Gavin Maclure's Musings

My take on politics locally, nationally and internationally

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The OAP is extinct

From the Archive: The OAP - Extinct

From the Archive: The OAP – Extinct

The OAP, also known as the old age pensioner, seen hobbling along to the post office to pick up her pension (most were female although this had no bearing on the rate of decline) are extinct. But unlike the dodo, the UK Government has kept DNA samples aside to re-introduce the OAP into the wild again in about 30 years time.

During the next three decades, the OAP will be superseded by its very distant cousin, the baby boomer. Hardly unrecognisable from the OAP, bar the silver hair and wrinkles, the baby boomer does not hobble but stands upright – and skis. The baby boomer is so known because they were born during the post-war years high birth rate of the late 1940s to early 1950s.

The OAP was known to rely on scavenging for their state pension at the local post office whereas the baby boomer has multiple pension pots delivering a very healthy annuity, wired electronically to their Premier Bank Account.

"Let's go spend that winter fuel allowance, love!"

“Let’s go spend that winter fuel allowance, love!”

The baby boomer unlike the OAP is also the first over 60 year old species in history to be wealthier than their grown children. Previously the OAP was poorer than their children but richer than their parents.

This economic phenomenon, theorised for sometime was today proven by the UK Office for National Statistics, which showed retired baby boomers living on pensions are wealthier than their children living on a working wage.

After adjusting for inflation, the income of retired households was on average £7,100 in 1977, while working households found themselves taking him £12,600 after taxes.
By 2011/12, the income of retired households had grown 2.7 times to £19,300, while the income of non-retired households doubled from its 1977 level to £25,700.

Economists are not surprised by this. Tony Blair’s Government saw the baby boomers enter power and they made darn sure they were set up for life (at the expense of their children). Sociologists link this selfishness to the liberalisation of the 1960s. Baby boomers gave themselves winter fuel allowances to pay for their bar bill in Marbella, they gave themselves free bus passes so they didn’t have to be burdened by the cost of fuel, instead ensuring their working children reliant on their cars to commute to work picked up the tab – twice (fuel duty increases and paying for mum and dad’s bus pass). Then they stored up a nice little earner for when they will be a third (if that) of the way through their retirement: free TV licences! Yippee. Paid for by their children of course.

The baby boomer felt they wanted more of the country’s wealth though. So because of Government policies in the Labour years between 1997 – 2010, house building was drastically reduced so the price of baby boomer property would rocket. It became a fun pastime for the baby boomer to sit watching the numbers whizz round on the value of their home. Meanwhile, their children couldn’t afford to buy as a result of a major lack of supply.

Then the baby boomers in Government thought wouldn’t it be nice if we could get a cheap gardener and cleaner from Eastern Europe to look after our five bedroom house in suburbia. So the baby boomers opened the doors to mass immigration from the EU. The baby boomers got their cheap domestic labour, whereas their children couldn’t get a job.

It is believed the baby boomer will live for around another forty years. Then like the dinosaurs they will be wiped out and the OAP will, thanks to the Government policies when the baby boomers were in power, re-establish itself back in the wild. A new record will then be broken when the OAP 2.0 will be poorer than their parents were thirty years before.

Wake up Generation X!


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It’s time to take away baby boomer benefits

"Let's go spend that winter fuel allowance, love!"

“Let’s go spend that winter fuel allowance, love!”

The doddering old age pensioner no longer exists. You know the one I mean: the elderly couple on the road sign or the elderly grandmother hobbling down to the post office with her pension book. Ok, a few are holding on but, sadly, most of them have now passed on.

elderley-people-road sign

A sign of the past?

The new generation of pensioners are – shock, horror – my parents! And believe me, this baby boomer generation are not your atypical decrepit old dears who shuffle around their houses with their coat on trying to keep the cold out. My parents will be trying to keep the cold out alright – but that is to be expected considering they are climbing to Mount Everest base camp later this month! You see: pensioners today are doing very well, thank you very much.

