Budget 2015: Unashamed pandering to grey vote

The economic gap between the old and young is wide enough already. But the Tories have reason to make it wider

Occasionally, Chancellors do something big to help savers; one of John Major’s abiding political achievements is the tax-free Individual Savings Account (the Isa), which he launched under the charming name of Tessa (Tax Exempt Special Saving Account). Today, millions of people have invested in the stock market and in savings accounts, and amassed some capital and financial independence as a result.

That was a quarter of a century ago, and we have not seen anything as radical since. The Chancellor’s proposed reform to the way interest on savings is taxed at source is less revolutionary, and apparently to be restricted to the retired population. To be fair, they are in the greatest need, and, one suspects, relatively few know about or have got round to filling in HMRC Form R85 in order to see their interest credited tax-free. The difference between a tax-free and a taxed pay-out on a small deposit account running an interest rate of, say, 0.1 per cent, as many do, is not going to make a vast difference to many people’s standard of living. Or indeed to the Exchequer, which is why the Government might have thought about extending the concession to those of working age, too. Savers of every generation have had a hard time of it in recent years, with interest rates deliberately pushed to ultra-low levels and, until very recently, inflation running uncomfortably high.

Welcome as this reform remains, though, it points up a much larger, more dramatic feature of government policy during the Coalition years; a careful, solicitous and usually generous approach to the benefits of those in, say, the 50-plus bracket; and a much less indulgent attitude to those not yet out of their twenties.

This “generation game” has been well-chronicled. On the one hand we find the “triple lock” for pensioners that guarantees their pensions rise in line with wages, inflation or at 2.5 per cent, whichever is the greatest. Against that, many benefits for working age people were frozen in 2013, and have started to wither on the vine in real terms. David Cameron is planning to cut housing benefit for the under-21s; while their grandparents are enjoying vast increases in wealth simply because they happen to own their own home, and grotesquely so if they happen to be in London.

With good health extending into their eighties, and free bus passes, television licences and a few other allowances helping things along, Britain’s older people are enjoying themselves as no equivalent previous generation has. Those trying to save for a home, to pay for higher education or survive a spell of unemployment have, by contrast, found things much more of a struggle recently. To top it all, the Chancellor and the Pensions minister, Steve Webb, have engineered a scheme whereby those in their fifties and beyond can cash in a substantial proportion of their pension pots tax free. Few of these prudent types are likely to spend the proceeds on a Lamborghini, as the joke goes, and it is their money that they have saved for; but the contrast with their children and grandchildren barely able to make ends meet is painful.

The politics of all this are maybe a little too blatant. The grey vote is strong and active, and the Tories pander to it unashamedly – especially as it’s older people who tend to like the look of Ukip. Labour, by contrast, with their proposed reductions in tuition fees, are hoping they can overcome the traditional apathy of the young, and there is some talk about reducing the voting age to 16. We have too many divisions in this country to want to create another one; but the two main parties seem to want to do their best to make the inter-generational divide that much wider.

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