Let us travel all the way back to 2010, a year in which a jubilant “Cleggmania” contrasted with a dire backdrop. The economy was in bad shape following the 2008 financial crash. We had just failed to reach an agreement with Gordon Brown’s Labour Party (the maths wasn’t ‘mathing’), and as a result went into a coalition with the Conservatives. Austerity was the word on everyone’s lips, and for many of us, it was an inevitable devastation for our families and communities.
However, there was a Liberal Democrat Minister – who is often forgotten in the re-litigation and discourse about that fateful coalition – Sir Steve Webb.
Webb sought to correct a major structural inequity; the shambolic state of the country’s state pension. Margaret Thatcher, who many gleefully refer to as “Milk Snatcher”, had decided to break the earnings link of the state pension in 1980. For decades, the pensions had only ever been uprated by inflation – which meant pensioner incomes fell steadily behind wages.
So what was his solution? The Triple Lock – and despite my blatant misgivings of it, I think it was a good idea at the time. It helped restore financial security to millions of pensioners who had been neglected.
But policy solutions are rarely permanent – especially economic ones. The problems they fix evolve and mutate, the numbers change, and even good ideas can outlive their purpose. Not even Beveridge’s reforms were meant to last forever.
Since 2010, when Webb introduced the policy, Britain has faced a saga of crises: Brexit, COVID-19, the Ukraine War, and Liz Truss.
Our population is ageing, productivity is stagnant, employment is fragile (not helped by Labour’s Employer NICs policy), and wages grow at a snail’s pace. These factors have led to crowding out of other welfare expenditure, the support ratio (the number of people supporting each pensioner) falling, and a squeeze on the working-age population.
The ground beneath the Triple Lock has become incredibly unstable. The Office for Budget Responsibility’s own findings tell us it will cost an additional £15.5 billion a year by 2029/30, while welfare expenditure elsewhere is likely to be slashed further by Rachel Reeves.
Make no mistake, the Triple Lock remains a liberal achievement. But it is also a policy mechanism – and like all mechanisms, it can outlive its purpose. What was once an act of fairness is now a major fiscal liability. We are transferring wealth from younger and working-age citizens to retirees faster than any major economy, according to the Resolution Foundation.
As liberals, we believe in fairness, dignity, and liberty through economic security. Therefore, we cannot – in good faith – continue to justify the existence of a policy that now undermines all three. There is a way to correct this course and protect the State Pension, and it eliminates the liability without hurting the poorest pensioners: means-testing.
Universality, in theory, is a nice idea – it avoids the bureaucratic stress of thresholds, tapering, cliff-edges and tribunals – but it is highly inequitable. People say that it works because of recapture, but does it really? When you give money to the wealthiest, richest demographics, those with the lowest Marginal Propensity to Consume, you do not get nearly as much – if anything – back.
That’s why we must consider a means-tested approach that protects those in genuine need while restoring balance, such as:
- We should make the Double Lock the default (higher of CPI or earnings). This removes the problematic 2.5% ratchet for most people, and in turn potentially still saves around £12 billion based on OBR figures.
- But that does not mean getting rid of the Triple Lock entirely, if we let the poorest pensioners (bottom 20-25% based on current income) retain the Triple Lock, they are not losing support from the State Pension. Moreover, the savings we make from equitable reforms means we can support them better, too.
- For those in the higher-rate tax band of 40%, or equivalent in terms of pensionable income, they do not get either the Triple Lock or Double Lock; they get the Single Lock (CPI only). Their pension grows with prices, but it does not grow faster than the working-age tax base. This could save around £1.3 billion at steady-state.
- Finally, those with the highest pensionable income – say £70k-£90k+ – do not need the state pension and therefore shouldn’t receive it. We shouldn’t be subsidising avarice when children are going to bed hungry and people are freezing to death on the streets in Winter. This could save around £5.75 billion per year, after admin costs.
At a steady-state, with everything settled in, that is an annual saving of £18.4 billion – money that could be put towards bigger welfare reforms, tackling homelessness, improving social mobility and investing in our communities. In my view, that is something worth pursuing; it protects the State Pension and allows us to redistribute wealth back to those who need it.
