In Brief

Will Labour spend £300bn more on pensions?

We would not have to work for as long under Jeremy Corbyn's leaked plans, but who will pay in the end?

Jeremy Corbyn's Labour Party is sticking to the "belief that radical ideas will pull voters", says the Financial Times.

A draft manifesto leaked to the press this week, which was "signed… off without major changes", says the paper, reveals plans to renationalise the UK's "railways, mail delivery and the energy grid".

It also proposes £10bn to scrap tuition fees, to invest £6bn "each into the NHS and schools" and to raise £25bn in taxes by raising businesses taxes and income tax for higher earners.

But perhaps the most eye-catching headline in terms of sheer cost is the claim that is has pledged £300bn more for pensions.

So what has Labour promised?

£300bn more for pensions? Wow, that is a lot of money!

It is - but it is not per year. Labour has pledged to scrap planned increases in the state pension age, meaning the amount is the total cost relating to current over-18s in work now until they start to receive state payouts in roughly five decades' time.

The first additional cost begins to appear from 2028. Over the 40-or-so years in question, the amount equates to around £7.5bn a year. The annual costs would continue after that.

How has that been worked out?

The calculation is the work of Steve Webb, the former Liberal Democrat pensions minister who instigated the current policy of increasing the state pension age.

At the moment, men retire at 65 and women at 63. From 2028, that increases to 66 for both and will then increase to 67 between 2026 and 2028 and rise to 68 between 2046 and 2048.

The state pension currently costs around £100bn a year, a figure that rises every year because people are living longer. Webb's policy is designed to keep the universal state pension affordable.

Labour would go ahead with the plan to increase the pension age to 66 next year, but then scrap additional rises.

According to Webb, this would mean that between 2028 and 2046, around 650,000 people per year will get an extra year of state pension. That's 11.7 million people getting an average of £8,000 more, or around £94bn.

Over the two years from 2046 until those now aged 18 retire, some 13 million people would get an extra two years' pension, or £16,000. That's a total of £206bn.

Is that it?

Not according to former pensions minister Ros Altmann, who warned that costs for elderly social care would also increase.

It also "doesn't take into account economic damage caused by people retiring earlier than they would have done under the current schedule", says Citywire.

How will it be paid for?

It's the eternal question. Labour insists it will fully cost all policies. It has already proposed to increase taxes on business and higher earners.

However, it's not at all clear those measures will cover this pledge. The party has previously indicated it would borrow more money at least for a time, while Altmann said it was very likely workers would need to pay more in national insurance.

She said: "I would assume that Labour will mitigate costs perhaps by increasing the number of years of NI needed for a full pension.

"We want to know more detail," she added. "I cannot believe Labour really mean this."

Webb said cancelling the age increases would come at an "astronomical" cost. "These are eye-watering sums of money which would either have to be found from somewhere or added to the national debt," he added.


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