, abolishing the carbon tax and cutting VAT on household energy bills. These measures would make a real difference to pensioners, helping them to keep more of the money they have worked hard for and saved throughout their life. They would deliver real, tangible benefits that would improve the lives of pensioners right now.

We should not and cannot forget the hard work and often the sacrifices that pensioners have made. They have worked hard and contributed to our society. I hope that the Minister will listen carefully to the concerns raised by the petitioner Tim Mason, as well as the thousands of people who have signed the petition.

The purpose of this debate is not simply to consider one particular proposal, but to consider the broader concern expressed by many pensioners about the interaction between the rising state pension, the frozen tax thresholds and the financial pressures that many older people continue to face. The triple lock has undoubtedly made a significant difference to pensioners’ incomes. It remains one of the most important reforms introduced by the previous Conservative Government: it has helped to improve financial security in retirement and has played an important role in reducing pensioner poverty.

Whether a separate personal allowance for pensioners is the right solution is a matter on which hon. Members may hold different views, but the petition demonstrates that these concerns are real and are shared by many people across the country. Pensioners have worked hard, paid their taxes, raised families, built communities and, in many cases, served or fought for our country. They deserve dignity, security and peace of mind in retirement. I look forward to the Minister’s response to the important issues raised by Tim Mason, and the many thousands of people who have supported his petition.

Will Members please bob if they wish to speak? Okay—not the most popular debate. It usually goes back and forth, but by process of elimination, I call Alison Griffiths.

It is a pleasure to serve under your chairmanship, Dr Huq. I thank my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (John Lamont) for opening this incredibly important debate, and I thank the Petitions Committee for scheduling it today.

I represent the communities of Rustington and East Preston, often described as the state pension capital of Britain. For them and for thousands of others across my Bognor Regis and Littlehampton constituency, this debate is not about Treasury spreadsheets or tax theory, but about their day to day finances and whether they feel the system is treating them fairly. They have worked hard and paid in throughout their life and are now looking at a situation in which the state pension continues to rise while tax thresholds remain frozen. They are asking a simple question: why are more and more pensioners being drawn into paying tax?

It is important to be clear about what sits behind that concern. The issue is not that pensioners have suddenly become wealthier; it is that frozen tax thresholds mean that the tax system reaches further into people’s incomes each year. That is why people feel so frustrated. They see their state pension increase on paper, only to find more of it being taken by the taxman. It affects more than pensioners—workers, families and businesses are feeling the effects of frozen thresholds, too, and across the country more people are paying more tax despite no change in the headline rates—but pensioners often feel it particularly acutely because many are living on fixed incomes and have less flexibility to absorb the additional costs.

The Government regularly tell people that they have not increased income tax rates. However, pensioners, who are a savvy bunch, can see exactly what is happening. They do not need a Treasury briefing to understand where more of their income is being taxed each year. The Chancellor chose to extend the freeze in the personal allowance until 2031. That was a political choice. It means that more pensioners will continue to be drawn into the tax system year after year. Ministers cannot make that decision and then act surprised when pensioners ask questions about fairness.

What concerns me most is the uncertainty. Last year’s Budget included an announcement that pensioners whose sole income is the state pension should not have to deal with small tax bills through the simple assessment process from 2027. Yet my constituents still do not know who will qualify, how the system will work, when the details will finally be published or how pensioners will be protected from unexpected tax demands. Those are reasonable questions, and people deserve answers.

There is also a broader principle at stake. At the previous general election, the Conservatives set out a different approach: we argued that the tax free allowance for pensioners should keep pace with the state pension, so that people could benefit from rises in the state pension without constantly worrying that frozen thresholds would erode those gains. Whether or not Members agree with that approach, at least it sought to address the underlying problem. The Government’s approach so far has been to extend the freeze, promise further details at some future point and ask pensioners to wait. My constituents deserve better. In Rustington, in East Preston and across Bognor Regis and Littlehampton, pensioners want clarity, fairness and above all a Government who recognise the contribution that they have made throughout their working life.

