The Sun’s campaign to ‘Ditch handouts to the rich’ is baffling. Winter Fuel Payments are the only policy the government has to address the ongoing scandal of older people dying due to cold weather
Wednesday saw many in the social policy world left blind-sided by the announcement from the Sun newspaper that it would henceforth be campaigning for the means testing of currently universal Winter Fuel Payments.
The government spends around £2bn each year on Winter Fuel Payments. Although the Sun does not go into details, the implication is that only those now entitled to means-tested Pension Credit should receive Winter Fuel Payments. This would save the state around £1.6bn a year.
The value of Winter Fuel Payments was already lowered in the March 2011 Budget, and as a result, households where the oldest person is aged between 60 and 80 receive £200 (instead of £300), and those where the oldest person is aged 80 or over receive £300 (instead of £400).
From the Treasury’s point of view, the Sun campaign will be manna from heaven. Winter Fuel Payments had previously sat in the box marked ‘politically untouchable’. Now, here is the Sun to tell the public that they should be means tested. If the Sun’s reports of a row between prime minister David Cameron and work and pensions secretary Iain Duncan Smith about means testing Winter Fuel Payments are true, it may just be the Treasury that tipped off journalists (and provided them with the figures for their story).
So is the Sun right to be launching a campaign for restricting Winter Fuel Payments to the poorest pensioners? Here are three facts to consider.
Let’s start with the key fact relevant to Winter Fuel Payments that the Sun, like other commentators, has disgracefully chosen to ignore. Every year, around 27,000 people die because of the cold weather, with the vast majority aged over 65. This is the annual number of preventable ‘excess winter deaths’, and according to the latest Office for National Statistics figures, the number for England and Wales in 2010/11 was around 25,700, virtually unchanged from the previous winter. The most high-risk group is women aged over 85.
If the number of excess winter deaths actually referred to 27,000 dead children, this would probably be considered something far beyond a national scandal. No doubt the Sun itself would be leading a campaign demanding action. But because these are older people dying unnecessarily, it is apparently acceptable for the Sun and a host of other policy commentators to blithely ignore the fact that in 21st century Britain, thousands of elderly people die each year simply because of the cold weather. It reveals a pervasive and disturbing form of ageism.
It’s long been acknowledged that Winter Fuel Payments are a not very effective response to the problem of excess winter deaths, even despite research published last year by the Institute for Fiscal Studies showing that 41% of the value of payments is indeed spent on fuel. This is the behavioural power of ‘labelling’, and is what distinguishes Winter Fuel Payments from alternative options, such as simply giving older people a slightly higher State Pension. Some of the rest of the value of Winter Fuel Payments – we can surmise – is spent on keeping warm in other ways.
Nevertheless, some of the money spent on Winter Fuel Payments could probably be spent on preventing excess winter deaths in better ways. What is really long overdue is a proper winter deaths strategy for the UK to bring down the number of preventable deaths, which would probably involve improved targeting, widespread home insulation, and temperature sensors. But this would all cost money.
So, barring any announcement of a new winter deaths strategy from the government, Winter Fuel Payments are effectively the coalition government’s response to this shocking problem. If IDS – and reportedly many senior Liberal Democrats including Nick Clegg – really do want to means test Winter Fuel Payments, they need to come forward now and explain how they are going to bring down the number of people who die each year because of the cold.
The second key fact that should be borne in mind when discussing means testing of Winter Fuel Payments is that the means testing system doesn’t actually work. The DWP’s own figures estimate that take-up of Pension Credit among those entitled to it is between 62% and 73% overall. For 2010, the DWP estimates that around £2.5bn of Pension Credit was left unclaimed – more than the state spends on Winter Fuel Payments. The DWP has long undertaken pilots and research into how to boost take-up among those entitled to Pension Credit, but has yet to get anywhere near cracking this issue.
What does this mean? Means testing Winter Fuel Payments would see payments only go to two-thirds of households who would be entitled to them. Using DWP figures, we can say there would be around 1.3 million older people living on just the Basic State Pension of £107.45 each week who would not receive Winter Fuel Payments if they were means tested. It remains unclear if this is what the Sun actually wants to achieve with its new ‘Ditch handouts to the rich’ campaign.
Does this matter? The third key fact on Winter Fuel Payments is that the problem of fuel poverty and winter fuel deaths is only going to grow in future. A recent review by John Hills of the LSE showed that on a ‘steady state’ basis, by 2016 there will be 8.5 million individuals in fuel poverty, with an aggregate fuel poverty gap of over £1.7bn, compared to a gap of £1.1bn in 2009.
As the Hills Review noted, living at low temperatures as a result of fuel poverty is likely to be a significant contributor not just to the excess winter deaths that occur each year, but to the much larger number of incidents of ill-health and demands on the National Health Service. Looking after a pensioner in hospital with pneumonia for a single night costs far more than the value of their Winter Fuel Payment.
In short, although Winter Fuel Payments have not been very successful at bringing down excess winder deaths, they are the only policy the government has to address an ongoing scandal, that is only going to get worse, and will require a lot of money to fix properly.
So why exactly is IDS so keen to means test Winter Fuel Payments? One reason may be that he sees it as a price he has to pay for Treasury agreement on implementing a higher, Single-Tier State Pension. If so, he has possibly got ahead of himself. The potential uprating of the State Pension to the current Guarantee Credit level might indeed be a moment to phase out Winter Fuel Payments, but we are still many years, many battles – and hundreds of thousands of dead elderly women – away from it happening.
What is particularly frustrating is that in recent weeks, organisations like the Strategic Society Centre, Institute for Fiscal Studies and the Nuffield Trust have floated the idea that public spending on Winter Fuel Payments and other universal benefits could be trimmed to pay for a reformed care funding system; for example, by linking the age of entitlement to that of the State Pension. The funding gap in the English social care system is universally acknowledged to exceed £1bn each year. The unmet need and suffering now pervasive in the care system is nearly as shocking as the ongoing scandal of excess winter deaths.
Again, it’s odd that the Sun doesn’t choose to campaign on social care. Alas, with such loud support for means testing from the Sun, the Treasury may now feel it can hold out for transferring expenditure on Winter Fuel Payments into deficit reduction, rather than see any trimmed expenditure used to plug the gaps in the care system.
What is needed is a careful, informed review of public expenditure on the older population, what works and what doesn’t, and a reallocation that balances support for the catastrophic costs of care with measures to prevent winter deaths and other urgent policy priorities. The depressing newspaper reports that some senior Liberal Democrats see means testing pensioner benefits as ‘payback’ for the Conservatives, given their acquiescence on increasing university tuition fees, does not reassure that the debate we really need is about to happen.
James Lloyd is director of the Strategic Society Centre
