Pensioners

Part of the debate – in Westminster Hall at 3:06 pm on 4 March 2009.

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Photo of Andrew Pelling Andrew Pelling Independent, Croydon Central 3:06, 4 March 2009

I agree entirely. I was somewhat perturbed by the suggestion that was made. It is a bit like what is happening in the Republic of Ireland. My local authority has suggested that it lobby the Government to be allowed to increase employees' contributions from 6 to 8 per cent. Going down that route would give rise to great consternation and great disruption to good industrial relations in local authorities.

I am, however, allowing myself to drift far too far from the issue of fair access to care. I am interested in the response from senior citizens in Croydon on this issue, because they tend to find that fair access to care is complicated, convoluted and sometimes lacking in compassion, despite the fact that the Government have the very best intentions. Indeed, the Croydon Older People's Network said:

"Older people in Croydon feel too many are missing out on essential services and are experiencing ill health and isolation because their needs are not being met".

It is fair to say that despite the local authority's best intentions, it tends to concentrate its support on pensioners with the most chronic needs.

We need to remember that many carers are pensioners or are about to become pensioners. Like many colleagues, I have come across people who have sacrificed almost all of their career, right up to becoming a pensioner. They have stayed in social housing with their mother or father, who has then passed away. Having made that caring commitment, and saved the nation a great deal of money, they find that they are unable to continue with the tenancy. I am currently dealing with the case of a gentleman who looked after both his ailing mother and his father. He lived in the property for 46 years, but now faces the prospect of being turfed out.

We need to bear in mind the fact that carers in employment, who benefit from the Government's generous carer's allowance, face difficulties if they want to leave employment and take up other benefits, because they will lose the carer's allowance. Rather perversely, the system encourages people to stay in employment who would perhaps save the state additional moneys by acting as full-time carers. I see many such problems as a director of Croydon Carers Centre. True independence is a distant dream for many older and disabled people, and charging and means-testing dictate that many older and disabled people are living their life in poverty or struggling to cope. The Government recognised that in their "Care, support, independence" consultation, and should be supported on the issue. However, pensioner poverty is so widespread—in the past year it has risen by perhaps 300,000—that it may take the total number living in poverty, when that is defined as being on less than 60 per cent. of the median population income before housing costs, to 2.5 million.

Many Members of Parliament often come across women pensioners living in poverty, because those women are not entitled to the full basic state pension. Many of them have paid not paid full attention to the matter in the past, or they may have been badly advised about the small stamp and been unable to pay their national insurance contributions, because of the need to care for their families. I know that the Government are concerned about that and want to deal with it, but it does not look good for our country that a recent European Union survey found that only pensioners in Latvia, Spain and Cyprus are more likely than those in the UK to fall into poverty. The Institute for Fiscal Studies concluded that the proportion of pensioners below the poverty threshold will remain at its current level at least into the next decade, despite the best intentions of the Government to reform the process.

For all of us who have benefited from saving for our pensions, the financial crisis offers a very bleak prospect, but there may be things that the Government can do to deal with some effects of the reduced interest rates, which can significantly affect pensioners, as the hon. Member for Castle Point mentioned. Age Concern takes the view that income from savings provides a modest but important top-up to the pension and benefits of many low-income pensioners, but the average gross savings rate on an instant access account fell from 4 per cent. to 1.6 per cent. over the year to January 2009. That can greatly affect the likelihood of a pensioner having a reasonable standard of living. For a pensioner couple with savings between them of £10,000, which is a substantial sum, the fall represents a reduction in income accrued from interest from £400 to £160 over a year—a loss of £4.62 a week. Perhaps it is possible for the Government to give consideration to the £16,000 upper capital limit for receiving housing benefit and council tax benefit. The rate has been frozen for several years, which is another source of frustration for older people, who feel penalised for saving. It is appropriate for the lower capital limit for income-related benefits to be increased to £10,000. The assumed rate of income for people with savings above the lower limit could be reduced to £1 in every £1,000, and the upper capital limit for housing benefit and council tax benefit could be increased.

I accept that it is easy for me to come to the Chamber and make suggestions about how things might be treated to deal with pensions needs, when the demands on the Government's finances are severe in the economic downturn. However, to repeat the point that I made earlier, if we want to stimulate the economy, we could do so by putting more money in the hands of pensioners, which is much more likely be spent locally in communities than it would if we took other economic initiatives. Despite the demands on the Government's finances, that might be justifiable from a macro point of view. From a micro point of view, I have spoken about Croydon, but I think that something can be said about the positive responses to the consultation carried out by Croydon Older People's Network and Croydon Retired People's Campaign: the Government's action is appreciated by Croydon people, but nevertheless the shortfall in standards of living affecting many Croydon pensioners suggests that further urgent reforms are required.