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How retired baby boomers captured £1 in every £5 Britain spends
Pensioners have benefited from 14 years of Tory rule that saw public spending ‘turn grey’
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Pensioners have been the biggest beneficiaries of 14 years under the Conservatives with more than £1 in every £5 spent by the Government going to the over-66s, a think tank has said.
A report by the Resolution Foundation found the average pensioner is £1,000 a year better off in 2024-2025 than they were when the Conservatives first took power.
By comparison, working households are £760 better off a year as the balance of state spending shifts toward the older population.
Meanwhile, substantial cuts to child-related benefits mean families with children under the age of 15 are £780 poorer a year since 2010.
Sophie Hale from the Resolution Foundation said: “The combination of Britain’s big baby boomer generation retiring, and policies that have benefited pensioners the most, has meant that the profile of Britain’s public spending has greyed.”
It comes as retirees make up an ever larger share of the population and hold greater sway over election results.
The number of people claiming the state pension has risen by more than half a million to 13 million since 2010, and is on course to hit 13.2 million by 2028-29.
This increase comes despite rises in the state pension age and underlines how public spending is increasingly shifting towards retirees, the report noted.
Spending on pensioners has grown by £270bn in real terms since 2010, taking it from 9.3pc of GDP to 9.8pc.
More than £1 in every £5 of all government spending in a year goes towards pensioners as a result.
The shift towards “greyer” public spending comes as changes to the benefits system have cost working-age people £1,400 since 2010, while pensioners gained £900 largely from triple lock pension rises.
The triple lock ensures the state pension rises in line with the highest of wages, prices or a baseline 2.5pc.
While pensioners are overall better off than working-age people and people with children as a result, some tax policies have limited their gains somewhat.
Former chancellor George Osborne controversially introduced the “granny tax” in 2012 that lowered the personal allowance for pensioners in line with that of working people.
When considering tax changes in isolation, working-age families are on average £2,200 better off, while pensioners have gained only £130 a year compared with 2010.
An increasing shift in generational inequality has made it far more difficult for young people to buy their first home or get a meaningful pay rise.
The report noted that millennials born in the late 1980s earn 8pc less than those born a decade earlier at the same age.
More favourable treatment of pensioners as the population ages reinforces a longer-term trend, the think tank said, adding that this will likely intensify in the years to come.
The Resolution Foundation warned it risked “entrenching the current imbalance between pensioners and non-pensioners, particularly non-pensioner households with children”.
Both Labour and the Conservatives have committed to spending plans that continue to raise personal income taxes by stealth and keep various benefits frozen or capped.
This includes sticking to the two-child benefit cap and freezing local housing allowance.
At the same time, they have united behind the triple lock, with Rishi Sunak even pledging to make it a quadruple lock to ensure the state pension will never be taxed.
This is despite warnings from the Institute for Fiscal Studies and the International Monetary Fund that the triple lock is already unsustainable in its current form amid demographic pressures.
There are some giveaways for younger voters too in the parties’ manifestos, however.
Ms Hale said: “Both of the main parties have a wide range of policies targeted at specific age cohorts – from the triple lock plus to banning exploitative zero-hours contracts, expanding childcare provision and support for first-time buyers.”
The Conservatives have also pledged to cut taxes for working-age people, but the report highlighted this would be paid for by taking away benefits from other people in the same age group.
It also noted that one of Mr Sunak’s flagship policies of bringing back National Service is overwhelmingly supported by the old and opposed by the young.
Regardless of such announcements neither party has announced anything that would turn the dial on the growing gap between younger and older generations, according to Ms Hale.
She said: “Ultimately these policies won’t decide whether the new generation of young adults enjoys higher living standards than their predecessors. That will only come from stronger economic growth.”