Many years ago, a pensions company ran an arresting advertisement that featured a man who looked cheerful at 25, but whose brow became more furrowed at ten-yearly intervals. The captions told the story: his insouciant "I can't be bothered to think about pensions" at 25 became a faintly apprehensive "They tell me my job doesn't have a pension" at 35 and a panicky "How will I manage when I retire?" at 55. Our national debate on state pension provision follows a similar trajectory. Two decades ago, Margaret Thatcher abolished the link between state pension rises and average earnings, and instead introduced a link with inflation. This didn't look so bad in inflationary times. It has taken the lowest inflation in a generation to wake the country up to what it really means. Now we all carry the haunted look of the 55-year-old in that advertisement, as we ponder freezing grannies forced to undergo humiliating means tests.
Chancellors do not usually deserve pity, but Gordon Brown does. How was he to know that this issue would explode in his face? Labour promised to restore the earnings link at three successive general elections. The country returned Tory governments. Labour made no such promise in 1997. The country returned a Labour government. Alistair Darling made it clear in a green paper in December 1998 that the basic state pension would wither away; the minimum income guarantee would rise in line with earnings. Barbara Castle was thus spurned, universalism consigned to the dustbin of history. Did blood run in the streets? Did the masses besiege Whitehall? The nation went to sleep for Christmas, stirring itself only to hear that Peter Mandelson had misbehaved.
This year's 75p rise involved no change of policy, no sudden increase in pensioner poverty. Its apparent miserliness was merely the result of Mr Brown's own success in holding down inflation. The whole middle ground of politics was agreed that the basic pension was an anachronism, suitable for an era when old age was virtually synonymous with poverty, when full-time employment to 65 was all but guaranteed and when few people lived long enough to collect more than a decade's worth of pension. Despite the erosion of the state pension, we have had 20 years in which the average pensioner, with an increase in income from all sources of around 60 per cent in real terms, has done better than the general population. It would be perverse if we now suddenly switched direction and added further to such prosperity. Far better, it was thought, to concentrate help on the minority that has sunk into real poverty. And that is exactly what Mr Brown has done, at greater cost than if he had simply restored the earnings link.
But all of a sudden, politicians of all parties become the pensioner's friend. If Mr Brown offers an extra £5 a week, William Hague will offer £8.50. If Labour has a smart idea for a pensioner credit (a concept not to be found in the 1998 green paper), the Tories have a wheeze for allowing the under-30s to invest their national insurance contributions on the stock market. Mrs Thatcher, of all people, accuses Labour of "fraud" on pensions, when all it is doing is continuing a policy she established. In truth, the restoration of the earnings link would lead to an outcome entirely in accordance with Thatcherism. The poorest pensioners would be no better off if the basic pension rose: they would lose an equivalent sum in means-tested benefits. (Thousands of old people cannot draw a full state pension in any case, because they have gaps in their contributions record. But these are mostly women and are therefore rarely mentioned, least of all by male trade union leaders.) Well-off pensioners would pocket most of the increase, less tax. Inequality among pensioners would thus increase.
The issue is not so much one of affordability as of coherence in policy-making. The move towards selectivity in social security - for parents, the unemployed, the sick and the disabled, as well as for the old - began in the 1980s. The move towards less progressive taxes also began then. We cannot reverse the one without reversing the other. That is why new Labour - which has decided, rightly or wrongly, that the country will not stand for substantial tax rises - has continued the move away from the universalism of the Beveridge welfare state, while being far more serious than the Tories were about directing resources to the genuinely poor. There is a case for debating the principles involved. There is no case whatever for politicians to start an auction for the pensioner vote.
