Politicians vary in ability and intellect, but most are genuinely dedicated to public welfare. Political parties may have what in my view are misguided policies but they do not set out to deliberately mislead the public.
These opinions may not be fashionable but they seem to me, as a political observer, to be true. They are suddenly thrown into doubt, however, by Labour’s pledge to supposedly compensate more than 3 million women owing to rises in the state retirement age. It amounts to an unfunded programme of up to £58 billion. Angela Rayner, the shadow education secretary, said on Sunday that “Tories with Liberal Democrats stole this money from these women who were born in the 1950s… [The women] want their money back and quite rightly so.”
Ms Rayner is a thoughtful politician but this amounts to either culpable ignorance or flagrant dishonesty. Labour’s pledge to the campaigners calling themselves Women Against State Pension Inequality (WASPI) is a regressive outrage. If the antisemitism issue marks the party’s abject moral descent, the pensions pledge is surely its intellectual nadir.
Exactly contrary to the campaigners’ claims, the issue arises because of a move to state pension equality, not inequality. The 1993 budget announced that the state pension age for women and men would be harmonised. This was enshrined in legislation in 1995 to raise the retirement age for women from 60 to 65, in line with men. The equalisation took place in 2018, and the common retirement age will rise to 66 by 2020 and 67 by 2028.
The coalition government of 2010-15 did not “steal” any money from women born in the 1950s. They accelerated the transition to a higher state pension age. It was absolutely the right thing to do. The campaigners have already lost a legal battle against the government for their handling of the issue and have been handed, for apparently purely electoral reasons, a get-out by the Labour Party for the failure of their case.
The language of the pensions issue is often misguided. There is no pensions “crisis” and no problem of an ageing population. On the contrary, it is a great social advance that average life expectancy for both sexes is well beyond the state pension age (though it has stagnated recently, it stands at just above 79 for men and just below 83 for women).
The problem for pension provision is not of an older population but of a retirement age that is too low. The options available to government are to allow the state pension’s real value to erode owing to below-inflation increases (a bad idea), encourage people to take greater responsibility for their own pensions through auto enrolment into occupational schemes (a good idea but one which raises the potential for misselling of investment products by private providers), raise the retirement age progressively (an essential step) and boost immigration (a very good idea but one that today’s politicians largely frown upon).
It’s a manageable problem, but a problem nonetheless. An older population implies a rising dependency ratio, whereby fewer people of working age have to pay for the state retirement incomes of more pensioners. Labour’s language of “theft” from women born in the 1950s is a gross misrepresentation of how the state pension system works. There is no pot of money, created by national insurance contributions, which workers build up for themselves. Rather, today’s workers pay for the state pensions of today’s retirees.
It is scarcely conceivable that a party nominally of the left and committed to equality should have adopted the WASPI agenda but that’s what’s happened. The women concerned stand to gain from payouts of up to £30,000. In an era of widening intergenerational differences due to the high cost of housing and commuting, this is a transfer from younger to older people, many of whom are very well off already.
How is it possible that Labour can pledge itself to divert public money to, for example, Theresa May, who is a woman of this generation? The answer, I fear, is that the party is lagging in the polls and has made a cynical appeal to a generation that typically votes in large numbers. There is not an iota of progressive principle behind it. It’s a piece of rhetorical legerdemain that overturns a quarter of a century of sensible and equitable pension reform. What a moment to do it. And what a disgraceful pledge to enact.
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