The Government traps itself in a generational war

AME must be cut, but if pensions are protected, then working-age people will be hit.

Research by the Social Market Foundation suggests that the increase in welfare spending over the next five years won't come from working age benefits, but instead will be due to the growing number of elderly people claiming things like the state pension and free TV licences.

This is will end up biting harder than it needs to, given a set of artificial constraints introduced by the government. Firstly, David Cameron pledged in 2010 to protect the universal elderly benefits like free bus passes and TV licenses, at the cost of £4bn. Then, Osborne announced a "triple lock" for old age pensions, promising that they would rise by the highest of inflation, wage growth, or 2.5 per cent.

Those two policies clash with the Chancellor's plan, announced in the budget, to set a cap on Annually Managed Expenditure (AME), a measure of public spending which includes social security benefits like the pension. The Social Market Foundation writes that:

While working-age welfare has been the biggest element of the rise in AME in recent years, it is set to fall in the future as the economy recovers and government cuts take effect. In contrast, pensioner benefits will continue to rise rapidly as the population ages, meaning that further cuts to working age benefits are likely under a cap unless the Chancellor is planning to cut pensioner entitlements.

The Conservatives have managed to engineer a situation in which they are forced to choose between working- and old-age benefits; and rather than trying to balance that obligation, they are cutting working-age benefits while boosting old-age ones, which is what the triple-lock ensures.

The Chancellor has also said that he will attempt to avoid cuts which impair automatic stabilisers – categories of spending which automatically increase in a recession and decrease in a boom, which is true of many of the working-age benefits at risk – but that appears to be a constraint too far.

As the SMF's Ian Mulheirn says, part of the problem comes from the bizarre focus on AME:

The only real virtue in a cap on AME is rhetorical: it lumps together different elements of unrelated spending, which facilitates cuts to some when others rise. This serves to obfuscate rather than clarify public policy choices about the shape of the welfare state at a time when the Chancellor himself is calling for an open debate about welfare.

By talking about pensions, Jobseeker's Allowance, and disability payments in the same category, the government avoids elaborating a coherent vision for the future of the welfare state. Punishing decreases in unemployment benefits hide the fact that there is no real plan to deal with the demographic problem that old age pensions will become; while disability benefits, which exhibit little natural variation, soak up an extra amount of the cost.

The SMF argues that the government should mirror its discussion of the "structural deficit", and cap cyclical changes in spending differently from permanent ones. But whatever the solution, the government is hiding the effects of its welfare policy behind a wall of statistics.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

A second referendum? Photo: Getty
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Will there be a second EU referendum? Petition passes 1.75 million signatures

Updated: An official petition for a second EU referendum has passed 1.75m signatures - but does it have any chance of happening?

A petition calling for another EU referendum has passed 1.75 million signatures

"We the undersigned call upon HM Government to implement a rule that if the remain or leave vote is less than 60% based a turnout less than 75% there should be another referendum," the petition reads. Overall, the turnout in the EU referendum on 23 June was 73 per cent, and 51.8 per cent of voters went for Leave.

The petition has been so popular it briefly crashed the government website, and is now the biggest petition in the site's history.

After 10,000 signatures, the government has to respond to an official petition. After 100,000 signatures, it must be considered for a debate in parliament. 

Nigel Farage has previously said he would have asked for a second referendum based on a 52-48 result in favour of Remain.

However, what the petition is asking for would be, in effect, for Britain to stay as a member of the EU. Turnout of 75 per cent is far higher than recent general elections, and a margin of victory of 20 points is also ambitious. In the 2014 independence referendum in Scotland, the split was 55-45 in favour of remaining in the union. 

Unfortunately for those dismayed by the referendum result, even if the petition is debated in parliament, there will be no vote and it will have no legal weight. 

Another petition has been set up for London to declare independence, which has attracted 130,000 signatures.