Friday, 15 September 2023

The anti-Robin Hood


In very general terms, when an individual’s earnings rise faster than prices, he or she feels better off, but when prices rise faster than earnings, he or she will feel worse off. At its core, the pensions triple lock was designed to ensure that people wholly dependent on the state pension would never suffer from the latter situation, because the annual increase is tied to the higher of earnings and prices, with a minimum increase of 2.5%. Over time, it is a system which guarantees that pensioners will never feel worse off, and should generally feel better off. And, with a few caveats, it’s worked; it's one of the few 'successes' of the last thirteen years of Tory government but instead of boasting about it, they seem determined to run away from it. It has lifted significant numbers of pensioners out of the poverty into which they were driven by the Thatcher government’s decision to break the link between earnings and pensions.

The argument for ‘reform’ seems to be driven by at least two different ideas: firstly, that it is wrong that pensioners should uniquely be protected from the government policy of driving down living standards; and secondly, that it is in some way ‘unaffordable’ to ensure that pensioners are protected from falling living standards. In principle, the argument that falling living standards should apply to all is not without some validity (although, as I’ve noted previously, there is a big unanswered question about what the relationship should be between the level of pension and the level of average earnings, an issue which politicians seem keen to avoid since it exposes the relatively low level of UK pensions to scrutiny) but it’s a diversion from the real question, which is why we accept a situation where the government of the day sets out, entirely deliberately, to reduce people’s living standards. Encouraging working families to look enviously at the level of pensions increases is a neat bit of ‘divide and conquer’ politics which diverts attention from the question of why people should have to accept reduced living standards in the first place. (Not all people, of course – blaming pensions for the plight of the many is also a diversionary tactic to draw attention away from the way in which wealth is increasingly concentrated in fewer and fewer hands.)

‘Affordability’ is another piece of diversionary sleight of hand: those arguing the case are doing so because they want to cut taxes (in ways which just happen to benefit the most well-off) and have convinced themselves that they need to cut pensions costs in order to do so. (There are alternatives available, even within that artificial straitjacket which ties government spending to tax income.) They see pensions only as a ‘cost’ and not as a means of ensuring a decent life for the oldest members of society, a viewpoint which translates into seeing pensioners themselves as a cost rather than full citizens. It’s worth noting that those so keen to restrict the level of pensions are never going to be wholly dependent on the state pension themselves. MPs enjoy a generous pension scheme of their own and the state pension will represent only a minority portion of their retirement income. The same is true for many others of us, of course; but when dealing with the minimum level of pension, the starting point should always be to look at the position of those who are totally dependent on that income. If the result of that is that the full state pension is also paid to some who, it could be argued, do not ‘need’ that income, then a properly progressive tax regime can and would reclaim a proportion by taxing their other income more. That would, however, involve taking money from those most able to afford it – the demand for changing the triple lock is about ensuring that money is taken, instead, from those least able to afford it, in order to reduce taxes on those who can.

It's a reverse form of the English folk hero, Robin Hood – instead of taking from the rich to give to the poor, they want to take from the poor and give to the rich. It’s depressing that the self-styled party of working people, Labour, is so unable and unwilling to put the argument for fairness, preferring to echo the Tory arguments about sustainability which encourage ordinary people to see each other as the enemy.

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