The House | Cut pensions to fund defence? That’d be electorally unwise and socially irresponsible

(Alamy)

3 min read12 min

Most welfare spending goes to pensioners, largely through the state pension. And much of the attention has focused on the triple lock that uprates payments according to wages, inflation or 2.5 per cent, whichever is highest. But even after years of this mechanism being in place, 1.9m older people still live in poverty, with millions more just about managing. In fact, when the Chancellor announced the disastrous decision to means-test the winter fuel allowance in 2024, it exposed just how many pensioners have incomes too low to pay any tax at all.

Triple lock critics often miss that the state pension is our clearest expression of intergenerational solidarity. Every working generation pays national insurance, which funds the state pensions of their predecessors. Today’s retirees aren’t getting something for nothing – it’s just their turn to have their pensions funded by today’s workers. To argue that this should be taken away is to misunderstand the case for the welfare state.

Any functioning society needs state intervention to ensure that everyone is able to thrive. Welfare also mitigates the effects of deep inequality, which otherwise risks social division and weakened cohesion. To treat it as a cash cow for the latest spending spree overlooks its core purpose.

And despite what the Conservatives and Reform might claim, our welfare system is far from generous. The Joseph Rowntree Foundation calculates that Universal Credit falls short of covering essential living costs by at least £22 per week for single adults and £51 per week for couples. Local Housing Allowance remains frozen, falling far short of the actual cost of rent in many parts of the country. Millions, including people in work, rely on the support of food banks.

Cutting the state pension would be short-sighted. Future generations of retirees will likely be even more reliant on the state pension for the bulk of their income after a lifetime of work than today’s pensioners. That is because the era of decent, final salary occupational pensions is long past its high watermark. Making the state pension less generous would inevitably push more pensioners into poverty, only adding pressure on future governments to intervene. Such short-termism is not what’s needed, especially when there are other ways that the government could raise money.

We could properly tax income from wealth, for example by applying National Insurance to investment income, raising up to £10.2bn a year. Reforming the Capital Gains Tax system, by increasing rates and closing loopholes, could raise around £12bn a year. And a two per cent tax on assets above £10m could raise up to £24bn a year.

It is a shame that the current fervour to divert money from welfare to defence in some quarters of the Labour Party has not matched by an enthusiasm for taxing the wealthiest. Such measures could allow us to build the council houses we need, fix our broken social care system or bring water back into public ownership.

Government isn’t just about deciding how to spend the money you raise – it’s also about whether enough is raised in the first place. If it isn’t enough, the answer lies in raising more, rather than simply moving money from one department to another. Asking pensioners, including those in poverty, to give up the triple lock so that we can spend more on defence is yet another electorally foolhardy and socially irresponsible suggestion. Let’s hope someone sees sense.

Neil Duncan-Jordan is Labour MP for Poole