The welfare state is grotesquely unfair. There are people who receive thousands of pounds from the taxpayer with little government oversight, even when they have no genuine need for the cash. They spend it on things like cars, flat screen TVs and other luxury ephemera. And there is a sense of entitlement among these scroungers, a feeling that they are somehow owed the fruits of other people’s labour. These people are of course pensioners.
‘But, but, but,’ I hear them gargle through Wine Society crémant, ‘I’ve paid into the system all my life, I’ve earnt my pension!’ No you haven’t. You very unwisely handed over your taxes to successive governments who spaffed it on Millennium Domes and Ethiopian Spice Girls. You didn’t pay into a savings account, you paid into the kitty card. That money has been spent. You knew this. Ministers like to imply there is a big pot called ‘pensions: don’t touch!’ but never explicitly say so, because it isn’t true. Yet you foolishly trusted them. Tut, tut.
This Ponzi scheme worked while we had a growing working-age population. But that hasn’t been the case for a while. The worker-to-retiree ratio is going in the wrong direction: more oldies, fewer workers. Today there are around three pensioners to every ten workers. By the 2040s there’ll be more like four. Already we’re spending £137.5 billion this year on pensions, up from £125 billion last year, which makes Liz Kendall’s £5 billion of savings on personal independence payments look piddling.
Part of the reason for that worsening worker-to-retiree ratio is a dramatic fall in fertility rates, which can be blamed on pensions too. A paper in the Journal of Demographic Economics found that historically people tended to have kids as a form of old age security. But once you know the government will pay for your new Jag or Waitrose order instead of your potential future kids, there’s less of an incentive to have a baby. The paper found that most of the fall in fertility since the 1950s can be blamed on the pension system.
So what have successive governments done to bolster the number of workers? Import them. That keeps the population growing artificially, but it’s a short-term fix (there’s also a looming question mark over whether the economics of mass migration really are as rosy as we’re led to believe). Immigration has its effects on the fertility rate, too. Don’t build enough houses – which we haven’t, obviously – and prices go up. Couples can’t afford a family home and the number of births goes down, so we have to import more people. It’s a doom loop.
Like most right thinking people, I’m in favour of tightening benefit payouts to those with a light smattering of anxiety. We all get nervy sometimes; it’s a sad fact of life but not one that should entitle you to taxpayer subsidy or a new BMW. In principle, though, disability benefit seems a far more virtuous thing than state subsidised retirement. Disability is either something people are born with or that happens to them out of the blue. You can’t really plan for disability. Getting old though? We all know that’s coming. Yet there is this belief that Brits have a God-given right to give up work in their mid-sixties. It’s treated as some ancient liberty, enshrined in Magna Carta, rather than an ill-advised use of our peace dividend. If you want to permanently clock off for David Dickinson, why should I have to pay for it?
The wartime Tory chancellor, Kingsley Wood, foresaw this when the Beveridge Report was first published in 1942. He said privately that ‘the weekly progress of the millionaire to the post office for his old age pension would have an element of farce for the fact that the pension is provided in large measure by the general taxpayer.’ He was right then. Today, it’s even worse. One in four pensioners is a millionaire.
And yes, I know it’s tied up as equity in your huge five bedroom homes, and you can’t actually spend the hundreds of thousands of pounds that you have accrued thanks to a dysfunctional planning system and construction industry. Boo hoo. Imagine how that sounds to a young couple in their early thirties, earning the same wages they would have 20 years ago, unable to buy a starter home because half their salary is going to a retired buy-to-let landlord. A couple who feel a bit iffy about having kids because they’re not sure if they can afford the extra bedrooms and, anyway, they didn’t get a pay rise this year because Rachel Reeves hiked national insurance so the triple lock could tick up another 4.1 per cent. Farcical. And that’s from Churchill’s chancellor, so if you disagree you probably hate Britain.
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