LABOUR: FAILING ON Fairness for Fylde’s pensioners
How pensioners are treated is a key test of a society’s fairness.
The impact of Gordon Brown’s tax and benefit policies mean Labour is failing on this fundamental yardstick. In addition, new analysis by the Conservative Party reveals that the rising cost of living means over two million pensioners will actually be up to £100 worse off – even after the increase in Pension Credit. Fylde Borough has one of the highest levels of over 50’s in Lancashire and this ticking time bomb will need strong Conservative policies to avert many Fylde pensioners from ending up on the Bread Line in a period of their lives which they should be enjoying.
Labour tax on pensions
Gordon Brown’s disastrous tax raid on pension funds has slashed £100 billion off the value of Britain’s pension savings. Recently published Treasury documents reveal that Gordon Brown received warnings from civil servants that his tax hike would cut the income of private pension schemes by up to 10%. It cannot be right that Pensioners have to pay tax on their pension payments, Conservatives need to scrap tax on Pensions and Savings.
Pensioner poverty
Figures from Eurostat show that Britain’s pensioners are some of the most likely in Europe to be at risk of poverty. Britain is the fourth worst country in the EU on the at risk- of-poverty rankings produced by the EU. Only pensioners in Cyprus, Spain and Latvia are more likely to fall into poverty. This position has got worse since 1997.4 Pensioner poverty grew by 300,000 compared with last year, measure both before and after housing costs.5
There are 2.5 million pensioners living in poverty (living below 60% of median
income measured before housing costs – the official measure of child poverty) which is 100,000 more pensioners than in 1997.6
Labour’s benefit system – failing pensioners
Labour’s increased use of complex means testing of pensioners has resulted in reduced take-up of benefits.
Pension Credit
Between 1.2 and 1.8 million pensioners failed to take up their entitlement to Pension Credit last year.
Up to 1.2 million of those were living in poverty (below 60% of median income
measured before housing costs).
4 Eurostat, At-risk-of-poverty rate for pensioners, February 2006 (latest available); Eurostat, At-risk-ofpoverty
rate of older people by gender and selected age groups, February 1997.
5 DWP, Households Below Average Income, June 2008
6 DWP, Households Below Average Income, June 2008
4
Council tax benefit
Because of the complexity of the benefit system, between 1.7 and 2.1 million
pensioners are failing to claim the Council Tax Benefit they are entitled to.7
As a result, between £1.1 and £1.5 billion of Council Tax Benefit went unclaimed by pensioners last year.8
Housing Benefit
Take up of Housing Benefit amongst pensioners has fallen under Labour
Between £380 million and £770 million in Housing Benefit went unclaimed by
pensioners last year. 42% of entitled non recipients of Housing Benefit were living in poverty last year compared with 10% of those entitled to and claiming the benefit.
Council Tax Benefit
Take up of by pensioners has fallen by at least 12% amongst pensioners since 1997.9
Council tax burden on pensioners
For a typical pensioner, a third of the increase in the basic state pension since 1997 has been eaten up by higher council tax payments.
For pensioner couple, council tax is up £685 on a Band D home from 1997-8 to 2008-9, compared to the couples’ basic state pension going up £2,353. For a single pensioner, council tax is up £514 on Band D, while the single basic state pension is up £1,469.10
7 DWP, Income Related Benefits Estimates of Take Up in 2006/07, June 2008
8 DWP, Income Related Benefits Estimates of Take Up in 2006/07, June 2008
9 DWP, Income Related Benefits Estimates of Take Up in 2006/07, June 2008
10 Hansard, 10 January 2008, col. 730W. Figures exclude payments for 70+ year olds, winter fuel payments and the 2005-06 £200 one-off payment; pension.
5
New Conservative Party analysis reveals that over two million of
the poorest pensioners will lose nearly £100 thanks to rising cost
of living under Labour
Pensioners face soaring living costs
Labour’s taxes and rising cost of living mean that pension increases for poor
pensioners will be entirely eaten up by higher inflation. Thanks to the spread of means-testing, more pensioners are now dependent on Pension Credit.
Poor pensioners are entitled to a minimum level of income via the Guarantee Credit component of the Pension Credit. The level of the Guarantee Credit was increased by 4.2% at the beginning of this financial year.11
Pensioner inflation is now considerably higher than CPI inflation because pensioners spend a much higher percentage of their income on high-inflation goods, like heating, light, and food. For example, pensioners spend 23%12 of their budget on food, whereas the average household spends only 11%.13 Pensioners spend 13%14 of their budget on fuel and light, compared with 9%15 for the average household. Official figures, buried away on the Office for
National Statistics website, show that:
For a two-person pensioner household, the rate of RPI inflation was 5.2%.16
For a one-person pensioner household, the rate of RPI inflation was 5.6%.17
But the official rate for annual RPI inflation was 4.4 per cent over the same period.18
Pension Credit rise wiped out by inflation
This means that the Guarantee Credit rise will be entirely eaten up by higher inflation. In fact, in real terms, the value of the Guarantee Credit19 is actually being cut.
A pensioner couple will lose £98 this year, at current rates of inflation.20
A single pensioner will lose £90 this year, at current rates of inflation.21
There are currently 2,130,620 Pension Credit claimants, all of whom will be
affected.22
11 DWP, Proposed benefit rates 2008/09
12 ONS series CBXR. This is for a one-person pensioner household.
13 ONS series CZGZ
14 ONS series CBXY. This is for a one-person pensioner household.
15 ONS series CZHG
16 ONS series CZJI
17 ONS series CZIT
18 ONS series CZBH, Q2 2008
19 The Standard Minimum Guarantee of the Pension Credit for a single pensioner is currently £124.05 per week, or £9,846.20 per year. For a pensioner couple, it is £189.35 per week, or £6,450.60 per year.
20 For a two-person pensioner household, the rate of RPI inflation was 5.2 per cent. This means that the
Pension Credit is falling by 1.0 per cent in real terms this year (4.2 minus 5.2).
21 For a one-person pensioner household, the rate of RPI inflation was 5.6 per cent. This means that the Pension Credit is falling by 1.4 per cent in real terms this year (4.2 minus 5.6).
22 DWP Tabulation Tool, Feb 2008. Includes claimants who claim Guarantee Credit only, or both Guarantee Credit and Savings Credit
