e-mail Paul Lewis on paul@deadline.demon.co.uk
Poverty among older people is increasing. Despite the growing number of well off retired people - figures which the Government likes to stress - there is also a growing number of pensioners living below the state poverty line. Official figures published without much of a fanfare before Christmas showed that there were between two and three million older people who were not claiming the extra help they were entitled to. And this month, with state benefit rates rising, even more will be entitled to claim extra help. It could be you - but you will not get it unless you ask for it.
Despite claims that pensioners' incomes are rising - which on average is true - the condition of our retired population is still one of disturbing poverty. Two out of three people aged 65 or more still have too little money to pay income tax - an income of around £100 a week or less - and another one in five pay tax only at the lower rate - an income of less than £180 a week. Only about one in seven of the over-65s has a high enough income to pay tax at the basic rate and only one in a hundred pays the higher rate of tax - which means they have an income of just over £30,000 a year.
There are far more very poor than very rich. Compared with the 150,000 pensioners who pay higher rate tax, there are millions of pensioners for whom paying tax at all is just a distant dream. About two million live on the state poverty line. And new figures out before Christmas show that another million have an income below that level.
Who loses out?
Each year the Government produces figures which estimate how many people could claim these benefits but do not and how much they are missing. The figures are always a couple of years late. So last November we got the figures for 1994/95. And they made depressing reading. The number of retirement pensioners missing out on benefits had grown by more than half a million and the amounts they were failing to claim were larger than ever.
People on limited incomes can get help through three main benefits. Those with the lowest incomes can get their weekly money boosted by claiming income support. This benefit brings income up to the level which Parliament thinks people need to live on. They also get all their housing costs paid. People whose income is slightly higher can still get some help with their housing costs. They can get council tax benefit to pay some of their local taxes and they can get housing benefit to pay their rent (and their local rates in Northern Ireland).
In round figures, between two and three million pensioners did not claim benefits from these three sources that were worth between £1000 million and £1500 million a year. These numbers were higher than the year before - by more than half a million people and more than £300 million. The amounts unclaimed were surprisingly large. The average unclaimed income support was £14.10 a week. In other words the million or so who are not claiming their income support are living on £14.10 a week less than they need to. Another million or so are failing to claim cuts in their annual council tax benefit which average £291 a year. And about a quarter of a million are losing out on rent reductions (housing benefit) which average £19.70 a week. These are large amounts of money which could make a real difference to the lives of the people who could claim them. And remember, these figures are now two years old. Today the situation could be worse.
Who can claim extra?
The calculations involved in working out if you could get extra help can be done quite simply. Income support tops up the income of older people to the amount the Government thinks they need to live on. This is quite a lot more than the basic state retirement pension of £62.45 a week (£99.80 for a couple). The amount you can get depends on age and is set out in the Table. Anyone with savings of £3000 or less should have their total weekly income topped up to these amounts by income support.
The interest from savings or investments does not count towards your weekly income. But if the savings or investments total more than £8000 then no income support will be paid at all. Savings between £3000 and £8000 reduce the benefit paid on a sliding scale from £1 to £20 a week. A couple's savings and income are added together and the limits apply to their joint money. If you get income support you can also get your council tax - and, if you are a tenant, your rent - paid in full. Leaseholders can get ground rent and essential service charges covered.
The new figures from the Government show that between 810,000 and 1,100,000 people over 60 do not claim the income support they could get. On average they lose £14.10 a week. The total loss is put at between £590 million and £800 million a year.
Housing costs
If your income is too high to get income support you may still be able to get your council tax reduced and some of your rent paid. The amount you get is worked out by a complex formula using the amounts in the table above. But there is a short cut which gives an approximate answer quickly. If it shows you would get help, or nearly would, then you should apply.
For council tax: subtract the amount in the table above from the person's (or couple's) income, multiply the answer by 0.2 and take that answer away from their weekly council tax. If the answer is 1p or more then that is the weekly council tax benefit they will get. (It is slightly more accurate to work out the weekly council tax by dividing the annual tax by 365 and multiplying by 7 rather than just dividing by 52.)
For rent: subtract the amount in the table above from the person's (or couple's) income, multiply that by 0.65 and take the answer away from their weekly rent. If the answer is 50p or more then that is the housing benefit they will get. If it is less than 50p they will get nothing.
Many people with incomes well over £100 a week can still get council tax benefit or housing benefit. Savings affect the calculation for both benefits. Anyone with more than £16,000 savings cannot get help at all. Savings between £3000 and £16,000 will reduce the amount paid on a sliding scale from £1 and £52 a week. So a high level of savings can wipe out any benefit completely.
Even if your income is too high to get council tax benefit there is another way to get your council tax reduced. If you live alone your council tax will be cut by a quarter. But the council will only do this if it knows you live alone. So make sure you tell them. And even if someone else is living in the same home, you may still get a reduction. If they are under 16 or a student they do not count at all - it is just the same as living alone. Even if the other person is an adult, you may still get a reduction if their income is very low. This is called second adult rebate but you cannot get it if you are married to the other adult or live with them as if you were married.
Housing benefit, council tax benefit, and the reduction for people living alone are all claimed from the local council.
The Government figures show that between 1,110,000 and 1,660,000 people over 60 do not claim the help with council tax they could get and the average reduction they could get is £291.20 off their annual tax. That saves the Government between £330 million and £480 million a year. Fewer people miss out on housing benefit - between 180,000 and 320,000 - but they lose much more, an average of £19.70 a week saving the Government from £590 million to £800 million a year.
Take action
The solution to this problem is in the hands of every one of us. People who are not claiming the help they can get should claim it. Their friends and relatives should encourage them. And all of us who are not retired and do pay taxes should say loudly and often that we want older people to claim these benefits and we are glad to spend our money in this way.
April 1997
e-mail Paul Lewis on paul@deadline.demon.co.uk