The Triple Lock was born from good intentions, with the goal of protecting dignity in old age, but it was never a permanent fix. If we are serious about building a fairer, more sustainable welfare state, we must not be afraid to adapt – even if adaptation is unpopular.
These are just my ideas on what we could do; they’re not about taking from pensioners but restoring a semblance of fairness to a system that is deeply imbalanced. By targeting support where it is most needed, we can rebuild trust, correct greater inequities, and lay the groundwork for a truly liberal welfare state.
* Jack Carter is the Co-Accessibility, Diversity, and Inclusion Officer of the Young Liberals, a Computing student with an interest in social and economic policy, mental health, and digital fields.
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45 Comments
Jack is right about Steve Webb’s wisdom. He is also right that at some point the Triple-Lock will have to go. However there is an aspect of Steve Webb’s reforms that Jack has not explicitly taken into account. Steve Webb introduced compulsory enrolment in employment pension schemes. Most people in employment will now be gaining an entitlement not only to the state pension but also to a “works” pension. You have to take active steps to opt out of the “works” pension. However before Steve Webb’s reforms you could be worse off by opting for a “works” pension because the extra income you earned from the pension would result in a reduction in welfare benefits. Amongst other things this meant that Independent Financial Advisors could not always advise taking advantage of a works pension. If we were to introduce a means-test for either all of the state pension or some aspect of it then we would go back to position where for some people it would no longer be sensible for them to stay in the “works” pension. Before going down that route it would be best to recall Steve Webb to service and ask his views on what the optimum pension policy should be.
Sorry, but denying someone a state pension which they have contributed to all their working live through National Insurance, is a complete non-started whatever their overall income. If we think some wealthy pensioners have too much income, we increase income tax rates to claw more back to the state. But we don’t deprive them of a pension they have paid contributions towards – that is morally unacceptable.
I tend to agree with Jack’s reasoning and solutions. What I think is anomalous is that the Triple Lock seems to apply to my teachers’ pension as well as my OAP. Perhaps, as a start, we should keep it with the OAP (which is still low by European standards) but be more sparing with public service pensions. Peter Wrigley (comfortably-off pensioner)
Senior citizens in Britain are not valued by Starmers people. Children are seen as a priority. I would rather reduce child benefit to one child and give the monies to our senior generation who have worked hard for out country.
Hi Jenny – thank you for your feedback.
You’re absolutely right that people have contributed through National Insurance, but the state pension isn’t a personal pot of money; it’s paid for by today’s workers. That’s why things like the support ratio, wage growth, and employment levels are relevant to sustainability.
It doesn’t operate like a private pension – it’s a social benefit – and there’s limited moral or economic justification for continuing to give full support to those who are already well off. Every pound we spend on high-income pensioners is a pound we can’t use to tackle child poverty or improve working-age welfare. That’s where the issue of universality and the Marginal Propensity to Consume really comes into play.
Sorry, Jack. Pensioners haver paid all their working lives through national insurance and income tax for their rather meagre state pension. I get £11,961 per annum as a state retirement pension. My sister in Germany gets 36,000 €.
The triple lock was introduced to start to give back to pensioners some of the pension they lost and to slowly start raising state pensions.
Even after 15 years of the triple lock, UK state pensions are meagre and many pensioners who do not have a works pension are eligible for extra benefits to help them get by.
Of course, if we do want decent incomes in retirement, then we will have to pay a lot more for them, but unless governments are going to start paying much higher pensions to the elderly ( which would stop the need to claim many other benefits) then keeping the triple lock is the only way to gradually bring up the state pension to a half decent level.
And to all those who think pensioners are well off, try living on £230 a week and pay for heating, lighting, cooking, clothing, council tax and food on it.
Like Peter Wrigley, I enjoy the benefits of a works pension, but I paid for that all my working life and didn’t do that to see it whittled away by parsimonious governments reneging on their commitments.
I am inclined to Jenny Smith’s view, but it could be easily fixed over the long term by scrapping Employee NI contributions and increasing Income Tax to cover. Thus removing the illusion that state pensions are funded by NI contributions. I am concerned that the costs of implementation, and the bureaucracy , really work against means testing. Plus most means testing is by household, not by individual. I continue to prefer that assessment, and would like to see it extended to Income tax. The spouse of a wealthy person may not have any obvious income. So there would be less effect from making penion entitlement based on personal income.
