Written evidence from the Independent Age CLP0029

About Independent Age

Independent Age is a national older people’s charity that supports people facing financial hardship in later life. We offer free and impartial advice and information and give grants to community organisations, and connection services to improve well-being and reduce loneliness. In addition, we use the knowledge and understanding gained from our frontline services to highlight the issues experienced by older people facing financial hardship.

For more information about Independent Age please visit www.independentage.org. Registered charity number 210729.

For more information about this submission please contact: public.affairs@independentage.org

Introduction and summary

This submission will answer Questions 1, 2a and 2b. We have provided evidence on older people’s experiences of the cost of living, drawing on nationally representative polling, the views and experiences shared with us for this inquiry by older people who campaign with us, and calls to our helpline.

Independent Age welcomed both the package of support announced by the Chancellor of the Exchequer in May 2022 to support people with the cost of living, and the additional payments announced for the 2023/24 financial year. This support has provided welcome short-term relief with the rising cost of living for some older people on low incomes, however for many it hasn’t gone far enough. Through our national services and research with people facing financial hardship in later life, we have continued to hear from older people who are cutting back on essentials in their homes and struggling to make ends meet as costs have continued to rise.

Independent Age hears from people in later life across the country facing financial hardship; some qualify for state funded social security payments, others do not. However, from the insights gained through our service delivery, and conversations we have with older people, we know that many of those who are just above the eligibility thresholds for benefits, such as Pension Credit, are still really struggling financially yet do not qualify for the Cost-of-Living Payments.

Among older people living in financial hardship, there is a significant problem with low uptake of benefits, which limits passporting, i.e., too many people do not receive the benefits they are entitled to and, consequently, also miss out on the Cost-of-Living Payments. According to the most recent estimates, up to 850,000 people could be eligible for, but missing out on, Pension Credit, a means-tested benefit. While we welcome recent government awareness raising activity, to make further and sustainable progress the government should produce a Pension Credit uptake strategy.

In addition to the evidence submitted as part of this inquiry, we would be happy to share the results of upcoming research we are launching on ‘essential costs’ with the Committee. This research will ask people aged 65 and over to share their experiences of household costs, such as energy and water, and their views on the extent to which they feel support, including the cost-of-living support package for 2023/24, will help them meet their essential costs over the next year.

1. 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?

The findings of nationally representative YouGov polling commissioned by Independent Age in November 2022 with people aged 65+[1] found mixed views on the extent to which the 2022 Cost of Living Payments have helped those eligible meet the cost of essentials.

Of those who had received these payments, 19% said they had helped a great deal with their cost of living, 27% a fair amount, 23% not very much, and 31% not at all.

While it is positive that for around half of eligible older people the payments have clearly helped them manage their cost of living to some degree, this leaves the other half for whom the payments have been insufficient; a considerable proportion of whom feel they haven’t helped at all.

This is reflected in what we heard around how older people on low incomes have been coping with their essential household bills and costs since receiving the Cost-of-Living Payments. Of those who had received the first Cost of Living Payment in 2022, 72% said they were either very worried or worried they would not be able to meet their electricity bills over the next 6 months when thinking about their financial situation. Similarly, 72% had this concern about their gas/heating bills, 40% about their water bills, 54% about their food and drink costs.

We also heard how many older people were still really struggling and cutting back their spending on essentials to get by, even after receiving the Cost-of-Living Payments last year. Of those who had received the first Cost of Living Payment in 2022, 59% said they were currently cutting back their spending on non-heating electricity a great deal or a fair amount. 66% were cutting back their spending on heating, 50% on their water usage (e.g., using the washing machine or having a bath), and 57% on their food and drink costs. To help manage rising food costs, 20% said they had skipped meals and 22% said they had reduced meal portions.

In April 2023, we invited people in later life on our campaign network to share their feedback with us on the questions included in the Work and Pensions Committee’s inquiry call for evidence. For some people, while the payments had helped ease their situation, they explained they had not gone far enough given the scale of certain bills:

“The payment was helpful but with electricity and gas being so expensive one could do with more!” 

