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Opinion

Could Labour really means test the state pension in its latest phase of neo-liberal madness?

01 Sep 2024 8 minute read
Chancellor of the Exchequer Rachel Reeves during a press conference. Photo Lucy North/PA Wire

Martin Shipton

The level of cuts being contemplated by the UK Labour government is horrifying, and if implemented would seriously undermine expectations we have had for more than a century.

A couple of days ago the Times reported how several departments were understood to have been told to find more than £1bn in savings each, with others ordered to find hundreds of millions of pounds in a cost-cutting drive that goes well beyond an attempt to fund public sector pay rises.

However, it’s suggested that Chancellor Rachel Reeves has been warned that she will have to look at more radical reforms, such as means-testing state pensions, to achieve the scale of savings needed in the years ahead.

Old age pensions were introduced in 1908, when Herbert Asquith was Prime Minister and David Lloyd George the Chancellor. Needless to say, they have been seen as a fundamental and irreversible part of our welfare state ever since. Not even in her darkest moments did Margaret Thatcher contemplate means testing the state pension, but such a prospect seems to be on the radar for a Labour Chancellor more than 30 years after Thatcher left office.

The idea is, of course, at complete odds with the values Welsh Labour purports to stand for. One of the main components of the “clear red water” ideology that Rhodri Morgan and his chief adviser Mark Drakeford devised was the notion of universal benefits to which everyone was entitled regardless of their means. The state pension was such an obvious part of the deal that it was completely taken for granted that no-one would ever seek to challenge it.

Lack of voices

What’s extremely worrying is the lack of voices from within Labour raising concerns about the direction their government is taking. Winning the election was the goal, and it seems little thought was given by most of those elected to what comes next. They’ll have been aware that saying anything that criticised Keir Starmer’s policy U-turns would imperil their hoped-for career, so they’ve got used to keeping quiet.

The bulk of them, of course, are from the right of the party anyway, and perhaps have no problem with the ideological lurch that has taken place. But by failing to challenge what is happening, those who think of themselves as having moral fibre are enabling moves that risk making the party unelectable.

Labour made much of the Tory failings over the NHS during the election campaign, citing long waiting lists in NHS England and conveniently omitting to mention that NHS Wales is the responsibility of a Labour government, where waiting lists are even longer. With the spending cuts advocated by Starmer and Reeves, there is little prospect of the situation improving.

In a prescient report released eight days before the general election, Guto Ifan and Ed Poole of Cardiff University’s Wales Governance Centre made it clear that the Welsh Government’s budget would suffer whether Labour or the Conservatives emerged victorious. They wrote: ”Both the Conservative and Labour manifestos largely maintain the trajectory of existing UK Government spending plans. If these plans are implemented as intended by the manifestos, the Welsh Government would face serious budgetary challenges. It would have to implement further deep cuts to non-protected spending areas to fund increases to health spending.

“Under Labour’s plans, the Welsh Government budget for day-to-day spending would increase by an average of 1.1% per year in real terms from 2024-25 to 2028-29. [Assuming] the Welsh Government directly passes on health and education consequentials, an additional £248m of funding would be required in 2025-26 to avoid real term cuts to non-protected spending areas, a gap which would grow to £683m by 2028-29. It is unclear therefore how these plans would fulfill the promise of “no return to austerity” under Labour. The additional consequential spending for Wales projected from the 2024 Labour manifesto amounts to just 5% of the consequential spending included in Labour’s 2019 manifesto.”

NHS budget

However, Ifan and Poole continued, even if the NHS budget grew by 3.2% per year in real terms, that would still be below likely spending pressures. That, we can conclude, would make it even more difficult to bring down waiting times – making a nonsense of Labour’s promise to do so.

I asked Liv Baker of the Welsh NHS Confederation in broad terms to estimate how much money would be required to deal with the problem of waiting lists in Wales. I received the following response: “That’s quite a complex question, as I’m sure you can appreciate, but a good one. I’m unaware of a specific monetary figure being out there at present, but it wouldn’t be just a question of money, but also available resource.

