Some protection from the cuts

People aged 70 and more were largely protected from the £7 billion of cuts in welfare spending announced by Chancellor George Osborne on October 20. The free TV licence for households where someone is aged 75 or more will not be changed. And those under 75 will benefit from a freeze in the TV licence fee. It will stay at £145.50 (about £2.80 a week) until 2016/17. Prescriptions and eye tests are still free for everyone over the age of 60. The budget for the National Health Service is not being cut – indeed it is being raised slightly ahead of inflation. But there are big changes planned in the way it operates and it will be some years before we know how they will work. In England the Government has refused to follow Scotland and Wales and make hospital car parks free. In some cities the charge may go up to fund other health services.

Despite reports in the press that Winter Fuel Payment would be cut back or means-tested it will be paid at the same rate this winter as last. David Cameron and Nick Clegg kept their promises to Saga readers that it would be “protected”.  So the Winter Fuel Payment of £400 for a household where someone was born on or before 26 September 1930 and £250 where at least one person was born on or before 5 July 1950 will be paid this winter as it was last. However, the future of the Winter Fuel Payment is not secured. It could be cut for the winter of 2011/12. An announcement is expected in the spring Budget. Winter Fuel payment is not paid to people in care homes if they also get pension credit. However, those that do not get pension credit should get the payment but only at half the standard rate.

Cold weather payments have also been kept at £25 a week. These are paid to people on pension credit for each week between November and March when the temperature in their area is at 0C or below – or is forecast to be at 0C or below. Until recently the payment was £8.50 a week but went up to £25 last winter. The Government has decided to keep it at this level in future. Cold Weather payments are not paid to people in care homes.

Warm Front – the scheme in England which gives grants towards the cost of loft and cavity wall insulation and replacing old and inefficient boilers – is to be phased out. Over the next two years its budget will be cut by two thirds and from 2013/14 it will be replaced by a new scheme called the Green Deal. Details are sketchy but the cost will be met by the energy suppliers rather than taxpayers. The Government promises that Green Deal it will enable “households to improve the energy efficiency of their homes at no upfront cost.”

The Government also intends to make energy suppliers give extra help with fuel bills to some households who are in fuel poverty and very elderly. This help – called Social Price Support – should begin in 2011 and cost the supplier £250 million a year, rising to £320 million a year by 2014/15.

Benefit cuts
The two and a half million households over 60 who get pension credit will see a rise in their income from April. But the increase will be below the rate of inflation. Prices are rising by 4.6% a year but the main rate of pension credit will only rise by about 3.5% - an increase of around £4.50 for a single person and about £7 for a couple. However, those aged 65 or more with an income apart from pension credit of more than £103.15 (single) or £164.55 (couple) will find the top up they get from pension credit rises by rather less. A single person aged 65 or more with an income of £125 will get a rise in their pension credit top up of less than £2 a week. The change is designed to save money – about £330 million a year by 2014/15.

There are also major changes planned in the help given to people with their council tax. Council tax benefit reduces the tax paid by five million people, half of them over 60. Many get all their council tax paid on grounds of low income. But from 2013 council tax benefit is to be changed. Instead of a system based on rules laid down by the Westminster parliament, local councils will in future decide how help is given. The whole cost of more than £4 billion a year will be passed to 326 English councils and the Welsh and Scottish Governments. But the money handed over will only be 90% of the current cost and how to cut the entitlement of five million low income households will be decided locally. The change, due to start in 2013, will discourage campaigns to get people to take up the benefit. At the moment the Government meets the cost of any extra claims. In future it will have to be found by local councils out of a fixed budget.

Care costs
As predicted in July in Saga Magazine all Government departments – except health and overseas aid – will be expected to find savings of around 33% over the four year spending review period which ends in 2014/15. That includes big cuts in the money paid to local councils. As they struggle to balance their books with their Government grant falling by 7% a year – a total cut of 31% over the four year spending period – they will have to do everything more efficiently and stop doing some things altogether. That could mean a cut in the amount available for care homes for elderly and disabled adults. There are fears that the homes will be sold to private owners which could mean lower standards for the residents and lower pay for the staff. It could also mean tougher restrictions on who gets care in their own home to help them avoid the need to go into a care home. The Government hopes to prevent those cuts happening by diverting £2 billion a year to local authorities for social care costs. It says that will mean “local authorities will be able to improve outcomes and will not need to reduce eligibility for services.”

Travel
Free bus passes in England will still be issued to men and women when they reach women’s state pension age. In London and some other cities the bus pass also allows local people to use underground, trams, and local rail services. However, outside free transport the cost of rail fares looks set to rise considerably as subsidies are cut. Regulated rail fares – including standard and saver returns and some season tickets – will in rise at 3% above inflation from 2012. At the moment they are pegged to 1% above the retail prices index. In 2012 that could mean a rise of 7% or more. There is no control over the cost of other rail fares and there are fears that the rail companies will implement large increases to pay for their share of the capital spending on new rolling stock and signalling which is planned.

Altogether the changes in welfare described by the Chancellor as ‘tough but fair’ will save £7 billion a year by 2014/15. These changes are on top of the £11 billion of welfare cuts announced in the June Budget.

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