Nick Clegg’s position on benefits for wealthy pensioners is confused and needs clarifying

Poverty LaneIn its first annual report, the Social Mobility and Child Poverty Commission has proposed cuts in welfare for well-off pensioners, including currently universal benefits such as the winter fuel allowance, free bus pass and free TV license, proposing the money should be used to help children in poor families.

Proposing a fundamental shift in welfare support from pensioners to the young the report says:

We do not believe that favouring pensioners over their children and grandchildren will be a sustainable position over the long term if a meaningful dent is to be made in the UK’s high levels of child poverty and low levels of social mobility.

Writing in the Telegraph yesterday Nick Clegg welcomed the majority of this report but has rejected one particular aspect.

Nick wrote:

It also makes some more debatable assertions, about the appropriate balance of fiscal consolidation between different age groups, for example – punishing pensioners isn’t going to help a single child achieve more in life.

This seems at odds with what the Deputy Prime Minister has said in the past, publicly advocating the need to look again at universal pensioner benefits and that welfare “should not be paid to those who do not need it”.

The stats back up the commission’s proposals. According to the Institute of Fiscal Studies recent report pensioners wealth has risen faster than all other groups in the past 30 years. They are the only group to have become better off since 2007/08, while young people’s income has fallen by 12% during the same period.

As a party the Liberal Democrats need to make a clear policy decision on where they stand on universal benefits for the elderly. It’s not a vote winner with pensioners, but in a time of austerity when one in six children are living in relative poverty we should be directing government support to the groups that need the most help and removing unnecessary universal benefits from those pensioners who are fortunate to be wealthy enough not to need them.

* Gareth Wilson is a Videogame Director turned Liberal Democrat activist who blogs here

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27 Comments

  • Well said. This needs courage, but if even Ed Balls can’t justify current levels of pensioner benefits then we must be bold and make it clear that it’s about fairness.

  • Mmmmm just how many ‘wealthy’ pensioners do the Lib/Dems think there are ? And….what is ‘wealthy’….. Still if Lib/Dems want to shoot themselves in the foot with the next Election pensioner vote then so be it.

  • Cllr John Bryant 18th Oct '13 - 10:34am

    The simplest starting point to redress the balance would be for the party to declare that any pensioners who pay the higher rate of income tax lose their universal benefits. That might not raise a lot in savings but it would be a political move in the right direction and is easily defensible with the fairness argument.

  • Maximilian Wilkinson 18th Oct '13 - 10:44am

    Agree 100%. I suspect Clegg’s line would be different if young people voted in the same numbers as pensioners.

  • “As a party the Liberal Democrats need to make a clear policy decision on where they stand on universal benefits for the elderly.”

    I thought the LibDems have made it clear, they are opposed to universal benefits – an ill-liberal position to take…

  • Paul in Twickenham 18th Oct '13 - 11:01am

    Well said. I recently posted elsewhere on this site that in the USA the median wealth of households where the head of household is over 65 is now x47 the median wealth of households where the head of household is under 35. In 1984 the corresponding number was x12. The increasing concentration of wealth in the hands of a subset of older people is a global phenomenon and needs to be recognized in legislation.

  • Helen Dudden 18th Oct '13 - 11:16am

    I’m a pensioner, the Lib Dems are a Party that cares little about those who voted them in.

    As I stated once before, I voted for Don Foster for 21 years, not any more.

  • Peter Andrews 18th Oct '13 - 12:37pm

    It will cost a significant amount to means test and in extra administration so I think any savings are very overstated. Plus if it complicates the application process for these benefits (or even creates on rather than it being automatically paid) then some pensioners in need will not get the benefits they are entitled to.

    Imagine the embarrassment of getting on the bus and using a free bus pass and thus revealing to the bus driver and everyone on the bus that you are ‘poor’ enough to qualify for the free bus pass. Pensioners are proud people and some will refuse to use something if it implies they can’t pay.