So why are we still giving them free bus passes, free TV licences and a winter fuel allowance? Many baby boomers are bringing in more money each month through their pension annuity than their children are taking home in their salary.

And that’s why it is right for the Coalition Government’s social mobility tsar Alan Milburn (of former Labour government fame) to state in his report today that growing numbers of elderly people could bankrupt the welfare state unless better-off pensioners are stripped of their free bus pass and other over-65 benefits. Why on earth does a baby boomer couple who get a new car every year need a bus pass?

Mr Milburn is also right when he is fearful of conflict between the generations when the penny eventually drops. When those in their 30s and 40s realise they have far less money than their parents had due to wage deflation and rising prices, the chances of a comfortable retirement will seem far fetched as they watch their parents head off on another Caribbean cruise.

You just need to look around to see where the money is. As soon as a run-down terraced house in my neighbourhood comes on the market, up shoots the silver haired 60-something bloke in the new BMW to snap it off the market – for cash. He then duly does it up and slots it on the rental market for a nice tidy sum a month to pay for his Val-d’Isère trips. And I’m sure his winter fuel allowance pays for the bar bill too.

Even Prince Charles has cottoned on. His Royal Highness is certainly at the upper-end of the baby boomer wealth-scale but at least he is being brave enough to feel the wrath of his fellow pensioners by calling out the problem. In a recorded piece he addressed the National Association of Pension Funds in Manchester today and told the industry to design pensions fit for “the 21st and not 19th century” or, due to the soaring older population, young working people today were going to be “consigned to an exceptionally miserable future”. The future King makes a very good point. Most people working today who are paying into a pension have a defined contribution scheme, which means they and their employer pay into a pot each month which gets invested in stocks and shares. The majority of baby boomers now retiring have a defined benefit pension, also known as a final salary scheme, where they receive a percentage of their final salary when they retire until they die. The final salary scheme is guaranteed, was not risked on a stock market, and is significantly greater in sum than defined contribution schemes.

The case is being made that paying billions of pounds in benefits to wealthy pensioners is amoral. Politicians have always sucked up to the over-60s as they vote but it is now time for them to lead rather than chase every last ballot paper. To keep kicking the can down the road is a very dangerous game. The masses are kept in check by having food in their bellies and somewhere warm to live. Once millions of people wake up to life’s basic elements being at risk in their old age, anything can happen.

As Alan Milburn writes in his report on baby boomer benefits, correcting the inequality in the benefits system will not be without pain, and neither will be re-designing pensions, but it has to be done if we are to ensure the children and grandchildren of the wealthiest generation in history (the baby boomers) do not end up in poverty once they can physically no longer work.

I know some of my baby boomer readers will say they put in so it is their right to take out now. Unfortunately, they didn’t put in half enough.

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Coalition Government deems all parents unfit to feed their kids

All infants between 5 and 7 will now get free school meals

All infants between 5 and 7 will now get free school meals at a cost of £600m to the taxpayer

Yes, that’s right, Nanny has determined every parent in the country can no longer be trusted to feed little Johnny so the State will just have to do it herself. Oh, but you’re paying for it. If you pay taxes that is.

So we now have, thanks to Matron Clegg, the perverse policy of providing free meals to the sons and daughters of millionaires paid for out of the taxes of a 16 year-old earning the minimum wage stacking shelves at Tesco’s. That just about sums up this Coalition Conservative-Lib Dem Government doesn’t it? We’re on the side of hardworking people. Give me a break. You are taxing us until the pips squeak (hat-tip Denis Healy)! The deficit is already £120bn – it’s just about to get larger which will mean more higher taxes in the future to pay it off. Cheers Nick and Dave!

We now have a situation where people who decided to have children – no one forced them – are now receiving MORE money from taxpayers who do not have children. These same taxpayers are likely to be children of the baby boomer generation: they cannot afford to have children as they are taxed to the hilt in professional jobs which thirty years ago would have paid a handsome wage but now just about get the person from one end of the month to the other. And then we have the baby boomers themselves who have done very well – thank you – from being born at the right time in the right place and are sitting pretty on gold plated final salary pension schemes. But let’s not forget these same gold plated pensions are topped up with the taxes of their children who are compelled by law to pay their heating, TV licences and public transport costs.

