Tag Archives: inter-generational fairness

Setting the young against the old is a smokescreen to protect the mega rich

Setting the young against the old is a smoke screen to protect the mega richThe House of Lords Committee report on “Intergenerational Fairness and Provision” recommends a redistribution of benefits from older people to younger people. Surely it is not an inter-generational issue; but one of confronting the widening income inequality and increasing poverty in our society?

At just 29% of national average earnings Britain has one of the lowest state pensions in the developed world, with much of Europe paying in excess of 90%, and there are 1.9m older people living in poverty many of whom were forced into retirement, pre 2011, and condemned to spending the rest of their lives in poverty.

According to Philip Alston, special rapporteur on extreme poverty to the UN, Government Ministers are in a “state of denial” about poverty. Quoting figures from the Joseph Rowntree Foundation, he said that more than 1.5 million people were destitute at some point in 2017, meaning they lived on less than £70 a week or went without essentials such as housing, food, clothing or heating. A fifth of the population, amounting to 14 million people, are living in poverty, Prof Alston said.

In contrast the pay of Chief Executives at businesses on the FTSE 100 index surged 11% on a median basis during 2017 while average earnings failed to keep pace with inflation, rising just 1.7% with inflation at 2.8%. Many of these Chief Executives have multi-million pound incomes. 

A consequence of this widening inequality is that there are now 3.9 million children living in poverty in the UK – an increase of 200,000 in just one year. The Government has focused on making work pay, but two in three children who are in poverty have a parent who is in work. Children brought up in poverty are less likely to do well at school, more likely to have health problems and have a shorter life expectancy.  

In 1997 Gordon Brown abolished the tax relief pension funds earned on dividends from stock market investment which sent many pension funds from surplus to deficit within a decade and led to the demise of many final salary pensions. In 1971 the index linking of public sector pensions changed from earnings to RPI and then in 2011 from RPI to CPI and more recently from final to average salary. Over the last ten years pensions index linked to CPI have increased by 26.6% when had they still been increased by RPI they would have gone up by 32.4%. Average earnings have gone up by 41.7%. 

Posted in Op-eds | 29 Comments
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