Have pensions just been capped?

I’ve been trying to follow the Budget. One of the most important statements for welfare policy could be this:

“the Government will strengthen the public spending framework by introducing a firm limit on a significant proportion of Annually Managed Expenditure (AME), including areas of welfare expenditure. This will be designed in a way that allows the automatic stabilisers to operate to support the economy.” (page 3 and paras 1.61-62)

If there is a firm limit on AME and welfare expenditure, that must mean that benefits are capped. Two thirds of relevant expenditure on ‘welfare’ goes to pensioners and nearly all the projected increase in the costs of welfare is attributable to the numbers and entitlements of people over retirement age.  Here’s a table taken from the Benefit Expenditure Tables:

2012/13 2013/14 2014/15 2015/16 2016/17 2017/18
Forecast Forecast Forecast Forecast Forecast Forecast
Nominal terms £bn
Children 1.7 1.6 1.6 1.6 1.6 1.7
Working Age 54.7 50.6 50.6 51.1 51.8 52.2
Pensioners 109.7 111.0 114.5 118.1 121.4 124.8
Real terms, £bn, 2012/13 prices
Children 1.8 1.7 1.6 1.5 1.5 1.5
Working age 54 54.7 49.6 48.6 47.8 47.3
Pensioners 109.7 108.8 110.1 111.3 112.1 113.1

If AME expenditure is capped, it seems to imply that payments to pensioners have to be capped. Is that what the government intends?

2 thoughts on “Have pensions just been capped?”

  1. I’ve added in some figures to help clarify the position. To take the money only from the ‘usual suspects’ while protecting pensioners, they’d have by 2017/18 to take out £15.1 billion from a payment of £52.2 billion, a cut of 29%.

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