Around the time when those who are eligible would have received the 2022 Cost of Living Payments, our national services colleagues were hearing from older people on low incomes who were still struggling to make ends meet. Older people in financial hardship shared they feel like they have no alternative but to keep the lights off (despite being partially sighted), boiling the kettle only once a day and not cooking hot meals. As we have come out of winter, we have continued to receive calls from older people expressing concern about how they will cope financially.

New nationally representative polling conducted by YouGov on behalf of Independent Age in April/May 2023 has further evidenced that concerns about meeting essential costs are still very much the reality for many older people on low incomes. 58% of adults aged 65+ in England with a household income of under £15,000 said they are currently cutting back their spending on heating a great deal or a fair amount. This isn’t a short-term concern that we expect will subside this year. 51% of the same demographic said they are worried they will not be able to meet their gas/heating bills, when thinking about their financial situation over the next 6 months. Further, 54% have this concern about their electricity bills, and 36% about their food and drink costs.[2] While the Cost-of-Living Payment for 2023/24 is substantial and will help to ease the financial pressure that older people on low incomes are under, our research indicates that many will still find it very difficult to meet their basic costs.

Making ends meet has been especially difficult, if not impossible in some cases, for those with disabilities or health conditions that mean they incur extra costs or need to be in a particularly/consistently warm environment. This is reflected in what older people in our campaign network told us (included below), and in the findings of other research, such as by Scope which found that 57% disabled people eligible for the £650 cost of living payment last year said it would not be enough to cover their increased costs for essentials.[3]

“My daughter has an autoimmune disease and has dietary restrictions. We do not eat lunch and make our evening meal to stretch over at least two to three days by using side plates to reduce portions. We lost a lot of weight and my daughter who has an underlying health condition, looks almost haggard. Heating is on for one hour between 04.00 and 05.00 to take the chill off before getting up and ready for work. The only constant is the fridge freezer with a low energy use rating”.

“So the cost of living payment means I have been able to eat over the winter, and I have kept the heating on so far, but as the crisis continues I am experiencing difficulties in paying my bills, with things getting increasingly difficult financially. I am having to stagger payments and always owe on something. Now that the worst of the winter is over, I am having to turn the heating lower than is good for my health even though it is still cold in this part of the country, I am starting to forego some items of food and I am about to cut back on care visits that I pay for myself for housework, laundry, and some shopping, because I need these rather than personal care, so far”.

“I have not been able to afford to have my heating on this winter. I am 73 years old with severe arthritis so I suffered even more this winter. As a consequence of not having my heating on I now have damp and mould throughout the property”.

2. 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.

Pension Credit is a means-tested benefit which many older people on low incomes are missing out on, despite being eligible, and are consequently prevented from accessing a whole range of other benefits and forms of financial support, including the emergency cost of living financial support.

The most recently available statistics – for 2019–20 – show that up to 850,000 older people were not getting the Pension Credit they were entitled to.[4] Given the cost-of-living crisis, and marketing activity by the Government and many third sector organisations, it’s likely that the uptake rate for Pension Credit has increased and there are fewer than 850,000 people eligible but missing out now. The August 2022 Pension Credit caseload data did show a (relatively small) increase in recipients, bucking the previous long-term decline. This is welcome and means more people are getting the Pension Credit and other linked support they need. However, despite this rise, in the absence of up-to-date uptake data, it’s not possible to assess how many people continue to miss out. This is likely to still be in the hundreds of thousands. Further, we should not assume the increase in recipients will continue, as it is likely driven by the cost-of-living crisis and/or marketing activity, neither of which are guaranteed to continue long-term. Given this, more sustained and innovative action needs to be taken by the Government.

The hundreds of thousands of people missing out on Pension Credit consequently missed out on the £650 Cost of Living Payment last year and, if they don’t make a successful claim, will miss out on the additional £900 over the 2023/24 financial year. Single women and people aged 75+ are particularly likely to be missing out in this way.