I am not here to write the Budget from Westminster Hall, but I am here to say very clearly that pensioners in my constituency should not find themselves paying more and more tax simply because thresholds remain frozen year after year. I hope that the Minister will provide some answers today.

rose—

Order. It is at my discretion whether I allow you to speak, Sir John, as you were not here at the start of John Lamont’s speech. Theoretically, I could be mean and say no, but I will be nice.

I am extremely grateful for your indulgence and generosity, Dr Huq. I wish to speak because I have enjoyed correspondence with the Minister at the Treasury Bench on exactly this subject on behalf of constituents who have written to me. Not only has he replied to me to address the concerns of my constituents, but so have his ministerial colleagues in the Treasury—such is the volume of my correspondence that it is too much for him alone to handle. It reflects the widespread concern among my constituents about the freezing of thresholds and the effect on pensioners, as my hon. Friend the Member for Bognor Regis and Littlehampton (Alison Griffiths) has so admirably and ably highlighted.

At the heart of this matter is a fundamental principle, which is that we owe a particular and special debt to those who have given a lifetime’s work to this nation. That is why a previous Government introduced what is known as the triple lock. I need not rehearse the argument for it at length today, except to say that in my judgment it is entirely legitimate and justified. Once it has been promised, it cannot be taken away—that is the political reality—but it has pushed more and more pensioners into taxation as thresholds have been frozen.

Each year, more pensioners pay tax who should never have paid tax at all. That is not an entirely new phenomenon: I remember my father, who had a small works pension, paying tax in his 80s. He has been dead for more than 20 years, but he said to me then, “I am 85 and still paying tax. Is that really appropriate?” My answer then, like my answer now, was no. It is not appropriate for people on relatively modest incomes to be drawn into tax because of the freezing of thresholds.

I endorse entirely what my hon. Friend the Member for Bognor Regis and Littlehampton said, but—with your further indulgence, Dr Huq—I want to make two other points. I want to make a case, as I have before in this very Chamber, for the WASPI women. Those women were caught out by a change in the provision of pensions due to an alteration in the age at which women retired. They have suffered an injustice; that is not just my consideration or judgment, but that of the ombudsman, who accused the Government of maladministration. Those women, too, deserve a hearing.

Before you call me to order, Dr Huq, and tell me that I am digressing from the subject at hand—

You have read my mind.

My final point is that the Government have options to take and choices to make. Of course, pensions are funded from the welfare budget. There are those, perhaps including some Members on the Conservative Benches, who say that the triple lock is no longer sustainable. The Minister himself might have flirted with that idea in an earlier life when he was a thinker, not a doer—[Interruption.] No, he ran a think tank. Now he is a man who does things; then, he was a man who only thought about doing things.

I take the view that the welfare budget is burgeoning because a large number of people of working age are claiming benefits, not because they are unable to work because they are profoundly disabled, infirm or otherwise incapacitated—for those people, I stand firm and do so proudly —but because they choose not to work and to let others work and pay tax, including those pensioners drawn into taxation by the freezing of thresholds. Pensioners have every right to ask why they should struggle, as many do; we know of pensioner poverty. I have the figures here: 2.2 million pensioners are in relative low income before housing costs, and 1.3 million are in relative low income after housing costs. We know that pensioners are struggling, and they will say, “Why should we do so when others, who could work, choose not to? Why have the Government failed to recognise that?”

Notwithstanding his change of status, I suspect the Minister still thinks seriously about these things from time to time, when he is not busy doing the other duties that are a necessary part of governing, including replying to my correspondence. I am sure he must have considered this issue in the broad minded way for which I know he is famed. For heaven’s sake, let us raise thresholds. Let us protect pensioners. Let us cut welfare, but cut it wisely and reduce the benefits of those who choose not to help themselves. Welfare is a safety net, is it not? It should always be for those who cannot do without it.

With those few thoughts, I leave the matter to the wisdom of the Minister and to the remainder of the Chamber —but I stand firmly and squarely behind the very appropriate advocacy of my hon. Friend the Member for Bognor Regis and Littlehampton for the pensioners in her constituency, and I stand with the pensioners in mine.

