I HAVE always taken a keen interest in the rights of pensioners. But I have to admit that the fact that I will become an old-age pensioner next March, and therefore qualify for my state pension, has given me a new focus on this issue. I have as a result, watched the manoeuvrings of both the Tories and Labour with regard to the pension triple lock with a combination of both disbelief and despair.
For those not familiar with it, the pension triple lock was a creation of George Osborne when he was Tory chancellor in 2010. What it guarantees is that the state old-age pension will increase each year by the largest of one of three figures. They are the rate of inflation, the rate of increase in wages, and 2.5%. He proposed this knowing that the old-age pension had, at the time that he came into office, been devalued. Cynically, he was aware that pensioners were most likely to vote for his party. He pandered to their interests.
It worked. As a consequence of the triple lock the real value of the state old-age pension has risen since he was in office. That is largely because as a result of the austerity programmes that he put into place and his deliberate policy of keeping interest rates down as far as possible, both inflation and the rate of growth in wages were very low from 2010 until 2021. As a result, 2.5% increases in the state old-age pension were commonplace in this period, and often exceeded the rate of inflation.
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What George Osborne never anticipated was the recent rise in inflation after the reopening from Covid and Putin‘s war starting in Ukraine. As a result of these two events, inflation has increased significantly. The 2.5% guarantee included in the triple lock now looks like a quaint anachronism. And this year, much to everyone’s surprise, wage inflation in the three months from May to July actually exceeds inflation. That is largely because of significant one-off bonus payments made to staff in public services like the NHS.
Now the Treasury is panicking about this. They are very reluctant to give old-age pensioners the 8.5% pay rise that the triple lock requires next year. This is despite the fact that every bit of research on the impact of inflation on various groups in society suggests that inflation has been worst for those on low incomes, where the inflation rate has significantly exceeded the reported average used for triple lock calculation purposes. Most pensioners are, of course, amongst those on the lowest incomes in the UK as a whole. They have, therefore, suffered real harm to their wellbeing over the last couple of years. Despite this, the Treasury is seeking to find ways to claw back some of this proposed increase in the old-age pension with the aim of saving around £1 billion of public expenditure in the next year.
This makes no sense to me. Leaving aside the fact that the adjustment will amount to, at most, about £100 a year and this quest just looks mean when it is so apparent that this saving is totally unnecessary.
As was mentioned in The National last week, I have now begun publishing what I call the Taxing Wealth Report 2024, which is intended to provide a very comprehensive guide to the potential ways in which additional tax revenues can be raised from those with very high incomes or significant wealth in the UK. It is well known by everyone, from the general secretary of the TUC onwards, that these groups are seriously under taxed at present. So far, I have produced seven recommendations for change, which between them might raise an additional £70bn of tax revenue a year. I have a lot more recommendations to come.
I am not suggesting that any government should adopt all the proposals that I am making. Nor am I suggesting that they adopt them using the tax rates that I propose. I have no right to demand either of those things. But what I can do is point out that when faced with the choice of supporting pensioners or taxing those with wealth just a little more, ministers do have options available to them. The ethical choice would, very obviously, be to protect the most vulnerable society and to ask for a bit more tax from those with financial wealth beyond their needs.
The Tories are unwilling to do this.
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Disappointingly, it seems that on this issue, as with almost everything else, Labour are also sitting on the fence. They are suggesting that they can make no commitment on this issue, which is a way of granting the Tories permission to do whatever they wish.
The SNP do not, of course, need a position on this issue: it is not something that they are likely to influence at present.
So why am I in despair as I noted at the start of this article? That is simply because one day I would like to think that we might be governed by some ethical politicians.
And what is my disbelief about? That relates to my amazement that both Tories and Labour are willing to take the risk of alienating old-age pensioners on this issue when both know that pensioners are more inclined to vote in general elections than almost any other group in society.
One day there might be politicians in Westminster willing to do the right thing for society.
Until then, it amazes me that anyone in Scotland thinks it’s worthwhile staying in the Union.
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Callum Baird, Editor of The National
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