Ending pension lockdown is a start, but there is no easy solution to the yawning generation gap | Will hutton


Hunger for equity is universal. But wanting fairness does not mean wanting equality. Rather, it means accepting the economic and social reality that intelligence, strength, effort, diligence, and ability may vary, but the rewards must remain commensurate. No one should receive more than their due.

Basically, fairness means recognizing that life brings good luck and bad luck to everyone, often through no fault of their own. The common good should intervene to correct the resulting injustices. These concepts of proportionality and collective action necessary to mitigate fortuitous crashes are deeply rooted. Almost all societies levy taxes when the inheritance is passed from rich parents to rich children – and all societies try to alleviate, although sometimes not very effectively, the plight of the children of the poor.

By these criteria, over the past 40 years Britain has become an increasingly less fair country. The rewards are grossly disproportionate to the contribution, most blatant at the top. There is less societal effort to make up for the bad luck of where and to whom you were born, and more leniency for the benefits of those born lucky. And when You were born has become another important lottery. Baby boomers, enjoying the benefits of a 50-year real estate boom, generous private pensions and virtually free higher education, have been lucky. A millennial is less fortunate, and Gen Z, born after 1997, drew the shortest of short straws – in the face of a wall of unaffordable house prices, the prospect of petty pensions and the highest bills to be educated and trained. This indebtedness and this educational experience is made much worse by the specter of Covid – and, for these millions of young people not doubly vaccinated, the risk of Covid is long.

Conservatives are lip service to fairness – but many conservative politicians enter politics not to build a fairer society, but rather to roll back the state, cut taxes, promote individual responsibility and kill the EU . However, last week has come an important moment – a recognition that they are reaching the limits of acceptability of the world they have created. It may be true that Brexit and the Tory parliamentary majority were built on the votes of baby boomers and those even older – but continuing to blatantly favor them becomes political dynamite.

Chancellor Rishi Sunak, backed by the Prime Minister and influential 1922 committee chairman Sir Graham Brady, has signaled that he is considering not automatically increasing the state pension to around £ 750 a year for each retiree, in accordance with the expected 8%. increase in average incomes this summer. The triple lock, promised in successive Conservative manifestos since 2010, requires retirement increase annually by at least 2.5%, but if consumer prices or wages increase faster, then by this amount higher.

But this year, the combination of profits which fell 1.3% in July 2020 and the rebound in July of this year shows the statistical anomaly of a 8% annual increase in income. Retirees will not share the prosperity of all equally, but will benefit unfairly from a potential £ 3bn oddity. They will reap most of the “savings” made by the brutal cuts in the aid budget.

Worse yet, this undeserved annual luck, juxtaposed with the bad luck of the world’s poorest, comes just as those on universal credit must stop receiving Covid’s vital £ 20 a week top-up in September. Additionally, students will return to college for online education, but they will still charge the same fees – many of them unable to secure part-time hospitality jobs to supplement their studies. income, and worrying about the kind of work that awaits them afterwards. Injustice will be added to injustice.

Sunak can read the runes, and he needs that £ 3 billion as well. He will move away from meeting the triple lock-in pledge, likely paying a two-year average pension increase of wage growth to 3.4%. But rather than talking about societal fairness, which will open the government to an avalanche of criticism, its definition of fairness will be narrower – to only “taxpayers”, as he says. made to BBC Today program Thursday.

He needs to keep the fairness debate as minimalist as possible because it is locked in by another obvious three-fold promise – not to raise income tax, national insurance or VAT rates, which together provide more benefits. two-thirds of all government revenue. Moreover, under pressure from donors, private equity and hedge funds, he has refrained from reforming Britain’s grossly unfair capital gains tax regime. The broader Conservative base will not allow it to adjust inheritance tax rates either, although what to do with the wealth accumulated by baby boomers – as during the unjust 19th century when the luck of a wealthy parent could transform a life – becomes a major concern of young and old.

The only avenues open to him to increase his revenues – increase in corporation tax and freeze allowances – which he has already taken. Britain is stuck with no sources of income to build a more just society.

This is a continuation of the position since 2010, which forced the economic stimulus to be provided not by flexible spending and tax management, but by lower interest rates and the Bank of England printing £ 895 billion in cash as part of its quantitative easing policy. This, as the Bank recognizes, stimulates the economy by pushing up the prices of stocks, bonds and real estate. But it’s another undeserved chance for the rich who own most of the assets.

Sunak’s hints point to a government making matters worse. Society won’t tolerate so much injustice with more to come, and some of the more decent conservatives with their ears close to the ground are picking up the red flags. Sufficient Conservative MPs threaten both proposed cuts in aid and universal credit. But the group is tied to the mast of the sinking ship it built, piloted by its reckless captain, the aftermath of Covid and Brexit placing it below the waterline. Sooner or later, and I guess sooner, Britain will look to a government determined to build a genuinely fairer country.

Will Hutton is an Observer columnist

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