It is a pleasure to serve under your chairship, Dr Huq. The Liberal Democrats have said clearly that we think it is both wrong and unfair that the Government have implemented a stealth tax grab that will hit some of the lowest paid and most vulnerable the hardest, by maintaining a freeze on income tax thresholds that hits ordinary families, people on low incomes and the group we are discussing today: pensioners. An estimated 600,000 people were dragged into paying income tax for the first time this April, while a further 580,000 were pulled into the higher 40p rate.

Raising tax thresholds is the best and fairest way to cut taxes. Liberal Democrats would advocate that as a way to reduce income tax for everyone at every stage of life, taking the lowest paid, including state pensioners, out of income tax altogether when public finances allow. When we were in government, we raised the personal allowance, taking millions of people out of income tax, putting money back into people’s pockets and helping ensure that work and hard earned state pensions would pay.

By contrast, the Conservatives and Labour have frozen it again and again. That has left us in a position in which the state pension is nearly equal to the threshold. The full rate of the new state pension for 2026-27 is £240.30 a week, or £12,547.60 a year, while the standard personal allowance is £12,570 a year. It is an absolutely tiny gap.

The Chancellor has said that state pensioners will be exempt from paying income tax. We support that exemption, which is all well and good, but we need the Government to publish more information on how they are going to guarantee it if they continue their policy of freezing the tax threshold. With less than a year to go, people will understandably be worried. They urgently need clarity about which specific process they will have to follow and a cast iron reassurance that they will not fall through the cracks.

Ultimately, stealth tax rises are not only dishonest with voters, but a completely inadequate and ineffective way for the Government to paper over the cracks in their economic plan. There is no better way to get the economy growing than to make everybody feel better off; the best way to balance the books is to grow our economy, and the quickest way to do that is to repair the damage of the terrible Brexit deal by negotiating a new UK EU customs deal. A better trade deal would be a huge boost to our public finances, and the best and fairest way to end the crisis in the NHS, boost our defence capabilities and look to reduce the unfair tax burden that people have shouldered for the last few years.

The Liberal Democrats are clear that everyone deserves a chance to enjoy a decent retirement where they can live comfortably, whether in my Witney constituency or anywhere else in the country. We strongly opposed the Government’s decision to remove the winter fuel payments. We welcomed the Chancellor’s U turn in that case, restoring payments to pensioners with incomes of £35,000 or less, but we continue to call on the Government to backdate payments to those who lost out and to confirm that the £35,000 threshold will be uprated with inflation each year.

We were proud when in government to introduce the triple lock. It was desperately needed after years of the real value of the state pension falling, as was set out very well by the right hon. Member for South Holland and The Deepings (Sir John Hayes). We will always fight to guarantee that pensions keep pace with the cost of living. We want to develop measures to end the gender pension gap in private pensions and ensure that working age carers can save properly for retirement. We would also like to see improvement to the state pension system by investing in helplines to ensure quicker resolution of underpayments, and an end to the scandal of lost top up payments through an overhaul of the processing system and provision of proper receipts.

In summary, I urge the Government once again to reconsider the freeze on tax thresholds, which has dragged millions of people into paying more tax at a time when cost of living pressures are hitting people at all stages of life really hard. Raising the thresholds would ensure that pensioners, as well as working age households, got a fairer deal. The Government should stop using stealth tax grabs to paper over the bigger issues in the economy and boost trade to get the economy moving, making everyone feel better off. Finally, I ask the Minister to spell out how he will ensure that people on the state pension are not dragged into paying income tax on it, so that we can give peace of mind to older people on low incomes.

Thank you, Dr Huq, for your stewardship of this important debate. I also thank my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (John Lamont) for introducing the debate. Most importantly, I thank the 119,000 people who signed this petition, 247 of whom are from my constituency of Wyre Forest. I thank my hon. Friend the Member for Bognor Regis and Littlehampton (Alison Griffiths) for also raising this issue, my right hon. Friend the Member for South Holland and The Deepings (Sir John Hayes) for bringing up the WASPI women, and the Liberal Democrat spokesman, the hon. Member for Witney (Charlie Maynard), who needs hearty congratulations on getting Brexit into this debate—well done to him.

