personal finance

Is Labour’s commitment on women’s pensions justified?


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Labour has come under attack on numerous fronts this week, most notably on Jeremy Corbyn’s record over anti-Semitism. But an issue that also deserves attention is the party’s sudden commitment to spend £58bn compensating women left out of pocket by a rise in the state pension age.

To recap, a group called Women Against State Pension Inequality (or the Waspis) has long complained about what it says is the “financial injustice” faced by 3.8m women born in the 1950s.

The Waspis said they did not receive “fair notice” of changes to the female state pension age, raising it from 60 to 66, originally made in 1995 and then accelerated by the Conservative-led coalition in 2011.*

Labour has accepted their complaint. It suddenly announced on Sunday that it would introduce a universal scheme that would see the women affected given a maximum payment of £31,300 and which could cost £58bn over five years.

Labour clearly feels this move is morally justified. Angela Rayner, a shadow cabinet member, says the coalition government “stole their pension, that contract, that agreement that they thought they had, and then accelerated it so those women didn’t have the chance to prepare for that”.

But Labour’s commitment can also be criticised on three fronts.

First, (as this Guardian piece notes) although the pledge to work with the Waspi women was made in the Labour manifesto, published last week, there was no provision for the policy in the costings “Grey book” that Labour published at the time.

Labour is therefore open to the argument that it is fiscally irresponsible. The charge is that Mr Corbyn is making up policies as he goes along to close a big gap in opinion polls ahead of the general election. 

Second, even after making this commitment, Mr Corbyn doesn’t know where the money will come from. Labour says it will treat the cost as a “contingency”, suggesting the money will come from official contingencies. But the sums involved are much larger than anything paid from such reserves.

Quizzed by Andrew Neil on the BBC last night, Mr Corbyn was reduced to saying the payment “will be an additional cost that should have been factored in to budgets in 2011 when the Conservatives and Liberal Democrats got together . . . in order to short change a whole generation of women in our society”.

Third, it is not clear that Labour’s concession to the Waspis is justified at all. Nobody would doubt that many of the women affected feel that they have been placed in a difficult situation. But as Oliver Kamm points out in this excellent piece for Capx, the acceleration to a higher state pension age was the right thing for the coalition to do, given rising longevity.

Labour’s proposal also means giving a substantial payout to many women who are comfortably off and putting yet more burden on younger workers.

As Kamm writes: “The women concerned stand to gain from payouts of up to £30,000. In an era of widening intergenerational differences due to the high cost of housing and commuting, this is a transfer from younger to older people, many of whom are very well off already.”

Labour doubtless feels that its policy will be an instant vote winner, given the millions of women affected. But on closer inspection, this is a cynical and unprogressive move that simply adds to the growing burden on younger working generations.

*This article has been amended to clarify when changes to the female state pension age were originally made.

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