Wednesday, January 30, 2008

There Is No Greater Shame

Next week, Channel 4 will broadcast "Heat or Eat" a Dispatches investigation into pensioners living in poverty in the UK. At the time of writing I can find no information about what is included in the programme. What I have discovered, however, has shocked me.

I know I rant a lot about politicians, privacy and the introduction of ID Cards, but the fact that almost one in four pensioners (and there are now more than 9m people over 65 living in the UK) are at risk of poverty (compared to a European average of 18% as of 2004) is utterly beyond the pale.

About 40% of men over 65 and women over 60 are living in, or dangerously close to, fuel poverty - when more than 10% of their weekly disposable-income is swallowed up by gas and electricity bills. In the twelve months up to Feb 2007, according to, "the state pension increased by just 2.7% (£2.20 a week), compared to gas bills which went up 38% on average"

A report this week, by the Newcastle Building Society, showed that this year pensioners will fare the worst of all consumers, facing 7% inflation overall. Last September's RPI figure, on which this year's state pension increase is based, was 3.9%. Pensioners suffer because typically their spending does not match the theoretical shopping basket of goods on which the RPI is based. Older people spend a third of their outgoings on food and fuel, both of which will cost significantly more in 2008.

The average council tax bill is expected to rise by 4% to £1,380 in April, making a total increase of more than 100% since Labour took office in 1997. Council tax and other housing costs are excluded from the Government's pensioner's price index, naturally.

In 2001, at an EU summit at Laeken there was a ratified proposal* that all member states should endeavour to attain a level of 40% of their median wages as their basic state pension by 2007 and thereafter work towards 60%. It should be noted that an income of 60% of the median wage is considered the poverty line by the EU.

The British Basic Pension is 18% of the National average wage. Including Pension Credits, it is still only 26% of the National average wage. Interestingly, only 2.7 million pensioners claimed Pension Credits in 2005.

The annual AON Consulting European pension survey confirmed in 2007 that the UK state pension is still the lowest in Europe. The report tries to explain why the UK has remained in last place: "It is a difference of philosophy and a different view of the role of the state. In most of Europe, it is believed that the state's obligation is to ensure that people have a reasonable standard of living, relative to what they had when they were working. In the UK, the role of the state is to ensure that people do not starve. If people want to have more than the basic level, they need to save for themselves."

A spokesman for the Department for Work and Pensions said the Aon report failed to reflect its plans to improve the state pension, such as restoring the link to earnings."By restoring the link to earnings and modernising the contributory principle, we will make the state pension much more generous and fairer to women and carers," he said to in 2007.

The charity Help the Aged said it was time for the Government to address the 'shocking levels of pensioner poverty' by bringing forward the introduction of the link between pensions and earnings, which is scheduled for 2012. "Our pensioner population should be entitled to retire with dignity and without the need to apply for means-tested benefits" the spokesman added. Amen to that, brother.

Tom McPhail, head of pensions research at the financial advisers Hargreaves Lansdown, partly blamed Gordon Brown for the collapse in defined benefit pensions. One of the (then) Chancellor's first moves when he came to power in 1997 was to scrap the dividend tax credit on pension funds, described by the Tories as one of the "great scandals of the last decade". And as the Tories know a great deal about scandals, you have to suspect they know what they're talking about when they said this.

Michael Portillo, himself a former Tory MP, has an excellent article on this last point here which details the scandal that Gordon Brown *should* be more definitely embroiled in.

There is no greater shame than a nation that does not look after the people that made that nation great.

* - From Help The Aged

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Blogger silas said...

And something I thought of while in bed last night (yes, I really am a dullard), the link to earnings was severed by the Tories in 1982 under Margaret Thatcher.

Anonymous The Devil said...

And you had been doing so well until you started with the whole Tories thing. Muppet!

Still, am proud of you for taking the initiative to write about something that will affect most of us (not you, obviously!)


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