I should have said that I am perfectly willing to pay more income tax, as IT is at the lowest rate it has been since I started work in 1968 when it was 33p in the pound and allowances were just a few hundred pounds, but I don’t want to see pensions cut because of spurious arguments that pensioners are wealthy, when the vast majority are not remotely so.
Some interesting ideas, and I agree Steve Webb’s formula may need to be changed at some point, Jack, but you don’t help your case by saying state pensions for the rich are “subsidising avarice when children are going to bed hungry”. As Jenny Smith has said, people are told they are contributing to their state pension when they pay NIC, so there is an implied contract to be honoured, and not all well-off people got there by committing one of the seven deadly sins.
It’s also true that many well-off pensioners (most, probably) transfer wealth to their offspring, during their lifetime and afterwards, so the generational inequality you refer to is not as stark as you suggest.
It might be helpful to know what “the lowest marginal propensity to consume” means in actual numbers. Pensions paid to those already on high incomes might be added to savings, but must in some cases be spent in the (struggling) hospitality industry, or other parts of the economy which provide employment and tax revenues, even if the amount is a small percentage of that person’s income.
If people were told that they were contributing to their pension when they paid NICs then someone was misleading them. I thought it common knowledge that NICs went into the same pot as other taxes and would therefore be spent on just about anything from hospitals to nuclear weapons. I’m now in receipt of my state pension and I’m not rich by any means but I think Jack is foot on. It’s time we rolled income tax and NI into one tax, like most of our European neighbours, and arrived at a retirement pension awarded to all citizens regardless of how much NI/tax they may or may not have payed.
And if the WASPIs manage to squeeze some cash out of this vascillating government, my missus is giving it to our sons, whose generation need it far more than we do.
Way back, in the mists of time, the SDP produced a White Paper – “Merging tax and benefits: attacking poverty”. Basically, it proposed people would only pay tax if they could so afford. Others would be exempted by reason of lower income and need; and would receive benefits without the indignity, and indeed huge challenge, of navigating around 40 separate benefits. Although recognised as a very fair approach, IT at the time might have made the implementation a challenge. But the principle seemed sound.
In 13 years as a city councillor, I met many people who struggled to navigate the benefits minefield, and some whose dignity would not allow them to take help to which they were entitled.
I agree that the Triple Lock is no longer fair or viable (even if I lose some income). Surely we can develop a policy that recognises the sad reality of financial straits, but is fair, protects human dignity, and makes us proud to be Liberal Democrats. Thanks for your post, Jack. Glad it has attracted helpful comments.
According to AI assisted Google 1,028,000 UK pensioners pay income tax at the 40% rate or above. There are around 13 million pensioners in all, predicted to rise to 17 million by 2072. According to JUST (*) about 1 million of these have only the state pension.
Meanwhile the public debt (along with that of most of the west which faces the same issues) is at a record peacetime high.
I expect people will end up working a lot longer and retire later than they currently hope/expect. And I absolutely agree NI and income tax should be rolled into one.
(*) https://www.justgroupplc.co.uk/~/media/Files/J/Just-Retirement-Corp/news-doc/2023/1-2-million-pensioner-households-primarily-dependent-on-the-state-pension.pdf
The state pension should be linked to earnings because, on average, earnings rise faster than prices; the 2.5% part of the triple lock has almost never been invoked. Back in 1980 when Thatcher broke the earnings link, someone on a full state pension was receiving about 25% of median full-time earnings; anyone who reached State Retirement Age before April 6th 2016 and is on the old Basic State Pension is only receiving about 19% of median full-time earnings now. These are the people who Jack Carter wants to hit. If we look at how additional pensions like SERPS or the Civil Service Pension are treated, these are not triple-locked and only increase with CPI; the least generous of the Government’s inflation measures. We need to remember that the triple-lock was brought in originally because of the rapid increase in the cost of means-tested benefits for pensioners in the first decade of this century when the Basic State Pension had fallen to just over 15% of median full-time earnings. It makes no sense to hold down pensions and then have to pay more in means-tested benefits that are more expensive to administer than universal benefits.
@ Jack,
….. {the state pension} doesn’t operate like a private pension….
