Budget 2014: Is not good for all pensioners

The budget announced by the Chancellor George Osborne on Wednesday 19^th March 2014, has been widely reported as appealing to pensioners and savers.

Some measures, such as pensioner bonds, will indeed help sizeable numbers of older people.

Yet for many people over retirement age, it will not be good news overall.

To begin with, though pensions have been exempted from the total benefit cap of £119 billion, to rise only with inflation, several other types of social security payment on which many pensioners rely have not.

For instance pension credit, housing benefit (for those not on jobseeker’s allowance) and winter fuel allowance are included in the sum capped.

So these could be squeezed in future, hitting worse-off pensioners in particular.

Secondly public services continue to face heavy cuts, affecting large numbers of older people.

Thirdly treating pension pots as a form of savings which can be withdrawn at any time, rather than a guarantee of income to maintain an adequate ongoing standard of living, will benefit some and others may suffer, especially in the longer term.

Osborne announced that:

 “We will legislate to remove all remaining tax restrictions on how pensioners have access to their pension pots. Pensioners will have complete freedom to draw down as much or as little of their pension pot as they want, anytime they want”.

“When it comes to tax charges, it will still be possible to take a quarter of your pension pot tax free on retirement, as today,”

He also stated. “But instead of the punitive 55 per cent tax that exists now if you try to take the rest, anything else you take out of your pension will simply be taxed at normal marginal tax rates – as with any other income. So not a 55 per cent tax but a 20 per cent tax for most pensioners.”

This may be helpful for some, especially those with large amounts who can afford to take risks by investing a certain amount in schemes with higher potential returns but less security. But it places others at risk of destitution.

Some may be persuaded to use their money unwisely, but even those who are cautious may be hit.

If their children or grandchildren are at risk of homelessness because of the current lack of affordable housing, they may be willing to help meet the costs of a deposit on a home for them and maybe assist with mortgage payments and there is no guarantee pensioners in such situations will get the money back.

Again if they, or those close to them, are denied adequate social care because of the cuts, they may dip into their pension pot.

The idea of letting a loved one be left without food and drink, or forced to sit in his or her own bodily waste for hours, if they can do something to help, may be too much to bear and this may mean that they run out of money to pay for food and heating for themselves.

The measure appears to undermine further the concept of social security, Nigel Stanley from the Trade Union Congress (TUC) states:

“Pensions policy should be about providing the retired with a reasonable standard of living. This should both lift them out of poverty and provide some continuity with their pre-retirement standard of living. There are many mechanisms that do this through state and workplace provision but in general the focus has always been post-retirement income”

“However, this budget goes in an entirely different direction and while many of its measures make some sense or are even welcome on their own, it is harder to argue that they improve the pensions system. Instead, they replace a pensions system with a savings arrangement”.

So, it should be remembered that bonds of family, friendship, empathy and solidarity connect people across generations.

Indeed, decades ago, many older people helped to change society to improve protection of economic and social rights.

They are not all willing to look on passively as their handiwork is slashed to pieces.

The government should not assume that all pensioners will be pleased with this budget.

Budget 2014: Social security budget cap and social justice

Budget measures announced by Chancellor of the Exchequer George Osborne on Wednesday 19^th March 2014, included a cap on the overall amount spent on a range of social security measures.

People who become severely ill or injured, or face other unexpected needs, may find their already low standard of living forced down, regardless of how much they have contributed to society.

Osborne announced a cap on ‘welfare’ bills of £119 billion in 2015-16, rising with inflation, to be voted on by parliament the week after the budget and this would set a limit on overall payments on social security except for “the State Pension and the cyclical unemployment benefits”.

In future, the government will not be allowed to exceed the cap without parliamentary approval.

“Britain should always be proud of having a welfare system that helps those most in need,” he said. “But never again should we allow its costs to spiral out of control and its incentives to become so distorted that it pays not to work.”

However many of the types of social security payment affected can be paid to people in as well as out of work, such as personal independence payment and child benefit, or are targeted at working households, for instance statutory maternity pay.

Nor is living on carer’s allowance of £59.75 a week while providing round-the-clock care a luxurious lifestyle.

The benefit cap helps to reinforce the notion that people on ‘welfare’ are ‘skivers’ and ‘scroungers’, undermining the principle of social security.

Even if someone has paid national insurance and other taxes for decades, if badly injured in an accident or desperately ill with cancer, any help he or she gets is treated as a favour, so that payment can be arbitrarily reduced or withheld.

Once the cap is in place, it can be lowered at the whim of the powerful.

