The current level of debate about universal pensioner benefits is, quite frankly, poor. Nothing illustrates this point more than recent comments by the Tax Payers Alliance, who urged the Conservative Government to cut pensioner benefits – such as Winter Fuel Allowance – now because older people hit by the cuts “may not be around” by the next election.
The Tax Payers Alliance have since defended the remarks as a ‘joke’. But with 18,200 excess winter deaths in England and Wales in 2013-2014 alone, it is a joke that many will find in extremely poor taste.
But this is just an example of a wider point: that the debate about universal pensioner benefits – free bus passes, winter fuel allowance, free TV licences and free prescriptions – tends to descend towards a slanging match between those who treat universality of pensioner benefits as a sacred cow and those who view a free bus pass as an extravagance the country cannot afford.
So today, we have launched a paper, produced together with the Strategic Society Centre, which aims to bring some much needed level-headedness to the debate and challenge the myths around universal pensioner benefits.
But in coming to the conclusion that, in age of austerity and with an ageing population, it is hard to justify universal benefits for some wealthier pensioners, we are acutely aware we still risk getting our metaphorical heads knocked off.
We are emphatically not saying that all universal benefits for all older people are unnecessary. On the contrary, our paper establishes that there are positive outcomes to many of the benefits and any government should be wary of dismissing them.
- Free prescription charges ensure good take-up of essential, preventative medication. Introducing charges may harm older people’s health and cost the NHS money
- There is evidence that winter fuel payments have been responsible for around half of the reduction in preventable winter deaths since 1999
- Every £1 spent on the free bus pass is estimated to generate nearly £3 in benefits by encouraging expenditure, ensuring access to medical services and enabling voluntary work
- For the poorest pensioners, TV is essential to their lives and the cost of a TV licence would represent nearly 2% of their annual income if not provided free.
- We also argue against simplistic assumptions about ‘wealthy pensioners’ and ‘high-cost’ universal benefits. We establish that
- Universal benefits are a relatively small part of the overall welfare spend on older people (the great majority is the state pension)
- While on average older households have seen little or no reduction in income over the last five years, there are still 1.6 million older people living in poverty, and there are many other non-pensioners groups who have also been protected
- Older people have been adversely affected by changes in other areas, particularly cutbacks in social care and poor returns in savings income which has eroded the value of pensions
Nonetheless, we do accept the concern that pensioners on the highest incomes continue to enjoy universal benefits, while other pensioners live in poverty or miss out on social care because of cuts. We fully expect these benefits to be protected until the end of this Parliament in 2020. But if future governments were to consider limiting pensioner benefits, we argue that any attempt must tread very cautiously for fear of harming the poorest and most vulnerable.
We show that simply requiring benefits to be means-tested would have a calamitous effect on take-up by the poorest pensioners, and other ways of targeting – by age or by opt-in – are also very problematic. However, we accept that there is a case to be made for using the tax system to remove benefits such as winter fuel payment from the wealthiest pensioners who pay the higher rate income tax (which we estimate to be less than 5% of all pensioners).
Most importantly though, we argue that a debate about universal benefits cannot be made in isolation. Rather it needs to be considered alongside the wider measures that we need to take to prepare ourselves for an ageing society.
The 2014 Barker Commission report on the future of health and social care argued for a ‘grand bargain’ to be struck in terms of targeting universal benefits to help the country afford a health and social care system fit for our ageing population. We believe this would be an excellent starting point for a wide, public debate about how best to ensure we have a country which becomes an even better place to grow old.
We are acutely aware that no cuts to benefits can be painless. But to achieve the sort of society we want, we need to be prepared to consider all the options and, if necessary, have a few metaphorical shots aimed at us in the interests of a proper, considered debate.