Pensioners are hardest hit in zero-growth UK

Over-70s have been punished by stealth taxes, yet don’t have the choice to increase working hours

They are protected by a government that depends on their votes. Backbench MPS nervous about their chances of re-election crumble at the first sign of upset. And the fear of interrupting their peaceful, prosperous retirement stops anything from being built.

It is easy to argue that a Conservative Party that relies on the support of pensioners will always put their interest first, prioritising them over the young and, indeed, the wider economy. There is just one flaw in that analysis, however. It is not actually true. In reality, from frozen thresholds to stealth taxes, pensioners are getting a rawer deal from our stagnant economy than almost anyone else – and it is time we stopped trying to punish them even more.

There has always been a generational gap in voting intentions, but in recent years it has grown even wider than ever. Support for the Conservatives has all but vanished among the under-50s, and among the under-30s it is near-impossible to find anyone who might even consider voting blue. As it relies on older and older voters, it is easy to portray the party as a gerontocracy, constantly stoking the “intergenerational wars” by putting the interests of retirees first.

We have the hugely expensive triple lock on pensions that protects their income; a planning system that hikes the price of their mortgage-free homes; and a range of subsidies to keep them comfortable. The younger generation, by contrast, has no hope of buying a property, faces punitive tax rates, and soaring living costs.

Here’s the problem, however. Pensioners are suffering more than any other single group. Analysis by the Resolution Foundation this week found that the 8.5pc rise in the state pension this year would leave the average recipient only £190 a year better off once rising prices were taken into account.

Even worse, that would be almost entirely wiped out by the Chancellor’s six-year freeze in income tax thresholds, meaning that once the figures are totted up they will only have £20 a year more to spend.

By contrast, the foundation found that a parent earning £60,000 a year, hardly a fortune for anyone bringing up a family, will be £900 a year better off because of the cuts in National Insurance, which pensioners don’t benefit from because they don’t pay it.

At the same time, increasing the level at which parents have to start paying back child benefit to £60,000 will boost their earnings by £1,300 a year. Add it all up, and the Chancellor has clearly been prioritising the interests of the 30-somethings over the septuagenarians – even though millennials are most unlikely to thank him for it.

It doesn’t stop there. Slashing the allowances on dividends will hit pensioners harder than any other group, as only the elderly have share portfolios of the size that means dividends account for a significant share of their annual income. The rise in council taxes, going up by more than 5pc annually, hits the elderly with their own, larger homes harder than any other group, and stagnant house prices as the Bank of England pushes up interest rates means they can’t cash in on the value of their property in the way they once could.

Meanwhile, frozen inheritance tax thresholds mean they will worry even more about HMRC confiscating much of the wealth they have built up over a lifetime in the hope they might pass it onto their loved ones. Lots of people in their 70s worry about IHT, but not many people in their 20s.

Rishi Sunak’s decision as chancellor to impose a lifetime limit of £1m on the reduced entrepreneur’s rate of Capital Gains Tax means that anyone selling a business they may have spent a lifetime building so they can retire will have to hand over a far larger chunk of their earnings to the Treasury. The list goes on and on.

By contrast, younger people have been helped out time and again. The cuts in NI benefits benefit those starting out their careers far more than anyone reaching the end of their working life. There have been big increases in childcare allowances, not to mention the Tory plans to offer “free” childcare to all children over nine months – a policy even Labour view as unaffordable.

Policies such as Help To Buy were solely designed to help younger people get on the property ladder.

The Government capped the repayment rate on student loans to compensate for soaring inflation. And while freezing university fees at up to £9,250 a year is less generous than it has been in the past, degrees are heavily subsidised and loans often written off.

If you take a step back and look at all the different changes to taxes and benefits this government has made over the past five years, one point becomes clear. Pensioners have suffered as badly as any group, and possibly even worse.

Exclude the triple lock, and they have been hammered repeatedly – at a time when they often cannot re-enter the workforce to earn more.

It is hard to think of a more unfairly maligned group within the economy. Landlords, perhaps?

The real point is this: in a stagnant, zero-growth, over-taxed economy, trapped in a self-inflicted doom loop where any form of meaningful expansion is virtually impossible, everyone struggles to get by.

It isn’t easy for students, or young parents, for employees or the selfemployed.

And yet, pensioners are perhaps the hardest hit of all, and unlike any other age group they don’t even have the option of increasing their hours, pushing for a promotion, or juggling a couple of side hustles to try and maintain their living standards.

It is ridiculous to pretend pensioners are a uniquely privileged group. The only big surprise is that a few of them may still consider voting for a government that has let them down so very badly.

‘The only surprise is that a few may still consider voting for a government that has let them down’