I think I am entitled to be a little peeved…


UPDATE (1): The Lib Dem Deputy Leader is against free school meals for those who can afford them:

UPDATE (2): Boris has spoken – he’s against free school dinners where parents can afford them. The London Mayor told Guido: “I tell you, it would be very easy to say, I think.. I think that it’s real you know errr I, what I think is there should be compulsion to eat the school meal, but I am in no means against getting parents who can pay for to pay for it.” Hat-tip to Guido.

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BUDGET DAY: George Osborne has shot up in my estimations

Help at last: Chancellor George Osborne

The Chancellor of the Exchequer, George Osborne, today announced in the Commons he was setting up a scheme to help millions of people get on the property ladder. Importantly for young professionals like my wife and I the Chancellor also opened up the possibility of help for so-called “second steppers”. These are people who bought a home some years ago and now want to move up the property ladder but because of banks demanding a 20 per cent deposit or higher they are unable to afford to move.

The Help to Buy scheme will see the Government underwrite up to 15 per cent of people’s mortgages for old and new houses, enabling the banks to safely demand a deposit of just five per cent rather than, say, 20 per cent. This scheme is primarily about giving confidence to lenders that up to 15 per cent of a deposit is as secure as it can get – because the Government is backing it. Therefore, it should unlock the desired mortgage lending of £130 billion easily. The scheme will start from 2014 and last three years.

Another part of the initiative is an extension of a shared equity scheme – formerly called FirstBuy – to include all purchasers of new-build homes. If eligible, the buyer will put up a five per cent deposit and the Government will pay a 20 per cent share of the home. The £3.5 billion scheme will be available for homes worth up to £600,000. The 20 per cent Government stake in their house will be paid back to the taxpayer when the house is sold. The loan will be interest-free for the first five years but then borrowers will have to pay a 1.75 per cent annual fee, which will then rise by 1 per cent above the Retail Prices Index (RPI) measure of inflation.

There was other good cheer with Mr Osborne scrapping the 3p rise on fuel duty in September and instead of raising beer duty in April by 3p he will be cutting it by 1p. The “beer duty escalator” of year-on-year increases in the duty was scrapped all together. However, the increases of +2 per cent annual inflation for wine, cider and spirits will remain.

Families will receive a 20 per cent tax break on child care up to £6,000 per child from 2015 which will equate to a saving of £1,200 per year although higher-rate taxpayers (of which far from wealthy families have now been pulled into) will lose out compared to the existing voucher scheme.

A big headline grabber was no one will be taxed on the first £10,000 of their income from 2014 lifting 2 million workers out of paying income tax at all. And a boost to growth and investment was unveiled by the Chancellor with Corporation Tax to be slashed by a further 1 per cent to 20 per cent in 2015.

The good news – for today only – hid the dreadful economic landscape: the Government’s growth forecast for 2013 has been halved to 0.6 per cent from 1.2 per cent as only predicted in December. Debt is increasing at a rate of knots with the national debt as a share of GDP set to increase from 75.9 per cent this year to 85.6 per cent in 2016-17. Borrowing continues at £120 billion a year; some of it is being used to boost the economy with spending on roads and construction projects but the vast majority is being used to keep public spending high with some budgets such as the NHS – where 3,000 people were killed through appalling treatment by nurses and doctors – being ring-fenced. This is despite the average voter thinking NHS spending is being CUT! Why does George Osborne bother ring-fencing over one hundred billion pounds on an institution which causes more harm than good, in the cases of thousands of needless deaths, when the voters give him zero political credit?

But today I want to be mainly positive. The Chancellor did a good job this afternoon and has helped millions of people who want to get on in life –  the same people who pay for the £120 billion of borrowing a year spent keeping the undeserving benefit-claimants at home playing X-Box all day or to help a wealthy baby boomer pay their bar bill with their winter fuel allowance. Thanks for finally thinking of us, George, even if it will be for only three years!