The budget hasn’t moved the polls. They never do. But it may mark a change in politics. Why? Because it didn’t prioritise pensioners. The chancellor announced the second 2p reduction in the basic rate of national insurance in just four months, and 4p off NI is a big win for workers, who gain up to £1,500 next year.
But the picture of winners and losers is complicated because cuts today follow big tax rises – not least the six-year freeze to tax thresholds that will raise £40bn a year.
Pensioners are hit by those freezes, but don’t benefit from NI rate cuts, leaving Britain’s 8 million taxpaying pensioners an average of £1,000 out of pocket. This is surprising because age has replaced class as the biggest divide in our politics – and pensioners are the Conservatives’ core vote: in 2019, 70-year-olds were more than twice as likely to vote Conservative as those aged 30. There’s a reason George Osborne introduced the state pension triple lock, even as benefits for younger families were slashed.
There’s a strong case (leaving aside whether they are affordable) for focusing tax cuts as Jeremy Hunt has: pensioners don’t benefit from the NI cut as they are already exempt from the tax. Plus pensioners’ relative economic position has been transformed; the share of pensioners in poverty has halved since 1990. For the first time in history, pensioners are less likely to be in poverty than the rest of the population.
The state pension will rise by 8.5% in April and the triple lock remains. But the budget choices are a big shift – whether intended or accidental - for the Conservatives. Maybe they’ve realised having an offer for working Britain is a good idea. Crazy thought, but perhaps some houses will get built next.
• Torsten Bell is chief executive of the Resolution Foundation and author of the forthcoming book Great Britain? How We Get Our Future Back
