If a government were operating purely on the basis of fixing the public finances, there’s no doubt state pensioners would be forced to endure a real-terms cut in their incomes.
It would mean that many would be pushed to the point where their health would be endangered, given the spiralling cost of heating, lighting and food. Hypothermia, flu and other respiratory illnesses take the lives of many every year. It’s neither humane nor fair to reduce the real-terms spending power of the old age pension. It’s the politics of it that may save the older generation from hardship this winter.
The cost of the state pension runs to more than £100bn a year. To put that in perspective, it’s rather more than double the defence budget, half the size of the entire spending on the NHS and social care, or a chunky four per cent of UK national income. When people talk about cutting social security benefits they should be aware that by far the largest component – some 60 per cent – is the old age pension. Contrary to some perceptions, it is not “paid for” by national insurance (NI) contributions over a working life, but funded directly from general taxation (including NI, which is essentially another income tax).
