One of the insights of the Public Choice School of economics is that voting groups with more homogenous interests will have much more influence on the political process than those with more diffuse concerns. In recent years we have seen this clearly with pensioners. Whenever somebody suggests that it would be prudent to examine the universality of pensioner benefits or reform planning laws, a wave of outrage ensues. This sort of fierce reaction doesn’t tend to be mirrored among ordinary taxpayers or those seeking to own a home in the future, even though they are having to pay or suffer for privileges afforded to others.

Quite simply, due to pensioners’ greater propensity to vote and their growing numbers, politicians have pandered in this Parliament to the interests of the old across a range of areas. The government has instituted a triple-lock so that the state pension increases by the higher of inflation, average earnings growth, or 2.5 per cent per year – completely unjustifiable by to any standard economic rationale. The policy has proved highly costly in a world where wage growth, and hence tax receipts, have been so subdued, and it is hard to defend on the grounds of fairness when working-age welfare has been increased much more slowly.

The protection of the winter fuel allowance, free TV licences and bus passes, when other universal benefits have been reformed, is also incredibly hard to justify. Compared to other spending areas, healthcare has been relatively protected – with a huge proportion of that budget spent on the old. There was also a decision to implement a variant of the Dilnot recommendations on financing social care. This is in effect a subsidy for wealthier pensioners in need of care such that the state will protect the inheritance of their children.

But this clientilism in the quest for votes has perhaps been best exemplified in the past week, with the launch of the government’s “Pensioner Bonds”. National Savings and Investments is offering three-year bonds, open to over-65s only, with yields of 4 per cent. This comes at a time when the government could borrow by issuing three-year bonds with yields of around 0.6 per cent. In other words, the government is deliberately borrowing more expensively than it needs to, guaranteeing a healthy return for pensioners who are wealthy enough to be able to purchase up to the £10,000 limit. No wonder the registration website keeps crashing.

This bond issuance is not just misguided because it crowds out other investment activity. Borrowing more expensively than the government needs to is effectively a direct subsidy to wealthier pensioners from the working-age population. Though in the grand scheme of things this will only be a subsidy to the tune of hundreds of millions, rather than billions, the likely cost of this policy will be as high as several of the controversial welfare eligibility changes which the government claimed were absolutely necessary to help improve the public finances.

Our deficit this year is still forecast to be around £96bn – and all parties have outlined the need for substantial savings in the next Parliament. Yet politicians are already falling over themselves to make guarantees to pensioners on the state pension, universal benefits, and the protection of greenbelt land. Given that as many as 76 per cent of pensioners voted in the last election, this is understandable – politicians want to maximise their chances of getting elected. But at some stage, they should think about what is right, not what will be most electorally favourable.

This article first appeared in City AM.