In U-turning on his cuts to the winter fuel allowance, Starmer has shown himself to be a coward. The fiscal arguments Starmer and Reeves made when they introduced the policy back in July 2024 are as strong now as they were then. The only thing that has changed is that Starmer has realised the huge unpopularity of the action through Labour’s thrashing at the local elections.
The main arguments for keeping the winter fuel allowance — i.e., pensioners will not be able to afford heating without it, and pensioners are entitled to it because they’ve paid in their whole life — are woeful at best. The reality is that pensioners can still afford heating without it — and most pensioners haven’t paid in on a net analysis.
Since the winter fuel allowance was cut, television and radio have been clogged with sob stories from pensioners about their hard choice between “heating or eating”. I am sure there are a few cases of genuine need out there — typically covered by pension credit. Yet the vast majority of poor pensioners can afford the £200 cut to their income. The bottom 20 per cent of householders over 65 spend 17.8 per cent of their income on recreation, restaurants, hotels, alcohol and tobacco. This comes to about £2,000 annually, meaning that all pensioners need to do is cut their leisure expenditure by about 10 per cent to make ends meet. For even the poorest it’s not a choice between “heating or eating” but a choice between “heating or treating”.
If Starmer increases the eligibility criteria to support the average pensioner he’d be giving hundreds of pounds to pensioners who spend an average of 23 per cent of their income on leisure; about £5,500 a year. It’s a total joke that middle class pensioners make out they need this money — and the only reason they are not exposed for it is that politicians are truly pathetic when it comes to telling the electorate they actually have it better than they make out. It should also be pointed out that while the winter fuel allowance was cut last year, pensioners still received an above inflation £472 increase in their state pension from the 6th of April this year.
At this point we can turn to pensioners’ favourite argument: “I’ve paid in all of my life – I am entitled to the winter fuel allowance!”
The basic idea behind the aforementioned is that a person who has paid a pound into the welfare state should get that pound back out when they retire. Let’s accept this argument for a moment. Does it work to support the winter fuel allowance? No, for the average person born between 1946 and 1966 has taken out or will take out £1.20 for every £1 they have paid into the welfare state. A proper application of the pensioners’ reasoning should see their state pension and old age benefits cut by a sixth. Should we accept the reciprocal nature of the above argument though? Well, I am sympathetic to it, but social democrats who believe in redistribution — and that almost definitely includes the poorest pensioners — certainly can’t because redistribution runs directly against reciprocity.
Given that pensioners are already taking more out than they have paid in, I think it is obvious their hand outs should be cut first
When the state spends a grand total of £1,279bn, why should anyone care about whether Starmer makes a tiny saving of £1.6bn or not? We should care about it because it was the potential start to fighting back against the Boomers who have continually ripped off younger people via the pension system and the housing market. At current tax levels, the national debt is due to explode to 235 per cent of GDP with debt interest at 9 per cent of GDP by 2066, largely due to pension and social care spending. This is simply not sustainable. Taxes will have to go up markedly on young people, or pensioners’ entitlements will be cut.
Given that pensioners are already taking more out than they have paid in, I think it is obvious their hand outs should be cut first. The interesting question is what will happen when meeting the real terms amount that pensioners want out of the welfare state they have been paying into, which might have corresponded to a 15 per cent tax on their income over their lifetime, requires taking 25 per cent tax off young people to finance it because there are fewer of them. Why should the younger people face a higher tax rate to get the same as the older generation. They would want a higher state pension, but this would then require taking 3 per cent% tax off the next generation because there are fewer of them still. The end point is a younger generation of indentured servants working almost exclusively for older people.
I don’t know what the exact answer to the question of intergenerational justice is — and, as a libertarian who believes taxation is theft and the welfare state a great swindle, I will always see it as an answer to a second-best question. Nevertheless, I am certain the right answer cannot involve no cuts to pensioners’ profligacy. Boomers as a generation have a stench of entitlement about them; I hoped Starmer was finally going to put them in their place, or, at the very least, make it clear they couldn’t always have it their own way. Alas, I underestimated the political power of the grey vote — and the strength of Starmer’s spine.