This is a timely debate, and I agree with the wider point at the heart of the proposal that the petition seeks to address. We are all facing a higher tax burden thanks to this Government’s choices and policies, and we are all really struggling with cost of living rises—again, thanks to this Government’s tax choices on employment. Pensioners, instead of living with the dignity in retirement that they have worked so hard for and deserve, have a greater financial burden placed on them. Now we have the prospect of the Chancellor of the Exchequer floating more tax rises in the next Budget. That is deeply concerning for all of us, but especially for those on low incomes. I hope that this Minister, who played a key role in the last Budget, will be able to rule out tax rises in the next Budget at the Dispatch Box here today.

The thrust behind the petition is very clear, but first we must understand the historical context of how the pension system works. That context goes back over a century to 1921, when the Government of the time struck a deal with future pensioners. The basis of that deal was that people could save money into a fund from untaxed earnings; the Treasury would contribute to that fund the tax that would otherwise have been paid. Then the fund would be allowed to grow without being subject to any tax during its lifetime. At the time of retirement, the fund would be used to provide an income for the pensioner but, importantly, that income would be treated as taxable income. It would be replacing the earnings that that individual would have been generating, had they still been in work. In 1946, when the state pension was introduced, that pension payout was to be subject to tax in exactly the same way that private pensions were back in 1921.

That system has remained unchanged ever since. The simple contract between the state and the pensioner has not changed at all since 1921. It is important to underline this point. Successive Governments maintain that a pension, whether state or occupational, is a form of income. Specifically, it is treated as a replacement for earnings. However, there have been breaks for pensioners, most notably the exemption from paying national insurance contributions. Today, a pensioner will be asked to pay income tax above the tax free threshold, but they will not be asked to pay national insurance, as the working population do.

Where we can absolutely agree with the wider sentiment of the petition is that this Government are confusing the pension landscape. In their first 20 months, the Labour Government have not been the pensioner’s best friend. Prior to the last Budget, the Chancellor flew a few kites about reducing the tax free lump sum. That resulted in pensioners withdrawing £3.9 billion in one off lump sums from their pensions between October 2024 and October 2025. That was an increase of nearly 30% on the year before. When the Budget was actually announced, the Chancellor raided unused pensions in her inheritance tax calculations—a policy that will bring more families into paying inheritance tax and will mean that fewer people can pass money on to their loved ones when they die.

However, this petition talks specifically about the personal allowance. The last Government made a decision to help those in the bottom decile of earnings by increasing the tax free threshold at an accelerated rate. That helped pensioners as well as lower earning people, and over time it brought the state pension to a level below that of the tax free threshold. That has two benefits: first, there is no tax for state pensioners, and secondly there is no tax return to be filled in by state pensioners. But now this Government are choosing to freeze income tax thresholds until 2031, and the Government have extended the freeze because of their economic mismanagement.

The Chancellor, in her first Budget, stated: “From 2028-29, personal tax thresholds will be uprated in line with inflation once again. When it comes to choices on tax, this Government choose to protect working people every single time.”—[Official Report, 30 October 2024; Vol. 755, c. 821.] As I say, that was her first Budget. After promising to not extend the freeze—something we would have supported —she went back on her word and chose not to protect hard working people. That matters to pensioners, because the state pension will soon rise above the income tax threshold due to the triple lock, which we all agree is a good thing to remedy the ills that happened when the state pension fell to, I think, about 13% or 14% of average earnings. That means that pensioners will now have to start paying income tax on—[Interruption.] I am being heckled by the Minister.

Order. You are chuntering from a sedentary position, Minister.

I will chunter from a standing position shortly.

Your time is near.

I am sure that the Minister will chunter intelligently at some point.

In our 2024 manifesto, the Conservative party proposed the triple lock plus to stop this problem happening. It would have exempted the state pension from income tax, as the threshold would have risen at the same rate as the triple lock. Now it seems that this Government might be considering using our policy, albeit in a slightly cack handed way.

The Government have proposed that basic rate state pensioners will not have to fill in a tax return, although this seems to be a specific sort of form filling break for the over-67s rather than an actual hiking of the allowance. However, in a Treasury Committee hearing recently, a director at His Majesty’s Revenue and Customs, Cerys McDonald, stated that the policy would be included in the next Finance Bill. She said: “We will be working with the Treasury and Ministers to bring forward legislation to support the policy intent in the next Finance Bill.”

