WHAT DOES AGE CONCERN WANT FROM THE BUDGET?

A century ago Asquith’s Budget introduced the state pension and helped shape a better financial future for older people. The Chancellor should follow in his footsteps and use his first Budget to help improve the finances of today’s pensioners. Pensioners are facing a cocktail of price hikes on energy, water, food and Council Tax Bills which unless the Chancellor addresses in the Budget he will be letting pensioners down badly.

Extra help for older people with fuel prices.
Energy prices have increased dramatically in the last year, with the average annual energy bill now over £1,000. When the £200 Winter Fuel Payment was first paid it covered a third of the average bill, it now covers less than a fifth.

Before the recent price increases the government was already in danger of failing to meet its fuel poverty targets for vulnerable households by 2010. These rises will have now pushed many thousands more older people into fuel poverty. The government must work much harder to address the huge pressure expensive fuel bills place on vulnerable groups.

We want to see the Winter Fuel Payment increased by at least £100 and significant investment in fuel poverty initiatives. We think the extra VAT revenue the government will receive from the increased fuel prices should be added to the funds available for government energy efficiency schemes. In particular there is an urgent need to increase the maximum grant available for the Warm Front scheme so it will cover the costs of all the heating improvements needed by the poorest pensioners. A Government amendment to the Energy Bill is also needed that will require all energy suppliers to offer meaningful social tariffs of a minimum standard to their vulnerable customers.

Re-link the Basic State Pension to earnings.
It is a national disgrace that there are still 1.8 million older people (17%) living in poverty in the UK. Huge rises recently in the cost of living will put an extra strain on older people, many of whom were already struggling to make ends meet. We know that many older people may be putting their health at risk by scrimping on heating their homes and the food they purchase, just to get by.

At the same time the real value of the Basic State Pension is declining. If the state pension had continued to be linked to increases in average earnings since 1980 the basic pension would now be worth over £50 more a week.

The Government has promised to re-link the state pension to earnings by the end of the next parliament, but this is far too long to wait. Unless the Government intervenes quickly, the real value of the basic state pension will fall to a dismal £81 (in 2007-08 earnings terms) by 2012. We want the link to be re-established now to stop the poorest pensioners getting poorer. With the centenary of the state pension this year  it would be particularly symbolic for the Chancellor to announce the re-linking in his first Budget.

Increase funding for Social Care.
The government has recognised social care needs reform with the promise of a green paper and a £520 million one-off modernisation grant.  But neither of these initiatives has addressed the massive shortfall in annual social care budgets.  Emergency funding to the tune of at least £1billion over three years is needed just to keep up with the increasing costs caused by our aging population and rising wages.

Due to lack of funds local authorities are using restrictive criteria to limit the number of people eligible to care, so that only those with the very highest need qualify. Up and down the country Local Authorities are setting their budgets and many will be cutting back further on social care funding. This is leaving vulnerable older people missing out on the care that they need.

We need to see a fundamental reform of social care which ensures everyone can get the care they need, that care is of better quality and that care is paid for in a fairer way. In the interim much more money needs to be invested to prop-up the existing system.

Address the problem of Council Tax.
Council Tax bills are a big burden for many older people, particularly for those who are ‘asset rich’ but ‘cash poor’. Council Tax has nearly doubled since 1997 whilst the Basic State Pension has only increased by forty percent. The system needs to be reformed to take into account people’s ability to pay, so that it is not just based on the value of their property. The government must also increase the state pension and improve benefit take-up so pensioners can afford to pay their bills.

www.ageconcern.org.uk March 2008