Why Tory pension plan contains a ‘debatable’ £13bn

Robert Chote was arguably the most dangerous man here at the Conservative Party conference. He was working through George Osborne’s speech at a fringe meeting alongside some journalists when his mobile rang. It was one of Mr Osborne’s lieutenants.

When a shadow chancellor is trying to prove his credibility and judgement to the nation, it’s no surprise that the chief of the fiscal watchdog the IFS, is directly lobbied by Tory hierarchy.

The £13bn number for the move to raise in the state pension age to 66 is in Mr Chote’s view ‘debatable’.

Originally that number was attributed to the National Institute of Economic and Social Research.

On Conservative plans, it won’t reach that level of saving until 2020. In the short term, it’s fair to take all women out of the equation, and they are more than half the age group at 65, so the savings are more like £6bn.

Then there’s the impact on pension benefits, particularly the Minimum Income Guarantee, which kicks in at 60.

Niesr itself now says that “until the Minimum Income Guarantee is changed the effect of the policy may well not be very great”.

So the mystery of the £13bn is becoming a little clearer. The savings only get to that level if pensions benefits are also adjusted sharply.

There is little mention of this in the Conservative costings. It was a difficult distraction for a shadow chancellor already trying to take the public on a long journey of painful cuts.