Leading article: Pensioners' benefits cannot be untouchable

There are hundreds of thousands of well-off old people being subsidised by the state

Thursday 07 June 2012 22:38 BST

People aged 60 and above have never lost the habit of turning out to vote. If the young only understood what that means, they would do the same because the voting power of the elderly has meant that no government dare mess with their benefits. As the Coalition has struggled desperately to find ways to reduce the deficit, the pensions and perks enjoyed by the elderly have barely been touched. And they are to stay in place at least until the general election is safely out of the way in 2015. Only now, however, do we begin to hear whispers from Whitehall that, after polling day, the elderly may have to share more of the pain.

About time, too. The case for finding efficient and fair ways to reduce the Government's deficit is overwhelming, though how to go about it is a fraught, complex question. This newspaper has urged the Chancellor to concentrate on measures to stimulate growth and target the cuts on areas of spending which produce no economic benefit. Funnelling money into the bank accounts of the elderly is not a good way to escape recession: the case for doing it is social, not economic.

In a civilised society, no one should be condemned to hunger and deprivation in their old age. But there is a large number of people well past their prime who can afford a very comfortable lifestyle without help from the state, and yet qualify for subsidies purely by virtue of their age.

In 1999, when pension increases were tied to the Retail Price Index, the Labour government ran into political difficulties because low inflation meant that the annual pension increase was calculated at just 75p a week. To avoid such embarrassment, there is now a "triple lock" which guarantees that pensions will rise by whichever is highest – inflation, earnings, or 2.5 per cent. With an eye on the grey vote, David Cameron made an election promise, later incorporated in the Coalition Agreement, to leave the triple lock alone.

There is more. Until recently, there were free bus passes for everyone over 60. The only change that the Government has dared make is to raise the qualifying age progressively, but too late to stop vast numbers of wealthy people who were born in the post-war baby boom and left school or university during the years of full employment from getting a free ride.

Members of that same generation also receive a cheque every year from the Government to help towards fuel bills they can easily afford. It has been estimated that no fewer than 500,000 people on the higher tax rates receive such a perk. A smaller number of the very wealthy also qualify for free TV licences, because they are over 75.

The cost of these benefits should not be exaggerated. In total, they come to around £5bn a year – only a fraction of the cost of state pensions – but they contribute to a bill for benefits for senior citizens that is forecast to rise from £76bn this year to £86bn in 2016. Meanwhile, the benefits paid to people of working age are forecast to fall from £53bn to £47bn over the same period.

There is no dispute that substantial numbers of pensioners are in real need. Yesterday's figures from the Office of National Statistics suggest the UK is already less generous to its elderly than most other EU states. But the fact that some old people are living either in poverty, or very near it, must not distract attention from the hundreds of thousands of very well-off people of advanced years who are being subsidised out of general taxation. The Chancellor, George Osborne, has set a target of cutting £10bn from the welfare bill by 2016. That target cannot be reached by any fair route if the pensions and perks of the elderly are to be treated as sacrosanct.

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