The Taxpayer Election Con

 

 

It is one of the best pieces of ‘conmanship’ to come out of W1 since the expenses scandal but the Pensioner Bond sting has pretty much gone unnoticed. It's actually very cleaver when you stop and think about it.

 

The story......

 

A year before the General Election, George Osbourne announced a number of giveaways aimed at the over 55’s as a sweetener for votes. The theory being that 75% of over 55’s will vote and they needed a little persuading. A kind of greasing of the election tubes. The giveaways included a massively increased tax free savings limit on ISAs, revolutionary pension freedom rules and a new Pensioner Bond.

 

Osbourne wasn’t daft……he knew there was a high proportion of over 55’s holding cash savings with banks and they were blaming the Government for the poor (abysmal) interest rates on offer. So, to “help those that need it the most”, Pensioner Bonds were offered (through NS&I – formally National Savings) with staggeringly attractive interest rates (between 2.8% and 4.0%) that were way ahead of what was available with banks (2% over the market rate).

 

It was no surprise that £13 billion was invested in these.

 

But here’s the catch……it has come at taxpayer expense as it has cost the Treasury £260 million in interest payments to date (and rising). That’s an extra £260 million that will need to be found through taxes or loss of public services.

 

Did Pensioner Bonds win the Conservatives the General Election? No. Did it help and contribute? Definitely.

 

Well done George……you fooled taxpayers yet again!