Bridging the Gap

The Government has admitted that nearly three quarters of a million older people do not claim the full weekly income they could get from the state. And it is responding by making it easier and faster to claim this extra weekly money – which should add £20 on average onto the weekly income of those who could claim but don’t. It is about time. I have been writing for nearly 20 years in Saga Magazine trying to encourage older people to boost their income by claiming income support and to get help with their council tax and rent through housing benefits. Now, at last, a Government has decided to join in.

The campaign, which you should already be seeing in television adverts, is headed by Dame Thora Hird under the simple slogan ‘Why get by when you could get more?’ It could almost be a Saga Magazine headline. Two million people identified as most likely to be able to claim will be sent a personal letter inviting them to do so. So if you get a letter, remember that it is not a guarantee that you will be able to get more – just an invitation to find out. You will be able to make the claim by phone without visiting an office or being visited by an official.

The campaign has come about following research which proves that the rich really are getting richer and the poor, relatively, getting poorer. The Government has found that the richest fifth of pensioner have seen their incomes grow by 80% - after inflation has been taken off – in the 18 years from 1979 and 1996. But the poorest fifth have seen their incomes grow by only 34%. In other words, the gap between rich and poor among the retired population has got bigger. The reasons are fairly simple. More and more people have been able to pay into good pension schemes with their jobs or save money for their retirement in investment schemes. Meanwhile, the value of the basic state pension – and until recently the means-tested benefits for the poorest – have risen slightly above the basic level of price inflation but not enough to close the gap with richer pensioners.

Those most likely to be in the poorer groups are older people who did not have the same opportunities to save, women who pay less into pension schemes, some self-employed people, and those who did not have full working lives including carers, sick and disabled people, and ethnic groups who have come to the UK later in life. All should be helped and encouraged now to claim the new higher benefits which the Government has decided to pay to the poorest people over 60.

The new campaign concentrates on the main benefit which helps people with a low income – income support. The Government now likes to call this the ‘minimum income guarantee’ because it is the amount of income that it guarantees most people aged 60 or more should have. If your income falls short, then the Department of Social Security should make up the difference. This year the minimum income guarantee is fixed at £78.45 for a single person aged 60-74 and £121.95 for a couple. If you are over 75 or disabled it is more – details in Table 1. In the future, the Government has committed itself to raise these weekly amounts in line with the rise in average earnings, not the much lower rise in prices which they use to calculate the annual increase in the basic state pension. While the pension went up this year by just 75p, the minimum income guarantee rose by £3.45.

Table 1 - Minimum Income Guarantee 2000/01

Your income should be increased to the amounts in Table 1. But if your savings are above £3000 the amount you get will be reduced and if you have more than £8000 you will get no help from the minimum income guarantee at all. Those limits will be raised next April to £6000 and £12,000.

So if your income is less than the amounts in the table and your savings are less than £8000 you should apply for the money the Government wants to give you.

It is now much easier to claim. You can ring a new freefone number 0800 028 1111 and talk to someone who will fill in the form for you and post it to. All you have to do is sign it and send it back, together with any supporting documents. No-one has to call and see you and you do not have to go to a Benefits Agency office.

Despite these changes it is likely that many older people will still not claim the money they could get. Pride still stops many from asking for more. So the Government has a long-term plan to replace income support with what is called a ‘tax credit’. The principle is simple – those rich enough to pay tax give money to the Inland Revenue, but those whose income falls below a certain level – probably around £100 a week (£150 for a couple) – are given money back by the Inland Revenue. The amount would be worked out automatically by the taxman and paid direct into their bank account. It is not a perfect system – what about those without bank accounts, what would happen to Post Offices, how would it take account of savings – there are numerous questions to be answered. But the work has begun. And if it does happen it could eventually transform the way the nation treats its older citizens. The Government hopes to introduce this new scheme after the General Election – widely expected next May – if, of course, it wins.

If you successfully claim income support then you will get most of your council tax paid for you. And if you are a tenant you will get most of your rent paid too. Some people will get it all paid. But if you are one of the disappointed ones whose income or savings are a bit too high to get the minimum income guarantee, you may still get some help with your council tax or with your rent. The calculations are complicated. But as a rough guide multiply your weekly council tax by five. Add that to the amount in the table above. If your weekly income is less than the total, then you should be able to get some help with your council tax. That calculation also works for rates in Northern Ireland. To see if you can get help with your rent, multiply the weekly rent by one and half. Add that to the amount in the table above. And if your income each week is less than the total, then you should get some help.

However, if you have savings over £3000 the help you get will be reduced – possibly to nothing – and if your savings are over £16,000 you will get no help. The lower limit is being doubled to £6000 next April.

There are other complexities which these very rough and ready calculations cannot cover. So if in doubt it is always best to claim. The limits have all been raised well above inflation over the last three years, and council tax and rents have all risen sharply, so even if you have been turned down in the past, it is worth applying again. Contact your local council about it and ask for a claim form. In Northern Ireland go to the Housing Executive or the Rates Collection Agency.

The Government has also announced the rules for people who have become entitled to a winter fuel payment following the case in the European Court of Justice in December 1999. The European judges ruled that the only qualification for the payment was age and that the same age must be used for men and women. In the past, many men aged 60-64 did not qualify and nor did most people over 65 who did not claim a retirement pension or a similar benefit. Now they do qualify and can claim the payments for 1997, 1998, 1999 and the higher £150 payment for this coming winter. If you did NOT get a winter fuel payment in those years you should claim the payment now if you were aged 60 on the dates shown in Table 2.

Table 2 - qualifying for winter fuel payments

You will get the full winter fuel payment if you lived in a household where you were the only person entitled to the payment. You will get the half payment if you lived in a household where there was someone else who was entitled to the payment.

You will NOT normally get the payment if on the qualifying date

· You were in a residential care or nursing home and got help from income support with any of your expenses

· You lived outside the UK

· You had been in a National Health Service hospital for at least a year

· You were serving a prison sentence

If your spouse has already had a winter fuel payment for any of these years that should NOT normally affect your entitlement to claim your own half payment now (even if your spouse got a full payment in that year). However, if he or she got a payment because they got income support then you will NOT qualify for a payment of your own now.

You can claim or get advice by ringing 08459 151515. If you have access to the internet you can print off the form yourself, fill it in, and send it to the freepost address given. Look at the DSS Winter Fuel Payment website

June 2000

e-mail Paul Lewis on paul@paullewis.co.uk