Tough UK pension call will define Boris Johnson's premiership

Sally Hewson, from the English seaside town of Boston, has received a state pension for more than a decade. The money that she gets has risen gradually and she enjoys a comfortable, if frugal, life. Every week, about £175 lands in her bank account, and this money provides the bulk of her income. “People like me really don’t have anything else,” she says.

Ms Hewson is a fairly typical pensioner: rightwing in her world view, a Brexiter and also a longstanding Conservative voter. Yet she depends almost entirely on the state. She is also a beneficiary of the UK’s long war on pensioner poverty. While 41 per cent of single female pensioners were in poverty in 1996, today that figure has plummeted to 22 per cent. 

Much of that is due to the Labour governments of Tony Blair and Gordon Brown, which pumped vast sums into means-tested benefits. More recent Tory administrations then shored up these gains with the so-called pensions “triple lock”. Introduced in 2010, it ensures that state pensions rise by whichever is higher: wages, inflation or 2.5 per cent. But today, the future of that policy is in doubt due to .

Chancellor Rishi Sunak must find around £40bn next year to cover the pandemic’s extra spending. Scrapping the expensive triple lock, often judged either a policy that protects the most vulnerable or an unfair bribe to Tory voters, is a prime candidate. That ’s government is considering breaching a core manifesto commitment is a sign of the UK’s dire fiscal situation. As one official says: “It’s an itch the Treasury has wanted to scratch for some time, but the politics of it are so dangerous.” 

Pausing or replacing the state pension triple lock is far from cost-free. Daniela Silcock, head of policy at the Pensions Policy Institute at King’s College London, argues “it would save the government money in the short term but push pensioners into poverty in the long term . . . cutting it would be levelling down, not levelling up the country.”

Faced with the binary choice of raising taxes or slashing spending to find the funds he needs, Mr Sunak also has to think beyond economics. Among traditional Tory voters, trimming public services would top the menu. Jacob Rees-Mogg, leader of the House of Commons, set out this argument on Monday. “At the point at which an economy is coming out of an extraordinarily deep slump, that is not the time when you want to slap the economy down with higher taxes.”

But Mr Johnson’s government is based on a fragile coalition of former Labour supporters, who flocked to his party over Brexit, and more traditional richer Conservative voters in the south of England. While they were united this time last year around his clarion call to “get Brexit done”, they are not united on taxes, spending or the economy.

Furthermore, Mr Johnson was elected with a thumping majority in part as a reaction against the austerity agenda of his predecessor David Cameron. Pursuing a similar strategy now is risky: ending the pension triple lock, for example, might not be felt acutely in prosperous Surrey, but the impact in post-industrial Scunthorpe would be drastic. It is hard to think of a policy that would alienate first-time Tory voters more.

A recent poll of northern voters in “red wall” areas — seats the Tory party won from opposition Labour for the first time — suggest 47 per cent are willing to pay more taxes to fund public services, whereas just 24 per cent prefer tax cuts. In other words, the opposite of what Mr Rees-Mogg and traditional Tories want.

Ms Hewson is hopeful Mr Johnson and Mr Sunak will not make her poorer, saying, “Boris is an optimist, I am confident he can fix this and get us through.” The chancellor has pledged to repair public finances without a “horror show of tax rises with no end”, she adds. Yet he could still deliver a time-limited horror show to some traditional Tories.

Politically, the prime minister has shown he can win both the north and south. Continuing to do so, however, will take an economic strategy that appeals across England. Finding it, while paying for coronavirus, is a critical test of what exactly “Johnsonism” and this government are about.

Read original article here.