Why is Jeremy Hunt pretending the triple-lock for pensions is expensive?
Jeremy Hunt: look at that smug face. He always thinks he can get away with spouting any old nonsense.
What a con artist. And in plain sight!
Jeremy Hunt is pledging to keep the triple-lock system to decide rises in the state pension, despite it being an “expensive” promise. There’s just one problem: it isn’t expensive at all.
The triple-lock ensures that the yearly increase in the state pension is the highest of average earnings growth, inflation or 2.5 per cent.
This year, it will rise with inflation, which was 8.5 per cent when the decision was made, meaning the pension, worth £203.85 a week for the full, new flat-rate (for those who reached state pension age after April 2016), and £156.20 a week for the full, old basic state pension (for those who reached state pension age before April 2016), will rise to £221.20 and £169.50 per week respectively, taking the annual totals from £10,630 and £8,145 to £11,534 and £8,838 respectively.
But pensioners are affected by freezes to Income Tax thresholds. This means all eight million taxpaying pensioners will see their taxes increase, by an average of £1,000.
So this year’s rises actually average out as falls in the amount that Income Tax-paying pensioners will receive – of £96 and £307 respectively.
There are more than 12 million pensioners, though, meaning although the government will end up paying more, it won’t be as much more as Hunt is making out, and therefore the effect won’t be anything like “expensive”.
Around 3,060,000 people receive the new version of the pension, meaning around 8,940,000 get the old.
So the government will save £293,760,000 in flat-rate pension payouts and 2,744,580,000 on the basic pension payouts – £3,038,340,000 in total.
If it spent £124 billion on pensions in 2023-4, as suggested by the BBC, then it should spend £134.54 billion – minus the £3.04 billion mentioned above. So: £131.5 billion.
It’s still an increase, sure – but only around two-thirds of what Hunt is trying to convince us it will be.
And I have a problem with those figures, because I make the increase in spending – which will only affect around four million pensions – as being between £2.8 billion and £3.6 billion, depending on how many receive the different types of pension.
So, with the £3.04 billion saving from the other eight million pensioners, it’s more or less a zero sum; no increase in spending at all.
(Experts: please feel free to correct me if my figures are inaccurate.)
Considering the size of the government’s annual benefit spend, the increase were being told to expect (whether accurate or not) is of only around three per cent. Hunt could get the Bank of England’s Magic Money Tree to provide that without any disturbance to the economy at all. Either way, it isn’t “expensive” and he knows it.
The BBC seems to have omitted these important details from its coverage.
I wonder why?
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