The dust will take some time to settle on last night’s extraordinary events. It will be some time before we have a full understanding of the dynamics that have fueled Labour’s surge and the Conservatives’ failure to meet their own, and others’, widely-held expectation of gaining a significant majority.
Until we understand what happened on the ground on a regional as well as a national basis any analysis of the election’s meaning for pensions policy must be provisional. More widely, we must remember that pensions policy per se will not be prominent in the minds of the party leaders and their officials as they seek to divine meaning in this result and work out what to do next.
What we can say at this stage is that the election result confirms the growing economic divide between young and old is now reflected in party political alignments. Labour is now the party of the young and the Tories the party of older voters.
This is a crude generalisation of course, but it matters. It has been the case for many elections that the young are more likely to vote Labour than older generations who are more likely to be Conservative. But the age to party identification correlation in this election has gone from significant to overwhelming. Two party politics is back and the rise in the total share of the vote for the two main parties is built on Labour’s surge among the young and strong Conservative support among older voters.
Much of the scepticism about Labour’s chances in recent days depended on the past being a sure guide to the future – that is, younger voters might be saying that they were going to vote Labour in huge numbers but turnout among younger voters is always much lower than among Conservative-supporting older cohorts.
The pollsters (with YouGov as a huge exception) deployed a backward looking deterministic model rather than a stochastic forward looking one. Just as advisers know the past is no guide to the future so turnout among young people surged in a fashion literally unheard of until yesterday. Early projections are that turnout rose by up to 50 per cent among 18-25 year olds.
Clearly there is an element of “remainers’ revenge” about this surge. But Corbyn’s politics of anti-austerity also matter a lot. With defined benefit pensions and home ownership a distant dream for most under 40s the increasing concentration of wealth assets among the over-45s appears to have produced a backlash from the younger unpropertied.
“Just as advisers know the past is no guide to the future so turnout among young people surged in a fashion literally unheard of until yesterday.”
Meeting the demands of this suddenly politically engaged demographic will define many of the debates about pensions policy going forward. In the short-term not much might change – both Corbyn’s Labour party and the Conservatives might seek to increase opportunities for the young without redistributing from the older and wealthier. Higher public spending might be the solution both parties alight on as we move towards the likelihood of another election.
But in the long term fiscal and demographic realities will bite: any Government wanting to spend more on the young will need to spend less on the old. One can’t understand the forces which will now shape pensions policy unless we understand the wider context: young vs old is now a legitimate, if stylised, way to understand UK politics alongside the more traditional divisions of social class and culture.
Fasten your seatbelts, it’s going to be a bumpy ride.
Gregg McClymont is retirement savings head at Aberdeen Asset Management and a former shadow pensions secretary