George Osborne prepares to lead members of the Treasury team out of 11 Downing Street to face the media before the Budget. Photograph: Getty Images.
Show Hide image

George Osborne shamelessly courts the pensioner vote

The Chancellor's offer to the over-65s is rational but crude politics: they vote more than any other age group.

There is a simple explanation for the lengthy section devoted to supporting savers and pensioners at the end of George Osborne's Budget speech: they vote. In 2010, 76 per cent of the over-65s turned out, more than any other age group. If the Tories are to edge Labour in a close election next year, winning the support of this group will be crucial.

For years since the coalition was formed, Conservative MPs have been calling for the Chancellor to provide relief to the pensioners (a significant number of whom have defected to UKIP) whose savings have been hit by the "monetary activism" (ultra-low interest rates and quantitative easing) he regards as necessary to support the recovery.

Today, he acted. He announced the abolition of the 10 per cent tax band on savings (taking at swipe at Labour by adding "when I abolish a 10p rate, I don't secretly turn it into a 20p rate") and the doubling of the zero pence band to £5,000, the launch of a new pensioner bond paying market rates, the removal of tax restrictions on how pensioners drawdown their savings pots, and a new "Right to Advice" for those retiring on defined contribution pensions. All of these measures were designed to match Osborne's rhetorical commitment to those who have "worked hard" and "saved" throughout their lives. His decision to exclude the state pension from the new cap on welfare spending is another show of support for this group. 

Many will rightly question his priorities. It is pensioners who have suffered the least during the long squeeze, with their benefits shielded from austerity, while the young have suffered the most. But Osborne's decision to favour the former over the latter is rational, if crude, politics. 

It is worth noting, however, that today's measures could well be a prelude to a Conservative pledge to means-test universal pensioner benefits, such as Winter Fuel Payments, free bus passes and free TV licences, in 2015. While the state pension has been excluded from the welfare cap, these payments have not. Osborne's "Budget for savers" may well be aimed at providing the Tories with the protective cover they need to execute this U-turn. 

George Eaton is political editor of the New Statesman.

Getty Images.
Show Hide image

Martin Sorrell: I support a second EU referendum

If the economy is not in great shape after two years, public opinion on Brexit could yet shift, says the WPP head.

On Labour’s weakness, if you take the market economy analogy, if you don’t have vigorous competitors you have a monopoly. That’s not good for prices and certainly not for competition. It breeds inefficiency, apathy, complacency, even arrogance. That applies to politics too.

A new party? Maybe, but Tom Friedman has a view that parties have outlived their purpose and with the changes that have taken place through globalisation, and will do through automation, what’s necessary is for parties not to realign but for new organisations and new structures to be developed.

Britain leaving the EU with no deal is a strong possibility. A lot of observers believe that will be the case, that it’s too complex a thing to work out within two years. To extend it beyond two years you need 27 states to approve.

The other thing one has to bear in mind is what’s going to happen to the EU over the next two years. There’s the French event to come, the German event and the possibility of an Italian event: an election or a referendum. If Le Pen was to win or if Merkel couldn’t form a government or if the Renzi and Berlusconi coalition lost out to Cinque Stelle, it might be a very different story. I think the EU could absorb a Portuguese exit or a Greek exit, or maybe even both of them exiting, I don’t think either the euro or the EU could withstand an Italian exit, which if Cinque Stelle was in control you might well see.

Whatever you think the long-term result would be, and I think the UK would grow faster inside than outside, even if Britain were to be faster outside, to get to that point is going to take a long time. The odds are there will be a period of disruption over the next two years and beyond. If we have a hard exit, which I think is the most likely outcome, it could be quite unpleasant in the short to medium term.

Personally, I do support a second referendum. Richard Branson says so, Tony Blair says so. I think the odds are diminishing all the time and with the triggering of Article 50 it will take another lurch down. But if things don’t get well over the two years, if the economy is not in great shape, maybe there will be a Brexit check at the end.

Martin Sorrell is the chairman and chief executive of WPP.

As told to George Eaton.

This article first appeared in the 30 March 2017 issue of the New Statesman, Wanted: an opposition