Government defends 'granny tax'

The Government has defended its 'granny tax' raid on older people in Britain, saying the changes announced in George Osborne's Budget are both 'fair' and necessary to pay off the country's deficit.

The planned reforms have been criticised by age campaigners and Labour opponents who have branded the changes as 'outrageous' when viewed in the context of tax breaks for millionaires.

But although Treasury minister Lord Sassoon admitted in a debate in the House of Lords that 'tough choices' had been made, he insisted that the Government will not 'shirk its responsibility to restore fiscal sustainability and economic stability'.

'We have learnt to all our costs the consequences of unsustainable spending and ever increasing debt,' he said.

The Lords' Opposition spokesman, Lord Eatwell accused ministers of attacking the welfare standards of the poor in a 'mean little Budget'. He described the Government's plan for growth as a 'spectacular failure' and warned of an economic depression that would last two years longer than the one that hit Britain in the 1930s.

Michelle Mitchell, Charity Director-General of Age UK, commented: 'Older taxpayers will be disappointed that the Government has decided to scrap the age-related tax allowance. This will affect those with modest pensions and savings for their retirement.

'Someone with an income as low as £10,500 who reaches 65 from April 2013 could be £259 a year worse off than under the current system with very little time to adjust their financial retirement plans.'

Copyright Press Association 2012