Triple Lock Becomes Double Lock For 1 Year

[Deleted User]

1970s were characterized by "easy"/profligate monetary policy combined with excessive role for the  state.  It has lead to stagflation and general underperformance of the UK economy vs other countries.  No, it wasn't "good".  

I have a strong suspicion that there would be riots in the streets if state pension was lowered to the 1970s level (in real terms). If we take 2009 as 100%, pension in 1978 was less than 80%. 

jamesd

Deleted_User said:

Living standards went down between 1973 and 1974, 1974 and 1975, 1975 and 1976 and did not get back to 1973 levels until 1978/1979. 

http://zippy.ifs.org.uk/bns/bn85.pdf

Thanks, Excellent. So, interpolating the chart data we find the following index levels:

1961: 0.76
1970: 0.88 16% increase. 0.88 / 0.76 * 100
1980: 1.02 16% increase. 1.02 / 0.88 * 100

So in the 70s the population overall had come from a 16% increase in the 1960s and experienced another 16% increase in the 1970s.

Weren't you trying to argue that the 70s were bad with your "Setting the wonderful 1970s as the golden standard is smart. Britain was doing so well, who wouldn’t want to try that again?" assertion?

Two consecutive decades of 16% increases in median real income is clearly excellent, not bad. Thanks again for the data proving it.

[Deleted User]

jamesd said:

Deleted_User said:

Living standards went down between 1973 and 1974, 1974 and 1975, 1975 and 1976 and did not get back to 1973 levels until 1978/1979. 

http://zippy.ifs.org.uk/bns/bn85.pdf

Thanks, Excellent. So, interpolating the chart data we find the following index levels:

1961: 0.76
1970: 0.88 16% increase. 0.88 / 0.76 * 100
1980: 1.02 16% increase. 1.02 / 0.88 * 100

So in the 70s the population overall had come from a 16% increase in the 1960s and experienced another 16% increase in the 1970s.

Weren't you trying to argue that the 70s were bad with your "Setting the wonderful 1970s as the golden standard is smart. Britain was doing so well, who wouldn’t want to try that again?" assertion?

Two consecutive decades of 16% increases in median real income is clearly excellent, not bad. Thanks again for the data proving it.

If you like growth in disposal incomes to slow down vs the last 40 years and experience extended periods of reduction in the level of life associated with boom and bust  while UK formally becomes a third world country then sure. 70s were awesome. 

jamesd

Deleted_User said:

jamesd said:

As it was for many, my own family not being particularly well off either in the 70s, but generally times were improving even if it was patchy for individual families.

Stagflation is when you have very high inflation combined with low growth.  Thats what happened in the 70s. Not just in the UK but UK was particularly badly impacted.  UK was rapidly losing out internationally in terms of real GDP per person and real income per person. Strong unions were not the only reason for the winter of discontent.   Houses were cheaper relative to salaries but far fewer people could afford them. 

“Generally times were improving” is not a particularly meaningful claim. 

That's OK, I'll go with your data showing a 16% increase in real median earnings in the 1960s and again in the 1970s. And also with the roughly 29% in UK GDP per capita in the 1960s and around 22% in the 1970s.

Those look like pretty substantial improvements in both median earnings and GDP in the1960s and 1970s so yes, in broad terms the 1970s were pretty good economically in spite of the industrial strife that was experienced during the 70s and my own family not experiencing much of it in the 70s.

itwasntme001

jamesd said:

Deleted_User said:

Living standards went down between 1973 and 1974, 1974 and 1975, 1975 and 1976 and did not get back to 1973 levels until 1978/1979. 

http://zippy.ifs.org.uk/bns/bn85.pdf

Thanks, Excellent. So, interpolating the chart data we find the following index levels:

1961: 0.76
1970: 0.88 16% increase. 0.88 / 0.76 * 100
1980: 1.02 16% increase. 1.02 / 0.88 * 100

So in the 70s the population overall had come from a 16% increase in the 1960s and experienced another 16% increase in the 1970s.

Weren't you trying to argue that the 70s were bad with your "Setting the wonderful 1970s as the golden standard is smart. Britain was doing so well, who wouldn’t want to try that again?" assertion?

