07 May 2009
I am writing to update you on three things – the outcome of my exchange with the Prime Minister today, a debate I led yesterday on local bus services and a chance for pensioners and others who do not pay income tax to reclaim overpaid tax on their savings.
Prime Minister’s Questions
Many thanks to the hundreds of constituents who offered suggestions for my question to the Prime Minister. A huge variety of topics was raised, from the global to the local. Apart from the many who wanted me to demand an early election (which I would certainly welcome), the main themes were, in order, the economy, immigration and the environment. On the economy, the two biggest items were the position of savers and the failure of banks to lend. In the end, I went on savers, and this is a rough transcript of what I said and how the PM replied:
“My constituents, who have worked hard and saved hard, now feel betrayed because the value of their savings has slumped and because interest rates have plunged close to zero. And indeed, the banks that their taxes have helped to bail out are the very ones now offering them virtually nothing for their savings. So what message does the Prime Minister have for my constituents who now wonder why they bothered to save?”
“As he knows, the worst thing that could happen to savers is if you had rampant inflation that wiped out the value of their savings, and we have kept inflation low during the last 11 and 12 years. The second thing that we tried to do in the Budget, particularly for elderly savers, is to increase the amount of money that they can invest in their individual savings account and soon that will be £10,000 a year. So we are aware that low interest rates put additional pressures on savers; we have taken action in the Budget to help them and I hope he will support that.”
I’m sure that many of you will have views on this response. With soaring costs of food, fuel and council tax, “low inflation” is not the first thing that springs to mind, whilst increases in the ISA limit are all very well but don’t really address the fundamental problem of poor returns to savers.
I can confirm that I went through all of the suggested questions and, given the widespread concern about illegal immigration, I will take this issue up in writing with the Home Office. Many thanks to everyone for their suggestions.
Local public transport
As many of you will know, I have long campaigned for better local bus and train services and have fought First’s attempts to cut bus services. Yesterday I led a short debate in Parliament on this issue. If you are interested in what I said and in the Minister’s reply, you can find it at the top of the list here:
Pensioners and savings – have you paid too much tax?
In 2008/09 the main personal tax allowance for those under 65 was £6,035, for those aged 65-74 it was £9,030, and for those aged 75 or over it was £9,180 ; if your total taxable income from pensions (including state and private pensions) and investments was under this figure then you should not have paid tax in that year. But many people in this situation have money in things like bank and building society accounts which normally deduct 20% income tax before they pay your interest. If you are in this situation then you can claim back the tax that you should not have paid. Furthermore, if this was the situation in other years you can still claim back tax for any year from 2003/04 onwards. The Government estimates that the average overpaid tax could be around £200 over the period.
If you think this might be you, you can find claim forms at http://www.hmrc.gov.uk/tdsi/claim-tax-back.htm.
Do let me know how you get on, or if you have any problems.
With best wishes,
Steve Webb MP