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13 November 2000

Pensioners want to join the aspirational society

Why should we expect the retired to be any less greedy than the rest of us? They, too, lived through

By Charlotte Thorne

Whatever Gordon Brown did for the pensioners in his pre-Budget statement (still unknown as the New Statesman went to press), he is unlikely to come anywhere near meeting the demand for the permanent restoration of the earnings link. Therein lies a puzzle, at least for new Labour. Why are pensioners so dissatisfied? Surely they are not still hankering after pensions linked to rises in earnings (rather than rises in inflation) 20 years after the link was abolished – a link, moreover, that only ever existed for a while in the 1970s? Surely they can see that it is right to make the poorest pensioners the priority, using the minimum income guarantee to channel resources to them, rather than to those who are already comfortable? Surely they can see that the Chancellor, even before his latest announcement, did his best, giving winter fuel payments and free TV licences to the over-75s, and spending an extra £6bn in all, over the lifetime of this parliament?

Well, that is not how pensioners see it. And it is hardly surprising. Since 1979, aspiration has been part of Britain’s political landscape: telling Sid about the sale of British Gas and selling off council homes to tenants brought aspirational politics to new audiences.

New Labour’s adoption of the same idea has been the secret of its electoral breakthrough – the recognition that people will vote for prosperity, for aspiration, for growth, but not for redistribution. The policies themselves might betray a redistributive heart, but the deed itself is done, if at all, by stealth.

So why should the rules be different for just one section of the electorate? Rather than being allowed access to these aspirational policies, the UK’s 11 million pensioners have been offered the worthy but unpalatable notion that although their pensions would rise only by minuscule amounts, poverty among their peers would be earnestly addressed.

If this vision of what happens to desire, to aspiration, to greed on reaching 60 was ever true (and it is hard to see why those nearing the end of their lives should be more willing than young people to defer gratification), it looks particularly odd now. A woman who turns 60 today, and thus attains the supposedly morally superior (if economically inferior) status of pensioner, will have reached adulthood in the 1960s. She began her working life as postwar prosperity took off, and she matured during the Thatcher years. She is hardly likely to be a self-sacrificing individual who rejects materialist values.

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Astonishingly, over the past two decades, average pensioner in-comes have grown almost twice as much in real terms as average incomes in the general population. Occupational pensions provide many newly retired people with a prosperity undreamt of 30 or 40 years ago. For the middle classes, retirement has become the point at which people start to live the life they really wanted, but deferred during their working years. To suggest to these people that they may wish to forgo income increases in order to allow the government to tackle pensioner poverty sounds very old Labour.

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Pensions were never designed to provide decades of real income growth; they were created when retirement was only expected to last a few years before death. For many pensioners, this is no longer good enough: 30 years of watching your children’s living standards creep above your own is not an attractive prospect.

Consider how much living standards have improved since 1970 – the growth of car-ownership, foreign holidays, household electrical goods. To today’s empowered consumers, the house of 1970 seems, for better or worse, almost Victorian – no TV remote controls, no videos, no microwaves, no sun-dried tomatoes. For those still in work, living standards in the year 2030 could make today’s standards look equally basic. Pensioners, like everyone else, want to participate in that growth.

But pensioners are not invited to the party. For 20 years, they have been enjoying zero real increases in their basic pension. High inflation masked this truth – pensioners thought they were getting more than they were. The 75p increase was, in reality, no smaller than any of the pension increases of the past 20 years. Once it had been tagged as derisory by the press, however, all hopes of a rational debate about the basic pension were lost.

The proposed pensioner credit may create a more sensible dialogue with pensioners. It will reward, rather than penalise, those who have saved something for their retirement, and so will shift the government’s focus away from just the very poorest.

But even in full swing, the credit cannot do much to provide the majority of pensioners with the year-on-year improvements in living standards to which they aspire. The clamour for real improvements will not go away, and pensioners show every sign of enjoying their new role as government irritants. America’s baby-boomer generation – which reaches retirement age over the next few years – is demanding, vocal and politicised. It has used its power to create a huge lobby that demands prosperity as a right. Britain’s pensioners seem to be embarking on a similar route – rejecting social security dependency in favour of activism.

The writer is a senior researcher for the Futures section of the Industrial Society