In macroeconomic terms it does. Simon Robinson recently on LDV, advised that we should think more in terms of resources. Both are mechanisms for reducing consumption of resources when younger workers are paying in, in return for being able to enjoy an increased consumption of resources in later life.
Paying NI is functionally equivalent to buying a government bond. In both cases, the payee is giving to the government now but will get more back later. A private pension company will use some of the money collected to buy government bonds and other securities so this component is no different from NI contributions.
The pension company will also buy company shares. The seller will then have the cash and the company will then have the asset of the shares. So this process will not achieve the object of immediately reducing aggregate demand unless this extra money ends up buying government bonds too. Probably most of it does.
This take doesn’t make the government’s job any easier unfortunately. If we have more elderly people wishing, or feeling entitled, to consume resources produced by others after they have stopped help create those resources, the government still has to ensure these can be transferred somehow.
@ Tristan,
“Meanwhile the public debt …is at a record peacetime high.”
Except it isn’t. For example it was much higher in the pre-WW2 period than it is now. If we had adopted a ‘bean counter’ approach to the economy we’d have simply surrendered in 1939 because we couldn’t have afforded to do anything else.
See the first graph on this link.
https://historyandpolicy.org/policy-papers/papers/covid-19-and-the-uk-national-debt-in-historical-context/
@Chris Cory – everyone’s entitlement to the state pension is directly linked to the number of years of National Insurance contributions they have made. The link is explicit even if NI doesn’t go into a special pot marked ‘pension’.
@chris Cory – there is literally a government website that tells you your projected pension and how this is based on the contributions you have made (and how you can increase it by making further contributions in some cases)
Laurence Cox,
Thank you for posting information about the relationship between the old state pension and median full-time earnings.
I am surprised that the (old) Basic State Pension (now £176.45 a week) has only increased from 15% to 19% of median full-time earnings. I assume that the new State Pension (now £230.25 a week) is 24.79% of median full-time earnings, nearly back to the 25% of 1980.
It is possible that at the next general election lots of political parties will not promise to keep the triple lock.
Thank you all for engaging with this so thoughtfully and in good faith. It’s very much appreciated, and I am mindful that this policy issue can be contentious and, at times, even somewhat taboo within our own circles and beyond.
The piece wasn’t written to prescribe a single answer, but to start a conversation about how we can balance fiscal sustainability with fairness and dignity. That balance is difficult, but it is also essential when discussing welfare policy.
I’m very glad that so many of you have taken the time to read the article, engage with it, and share your perspectives. While it may be presumptuous of me to say so, I think many of us recognise that there are issues with the policy that cannot be ignored, and that we must begin considering how best to address them.
I am particularly grateful to those who have shared their own experiences of the welfare system. As someone who has interacted with that system myself, I deeply value the honesty and insight those experiences bring to the discussion.
As someone who takes a strong interest in these policies, I believe we need to consider how best to correct existing inequities and explore practical solutions, even when the numbers are not in our favour. While my own perspective on the Triple Lock is shaped largely by economics, it has been invaluable to hear from those who approach the issue from other perspectives.
Could we please have details of the components of the National Debt, to whom it is owed, under which conditions and by when?
@Peter Martin. ” the payee is giving to the government now but will get more back later” This is not always the case: high earners are paying more than they expect back. Some are paying knowing they will never be eligible. The unemployed are getting their contributions paid by the Government but they still expect a pension. In all cases, the amount you receive is unrelated to the amount you pay only to the number of years you (or the government or your partner) have paid. That makes it a tax not a loan.
Eligibility is effectively based on the number of years you have been tax resident (and not a student). It should be made explicitly so (without the student bit).
@ Steve,
You’ve asked the same question before. If you Google “who owns the UK’s National Debt” you’ll get most of the answer.
One problem with understanding what goes on is that the definition of National Debt hasn’t been kept up to date. It was OK when we were on a Gold Standard and the issued currency wasn’t counted because it was backed by Gold. The issued currency now should be included and this is where the debt initially arises. What we call issuing debt is simply an asset swap of one type of debt (the govt IOUs of cash and bonds ) for another.
I’d just make the following points:
1) Everything adds to zero. So if we want to have net positive financial assets someone else has to assume responsibility for the negatives. Therefore, technically, the Govt has to be in debt .
