A few shades of grey at the Treasury

Would paying more money into the system heal the generational divide?

Newsnight is devoting most of the programme tonight to the generational divide - what more could the older generation put back in, if anything?

I am sure there will be many of you who do not accept the premise that the over 65s should pay more back in at all.

Indeed that is what will be dissected by government minister David Willetts, author of "The Pinch - How The Babyboomers Took Their Children's Future And Why They Should Give It Back", and a large audience of said babyboomers.

One sore point for this group is that for some, this country's basic pensions have been meagre, complicated and occasionally demeaning.

Pensions Minister Steve Webb has long-believed this and he has spent a lifetime campaigning to reverse it.

So, on entering government he put his head down and came up with something embraced by the coalition - get rid of the complicated pensions with endless top-ups and add-ons and bells, and bring in the single-tier pension of £140-a-week.

Last week in his speech on welfare, the prime minister gave Webb's work a hefty plug: "If you have worked hard all your life, then you deserve real dignity and security in your old age... it's why we're bringing in the single-tier pension... It's about doing the right thing by those who have done the right thing all their lives and I'm proud that we are the government taking this forward."

Today, sources tell me the reforms have met a large high and thick wall in the corridors of the Treasury.

The problem is this: rolling the basic state pension (currently £107.45 a week) and second state pension into one single scheme will be excellent for those who have only been able to make small or indeed no pension contributions.

But what about those who have been paying quite a bit in? Quite a lot in?

The National Pensioners Convention has pointed out that someone retiring today with a 30-year contribution record would get a pension of £150 - this would become £140. So clearly they stand to lose.

It is this group Conservative ministers are looking to help. The trouble is, how can you mitigate the effects for this group, without costing the Treasury?

Any mitigation fund has to come from somewhere. Perhaps from those Barclays fines? This is why Treasury officials are concerned. As one source told me, they are "demanding to know where there are going to be savings down the track."

I understand there is enough political pressure to find a resolution from Steve Webb, flanked by Danny Alexander and Clegg and with prime ministerial power behind them. It was raised in the meeting of the so-called "quad" this week and there is demand for it to come out soon.

But it is a reminder that there are 50 shades of grey in the debate over generational inequality - there are the howls of anguish as inequality between the generations is discussed and ideas for redress are broached.

And it turns out there are similar howls when someone like Webb tries to bear down on inequality within the older generation too.

Watch Allegra Stratton's full report on Newsnight on Wednesday 4 July at 2235 BST.