The budget does make clear where society’s priorities lay. Cuts to incomes and services of the youngest and poorest, yet tax breaks and protected services for many of the oldest and wealthiest. Tax credits, housing benefit, student grants all sacrificed to reduce the deficit, yet inheritance tax, fuel allowances and state pensions are deemed too important to feel the knife. Why?
The answer of course, is that old people vote in record numbers. None of us who spend time trying to win elections doubt the wisdom of bending to the grey vote, but it is hard to defend. Today’s retirees worked through years of rapid wage and house price inflation, benefited from unsustainably generous final salary pension schemes, and enjoyed the full flowering of the welfare state. In contrast today’s graduates face years of paying off student debts before even dreaming of owning a home, will have to work longer for lower pensions, and are in competition with often better educated people from the four corners of the globe. And to top it all the older generation has bequeathed a national debt that now tops £1.5 trillion, on which the younger generation must pay interest for the next 40 years.
Retired citizens who drive four-by-fours, who subscribe to cable TV and who still live in family homes worth anywhere near a millions pounds don’t need free bus passes, TV licences and fuel allowances, and their middle age children probably don’t need tax breaks on their inheritance. It’s not that pensioners have done anything wrong or are undeserving in any sense, but the budget cuts will result in genuine hardship for some of our most luckless citizens, and we should look at this unfairness with fresh eyes.
Why is the next generation not up in arms about pensioners continuing to enjoy benefits they don’t need? Its hard to say. Perhaps a mixture of youthful optimism and blissful ignorance of just how much of an economic struggle they are facing. That may change, but in the meantime I’d like to think our party can begin to nudge the debate on economic fairness onto this ground. There may even be some votes in it!
* Tobie Abel is a software designer and PPC for Richmond Yorks. He joined the party in 2013
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21 Comments
A lot of nonsense here. People who drive 4x4s probably do not even apply for a bus pass. With equalisation of pension ages the fuel allowance could be merged with state pension and be taxed at the same rate. The reason we saw large wage increases was high inflation and mortgage interest rates in the teens. House inflation was because of insufficient building just like now. Every generation has paid off previous generations government debt at least the current debt is at a historically low interest rate.
Not sure that it’s the elderly who benefit from inheritance tax policy surely it’s their children and grandchildren and sometimes charities. Also aren’t final salary pensions still there for today’s soldiers, firemen, nurses, teachers, civil servants etc, so aren’t young and middleage people getting the same benefits. Many OAP’s may have enjoyed the “full flowering” of the welfare state as you put it, but many took little out and contributed at far higher rates of income tax than people pay now. I have noticed in recent years many LibDems attacking pensioners for getting free tv licences or winter fuel payments and I have no idea why. Most of the population are happy to see the elderly get a few perks and like me look forward to the day they can receive some. Believe me there is absolutely no votes in this, which is why the Tories never attack the elderly.
At least we are all agreed that government deficits benefit current taxpayers at the expense of future taxpayers who will have to pay interest on the loan and/or pay it back in the future.
So any curtailment of current deficits and reduction of debt benefits helps keep future taxes down for the current younger generation.
Well of course it’s not fair but then it’s always about power despite any rhetoric to the contrary and, as Tobie says, the old vote.
What I do find alarming is the dearth of good thinking on how to shape the future in a positive way. It’s not about attacking the elderly but about how to make the economy work better for everyone but especially the younger. We need more and better jobs and everything else would flow from that. Unfortunately the Westminster Village doesn’t know how to create more and better jobs.
The last PM with fresh thinking on this was Thatcher but it turned out that her ideas didn’t really make the economy work better; their main effect was to enrich her backers which is not the same thing at all.
Tragically, the Lib Dems approach to policy-making has always been pretty clunky and not at all strategic. On the bright side that leaves an open door for the incoming leader.
benefited from unsustainably generous final salary pension schemes……etc etc
Implying that its someones fault for their actions 20/30/40 years ago (when final salary schemes were quite normal) is hardly the way to win them over.
Ahhhhhhhhh I see the privileged are here to defend their privilege. How depressing. No-one should be enslaved by POVERTY, ignorance or conformity, guys. We should be fighting this regressive budget with every bone in our liberal bodies, and the article is entirely correct about the unfairness of it.
As for why young people aren’t fighting harder, seeing comments like those above, I suspect it’s more resignation than hopefulness or ignorance
The answer is not to reduce old age pensioners to the kind of poverty that was experienced thirty years ago. For the young there is need for the creation of worthwhile jobs and this is not going to happen with this present government. The kind of jobs this government want to create are low paid low skilled jobs.They see wages as a cost not an income.
