Ros Altmann: Ministers must rethink abandoning the commitments of the manifesto to pensioners

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Baroness Altmann is a conservative peer.

The bill regulating next year’s state pension hikes for the country’s 12 million retirees returns to municipalities for table tennis on Monday 15ns September. MPs have a chance to reconsider their decision to lift promised protections for next year, just as household bills for basic necessities like heating and food are rising sharply.

There was very limited debate when it voted in September to remove next year’s triple-lock increase for all retirees. Upon careful consideration of what their role is, Peers concluded that legislation that would increase state pensions by only 3.1% in the September CPI required changes. He concluded that MPs had inadequate or misleading information, so they should be asked to reconsider their original decision.

The triple block promise of raising pensions at least in line with earnings was part of the 2019 Conservative Manifesto. This should not be abandoned lightly, especially as the bill also removes long-standing income protection for the poorest retirees. , who rely on income-tested retirement credit.

Retirement credit never benefited from the triple lock, it was tied only to earnings inflation. However, for 2022-23, this would be replaced by the September CPI.

Of course, the ministers themselves could recognize the changed circumstances of retirees and the need to rebuild public trust by accepting the Lord’s amendments.

These ensure that the government honors its commitment to the Manifesto, but without increasing state pensions by the full 8.3% increase in the traditional measure of earnings inflation. This year’s ONS average weekly earnings figure for the three months to July was artificially inflated by the composition and base effects of last year’s sectoral job losses and leave scheme, making the comparison year over year for those exceptionally high months.

However, the Lord’s amendments propose to adjust the data for pandemic distortions.

This is part of new evidence for parliamentarians to consider. When they voted in September, they were led to believe there was no alternative to using the 8.3% profit increase, which costs over £ 5bn at a time when public finances are under pressure. exceptional.

However, this is not actually true. The 1992 Social Security Administration Act, which this bill amends to remove the provisions on increasing earnings, actually allows broad discretion for the government to adjust the data as it deems necessary each year. Section 150A subsection (8) states that when examining how to raise the state pension “the Secretary of State should estimate the general level of wages as he sees fit.” So why didn’t the government do it?

Apparently, officials believe they cannot produce a correct and reliable figure. This is rather a strain on credulity, given the large number of statisticians, mathematicians and actuaries at the department’s disposal. However, from the original debate, the ONS itself released information to explain the methodologies for adjusting the data, and the 2021 budget also provided OBR data for average earnings: all are below 8.3 percent, but at the above the September CPI by 3.1 per cent.

Indeed, the September CPI itself is too low, partly due to the effects of the pandemic. For example, last year’s sharp rise in restaurant meal costs at the end of Eat Out to Help out meant a significant year-over-year decline this September. Budget figures forecast inflation well above 4% with OBR warnings of over 5% and even 7.5% next year, possibly driven by rising energy and food prices.

The budget has also undermined affordability arguments with announcements of huge spending increases and tax cuts, including lowering bank taxes and alcohol duties. What would it say about the values ​​of our society if Parliament forced retirees to accept a real income cut during a cost of living crisis to help pay the lowest bank and alcohol taxes?

And do it in the eye of a cost of living storm, with UK state pensions being the lowest in the developed world and pensioner poverty levels already rising even before the pandemic.

Not all pensioners are doing well: two million live in poverty, more than half of single pensioners (mostly women) are in energy poverty and one in eight in extreme energy poverty. Most rely largely or entirely on their state pensions for retirement income. If they are not protected from the rising cost of living, they will struggle to pay their bills.

The parliamentarians have a chance to reconsider and so does the government. They also have a chance to restore some confidence and security by demonstrating a determination to deliver on the Manifesto’s promises.

Protecting retirees as promised also supports the values ​​of our welfare state. It is no surprise that younger generations are paying for unfunded retirement benefits. This is how our social security system has always worked, and as the population ages, costs are bound to rise. That can’t justify chancellors considering state pensions a worthwhile target to raid when the government wants money for other priorities.

Retirees will have good reason to get angry as their bills continue to rise. Even if presumably only for a year, this clearly inadequate 3.1% increase will not protect retirees as inflation skyrockets and causes more hardship and poverty. A decent society does not knowingly abandon its senior citizens in this contemptuous way. Retirees will not readily forgive such a betrayal.

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