A mate of mine recently started working in a garden centre in the North-West of England. Besides becoming increasingly familiar with innumerable varieties of plants, his experience there has radicalised him against pensioners. This isn’t because they repeat themselves when asking him for directions to the geraniums, but because of the money they spend there.
This may sound unfair. But the thought my friend can’t shake each time a silver-haired customer purchases a new gnome is whether they’re using their Winter Fuel Allowance to buy it.
Recent announcements on the matter have, in fairness, driven me a bit mad too.
After styling themselves as the party of tough choices, Labour have buckled and U-turned on their promise to limit the eligibility for the Winter Fuel Allowance. All pensioners with an income of £35,000 or less – around 75% of them – will have their winter fuel payments restored in full, the estimated cost of which is £1.25 billion.
In her announcement, Rachel Reeves stated that she had ‘listened to people’s concerns’ and claimed that the volte face was now possible because her party had heroically stabilised the economy.
Even by the standard of modern politics, that is an insultingly unimaginative piece of spin.
The fact of the matter is that changing any old-age benefit to make it marginally less profligate is a politically challenging thing to do, and the Government wasn’t up to it. After much fury from Labour backbenchers, the Conservatives and (most humiliatingly) Reform, they bowed to the pressure. This was hardly the happy by-product of a sudden economic rally – in fact, the OECD has only just downgraded its UK growth projection.
Politically, the ramifications of this are dire for the Government.
Even if they get the money back, pensioners are still going to be furious at Labour. Equally damaging is that, rather than sticking to their guns, the Government have proved that their policies are beholden to whatever populist pronouncement by Nigel Farage happens to be playing well in the media.
While Labour have said that there will be no ‘permanent’ increase in borrowing to fund the measure, our national debt is at almost 100% of GDP, so any major increase will be felt acutely. Tax rises, widely assumed to be coming in shortly, will also be used to plug the hole. Besides those wealthy financial masochists who claim to want to pay even more to the state, this is no voter’s idea of a good time.
There’s a deeper problem here: Britain has become a gerontocracy. On practically every metric, our economy is weighted towards the interests of the old at the expense of the young. The way benefits are distributed to the elderly is the most egregious example of this.
What makes this whole debacle so pathetic is that scrapping the Winter Fuel Allowance would have come nowhere close to the reform the age-related benefits system needs. Winter fuel payments are £200 or £300 a pop, which amounts to a substantial amount of money, but it is dwarfed by the cost of maintaining the triple lock on the state pension.
The triple lock – whereby the state pension rises each April by whatever is highest out of inflation, average earnings or 2.5% – is exorbitantly expensive. Since it was introduced by the coalition government in 2010, the system has cost taxpayers £78bn. By 2034, it is estimated that it will cost taxpayers an extra £10bn annually.
This might be understandable if all of Britain’s pensioners were like the destitute grandparents out of Willy Wonka and the Chocolate Factory, but that just isn’t the case. Around 74% of pensioners own their own homes outright, and of the 12.6m people in the UK who receive the state pension, 1.1 million have a private pension pot over £1m. Some estimates suggest that at least 1 in 4 pensioners are now millionaires.
Let’s compare this with the lot of the working-age suckers who have to fork out for these welfare payments. The Centre for Policy Studies’ ‘Justice for the Young’ paper contains some grim statistics. Since the financial crisis, the share of national wealth owned by the over-55s has increased by 11% while the share held by under-55s has decreased. The proportion of those aged 25-34 who own their own homes is 28%, down from 51% in 1991. Terrifyingly, the workforce is expected to start shrinking by 2043 as the old live longer and the young continue to have fewer children.
These figures might give you some idea as to why young people like my friend in the garden centre are sick of having to give up chunks of their stagnant wage packets, which they open in cramped, rented flats, to fund some of the wealthiest people in Britain.
Clearly, not all pensioners are so well-off, and many of course require support from the state. But this cannot justify the blanket approach adopted thus far: means-testing benefits is the hallmark of a sustainable welfare system.
Returning for a moment to that CPS report, a particularly telling stat is that while only 50% of voters in their 20s are expected to turn out at elections, it is 81% among the elderly. Politicians know this, hence their record of genuflection to older voters on every issue under the sun. Don’t want the view from your bungalow obstructed by new housing? Fret not, we’ll make sure it isn’t built. Don’t want to give up on your nice meal out? Why of course, here’s another £200 towards your winter fuel.
All of this, inevitably, comes at the expense of younger, working-age voters. It is also impossible to foster an economy which grows if all of the political capital (not to mention actual capital) is held by voters who have an incentive to maintain a stagnant status quo. If you want to see the damage this has done to a generation of young men and women, just look into the sunken, tired eyes of the next Gen-Zer you see working at a garden centre.
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