Two consecutive decades of 16% increases in median real income is clearly excellent, not bad. Thanks again for the data proving it.

Oh its even better than that jamesd.  See below link from ONS (who surely even Mordko can't argue that it shouldn't be used over his data in his few posts earlier):

https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/ihxy/ukea

Real disposable income per capita rose by around 30% during the 70s, 34% during the 80s, 14% during the 2000s, and what is presumably even worse than the 2000s the 2010s.

Sure Mordko, the 70s were a terrible decade for the working class.  They only managed to have a rise of around 30% in disposable income, comparable only to the 80s boom period...

itwasntme001

Deleted_User said:

itwasntme001 said:

Deleted_User said:

Given the data I have presented, it appears the 70s were not at all bad for workers, in fact, overall, this period seems to be one of fairly rapid rise in living standards as measured by disposable income.

I am seeing the exact opposite but lets agree to disagree. 

In other words you can't back your claim.

Alright, let's play.  As you can see from the plot below there was an increase in disposable income if you take the totality of 1970s but at a slower rate than since 1980.  And between circa 1972 and 1977 there was no increase with extended periods of drops in disposable income.  

https://tradingeconomics.com/united-kingdom/disposable-personal-income#:~:text=Disposable Personal Income in the United Kingdom averaged 195250.86 GBP,the first quarter of 1955.

See my reply to this in the above post.

jamesd

itwasntme001 said:

jamesd said:

Thanks, Excellent. So, interpolating the chart data we find the following index levels:

1961: 0.76
1970: 0.88 16% increase. 0.88 / 0.76 * 100
1980: 1.02 16% increase. 1.02 / 0.88 * 100

So in the 70s the population overall had come from a 16% increase in the 1960s and experienced another 16% increase in the 1970s.

Weren't you trying to argue that the 70s were bad with your "Setting the wonderful 1970s as the golden standard is smart. Britain was doing so well, who wouldn’t want to try that again?" assertion?

Two consecutive decades of 16% increases in median real income is clearly excellent, not bad. Thanks again for the data proving it.

Oh its even better than that jamesd.  See below link from ONS (who surely even Mordko can't argue that it shouldn't be used over his data in his few posts earlier):

https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/ihxy/ukea

Real disposable income per capita rose by around 30% during the 70s, 34% during the 80s, 14% during the 2000s, and what is presumably even worse than the 2000s the 2010s.

Sure Mordko, the 70s were a terrible decade for the working class.  They only managed to have a rise of around 30% in disposable income, comparable only to the 80s boom period...

Thanks, I took a brief look around for a time series rather than interpolating a chart and I appreciate the data!

There was undoubtedly considerable strife during the period but still substantial growth in median wages and GDP.

Still, lets not forget that Mordko was trying to ridicule that idea that the 70s were decent as a distraction from the point that we lost the wages link for state pensions in a Thatcher administration cut from wage to inflation increases in the early 80s recession and the triple lock is to get back to the 1970s level.

[Deleted User]

jamesd said:

itwasntme001 said:

jamesd said:

Thanks, Excellent. So, interpolating the chart data we find the following index levels:

1961: 0.76
1970: 0.88 16% increase. 0.88 / 0.76 * 100
1980: 1.02 16% increase. 1.02 / 0.88 * 100

So in the 70s the population overall had come from a 16% increase in the 1960s and experienced another 16% increase in the 1970s.

Weren't you trying to argue that the 70s were bad with your "Setting the wonderful 1970s as the golden standard is smart. Britain was doing so well, who wouldn’t want to try that again?" assertion?

Two consecutive decades of 16% increases in median real income is clearly excellent, not bad. Thanks again for the data proving it.

Oh its even better than that jamesd.  See below link from ONS (who surely even Mordko can't argue that it shouldn't be used over his data in his few posts earlier):

https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/ihxy/ukea

Real disposable income per capita rose by around 30% during the 70s, 34% during the 80s, 14% during the 2000s, and what is presumably even worse than the 2000s the 2010s.

Sure Mordko, the 70s were a terrible decade for the working class.  They only managed to have a rise of around 30% in disposable income, comparable only to the 80s boom period...

Thanks, I took a brief look around for a time series rather than interpolating a chart and I appreciate the data!

