It's time for pensioners to lose their sense of entitlement

With a happily ageing population and, very likely, lower immigration to redress our increasing demographic imbalances, the burden of the triple lock on the social security budget is getting heavy indeed

Baroness Altmann is proposing to break the triple lock on pensions

Sometimes I feel like I am living in a gerontocracy. Suits me, in many ways, seeing as I am at the “right” end of the age scale, at least in that respect, but is still disquieting, and I find the age division in society, overlaying so many others, rather worrying. The recent referendum vote demonstrated the power and, oddly enough, sheer militancy of the grey vote.

Last year's general election was also a reminder of what a promise to look after pensioners can do for a political party: Mess with the wrinklies at your peril. For as long as the young rely on email, Facebook and Twitter, and Jeremy Corbyn, to achieve political change rather than turning up to vote at the polling station, they will remain economically differentially disadvantaged or, as we experts say, shafted.

So when the outgoing pensions minister, Baroness Altmann, said that the time had come to break the “triple lock” that guarantees relatively generous annual increases in the state pension I had mixed feelings. I feel unease because I know that it will affect me personally, ere long. I also remember what happened when the Thatcher government ended the automatic uprating of the state pension with earnings back in 1980. It was replaced with a link to price increases instead, usually a bit smaller than the rise in wages. Year-to-year that doesn't matter much, and sounds reasonable, but over a long period it means pensioners steadily become worse off compared to the rest of the population, and more slide into relative poverty. That was an ugly thing to watch happening to parents.

Forget privatisation or any other “vicious Tory cuts”, by the way; this was one of the main reasons why the size of the state fell in the Conservatives' last run in power, because the old age pension is such a big part of public spending. The Thatcher policy of linking to prices was continued for a time by New Labour, and, with inflation coming down so far as it did, resulted in the notorious rise of 75 pence a week in the pension in one of Gordon Brown's budgets. In 1999 a rise of less than a quid a week was all that was required to keep up with a minimally rising cost of living; it was, however, seen as an “insult”. By that time pensions were down to 15 per cent of earnings, which was really the point of the objections.

By 2010 the Liberal Democrats had the idea of the triple lock to redress the balance, opportunistically adopted by the Conservatives in the Coalition and again at the last election. Electorally, it worked. Economically, it makes very little sense. So despite my misgivings, I can recognise and accept that too. Let us look precisely at what Roz Altmann proposes: keeping the link with prices or earnings, whichever is greater, but dumping the 2.5 per cent minimum. This is merely a modernisation of the triple-lock pledge, and not a return to the Thatcher-Major era of miserly rises. Pensioners will not fall behind the rest of us.

Barroness Altmann is right to call for reform because the world has changed. Inflation, even including the cost of things that especially matter to pensioners, has, for the moment, been tamed. A rise of 2.5 per cent is far too large in an age of zero inflation and one per cent pay rises (if that). It is also far too large when the country is going into recession. And it is a con, anyhow. All it means, in reality, is that those coming up for retirement (I declared the interest) have to work ever longer before we even get to qualify for the state pension. This is the reality of what has happened to the state pension in the last few years: smoke and mirrors.

Moreover, with a, happily, ageing population and, very likely, lower immigration to redress our increasing demographic imbalances, the burden of the triple lock on the social security budget is getting heavy indeed. I repeat: Altmann is only talking about moving to a double-lock, not condemning older fellow citizens to eternally falling relative living standards. As Theresa May said in her first PMQs, the nation has to live within its means.

As a matter of fact, I happen to think we should start to move to a post-inflation approach where we move away from the annual ritual of pay increases and parallel increases in benefits payments. We should also scrap some of the other regular rises in prices and tariffs, as for utilities and public transport. These traditions go back to an era when we had to deal with high inflation by more or less institutionalising it, through index-linking, so it became a way of life. We don't need to do that any more, and for most of the history of civilisation the world existed with fairly stable prices and a constant value of money. Two-yearly reviews would be a start.

Even if inflation goes up again (the devalued pound will push import prices up) the British need to realise that, old and young, rich and poor, their living standards have been protected for far too long by borrowing from foreigners or by selling national assets to foreigners to cover the bills (everything from nuclear power projects to our airports to ARM Holdings plc). Pensioners, like everyone else, need to lose their sense of entitlement. Post-Brexit, there will be no alternative.