Andy Burnham has been urged to consider raising taxes on wealthy pensioners in order to help stabilise public finances amid the growing costs associated with an ageing population. The Institute for Public Policy Research (IPPR), a think tank favoured by the Labour Party, has recommended extending National Insurance contributions to older earners, including applying the 2 per cent National Insurance surcharge to pensioners over 65.
In a recent report authored by Oxford professor Ben Ansell, the IPPR calls for the establishment of a new “fiscal contract”. Among its proposals are reforms such as replacing council tax and stamp duty with a single, proportional property tax.
Professor Ansell explained, “Britain cannot meet the fiscal challenges of the coming decades simply by asking people in work to pay more and relying on another round of stealth taxes. Ageing is set to become the greatest pressure on public finances. Yet our tax system increasingly shifts responsibility onto younger workers while protecting those who have benefited most from decades of rising property and asset wealth.”
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He added, “Though reform is politically challenging, avoiding it has resulted in an ever more complex tax system. We need a fiscal contract that raises the necessary revenue, shifts more of the burden from labour onto wealth and property, and is transparent with the public regarding who pays and why.”
The report’s recommendations include extending the 2 per cent National Insurance surcharge currently applied to workers under 65 to pensioners, introducing a proportional property tax around 0.65 per cent to replace council tax and stamp duty, and aligning capital gains tax rates with income tax rates, alongside an investment allowance for typical returns.
However, the proposals have faced criticism from opposition figures. Sir Mel Stride, the Shadow Chancellor, cautioned older voters ahead of the upcoming Budget, saying, “When Andy Burnham’s favourite think tank proposes significant tax increases on investment, pensioners, and family homes, it should serve as a warning about what might be coming. Labour has already stifled growth with hefty tax rises, yet Andy Burnham refuses to rule out further increases.”
A Treasury spokesperson responded by emphasizing that the Chancellor remains focused on supporting business, addressing the cost of living, and aiding communities across the country. They stated, “As always, the Chancellor will announce decisions at formal fiscal events rather than comment on rumours, speculation, or proposals.”