The Budget 2014, tries to lock-in austerity for millions of low-paid families, poor children, carers and disabled people.

Announcing a cap for social security spending without a plan to address the root causes of low pay, high rents and high childcare costs, simply forces the most vulnerable in society to pay the price for inaction.

Meanwhile tax cuts are lavished on rich individuals and large corporations and tax loopholes kept open.

This is profoundly unjust.

Benefit Fraud: So people could have their TVs and PCs seized, but this is promoting suspicion of those in need.

Prime Minister David Cameron is threatening to seize computers and cars from people supposedly guilty of benefit fraud, according to media reports.

This could reduce their chances of getting work and access to everyday activities, harming families and communities.

“Benefit cheats will be subject to credit checks to see if they have any high-value assets, in a bid to clamp-down on fraud, ministers have said,” according to the BBC.

“The Department for Work and Pensions (DWP) says the aim is also to recoup more of the £1.2 billion the government loses to benefit fraud every year.”

It added, “Prime Minister David Cameron believes calling in bailiffs to confiscate and sell expensive items like cars and computers from cheats will be a strong deterrent to fraudsters.”

There has been huge media coverage of a few high-profile cases of people who cheat on a major scale and are rightly prosecuted.

However 'benefit fraud' could also apply to someone unable to get a steady job because of the economic crisis who did a few hours 'cash-in-hand' work to help pay for his or her children’s clothes and toys.

Even if he or she were apparently paying off sizeable debts on household items, this could be due to a backstreet loan or the generosity of the extended family.

Parents in Britain often help out their adult children and grandchildren, according to research by Standard Life:

“Nearly half (46 per cent) of grandparents have given money to their children in the last year, giving £1,222 to each child on average.”

If someone in this situation used a computer for job-searches and a car to get to interviews and job centre appointments, taking these away would hardly help his or her chances of finding work. 

Indeed, without easy access to the internet, he or she might be sanctioned for not doing enough to find a job.

Worse still, people are often falsely accused of benefit fraud. 

However blameless your life, it is easy to find yourself on the receiving end of the government’s relentless attempts to portray people receiving social security as ‘scroungers’.

In one case in 2013, 63-year-old lorry driver Robert Punter was hauled before a court and accused of being a benefit cheat. His left leg had been amputated, but the DWP apparently got confused because he also had problems in his right toe from which he recovered.

“I suffered a very serious injury to my left leg in a shotgun accident when I was 12. At one stage it was touch and go whether I would survive,” he later said. "I never used it as an excuse not to work. I started in an old factory when I was 15 and then drove dumpers and tippers on building sites until I passed my HGV and became a lorry driver.”

He “did that for 40 years until I suffered arthritis in my right foot which led eventually to me having an operation to fuse my toe.” He then reportedly found out that he was entitled to disability living allowance even if he was planning to go back to work, but he was falsely accused of claiming fraudulently.

“After I was called in for interview and told I would be prosecuted my wife took photos of my left leg and sent them to the DWP but it made no difference.”

However when he got to court, the DWP apparently offered no evidence – it was obvious he only had one leg – and he was quickly cleared.

Others prove their innocence on appeal, but this is not always easy, especially for people who are less articulate or cannot get access to specialist advice and fearing that one's more valuable family possessions may be seized, if these are not regarded as household essentials, can make a bad situation worse.

British government figures for 2012 indicate that fraud across the whole economy amounts to £72 billion a year, including £14 billion tax fraud and other estimates suggest that the cost of tax evasion and avoidance is far higher.

It seems likely that unclaimed benefit amounts to over ten times as much as 'welfare fraud'.

Politicians’ promises to make life more unpleasant for "benefit cheats" are not primarily about saving money.

They are damaging, divisive and promote suspicion of those in need.

Last week was a week of surprises

The death of Trade Union Leader Bob Crow at 52 on 11^th March surprised everyone. 

So too did the tributes from opponents. London Mayor Boris Johnson, for whom Crow had been a constant thorn, said “whatever our political differences, and they were many, this is tragic news. Bob fought tirelessly for his beliefs and his members.”

The most prominent voice of the hard left, Crow was loathed by the right wing press but loved by his members and their numbers grew throughout the twelve years of his leadership of the RMT.

David Cameron was in Israel on last Wednesday so Nick Clegg deputised at PMQs and was given a hard time by Harriet Harman who accused him of selling out to the Tories and of hypocrisy for denouncing Government policies at Liberal Democrat conferences but voting for them in Parliament. 

She cited the ‘bedroom tax’, cutting the 50p tax rate, youth unemployment and concluded that the Coalition were “two parties bound together by their mutual terror of the electorate”.

