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Rishi Sunak’s pension tax cut is another insult to the young

Zero seats. Credit: Getty

May 28, 2024 - 3:45pm

As a soggy Rishi Sunak was almost literally drowned out by the New Labour anthem “Things Can Only Get Better” on the steps of Downing Street last week, I began to wonder why the Conservative Party has never coalesced around an optimistic anthem of its own in quite the same way. If it did, what song would it be? Then it hit me: “There’s No One Quite Like Grandma” by the St Winifred’s School Choir would be the perfect choice.

It would be consistent with the party’s choices over the last 14 years in office, prioritising pensioners over working-age people at every turn — with the net effect of tax and benefit policy changes since 2010 putting pensioners £2,000 a year ahead of those below 66 years of age. Meanwhile, the postwar promise of a home of one’s own for those who work hard and do the right thing has been broken for Britain’s youth for over a decade.

New depths of the pork barrel were scraped last night when the Government announced plans to tighten the triple-lock pension thumbscrews even further, uprating the tax-free allowance for pensioners by the highest of 2.5%, earnings or inflation. For workers, no such luck — another shift in the salt mines will help bring out the flavour of the pensioners’ pork.

If there is one thing that links the incoherent mishmash of policies that Sunak has announced since becoming prime minister, it is a disregard for young people and a pervasive disinterest in tomorrow. Transport infrastructure for the future? Cancelled. The labour of 18-year-olds? Free, to be “volunteered” for the state in the form of national service. The liberty as a grown adult to choose to buy and consume a cigarette, even if it might harm you? Gone.

Sunak and the Tories increasingly resemble the inverse of Robin Hood and his Merry Men, taking cash and liberty from the young to give to the elderly. Alongside the national service policy announced at the weekend, it speaks to a party that hasn’t just given up on the young ever voting Conservative — it’s as if it actively wants to punish them.

If the party wants a new generation of patriotic youth who believe in service for their country, why not set out a genuine retail offer? Forget national service; give young people an improvement in living standards and a country that fights for them. Why should they be compelled to work for free for a state that has failed their needs so comprehensively?

It should be no surprise that the youth vote has progressively abandoned the Conservative Party since 2010. The election that ushered in David Cameron as prime minister saw 29% of 18-24 year olds voting Conservative. Four prime ministers, Brexit, a pandemic, and overlapping cost-of-living and housing crises later, this has plummeted to only 7%, barely surpassed by 25-49 year-olds at 13% of the vote. Just as 20th-century markers of adulthood such as homeownership have elongated into the future, so must our definition of the youth vote.

The problem with taking from the future to finance the spending of the present is that eventually you run out of the future. Who could say that the NHS and other public services are in a good state today? Putting the votes and priorities of economically inactive pensioners first has lowered economic growth to such a degree that state spending is becoming unsustainable.

All of these policy announcements represent the Conservative Party steering into, not out of, the reasons it is facing a catastrophic defeat. Sooner or later, it will need to find a pathway to economic growth and a new generation of voters, not least because one in ten of its entire 2019 voter base has already died. Finally facing the intergenerational inequality question, let alone giving an answer, will be the first step the party needs to take should it wish to recover.


James Sean Dickson is an analyst and journalist who Substacks at Himbonomics.

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Aidan Twomey
Aidan Twomey
26 days ago

This is really a result of the idea that those with the broadest shoulders should pay the most. If taxes are only to be paid by the rich, then every political interest group will try to opt out and get someone else to pay. British pensioners don’t hate the young, they just don’t seem to realise that there are 13 million of them, so protecting their incomes means a worse life for young people.

Hopefully a repudiation of the Tories will also be seen as a repudiation of the triple lock. I’m all for a modest state pension, but it just cannot rise more than inflation in saecula saeculorum.

Alex Lekas
Alex Lekas
26 days ago

The problem with taking from the future to finance the spending of the present is that eventually you run out of the future.
is this similar to how other people’s money is a finite resource? This truism is not limited to pensioners and it’s a huge reason why govt debt is so massive. It will only grow as politicians who engage in this are rewarded with re-election, as is the case on this side of the Atlantic.
Perhaps one way that govt can be a conduit for economic growth is to cut spending. Stop acting as if every issue that arises requires a new govt program to address it. Quit expanding the bureaucracy at every turn and permanently committing limited resources to a non-productive portion of society. Sunak is not a problem, per se; he is a symptom and it’s one that is limited by party.

T Bone
T Bone
26 days ago
Reply to  Alex Lekas

Exactly. Part of the reason the Left is so effective at pulling culture and politics towards Socialism is that they preface everything as a battle between the more worthy vs less worthy group recipients of State funding. Fearing mass electoral blowback, this forces Conservatives to pick a side instead of being principled and making cuts to unnecessary funding across the board. So the ball is always rolling left towards a loose monetary environment.

