Opinion: pensioners will be the next target for austerity

Historically pensioners have been protected from the worst ravages of austerity, but Felicity Hannah believes that could all change…

There has never been a more opportune moment for the Government to cut benefits and support to pensioners.

I don’t say that the Government should, that’s a separate debate. However, I think it’s undeniable that the UK’s pensioners are in the most precarious position they’ve been in a long, long time.

If it does come, it will undeniably be a shock. Older people vote in vast numbers: research from Ipsos Mori shows that, in the last election, 78% of those aged 65 or over turned out to vote.

That compares to 43% of 18-24s, making younger voters almost half as likely as older voters to make it to a polling booth.

With numbers like that, a cynic might suggest that politicians are keen to cosy up to pensioners.

Of course, there could be another motivation; maybe MPs have been genuinely keen to help.

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Pensioners have fared relatively well

Historically, the elderly in the UK have been impoverished but now they are the least likely demographic to be in poverty (which is not so say that a great many are not experiencing terrible poverty; Age UK reports that there are currently 1.6 million pensioners living on or below the poverty line).

While some pensioners are undeniably experiencing hardship, as a group they have emerged from the years of austerity remarkably unscathed.

A study from the Resolution Foundation published last year revealed that pensioner households saw their incomes rise by almost 10% in real terms between 2007 and 2014, while working age households experienced a 4% cut.

One of the policies that has best cushioned pensioner incomes is the ‘triple lock’, which means the State Pension increases each year by inflation, average wages, or 2.5% - whichever number is the highest.

Since its introduction in 2012, the triple lock has meant the basic State Pension has risen to £119.30 a week.

On top of that, pensioner benefits have by and large been spared the swingeing cuts – bus passes, winter fuel allowances, even the cost of the subsidised TV licences is being passed on to the BBC rather than abolished.

And now, that’s being challenged.

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Intergenerational fairness

The influential Work and Pensions Committee has argued that pensioners should lose the triple lock guarantee that has protected them through the recent difficult years.

Labour MP Frank Field (pictured, above) pointed to the fact that children are twice as likely to be living in poverty as pensioners, and said that the protection was “unfair and unsustainable”.

The committee, which has a Conservative majority, argued that pensioner benefits should not be “sacrosanct”, with its report into intergenerational fairness concluding: “The triple lock should not continue beyond 2020.

"By then, the value of the new State Pension relative to average earnings will be close to the historic high for the headline State Pension rate.

“If maintained, the arbitrary boost the triple lock gives to the State Pension relative to both earnings and prices will become ever harder to justify both in fiscal terms and from the perspective of intergenerational fairness.

"We urge political consensus before the next general election on a new earnings link for the state pension.”

Field was even blunter, commenting: “At the same time as tightening their belts, they are being asked to support a group that has fared relatively well in recent years. Millennials face being the first generation to be poorer than their forebears.”

This article is not about justifying stripping pensioners of benefits, or arguing in favour of them retaining their privileged position.

However, the report’s comments highlight that a core of influential MPs – Tories among them – believe the protections accorded to older voters must be scrapped ahead of the next election.

And that’s important because this could be the first election where the Conservatives could do so and still win – and the nation’s finances are undeniably tight.

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£25 billion worse off

Chancellor Hammond has already warned that when presents his Autumn Statement to Parliament later this month there will not be many giveaways.

The country was not on course to meet the Conservative’s austerity objectives before the Brexit vote and now the outlook is even shakier.

The Institute for Fiscal Studies has warned that weak growth will mean lower-than-expected tax receipts, knocking £31 billion off tax revenues by the financial year 2019/20.

There could be savings of £6 billion through the withdrawal of payments to the EU, but that will mean the country will have taken a £25 billion toll.

That means there will be a deficit of almost £15 billion rather than the surplus of £10 billion that the former chancellor George Osborne had aimed for in his final Budget earlier this year.

Even if this gloomy forecast is wrong, it will have sharpened politicians’ minds about where they can make further cuts and pensioners could be in the firing line.

Usually, it’s imperative that politicians appeal to core voter groups, with political leaders falling over themselves to appeal to parents, pensioners and any group that promises to turn out in large numbers and support the candidate who supports them.

However, the current political climate is unlike anything we’ve seen in a very long time.

Government in a strong position

You don’t need me to tell you that the Labour party has imploded, with a massive chasm emerging between the party leadership and a substantial number of MPs.

UK voters remain unmistakably concerned about the country’s economy, yet the polls suggest that most do not trust Corbyn and Labour to handle it.

A recent poll carried out by Opinium and The Observer revealed that 44% of the country believe May and Hammond are the most trustworthy team to handle the economy, while Corbyn and McDonnell polled just 16%.

Of course, events this week have highlighted once again that the polls can be very, very wrong.

However, the Conservatives may well consider that now is the best chance they will have in a long time to push through necessary but unpopular cuts.

If such cuts would normally be electoral suicide, then the next few years are the only time it may be possible to make changes without risking the next election.

That’s not certain – perhaps politicians believe in supporting pensioners regardless or perhaps the Opposition will recover and fight a credible campaign.

However, unlike at any other time in recent history there’s a strong chance that politicians could target cuts against their hard-core voters without risking their grip on power.

For years they have been the protected, favoured demographic but now there’s a strong chance that they are about to experience the austerity that has hit the rest of the country for the last six years.

What do you think? Have your say using the comments below.

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More on pensions:

MPs: State Pension triple lock 'should be scrapped’

Deferring your State Pension: how much can you get and is it worth it?

 Secondary annuity market scrapped: what it means for pensioners