We must not discriminate against those below pensionable ageby Frank Field / November 11, 2016 / Leave a comment
Read more: Why the government should shelve Lifetime ISAs
Had Prospect invited me ten years ago to write about the state pension, the question in play would have been, “what can Britain do to reduce pensioner poverty?”
The triple lock—by which the state pension is increased by whichever is highest out of inflation, earnings, or 2.5 per cent—has provided a lock, stock, and barrel answer to that question.
Once housing costs are factored in, pensioners are now the least likely section of the population to be poor. The rate of poverty among pensioners has fallen by 6.2 percentage points over the past decade; three times the size of the fall among children. Poverty among childless adults below pensionable age actually increased 1.1 percentage point over the same period.
The Commons Work and Pensions Committee, which I chair, has therefore concluded that the triple lock has done its job in advancing pensioners’ living standards. The Committee has also recommended that it should cease to operate after the next general election.
The Committee’s aim here is not to destroy the real gains that have been made for pensioners’ living standards, but to entrench them in a more sustainable way. The combined effect of affording generous protection to the whole pensioner population for the whole of the current decade will be to increase the amount of welfare spending on pensioners from £105.9bn in 2010 to £117.2bn in 2020; a real terms increase of £11.3bn (11 per cent).
Looking only at the triple lock, the Office for Budget Responsibility last year put its cost at £2.9bn in 2014-15; £2.4bn higher than forecast in June 2010.
Against this increase, welfare spending on families below retirement age—many of whom are in work and have children, or have disabilities—will have fallen from £98.3bn to £84.9bn; a real terms reduction of £13.4bn (14 per cent) over a decade. A large proportion of these cuts will have come from reducing the scope and generosity of benefits available to low-paid workers.
This same group of people have had many of the certainties which those in my generation could expect from life—homeownership and company pensions, for example—snatched away from them. People who were born between 1981 and 2000 face being the first in modern times to be financially worse off than their predecessors. They will naturally resist any further cuts to their income…