Thursday, 25 April 2019

Tokenistic tinkering at the margins

From the BBC:

"Outdated" age-specific benefits for older people should be replaced with support for the young to "deliver a fairer society", say peers...

The peers also propose changes to benefits for older people, including:

* Removing the triple lock for pensions, which raises the basic state pension by the rate of average earnings increases, inflation or 2.5% - whichever is higher
* Phasing out free TV licences based on age (currently free for over-75s) and ensuring the government decides on whether to give free licences based on household income
* Limiting free bus passes for the over-65s and winter fuel payments until five years after retirement age

As daft as the free TV licence, bus passes and winter fuel payment (fka "Christmas Bonus") are, the nominal cost of these things is minimal in national accounts terms and the real cost to those not receiving them is nigh on zero.

The triple lock is a gimmick, but it seems sensible to index the state pensions to wages, and I doubt that state pensions would be much lower had they just been indexed to wages without a "triple lock".

They have deliberately missed the point.

There's no particular conflict between 'young' and 'old' on the spending side, the real battle is between landowners (landlords or homeowners) and tax-payers (businesses, workers and consumers) on the taxation side.

And at present, the landowners are winning, as they have been doing since 1066. Funding public services - which create and sustain land values in the first place - with service charges on land (Land Value Tax) instead of with taxes on output and wages (VAT and NIC) will go a long way to sorting all this out, no need for sticking plasters on sticking plasters.

As long as ALL pensioners get the same goodies, regardless of how much land (by value) they own, there's not really a problem.


View from the Solent said...

The Christmas Bonus is a (now merely a token) £10 paid in December. Stupid. Probably costs about that to administer.
Quite separate from the fuel payment (aka Christmas beer money)

Mark Wadsworth said...

VFTS, ah, thanks. I didn't know that.

mombers said...

Why don't they just whack all of the goodies into the state pension, i.e. increase it by the TV licence and winter fuel allowance and be done with it? Then it's mean tested automatically in a way in that it's taxed somewhat if the recipient has a modest private pension to take them over the personal allowance. The admin savings can be used to say refund the VAT of children in poverty or similar government mandated poverty programmes

Mark Wadsworth said...

M, exactly, that's all part of the YPP plan.

Physiocrat said...

Politicians and journalists have an uncanny knack of missing the point, often by precisely 180 degrees.

This has been widespread in the Brexit referendum aftermath. The use of the term 'access to markets' is a good example of being exactly, precisely, wrong, likewise the 'backstop'.

Frank said...

1. The last time I checked (a couple of years ago) free bus passes cost the country about £100/year per pensioner (about £1 billion for 10 million pensioners). Why not incorporate the £100 into the pension and sell off-peak bus passes to everybody for £100/year?

2. As a pensioner, I benefit from the triple lock but even I can see that it's not sustainable, especially in times of low wage and price inflation. Somebody has to pay for it and taking an ever growing slice from the people still working to pay for those who aren't can't go on forever.

Mark Wadsworth said...

P, agreed.

F, re 1, a free travel card cam be worth £1000s to a pensioner in an area with good public transport who uses it regularly.

But it's worthless to those too infirm to use it, those in areas with shit public transport or those who use a car.

So an extra £100 per oap is s much simpler and faster way of doing it.

Mark Wadsworth said...

Faster = fairer.

Bayard said...

"free bus passes cost the country about £100/year per pensioner (about £1 billion for 10 million pensioners)."

I wonder how that figure was worked out. Given that the buses and trains are running anyway, whether the pensioners use them or not, then the cost of a pensioner travelling is very close to zero, unless that pensioner is taking the last seat on a bus/train and preventing someone else, who doesn't have a pass, from buying a ticket, which seems very unlikely. Also, given that most free journeys are made because they are free, there is very little in the way of lost revenue either.

Mark Wadsworth said...

B, it's a made up number, but it'll do as an approximation. Call it £100 per oap, job done.

Bayard said...

I don't know if you remember, but way back in the past, one of the things the new Network SouthEast did was have Saturdays where you could travel anywhere for £1, all day. Sadly, in those days NSE didn't reach Somerset, where my parents lived, but I still had a jolly day on packed trains seeing bits of the countryside I hadn't seen before. The point being that NSE didn't put on any extra trains, so every £1 ticket was £1 of almost pure profit. Apparently they stopped doing it because the regular Saturday travellers complained about the overcrowding. Presumably they were used to having the trains almost to themselves.

Mark Wadsworth said...

B, I don't remember as i didn't live there at the time. The whole marginal pricing topic is fascinating, but not really the point here.