Consumer champion Martin Lewis has revealed his three asks of Chancellor John Healey in this month’s Budget. The TV star told the Mirror he wanted to see action on student loans, energy bills - including an extension of the temporary VAT cut - and clarity on what will happen to older people when the increase in the state pension tips some just over the threshold for paying income tax.
Martin said he had deliberately avoided choosing things that others might be demanding of Mr Healey ahead of the Budget on October 28. “They are little asks,” he told the Mirror. “All are plausible, is how I would phrase it. They are the three things that other people may not be talking about.”
Student loan threshold freeze
On the first, he said: “I want to see a reversal in the freeze in the student loan repayment threshold, for Plan 2, which I’ve been campaigning very loudly on.” Plan 2 loans were taken out by students in England between September 2012 and July 2023, and are still issued in Wales. Graduates pay back what they earn above the repayment threshold at a rate of 9%.
Last November, former Chancellor Rachel Reeves froze the Plan 2 repayment threshold at £29,385 from next April for three years, instead of allowing it to rise with inflation. The change will mean students starting to repay their loans sooner than they would otherwise have done, and their rising salaries leading to bigger repayments. Martin has previously branded the freeze “immoral because it is a negative retrospective change of terms to loan contracts students, often aged 18, signed up to.”
The Institute for Fiscal Studies has said a borrower with an outstanding Plan 2 loan earning above £30,416 will repay an extra £93 next year, rising to £259 more in 2029/30.
Energy bills and state pension
Martin’s second ask of the Chancellor was on energy bills, with forecasts that regulator Ofgem’s price cap could rocket by 16% in January, leaving a typical household facing a bill of around £2,000 a year. One of Andy Burnham’s first announcements after becoming PM was to temporarily remove the 5% rate of VAT on electricity bills, saving a typical household £45 a year. “On energy bills, I would like to see an announcement to extend the electricity VAT, and also reducing the standard charge,” Martin said.
He went on: “And I also want to understand exactly what the government will do about the state pension from next April going above the personal allowance. Rachel Reeves promised me last year that those who earn just above the state pension won’t have to pay tax. I want to know how will that work, how will it manifest. That leave some unfairness for people who’ve got 20 quid's worth of income, which means they are suddenly paying tax. On that one, the devil is all in the detail. It will be coming but I want to see how it will work.”
It is likely the full new state pension will rise by 3.9% to just over £13,000 a year next April. However, that would put it above the tax free personal allowance, which is frozen at £12,570. The Treasury subsequently confirmed that pensioners who only just exceed the personal allowance will not have the “administrative burden” of paying small amounts of tax in this Parliament. But Martin asked: “Is there be a taper, will there be a cut off, how will it work?”
Small Ideas Initiative
It came as he launched a crusade to combat “life’s potholes”. He has set up and is funding The Small Ideas Initiative, which will pull together suggestions from the public, charities and others. It has been started with a £175,000 personal donation from himself to the two organising charities - Nesta’s Centre for Collective Intelligence and Involve.
