Could older people's benefits be next for welfare cuts?

 
Older women having lunch on a bench Older people's benefits have largely escaped austerity cuts

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They receive around half of the government's welfare budget but so far older people have largely dodged the austerity bullet.

Unlike working age benefits, their pensions will go up by at least the rate of inflation for the next few years.

While child benefit is now means tested, bus passes, free TV licences and winter fuel payments still go to pensioners regardless of their income.

And that looks likely to remain the case until at least 2015.

Share the pain

But there have been murmurs on all political sides about whether older people should continue to enjoy protected status beyond the next election.

There may well be working age benefit and tax credit claimants who think it is right that older people share more of the pain.

The Institute for Fiscal Studies estimates means testing the help older people get for fuel and their TV licences could save £1.6bn alone.

And some older people are already sacrificing those benefits.

Start Quote

Sir John Hall

We don't need those benefits. We are comfortable, and there are many people like us”

End Quote Sir John Hall Former Newcastle United owner

Former Newcastle United owner Sir John Hall is a millionaire, living in the luxurious County Durham hotel he owns.

And yet the 79-year-old is entitled to free prescriptions, a state pension, a £200 winter fuel allowance, a bus pass and a free TV licence.

He acknowledges they are benefits he doesn't need.

He said: "We have paid the £200 fuel allowance each year to the Durham Foundation. They collect it from as many people as are willing and then distribute it to those who need it more than we do.

"I do not have a bus pass, and I think we pay the TV licence. We don't need those benefits. We are comfortable, and there are many people like us."

Ration benefits

Sir John's money then has ended up subsidising a lunch club for older men in Shildon in County Durham.

They're certainly not millionaires, and many believe it's time to ration those benefits to those who really need them.

Vernon Chapman said: "Nowadays this country's got more millionaires in it but they will still be getting all the entitlements when they do not need them."

And Richard Wheatley said: "There should be a guide, a level beyond which the payments are cut-off, say those getting more than £40,000 to £50,000-a-year."

But what about those pensioners who are reasonably comfortable but well short of Sir John Hall's status?

Older men's lunch club Some believe older people's benefits should be targeted at the less well-off

I caught up with some at the Tyneside Cinema's Silver Screen club in Newcastle. Most certainly don't consider they are wealthy. They are reluctant to see their benefits targeted.

John Goss said: "I do not consider myself to be wealthy at all. I do not think expats in their villas in the south of France should get a winter fuel payment. On the other hand why shouldn't I get it?"

Ray Garside agreed: "I think it is very hard to say because we are fairly comfortable we should not be getting these allowances when it's due to our efforts that we are in this position."

But Ray's wife Doreen does think there is some scope for sacrifices to help younger people.

She said: "Our generation has been lucky. They have been able to buy their house, they have seen them go up in value, and paid their mortgages off.

"They have got a working pension and a state pension so I feel that we are quite privileged."

Economic turbulence

Start Quote

Ray Garside

I think it is very hard to say because we are fairly comfortable we should not be getting these allowances”

End Quote Ray Garside

But although older people have seen many of their benefits protected they have not been left entirely untouched by recession.

Many private pensions have been badly affected by economic turbulence, annuities have been cut, and savings are earning pitiful amounts of interest.

In addition, studies suggest older people are much more vulnerable to inflation.

The argument for protecting older people has also been based on their inability to change their circumstances.

While those of working age can hope to get a job to get out of the benefit system, it is harder for older people.

And of course many have paid decades of taxes on the basis they could benefit when they retired only to see their savings eaten up by care costs.

But perhaps some may be able to work longer in order to support themselves and generate more taxes.

Paul Hancox, from Wallsend, in Tyneside, would certainly like that opportunity. He may be 66 but he still wants to carry on working as a marine engineer.

So far opportunities have been few and far between.

He said: "Employers are not supposed to discriminate on the grounds of age but you do not know what they are saying at HR.

"They might ask, is he going to have a heart attack when he's working for us, is he going to get ill? You can see the challenge for the employer."

Of course many more of us will be forced to work longer as the pension age begins to rise.

But it does seem increasingly likely that benefits for the current older generation will be scrutinised more closely beyond 2015, especially as more cuts to public spending seem likely.

Given older people currently get £200bn from the public purse, the temptation to eat in to that will be great.

But politicians may still tread a little carefully. There's one thing all older people have in common - they're the most likely to vote in elections.

 
Richard Moss, Political editor, North East & Cumbria Article written by Richard Moss Richard Moss Political editor, North East & Cumbria

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  • rate this
    -2

    Comment number 28.

    I am not in the John Hall class, and would not consider myself rich. I am a pensioner with an employment pension too. I am very lucky. My employment pension is more than some working people can earn. I have time to cook, shop, walk etc to save money. Why should I, just because I am old, get more favourable tax treatment etc. than someone working hard and long to get the same income as me?

  • rate this
    -2

    Comment number 27.

    All people should receive enough to live a basic lifestyle whether a pensioner or unemployed.

    FACT - State pension has not been accrued by the receivers - Gov pensions are paid for by the current workforce - pensioners have not saved enough to cover the THEIR State pension

    FACT - the past 15 years we have either spent too much or not taxed enough

    FACT - Current Account defecit still > £120bn

  • rate this
    -3

    Comment number 26.

