Retired people should work for their pensions, says Lord Bichard. The fact that pensioners already have worked for their pension, by definition, doesn’t detain him. Pensioners are a “negative burden” on the state, who need to be “incentivised” into doing jobs that young people could do for a wage.
The interesting thing about Bichard is that he isn’t some rabid Tory. He is a cross-bench peer, a technocratic former senior civil servant who worked closely with the last Labour government. His suggestion was raised in the context of discussions between politicians, bureaucrats and Bank of England experts on the state’s response to demographic change.
And while his specific idea may have been off-centre, they point to a consensus among policy-making elites. In general, the consensus is that British capitalism will find its way out of crisis and restore global competitiveness by squeezing more work out of the labour force. In terms of pensions, the consensus is that people will have to work longer, for less.
Part of the rationale for this consensus is that the “old age dependency ratio” is going to change dramatically, with a growing elderly population relative to the working-age population. By 2051, just under a quarter of the population will be over 65.
According to a simplistic inference, pensions would therefore have to be paid for by raising taxes on the working population. However, labour migration counteracts this tendency, meaning that the “economic support ratio”, the ratio of the working population to the dependent population, will either remain static or any fall will be compensated for by increased productivity. The demographic rationale is therefore a red herring.
The real issue is how the growing pensions system will be managed. The orthodoxy among civil servants and politicians alike is that salvation lies with “thrift” and private sector provision. This means relying on a costly complex of financial entities to provide coverage, while grinding down public pensions. This explains the Tories’ introduction of the workplace pensions scheme. The result will be inequality and greater poverty in old age.
Bichard admits that forcing pensioners to work will be hard to sell to the public. But then, as he puts it, “so was tuition fees”. There is a lesson in governance here. Senior civil servants and technocrats formulate many of the policies or underlying policy goals that governments try to gain public support for. Formally neutral as far as the party system is concerned, they are the permanent administration of the country.
All three main parties agree on the broad lines of pensions policy. The differences between them are to do with the circumstances in which they govern, and their social base. The last government had a terrific fight with public sector workers to compel them to work until the age of 67, as part of an initial step towards raising the state pension age. As a result of the economic crisis, however, the Tories and Liberals have been able to press ahead with the policy.
Ironically, though, the Tories have some of the greatest difficulties in winning support for such policies. Older voters still form a disproportionately large part of their electorate. This is why, despite raising the pension age, they also pledged a modest increase in the state pension. A party of ruthless cutters they may be, but they still have to keep an eye on their base. And this necessitates a degree of manoeuvring that obscures the underlying consensus.
Take the recent coalition debacle over pensions. In July, the Tories sent out a stalking horse named Nick Boles to suggest that old-age benefits such as winter fuel payments should be cut. The Lib Dems backed him, urging the government to start looking at cuts in the next parliament. With monumental chutzpah, after it became clear that this wouldn’t wash, the Tories then turned round last month and said they were opposed to heartless Lib Dem schemes to cut benefits for older people, with Iain Duncan Smith calling it a “granny wealth tax”. This ironically left the Tories defending universal benefits in this case, with the Liberals attacking them from the right.
It is understandable that technocrats insulated from electoral pressures find it easier to articulate these ideas. But why can the Liberals be more open about this agenda than the killer-instinct Etonians? Partly it will be because, unlike students, elderly voters never formed a core part of the Liberal vote. But they now seem to be responsive to different pressures anyway. Having governed without winning an election, they have embarked on an elite strategy based on influence-mongering, proving their credentials through experience in government, positioning themselves for future coalitions, rather than building a sustainable democratic base.
We should pay attention to the likes of Bichard because the grey men in suits can often be more honest about what they want to do with us than the elected politicians.
• This article was amended on 1 March 2016. An earlier version referred to his “specific proposals” that old people should work. Lord Bichard has asked us to clarify that he was being ”ironic” at the committee and denies that he was supporting the idea.
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