In addition, someone eligible for, but not receiving, Pension Credit could be missing out on up to £8k per year in linked support through things like help with rent, help with health costs and a free TV licence for over 75s.

We have also heard anecdotally that some local authorities have distributed some financial support from the Household Support Fund to people on the basis that they are receiving Pension Credit. This makes sense in that it is a practical, fast and efficient way to identify and support older people on lower incomes, but it also means that those eligible for but not receiving Pension Credit miss out again.

The increasing cost of living has added a new urgency to the low take-up of this entitlement, both for the long-term extra income it provides – recipients on average increase their annual income by £3,523 directly through Pension Credit[5] – and for its ability to enable the government to identify pensioners on a low income when emergency one-off cost-of-living payments are needed. In a broader sense, evidence clearly shows that a system in which benefits have to be proactively claimed often leads to less than 100% take-up, with an estimated £19 billion of income-related benefits unclaimed as of April 2023.[6]

When researching Pension Credit, Independent Age found that the primary barrier preventing eligible people from claiming it is that they don’t believe they are eligible. Among respondents who said they would be unlikely to claim Pension Credit if they were struggling financially, 83% gave this as their reason.[7]

Other barriers include stigma. In line with what we have heard through our helpline and from other charities, DWP research carried out in 2010 found that a third of eligible non-recipients surveyed agreed they would ‘feel bad’ about claiming Pension Credit, and 16% agreed that their family or friends would have a negative view of them claiming Pension Credit.[8] One way to overcome this would be to look at full or partial auto enrolment for financial support.

These barriers are well-established, and the government has factored some of it into recent awareness raising activity, such as by encouraging people to check their eligibility even if they own their home or have savings. We welcome this activity, but the government should produce a Pension Credit uptake strategy to build on recent improvements, make progress sustainable and develop innovative ways to overcome persistent barriers to reach particularly excluded groups.

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

The blunt nature of the cost-of-living payments means there are significant ‘cliff edges’ for those just outside eligibility. For example, a person just outside the eligibility threshold for Pension Credit would have lost out on the £650 Cost of Living Payment in 2022 and the additional £900 that will be paid over the next year despite being in a similar position to someone in receipt of the financial support. That person could have an income just above the eligibility threshold but face high costs, meaning they face financial hardship.

Through our national services, we are hearing from people in later life who are in this situation and having to make tough decisions in order to cope, such as going to bed early to stay warm. These challenges are reflected in what we have heard from older people who told us:

“I don't go out, eat out, visit coffee bars, shops or entertainments, that is OK, I have Christian faith that keeps me going. But struggling with cold and hunger is tough. I have chilblains like I did in an unheated boarding school. I do not qualify for Pension Credit, I made the mistake of having a small private pension that provides £1000 a year and I have to run down my savings to live, maybe at some point I will qualify. I also work still at 76 but don't think I will be able to carry on, or necessarily get more”.

“At present we are faced with a ‘cliff edge’ – those on benefits stand to receive generous help, whereas the many who are only just above, get very little. I don't know how I'll face another cold winter with no heating. The average temperature in my house last winter was 8 to 10 degrees, which may explain why I have had a succession of viruses, including Covid, over the past 3 months.”

We recognise that there is no simple solution to the cliff edge problem. One avenue to explore may be ensuring that the Household Support Fund has sufficient flexibility to support people who are in financial hardship but just outside of eligibility for benefits, and that local authorities have the resources needed to administer support in this way.

Another longer-term solution to the cliff edge problem more generally is for the Government to conduct a cross-party process to establish an adequate level of income needed in later life to avoid poverty and, over time, ensure that the social security system allows people to reach this level. Until this has been done, the Government should retain the State Pension triple lock to maintain the value of the pension and keep as many people as possible – especially those who are reliant on the State Pension and benefits as their main source of income – out of financial hardship.

May 2023