2) The Govt is a currency issuer so this isn’t a big problem . They can’t go bust.
3) The purpose of taxation isn’t to provide Govt with money. It is to give a value to the currency that is created.
4) The purpose of interest payments (or the yield of gilts/bonds) isn’t to borrow money. It is to attract money from overseas and keep domestic money from leaving. It’s to maintain the value of the £ .
The government could pay no interest on debt in a matter of days if they wanted to. But the pound would fall on the forex markets.
A large proportion of home-owning pensioners will have paid off their mortgages, so their housing costs will be many thousands of pounds lower than younger people who are paying a mortgage or renting.
@ Peter Davies,
The points you raise are quite correct. The rules of the State Pension are unfair. Anyone needs 35 qualifying years of National Insurance contributions or credits for a full pension and a minimum of 10 qualifying years. So it isn’t at all proportional. Someone starting work at, say, 20 will now have to carry on working until 68 or so. Therefore they’ll likely have paid 13 years of contributions for no return.
I seem to remember paying into an earnings related scheme (SERPS?). I’m not sure what happened to that!
But, leaving this unfairness aside, the principle is the same as for a private pension.
@Peter Martin
‘I seem to remember paying into an earnings related scheme (SERPS?). I’m not sure what happened to that!’
I paid into that for 6 months in 1963-4 until I could follow my father’s excellent advice and joined my employer’s scheme as soon as possible. It does result in a minimal uplift to my stste pension.
@Michael BG
The House of Commons Library is, as usual, a vital source of information; in this case a research briefing from two years ago (CBP-7812). Notably, it mentions the Resolution Foundation’s report from 2018 which recommended increasing the New State Pension to 32.5% of median full-time earnings by 2035 and thereafter linking it to earnings with temporary protection for periods where inflation exceeded earnings.
Please forgive me if I’ve missed it BUT, no mentions, among all the ‘Triple Lock is unaffordable’ posts, have I read anything about how we, in the UK, have the lowest state pension in Europe whilst our store prices are among the highest..
Laurence Cox,
I was thinking that at the next general election we could say we would introduce a double lock – earnings and inflation for the new State Pension, while keeping the triple lock for the (old) Basic State Pension. We should also increase the maximum Pension Credit pension to the level of the new State Pension. At the moment it is £3.15 a week less that the new State Pension.
Looking at the comments here, all I can say is that this is why we will never get any reform. We are literally going to end up being like France and see constant gridlock to reform to where we will become bankrupt. Look at France folks.
The fact is, the current system is just unsustainable. We keep hearing the Welfare Bill is going up, but it is vastly coming from pensions. We have an aging population as well, something needs to change unless we are going to convince the public to massively change their opinions on immigration.
The fact is, people have to make political choices. You either pay more taxes (an argument to be made, unless it becomes uncompetitive like France), or we reform it. I am reminded of a recent private eye magazine “We all agree that someone else should pay for it by everyone”. This feels like this sentiment. I seriously cant forsee a situation where people will accept this with a aging population, decreased workforce, and a benefit system which locks people out but keeps pensions unchanged.
@ Andy,
“The fact is, the current system is just unsustainable. …..”
No it isn’t. However, it does seem this is what a lot of people want us to believe.
We do have to get our thinking straight to help solve our problems though. On the one hand we are told that the robots will take all our jobs and therefore we have to give everyone a UBI. On the other hand we are told that there aren’t enough workers to support the ageing population and we need more immigration to expand the economy.
The truth is somewhere in the middle of course.
We can start by realising that we cant actually go bust because we have our own currency. So the UK government is in a better position than France which uses a shared currency. The dangers are too much inflation, if we run a loose fiscal policy, and too much recession and unemployment if we run a policy which is too tight.
RR seems determined to get it wrong by choosing the latter.
@ Peter Martin
Here’s a list of some of the wars between the Glorious Revolution and 1815. Apparently England Britain was at war with France for more than half that time – the Second 100 Years War. What a waste of blood and treasure.
