Parties are bribing the voters into bankruptcy

It’s not yet election season – we may have many months to go – but the pledges are already coming thick and fast. And they’re not small promises, either.

Last week the Chancellor, Jeremy Hunt, told the BBC that, were the Conservatives to win a fifth term, his Treasury was “committed to retaining” the triple lock on the state pension, which sees the payment rise by inflation, average wage growth or

2.5 per cent – whichever is highest.

Labour rapidly followed suit. While Sir Keir Starmer had been slightly more ambiguous about whether a like-for-like policy would make its way into his party’s election manifesto, a spokesman confirmed that they, too, were “committed” to the triple lock.

It’s not the most obviously exciting announcement: the parties are recommitting to a policy that nobody thought would be scrapped. However, it confirms that the country will remain on the wrong track, regardless of which party wins. Were Labour to find itself in Downing Street, it will soon discover what Tory ministers have known for some time: that there’s no more cash to splash. Yes, there is plenty of money swirling around, as the Treasury is currently taxing and spending record amounts, but it cannot cover what’s already been promised – which is likely to drive debt above £2.5trillion in the next parliament – let alone anything new.

New spending offers includes the £8bn announced this week by Labour for green investment, which will be distributed through its proposed state-owned Great British Energy company. This seems to be the party’s scaled-back replacement for a £28bn a year green pledge, which had to be scrapped because it couldn’t be costed.

We’ll see how Labour costs its lower investment pledge. There were hints in Rachel Reeves’s Mais Lecture earlier this month that Labour will try to get the Office for Budget Responsibility to forecast that such capital investments will drive faster growth. It’s a strategy that might help Labour borrow more but it could also derail its spending plans if the OBR says grandstanding, state-backed projects don’t actually (shock, horror) have a transformative effect on GDP that politicians claim.

This is what makes the breezy dedication to the triple lock all the more curious. Both parties have simply waved through a commitment to raise a benefit that already accounts for an enormous proportion of spending. The OBR expects the state pension will cost £124bn in 2023-24, up from £110.5bn in the previous fiscal year. The Department for Work and Pensions says its total spending on pensioners in 2023-24 will rise to £152.6bn. These numbers will keep rising, by billions.

Politicians know there are defects in the design of the triple lock that can lead to distortions. It was suspended in 2022, as pandemic-related hiring and firing trends warped average wage growth (the fear was that retirees were about to get a big hike while younger, vulnerable workers had lost their jobs). It’s the kind of flaw in the system that you would hope politicians might look at, or try to fix, before giving the policy a green light for another five years.

So, recommitting to the triple lock is not a small election pledge, a mere footnote. Rather, it is one of the key policies, alongside unreformed healthcare, that puts the UK on the path to effective bankruptcy. Younger generations know that, despite the taxes they’re paying now, they can’t expect anything like this generosity when it’s their turn.

Both major parties like to talk about spending trade-offs. That should, in theory, make this the election to confront hard truths. However, there is no real appetite for this discussion. Politicians seem far more interested in imagining that economic growth will ride to the rescue. It’s the silver bullet, they suggest, to keep spending sky-high and avoid catastrophe.

Economic growth was Hunt’s answer when asked about how he’d fund the triple lock. It’s Labour’s favourite answer these days too. Lofty promises about creating a booming economy (always just around the corner) are then made: light on detail, yet doing a lot of the heavy lifting.

The diagnosis is right – the UK is in desperate need of a GDP boost – but that does not justify higher spending. Less than two years ago the Tory leadership election came down to this question: could the vague promise of more growth sustain looser fiscal policy? Within weeks we were given an answer: a clear and painful no.

Overspending is the one habit politicians across the spectrum can’t seem to kick. The Tories and Labour have made clear that big spending will feature in their manifestos. Let’s not wait until the country is weeks from an election to scrutinise what this means. And let’s not pretend that these promises line the path to prosperity.

‘Younger generations know they can expect no such generosity when it’s their turn’