Written evidence from Age UK CLP0017

 

About Age UK

 

Age UK is a national charity that works with a network of partners, including Age Scotland, Age Cymru, Age NI and local Age UKs across England, to help everyone make the most of later life, whatever their circumstances. In the UK, the Charity helps millions of older people each year by providing advice and support. It also researches and campaigns on the issues that matter most to older people. Its work focuses on ensuring that older people: have enough money; enjoy life and feel well; receive high quality health and care; are comfortable, safe and secure at home; and feel valued and able to participate.

Introduction

Age UK welcomes the opportunity to give evidence to the Committee on the cost of living payments. Steep rises in the cost of energy and other essential bills over the last year or so have had a major impact on many older people with low and modest incomes, especially given the State pension and State benefits rose by just 3.1% in April 2022. Age UK therefore has welcomed the cost of living payments alongside other measures such as the Energy Price Guarantee. These have made an important difference to many older households. However, we are concerned that there are many older people with low incomes who are in need of extra support but who do not receive Pension Credit. As set out below we believe:

To what extent have the cost of living support payments been sufficient at helping eligible households meet the cost of essentials such as food and electricity?

In line with last year’s payments, this year, pensioner households will receive £300, and those getting certain disability benefits £150, while the payment for households receiving certain means-tested benefits, including Pension Credit, will rise to £900 (from £650 last year).

The extent to which these payments compensate for rising bills will depend on people’s circumstances. However, particularly for those eligible for the higher amounts because they receive a relevant means-tested benefit, payments have made an important difference. As set out below, our main concerns are those low-income households which do not receive means-tested benefits. We also note that while these additional payments are welcome and very necessary, going forward we would like people to be able to meet essential costs without needing ad hoc payments. Two policies that would help achieve this for older people would be a commitment to increase the State Pension in line with the triple lock on an ongoing basis, and the introduction of an energy social tariff which discounts energy bills for those most in need due to low income or risk of fuel poverty.[i]

What role have the following factors played in access to the cost of living support payments:

a) Passporting: Not already being in receipt of certain means-tested benefits, despite being eligible, and consequentially being prevented from accessing emergency support;

b) Cliff-edges: Not being in receipt of a certain means-tested benefit, because households failed to meet certain qualifying thresholds.

Linking the main payments to means-tested benefits is a straightforward way of reaching many on low incomes but fails to reach all who are in need. Among older people there are two main groups who miss out – those entitled to, but not receiving Pension Credit, and those not entitled to Pension Credit but who have a low income after meeting essential costs.

Pension Credit take-up

As the Committee knows there is an ongoing problem with the take-up of benefits including Pension Credit which means older people are also missing out on linked support such as the £650/£900 cost of living payment.

Age UK and other organisations do much to encourage take-up and help people claim their entitlements, and we support the Government initiatives to promote Pension Credit. However, as set out in our evidence to the Committee’s 2022 Cost of Living inquiry, we believe the Government needs to do more to identify those likely to be missing out based on available data and also make changes to ensure benefit systems are more joined up.[ii] We were therefore very pleased that the Committee recommended that the Government sets out a strategy to increase take-up and explore ways to simplify or automate parts of the claiming process.

 

However, it is disappointing that the Government did not accept the Committee’s recommendations. It did state that ‘The Department is looking at processes within Pension Credit which might be simplifiedalthough, as yet it is not clear what the outcome of this will be. It also remains difficult to assess the effectiveness of any initiatives, including awareness raising campaigns, as the last published take-up figures date from 2019-20[iii] and the Minister told the Committee that it cannot track the proportion of new Pension Credit claims that result in a successful award[iv]. We know that statistics are affected by data collection issues arising from the pandemic and the IT systems that the DWP has to deal with, but we believe it should be possible to develop ways to get an indication of the impact of initiatives.

 

Cliff edges

Using the receipt of means-tested benefits such as Pension Credit as a passport to additional help makes the administration relatively straightforward but creates a cliff edge so that those with incomes just over benefit thresholds miss out on additional support. This is a long-standing issue but one which we are increasingly hearing about at Age UK. Older people who were previously just about getting by have been affected by the steep rises in the cost of living and Pension Credit has increasingly been used as a gateway for other support including the £650/£900 cost of living payment.