I think one needs to differentiate between the ‘old rich and the old poor’ and may be realise there is a lot of others, like myself, who consider themselves to have a moderate income.
I’m 70 in a few days time and consider myself to have adequate income to live a pleasant existence. However I have been sensible with money all my life. I did not run up huge ‘spend now pay later’ credit card debts. I do not get full state pension because I stayed at home and brought up two daughters then divorced. As a single woman again, I studied and worked hard to become a probation officer retiring age 60 on a 3/4 pension.
My main aim in life now is to stay healthy and not be a burden on my daughters. I don’t think the state should provide everything and people do have responsibility to look after themselves. However, some people need society’s support during their lives and surely any decent society should look after its older folk.
‘generous final salary pension schemes’
They were very sustainable at one time, and many of them still would be but for two major mistakes. In the early 1990s actuaries were advising that employers’ pension schemes were overfunded and that encouraged employers to reduce their contributions and also the (smaller) percentage deducted from the employee’s salary. (Just to gauge the changes from that time; that was when the Thatcher government had the UK in the ERM (precursor to the Euro) and any savvy financial advisor recommended Equitable Life as a pension provider.)
The next blow to pension schemes was Chancellor Gordon Brown’s change in the tax arrangements for pension schemes; this caused a lot of employers to look again at their pension schemes and thus destablised the system.
Of course, falls in the stock and bond markets also (2008?) also make life difficult for all pension providers.
As an older person, it is my next door neighbour (with two small children) who drives the 4 x 4. I drive a 16 year old Megane. The house is worth about 60 times what it cost us in 1966; but the pound is probably worth about a 10th of what it was then. And there is some tens of thousands of pounds needing to be spent on the house to bring it nearer modern standards and recover from the ravages of time on work done from 1944 onwards, Although my wife is entitled to a free TV licence, I pay the licence in full.
The Freedom Pass is very useful; it saves an inordinate amount of time buying tickets; it also encourages older people to leave their cars at home, which has an environmental benefit and reduces the amount needed to spent on urban roads. As a better off pensioner, I would be quite happy to pay an annual fee of several hundred pounds to retain it.
I could also pay prescription charges on the six medications my doctor tells me to use daily.
However, there is a good reason what many of the benefits for the elderly are universal. Many older people do not have the information to claim the benefits they should receive; also, many still feel stigmatised if they accept ‘charity’.
If we try to insist they claim for everything, many of the needy will go without.
“and their middle age children probably don’t need tax breaks on their inheritance. ”
Au contraire. Their middle-aged children are suffering under the weight of a stonking mortgage caused by the undersupply of family homes and the massive inflation in house-prices that the older generation have benefitted from, and will then have to support their elderly parents and teenage/recently graduated children simultaneously.
Though I do not agree with everything Tobie says, I do understand the thrust of his argument. I am retired, disabled and living on state pension, pension credit and DLA. I do not have a private pension but as someone who always earned around minimum wage or less I am actually better off than I was before retirement. Most of my friends are out of work or in minimum pay jobs and are in a much worse position than me.
Those friends tell me that I’ve worked hard all my life and deserve every penny I get but it doesn’t make me feel any less guilty as I sit in my comfortable council flat or in the pub and watch them struggle to live – and yes some of them do struggle.. I already donate my winter fuel allowance to charity. I do not claim a bus pass, preferring to pay my fare on the rare occasion I use the bus (by choice I do not have a car any more but use a mobility scooter or taxis instead). I feed a couple of my friends when they come to see me and I buy a few drinks for them once a week. I do what I can but I would like to feel that I and my generation were doing more
Tobie is correct when he says ‘ Cuts to incomes and services of the youngest and poorest, yet tax breaks and protected services for many of the oldest and wealthiest. Tax credits, housing benefit, student grants all sacrificed to reduce the deficit, yet inheritance tax, fuel allowances and state pensions are deemed too important to feel the knife.’ It is time that, as a party we begin to look at ways in which my generation can begin to take more of our share of any cuts that are necessary and not simply pile the burden onto the young . As a generation the elderly can do more to contribute to the burdens facing society, taking into account the protections that must be in place for those elderly people who are less well off than some of us. To be honest those richer pensioners who scream about losing their bus pass, their winter fuel allowance or their tax breaks are probably not our natural supporters. I believe that those of a liberal mind will understand and support such cuts.
