THIS week’s pre-Budget report was a huge gamble for the Government and one that delivered much-needed financial help for pensioners.
Yet, despite Alistair Darling’s surprise announcement of a one-off £60 payment in January for all pensioners and his pledge to do “whatever it takes to protect people”, the oldest and poorest pensioners remain among those most at risk of paying the price for the economic downturn.
Unlike a cut in income tax, the headline measure – a 2.5 per cent reduction in VAT – will help the majority of pensioners. However, the very poorest will see little or no reprieve in their basic outgoings, such as food and energy bills, which are exempt from the reduction. With these costs taking up such a high proportion of their income, they have already been hard by the rising cost of living.
Recent Institute for Fiscal Studies research, supported by Age Concern, found that the huge hikes in food and fuel prices pushed the real rate of inflation for this group up to
9 per cent in August this year – well above the 5.4 per cent experienced by non-pensioners at the same time. And with one in 10 of the poorest pensioners being forced into debt by recent rises in basic household
bills, the danger is that the Chancellor’s measures are insufficiently targeted to help the most vulnerable.
The news that the pension credit will go up in line with inflation next year, again welcome on the face of it, may offer little comfort to those who need it most – the 1.8 million pensioners who currently do not claim their entitlement. In the short term, a Government campaign to encourage the take-up of up to £5 billion of unclaimed benefits and get this much-needed cash into the pockets of millions of pensioners is needed urgently. In the longer term, the Government must prove its commitment to tackling pensioner poverty by moving towards the automatic payment of benefits – the only real solution to the unacceptably low take-up rate.
The Chancellor’s announcement that funding for the Warm Front scheme will be increased is welcome. But with five million British households in fuel poverty, half of which are pensioner households, there is still a huge amount for the Government to do to reverse the escalating crisis. Ed Miliband recently admitted to feeling ashamed that so many people are living in fuel poverty in one of the richest countries in the world. He has threatened to intervene if the energy companies fail to end the unfair pricing policies that mean the poorest often end up paying more for their fuel. These are brave and honest words from the new Energy and Climate Change Secretary. But such threats have been made before and must be followed through if the energy industry fails to respond.
Radical measures are needed which go beyond simply papering over the cracks of the Government’s floundering fuel poverty strategy. This means devising a new approach, supported by a fair funding formula that recognises the estimated £9 billion in windfall gains likely to accrue to the energy industry from the European Union’s Emissions Trading Scheme.
This week also saw the publication of the excess winter death figures for 2007/08 and it is nothing short of a national scandal that we have the highest number of excess deaths in Europe. And with this winter predicted to be colder than last year, it seems likely that we can expect this number to increase. So welcome as many of the measures announced this week are, it seems that, once again, the stark decision facing many of the oldest and poorest pensioners during the winter will be whether they can afford to turn on the heating.
Gordon Lishman is director general of Age Concern
