We may all “be in this together” as Chancellor George Osborne said in October but some of us will end up right in it. Because older people will bear the brunt of many of the spending cuts which the Coalition Government has decided are the only way to cut the massive annual overspend and the even bigger accumulated national overdraft.
Any woman born after 5 April 1953 will now have to wait longer to get her state pension than she expected. And any man born after 5 December 1953 ditto. Anyone born 6 April 1954 or later will be 66 before they are a ‘pensioner’.
It is not just the state pension. The winter fuel payment, free bus travel, pension credit and soon, no doubt, free prescriptions are slipping further into the future linked as they are to the female state pension age as it rises. It all saves money. From the old.
And when you do get your state pension don’t be fooled into thinking it will go up in line with the higher of earnings, prices, or 2.5% – what Pension Minister Steve Webb likes to call a “triple lock”. In fact that guarantee only applies to the basic state pension not SERPS, not the extra for deferring your pension claim and not the graduated retirement benefit earned between 1961 and 1973. Between them they can double your basic pension but they will go up this April – and in future – just with the Consumer Prices Index (CPI) which is systematically lower than the old Retail Prices Index (RPI) which was used for decades to decide how much to raise the pension each year. Even the basic pension looks set to go up by less than RPI for a couple of years as the Office for Budget Responsibility says all three elements in the “triple lock” will be lower than RPI in 2012 and 2013. Those who depend on public sector pensions will find they grow more slowly too as they – and at least a third of company pensions – will be following the CPI in future.
No wonder the Government prefers the CPI to the traditional RPI – which dates back to 1947. It is already around 5% and heading up, boosted this year by VAT, fuel duty, the price of a postage stamp, railway fares, and parking charges, which are all rising thanks to Government policies. But worse than all of those is the policy started by Labour and continued under the Coalition of printing money. It is called ‘quantitative easing’. But that daft euphemism does not stop its inevitable effect on inflation. Whether you pump £200 billion of electronic money into the economy or print 20 billion new tenners you will fuel inflation just the same. As Zimbabwe and the Weimar Republic both discovered. Before the recent crisis any economist would have told you that. Now they all seem part of the same conspiracy to deny it.
Every month that passes our hard earned savings (but not hard earning savings with interest rates at historic lows) are falling in value. At this rate their buying power halves every fifteen years. But of course the real value of Government debt will also halve over fifteen years which makes repaying it much easier.
Government statements about cuts to benefits would have us believe that most of the money is being saved from wasters and layabouts living in mansions funded by the few of us foolish enough to work and pay taxes. But many of those who will suffer are older people who have worked hard and now find that the economic crisis has left them needing a bit of help.
Almost 120,000 people over the age of 60 had the help they get with their mortgages cut by 40% in October. The average cut was £16.50 a week for those aged 60 to 64 and £11 a week for the over 65s. They all got help with their mortgage interest as part of the pension credit they claimed. But the rate of interest paid was slashed from more than 6% to well under 4%. And official figures also show that 200,000 over 50s will lose an average £9 a week each from the package of cuts to housing benefit for people in private rented accommodation when they start this April.
On top of cuts in welfare benefits local councils are being squeezed too. Age UK estimates those cuts will take £2030 worth of public services from people over 75 by 2014/15. It could leave 500,000 older people without care in their own homes. And will put further pressure on the standards in care homes as local councils cut the money they are able to pay.
I do hope George has time to read this now he is back from Klosters. He may be off the slippery slope. But the rest of us are not.