Liberal Democrat MP for Eastbourne Stephen Lloyd has written to Chancellor Philip Hammond urging him to fix the net pay pension tax anomaly.

Lloyd has also signed a petition created by Now Pensions calling for the government to rectify the issue, something which Now Pensions has estimated will cost £115m. He criticised Hammond for rejecting to fix the issue as it is "not cost effective", and stated that the government’s focus “lacks compassion”.

Lloyd said the government’s skewed priorities can be seen in the fact that the Department for Work and Pensions spent £108m in the two years from October 2015, solely on administrative costs of fighting appeals against decisions by the DWP of disabled people’s right to Personal Independence Payments and Employment Support Allowances.

The £108m figure does not include the legal cost of fighting such cases, and the department loses about two thirds of them annually.

Commenting, Lloyd said: “As so often happens when this government tell us there isn’t any money, a pot of cash magically appears to pay for one of their obsessions; in this case the desire to challenge disabled people in court, and usually end up losing! Meanwhile there is a genuine wrong to be righted in the pensions system, but they’d prefer to ignore it. Yet another example of the Tories lack of compassion toward the poorest and most vulnerable in our community.”

In article published earlier this month, it was reported that Now Pensions estimates 1.75 million low earners in net pay pension schemes are missing out on up to £111m of pensions tax relief.

The number of people is almost half a million more than previously expected, following an increase in the personal allowance from £11,850 to £12,500 in April 2019, increasing the amount of tax relief workers missing out on from £34.91 to £63.64 a year.

The issue affects workers who earn more than the auto-enrolment threshold of £10,000 a year, but who are under the income tax threshold of £12,500 a year.

According to the provider, three quarters of the workers are women in low-paid or part-time roles.

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