I noticed over the previous 15-20 years, the term “Austerity” was not part of the mainstream American political lexicon but you hear it throughout Europe whenever cuts are made. That word seems to freeze European Conservatives.

j watson
j watson
25 days ago
Reply to  Alex Lekas

Cutting spending is a legit view to hold. One suspects vast majority of us could identify some spending we don’t agree with. But to move it beyond yet another slogan lacking substance one has to indicate what spending you plan to cut, how much it actually saves and tell the public truthfully what you propose.

Robbie K
Robbie K
26 days ago

Goodness, Unherd are really giving it to Sunak the last few days, or rather feeding the rabid cynical right winger Herd audience here, many of whom ought to be happy with this concept.

Lancashire Lad
Lancashire Lad
26 days ago
Reply to  Robbie K

This is the perfect example of why you consistently get things wrong. Life just isn’t that simple.

Matt M
Matt M
26 days ago

The “generational war” rhetoric from this author is very odd.
Pensioners are the parents of working age people. Any benefits that go to the parents eventually find their way down to the children. If your dad’s pension is generous, you don’t have to help him out financially. If the house he bought in the 1970s has shot up in value, it will be passed on to you in due course. If he is now well off, he can help you out in your hour of need. And of course if he is living a comfortable life, you are happy for him.
Journalists and analysts sometimes forget that we are families, not individuals.
I suspect the type of people who complain so loudly online about triple-lock pension are the self-same people who will inherit the tsunami of accumulated property wealth that will soon wash over the country. I suspect they will learn to love IHT thresholds and tax-free allowances at that point.

Aidan Twomey
Aidan Twomey
26 days ago
Reply to  Matt M

You can’t justify increasing state pensions by trickle down inheritance theory. Due course doesn’t interest me, I don’t want a large lump sum when I’m 60 and my kids are grown up. I want to pay less tax now so I can bring my kids up as I want.

The Tories want to treat young people like slaves and old people like kings. Just leave us alone.

Stephen Walsh
Stephen Walsh
26 days ago
Reply to  Aidan Twomey

The full basic State Pension is £221.20 per week. You usually need 35 qualifying years of National Insurance contributions to get the full amount. Both Labour and the Tories have committed to maintaining the Triple Lock, so no difference there. What is at issue here is a promise to index-link pensioners’ personal tax allowances. As the Tories are certain to lose it probably won’t happen. But it’s hardly a king’s ransom.

Chris J
Chris J
25 days ago
Reply to  Stephen Walsh

Why is it that articles on the State Pension never give the full facts.
Currently 9,576,000 pensioners get the the Basic (old) State Pension which is £169.50 per week.
3,024,000 pensioners the New State Pension is £221.20 per week, which is still less than the tax allowance. Only half get the full amount.
The increase in the tax allowance will only affect a small number of pensioners who have extra work related pension income.
Finally the total cost of both State Pensions is less than half the cost of the unelected quangos that successive governments have used to remove much of the workload our representatives should be doing.
Perhaps a bit more pressure to close these would be more of benefit than this constant attack on the elderly which, in itself makes no sense, as the young will one day be the elderly.

Matt M
Matt M
26 days ago
Reply to  Aidan Twomey

Your “old kings” are just the parents of your “young slaves”. It seems a bit sulky and adolescent from adults to refer to their parents in this way. Another way of describing this policy would be to say that it is protecting family wealth from the taxman.

AC Harper
AC Harper
26 days ago
Reply to  Matt M

The “generational war” rhetoric forgets (deliberately I think) that for a long time old age pensions lagged badly compared to other benefits. The media ran with stories of old people dying of cold because they couldn’t afford heating. The triple lock has brought things back into balance and, perhaps, favoured those on old age pensions.
If the triple lock ended tomorrow I would not be bothered, but at the heart of the matter is that ‘rhetoric’ is skilful argument, not necessarily factual argument. It suits the media to present opinions as facts – it sells more advertising.

Aidan Twomey
Aidan Twomey
26 days ago
Reply to  AC Harper

If it lagged badly when the boomer generation were paying pensions but are triple locked when they are receiving them that is an admission of unfairness. Those 35 years of contributions covered unemployment insurance, sick pay and a smart small bit of pensions. It’s like paying in for a Micra and expecting a Bentley.

j watson
j watson
25 days ago
Reply to  AC Harper

It’s less the sum paid as a pension, and more the increasing numbers qualifying and the years it needs to be paid to them vs the diminishing pool of tax payers.
The idea we’ve all paid for our pensions is false. We paid for the pensioners before us, and the young will be paying for ours, but fundamentally they’ll be too many of us and not enough of them.

Dennis Roberts
Dennis Roberts
26 days ago
Reply to  Matt M

My parents are comfortable and as things stand now I will get an inheritance (possibly not that much and possibly after I’ve retired, so of limited utiiity).

But not everyone will get something. In the meantime they are paying the taxes for ever increasing (in real terms) state pensions whilst they have not had equivalent wage rises. They are delaying starting a family or not having one at all as they can’t afford to pay rent (often to the older feneration) and have children.

It’s a divisive policy, unnecessarily and not meritocratic. And obviously just a massive bribe.

Matt M
Matt M
26 days ago
Reply to  Dennis Roberts

True not everyone will get something. 20% of pensioners are renters for one thing (probably the group that most welcomes the triple lock).

