Tory ex-minister says plan to raise state pensions by 10% is ‘ludicrous’
Government plans to raise the state pension by 10% while forcing real-terms pay cuts on public sector workers have been attacked as “ludicrous” by an ex-Conservative Treasury minister.
Jim O’Neill, the former Goldman Sachs chief economist who served as a minister under George Osborne, said it was “crazy” to protect pensioner incomes while younger people’s wages were being eroded by the highest inflation rates for 40 years.
Asked why pensions were rising in line with inflation when ministers were urging public sector pay restraint, Lord O’Neill told BBC’s Radio 4 Today programme: “I have no idea. It seems to me pensioners, given the pressure on fiscal policies and inequalities, the constant protection of pensioners seems ludicrous in itself and in these circumstances particularly crazy.”
He was also scathing about the government’s overall lack of direction on the economy and said central banks had been guilty of “group think” when it came to the effect of quantitative easing and low interest rates on inflation.
Official figures show the government’s preferred measure of inflation rose to 9.1% in May from 9% a month earlier, hitting the highest rate since February 1982. It comes as the government attempts to face down rail unions amid the most widespread strikes on the railways since the late 1980s in a dispute over pay and conditions.
Boris Johnson has warned workers against asking for bigger pay increases because it could risk a “wage-price spiral” similar to the 1970s, in a marked shift from language used last October when he claimed Britain was on a path to a high wage economy under his leadership.
The chancellor, Rishi Sunak, confirmed last month that the pensions triple lock would be reinstated, while benefits would also
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