I rarely disagree with anything that comes from the Joseph Rowntree Foundation. Their work over the years on housing, regeneration and poverty has been second to none. But this week they surprised me by publishing a ‘Memo for the new Secretary of State for Work and Pensions’ on ‘five things he can do to reduce poverty’.
Four of the five things are hard to disagree with. They are to:
- Reboot Universal Credit – reverse cuts to the Work Allowance.
- Support Living Rents – peg social rents to earnings levels.
- Focus on creating better jobs not just more jobs.
- Reshape welfare to work programmes – so they are geared to helping people increase their earnings as well as get a job.
My objection comes to their point about pensions:
- Revisit the pension triple lock – because child poverty will continue to rise while pensioner poverty continues to fall, the Chancellor ‘needs to make sure that resources are used fairly and efficiently, so that no generation is locked into poverty’.
This seems to me to pander to a narrative which says that there is some kind of inter-generational battle going on, under which older people have feather-bedded themselves with valuable houses and extremely generous pensions that no future generation will ever receive, and that this has been at the expense of younger people and children. Whatever the generality of the position retired people find themselves in, it does not apply to pensioners who are still in or close to poverty. The battle for resources is between rich pensioners, who have tax-relief driven large pensions, and poor pensioners, not between pensioners as a whole and later generations.
JRF defines poverty as ‘when a person’s resources are not enough to meet their basic needs’. So why would they support a policy which implies de-prioritising the attack on pensioner poverty in order to release resources to reduce child poverty? I simply do not think these things are linked. Removal of the triple lock (state pensions rising linked to incomes, prices or 2.5%, whichever is the higher) might lead to a saving but do they really believe that Osborne would apply this saving to helping poor children? No way.
The decline in pensioner poverty is indeed a success story, declining from over 40% in the 1980s to around 12% now. But 12% is still scandalously high. Much of the achievement came under the Labour Government but it has continued since 2010 – no doubt as a result of the power of the ‘grey vote’. Over the same period since the 1980s, child poverty has remained stubbornly high at around 30%, although the Tories like to play definitional games with the figures. The biggest losers in this period have been working-age adults without children, with the proportion living in poverty rising over the same period from 12% to touching 20%. It should never be forgotten in a society that believes that everyone on benefits is a scrounger that half the people in poverty live in a working household.
Pensioners did well under Labour, not just in basic pension but also in new additional benefits. Labour did not gain much from this politically: all anyone remembers is Gordon Brown’s disastrous award of a 75p increase at a time when inflation was very low (therefore anything that was index-linked would also increase by a small amount). The Tories, with characteristic bravura when they have a policy that benefits people who might vote for them, have reaped a large political dividend from the triple lock.
But my main point is that it is simply wrong to pit one group in poverty against another. Slowing the reduction in pensioner poverty does not mean one penny extra for children, Osborne would just give it to some other grouping that he hopes might be seduced into voting Tory.
Despite the triple lock and the protection of other benefits like bus passes, pensioners have not been immune from austerity. Far from it. Pension entitlement dates have been pushed back and back, women in their fifties now will retire at 66 when their expectation a decade ago was that they would retire at 60. In addition, two of the most important services for older people are in crisis. The care system is facing collapse, and most older people cannot afford to pay for it. Most require some care and some require a lot of care. The triple lock does not enable a pensioner to leave their home if they have mobility problems or to leave hospital if their home environment is not adequate to their needs. Supported housing is also in disarray, with Government changes to funding threatening to cut off future supply. Previous changes to the ‘supporting people’ regime have already undermined the very popular sheltered housing model which enabled many poorer pensioners to continue to live in their own homes with on-site support.
Austerity must never be used to pit the interests of one group of poor people against another. If there is an issue to be addressed, it is whether richer pensioners should be taxed on the universal benefits they receive and have their higher rate tax reliefs removed. Recent work has shown that better-off people generally get more out of the tax relief and benefits system than poorer people. That is where the distribution challenge lies, not in setting up an artificial inter-generational conflict which simply does not exist.