“To increase elective capacity, you’d need more hospitals/wards/capacity with staffed beds (aka also more staff), more diagnostic capacity etc. So capital investment would be an essential part of the cost of increasing elective capacity, but this would not have instant results if money was ploughed in due to the time it would take to plan and build additional facilities.

“In terms of staff, this is also not an overnight fix in terms of increasing the number of staff to be able to tackle elective backlogs. Bringing in agency staff would be one option of course, but there’s been a huge drive to reduce the agency bill as part of financial efficiency efforts, and this is an area of constant criticism for the NHS (spending too much on agency). You‘d also need to target things impacting overall capacity such as patient flow/hospital discharge, urgent and emergency care demand etc. to really be able to make headway with the elective backlog.

“In terms of putting a figure on it, it probably also depends what kind of time frames you’d want to work towards – doing something over a longer period of time is of course cheaper. NHS leaders are constantly trying to balance reaching performance targets and achieving financial balance – an increasingly difficult balance to strike in the current climate. So, as you can see, there are too many variables to be able to quickly figure out a number.”

At the root of the problem, and the cause of continuing austerity, is the devotion of Starmer’s Labour Party to the kind of neo-liberal economics that has held sway in the UK and further afield since the 1970s. The left-wing economist Richard Murphy, who not that long ago was an adviser to Labour’s previous leader Jeremy Corbyn, wrote a book published in 2011 called The Courageous State, in which he outlined how politicians’ failure to have faith in a government’s duty to intervene in the economy to create a fairer society had led to mounting inequality and the near crash of the banking system.

Our current UK Labour government has swallowed whole the orthodox view that imposing public sector spending cuts leads to economic growth – a belief that deserves to be cited as a classic example of economic illiteracy. There are, as Murphy argued in his book and as he continues to argue now, other strategies, including borrowing money and simply creating it, as the Bank of England did during both the 2008 banking crisis and the Covid lockdowns.

The worrying conclusion one must draw from Labour’s cowardice is that Reform UK, with its simplistic narrative that illegal immigrants are responsible for all the UK’s ills, could pose a realistic challenge at the next Senedd election in 2026.

Disillusioned

Plaid Cymru’s health spokesperson Mabon ap Gwynfor accepted that the election is likely to see a battle for the support of disillusioned Labour voters between Plaid and Reform.

He said: “The difference between Plaid and Reform is that Plaid will be honest about what needs to be done while Reform will lie.

“Labour in Wales is in a real mess. Its members in Cardiff West, which has been the intellectual centre of the party, with Rhodri Morgan and Mark Drakeford trying to set out a distinct policy framework for Wales, must be mortified at having one of Starmer’s closest aides imposed as their new MP. The Welsh emphasis of the party has disappeared, and they just seem to be going along with Starmer’s right-wing agenda.”

Gaining control of the Senedd wouldn’t be a complete solution, though, as Mabon ap Gwynfor and others in Plaid realise. We now have a UK Labour government that shares a neo-liberal economic outlook with the Tories it recently defeated. So far, there isn’t the smidgeon of a hint that they’ll change course.

So much the worse for Wales.


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Alun
Alun
3 months ago

“But, but, but, the Tories are still the nasty party”.

hdavies15
hdavies15
3 months ago
Reply to  Alun

Labour will out-nasty the nasties on their way to becoming totally Brit-Nazi. Starmer’s “new order” will push us further on the road to serfdom.

Maesglas
Maesglas
3 months ago
Reply to  hdavies15

You will soon see Starmer’s new model Labour party competing with the Tories for the nastiest party—their popularity is already falling like a stone. This is no surprise because they are bereft of ideas and have nothing different to offer from the Tories. Anti-poverty groups are already condemning their pension raid,

Jeff
Jeff
3 months ago

I was with it until the Times got a mention. Funny how this seems to be doing the rounds in the usual suspect press rags.