  • @ Peter Andrews – Clearly the way to deal with this is massively simplify the situation and remove all the perverse Brownian ‘perks’. Scrap the Free Bus Pass, Winter Fuel Allowance, etc. etc. and put all the money into an increase of the State Pension. That way, high income pensioners pay this back through increased income tax and those pensioners less well off get the benefit. (Clearly this assumption equates income with wealth, which is inaccurate but that is a different issue/argument)

  • Agree the simple way of dealing with this problem is to fold these extras into the state pension. For the free bus pass and other ‘perks’ where the monetary value is less precise then these can be handled through an equivalent to the P11. In fact we could go the whole hog and introduce flexible benefits, just like many companies offer to their employees…

    The only downside to all this common sense is that it gives the politicians nothing to continually shout about and get their soundbite.

  • Shirley Campbell 18th Oct '13 - 5:45pm

    I will pass on this one, since I just love sitting alone on a bus having proffered my free bus pass. Alone on a bus, I dreamingly speculate that if I were not sitting alone on the said bus, it would be devoid of passengers. So sad. So sad that the government is hellbent on promoting and subsidising private motor vehicle fuel subsidies. Sigh, sigh, sigh!

  • Helen Dudden 18th Oct '13 - 8:42pm

    @ Simon Shaw. Yes I have a freezing damp cold home, not insulated, and damp. It would cost me very nearly £50 per week to try to warm up.

    My home will be void when I move out. I have been blind, seriously ill and nearly died. Of course, you are right , what should anyone do for me? I am pensioner, I have no rights,

    This is reason why I no longer vote for your for your party,

  • A Social Liberal 18th Oct '13 - 9:20pm

    Interesting idea, taking the allowances given to pensioners and putting it onto the state pension. The trouble is, will the government really raise it by several hundred pounds a year (up to £300 for the winter fuel allowance and £145 for the television licence alone).

    In addition, how does one evaluate the worth of the free bus pass. I know of pensioners who use the bus every day to travel into town (some 12 miles) – the cost being around £4 for a return journey. I also know of pensioners who have never used their bus pass.

    I am not against this idea, so long as our elders do not lose out.

  • Helen Dudden 18th Oct '13 - 10:09pm

    I think that they will lose out, that is the whole point of the exercise.

  • Peter Andrews 18th Oct '13 - 10:56pm

    Social Liberal is right how can you add a free bus pass into the state pension when some (usually poorer pensioners) use their free bus pass much more than others.

    Also just giving a cash boost to the pension removes the incentive for pensioners to use public transport rather than their own vehicles and given regular bus services rely on their being enough passengers to make the financially viable then removing a core of bus users will result in poorer bus services for all of us.

    The winter fuel allowance would have to be converted into some sort of seasonal variation in the state pension or else you risk it missing its purpose and ending up with some pensioners unable to save the extra money they would receive through the summer for their winter fuel bills and so freezing to death.

    Basically IMHO the winter fuel allowance and the free bus pass and free TV license are by far the simplest way of achieving the worthwhile goals they are there for and I do not see a rise in the state pension equivalent of averaging out the cost of these benefits across all state pensioners as more desirable than continuing them.

    It would be far more effective to raise more money for the government by removing higher rate relief on pension contributions and/or reducing the annual relief limit

  • Re: Bus pass
    Because of the variable nature of use and hence value to the individual, the best we can do is to set a value in the same way that a petrol card or medical insurance are assigned a financial value, and tax this value via the P11 – a process which is well understood and requires next to no change to the existing tax system.

    Obviously, if we then implement a flex-benefits (ie. pick and mix) approach to these benefits, people can tailor their benefits to their circumstances, as they change during retirement.

