PENSIONERS would have an average of £342 cut off their council tax bills under proposals to be announced by the Conservatives today.
The plan, the first of the party’s targeted tax cuts, would affect five million people over 65 in 3.8 million households. It would cost £1.3 billion, a third of the £4 billion earmarked by the Conservatives for tax cuts if they win the election.
Today’s announcement, on the day that the Commons returns after the half-term recess, will bring a new intensity to the bidding war between the parties just over ten weeks before the expected election date of May 5.
It was slammed in advance as “fantasy” by Labour, which asserted that council tax bills were higher in Tory areas than Labour ones and that the best thing Michael Howard could do was to urge Tory councils to keep them down.
Over the next few days Labour will announce plans to raise the minimum wage to more than £5 an hour in a third term, improve the school examination system, flesh out its proposals for an ambitious new childcare strategy and launch a new series of election posters highlighting its economic record over two terms.
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Under the Conservatives’ tax plans, all-pensioner households would have their bills reduced by a “substantial” set percentage. But to prevent people living in mansions or other highly expensive homes from benefiting excessively there would be an upper limit on the amount that would qualify for the discount. For example people with council tax bills as high as £5,000 would get their discount on a much lower figure.
People who receive council tax benefit will get the discount on what remains of their bill after help has been received.
The Conservatives say that their policy is aimed at the thrifty pensioner who has put aside savings for his or her retirement and does not want to see it all eaten up by payments to local authorities.
The party said yesterday that the typical single pensioner has seen 40 per cent of the increase in the basic state pension since 1997 taken back in higher council tax. Pensioner couples have lost a third of their increase.
Mr Howard said that the issue would be a top priority for a Tory government. “We think that older people in our country need dignity, respect and security. We owe them a great deal. Many of them fought for the freedoms which we enjoy today.
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“I think you can tell a lot about a country by the way it treats its older people.”
Mr Howard told the BBC that Labour had used the council tax as one of its most unfair and oppressive stealth taxes.
He denied that his part in the introduction of the poll tax undermined his credibility on town hall funding.
“I was wrong about that,” he said. “We made a mistake about that. Governments do make mistakes.”
Oliver Letwin, the Shadow Chancellor, said that council tax bills had gone up by 70 per cent under Labour.
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“For people who have worked hard all their lives, who have scrimped and saved a bit and who are not fully protected by council tax benefit, they are now paying a huge proportion of their disposable income in council tax,” he said.
Labour dismissed the Tory plans, saying that Conservative town halls would impose bigger council tax increases than their Labour counterparts.
Nick Raynsford, the Local Government Minister, said that the Conservatives could not identify where the savings to fund the plans would come from, adding: “This proposal has no credibility and is based on a complete fantasy.”
He added: “Pensioners will remember him as the man who imposed VAT on fuel and introduced the poll tax, describing it as ‘fair’.”
Labour recognised that pensioners deserved extra help. “That is why, this year, we are helping pensioner households over 70 with £100 extra and we are committed to giving them a further £50 next year. Council tax increases this year are set to be the lowest in a decade, which will help pensioners and hard-working families.”