Pensioners’ friend works on getting them more money
Tuesday 28th August 2012, 5:00PM BST.
IT IS early days, but there is a lot of research going on in a corner of the Vale into how to increase financial support for pensioners.
Deputy Andy Le Lievre has his sights set on the forthcoming October Billet, which will include Social Security’s recommendations for benefits rises.
In a break from past practice, that has been moved alongside the Budget debate to give members a more rounded picture of what they are spending the public’s money on.
But what it has also meant is at the end of this month the States will be debating the department’s report on the upper and lower earnings and income limits for social security contributions – basically how it will put the pot of money together – but not what that cash will be spent on.
All the time there is a background of evidence that up to £20m. a year more needs to be spent on helping the poorest and most vulnerable in our society to just have the minimum level of income required.
And then contrast that with ongoing efforts to bring States spending under control and to shut the ongoing £30m. a year deficit and you can see that this Assembly faces some fundamental challenges that may well split it along ideological lines.
Deputy Le Lievre has to remain flexible with his proposals, but it is expected the department will recommend in the October Billet a 3.6% increase in contributory benefits, including the old age pension, and 3.1% rise in income support, family allowance, attendance allowance and invalid care allowance.
‘I suppose one of my main gripes concerning the September Billet is the unfortunate departure from long-standing practice of more than 40 years with the introduction of two policy letters in consecutive months to cover income and expenditure aspects of the same organisation,’ said Deputy Le Lievre.
‘In the past, the Social Security Department has established the increase in benefit levels required to sustain the true value of those benefits and then said how such increases would be funded via contributions.
‘This time the board will present the States in September with recommendations concerning the increases that should be applied to contributions and only after that debate will it consider, in the following month, what rises might be applied to benefits.’
He said this placed States members in the awkward position of having to decide whether to amend the contribution proposals without knowing exactly what is to be proposed for contributory and non-contributory benefits – or at least not in an appropriate timeframe to contemplate carefully any amendment.
‘Ironically, by the time of the States debate in September members will be in possession of the October Billet, so they will know what is to come, but the time for well thought out and well supported -documents-wise – amendments will have passed. In my mind, at least, increases applied to pensions are not a matter to be dealt with “on the hoof”.’
In any event, he said, any proposed amendment to benefits in September would go well beyond the propositions contained in the existing report given that they are wholly about contributions.
‘All of the above matters are why I have chosen to commence research and information gathering work now so that I can publish a paper on contributory and non-contributory old age pensions before the September debate to enable new members in particular to be better informed at the very outset of the debate.’
Social Security is expected to recommend pension and other benefits are increased by RPIX plus 0.5%.
But Deputy Le Lievre intends to propose that contributory old age pensions for couples are increased by RPIX plus 1%.
He stressed this amendment would only apply to the pension in relation to a couple, not to any other benefits.
‘My research regarding the level of pension to be paid to a single pensioner is not as yet complete but I would expect an amendment of similar wording ie RPIX plus 1%. There exists the possibility that for single pensioners the amendment might be RPIX plus 1.5% or even 2%, but as I have said it is too early to say at this stage.’
Deputy Le Lievre is also leaning towards directing the Policy Council to produce an RPI specially for pensioners.
There were four main reasons behind these amendments.
He said that pensioners, and more especially the level of pension paid, were too reliant on the social beliefs or aspirations of board members, which can fluctuate over time.
The link between the pension for a couple and that for a single person needed to be examined in far greater detail, he added.
There was also some good reason to believe that the pension was undervalued and should be subject to a thorough review of its actual purchasing power – the RPIX plus 1% should therefore only be seen as a holding exercise, he said.
And he dismissed Social Security’s reasons outlined in the September report for not increasing pensions by RPIX plus 1%.
The department stated that in the last six years the single person’s old age pension has increased by 29%, compared to an increase in earnings of 24%.
‘A chart going back six years smacks of a short-term view when in reality pensions must always be part of a long-term scenario,’ said Deputy Le Lievre.
He also intends to amend the proposals for income support for pensioners including widows.
‘The reasons for the amendment(s) and the nature of the amendment(s) themselves are more complicated than those related to contributory pensions,’ he said.
‘In the main, this is because the States back in 1988 “decoupled” the rate for an OAP couple and a couple on what was then supplementary benefit.
‘The two rates of benefit have remained separate to this day and there now exists a considerable and unjustifiable disparity between the two rates of benefit. Even SSD accepts that the current rates of income support are far too low and proposed very significant increases, unfortunately unsuccessfully, earlier this year.’
The department is likely to recommend a general increase of 3.1% for non-contributory benefits.
‘I will be proposing that the requirement rate for a couple living together (where one or both persons is over 65) be increased by RPIX plus 1.5% for the next five years or, until such time as the Social Security Department conducts a complete review of the income support requirement rates.’
He said that this increase would not make good the appalling shortfall in the existing rate of benefit but it would provide a stimulus to the department and the social policy group or Policy Council to revisit the work carried out by Social Security over the last three-and-a-half years that showed that massive increases were required.
His research regarding the level of pension to be paid to single householders over 65, including widows, is not yet complete.
‘But I would expect an amendment of similar wording i.e. RPIX plus 1.5% for the next five years or until such time etc. There exists the possibility that for single householders over the age of 65 the amendment might be RPIX plus 2% or even 2.5% but as I have said it is too early to say at this stage.’
He may also look to amend the income support benefit limitation if the department fails to increase it as sufficiently as he thinks is needed to assist with the goal of amalgamating it with Housing’s rent rebate scheme.
Deputy Le Lievre is probably the best-placed States member to create a package of measures in opposition of the Social Security department given his history of working on benefits when he was a civil servant.
And by producing a report with evidence to support his case he will be placed in a much stronger position than has been seen with similar attempts in the past.
This new States appetite for spending has not yet been tested – and this debate will do that in spades, especially given the emotive tug of pensioners’ living standards.