Of course, we welcome the Government effectively taking our policy and exempting those who are on a state pension, but we do not have any detail as to how this plan will work. Pensioners deserve clarity. Perhaps the Minister could confirm today that the proposals to which Cerys McDonald referred will be introduced.

It is not just policy that is blighting pensioners. The Sunday Times has highlighted that up to 8.7 million pensioners have been overcharged on their tax bill by an apparently careless taxman. That means that as much as £43.5 million was collected in error last year. I am pleased that HMRC is putting that right and that the fix should be finalised in the summer, but it has been working on this for a year. It is taking far too long. Will the Minister set out what he will do to resolve the situation and confirm to the House when it is fixed?

This petition is well intentioned and it is correct that we are all facing a higher tax burden than ever before. As has been reported, many pensioners are being overcharged on their tax bill. The Government need to get a hold of this situation and do more to reduce the tax burden on pensioners, because, as we have heard from many Members today, they deserve dignity and security in their retirement, but they have been left wanting by this Government.

I look forward to hearing from the Minister whether he is willing to raise the tax free threshold, as identified in this petition, from £12,500 or thereabouts to £25,140, and will then maintain it at 200% of the working person’s tax free threshold. Will he agree with the petition, or will he rule out that proposal today?

Finally, I have been shadowing the Minister for about 18 months now. He is a very decent gentleman and I enjoy shadowing him. I wish him the very best of luck in the upcoming reshuffle after the by election on Thursday.

It is a pleasure to speak in the debate with you in the Chair, Dr Huq. I thank the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont) for opening it and for rightly highlighting and celebrating the fall in pensioner poverty, while noting that that is no grounds for complacency about what happens in the years to come.

I also thank the select but high quality group of hon. Members who have chosen to speak and to share their insights, and the honourable members of the public who contributed their own voices to the debate by signing the petition. As we have heard, over 100,000 have done so. I suspect that many more people would have at least shared the sentiment behind the petition of wanting to support our pensioners in retirement. This Government certainly do. The real question is how that is best done. Do we have clear enough priorities that can be delivered on, and delivered on at times when there are many other competing pressures?

Our priorities as a Government, when it comes to supporting pensioners, are twofold: raising the state pension and rescuing the NHS. The foundation of the vast majority of pensioners’ incomes is, of course, the state pension, which we have heard a lot about today.

I recently met a constituent on the basic state pension who told me that rising living costs were leaving him worse off in real terms. What consideration have the Government given to reviewing pension thresholds? In particular, is a phased increase over several years being explored?

I thank my hon. Friend for her question. Our approach is to increase the basic pension and the new state pension in the years ahead, because pensioners, as well as the population as a whole, have seen living standards pressures in recent years. As her constituent’s case shows, the foundation of not all but the vast majority of pensioners’ incomes is the state pension. The yearly amount of the full new state pension is projected to rise by about £2,100 over this Parliament, reflecting our manifesto commitment to uprate via the triple lock throughout this Parliament.

I enjoyed the discussion of the triple lock and the praising of the raising of the level of the state pension from the lows we saw before. It is interesting that—one, two, three, four—four Conservative Members neglected to mention that the pension had to be rescued because of policies put in place by Margaret Thatcher in the 1980s. Decoupling pensions and leaving the uprating significantly behind the level of earnings in the population is why we saw pensioner poverty rates rise to 30% over the course of the 1990s. Everyone has limited time and there is only so much we can choose to—

Will the Minister give way?

Of course. I look forward to the denunciation of the hon. Gentleman’s previous Prime Minister.

It is interesting that the Minister raises that point. He will no doubt remember that Chancellor Gordon Brown raised the state pension by, I think, 50p a week. Did he support that policy by one of his predecessor Chancellors?

