We can't afford such generosity to the elderly

We can’t afford such generosity to the elderly


The Queen’s Speech will undo one of the most sensible reforms of the
Thatcher era, writes Andrew Haldenby.








The Pensions Bill will introduce
a new flat-rate pension Photo:
Rex






By Andrew Haldenby

7:36AM BST 07 May 2013

181 Comments




Speaking after last week’s chastening local election results, the
Conservative Party chairman, Grant Shapps, set out his agenda to regain popular
support. He emphasised “fixing the economy”, “sorting out the welfare system”
and “helping hard-working people to get on”. Tomorrow’s Queen’s Speech is a
timely opportunity for the Government to make progress on those fronts – and,
indeed, its last practical chance to introduce any radical legislation in this
parliament.


Ministers know that the stakes could hardly be higher. Despite their efforts,
the national debt is already at its highest level for 40 years. Because the
annual deficit in the public accounts is proving so hard to control, our debts
are set to increase even further, peaking in the next parliament.


How can we tackle this challenge? Well, in a way, Grant Shapps’s comments
were on exactly the right track. It is the cost not just of the welfare system,
but of the welfare state – and in particular pensions and the NHS – that will
threaten the public finances both in this parliament, and for decades to come.
And what is chiefly responsible for this process, which will imperil the economy
and demand higher taxes from the hard-working people he talks about, is the
ageing of the population.


Someone aged 65 who retires today has a one in six chance of spending three
decades in retirement. By 2035, the odds will be one in four. This increase in
life expectancy is a cause for celebration – for everyone but the Treasury,
which is saddled with rising commitments to retired people. Already, the basic
state pension costs more than £70 billion per year, while the NHS spends roughly
twice as much on pensioners as on those of working age.


We got a taste of how difficult it will be to address these issues last week,
when Cabinet unity collapsed completely over the future of three benefits for
pensioners: the winter fuel allowance (which Iain Duncan Smith suggested should
be handed back by those who felt they didn’t need it), free TV licences and free
bus passes. Their collective cost is nearly £4 billion annually. That is
certainly a lot of money – it would pay for the entire police service in England
and Wales for three months of the year. But even a saving on this scale would be
just a first step.



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On this score, tomorrow’s Queen’s Speech should be a timely chance to make
some progress. It looks set, however, to be a missed opportunity. The Pensions
Bill will introduce a new flat-rate pension that will increase at the fastest
possible rate for years to come: under the “triple lock”, it will rise in line
with whichever is highest out of inflation or earnings growth – and by at least
2.5 per cent a year come what may. This will, in time, cost the Exchequer more
than £10 billion a year. Tories might reflect that one of the early reforms of
Margaret Thatcher’s government was to impose a strict limit on the basic state
pension, so that it would only rise in line with prices.

The Bill on social care is much better. It accepts that government cannot
afford to pay for all of the costs of care homes. It tries to help people
provide for themselves by capping their payments (excluding bed and board) at
£72,000. But the Coalition is leaving unchallenged the main NHS budget – which,
at more than £100 billion a year, is six times bigger than social care.

Last week, Lord Warner of Brockley, the former Labour health minister, argued
that ring-fencing the health budget “creates the illusion that people don’t have
to change the way they deliver services”. Areas subject to cuts, such as the
police, fire and rescue and local government, are using the financial pressure
as a catalyst to update their thinking. They are leaving behind expensive ways
of working and styles of employment that should have been culled years ago. The
NHS has barely begun.

The Government has to go further. Its ideas should include lower and more
realistic increases in the state pension. It should embrace the idea that people
must share some of the costs of the NHS as well as social care. Professor
Malcolm Grant, the chairman of NHS England, observed last month that future
governments will inevitably have to consider charging for NHS services unless
growth returns – and at unprecedented levels. Other developed countries devote
roughly twice as much of GDP towards private payments for health care. These
countries are better prepared for the future – and, in time, will have far more
freedom to reduce taxation.

Part of the problem in Britain is the strength of the elderly voting bloc.
Between 2005 and 2010, the number of retired voters increased by nearly 10 per
cent. At the next election, fully a quarter of the electorate will be 65 or
older; by 2050, it will be a third. Faced with these numbers, any politician
could be forgiven for kicking the can down the road.

Yet there is a new mood in politics. Figures such as Boris Johnson or Nigel
Farage are popular because they are seen to speak honestly, warts and all.
Voters want the right policies – but they also want authenticity and truth. And
the honest truth is that the welfare state can no longer honour the promises of
the past.

Through no fault of their own, pensioners have received a level of support
that cannot now be afforded. And if ministers grasp the nettle now, Britain will
be in a much better place – with families able to prepare for their own future,
higher levels of saving, and, eventually, lower burdens on the taxpayer. If that
was the message of the Queen’s Speech tomorrow, we would all be better off.

Andrew Haldenby is director of the independent think tank Reform

Ooh, does that mean MPs? If so I am in complete agreement.

When I lived in Jersey , Family Allowance was based on your income , we qualified for 40 pence so we declined to receive it.

I really think that there should be a limit on Child Benefit and over 4 children do not qualify .
I must admit Pensioners today DO receive a lot of help, Free Bus Pass over 60 yrs of age, Winter Fuel allowance, Free Prescriptions ,Carers Allowance if you want to stay in your home but can't manage , A Husband can even claim for his Wife and viceversa.!!! Free Cars which you only have to pay for its maintenance and after three years have the option to buy it at a very low price .
Aneurin Bevan had the right idea, free care for everyone but it has gone way OTT and needs re-appraising.

Panda wrote:When I lived in Jersey , Family Allowance was based on your income , we qualified for 40 pence so we declined to receive it.

I really think that there should be a limit on Child Benefit and over 4 children do not qualify .
I must admit Pensioners today DO receive a lot of help, Free Bus Pass over 60 yrs of age, Winter Fuel allowance, Free Prescriptions ,Carers Allowance if you want to stay in your home but can't manage , A Husband can even claim for his Wife and viceversa.!!! Free Cars which you only have to pay for its maintenance and after three years have the option to buy it at a very low price .
Aneurin Bevan had the right idea, free care for everyone but it has gone way OTT and needs re-appraising.

The problem with limiting Child Benefit is that children suffer. They don't choose to be brought into the world, but poverty hurts them.

AnnaEsse wrote:

Panda wrote:When I lived in Jersey , Family Allowance was based on your income , we qualified for 40 pence so we declined to receive it.

I really think that there should be a limit on Child Benefit and over 4 children do not qualify .
I must admit Pensioners today DO receive a lot of help, Free Bus Pass over 60 yrs of age, Winter Fuel allowance, Free Prescriptions ,Carers Allowance if you want to stay in your home but can't manage , A Husband can even claim for his Wife and viceversa.!!! Free Cars which you only have to pay for its maintenance and after three years have the option to buy it at a very low price .
Aneurin Bevan had the right idea, free care for everyone but it has gone way OTT and needs re-appraising.

The problem with limiting Child Benefit is that children suffer. They don't choose to be brought into the world, but poverty hurts them.

The problem is more to do with these Families who have more than 3 to 4 children, if the Parents never received child benefit and bigger houses would they have so many children. ? There is absolutely no reason for any Woman to get pregnant today and these 17 and 18 yr olds who have children are another drain on the Country. If the Government were not so soft they would save a hellova lot of money, housing , cheap loans to furnish the Houses these teenagers enjoy. Bring back Hostels with Carers looking after Babies while the Mums went out to work. Better still , let the Parents of the pregnant girls let them live at home with the baby.