‘Hypocrite’ Starmer to avoid tax on pension

 Labour leader has a unique pension deal despite attempts to abolish lifetime allowance

Source - Daily Telegraph - 21/03/23

Link

Sir Keir Starmer has been accused of hypocrisy after it emerged that he has a unique pension deal from his time as Director of Public Prosecutions which allows him to avoid tax on his savings.

The Labour leader has pledged to force other wealthy savers to be subject to a cap on their pension savings and on Tuesday night led a Parliamentary attempt to overturn the centrepiece of Jeremy Hunt's Budget.

However, The Telegraph can reveal that under a special arrangement with the Government, Sir Keir's pension from his time as Director of Public Prosecutions (DPP) is exempt from tax rules he would apply to other workers who save more than £1m.

Sir Keir has criticised Mr Hunt for holding a “huge giveaway to some of the very wealthiest” by abolishing the lifetime allowance for all pension pots. 

The Chancellor's policy will mean that pensioners can save more than the current limit of £1.07m without incurring tax charges that the Government says are preventing many from remaining in work. 

On Tuesday night, Sir Keir led 176 Labour MPs through the Commons lobbies to vote against the change, and the party has pledged to reverse it if it wins the next general election.

Moments before the pensions change passed in Parliament on Tuesday, Labour MPs shouted at ministers that “bankers” would be among the people who benefit and spoke in favour of a scheme limited only to doctors.

But The Telegraph understands that despite his opposition to the cap, Sir Keir himself benefits from a one-man “tax-unregistered” pension scheme, which means the lifetime allowance does not apply to his contributions from his time as DPP between 2008 and 2013, when he earned almost £200,000 a year. 

The Labour leader was the only member of the exclusive pension scheme, which had tax benefits that “broadly” matched those enjoyed by judges, and disclosed in Crown Prosecution Service accounts signed by Sir Keir himself. 

When he stood down, the Government passed secondary legislation, titled the Pensions Increase (Pension Scheme for Keir Starmer QC) Regulations 2013, that ensured his pension was increased once a year to keep pace with rising prices.

The arrangement means he can continue to save money from his salary as an MP and any future salary as a Government minister for longer without incurring a tax bill.

The Labour leader has described Mr Hunt’s policy, which would involve similar tax breaks for all members of the public, as a “for the richest one per cent”.

In response to the Budget statement last Wednesday, he said: “The Chancellor made a big spending commitment that will benefit those with the broadest shoulders when many people are struggling to save into their pensions. 

“We needed a fix for doctors, but the announcement today is a huge giveaway to some of the very wealthiest. The only permanent tax cut in the Budget is for the richest 1 per cent.”

The Telegraph understands Sir Keir’s civil service pension is not large enough to incur a tax charge under the pension cap system on its own, and he has not paid into it since 2013.

Under the current system, almost all taxpayers must pay rates of 25 per cent on money taken as income, or 55 per cent on a lump sum, on any sums over £1.07m.

But under Sir Keir's arrangement, any money he saved while serving as DPP does not count towards his total.

The same benefit is not given to other senior civil servants of an equivalent rank, such as permanent secretaries in government departments, and was removed from Directors of Public Prosecution in 2014 after Sir Keir stood down.

The tax perk had also applied to his predecessors in the DPP role. The benefit was abolished for Sir Keir's successors the year after he stood down.

'This makes a mockery of the current Labour Party position'

Conservatives on Tuesday night accused Sir Keir of hypocrisy for accepting a tax-unregistered pension while campaigning against the same policy for all public sector workers.

Sir Iain Duncan Smith, the former work and pensions secretary, said: “Politicians who take policy positions should recognise that complaining that others benefit, while they themselves have also benefited, is as close to hypocrisy as it is possible to get. 

“This makes a mockery of the current Labour Party position.”

Kieran Mullan, a Tory MP who first trained as a doctor, said: “This is brazen hypocrisy from Sir Keir Starmer. 

“While Starmer benefits from a bespoke public sector pension with no lifetime cap, he wants to re-introduce a cap for everyone else.

“Sir Keir should come clean and explain why he should benefit from an uncapped pension pot, but other public servants shouldn’t.”

Rachel Reeves, Labour's shadow chancellor, said abolishing the pension cap was “the wrong priority, at the wrong time, for the wrong people” and pledged to create a targeted scheme that only applied to doctors.

A Labour spokesperson said: “The pension rules for the Director of Public Prosecution are set by the government of the day, not the DPP themselves.”