There was undoubtedly considerable strife during the period but still substantial growth in median wages and GDP.

Still, lets not forget that Mordko was trying to ridicule that idea that the 70s were decent as a distraction from the point that we lost the wages link for state pensions in a Thatcher administration cut from wage to inflation increases in the early 80s recession and the triple lock is to get back to the 1970s level.

If you want to reflect the impact of Thatcher's administration and policies which involved severing links between state pension and earnings then we have to align the timescales with her administration:

- Labour Harold Wilson came to power in early 1974 and left in early 1976.  In 1974 Barbara Castle introduces the link between the state pension and average earnings.  Average annual disposable income growth 1974-75: 0%.

- Labour James Callaghan came to power in early 1976 and left in early 1979.  Average disposable income growth 1976-1978: 2%

Overall average annual growth for the two Labour administrations: 1%. 

- Tory Margaret Thatcher came to power in early 1979 and left in late 1990.  In 1980 the link between pensions and earnings is removed so that people are encouraged to rely on themselves.   Average disposable income growth 1979-1990:  3%.  

How about that?  

Source: https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/ihxy/ukea

1973	8139
1974	8069	-1%
1975	8140	1%
1976	8114	0%
1977	7969	-2%
1978	8555	7%
1979	9054	6%
1980	9188	1%
1981	9149	0%
1982	9176	0%
1983	9405	2%
1984	9735	4%
1985	10174	5%
1986	10583	4%
1987	10753	2%
1988	11335	5%
1989	11910	5%
1990	12366	4%

P.S. It's kinda cool that disposable income went down between 1973 and 1977.  Something similar happened between 2010 and 2014, albeit milder.  At least in 2010 there were no garbage-filled streets and people, for the most part, owned their houses (bad Thatcher, bad.)

And linking of state pensions to wage growth by Mrs Castle wasn't a big deal given there was no wage growth under that government.  "Have yourself a present from the goverhment, oldies: zero".  At least in 2010 most retirees knew not to rely on the state pension alone but on themselves.  They should thank Maggie. 

MK62

Arguing over the history of the state pension like this is pointless tbh.......since the 70s, the population has changed.....the % of state pensioners to workers has changed.....the state pension itself has changed......NI has changed......SERPS has come and gone....S2P has come and gone.....other taxes have varied (eg VAT).....and so on......blah blah....

That said, in real terms the state pension has risen faster than either CPI or earnings (or even RPI)......and that's down to the triple lock.

In April 2010 (Triple lock introduced 2010), the Basic State Pension was £97.65. In April 2021 it's £137.60.

If linked only to CPI, the BSP in Apr 2021 would have been c£118.64 (Sep 2010 CPI index=89.8, Sep 2020 = 109.1**)

If linked only to earnings, it would have been c£125.14 (using Avg Weekly Earnings Sep 2010=437, Sep 2020=560)

(if linked only to RPI, it would have been c£127.55 - for comparison purposes)

Fair enough, those figures are for April 2021.......it's not until April 22 that we'll see the effect of the temp removal of the earnings link.......but, assuming CPI at 4% (as is being touted), then the Basic State Pension in April 22 should be around £143.10. (If the triple lock were maintained, the BSP would rise c8% to c£148.60)

If linked only to CPI since 2010, it would be c£123.40 (£118.64 + 4%)

If linked to only to earnings since 2010, it would be c£135.15 (£125.14 + 8%)

** The SP was increased by RPI in 2010, the triple lock was first used in 2011....

The govt has to be fair to both the people who are in receipt of the State pension, and those whose NICs pay for it - given that, personally I don't see that they had many options here, other than what they've done.

maisie_cat

Silvertabby said:

Dale72 said:

Right from day 1, the State pension was only ever intended to fund a basic standard of living, with 'luxuries' being paid for from other pensions or savings.

Somehow, over the years, "The State pension will pay for everything you need" has Chinese whispered into: "The State pension will pay for everything you want".

Spot on, the Beveridge report that was influential in the founding of the welfare state specifically stated that benefits should be at a subsistence level.
My two grandmothers were poles apart with respect to financial planning, one told me when I was starting work to not bother with a pension because "the state will provide for you if you don't provide for yourself", the other told me to put into a pension.