The thing is that family wealth compounds. You get something when your parents and in-laws die. So you can help your children now or you can increase your store of assets that you pass on to them. And on and on through the generations until some bit of evil luck stops the process.

This is something the upper classes understand but for the first time in British history we are about to see inherited wealth become a significant factor for possibly the majority of families. Which will doubtless bring its own downsides.

Most demographers don’t believe family formation is being retarded by high housing costs as birth rate falls are occurring in countries with low housing costs at similar or faster rates to the Anglosphere countries with ultra-high property inflation. But if it is the case then clamping down on immigration is the answer which is responsible for almost all the increase in house prices and rents.

Dennis Roberts
Dennis Roberts
26 days ago
Reply to  Matt M

One of the first significant policies Labour enacted was to tax aristocratic inheritance. That permitted the social mobility that came after the war. Mt paternal grandfather worked for a landed estate, until they dismissed him for not make his son work for them too (or so my dad, the son, says). Perhaps without that policy from Labour I’d be there, working the land for a pittance?

Immigration is a factor in high house prices, but ZIRP and QE is a major factor too.

Matt M
Matt M
26 days ago
Reply to  Dennis Roberts

And the temptation to tax inheritances may once again be too much for a future government to resist.
My late father-in-law was a gamekeeper’s son on a small gentry estate too as it happens. He was a country boy through and through but I think was happy to have escaped the life himself (he ended up doing very well in sales and having a very nice life).
What you say about ZIRP and QE is very true.

j watson
j watson
25 days ago
Reply to  Matt M

Inheritance is unearned MM. It locks in inequality and disincentivises economic endeavour. It’s one of the classic Right Wing contradictions – it’s favours something that advantages it’s base but actually mitigates against more vibrant capitalism.

Penny Rose
Penny Rose
26 days ago

It’s gerrymandering. Like Labour with votes for 16 year olds. Not that I’m usually a fan, but what did George Galloway say?

Stephen Follows
Stephen Follows
25 days ago
Reply to  Penny Rose

Something offensive, usually.

J Boyd
J Boyd
26 days ago

Anyone under 30 has benefited from free health care, generous welfare payments, free museums, subsidised higher education, a generally secure life in a peaceful country, free public transport and a decent infrastructure.

Who paid for that? Pensioners and the older citizens through taxation.

And anyone who grew up in the 40’s, 50’s or even the 80’s had it tougher than the young now.

j watson
j watson
25 days ago
Reply to  J Boyd

Two of the key differences JB is we had better housing and occupational pension prospects. Our youngsters certainly do not have those things in the way we did.

J Boyd
J Boyd
25 days ago
Reply to  j watson

That’s debatable: occupational pension provision was dependent on the sector you worked in, and largely the preserve of skilled and white collar workers until the 90s.
And we often had to rent or live at home well into our 20s and often longer.
The quality of housing now is much better: central heating for example was far from universal.

j watson
j watson
25 days ago
Reply to  J Boyd

Of course there were some occupations without pensions, but Coal miners and Steel workers had a scheme. What do their children have now? Before the outsourcing of many ancillary functions in the NHS these staff had access to the NHS pension. Now they don’t and their employment much less secure. You are correct white collar always done a bit better but even here the final salary schemes have largely ceased.
I don’t know anyone my generation who lived at home deep into the 20s. Some of that is families were a bit bigger and hence the desire for one’s own space greater, but fundamentally we could pay a rent and our incomes allowed us to get a mortgage after a few years.
I know folks my generation don’t all welcome the view we did well and better than the younger of today, but reality is we did and history will make that clear.

Andrew Martin
Andrew Martin
25 days ago

Why not spend it on Pensioners? When Labour get in we know where the money is going… to feed the State machine and its Labour voting hangers on. How are they going to fund it? Why yet another raid on Private pensions to start with. We WILL run out of money because of the prejudice of the Public sector over the ever diminishing Private Sector
Typically a Person in the Civil Service would expect to retire 70.73% of their Final Salary compared to 19.59% for a private pension, same wages, same age, same retirement (68). Can the author explain who is going to pay for that?
Time to reduce these Public Institutions notably Quangos. We just can’t afford them.

Andrew Fisher
Andrew Fisher
24 days ago

I think the article makes some good points but gets a few things confused. Firstly it’s a good thing to incentivize people having pensions. That doesn’t mean to say that the current generous guarantees on state pensions is justified compared to say public sector pay.

The author talks kind of a free market game but then switches to talking about “giving” the young better living standards. Oh what assumptions are encompassed in that simple word!

As for “national service”, it’s depressing how the author seems that the only currency of political discussion should be who gets what slice of the economic pie. The argument for national service isn’t that we get masses of free labor that ought to be paid for it’s that it’s a bonding experience for many young people, and that they both faith and society benefit. It doesn’t seem such an outlandish idea as many states have some form of national service, including many of the European ones endlessly praised by liberals of superior to our own. However, British society is now totally different from the much more homogeneous – and far prouder – one of 70 years ago, where this was possible and seen as a good thing.