He was not my predecessor, because I am the Pensions Minister and Gordon Brown was never a Pensions Minister. Does the hon. Gentleman know who was? Margaret Thatcher. Gordon Brown oversaw big falls in pensioner poverty. Why? Because he introduced pension credit in the early 2000s. That then drove the huge falls in pensioner poverty that we saw in the 2000s, supported by increases in private pension savings that came through during those years. So, yes, I do endorse the record of that previous Chancellor, even though he is not a predecessor of mine.

Hon. Members will know that the basic and the new state pensions increased by 4.8% in April; I think it is a matter of cross party consensus that that is a good thing. It will boost pensioner incomes by up to £575 a year. We are also protecting the poorest pensioners with a 4.8% increase in the pension credit minimum guarantee.

I am delighted to hear about the increase in pensions. The Minister can tell us what they increased by, but can he perhaps tell us what they were reduced by with the taxation that they were then dragged into?

Order. I am not sure that this is entirely appropriate—

It is for the Chair to decide what is appropriate, but I will come on to the question of fair rates of tax. We should be clear and transparent in how we talk about this issue: any increase in the rate of the state pension is always significantly greater than any increase in tax that follows from that increase due to our not having tax rates of over 100%. It is important that we are heard to say that to people. I will come on to the rates of tax in a second. It is obviously an important part of this debate, given the nature of the petition.

The single biggest betrayal of older generations today is not anything to do with pensions. It is the state of the NHS that we inherited: an NHS that our pensioners in particular rely on and that in 2024 was letting far too many of them down. Here is one fact that it is hard to get over: over one in five of those aged over 75 were on English NHS waiting lists, which soared to over 7 million. One in five people over 75 were left on an NHS waiting list. That is what letting down pensioners looks like, and our priority is to turn that around. The number of those waiting has fallen by over 400,000 since we took office. That progress reflects reform, but it also reflects resources, with £26 billion additional investment supporting 5 million appointments.

The need to turn around the NHS is something that I think we all agree on. It is slightly telling that there was no mention of the NHS in the previous contributions. As I am also a Treasury Minister, it is my job to remind all hon. Members that we can will the ends, but not the means. As always, that applies particularly to the Liberal Democrats, who gave up connecting the two several years ago. Delivering the funding to raise the state pension and rescue the NHS involves choices.

The hon. Member for South Holland and The Deepings (Sir John Hayes) talked about one area in the welfare space and about choices there. I gently say to him, having seen the work of the Department under the previous Government, that there was no plan then. Under the current Opposition, there still is no plan to change the welfare system, but they also claim that changes to the welfare system would fund their proposals on defence and on tax. It is implausible that they would make any difference in this area.

The hon. Member has undersold me: I am right honourable, as he ought to know, really. Leaving that to one side, he will know that £253 billion is spent on non pensioner welfare benefits. Many of those are entirely laudable—as I described when I spoke, the chronically sick, the infirm and profoundly disabled people deserve benefits, and I want those to be bigger and better—but many are not. The Government have ducked that responsibility. Whether previous Governments did, too, is not the point: this Government are in power, power brings responsibility and the Minister has the responsibility to tackle welfare.

I apologise to the right hon. Member for underselling him, but I think that he is also underselling the work that this Government are doing. Changes to the flawed welfare system that we inherited are already taking place. In April, we reduced the financial incentive put in place by a previous Conservative Prime Minister that provided people with a strong incentive to label themselves as too sick to work and therefore did not provide them with any employment support whatsoever. We are bringing forward other measures month by month. Members will see progress in the next few months, in terms of offering people support if they hire young, unemployed people. Changes are happening right now.

I have discussed the choices on the welfare side. Given the nature of the petition, I want to come on to how those choices include tax, because those who made the effort to sign the petition deserve to know where we stand. Not a single Member set out their views on the petition’s proposal clearly, but we owe some honesty about that for the quality of the debate. The reality is that no political party will deliver a doubling of the personal allowance for pensioners. If any Member disagrees with that, now is the moment for them to stand up and set out their support for the petition, but I suspect all Opposition Members will agree. Why is that? It would come at a very substantial fiscal cost of several billion pounds each year. That is inconsistent with the priorities I have set out, including on the state pension and the NHS, which I think most hon. Members share.

