Rachel Reeves to deliver major economic speech as she's warned not to scapegoat pensioners

Pensioners must not be made the scapegoat for Rachel Reeves’s economic failures, campaigners have warned ahead of a speech by the Chancellor on Tuesday. Ms Reeves will reveal her priorities for this month’s fiscal event and address mounting speculation about plans to break her manifesto commitment on income tax.

She is expected to admit that her 2024 Budget failed to fix the economy’s foundations, and is now coming back for more to boost funding for other priorities such as the NHS. She will say: “You will all have heard a lot of speculation about the choices I will make. I understand that – these are important choices that will shape our economy for years to come. But it is important that people understand the circumstances we are facing, the principles guiding my choices – and why I believe they will be the right choices for the country.”

However, she was issued a stark warning not to balance the books on the back of pensioners amid rumours of a hike to income tax.

Dennis Reed, of over-60s campaign group Silver Voices, told the Express that rumours of a 2p rise in income tax would “hammer the large majority of pensioners”.

He warned: “Silver Voices has no objection to the very wealthy, whatever their age, paying more in income tax to improve our public services, but we warn the Chancellor not to target pensioners again in her Budget plans.

“A sneaky move to raise income tax but pay it back to working families through a cut in National Insurance would intentionally hammer the large majority of pensioners, including those on low and modest incomes.

“If the lower tax threshold remains frozen, this would be a double whammy for all older people and confirmation that pensioners are being made scapegoats for the economic mess the country is in".

The Resolution Foundation, a Left-wing think tank closely linked to the Labour Government, is pushing for a policy that would raise income tax by 2p while cutting National Insurance by the same amount.

This would shift the burden onto those who do not pay National Insurance – including pensioners, the self-employed and landlords – while leaving most workers’ pay packets unaffected

Publishing its pre-Budget report today, the Resolution Foundation did not hide that it wanted pensioners to shoulder much of the expected tax rises.

The think tank, whose former chief executive Torsten Bell is now a Treasury minister leading on Budget preparations, insisted: “Pensioners’ living standards have increased by much more than those of working age – typical pensioner incomes have increased by 21% over the past 20 years compared with just 4% for those of working age – and with the state pension going up £560 next April, only pensioners with incomes above £40,000 would be worse off overall in cash terms.”

A spokesman added they would be happy to shift the tax burden onto pensioners, after last year’s Budget saw them “spared completely” in light of the U-turn on winter fuel cuts.

Tory Shadow Chancellor Sir Mel Stride pointed to Ms Reeves’s recent appointment of a new economic adviser, also plucked from the Resolution Foundation, as further proof she is “intent” on higher taxes.

He told this paper: “This is a team that has proposed tax hikes on everything – pensions, family homes, employers, fuel, council tax, inheritance. You name it, they want to tax it.

“That's the risk of putting people in charge of the economy who've never run a business and never created a job. Reeves and Starmer should start listening to those who actually drive our economy.

“Starmer and Reeves cannot hide from the facts – they said they would not be back with any more tax rises after their disastrous Budget last year. If they break their word again, the Chancellor has to go.”

Conservative Party leader Kemi Badenoch will also deliver a pre-Budget speech on Tuesday, calling on Labour to focus on getting Britons back to work.

She will condemn Ms Reeves and Welfare Secretary Pat McFadden for having “given up” trying to reduce the welfare bill after reports emerged that the Government has failed to identify any potential savings.

Left-wing Labour backbenchers appear to have forced the Government into ditching all efforts to cut those on benefits such as Personal Independence Payments, despite the PM saying the cost of the bill is “unsustainable”.

Mrs Badenoch will warn: “Britain has stopped working, because it has stopped making sense to work. Far from solving this, Labour seem intent on making it worse.

“Conservatives are going to get Britain working again. Because above all else, this is deeply unfair.

“Earlier this year, Labour backbenchers celebrated when they managed to pass legislation guaranteeing that the sickness benefits bill would rise to £100billion a year.

“Labour has given up. They have given up making savings on welfare altogether in the Timms Review. Just as their own internal assessments are now warning that the cost of PIP payments will continue to spiral out of control.

“The deficit is set to double thanks to decisions this weak Labour Government are taking.”