Clegg responded vigorously that with 1.7 million people on housing waiting lists and over 1.5 million spare bedrooms, encouraging some to downsize so that others might find a home made sense. 

On tax he reminded her that the 50p rate only applied for one month of Labour’s 13 years in office and the rich now paid more than they did under Labour. 

He said youth unemployment was higher pre 2010 than today and it was Labour’s record that needed defending. 

Tributes are pouring in from all sides of politics to the veteran Labour politician and former cabinet minister Tony Benn, who died at home on 14^th March at the age of 88

A major figure on the left of the party, he narrowly missed out on the deputy leadership in 1981.

Prime Minister David Cameron spoke of his sorrow at the death of a man he described as a ' magnificent writer, speaker, diarist and campaigner.

The Labour Leader said Mr Benn was a great parliamentarian and a conviction politician, "Tony Benn spoke his mind and spoke up for his values. Whether you agreed with him or disagreed with him, everyone knew where he stood and what he stood for"

Next week’s Budget is the hottest topic at Westminster. 

The Chancellor is expected to say the economy is recovering but the job is only half done and £25 billion further cuts are needed to clear the deficit and manufacturing for export needs to replace consumer spending as the driver of recovery. 

Opponents will look for what he proposes to cut youth unemployment, stimulate house building and fund a major flood prevention programme. 

Others want him to offer means of cutting fuel bills and reduce dependence on imported energy resources, farmers will hope for increased investment in their industry to move us closer to food self- sufficiency.

Economists are pitching not just for a rebalancing of the economy but also for measures to encourage saving. 

Some of his backbenchers are urging the Chancellor to ease the pressures on middle income households by raising the threshold for the 40p income tax rate. 

Others want him to help the poorest by either increasing the personal allowance to take more out of income tax altogether or by raising the minimum wage. 

Mr Osborne’s choices will inevitably be influenced by a wish to create a ‘feel good factor’ before the May 2015 General Election and his party is behind in the polls and threatened by UKIP’s appeal to Conservative Europhobes.

Crow fought for his members but cared little for the public he inconvenienced and most politicians are pre-occupied with gaining or retaining office. 

Where is the vision that focuses on seeking the common good?

Outcome of the Welfare Reform (Sick and Disabled People) debate held on 27th February 2014

The full motion (the "question put and agreed", in parliamentary language) in the WOW petition debate on a cumulative impact assessment welfare reform in the House of Commons on 27^th February 2014 is set out in full below.

It is in effect a take-note motion, and cannot oblige the government to do more than that. 

The coalition decided not to oppose it for "we're listening" reasons, though it spoke against the key points. 

Few government MPs took part in the debate, no Conservatives and only three Liberal Democrats were among the 250 MPs who signed in support of such a debate taking place.

However, a publicly-triggered policy debate of this kind is a significant milestone in the struggle to define and win support for radically different welfare policies which, using the slogan from Common Weal, is about achieving "all of us first" rather than "me first" priorities. 

It also indicates that petitioning can be a powerful tool for calling power to account and promoting alternatives.

Question put and agreed to:

Resolved,

That this House calls on the Government to commission an independent cumulative assessment of the impact of changes in the welfare system on sick and disabled people, their families and carers, drawing upon the expertise of the Work and Pensions Select Committee; requests that this impact assessment examine care home admissions, access to day care centres, access to education for people with learning difficulties, provision of universal mental health treatments, closures of Remploy factories, the Government’s contract with Atos Healthcare, IT implementation of universal credit, human rights abuses against disabled people, excess deaths of welfare claimants and the disregard of medical evidence in decision-making by Atos, the Department for Work and Pensions and the Tribunals Service; urges the Secretary of State for Health and the Secretary of State for Education jointly to launch a consultation on improving support into work for sick and disabled people; and further calls on the Government to end with immediate effect the work capability assessment, as voted for by the British Medical Association, to discontinue forced work under the threat of sanctions for people on disability benefits and to bring forward legislative proposals to allow a free vote on repeal of the Welfare Reform Act 2012.

Full Hansard report on the Welfare Reform (Sick and Disabled) debate at: http://www.publications.parliament.uk/pa/cm201314/cmhansrd/cm140227/debt...

You can watch the full Welfare Reform (Sick and Disabled) debate at: http://www.bbc.co.uk/democracylive/house-of-commons-26367342

The WOW Petition Campaign can be found at: http://wowpetition.com

Centre for Welfare Reform: http://www.centreforwelfarereform.org