John Ellis
John Ellis
3 months ago
Reply to  Jeff

Quite! (-;

John Ellis
John Ellis
3 months ago
Reply to  John Ellis

Four down-ticks? I suggest that it’s always worth checking out who owns the journals and what is their known political stance. Only then are you in a position to evaluate anything published in the said journals.

Adria
Adria
3 months ago
Reply to  Jeff

Jesus Jeff! Someone mentions a newspaper you don’t like and you look away? If a Tory knocked your door and said your house was on fire, would you ignore them? I’ll happily buy you a book on critical thinking if it would help.

Jeff
Jeff
3 months ago
Reply to  Adria

I know what the Times is. I know what murdoch is, the two are a political attack dog for the tory party. The long ago excellent reporting is long since devoured by a bitter old non dom, and you swallow it, keep your book, you need it. Murdoch is one of the most dangerous people in worlds politics. They need fact checking along with the usual suspects before you even look at the basics of a story they run. I know the political bias that leaks through to here in spades. If a Tory knocked on my door saying my… Read more »

Alun
Alun
3 months ago
Reply to  Jeff

What newspapers are fair and impartial, in your opinion?

Jeff
Jeff
3 months ago
Reply to  Alun

Nice article in Open Democracy on Starmer’s freebies. Another on labour networking events including chats about pensions and Private Eye go in studs up no matter the party. Byline Times have a good network as well and well as Wales.

Adria
Adria
3 months ago
Reply to  Jeff

I’m also aware of the myriad legacy media biases: that’s why I read as broadly as I can ; it’s why I inhabit this left-wing echo chamber.

hdavies15
hdavies15
3 months ago
Reply to  Adria

Adria you get multiple echoes on here mostly from left and pseudo left with a dash of wet and centrist, and a smaller tincture of right wing Brit Nats and an even smaller right wing Welsh Nat presence. Personally I enjoy the occasional ambivalent redneck visitor’s contribution. You know, the one that doesn’t give a vuck for any stance or view.

Adrian
Adrian
3 months ago
Reply to  hdavies15

Yes – it’s not completely a lefty fest: I was probably being a little sweeping there. I can’t speak for rednecks – TBH I don’t even know what that means! Pretty centrist myself as it goes. I’m always interested in others’ opinions, but more interested in why they hold them: I’m keenly interested in epistomology. I find that a lot of people have no idea why they believe what they do.

Karl
Karl
3 months ago
Reply to  Adria

Critical thinking. While believing a murdoch mouthpiece and thinking a Tory honest. You need to read a better book. As a paperboy i was reading the headlines, you got a good feel for the lack of journalism that grew in the 90s into desperate attempts for attention and doing the masters biding. There is no fair newspaper. All come with opinion. You have to fact check everything these days and look at who benefits from the lie.

Padi Phillips
Padi Phillips
3 months ago
Reply to  Karl

There is that old, old warning, from way back when before the internet was even the grain of an idea to never uncritically believe what is printed in newspapers – of whatever hue. Media has always been biased, and bias isn’t the huge problem that some seem to think it is, we just need to be aware of bias and look at everything with an awareness that bias will be present and then identify that bias. The reality has always been that anyone claiming something is the truth needs to be fact checked to ensure that it is actually the… Read more »

Adria
Adria
3 months ago
Reply to  Padi Phillips

I agree with all of that, although I’d add that objective reality has the final word on what is true.

Adria
Adria
3 months ago
Reply to  Karl

On the subjects of critical analysis and fact-checking, where exactly did I say I believed a Murdoch mouthpiece, or state that I thought a Tory was honest?

Last edited 3 months ago by Adria
Neil Anderson
Neil Anderson
3 months ago

This silly woman needs to go.

Change the Chancellor!

David
David
3 months ago
Reply to  Neil Anderson

Also KS and cohorts must go and never to be seen again as a politicians.

j91968
j91968
3 months ago
Reply to  David

That is hilarious – KS & co have won a virtually unassailable landslide which will last enough years to make a real difference. They MUST go? Go on, just tell us how you intend to achieve that…a UDI from Cardiff? Invasion across the Severn…? Get a grip.