In 2023-24 an older person with an income of say £1 above the Pension Credit threshold could be well over £1,000 worse off than someone receiving Pension Credit because they will not be able to receive: the £900 cost of living payment, the warm home discount of £150, £25 cold weather payments in weeks when the weather is particularly cold, a free TV licence (if they are 75+), plus other support.

The full rate of new State Pension is now £2.80 more than the standard Pension Credit rate for a single person meaning someone with only the full new State Pension is likely to just miss out Pension Credit and linked support. While the £650/£900 payments are aimed at those receiving means-tested benefits, they do not apply to all means-tested benefits – for example they are not given to those receiving just Housing Benefit and/or Council Tax Reduction. Although these benefits are administered by local councils, Housing Benefit is based on national rules, as is Council Tax Reduction for pensioners. (Councils can set their own rules for Council Tax Reduction for working age people but schemes are all aimed at those with low incomes.)

 

A few examples of comments and feedback from people who do not receive Pension Credit and who have contacted Age UK are given below. 

 

A woman described herself as ‘fuming’ that her small works pension on top of her State Pension means that ‘this will be TOO much income for myself to obtain pension credit...which is a gateway to other help such as health costs and warm home discount and even cheaper broadband and calls deals...’. She told us when she was working, she could ‘barely afford’ a pension but budgeted to put money aside from her wages. However, now she says ‘I wouldn't have taken out a workplace pension if I had known it would make me worse off in the future, it’s very wrong!  I'm being penalised for looking after my finances’. 

 

‘My concern is, as a 72yr old OAP, on Housing & Council tax, means tested benefits, I seem to have fallen through the net regarding the cost of living payments of £650 and the warm home discount of £150, a total of £800, that is because my small private pension takes me over the Pension Credit (pc) threshold by £6 pw, ie £300pa, meaning I have an income of £500 pa less than those on pc, …. if things do not change I fear many OAPs will also miss out on the £900 cost of living next year.’ 

 

A woman who receives Housing Benefit but cannot get Pension Credit because her new State Penson takes her just over the threshold told us how unfair she thought the situation was when people like her are struggling to get by and cannot get the extra cost of living payment that those on Pension Credit receive

 

Addressing the issue of the cliff edge is not easy. While the Government has pointed to the Household Support Fund as an alternative source of help, we do not believe that a discretionary fund, where eligibility is decided at a local level, is the best way to reach people or sufficient to meet the scale of need. In theory it might seem fair to provide some support to those who just miss out on means-tested benefits on a tapered basis. However, we acknowledge administratively this would be relatively difficult to do. A more straightforward way of extending support would be to include Housing Benefit and Council Tax Reduction as qualifying benefits for future cost of living payments. While this still leaves a cliff edge between those who receive support and those who do not, it would ensure that extra help is given to more people who have incomes just above benefit rates. It would also be possible to provide partial support, such as a half payment, to people in this situation to reduce the severity of the cliff edge and reduce costs.

 

When Rishi Sunak, the Chancellor at the time, made a statement about cost of living payments in May 2022, he recognised that there would be people who ‘fall between the cracks’ but said ‘it is not possible right now for DWP or HMRC to identify people on Housing Benefit who are not also claiming other benefits’.[v] However, this is now a year ago and councils can share data with DWP, so we believe that it should be possible to find a way of joining up systems.

 

So, in summary, we believe extending the payment to people receiving means-tested help with housing costs would be a feasible and much needed way of increasing support to more lower income benefit recipients.

 

 

May 2023

 

 

 


[i] https://www.ageuk.org.uk/globalassets/age-uk/documents/reports-and-publications/reports-and-briefings/safe-at-home/age-uk-energy-public-policy-report-march-2023.pdf

[ii] https://committees.parliament.uk/writtenevidence/109277/pdf/

[iii] https://www.gov.uk/government/statistics/income-related-benefits-estimates-of-take-up-financial-year-2019-to-2020

[iv] https://committees.parliament.uk/publications/22146/documents/164419/default/

[v] https://www.gov.uk/government/speeches/cost-of-living-support