George Osborne has been accused of "bribing" voters with his pensioner bond giveaway.
With just three months to go before the general election, the chancellor announced on Sunday that the taxpayer will spend "several hundred million pounds" extending the deadline to apply for the special government-backed investments, which are only available to over-65s.
It means pensioners now have until May 15 to sign up for the savings, which pay up to 4% interest. More than 600,000 over-65s have already snapped them up since they were first offered last month.
The Intergenerational Foundation, which campaigns for fairness between generations, accused him of robbing young people to "bung it to the grey vote".
Co-founder Ashley Seager told BuzzFeed News:
It is scandalous that George Osborne is using money from young and middle-aged taxpayers in a pre-election bribe to wealthy older people in an attempt to buy their votes. This flies in the face of David Cameron's claim that we are 'all in this together', after recent announcements of further cuts to child benefit which will hit young families.
Young people are already a packhorse generation struggling to buy a house, save for a pension or pay off their student loans, yet George Osborne has slipped his hand in their pockets to the tune of half a billion pounds to bung it to the grey vote. He should be ashamed of himself.
Tory MP Phillip Lee branded the move "intergenerational theft" and said Osborne was letting down young people.
In a statement on his website, Lee warned that making "attractive pre-election offers" to pensioners simply deterred younger people from voting.
The MP for Bracknell said pensioner bonds "act as a disincentive to younger people when our priority should be to incentivise them to work harder and be more productive". He added:
The problem is that, in order to afford to offer such preferential rates to a specific section of the community, the Exchequer has to borrow more money, a debt which will not be repaid by those benefitting from the bonds but by future generations. Although the cost of this policy (somewhere in the region of £350m) is relatively modest, it (along with other pensioner benefits) sends the wrong message to the younger electorate.
This tax barrister isn't happy either.
So what are pensioner bonds, anyway?
They're basically just fixed-rate savings accounts for the over-65s. Available through NS&I, the Government's savings arm, they offer far higher rates of interest than normal high-street accounts.
The one-year bond pays an annual interest rate of 2.8% before tax, and the three-year bond pays 4% before tax. At the moment, the best one-year bond on the open market is currently paying about 1.85% interest while the best three-year bond is paying 2.5%.
Investment is limited to £10,000 in each bond, meaning people are only able to invest a maximum of £20,000 each. Tax is deducted from the interest paid on these bonds but non-taxpayers can claim this back from HM Revenue and Customs. They first went on sale in January.
Emily Ashton is a senior political correspondent for BuzzFeed News and is based in London.
Contact Emily Ashton at firstname.lastname@example.org.
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