Ben Ramanauskas is a research fellow at Oxford University, associate fellow at Bright Blue, and former adviser at the Department of International Trade.
The Labour Government has pledged to essentially means test the winter fuel payment so that only pensioners on Pension Credit or in receipt of other benefits will be able to receive it. The move has been welcomed by many of my fellow free-market travellers.
But while I understand their enthusiasm for this, I believe it is a bad policy.
It is true that pensioners do get a good deal compared to young people in the UK. Most of them own their own home – something which is sadly a pipe dream for many young people – and of course they see their incomes protected through the Triple Lock on pensions, which is not something afforded to any other group in society.
There is also the fact that one in four pensioners in the UK is a millionaire, which is mainly due to the value of their assets such as their homes, propped up and protected thanks to our restrictive planning system (which also forces up housing prices and rents for young people).
As such, it might feel particularly galling to hear calls to protect another benefit for boomers – but this does not mean that it’s wrong.
There are a lot of wealthy pensioners who do not need the winter fuel payment or any other benefits. However, there is still a lot of deprivation among the pensioner demographic.
Labour will argue that the very poorest will be protected, as the payments will still be available as those on Pension Credit will still be eligible. This is welcome but it ignores the fact that the uptake of Pension Credit has actually been very low. Accessing it means forcing people to interact with our needlessly cruel and bureaucratic benefits system which really does not handle nuance well, and so for various technical reasons many very poor pensioners are not eligible to receive extra support.
(As an aside, I have argued that the whole welfare system needs reforming in order to help people of all ages who are in receipt of benefits.)
What is more, given that the ‘simplest’ way of receiving Pension Credit is online, this is obviously going to be a barrier for elderly people who are among the least tech savvy people in the country.
This means that thousands of pensioners who are poor but who, for whatever reason, are not eligible for Pension Credit, are going to miss out on support payments – which means that they will have to face the choice between eating and heating.
Again, this is sadly a choice faced by many people of working age and their children. This is a dreadful thing. But it does not mean that we should therefore impose this choice on even more people. We will see elderly people become sick and die as a result of this policy. As such, it is wrong in and of itself.
It is also bad news for public services and taxpayers; the policy is being introduced in part to reduce the amount spent on welfare, but it will likely just shift the burden onto other public services. Old people becoming sick means that they will need to be taken care of. This means we’ll see an influx of older people becoming reliant on the NHS and the social care system.
The previous government failed to grasp that failing to adequately fund things such as mental health services would lead to the State spending more money on supporting people who couldn’t work due to ill health. This government seems doomed to repeat these failings by trying to save money by freezing pensioners who, if they don’t die, will be costing taxpayers a lot of money as they languish in a hospital bed.
Finally, it is a bad policy because it is a cop out. It is more tinkering rather than fundamental and radical reform.
The State Pension does need to change. The Government should look at introducing a form of means testing for the entire benefit, which would probably mean that most older people do still receive it but that the very wealthy get no handout from the State.
Pensioners should also definitely start paying National Insurance Contributions. We need to tackle this false notion that pensioners are getting back what they paid in. The State Pension is a benefit just like Universal Credit, and is paid for by current taxpayers – so it’s important that older people understand and appreciate it.
The Government should also look at raising the State Pension age for people in some professions whilst lowering it for those who have spent most of their lives working in manual labour.
Doing all of this will be unpopular and require huge political capital. But it is the right thing to do, whereas this tinkering at the edges is simply a distraction. We do need a system which gives a fairer deal for younger people, but means testing the winter fuel payment is a terrible way to go about this.
Ben Ramanauskas is a research fellow at Oxford University, associate fellow at Bright Blue, and former adviser at the Department of International Trade.
The Labour Government has pledged to essentially means test the winter fuel payment so that only pensioners on Pension Credit or in receipt of other benefits will be able to receive it. The move has been welcomed by many of my fellow free-market travellers.
But while I understand their enthusiasm for this, I believe it is a bad policy.
It is true that pensioners do get a good deal compared to young people in the UK. Most of them own their own home – something which is sadly a pipe dream for many young people – and of course they see their incomes protected through the Triple Lock on pensions, which is not something afforded to any other group in society.
There is also the fact that one in four pensioners in the UK is a millionaire, which is mainly due to the value of their assets such as their homes, propped up and protected thanks to our restrictive planning system (which also forces up housing prices and rents for young people).
As such, it might feel particularly galling to hear calls to protect another benefit for boomers – but this does not mean that it’s wrong.
There are a lot of wealthy pensioners who do not need the winter fuel payment or any other benefits. However, there is still a lot of deprivation among the pensioner demographic.
Labour will argue that the very poorest will be protected, as the payments will still be available as those on Pension Credit will still be eligible. This is welcome but it ignores the fact that the uptake of Pension Credit has actually been very low. Accessing it means forcing people to interact with our needlessly cruel and bureaucratic benefits system which really does not handle nuance well, and so for various technical reasons many very poor pensioners are not eligible to receive extra support.
(As an aside, I have argued that the whole welfare system needs reforming in order to help people of all ages who are in receipt of benefits.)
What is more, given that the ‘simplest’ way of receiving Pension Credit is online, this is obviously going to be a barrier for elderly people who are among the least tech savvy people in the country.
This means that thousands of pensioners who are poor but who, for whatever reason, are not eligible for Pension Credit, are going to miss out on support payments – which means that they will have to face the choice between eating and heating.
Again, this is sadly a choice faced by many people of working age and their children. This is a dreadful thing. But it does not mean that we should therefore impose this choice on even more people. We will see elderly people become sick and die as a result of this policy. As such, it is wrong in and of itself.
It is also bad news for public services and taxpayers; the policy is being introduced in part to reduce the amount spent on welfare, but it will likely just shift the burden onto other public services. Old people becoming sick means that they will need to be taken care of. This means we’ll see an influx of older people becoming reliant on the NHS and the social care system.
The previous government failed to grasp that failing to adequately fund things such as mental health services would lead to the State spending more money on supporting people who couldn’t work due to ill health. This government seems doomed to repeat these failings by trying to save money by freezing pensioners who, if they don’t die, will be costing taxpayers a lot of money as they languish in a hospital bed.
Finally, it is a bad policy because it is a cop out. It is more tinkering rather than fundamental and radical reform.
The State Pension does need to change. The Government should look at introducing a form of means testing for the entire benefit, which would probably mean that most older people do still receive it but that the very wealthy get no handout from the State.
Pensioners should also definitely start paying National Insurance Contributions. We need to tackle this false notion that pensioners are getting back what they paid in. The State Pension is a benefit just like Universal Credit, and is paid for by current taxpayers – so it’s important that older people understand and appreciate it.
The Government should also look at raising the State Pension age for people in some professions whilst lowering it for those who have spent most of their lives working in manual labour.
Doing all of this will be unpopular and require huge political capital. But it is the right thing to do, whereas this tinkering at the edges is simply a distraction. We do need a system which gives a fairer deal for younger people, but means testing the winter fuel payment is a terrible way to go about this.