Should the old bale out the young?

People over the age of 50 could be forced to pay over £300 more in national insurance each year in order to fund social care, under plans that have been branded a tax on getting old by Labour.

Senior Tory MP Damian Green has proposed a major shake-up to funding for care, arguing that it should follow the state pension model where everyone is entitled to basic support but individuals can top up the pot through their own savings.

Incomes for retirees have risen by 60% in 12 years, but by just 36% for the rest. Maybe they should be made to share their good fortune

At 76 years old, if some of the press coverage is to be believed, Joe Biden is too old to be US president. By the same argument, at 78, Ken Clarke MP is past his sell-by date and 82-year-old Ann Clwyd, MP for Cynon Valley since 1984, should definitely be put out to pasture.

Entertainers, who have always pushed the boundaries of acceptability, go the extra mile. Whoever booked the crooner Tony Bennett to perform at the Albert Hall in 2017 to celebrate his 90th birthday, with a follow-up gig in June this year, hasn’t heard about retirement. Neither has the conductor Bernard Haitink, who in March took to the Barbican stage during his 90th year for two concerts with the London Symphony Orchestra: Mozart and Bruckner; and a few days later Mahler and Dvořák.

What are these people thinking when they hog the stage and push out younger performers? Shouldn’t they take a lead from Japan’s emperor Akihito, who is set to abdicate this week, at the age of 85, in favour of his son, Crown Prince Naruhito?

Of course we should celebrate Bennett, Haitink and the rest for being great performers. Their age is irrelevant. But those who have done well financially from the postwar economic boom, and retained their wealth and health while others missed out, should not be allowed to continue as if nothing has changed. The winners from the financial and health lotteries, who have largely been handed wealth via the property market and health via their genes, should make a greater contribution to addressing today’s problems.

Last week, the National Institute for Economic & Social Research warned that waiting to tackle the question of an ageing society until the middle of the next decade, which is the timeframe the chancellor Philip Hammond laid out in relaxed terms for MPs last week, is a grave mistake. NIESR said the costs of an ageing population were going to wreck the outlook for the public finances from next year without some fundamental rethink of what the government spends.

Hammond’s view – that the Treasury can keep Whitehall spending in check while he steers the UK through Brexit’s troubled waters to a position in 2025 when the public finances will be healthy was “unbelievable”, the NIESR said, and not just because Hammond may be toast in a few months.

The thinktank, which is about to celebrate 60 years of economic forecasting and maintains strong links with the Treasury and individual government departments, wants Hammond to commission a comprehensive tax review to accompany the planned comprehensive spending review that will consider how an ageing population, among other things, should be paid for.

Of course, this focus puts all the emphasis on older people as an added burden to society and restricts discussion to how much tax should be raised to cope. What is missing from the debate is any concern about what older people do with their lives.

The first issue is that, in the main, expectations of retirement are unfeasibly high, mostly in response to Britain’s postwar final salary pension system, which saw millions of people retire on relatively generous incomes.

The lobbying of recent decades has been to preserve as much as possible of this dying body of commitments, to give as many people as possible the same chance of putting their feet up until they die.

And this lobbying has worked. Official figures show that between 2006 and 2018, household income for retired households rose by 60%, while the non-retired were left behind with an increase of just 36%.

Occupational pension scheme payouts were the main reason for the increase, but the healthy rise in the average disposable income for the UK’s 12 million retirees disguises huge inequalities.

Many of the 1.28 million over-65s who are in work – up from 701,000 a decade ago – are like the politicians and entertainers in the same age bracket. They want to work and have the health to do it.

Sadly, they tend to be among those who believe their privileged position reflects their own efforts. Recognising the fallacy of this argument is the first step to sharing more of their good fortune – in time and money – with those who have not lucked out.

NIESR is right to call for a tax review for a new age. Yet there also needs to be a broader debate about how older people can be supported to help each other – and not just call on the resources of the young.


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