TCO
If the middle-aged children do support their elderly parents that is their choice. They don’t have to, the alternative is to let their elderly parents use their own assets to pay for care, this will of course mean any inheritance will be greatly reduced. I think we all know the route most people will take, but they certainly don’t have to.
Malc – we are into year seven of austerity and to my knowledge pensioners have suffered none of the cuts, and that is not because of any economic argument, its purely political. Fairness implies to each according to need, from each according to ability to pay, and some of the £12 billion of fuel allowances we’ve spent since 2010 was neither needed nor affordable. Would you support a move to restrict that allowance to those who qualify for pension credits?
No I wouldn’t support that, after a lifetime of paying in they deserve a few perks and I’m more than happy for my tax money to be used this way. This attack on the elderly really is unfair, do you want means testing for disability benefits or free child care. Should children of higher rate taxpayers get free prescriptions, eye tests, dental care, free meals etc? You may want to live in a society where every thing is means tested, I don’t. Incidently – just so it doesn’t seem as if I’m against young people – I would happily pay more tax to see tuition fees scrapped.
Dave G Fawcett,
I agree with your friends and I cannot see why you should feel guilty.
You have earned the right to live a comfortable life in retirement and to make whatever choices you choose to make.
The problem with some of this line of thinking is that it will not help younger people to become better off. It will simply end up as a way of making them poorer when they get older. The problem isn’t just where money goes, it’s the economic philosophy of low tax, low pay, small state and high personal debt
Driving into London and parking there has practical difficulties. Those who live miles from a railway staion or bus stop also use public transport in central London. Seeing double -decker buses queueing along the Strand to get into Charing Cross station is like a Carlsberg advert for taxis at three o’clock in the morning outside a nightclub. There may be a bus for the route you need, or there may be two.
I think that part of the problem in these debates is that a lot of people (young and old) at the moment seem to have something of a rose-tinted view of what the past was like. For the great majority there never was a golden age. My Dad will very happily take issue with anyone who thinks that 45 years on a production line was wonderful.
That having been said it is very hard to look at the insecure world the young now face and not compare it to the past. Of course the young today have many things going for them. But I would think of most as advances in technology rather than advances in society. Stark reality is that my Dad was able to walk out of school at 15 and walk straight into a secure job. By the early 1970 he was paying a mortgage (with double digit interest rates), driving a car and raising a family on a single wage. Yes, it wasn’t fun and games. And those with the rose tinted view would do well to remember that unemployment was a million in 1970. But my parents had the full benefit of supports in an environment that is simply not there for the young now. Try leaving school now as an unqualified 15 year old and see how far you get.
So yes – I can understand the frustrations of the older when they are told they lived a gilded life. Just some of those now older would do well to dwell for a moment on just why so many of the young look at the past and think they’d like to experience that world for themselves.
I suspect that this intergenerational angst, is a sub-set of an even bigger problem, (dilemma)?
It appears we’re entering a new and unwelcome phase in history, but a phase that we must face head on, and soon. If you overlay two graphs that span a few centuries, you see the global population rise almost in lockstep with the discovery and use of fossil fuels. Better housing,.. clean water,.. sewage treatment, better healthcare, hygiene..advances in technology, . antibiotics,.. and as a result, much greater longevity, are all as a result of *cheap*fossil fuels.
Over two and a half centuries, we built a world on (firstly cheap coal), and then cheap oil at under $20 per barrel. But at $60+ per barrel, we are hard pressed to even maintain our global economic and societal ‘gains’, and any thought of continuing to grow it, is a fantasy that we must soon acknowledge. We,.. both young and old must accept that growth as we have known it over the last several decades, is not coming back. This end of growth is going to be a bitter pill indeed, but as the global ‘resource pie’ inevitably shrinks, both young and old are going to have to be willing to give up some share of economic ‘pie’, as we try to develop maybe, a new style of *Triage politics*?
I’ve never wanted to be more wrong, but everything points to this unwelcome dilemma.
https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&sqi=2&ved=0CCEQFjAA&url=https%3A%2F%2Fwww.tullettprebon.com%2FDocuments%2Fstrategyinsights%2FTPSI_009_Perfect_Storm_009.pdf&ei=Ah2hVbDoGKuU7Qb54bPwCA&usg=AFQjCNEf470gAjSnI23S9HEuTw7-v6nYnA&bvm=bv.97653015,d.ZGU
Even the inheritance tax proposals in the budget are discriminatory. The effect is to concentrate wealth and not to disperse it.