Stop This Auction on Pensions
Many years ago, a pensions company ran an arresting advertisement that featured a man who looked cheerful at 25, but whose brow became more furrowed at ten-yearly intervals. The captions told the story: his insouciant "I can't be bothered to think about pensions" at 25 became a faintly apprehensive "They tell me my job doesn't have a pension" at 35 and a panicky "How will I manage when I retire?" at 55. Our national debate on state pension provision follows a similar trajectory. Two decades ago, Margaret Thatcher abolished the link between state pension rises and average earnings, and instead introduced a link with inflation. This didn't look so bad in inflationary times. It has taken the lowest inflation in a generation to wake the country up to what it really means. Now we all carry the haunted look of the 55-year-old in that advertisement, as we ponder freezing grannies forced to undergo humiliating means tests.
Chancellors do not usually deserve pity, but Gordon Brown does. How was he to know that this issue would explode in his face? Labour promised to restore the earnings link at three successive general elections. The country returned Tory governments. Labour made no such promise in 1997. The country returned a Labour government. Alistair Darling made it clear in a green paper in December 1998 that the basic state pension would wither away; the minimum income guarantee would rise in line with earnings. Barbara Castle was thus spurned, universalism consigned to the dustbin of history. Did blood run in the streets? Did the masses besiege Whitehall? The nation went to sleep for Christmas, stirring itself only to hear that Peter Mandelson had misbehaved.
This year's 75p rise involved no change of policy, no sudden increase in pensioner poverty. Its apparent miserliness was merely the result of Mr Brown's own success in holding down inflation. The whole middle ground of politics was agreed that the basic pension was an anachronism, suitable for an era when old age was virtually synonymous with poverty, when full-time employment to 65 was all but guaranteed and when few people lived long enough to collect more than a decade's worth of pension. Despite the erosion of the state pension, we have had 20 years in which the average pensioner, with an increase in income from all sources of around 60 per cent in real terms, has done better than the general population. …