THERE was a brief outbreak of inter-nationalist politics last weekend as Sinn Féin and the SDLP tried to portray Iain Duncan Smith’s resignation as vindicating their stances on welfare reform.
Both parties soon gave up, because their stances were indistinguishable right up to the Fresh Start agreement, which in turn is unaffected by the budget that provoked Smith’s resignation or the U-turns announced since.
More interesting is the inter-generational politics this Tory split represents. Smith’s official reason for stepping down is that his theoretically coherent welfare reform programme was raided by the chancellor for “benefits given to better-off pensioners”. Whatever other reasons Smith has, this is the only one that adds up.
Pensioners are the richest age group in the UK, with a higher median income than those in work. They have also gained most from the property price boom that has locked the under-30s out of home ownership.
Because the state pension and pensioner benefits are such a huge share of the total welfare bill - 55 per cent - propping them up involves major raids on anything else. Conversely, any shortfall with working age disability benefits (11.9 per cent) or unemployment benefits (2.4 per cent) can be funded from trivial tweaks to the pensions bill.
However, pensioners are the most inclined to vote, while the ‘most vulnerable’ are the least inclined to vote - and Smith has openly accused Osborne of framing budgets on that basis.
The related priority to force down house prices seems to be another thing Osborne knows he needs to do, yet shies away from due to the electoral consequences.
Inter-generational politics has long been a feature of the United States, although it is driven there by the cost of free health insurance for the retired. We have been protected from this argument by the NHS, causing it to break out over welfare instead - although it will get around to healthcare eventually, as the over-65s account for two-fifths of NHS spending and almost all of its growth.
Could these arguments arrive in Northern Ireland politics? The scope is certainly there. We have the UK’s youngest population and highest economic inactivity rate, putting the greatest non-pensioner pressure on the benefits system. Fresh Start has formalised the principle that Stormont can adjust that system. The adjustment agreed last December was to make one-off savings elsewhere then use them to phase in benefit changes. The state pension was considered untouchable, to the extent of being clearly unmentionable - but scaling back free public transport for the retired was suggested as a possible saving, before howls of outrage shot the idea down. Were these the first shots of inter-generational politics?
An equally intriguing question hangs over unfunded UK public sector pensions. On top of its £6bn benefits bill, Stormont receives £2bn a year from London to pay the occupational pensions of retired civil servants, teachers, healthcare workers and so on. In accounting terms this works in a similar way to benefits before Fresh Start, in that Stormont administers the payments but if it tried adjusting them we would find ourselves in uncharted devolutionary waters. This seems implausible now but until recently the same was true of ‘breaking parity’ on benefits.
Pensions are of particular interest to nationalists because of points that were clarified during the Scottish independence debate.
People think they have ‘paid their stamp’ towards the state pension but London and Edinburgh quickly conceded it is just a benefit paid out of general taxation, so an independent Scotland would have to cover it without inheriting any national insurance fund.
Public sector workers also think they have paid towards their occupational pensions but EU rules require cross-border schemes to be fully funded, so those payments would stop even if London was open to maintaining them.
A united Ireland may be a case of waiting for old Protestants to die - or maybe not, if every old person that lives is another gilded fence-post on the border.
We could all be old before full blown inter-generational politics is allowed to break out here. Stormont displays Osborne’s electoral cynicism in full, complete with his squeamishness about driving down property prices. Margaret Thatcher understood the importance of home ownership. Forgetting that will be her party’s undoing, as ‘generation rent’ starts to despair of ever reaching its parents’ standard of living.
We have the lowest house prices in the UK but with the low wages to match, this could be what finally pits the old against the young in Northern Ireland.
newton@irishnews.com