    But this is taking a very narrow approach, as is the suggestion that ‘welfare’ should be taken away from pensioners and given to children. I suggest that with a little thought we can benefit children by giving through pensioners and in so doing help to deliver on what Jeremy Hunt is currently talking about, namely the restoration and reinvigoration of the social contract between generations. Naturally for this to work, we need to provide incentives that encourage people to “game the system” to their benefit and so adopt or look after pensioners. Given that it costs the state significantly less for an elderly person to be cared for at home within a ‘family’ rather than in a care home, there is lots to be gained by such an approach.

  • Helen Dudden 19th Oct '13 - 9:25am

    Get pensioners back working, there you, are problem solved.

    We would no longer be a drain on society, and that is how to save money.

    We should all be working until the day we die. Pensioner speaking, so, of course, I don’t want anyone to feel they owe me anything.

    I repeat, I am a pensioner, so I have the right to this comment, there you are Nick, so glad I am no longer a member of this Party, don’t like your ideas.

  • Helen, you saw the implication of what I was saying!
    I however wouldn’t wish to call it work but more of a social contribution to society.

    Why do I say this, well ‘work’ implies direct involvement with economic activity, wages etc. whereas a social contribution is more of a giving back to society and is discharged more flexibility and informally (things the bean counters hate), a few examples I can thing of include: running a coffee morning every week to bring the elderly out of their homes and providing a social outlet, visiting people in care or in hospital, ‘grand parents’ looking after children whilst their parents work.

    I agree a person consigned to a home to wait out their days with no way to meaningful contribute to society is a drain on society, it is also more importantly a waste of a life.

  • Helen Dudden 19th Oct '13 - 7:54pm

    Actually I do just that, I work on the subject of international and human rights, like you say I will make coffee too.

    I have been studying law for over 10 years, the international stuff, as well as the English stuff.

    You have no input into the All Party on Abducted and illegally retained children. Someone needed my help and I had to study to get there. Translating court papers into the given language.

    Like you say, stand up for your rights, but there are others not able to do this. I have been out canvassing with my local Labour Party on childrens centers for those in need. Again, massive cuts in spending

    I did speak with some very worried older people, one person was 90 years of age.

    I hope the MP of my area Don Foster retires. I supported him for over 21 years, he, then supports the Conservatives as only Don can.

    I was being a smart Alec. Playing along with the children.

  • I am a well- off pensioner. I was lucky enough to be born in 1940. I and those like me have had the best of it and I doubt if future generations will be as lucky. The government owes me nothing and that includes all the benefits I receive and would not miss If withdrawn. I would plead caution re. bus passes because it is a hidden subsidy for local bus services but if the issue of the pass is related to income (possibly complex administration) that’s fine

  • Helen Dudden 19th Oct '13 - 9:37pm

    I am not well off. I stayed home to do child care until my children were around the age they could be left. After a car crash killed my partner, life was never quite the same.

    But, for those who will say she should have worked, despite, I will say I did return ,until I became very ill and went blind.

    I have tried in my life, and after sight surgery restored some sight I have tried again. Being a little older, and wiser.

    Also, I am not in the habit of judging others, we must leave that to the perfect souls with so many comments.

  • ITS BECAUSE THEY DONT PAY NATIONAL INSURANCE

    Why do wealthy pensioners get to pay 12% less tax than any other age group ?!?

    And why do they pay 21 % less than young(ish) graduates. TWENTY ONE PERCENT LESS !!!

  • Helen Dudden 20th Oct '13 - 9:40am

    But they are not working.
    It reads like you almost dislike the above situation.
    Yesterday I canvassed to keep childrens centers that serve a varied group of childrens needs. I was talking with pensioners who signed and agreed with what we doing. They are worried about what you are writing, bus passes, cuts in their benefits, the price of energy.
    You may feel that the above is useless, I don’t, I support the Labour Party on vulnerable children, it is your Lib Dem councilors that are trying to cut back on their budget. Sorry, just not acceptable.

  • Helen Dudden 21st Oct '13 - 6:56am

    MP’s are asking for an 11% pay rise.

    Do you not feel this is totally out of the question in the present climate?

    In this together?

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