Forgetting the objective

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On Tuesday, a former Secretary of State for Wales told us that scrapping the pensions triple lock before 2020 would be an act of bad faith, given the promise which he and his party made only two years ago.  My first reaction was that, given Mrs May’s clear and intense dislike of opposition to anything she says from the opposition parties let alone from her own side, Crabb has obviously written off his chances of returning to the Cabinet any time soon. 

There is one thing that he has learned from his leader however, and that is the art of making policy U-turns.  Unless I’m very much mistaken, this is the very same Stephen Crabb who argued strongly  last year, just after the Tory leadership election, that the pensions lock should be scrapped, or at the very least modified, immediately.  Clearly, changing it two years after promising it would be in place for five is ‘bad faith’, but changing it only one year after making that promise is entirely reasonable.  But then, when he made his statement last year, he wasn't expecting to be facing the electors quite so soon, and might have thought that they'd have a bit more time to forget the decision.  The U-turn might suggest that he is from the same planet as May after all, but if he wants to get on, he probably needs to co-ordinate his policy flip-flops so they coincide with May’s, rather than conflict.

There's another aspect to this as well.  If dropping one promise three years early is a sign of bad faith, why is it then OK to drop other promises?  On the basis of that argument, the manifesto for the first three years would have to simply carry forward the pledges made in 2015, but part of the reasoning for holding an election at all is surely so that May can free herself from all commitments made by the Conservative Party and implement the UKIP ones a manifesto more to her liking instead.

Anyway, to the substance of the matter.  My recollection of the reason for introducing the triple lock in the first place was that pensioners had lost ground in relative terms over the period since Thatcher scrapped the link with earnings, and the intention of the policy was to restore their relative position.  There has been some criticism recently that, as a result of the policy, pensioner income is growing faster than income for other people – but that was precisely the intention.  The question should not be ‘are pensioner incomes growing faster?’, but ‘has their relative position been restored yet?’  In any rational world, the question of whether the triple lock should be retained would be related directly to determining a target ratio between pensions and earnings and then establishing whether that has been achieved.

When that point has been reached, it would seem entirely reasonable to me to re-open the debate about how pensions increases should be calculated and how we ensure that the relative position of pensioners should be maintained.  I haven’t done the sums; my feeling is that we’re probably not there yet; but maintaining the triple lock indefinitely would result in a significant target overshoot over time.  But it’s as though the politicians have all forgotten the origins and rationale for the policy.

The policy is promoted as something which will appeal to pensioners, and attacked as something with which young working people are being burdened.  That is completely at odds with reality.  I’m not at all convinced that Einstein ever said that compound interest is the most powerful force in the universe, but it certainly is a powerful financial force.  And it means that the biggest beneficiaries of a triple lock maintained indefinitely are not current pensioners, nor those about to retire, but those who haven’t even been born yet.

I don’t think that it’s right or sensible to maintain the policy for ever, but it would be helpful to have a more informed debate about the objectives of pensions policy rather than an attempt at point-scoring between those who are targeting older voters and those targeting the young.  It’s another example of the froth of modern politics.