Tories pledge pension triple lock plus, as Labour insists it's the 'pro-business' party

ITV News' Romilly Weeks break down what the Tories' pension tax pledge means and how Labour is seeking to appeal to British businesses

Rachel Reeves has insisted Labour is the "natural party of British business", as Rishi Sunak set out the Tories' new pension tax pledge as they continue to battle it out on the election campaign trail.

The Tories and Labour are focusing on key economic policies today, with the former appealing to pensioners and the latter hoping to cut through with British executives.

Ms Reeves today said Labour was now “the natural party of British business” and promised to lead “the most pro-growth, pro-business Treasury” in the UK’s history, adding that corporation tax would be capped at its current level under a Labour government.

Meanwhile, Mr Sunak unveiled his landmark pensions policy as he sought to get his campaign back on track by offering a £2.4 billion-a-year tax giveaway.

He promised to increase the income tax personal allowance for pensioners, giving them a tax cut worth around £95 in 2025-26, rising to £275 in 2029-30.

In her first major speech of the campaign pitching herself as chancellor, Ms Reeves said her party’s proposals meant there were “no additional tax rises needed beyond the ones I have set out”.

Her speech came after scores of business leaders backed Labour's economic pledges, with 121 executives, including the Wikipedia founder, wrote to The Times on Tuesday to declare their support for the party.

Standing in front of two jet engines at Rolls Royce’s plant in Derby on Tuesday, she said the increases already proposed include closing “loopholes” in the windfall tax on oil and gas companies and the government’s plans to tax non-doms, and making private schools subject to VAT.

Ms Reeves also hinted she would like to cut income tax and national insurance, but would not do so without being able to say how she would fund those cuts.

Ms Reeves said: “I know there is no policy that I can announce, no plan that can be drawn up in Whitehall, that will not be improved from engagement with business, and our manifesto will bear the imprint of that engagement.”

She also sought to emphasise Labour’s dividing lines with the Conservatives, saying her party would fight the election on the economy and blaming “Tory instability” for Britain’s economic situation.

Ms Reeves urged voters to “pass judgement” on the Conservatives, saying they had “failed on the economy”.

Asked whether her support for business came at the expense of supporting workers, Ms Reeves insisted that Labour was both pro-worker and pro-business, “recognising that you can’t be one without the other”.

Meanwhile, Labour hit out at the Tories' pension tax break, calling it a “desperate move” from a party which was “torching” what was left of its claims to economic credibility.

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Mr Sunak’s new tax policy would see the age-related allowance rise in line with the increase to the state pension under a “triple lock plus” guarantee.

That would mean that both the state pension and the allowance – the amount that can be earned before being liable to income tax – rising by inflation, average wages or 2.5%, whichever is highest.

The announcement will guarantee in legislation that the pensioners’ personal allowance will always be higher than the level of the new state pension.

The policy will cost £2.4 billion a year by 2029/30 and will be funded through the clamping down on tax dodgers – the same pot of money which will help pay for Mr Sunak’s plan for new mandatory national service for 18-year-olds.

Mr Sunak said: “Thanks to the Conservatives’ triple lock, pensions have risen by £900 this year and now we will cut their taxes by around £100 next year.

“This bold action demonstrates we are on the side of pensioners. The alternative is Labour dragging everyone in receipt of the full state pension into income tax for the first time in history.”

But experts have responded to the announcement by highlighting that increasing pensioners’ personal allowance is a reversal of previous government policy.

The former approach would have seen pensioners’ income hit by “fiscal drag”, while the Institute for Fiscal Studies (IFS) calculates that around half of the £2.4 billion annual cost of the new plan is the price of not continuing to raise income tax on pensioners.

Institute for Fiscal Studies director Paul Johnson said about half the cost of the plan was from not imposing three more years of frozen personal allowances on pensioners.

“So the £100 ‘saving’ next year is mostly just avoiding a £100 tax increase, rather than an actual giveaway,” he said.

Torsten Bell, chief executive of the Resolution Foundation think tank which focuses on living standards, said the sales pitch is about keeping those on basic state pension out of tax, but the “biggest beneficiaries of another tax system complication will largely be better-off pensioner households”.

Work and Pensions Secretary Mel Stride said his party can “comfortably” raise the money to cover the cost of a tax cut for pensioners.

Mr Stride said £6 billion a year would come from clamping down on tax avoidance and evasion, insisting the target figure is “very much in line” with figures achieved in the past.

He went on to say the head of the National Audit Office had confirmed that the number is “achievable”.

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