Nick Clegg and the incredible shrinking pensions

Posted by Alexander Hay

Just in time for Christmas, the Deputy Prime Minister announces means-testing for pensioners' benefits, threatening more red tape, intrusion and poverty for the elderly

Pensions of the future, by the look of things...Nick Clegg serves many purposes these days, none of them dignified. For example, propping up an unpopular government... Taking orders from David Cameron... Serving as a fig leaf to the cuts and privitisation agenda...

And he also has a brief as bearer of really bad news. For example, being the man who had to tell everyone that the government was going to start trimming away at state pensions. Since he now shares similar levels of popularity with the Black Death, it was inevitable that he be chosen to unveil the government's latest cost-cutting exercise, means-testing pensioners' universal benefits.

This would mean each pensioner having to justify their eligibility while their personal affairs are pored over. It may indeed come to pass that people who remember means testing in the 1930s will live to see its reintroduction in 2012. Or as Flack-Catcher Clegg put it, "We should be asking millionaire pensioners to perhaps make a little sacrifice on their free TV licence or their free bus passes." The party is over.

Now, let's be Liberal Democrat's Advocate here and argue that Clegg is right. After all, it doesn't make sense that a wealthy pensioner with a six figure sum in the bank should be given the same free bus pass and TV license as someone living in local authority housing. There is a lot of money that could be saved simply by making sure the deserving each get what they need and limiting the amounts handed out, surely?

Therein lies the problem. Who is to say the system will be fair? There is an inherent conflict in interest where a government keen to cut costs puts itself in charge of means testing. Indeed, the stated aim is to cut costs, with Nick Clegg putting the case for it in terms of fairness and cost, but not whether it will actually improve matters for pensioners or make them worse.

Likewise, how will these pensions be means tested? One can easily imagine a new layer of bureaucracy coming into being, costing more money to run and so reducing whatever savings are made. Or where the government uses its existing infrastructure to organise the scheme and causes further over-stretching of its resources. In this case, the possibility for mistakes would be considerable.

And would the scheme save money in the first place? Free bus passes cost £1 billion a year, while - for example - winter fuel £2.7 billion. Would restricting access to them, and pensions themselves, make much of a difference, given the size of the costs? Assuming 10% of pensioners are wealthy enough to have their benefits slashed, that would only make a token dent in the costs involved. It appears that attempts to cut the money spent on pensioners are ideological rather than practical.

The Liberal Democrats' partners in government, the Conservative party, are wedded to the small state. In that sense, this seems less like an exercise in making the right people get the right benefits and more one where the aim is to make sure as few people as possible get what they are entitled to.

The government does, after all, have an obligation here. Having paid into the state during their working lives, pensioners may feel some return on their investment is needed. By reneging on the deal, the Coalition - which, let us not forget, lacks a popular mandate - is showing it is untrustworthy. Younger relatives may well ask themselves whether they should be paying so much into the system, given that they are likely to get even less. And so the social contract begins to break down, all just to trim a small percentage away from the benefits bill.

Prime Minister David Cameron may assuredly be congratulated for one thing - making sure it's Nick Clegg who announces all the really unpopular decisions. In exchange, he gets to announce that he might, possibly, be allowed to crack down on executive pay. The likelihood of that will no doubt amuse many pensioners, as they struggle with their heating bills. In fact, they'll be in stitches. 


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Alexander Hay

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