If Labour won't reverse its winter fuel raid, it must do more to support pensioners
Last summer, the Government's decision to means-test the winter fuel allowance caused quite an uproar. Although winter has passed, the outcry hasn't died down – as the local election results have shown, it's been neither forgotten nor forgiven.
While the poorest pensioners still receive the allowance, many who narrowly missed out have undoubtedly suffered financially by up to £300.
On the other hand, wealthier pensioners may feel they did not need the support. This situation underscores the importance of prioritising government spending, as every pound spent in one area leaves a pound less for other essential services.
In March, the Spring Statement focused heavily on growth and on how the Government is prioritising supporting working people.
By contrast, references to supporting pensioners were notable by their absence. This omission raises questions.
Are pensioners no longer seen as contributors to economic growth once they retire? Or did the Government intend 'working people' to refer to those of working age and beyond who rely on earning through work, rather than investments and inheritances?
The voting public is increasingly skewed towards older generations, making the 'grey vote' a force to be reckoned with.
Historically, this early in a parliamentary term, governments can get away with making unpopular decisions without fear of election reprisals. But then came the recent rise of Reform.
I'm in favour of any government seeking fairness across all generations, creating tailored opportunities and providing safety nets for all. So how is the Government doing this for pensioners?
Beyond the winter fuel allowance, its stance on supporting pensioners includes a commitment to the state pension triple lock until the next election.
The year-on-year increase of the maximum of inflation, wage growth or 2.5pc means state pensioners receiving higher increases than average earners if inflation outpaces wage growth.
That has raised questions over predictability and long-term financial sustainability which is why we favour a modified formula that pays above inflation only if wage growth exceeds inflation over a three-year period. Remember, it's today's workers who finance current state pensions.
A more immediate concern is that the full new state pension at £11,973 is not far below the personal allowance, currently frozen at £12,570. In two to three years, pensioners relying solely on the state pension may find themselves liable for income tax.
Initially, the amount will be minimal, and the Government could ease concerns by agreeing to waive it – the cost of collection could otherwise exceed the revenue generated. However, this issue will grow unless addressed.
Social care funding is another critical issue. The Government cancelled the proposed deal, which would have capped personal contributions from this autumn, at the same time as means-testing the winter fuel allowance. Despite its potentially far greater impact, that decision was met with barely a public whimper, compared to the outcry over winter fuel.
All political parties should avoid making uncosted and unaffordable promises. Unfortunately, that's not always how politics operates.
If as has been indicated, there will be no U-turn on the winter fuel allowance, I'd ask the Government to look intergenerationally across policy measures. Any government must support pensioners if they want pensioners to support them back.
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