Giveaway for richest 1% as Hunt tries to stem exodus from workforce

Pension change in Hunt budget puts wealthiest in line for enormous tax cut | Public services 'basically ignored' and face 'implausibly tight spending' | Living standards to decline by 5.7% in two years - the biggest fall on record

- Jessica Elgot, Larry Elliott, Pippa Crerar

Jeremy Hunt handed a huge pensions giveaway to the wealthiest 1% to help stem the tide of people leaving the workforce yesterday, in a budget designed to reboot Britain’s faltering economy with business investment incentives and childcare support.

In an attempt to keep older skilled workers from retiring early, Hunt announced his only major surprise of the budget – scrapping the £1m cap on tax-free pension savings. He said: “No one should be pushed out of the workforce for tax reasons.”

The chancellor claimed his “budget for growth” would address Britain’s two big structural economic weaknesses – a lack of investment and a shortage of workers – but the most eye-catching measure was the pension boost for the top 1% of earners.

Someone with a £2 m pension pot will now get a tax cut of £275 ,000 when they take their tax-free lump sum . The Labour leader, Keir Starmer, questioned how the change could “possibly be a priority for this government”, while other critics noted Hunt’s statement said nothing about public sector pay. Torsten Bell, chief executive of the Resolution Foundation think tank said Hunt had “basically ignored” public services, leaving them facing “implausibly tight spending plans”.