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Blog: State pension promises will be key battleground in election

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Blog: State pension promises will be key battleground in election

Winning an election requires a party to secure the agenda or battle ground and the impending 2017 general election will be no exception.

This time round Brexit, immigration and the NHS (not necessarily in that order) will be the duelling territory but while pensions will not be the central issue or deciding factor, it will play an important part.

As Tom Selby, senior analyst at AJ Bell, said: ‘The general election is likely to be a bun fight for the so-called “grey vote”.’

All parties, with the possible exception of the Liberal Democrats, will be fighting hard for older voters. The EU referendum was seen by many as being won by this demographic, with the turnout among the young weaker than the old.

Anecdotal conversations with my fellow 20 somethings suggests a fair chunk of young people will stay at home on 8 June. Many do not see a party representing them, and even more will feel a sense of disillusionment following the Brexit vote, meaning they do not have the inclination to back a party which has let them down over the referendum. 

So both the Tories and Labour are eager to garner the ‘grey vote’ and a big factor in this will of course be the state pension.

Prior to Theresa May’s snap election announcement, Labour produced a pension pledge card which promises to legislate for the triple lock staying in place until 2025 (so far the Tories have not said what they will do with the triple lock beyond this parliament). The pledge also includes providing pension credit for women affected by the rise in state pension age and also that free buses for pensioners will remain in place – so Labour is making a big older vote play.

Speaking to Channel 4 last week, shadow chancellor John McDonnell, said he is trying to get the government to ‘match us’ and push the Tory government to also legislate for the triple lock.

Since the election announcement, the Tories have been typically tight lipped on the triple lock, but an announcement is likely in the manifesto when it is produced.

If I was a betting man I would predict the Tories, particularly if nervousness around the election creeps in, will back the triple lock.  It is, in the words of Yes Minister, a ‘vote winner’, and the longer-term issues of seeing GDP spend on the state pension rise is likely to be overlooked for the short-term gain.

SPA-rring parties

Another headache the Tories will have  is that of the state pension age (SPA).

The government is due to publish its SPA decision on 5 May following the independent report by John Cridland. The report said SPA increases to 68 should happen seven years earlier than planned and the corresponding report from the Government Actuary’s Department (GAD) said SPA should reach 70 between 2054 and 2056.

A Tory announcement that the SPA is going to increase just weeks before the election is a headache the Party will want to avoid – it will be an open goal for Labour which even its leader is unlikely to miss.

Last month Labour’s shadow pensions minister Alex Cunningham told New Model Adviser®: ‘We cannot support the review’s recommendation for a faster increase in the state pension age.’

At the time of writing a spokesperson from the Department for Work and Pensions (DWP) is yet to confirm to New Model Adviser® if the planned announcement on the SPA will go ahead.  It will be interesting to see how the Tory electioneering strategists play this one, a delay will make them look shifty and an announcement could mean a few bad front pages. 

Pension tax relief?

While pledging to keep the triple lock will win votes, any party which says it will reform tax relief will almost certainly lose votes – although the effect of this is not likely to be huge given it is not understood by the majority of the population.

I may be proved horribly wrong when they are unveiled but I suspect there will not be an inclusion of a reform of tax relief in either Labour or the Tory’s manifestos when they are released. When I spoke with Labour’s shadow pensions minister in February there was no policy direction on tax relief and the Tories are unlikely to want the gamble on any changes at this stage.

However if the polling is anywhere near correct and the Tories do secure victory in June, tax relief reform could still be on the cards into the future, even if master builder George Osborne will not be in the House of Commons to see it happen.

With a national deficit to fill and pretty much every other tax rise ruled out or viewed as unfavourable pensions are likely to come in the firing line. 

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