    The problem here is that the aged have grown up believing the flawed socialist ethos 'to care for you from the cradle to the grave'. So, many made no provision for their old age. Many are widows of men who also grew up in this belief. The lesson for future generations is that the State can no longer fund you in your old age so you must do so yourself, or else you will inevitably suffer hardship.

  • rate this
    0

    Comment number 25.

    Yes there are pensioners who have millions but why bring those few up as example?
    Most of us have to live on what is considered very meagre means and have little or no chance of suplimenting our small incomes.It is no secret that many of the benefits go to people who do not need them however,if those responsible were to look closer,instead of generalising,they would fine this applies to many other

  • rate this
    +2

    Comment number 24.

    Politicians already have enough on their minds as to how to vote themselves a £20k pay rise without having to consider pensioners one way or other.

  • rate this
    +1

    Comment number 23.

    I am not a pensioner, good 30 years away yet. I don't understand why this lunatic government are penalising the main bulk of people who have contributed to society during their life. This, to me is the result of the horrible Thatcher years with greed being the main Tory mantra

  • rate this
    +4

    Comment number 22.

    Benefits have already been cut. Last year I received £4:32pw pension credit then my wife got a rise of 81p. wk in her work pension and the pension credit was stopped. Result was the highly publicised 5.5% rise was actually 4.2%. Savings are assessed as earning 10.8%pa. Actual interest is about minus 2% after inflation. Loss of interest has cost pensioners about £7billion pa in recent years.

  • rate this
    +1

    Comment number 21.

    For means testing it depends what you mean by comfortably off. I have just retired because I am 65 and there is no work. My state + work pension is under £10K. I can manage because I saved to pay the mortgage off long time ago and I was brought up to 'make do and mend' and have continued that way. No TV, no bus pass as no suitable buses. Enjoy my push bike, camping and flying light aircraft.

  • rate this
    +1

    Comment number 20.

    Most pensioners ask for nothing other than the state pension which they have contributed to all of their working life.The Government never mention the billions of unclaimed benefits pensioners are to proud to claim.

  • rate this
    +5

    Comment number 19.

    #6

    Yeah lets just put them in prison then that would be safe and warm... are you 10 years old?

  • rate this
    +2

    Comment number 18.

    Although I don't think the poorer elderly should suffer cuts at all, I have to say I find it wrong that my mum and her husband both have a free bus pass, when he is still working and although she has taken early retirement, her pension plus his wage are a good amount to live on. They have no mortgage and go abroad three or four times a year, so really really should not qualify for freebies.

  • rate this
    -1

    Comment number 17.

    Fine.
    The universal heating allowance and Xmas bonus were just Brown's cynical poison pill electoral bribes.
    The right solution is to make them taxable and consolidate in the old age pension. Job done.
    But don't forget those who saved to maintain themselves have seen their income halved by govt policy and their savings devalued.
    We are paying, heavier than anybody else in many cases

  • rate this
    +1

    Comment number 16.

    "We are comfortable, and there are many people like us." says Sir John Hall.

    ++++++++++

    And many, many more who are not. Good on yer Sir John for giving up those benefits in favour of the more needy. Haven't you done well for yourself after ripping off the Church Commissioners all those years ago when you built the Metro Centre Retail Park on very cheap land...

  • rate this
    +1

    Comment number 15.

    At the end of the day no significant dent can be made in the welfare budget without first tackling the highest areas of it.

    Pensioners cost the most, with the biggest cost therein their Housing Benefit (with HB across the age ranges being the biggest area of welfare spend by type).

    Is it really beyond the wit of Govt (left or right leaning) to introduce rent caps...???

  • rate this
    -1

    Comment number 14.

    Wow on those pension pounds converted to dollars.

    Makes the article lose a lot of steam.

  • rate this
    0

    Comment number 13.

    There areproblems with means testing, it is itself expensive, it penalizes those who have worked hard and saved, it discourages saving - why save if you will get more later if you don't?
    I tend to think many the age related benefits kick too young, there are people over 60 at work who are earning more than me who get free bus passes. Winter fuel should be for 70+ as they need extra heating.

  • rate this
    +2

    Comment number 12.

    Maybe the government should look at what people have paid into the system in order to determin who gets hand outs/benefits. Too many teenage mums claiming child benefit, too many scroungers claiming unemployment benefit, too many large companies avoiding tax. Those that paid in should be first in line to get benefits.

  • rate this
    -5

    Comment number 11.

    At a time when the younger generation are struggling, seeing their real term pay and benefits cut it just isn't right or fair for older people to expect luxuries such as free TV licenses and bus passes to continue, especially as they are probably better off than most working households at the moment.

  • rate this
    -1

    Comment number 10.

    #9 or as it actually happening pension returns are being cut & cut and retirement age rising by 5 years... about every 5 years. When I started work 12 years ago I had a retirement age of 65 & 2/3rds salary pension. Now that compulsory retirement age has gone and the pension is 50%. Whats it going to be in another 12 years? 1/3 final salary and retire at 80?

  • rate this
    +1

    Comment number 9.

    Demographics: As the population ages, to keep paying out what we are now, income tax will eventually have to rise until it hits 100%.

    You can run a country where half the population is retired and being supported by the state in the standard/way of life they had when they were at work.

    Nor can you have a country where people spend as long in retirement as they did working.

    Something has to give

 

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