John Ellis
John Ellis
3 months ago

‘… she will have to look at more radical reforms, such as means-testing state pensions, to achieve the scale of savings needed in the years ahead.’ That I very much doubt, because it’d be an absolutely catastrophic step for Labour to take, in terms both of the reaction from party supporters and from the public in general. Especially as pensioners are the section of the electorate most likely to vote! But what I wouldn’t wholly rule out is a proposal to change legislation in order to require people of state retirement pension age to continue to pay National Insurance contributions,… Read more »

Last edited 3 months ago by John Ellis
Billy James
Billy James
3 months ago

The Labour party making the older generation pay for the years out of power & brexit..

Thatcher did the same with the miners.

John Richardson
John Richardson
3 months ago

So your source is The Times. Say no more. It’s a non article.

Jeff
Jeff
3 months ago

It is also in Gbeebies, torygrapgh, express probably the daily wail and been disputed by a political fact checker. Funnily enough it comes up in the FT in 2017. Times seems to get the articles going here in PC Towers.

The usual suspects chuck around attack idea’s and let it run.

Padi Phillips
Padi Phillips
3 months ago

The article suggests that the Times was a source of one of the details of the piece, not that the Times is the sole source. Martin Shipton is an experienced and respected journalist who is more than capable of finding the many sources required to write the article. Reading the Times isn’t yet a crime, and it’s often important to read what the ‘opposition’ publishes even is only to confirm that it’s rubbish.

hdavies15
hdavies15
3 months ago
Reply to  Padi Phillips

“Read a wide variety of comment and analysis” is good advice. Yet so often ignored by many including a few on here.

Karl
Karl
3 months ago

Well the Tories already did by upping the retirement age. Sick of this fiddling with our retirement. But on the other hand the old voted bexit

Padi Phillips
Padi Phillips
3 months ago
Reply to  Karl

This ‘old’ person certainly did NOT vote for Brexit!

hdavies15
hdavies15
3 months ago
Reply to  Padi Phillips

Lots of presumption about Brexit voters which breeds unhealthy prejudice and a vindictive attitude as evidenced above. Young Karl might be advised go get his head out of his derriere more often !

Alan Jones
Alan Jones
3 months ago
Reply to  Padi Phillips

Nor, I. Yet another lazy generalisation no doubt picked up reading lazy journalistic throw away lines, or worse, social media.

Adria
Adria
3 months ago

I’ve got the popcorn in: looking forward to watching all those Labour voters enjoying win after win.

David
David
3 months ago
Reply to  Adria

until they reach pensionable age.

Frank
Frank
3 months ago

Will anybody be messing about with her pension I wonder.

Maesglas
Maesglas
3 months ago

You will soon see Starmer’s new model Labour party competing with the Tories for the nastiest party—their popularity is already falling like a stone. This is no surprise because they are bereft of ideas and have nothing different to offer from the Tories. Anti-poverty groups are already condemning their pension raid,

Ap Kenneth
Ap Kenneth
3 months ago

The Labour Party has been making a meal out of how bad everything is but without offering any hope of things improving.They cannot go down that road for too long as it will embed the feeling that “this lot are as bad as the last lot”, which will be impossible to shift. So the budget should be when they will try to shift the dial, and there are numerous ways of raising a huge amount of money from those at the top of society as Richard Murphy has outlined in his taxing wealth report. https://taxingwealth.uk/ My worry is that the… Read more »

Bob Gallagher
Bob Gallagher
3 months ago

Someone has to pay for Brexit. So it may as well be the only demographic that backed it with a supermajority.

Linda Jones
Linda Jones
3 months ago

It seems incredible the Labour Party are intent on further impoverishing the already poor. Like their neo liberal tory colleagues, the Labour party are also targetting the vulnerable and the least well off for austerity cuts. Means testing the state pension would be part of that agenda. However the state pension is contribution based and available to everyone over a certain age and with enough qualifying years of paying NI. It should never be means tested, retaining its universality is important for cohesion and fairness. Clearly Labour, like the tories, are choosing austerity and the infliction of further harm on… Read more »

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