Last week I visited Southwark Pensioners’ Centre with Shadow Chancellor John McDonnell MP to talk about Labour’s commitment to pensioners and those approaching older age. We will guarantee their pension incomes regardless of the Tories’ shambolic handling of Brexit. You can watch our video of the visit here.
We have called for the extension of the “triple lock” on pensions to at least 2025 after Chancellor Philip Hammond suggested the Tories may scrap it. In addition, we are also guaranteeing pensioner benefits – Winter Fuel Allowance, free bus pass, and free TV-licence for over-75s – until 2025.
The Tories’ failed austerity agenda has targeted young people for six years. Now they are targeting older people. The OECD has ranked the UK’s pension system at 32nd out of its 34 nations, ahead of only Japan and Mexico in terms of its ability to maintain a standard of living in retirement. We must ensure that pensions continue to rise if this is to improve.
The triple lock guarantees that the State pension rises by the highest of average earnings; CPI inflation; or 2.5%. Analysis by the Pensions Policy Institute (PPI) suggests the triple lock has been successful in continuing the relative rise in pensioner incomes that began under Labour in government.
Levels of pensioner poverty fell sharply under Labour in Government, from 25% of pensioners in poverty in 1997 to 15% by 2010. Since 2010, the number of pensioners in poverty has fallen slightly to 14%. PPI analysis shows that the triple lock is broadly progressive in its forecast impacts, increasing incomes most at the middle and lower half of the income distribution.
PPI also show that the triple lock stands to benefit younger workers the most, since they stand to gain the most from the effects of guaranteed percentage increases in the pension before they retire.
In terms of paying for this pledge, the Government has made an absolute commitment to cut Corporation Tax, Capital Gains Tax and Inheritance Tax for the wealthiest. We have different priorities and will make an absolute commitment to protect pensioners.
All our of our day-to-day spending will fit inside our Fiscal Credibility Rule, which will bring day-to-day spending into balance over a five year period without damaging economic prosperity. Unlike the Tories’ own spending rules, Labour’s has been drawn up with advice from world-leading experts and is still operational. It is the Government who keep making spending rules they can’t keep (like the flawed welfare cap last week) and are then forced to abandon them.
We don’t believe that pensioners should be made to carry the costs of this Government’s failures. Like David Cameron we think that Government has a “fundamental duty” to look after old people.
Independent research shows that younger people stand to benefit the most from the triple lock, because it guarantees their earnings in retirement will have at least kept pace with earnings in the wider economy. So every section of society stands to benefit – Labour does not believe in playing younger people off against older. We will make sure Government delivers the investment needed to give young people decent, secure jobs.
We stand by the principle that everyone deserves a decent retirement and that it is a duty for Government to look after our older people. Pensioner incomes have risen from the poverty levels the Tories took them to, but 1.6m pensioners remain in poverty and more can be done. Where pensioners are better off, we support progressive taxation, like the 50p upper income tax rate, to make sure they are paying their fair share.