The right wing welfare state: capitalism for the young, socialism for the old

(Photo: Getty)
From the Spectator 22 June 2015

On the radio this morning, a campaigner from the Child Poverty Action Group had an ‘emperor’s new clothes’ moment. Why not, she said, treat the young like the old. If the Tories insisted on having a ‘triple lock’ on pension benefits for the elderly, which guaranteed that the state pension must increase every year by whatever target was the highest – inflation, average earnings or a minimum of 2.5 per cent – why not put a triple lock on the benefits of poor families. The state would then treat the young like the old, and subsidise the future as it subsidises the past.

You will understand why she was speaking out of turn when you listen to David Cameron describe his plans to cut £12 billion today. In truth, Cameron does not want to cut the welfare state, just a part of the welfare state that helps the working poor.

When it comes to pensioners, however, his fiscal conservatism vanishes. His commitment to the state subsidies for the elderly is close to socialist. As Paul Johnson of the Institute for Fiscal Studies says, 30 years ago pensioners were much more likely to be poorer than their younger counterparts were. In 2011, for the first time, the average incomes of pensioner households rose above the average incomes of the rest of the population. As for people retiring now, on average they will be better off in retirement than they were when they were working.

It does not stop there. Gross spending on pensions for former public sector employees approached £36 billion in 2014. Despite some reforms, these pensions, and those still being accrued by current public sector workers, are hugely more generous than almost anything in the private sector. Finally, just before the election, George Osborne used public money to fund one of the most naked electoral bribes I have seen: pensioner bonds, where the state, or rather the taxpayer, subsidised higher interest rates for the over-65s.

We are moving towards a gerontocracy, where the smartest financial move you can make is to grow old; where politicians go hoarse as they shout of their love for ‘hard-working families’, while all the time directing subsidies to families who don’t work at all.

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It seems virtually impossible for Conservatives to admit what they are doing. The usually perceptive Conservative writer Tim Montgomerie sounded plausible when he explained the collapse of the left across the West by saying that ‘it still hasn’t answered the biggest question it has faced since the second world war: what does it mean to be left-wing when the money has run out?’ Left-wing parties can no longer bribe people to vote for them, he said; no longer use other people’s money to hold their coalitions together. Without its piggy bank, the left had nothing to do.

So it seems. Everywhere journalists ask left-wing politicians how they can possibly fund their socials project in an age of debt and austerity. They neither notice nor care that in Britain at least Conservative politicians are using other people’s money to build a client state of grey voters. The cost to the public purse and the size of the bought vote is only going to grow as vast numbers of baby boomers slouch towards retirement.

In other words, fiscal conservatism is age-limited. If you are a teenager, who cannot afford to go to a sixth form college, or a working mother, who cannot provide for her family, or a police officer, local council officer or any other public sector worker in an unprotected department, you must ‘face reality’ and accept there is no ‘magic money tree’. If, however, you make it through to 65, then the magic money tree comes back to life like a Saharan oasis after a desert storm, and rains its fruits down on you.

And, by God, once the old are bought they stay bought. The Conservatives got nearly half of the pensioner vote at the last election. Labour strategists, quite rightly from a cynical point of view, are already vowing that they will never be out bribed again. Liam Byrne said that ageing baby boomers meant there would be 1.5m more voters aged 65 and over at the 2020 election.

Labour is facing a demographic time bomb. We must never again fail to be the party that speaks for older Britain. And the conclusion for our leadership debate is quite simple. If the next Labour leader does not connect with older people — especially older women — then we will lose again.

I did not use the word gerontocracy lightly earlier. We are moving towards a society where parties win by offering the biggest bribes they can to elderly voters; where the taxes of the young people support the leisure of the expanding number of old people.

This is a society as upside down as it is possible to imagine. The young are the future. If we don’t encourage them, there won’t be enough money to support the old. Rather than face that, and accept that scarce resources  should go to poor pensioners, not all pensioners, the government has decided to tour the over-60s clubs, National Trust cafes, and golf courses of Britain and use taxpayers’ money to buy every voter it can find.

It would make a refreshing change if it wasn’t just the director of the Child Poverty Action Group but our supposedly clear-sighted journalists who pointed out to Cameron that his ‘austerity’ and ‘tough choices’ were as invisible as the emperor’s clothes.

 

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