I have every incentive to cheer Chancellor John Healey to the rafters when I’m told he intends to “protect pensioners” in Wednesday’s Budget. Some of my best friends – as we say – are already in that camp. I’m not far behind and my mother just turned 91.
Andy Burnham would be proud of her backstory. Working-class family, living in a council house with a very basic kitchen and an outside toilet. Parents were cultured but largely uneducated. My mam and her brother were the first in the family to get to university.
Great news then that the state pension is set to rise by 3.9 per cent, giving her an extra £500 cash to spend over the next year. We’re also told she can expect generous help with her energy bill, that fuel duty will be frozen and that people like her will be “shielded” from income tax, despite the latest increase taking them over the threshold where everyone else forks out more to HMRC. Living in Wales, she doesn’t pay for health prescriptions, and like everyone over 60 across the rest of the UK, she’s entitled to a free bus pass. Nice!
No one here is knocking pensioners, but my mother is not alone in feeling embarrassed at some of the freebies directed at her whilst the grandchildren pay punitive and accumulative interest rates on the university education today’s pensioners had for free.
I recently turned down the bus pass I’m now entitled to, not because I wanted to pretend I’m not as old as I am, but because it seems grossly unfair to me that my travel should be subsidised by my children’s generation who find those fares much harder to pay. I know it’s a pointless protest because most people my age will snap it up, but these unnecessary presents paid out on auto-pilot cost a lot of money, and the marginal help for the individual is a lot less than the combined hit for society.
Likewise, the winter fuel payments Rishi Sunak was determined to hand out four years ago. He wasn’t chancellor by the time the public received them and Liz Truss – who put the finishing touches to the package – was already a footnote in the history books. But we’re all still paying the bill and handing out £400 to every household that I believe could be better spent. Most recipients don’t really need it. Those who truly do would appreciate more generous and targeted help.
The triple lock (the mechanism that means the state pension increases by whichever is the highest of inflation, wages, or 2.5 per cent) loomed large during the early summer I spent at No 10, meeting every morning in Margaret Thatcher’s old study with the key people advising Boris Johnson at the time. Having just emerged from Covid – and finally managed to stop spending £2bn a month on universal Covid testing – there was a strong claim for rewarding NHS staff who heroically took us through that nightmare with a hefty pay rise. Their pay – however – was discretionary. Extra dosh for pensioners was not. That year saw the Russian attack on Ukraine send inflation through the roof. Everyone took a hit, but the knock-on effect on the triple lock hit the Government even harder. The state pension was set when inflation was at its highest, so the rise in April 2023 hit double figures.
I’m not saying pensioners don’t deserve a generous settlement, but even my fellow Welshman, and proud founder of the NHS, Nye Bevan, famously pointed out that “the language of priorities is the religion of socialism”.
Today I’d like to help students. We need a massive boost to defence spending. Taxes are so high that they’re stifling growth and there isn’t money for the much-needed investment in our energy infrastructure. All we have in the pipeline is one major nuclear power station – green-lit by Johnson to come online by the end of the decade. We should have half a dozen or more. That would simultaneously make energy cheaper, ease the cost of living, make British industry more competitive and boost national security. A no-brainer- but there can be no fix for tomorrow if we keep focusing precious taxpayer funds on pain relief today.
Tragically, John Healey looks set to do just this. No long-term fix, big decisions deferred and even more handed out now to the usual political suspects, paid for by adding to a national debt that has already topped £3 trillion. Not only is that disappointing. It’s dangerous – as one of the most experienced Treasury mandarins of all time told my new podcast with Sir David Davis, Politics Unleashed.
Lord (Terry) Burns handled twenty budgets from the early days of Thatcher to the later days of Tony Blair. As chief economic adviser and then Permanent Secretary to the department, he saw many crises and a lot of pain. He also helped fix deep-rooted problems and turbocharge growth.
The key – he told us – is to fix things in “peacetime”, implying that it’s currently critical to clean up before another crisis hits like Brexit, Covid or Ukraine. He compliments Burnham and Healey on their political skills but urges them to “use them well”. The risk of a major crisis is extremely serious – as wise old heads like Terry Burns see it. And if you don’t start fixing the problems now, primarily by cutting expenditure, tomorrow’s crisis will need “big weapons” like changes to income tax, national insurance or VAT – that would break manifesto commitments. Pensioners may welcome today’s pledge to protect them – but if the economy goes down the pan, we’ll all suffer – including them.
Guto Harri is the co-host of the new Politics Unleashed podcast
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