Nine Years’ War (1688–1697)
War of the Spanish Succession (1701–1714):
War of the Austrian Succession (1740–1748
Seven Years’ War (1756–1763)
American Revolutionary War (1775–1783)
French Revolutionary Wars (1793–1802)
Napoleonic Wars (1803–1814)
I suggest the debt on the graph results from these and other wars, and accurate it to say that the UK’s current debt is the highest peacetime debt.
This is highly relevant to the discussion. The US now can’t be relied on to support European security and Russia is threatening from the east. As a result we have to rearm and we have to pay for it because (we agree) liberal democracy is worth defending. The alternative is Farage’s approach.
This (from the Party’s candidate in Cities of Westminster and London in 2024) is worth a listen: https://shows.acast.com/frontline/episodes/the-uk-is-already-at-war-with-russia-edward-lucas
Thanks to Peter Martin!
Below is an article on the ownershp of “National Debt”, how it can be realisically understood and better managed.
https://www.taxresearch.org.uk/Blog/2024/05/08/why-we-have-a-national-debt/
Another relevant article may be found by using the heading “Why are all countries in debt? (also Richard Murphy)
Hoping this helps!
Simon Pike.
True, but of course those who have paid off their mortgages struggled to pay theirs in the early years. Little changes.
We went without holidays etc etc.
Hi Tristan,
You’d have been better simply arguing that the high public debt in the interwar period was the consequence of WW1 spending. The Nine Years War, and the others you mentioned, had little or nothing to do with it. IMO.
The link I gave you correctly makes the point that the recent rise in public debt is the first time any significant increase has happened in peacetime. I’ve got some Premium Bonds. This adds to the National Debt. Is this a bad thing? There’s a good case to be made that it isn’t. Of course if all holders of National Debt started to spend the proceeds, and which would cause the ND to fall, there could well be an inflation problem. On the other hand if everyone, including all overseas holders of the ND, started to save more , which would cause it to increase, there could be a deflation problem.
So I’m not saying there is never a potential problem with a high ND but the way macro-economics work is often the often the opposite way around to the common perception.
@Peter Martin
“You’d have been better simply arguing that the high public debt in the interwar period was the consequence of WW1 spending.”
I thought this was so obvious as to be not worth saying. My mistake. The link you posted to supports the conclusion that, generally, historically high levels of debt result from war. It states in the executive summary:
“The growth in the [UK’s national] debt burden since 2008 is unique in not being driven by war.”
And (in the first substantive paragraph): “The public debt first rose significantly during the long eighteenth century [ie 1688 to 1815] as the fiscal-military state engaged in increasingly expensive global conflicts”.
Quite. This was my underlying point when I said “ the public debt …is at a record peacetime high.”
“The fact is, the current system is just unsustainable. …..”
That is what we are arguing about. Today we are told that income taxes won’t increase and there there will be no exit tax in the budget. Possibly coincidentally (but I think not) the value of the £ and gilts has fallen. UK creditors clearly think the value of what they will get back from government is less today than it was yesterday and are so demanding more compensation for holding these (now more risky) assets. They must think the risk of default is higher too.
Whether high and [and expensive] debt is sensible and/or sustainable is another question. One for the weekend perhaps.
expats 13th Nov ’25 – 5:59pm:
…we, in the UK, have the lowest state pension in Europe…
But that does make it potentially sustainable at around 5% of GDP with a few tweaks such as bringing forward the planned rise in pension age, reducing the default 2.5% ratchet to 2.0% and increasing contribution years required for a full pension (it was 44, but is now 35). By contrast, most state pensions on the continent are unaffordable – a reality that many are now just starting to realise…
‘Work until 73 to save pension system, German experts warn’:
https://brusselssignal.eu/2025/10/work-until-73-to-save-pension-system-german-experts-warn/
…whilst our store prices are among the highest.
Source?
‘Are UK food prices really higher than Europe?’ [October 2025]:
https://www.igd.com/articles/are-uk-food-prices-really-higher-than-europe/71857
The graph in this article by the economist Julian Jessop shows food price inflation from 2015 (=100) to September 2025 has been less in the UK (142.5) than in the EU27 (148.41)…
‘Blaming supermarkets for soaring food prices is economic madness’ [October 2025]:
https://archive.is/y6lcS
@Mick Taylor: In Germany the average public pension for someone with a full lifetime of contributions is around €1,550 a month (https://fullfact.org/online/uk-france-germany-pension-comparison/). As in the UK, it will be proportionately less for people without a lifetime of contributions. If your sister receives €36,000 a year then her pension is truly exceptional and not a good basis for comparison UK state pensions. Unlike the UK where our state pension level is fixed, public pension levels in Germany are linked to pre-retirement income levels, so it is possible for a small number of high earners to receive much more than the average. Or maybe the figure you quoted includes a private pension source?
