In the bleak midwinter, by Gordon Lishman

18 Dec 08
Older people are facing a worrying winter, with energy and food costs rising. But pensioners will be better off in 2009 if the government acts on a range of proposed policies, explains Gordon Lishman

19 December 2008

Older people are facing a worrying winter, with energy and food costs rising. But pensioners will be better off in 2009 if the government acts on a range of proposed policies, explains Gordon Lishman

On the face of it, recent months have offered little in the way of festive cheer for older people, unless you count the one-off payment of £60 announced in the Pre-Budget Report. Rising pensioner poverty, the high cost of gas and electricity, discrimination in health care and a crumbling social care system continue to blight the lives of many of the poorest and most vulnerable pensioners.

Yet the new year could bring renewed optimism, if ministers can turn their rhetoric about fairness into reality. And, with landmark legislation planned to tackle age discrimination and a green paper promised on care reform and funding, 2009 could turn out to be a good year for older people.

People on low fixed incomes spend more of their income on food and heating than others and have been hit hard by the rising cost of living. The steep rises in household bills earlier this year pushed one in ten of the poorest pensioners into the red. Research commissioned by Age Concern in partnership with the Institute for Fiscal Studies showed that the 'real' rate of inflation experienced by the oldest and poorest pensioners in August this year was 9% compared to 5.4% for other age groups. And, with around one in three pensioner households now in fuel poverty, it promises to be a bitter winter for many older people.

Only a few weeks ago the Office for National Statistics reported a 7% increase in the overall level of excess winter deaths, the majority of which were among older people. Failure to keep warm or eat properly in cold weather can put elderly people's health at risk, but more than half of the over-60s are cutting back on food and heating to cut costs.

Compounding the high cost of gas and electricity is an energy market in which poorer people are routinely charged more for their energy than wealthier households. A good deal of attention has been given to the higher prices paid by those using pre-payment meters. Evidence suggests that those paying by cheque or cash, which include many older people, are being charged £93 a year more than direct debit customers.

Recent statements from ministers that they will intervene to end unfair energy pricing are therefore welcome. But more radical action is needed to help pensioners and families who are struggling to pay their bills. With the government being pursued through the courts for failing to meet its target to eradicate fuel poverty for vulnerable households by 2010, a new strategy is needed. This would be supported by a fair funding formula that recognises the estimated £9bn in windfall gains received by the energy industry from the European Union Emissions Trading Scheme.

The £60 payment announced in the Pre-Budget Report and the previously announced increases in the Winter Fuel Payment will go some way to easing the financial pressure on pensioners over the Christmas period. However, as food and energy bills are not affected, the oldest and poorest households will see little benefit from the cut in VAT designed to boost the economy.

The commitment to increase Pension Credit in line with inflation is welcome. But the extra benefit will not reach millions of pensioners who are missing out on the money they are entitled to. Five years on from its launch, almost a third of people entitled to Pension Credit are still not receiving it, with the 1.8 million pensioners who are failing to claim missing out on almost £1,500 a year each. The government must do more to help older people claim the money they are entitled to by moving to a system where benefits are paid automatically.

The government must also ensure that, as in previous recessions, older workers do not bear the brunt of the economic downturn. In the early 1990s, the employment rate for men over the age of 50 fell by seven points and did not recover for almost a decade. Labour supply in the subsequent upturn was suppressed by the premature exit from the labour market of more than 300,000 older workers.

Unemployed people over 50 have the highest rates of long-term unemployment so Age Concern supports the emphasis on getting them back into work in the welfare white paper. But this will work only if jobs are available and the right kind of support is on offer – this is not currently the case and sanctions to withdraw benefits should not be introduced until they are. These proposals must go hand in hand with a strategy to keep the over-50s in work in the first place.

This means ending mandatory retirement ages, which allow employers to force workers into retirement at the age of 65, regardless of performance or ability. Only a third of those who retire early do so voluntarily and one in five employers has said they plan to use MRAs in the economic downturn. MRAs create a barrier to opportunities for selection, promotion, training and job mobility for people in their late 50s and early 60s.

Age discrimination is not limited to the workplace. One in four people reports that they have experienced ageism in some form. But the Equality Bill in the Queen's Speech promises that ageism will be taken as seriously as any other form of discrimination.

Another issue is the arbitrary divide between mental health services for adults of working age and older people. Most mental health services for depression exclude people aged 65 and over, despite the risk of this increasing with age in later life. The forthcoming NHS Constitution must be amended to include the right not to suffer discrimination on the basis of age.

The government's promised green paper on reforming care and support services is also due to be published in early 2009. The current care system, which is woefully underfunded, routinely fails the people who use it. As part of its Big Q campaign, Age Concern recently held 47 events across the country to capture the views of more than 700 older people, many of whom were either receiving care themselves, acting as a carer for a loved one or helping a friend or relative navigate the system. The overwhelming message was that the current system often fails to meet people's needs and too often denies them the care they need in the first place.

Spending at least £1bn extra now is crucial just to prevent further deterioration in the quality of care and more restrictions in eligibility for care and support services. In the longer term, we need a new settlement for care that maps out how it will be provided and paid for in the decades ahead. Whitehall insiders have described this as the biggest social policy challenge facing government in the next 20 years. It is a challenge that will provide a key test of whether the government can continue to protect the most vulnerable in challenging times.

Gordon Lishman is director general of Age Concern


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