{"id":744765,"date":"2026-07-05T15:18:18","date_gmt":"2026-07-05T15:18:18","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/744765\/"},"modified":"2026-07-05T15:18:18","modified_gmt":"2026-07-05T15:18:18","slug":"burnham-told-to-consider-means-testing-state-pension-to-fill-defence-blackhole","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/744765\/","title":{"rendered":"Burnham told to consider means-testing state pension to fill defence blackhole"},"content":{"rendered":"

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Andy Burnham<\/a> is being advised to consider means-testing the state pension as a way of filling the \u00a34.7bn blackhole in the defence budget left to him by Sir Keir Starmer.<\/a><\/p>\n

The suggestion has come from tax expert Dan Neidle<\/a>, a member of the Labour Party, in a list of 37 options he published on the tax policy website<\/a> to find the money to pay for the unfunded part of Sir Keir\u2019s Defence Improvement Plan.<\/p>\n

He claimed that barring the wealthiest from receiving the state pension<\/a> could save \u00a31bn a year. But it would break the link between the state pension being a universal benefit funded by National Insurance which was established when David Lloyd-George created it in 1908.<\/p>\n

Mr Burnham has ruled out breaking Labour\u2019s 2024 manifesto promise to not raise income tax, VAT or personal contributions to National Insurance, which in theory fund the state pension.<\/p>\n

\"AndyAndy Burnham has to fill a \u00a34.7bn blackhole in the defence budget (PA Wire)<\/p>\n

He has discussed changing business rates in a way which would target large online retailers like Amazon that rely on huge warehouses.<\/p>\n

But he has also recommitted to the triple lock on the state pension rising each year by 2.5 per cent or the highest rate of inflation which adds to the burden of the bill.<\/p>\n

However, he has to find at least \u00a34.7bn to fund the black hole in the defence package and may need to find another \u00a313bn if he is to meet the amount which military chiefs claim is required to prepare the UK for an increasingly dangerous world.<\/p>\n

Listing means-testing the state pension as option 37, Mr Neidle noted: \u201cThe state pension pays out about \u00a312,500 per year. It\u2019s easy to think that\u2019s an irrelevant amount to wealthy retirees, and we should means-test the pension to stop them benefiting. <\/p>\n

\u201cGiven the government spends over \u00a3150bn each year on pensioner benefits, blocking even just the wealthiest 1 per cent from pensions would raise over \u00a31bn. It seems a slam dunk.\u201d<\/p>\n

However, in a warning over the proposal he admitted that it would have problems.<\/p>\n

He said: \u201cA pension of \u00a312,500 per year, updated with the \u2018triple lock\u2019, is actually a highly valuable asset. <\/p>\n

\u201cIt would cost the average 66-year old somewhere over \u00a3250,000 to buy an asset like that. A family \u2018just\u2019 in the wealthiest 1 per cent has average assets of \u00a31.9m per adult. So removing their pension would effectively expropriate over 10 pe cent of their wealth. That feels unjust. I doubt any chancellor would do this.\u201d<\/p>\n

Instead, the top suggestion from Mr Neidle is to continue the fiscal drag on things like freezing income tax thresholds so more people are included in the higher rates of 40p and 45p as well as the basic rate of 20p.<\/p>\n

\"DanDan Neidle came up with 37 options on tax (Dan Neidle\/CC BY-SA 4.0)<\/p>\n

\u201cInflation and earnings growth mean we\u2019re all earning more in cash terms, but not in real terms \u2013 however tax thresholds have stayed the same for years. The Johnson and then Sunak governments raised very large amounts with fiscal drag \u2013 over \u00a329bn by 2027\/28. This has only a limited effect on median earners, but represented a significant tax increase for higher earners. Rachel Reeves extended the freeze to April 2031. It seems likely that we will get another extension from Mr Burnham, raising around \u00a35bn in 2031\/32 and more in subsequent years.\u201d<\/p>\n

Mr Neidle also suggested that a proposal aired by one of Mr Burnham\u2019s key lieutenants Louise Haigh recently of raising capital gains tax could bring in \u00a36bn.<\/p>\n

He noted: \u201cIt\u2019s obvious from the charts above that capital gains tax is the single largest way to raise tax without breaking pre-election promises.\u201d<\/p>\n

But he warned: \u201cHowever, it comes with a large catch. A simple rate increase will, on the basis of HMRC figures, lose revenue, not raise it.\u201d<\/p>\n

Other suggestions include an exit tax for wealthy people leaving the UK, capital gains tax on top of inheritance tax when people die, an increase in inheritance tax and forcing law firms to start paying employer national insurance. Currently they are exempt because lawyers have partner not employee status.<\/p>\n

He also wants Mr Burnham to look at eliminating the loophole on stamp duty for commercial property, introducing a tax for large gifts and force the Bank of England to stop paying interest on its own reserves.<\/p>\n","protected":false},"excerpt":{"rendered":"Your support helps us to tell the story From reproductive rights to climate change to Big Tech, The…\n","protected":false},"author":2,"featured_media":744766,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[28,147,530],"class_list":["post-744765","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/744765","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=744765"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/744765\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/744766"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=744765"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=744765"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=744765"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}