The triple lock was the right plicy for the time, and has helped reduce pensioner poverty, but as the population ages the bill is getting bigger. There is also the hard reality that a large percentage of current pensioners were able to retire at 65 (or earlier) benefitted from Defined Benefit pension schemes, and spiralling house prices.
Woud it nor make sense to now move to a triple lock system for Pensioners who have either only state pension or that plus a low occupational pension (under say £20,000) and for those above that level to be subject to a double lock or inflation and earnings?
@ Tristan,
If you’re arguing that the inter war period shouldn’t be classed as ‘peacetime’ then the same can be said of post war period when, for most of the time, we were engaged in a cold war with the USSR or one of a number of smaller hot wars.
You’re still stuck with the idea that governments have to firstly borrow the money, or obtain it in tax, first before they can spend it. So where does it come from before it’s there to be borrowed or taxed?
All government spending comes back as taxes sooner or later. It actually comes back as borrowings sooner. The borrowings represent what everyone else chooses to save. So if you’re opposed to the Government borrowing too much you are also opposed to everyone else, including our overseas trading partners, saving too much.
“If you’re arguing that the inter war period shouldn’t be classed as ‘peacetime’ then the same can be said of post war period when, for most of the time, we were engaged in a cold war with the USSR or one of a number of smaller hot wars.”
No I’m not. I’m saying the high debt between the wars was the debt taken on to fight WW1 and it fell as it was either repaid or inflated away. And the same applies after 1945. And the high debt in the long 18th Century was down to war as well. I don’t see what is so difficult about this. It’s exactly what the paper you linked to sought to demonstrate.
“the high debt between the wars was the debt taken on to fight WW1 “……… “And the high debt in the long 18th Century was down to war as well…….. I don’t see what is so difficult about this”. Well, that’s all right then, Tristan ?
But I’m not so sure the families of the 886,000 UK military deaths in WW1, plus three times that number of non fatal casualties and their families would agree with, “I don’t see what is so difficult about this”…….. especially this week.
4th August, 1914 wasn’t the greatest decision day of a then Liberal government.
@ David Raw
I’m not sure I follow. Peter Martin and I are arguing about government debt and the explanation of it being high being down to war, not whether joining WW1 was a good idea. As to what I think about war – see my comment at 9:23 on 14th Nov 25 in this thread. Sometimes it is necessary.
I’m sorry you don’t follow. As an exponent of Gladstonian economics I’m surprised that you don’t.
I don’t think the Asquith cabinet’s decision to enter WW1 on 4 August, 1914 was either necessary or justifiable…… as you seem to suggest….. the human cost and economic cost was appalling. The strongest advocate of Gladstonian economics ‘Peace, retrenchment and reform’ in thar cabinet was John Morley. He understood and resigned.
@ Tristan,
We agree that high government debt did previously occur mainly during times of war. Also that the increase in govt debt since 2008 is unusual in that a significant increase has occurred during peacetime.
The ‘problem’ (if this is the right word) is more that everyone wants to save during times of national crisis, to help the Government and aid a war effort. They’ll also spend less and save more if they mistakenly think that an economic depression can be cured this way. Although if prices are falling and interest rates are positive there is a measure of self interest involved too. This explains the relatively high government debts and deficits of the interwar period.
There may also not be much available, especially if there is rationing, to buy in the shops during wartime. We saw this to an extent during the Covid crisis- not much to do or buy! Inflation didn’t happen when the deficit rose but it did later when the savings of everyone started to be spent and when the deficit fell.
The other big factor in the rise of government debt since 2008 was the desire of many to save and reduce their debts. This is a big factor causing govt deficits and debts. The government can only borrow and spend money, without causing inflation, if everyone else is saving more and spending less. Japan is the prime example of this with its govt debt ratio of some 240% of GDP.