Written evidence from Hornsey Pensioners Action Group (HPAG) (IGF0019)

Our group, HPAG has been established in this area for more than twenty five years. We are a non-party political organisation of around 100 members affiliated to the National Pensioners Convention and the Greater London Pensioners Association. Our members were so indignant at the mistaken premises for the inquiry launched by the Commons Work and Pensions Committee entitled Intergenerational Fairness, that we are submitting the evidence below.

Introductory statement

We would welcome an assessment of how various generations have fared economically.

• One could take account of the advantages received by those born in the 1940’s for health & welfare- such as free school milk, maternity benefits, education, particularly higher education, free with maintenance grants. Many of these advantages will be lost or reduced for younger generations.
• Public sector employees benefitted from secure pension schemes. Some were even retired early with generous pensions. We agree that prospects for a secure income in retirement have deteriorated.
• The biggest boost in wealth resulted from government policies that promoted property speculation. Year on year, house price rises have increased the property wealth of those purchasing early. This wealth is not beneficial. While a proportion of older people may be property wealthy they still need public services. Affordable living accommodation is not available for workers, even for professionals, and community suffers.

The Intergenerational Fairness Inquiry focuses upon baby boomers and younger generations, ‘baby boomers’ being those born in the middle of the baby boom (between 1956 and 1961). This cohort is already suffering. The pension age has gone up and for those losing their job before they are eligible for a pension, prospects for finding work are bleak.

Committee intentions:

We are critical of the intentions set out for the inquiry.

•                               Assess trends in, and the sustainability of, the intergenerational distribution of income, wealth and public expenditure

The assessment is unlikely to include social capital, and the informal ways in which generations support each other. For instance there is a net financial contribution to the community from older volunteers. The work pensioners and family carers carry out, if they were paid, earns much more money than the amount paid out for pensions, care and benefits. This difference is around £40 billion as reported by the National Pensioners Convention.

The largest contribution to wealth inequality has come about through the unregulated effects of property speculation, coupled with government policies promoting home ownership above secure and affordable rented accommodation.

For all age groups, inequality of income is greater in the UK than other European countries.

•                               Assess the impact of recent developments in welfare policy on intergenerational fairness and the interaction of pensions and welfare with other policy areas

Strictly speaking, pensions – both occupational and state – are not welfare payments.  Pensions are awarded according to contributions made while working. But the Treasury does lump the state pension with welfare. Younger workers will be worse off pension wise, as there are fewer occupational pension schemes and the new state pension, as acknowledged by the DWP will benefit future generations less well than the existing state pension.

Other welfare payments to retired people have been introduced to make up for the low level of the UK Basic State Pension.  Pensioners in the UK receive much less state pension than they would in many other countries around the world, according to the latest figures from the Organisation for Economic Cooperation and Development (OECD). (from www.bt.com)

Even with welfare payment, poverty levels amongst older people remain high in the UK.

•                               Produce a cross-party assessment of the sustainability of the existing welfare system, in its wider context

This assessment is likely to assume the reduction of public expenditure, and pegging of taxation levels. But the wider context should include that a healthy economy needs workers and pensioners to spend. Those with lower incomes spend on necessities, whereas those with superfluously high incomes spend relatively less within the economy.  Older people have contributed during their working lives and continue to pay taxes. In general welfare boosts the economy rather than depresses it.

•                               Take a view on the long-term viability of policy measures such as the triple lock in the context of financial pressures on younger groups

The system of uprating of pensions in a way that maintains living standards comparable with the working population cannot disadvantage younger people; they will want to have such assurance when they retire. The financial pressures that are felt by to-day’s younger people are not the result of pension protection policies. The causes are quite different. In fact, intergenerational solidarity, as practiced within families, helps the younger generations, and this could not happen if pensions were unprotected.

Committee's call for written evidence

We can address the points set out for the inquiry with argument and evidence.

•                               What has been the collective impact on different generations of policies in recent years, including welfare reform and deficit reduction with areas of protected spending?

The National Pensioners Convention has opposed changes to the welfare system that have targeted the poorer sections of society in all age groups.  Many studies report on the impact of public spending cuts and welfare reform on older people, such as the article by Jay Ginn, ‘The unkindest cuts: the impact on older people.’ Radical Statistics 103.  This is included in the list at the end.

Even before the most recent austerity cuts it was evident that the groups suffering extreme poverty were single parents, the very old and those living alone. According to the Office of National Statistics (ONS), more than one in five (21.4 per cent) of older British people were classed as being at risk of poverty in 2010, "significantly higher" than the EU average of 15.9 per cent.

Also, the Independent, reported in January 2015 from data supplied by Age UK, that care for the elderly is in a state of 'calamitous decline' amid £1bn of austerity cuts.  The number of older people receiving home care has fallen by a third since 2010. The numbers of those lacking care were:

500,000 of the 1 million over-65s who struggle to wash do not receive any help

1 in 5 of the 240,000 who need help taking medication do not receive any help

19.4% fall in spending on home care since 2010/11 – from £2.25bn to £1.81bn

The situation may well have got worse since January last year.

One report ‘Hitting the poorest places hardest: the local and regional impact of welfare reform’ by Christina Beatty and Steve Fothergill’ finds that ‘the worst-hit local authority areas lose around four times as much, per adult of working age, as the authorities least affected by the reforms’.

Thus collective impact varies according to regions, and the poor, young and old, have suffered the most.

•                               To what extent is intergenerational fairness a welfare issue? 

Generations are mutually supportive. A sensible government policy supports those who are vulnerable, children families, disabled, ill and the elderly. In the long run this saves money. Welfare helps people become more independent and avoids further deterioration that would be more expensive to deal with. Such a policy helps the whole nation.

•                               What effects are these changes projected to have over time? Are they sustainable? What have the long-term trends been?

Reduction in public support has been damaging. Sensible, fair taxation would adequately finance welfare. Also welfare supports a sustainable economy.

•                               How does the welfare system interact with other areas of public expenditure and income and wealth in the wider economy, including issues of health, education and housing?

At present not well enough. Profiteers meddle in all these areas.

•                               Is the triple-lock necessary to prevent future increases in pensioner poverty?

Yes.  But the current Basic State Pension is practically the lowest in OECD countries, and the New State Pension is worse.   See the NPC pamphlet.

•                               What would be the effects of reforming the triple lock and how might the worst of these be mitigated?

We should retain the triple lock, but current measures of inflation needs to be reformed.

•                               How might other benefits such as Winter Fuel Payments be reformed?

A programme that supports home improvements – such as insulation, should be combined with winter fuel payment schemes. A greater choice of housing options for older people would also tackle fuel poverty.

•                               To what extent will existing policies encouraging work and savings ensure a more sustainable system?

The existing policies are a failure.  See the NPC pamphlet.

•                               What are the options for reform?

Implementation of a fairer tax system.  Reinstate lost Inland Revenue staff.  Social Services should be funded from taxation and be integrated with the NHS. Follow the policies outlined in the NPC pamphlet, ‘For what it’s worth: Understanding the new State Pension’ £1 from NPC, Walkden House, 10 Melton Street, London NW1 2EJ.

February 2016

References – source www2.warwick.ac.uk/fac/soc/law/research/centres/.../reportsgroups/

Reports on the impact of Spending Cuts on Different Disadvantaged Groups in the UK. 4 Dec 2015