Too often, debates on this topic do pensioners an injustice by pretending that most of them are not already paying income tax. The hon. Member for Bognor Regis and Littlehampton (Alison Griffiths) said a little about that, but the hon. Member for Wyre Forest (Mark Garnier) explained the situation exactly: the system, as it was set up, has always been that state and private pensions are taxable. The vast majority of pensioners are already paying income tax; over 80% of pensioners were doing so by the end of the previous Conservative Government.

The question is whether we can keep the contribution that is asked of pensioners—and workers, for that matter—down by making other changes to our tax system. That is what the last Budget focused on: making the system fairer by asking those who can afford to contribute more to do so, not least by taxes on those with the most valuable properties. As he has done in many of our interactions, the hon. Member for Wyre Forest opposed some of the changes that we set out on inheritance tax, salary sacrifice and the rest, but that would mean less money for the NHS or higher tax rates on pensioners, workers and others—there are consequences to our choices.

It is true that we have extended the personal allowance freeze that was put in place by the previous Government. That reflects the need to protect the state pension, rescue our NHS and make sure that public finances are put on a sustainable footing. I am not hiding from the consequences of that policy decision, but the UK has one of the most generous personal tax allowances in the OECD and the G7. It is important to note that our income tax system is progressive; it is not about just who comes into tax but how much tax people pay. Those who have more contribute more, which is exactly as it should be. The impact of the freeze is that higher rate taxpayers, on average, will contribute roughly three times as much as a basic rate taxpayer; the majority of pensioners who pay tax do so at the basic rate or not at all.

Although I have been honest that doubling the personal allowance for any particular group is not a remotely realistic prospect, our tax system recognises pensioners. The hon. Member for Berwickshire, Roxburgh and Selkirk mentioned the 2010 Government’s record on the triple lock, but he slightly missed the abolition of the age related personal allowance, a very generous version of which the petition calls to have brought back. The hon. Member for Witney (Charlie Maynard) praised the coalition Government but somehow also forgot to mention the abolition of the age related personal allowance. Our tax system recognises pensioners in other ways, not just by that position, which was abolished under the coalition Government.

As the hon. Member for Wyre Forest set out, those over the state pension age pay no national insurance. Older generations also tend to benefit most from the multiple tax allowances, not least the £1,000 savings allowance for basic rate taxpayers. The personal allowance will continue to exceed the basic state pension and the full new state pension this year, but, as several hon. Members have set out, the Chancellor has also promised that we will ease the administrative burden for pensioners so that they do not have to pay small amounts of tax via simple assessment from 2027-28. I have heard hon. Members’ requests for more detail on that in the near future, and the direct answer to the question from the hon. Member for Wyre Forest is that those changes will be included in the forthcoming Finance Bill.

I recognise the substantial support for the petition, which is as it should be. Pensioners who have worked hard all their lives deserve a decent retirement. The best way to deliver that is for this Government to continue their work to rescue the NHS and increase the state pension throughout the course of this Parliament, and, as we look to future generations of pensioners, to put in place a stronger private pensions system. That is what the Pensions Commission is looking at right now, which I think has cross party support, because we want to know that tomorrow’s generations of pensioners will also look forward to the retirement we all want to see them enjoy.

I did not anticipate having 45 minutes to speak, but I will do my best to fill the time. I thank Mr Mason for starting this petition and the 120,000 people who signed it. I also thank the right hon. and hon. Members who have participated in the debate; there was perhaps more quality than quantity on this occasion, but it was a very good debate and a lot of useful points were made.

It is remarkable how often Mrs Thatcher and Brexit can still creep into some of these debates, but legitimate concerns were raised by the petitioner and those who signed the petition about how the tax system interacts with the state pension in particular. The Minister was very clear about the choices the Government have made, and I think that we all accept that the highest paid pensioners should be paying tax, but the main thrust of this petition is about those at the bottom end of the income stream who are now creeping into the tax system, which I do not think any of us intended. Pensioners deserve protection and clarity, and they need to know the Government’s intentions for how they will be protected and looked after in their retirement.

Question put and agreed to. Resolved, That this House has considered e petition 740671 relating to personal allowance for state pensioners.

Sitting suspended.