Why will no party criticise the triple lock?

As a former Labour defence secretary and adviser Lord Robertson has delivered a torpedo to the Labour government.  I have seen it suggested on social media that he is an adviser to two US defence companies, but I have been unable to verify this.

Defence spending was hollowed out under 14 years of Conservative prime ministers.   There were also arguably some poor spending decisions: two aircraft carriers that are sitting ducks without adequate destroyer protection and new destroyers that seem to spend most of their time in port having problems fixed.

Nevertheless the defence budget does seem to be £28 billion short of required spending over the next few years.  The Conservatives would pay for this by cutting welfare or making poor people poorer.

Yet no party will contemplate getting rid of the unsustainable triple lock because they know that older people are far more likely to vote than younger people.   It should be noted that pensions are defined as a benefit under the 1946 National Insurance Act.

Around that time one Labour politician said 'there ain't no fund' (possibly Ernie Bevin).   Pensions have to  be paid out of current taxation, a burden that will increase despite controversial age adjustments.

Yes, state pensions are lower in the UK than in many European countries, but private provision is much higher.  The state pension is an important safety net, but it should be focused on the most needy.

BTW, I think the latest attempt by the media to sack Starmer is not going to succeed.

The magic money tree is back

One of the unfortunate consequences of the restoration of winter fuel payments is that voters' faith in the magic money tree has been restored.   Shake it hard enough and it will deliver!

Pensioners, of course, are much more likely to vote and those over 55 voting exceeded those under 55 at the last general election.    

The Government has suffered political pain for little fiscal gain.  Ironically, although I will be (rightly) taxed on the payment I receive, my partner will receive it tax free.

The policy change encouraged more pensioners to apply for pension credit which is a good if unintended outcome but it reduces the fiscal benefits even further.

Why did the Government do it?   I think they were genuinely spooked by the state they found the public finances in and thought this would be a current financial year win.

It also means that no one is likely to challenge the triple lock although it has delivered pensions £800 higher than they would otherwise be because of the earnings link.

Its defenders will say that state pensions are lower in the UK than elsewhere in Europe, but private pensions are higher.   Not everyone has them, but that is why we have pension credit.

This policy change will encourage backbench Labour MPs to demand retreats on benefit payments and qualifications which means that it will be difficult to avoid tax rises in the autumn.

Grasping the retirement nettle

It looks as if the Government is going to tackle the state pensions timebomb by bringing forward the increase of the retirement age to 66 to 2016. After that it seems that the plan is to increase the retirement age every five years on through a link with life expectancy on the Swedish model.

So far we have dealt with the increase in the pensionable population by holding the pension down at a level below most comparable countries. No one could live on it and it has to be topped up by means tested benefits for some but those are not always claimed.

The unions have objected that it is not possible for people to carry on undertaking strenuous manual work beyond their mid-sixties and that a lot of people will be effectively transferred to the unemployment register. What one needs, however, is a labour market that will make other sorts of jobs available, particularly part-time work. We need to move byeond the 'falling off a cliff' fixed retirement age.

As it is, a lot of people cease being economically active, or at least stop working full-time, before the state retirement age, although economic activity rates in the pre-retirement group have been increasing. Raising the retirement age means that some of these early retirements would take place somewhat later.

As for the argument that extending working life denies younger people jobs, that is to subscribe to the 'lump of labour' fallacy. For many younger people there are still problems with skill deficiencies and attitudes to work.

Some grumbles about raising the retirement age have come from the holiday industry as apparently the early retired are important customers for the 'shoulder' season. Certainly travelling the world is a preoccupation for many of the early retired. I am looking forward to spend less time in airports and on lomg-distance flights.