Danny Alexander has got widespread coverage today for his shocking piece of research showing that pensioners are worse off than in 1950. As his news release says:
On the day that the Government has announced the level of benefits for next year, the Liberal Democrats have released figures showing that pensioners now receive less than in 1950.
The figures show that pensioners now receive only 15.9% of the average wage, compared to 18.4% in 1950.
Commenting, Liberal Democrat Shadow Work and Pensions Secretary, Danny Alexander MP said:
“These figures are disgraceful. We have had a Labour government for ten years, and yet pensioners are getting even less than under Margaret Thatcher.
And here’s part of the Daily Mail’s coverage of the story:
The elderly are worse off now because living costs – particularly power bills and council tax – are rising much faster than their state pensions.
Also the pensions credit system is so complex that 1.7million fail to claim it while many are facing means-testing for benefits.
The Office for National Statistics said more workers would also have had final salary schemes which guarantee a higher pension.
Follow @libdemvoice.org on Bluesky
Like us on Facebook
Subscribe to our feed
Sign-up for our daily email digest
Knaptoft: The very heart of England
We do have a two-tier policing system but it is not what our homegrown racists think it is.
From Norman settlement to a civic square
Tom Arms
Ruth Bright
Tom Bailey
Alex Macfie
14 Comments
This is bogus on oh-so-many levels.
Firstly, if you’re going to put out a press release making bold claims based on statistics, include the statistics in the press release. It isn’t rocket science.
It says a lot when the Daily Mail is more forthcoming than the Lib Dem website. On that basis we can see that what Alexander is talking about is the basic state pension as a proportion of average gross weekly earnings.
Can someone tell me what the level of tax was in 1950? I suspect it was higher than it is now. Net earnings are therefore more relevant.
And what about those pensioners who aren’t dependent on the basic state pension? There are quite a few of them you know.
This mythologising about all pensioners living in poverty has got to stop. Apart from anything else it leads to policy measures that favour comparatively wealthy pensioners (scrapping council tax, free personal care, etc) at the expense of the ones in genuine need.
James: I think the stats were included in “notes to editors” but these aren’t (at the moment) always put up on the website as the formatting of them can go rather ugly unless time is taken to hand-craft the upload.
I’ll forward you the original press release with figures, James.
This is amazingly good politics.
We can of course argue as to whether it’s true (we probably need to be talking in terms of purchasing power parity for it to mean anything), but ultimately does it really matter?
Of course, there’s the issue that James Graham keeps banging on about in terms of generational equity – is the Lib Dem line that we need to be transferring even more wealth from the young to the old?
It’ll get good headlines, so fair play for that, but it’s not actually true, is it?
Pensioners whose only income is the state pension are entitled to £119/week, which is about 21.6% of average earnings (though there are problems with take-up). So higher than 1950, though lower than 1975-85.
If you’re looking at pensioners who have other sources of income and so rely less on the state pension, then you need to have information about how those other earnings compare to 1950, and as others have said, on the comparative cost of living and tax rates.
Slightly surprised that your party is keen on ‘research’ that gets positive coverage in the Daily Mail but is at best misleading. Is that really what you want to see from your spokespeople?
People live longer now, so there are many more pensioners as a proportion of the population. So if the money which goes to them from the state is to be the same, then tax will have to go up to pay it.
One of the reasons council tax has gone up is similar – a growing proportion of the population is elderly and infirm and therefore requires care, paid for out of the Council’s Social Services budget.
The Daily Mail is very good at calling for things which would require much higher taxation simultaneously with complaining that taxation is too high.
Graham: Government spending was lower in the early post war period than now, so it is likely that taxes were lower then than now. http://www.ifs.org.uk/bns/bn25.pdf – scroll down to fig 1.2 on page 3.
What we have seen in the last decade or so is a big move of *wealth* towards the old (because of house price rises), but not nearly such a big move of *income*. Thus we have pensioners who are simultaneously holders of significant amounts of wealth, but who may also be income poor. A small one bedroom flat in SW London can be worth £200k, but the £100k rise in the last few years is of little use to a pensioner on £100 a week.
Leunig (why the formality by the way?): if older people are sitting on huge resources, shouldn’t we be encouraging them to capitalise them rather than subsidise them further? Remortgage the house and spend the kids inheritence (and if you’re worried about what might happen if you live to long, you can get insurance policies for that too).
I know I always sound like a heartless bastard when I “bang on about this” but I simply do not accept the argument that rich people should be given hand outs at the expense of less wealthy people simply because they don’t manage their assets well enough. Zany stuff, I admit, but at least I’m in good company (JS Mill and David Lloyd George to name but two).
Mark #2: I don’t mean to teach you to suck eggs, but if formatting is the issue why not simply append the statistics as a pdf?
Dear James
I am not sure what you mean by formality – I give my name as Tim Leunig, just as you give yours as James Graham.
Yes remortgaging is an option for some, but that is hard when life expectancy is unknown. If you retire aged 65 and mortgage just 25% of your house on a non-repayment, roll-up basis (which is what I assume you are suggesting), then after 22 years the mortgage company own all of your house, and you are on the street (6.5% interest assumption)! Having met a 104 year old last week, still living at home, we need proper worked out plans on this. It is easy to “bang on about this”, less easy to come up with plans that work. Like you I am not in favour of handout for the affluent, but sometimes that is the price you pay to get money to those in need (eg child benefit)
It’s a Daily Mail situation again. The DM can simultaneously treat it as sacred that anyone can pass on their housing equity in full when they die, and still decry the inevitable effect of this – high taxation on earnt income (because we don’t dare suggest taxing anything else), and family misery and breakdown due to the imbalance between home ownership and home need.
With today’s lifespans, inheritance is daft – it means you live through your child-rearing ages in poverty or paying huge amounts to get suitable housing, then, when it’s too late for your family needs, you get a big dollop of inheritance cash – which you probably blow on putting even more into the housing market, here or overseas to buy a second home.
But, as James suggests, to actually talk about things like this will get you denounced as a heartless granny-basher.
@5. “Slightly surprised that your party is keen on ‘research’ that gets positive coverage in the Daily Mail but is at best misleading. Is that really what you want to see from your spokespeople?”
Yes.
It’s what Labour and the Tories have been doing for decades. Our turn.
Damn! I can’t find it right now, but I have a paper somewhere on how using “Open Capital” could produce a less toxic mechanism for releasing equity from housing without handing it over to a mortgage company. If I find it I’ll post it.
The problem is that we are all living for an indeterminate length of time. Perhaps the solution would be to allow everyone ten years pension – to be taken BEFORE you are 50 – and then you just carry on working till you drop. That way everyone gets the same benefit from their contributions.
Oh, and you get an extra bonus year if you sign a legally binding contract agreeing to never read the Daily Mail.