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Universal benefits meanstesting

(23 Posts)
golfina Sun 24-Nov-13 11:13:21

I contributed to your survey and have read the results with interest. However, there is an assumption embedded in it which I would like to challenge, which is that the only way to distribute these benefits in a socially fair way is through means testing. The problem with means testing is that it is extremely expensive to administer and tends to involve sudden cut-offs so that if, for example, your income goes up by a small amount, you lose ALL your benefits, which can be quite a considerable amount. Wouldn't a better way be to TAX benefits, so that the higher your income, the more you 'pay', but you don't lose the lot in one fell swoop. For example, a sick elderly person could find paying for prescriptions a huge burden, even if they are reasonably well-off (and for this reason I am inclined not to include these in the system, as it penalises the sick and disabled who already need a lot of support, and is complex to administer). But it would be easy to assume a sum for travel passes and winter fuel payments, and deduct tax at either the lower or the higher rate, depending on income. (I would do the same for child benefit). The tax system is already in place and wouldn't require a whole lot of new forms and new administrators.

ps Sun 24-Nov-13 15:09:36

golfina you mention means testing being expensive to administer, I will have to bow to your knowledge on that point as I have no idea what the administration costs against savings costs are however as far as I'm aware most benefits are taxable and I assume universal credit will also be. I think however that most who claim receive less than the tax threshold (currently £9440 for those born after 5 April 1948 & £10500 for those born between then and 6 April 1938). Therefore no tax is payable. Those with an income which is taxable receive blanket benefits such as winter fuel allowance which is not taxable as far as I'm aware.
I see the logic of your argument but to be honest whichever way is chosen there will be winners and losers. I would have thought means testing is an effective way to distribute benefits to where they are needed most. As one on a K tax code I have no issue with helping those in need through my taxes but handing out sums to those not in need seems a waste of what could be used to benefit the most needy and the most vulnerable in our society which includes a lot of us pensioners. If I am to believe what papers print it is said there are many who need to choose between heating and food. That is not right in the 21st Century in what is claimed to be a civilised society. I guess whichever method is chosen will have faults, perhaps means testing has less than the current system. Keeping the elderly warm will prolong their life and is probably the least we should do. If energy companies were nationalised we perhaps could only charge a small percentage of cost to the elderly, now that would help many, but will still need to be means tested.

FlicketyB Sun 24-Nov-13 15:59:29

Why not just get rid of all these bells and whistles and simply increase the state pension by £5 - £10 a week. No money and staff wasted on a administrating the bus pass, winter fuel payment, prescriptions and everything else. Just one payment and we are on our own to manage our budgets like everybody else. The minimum pension guarantee level should be increased by the same amount

I am now going to call coals of fire on my head because I am going to say that I am always puzzled by many of the stories of older people having to choose between food or heat.

The minimum income for a single pensioner is guaranteed is now £144.50 and for a married couple £222.05. Anyone whose income is being supplemented to that level will also get their rent and council tax paid so that the £144.50 (£222.05) does not have to stretch over those as well. Housing benefit and council tax benefit are benefits that taper with income so those with incomes £100 a week or more above that level can still get some help. They will also be getting free prescriptions, bus pass, winter fuel payment etc.

When I was visiting older people to help with benefit claims, most of the clients I visited were in LA or Housing Association properties, which were generally well insulated and with modern heating systems so their heating bills should have been manageable. Whatever financial problems they had before they received their full benefits these disappeared once they were in receipt of them. If they were also in receipt of disability pensions then their pensions could be £100 - £200 a week higher.

Yes, one or two clients did have problems, but they were generally of their own making. One had £50,000 'rainy day' money in a building society so did not qualify for any income or council tax help. My suggestion that at 85 she could risk spending some of this fund on much needed house repairs and to make her house warm and efficient to heat, which would also run her funds down sufficiently to claim various benefits was greeted with horror - it was her rainy day money, it mustn't be touched!!. Another lady with a good income had taken out an enormous mortgage to fund the unsuccessful business dealings of her son and was in poverty after making the monthly mortgage payments.

I will now run for cover.

janeainsworth Sun 24-Nov-13 16:28:11

I won't be heaping coals on your head Flickety.
I think most pensioners are relatively well off - it's the young families who struggle.
And no I wasn't one of the 24% or whatever it was, who said in the survey that WFA should be abolished - it was introduced instead of a pension rise. Time as you say to just include it with the state pension.

Tegan Sun 24-Nov-13 17:37:18

I'm now on about 13,000 a year. Just enough money to pay my bills and eat but it leaves very little for holidays, clothes etc. And not entitled to any benefits that I know of [other than 25% off my council tax]. I dread the thought of not getting the fuel allowance or losing my newly acquired bus pass. I'm not dependant on either of them at the moment but may be in the years to come [if I have to stop driving for example]. There is talk of our village surgery closing which may mean a bus journey to the nearby town if I need an appointment [£4 return trip]. All my life I've been in the group of people that pay for everything but qualify for nothing, so I just hope, for once I keep my fuel allowance and bus pass. They're worth far more than £40 a week to me.

Aka Sun 24-Nov-13 17:43:56

Good point Tegan about having to use buses in years to come. Perhaps bus passes could just be issued to those who don't have a car?

mollie65 Sun 24-Nov-13 17:46:00

tegan you are in the same ballpark income wise as myself - as you say we pay tax, council tax and get very little in return. I do find I get very cross when posters come out with the same old comment ' most pensioners are relatively well off' they really have no idea. In fact the average income for a single pensioner household is about 13K. At the moment I manage - but things are tight and I cannot take a holiday each year because it costs so much as a singleton. The WFP being per household is about the only thing that does really benefit single pensioner households and it would be wicked to withdraw it on the basis we are 'well-off'.

FlicketyB Thu 28-Nov-13 22:45:44

Just came back to this after a gap. I am not saying 'most pensioners are relatively well off'. What I am saying is that providing a pensioner is getting all the benefits they are entitled to then I do not understand why so many say that they are having to choose between heating and eating.

I would have thought that on £144.50 a week (£222.05, if a couple) and even more if also in receipt of a disability benefit and with rent and council tax fully covered by the appropriate benefits, no older person should need to choose between food or warmth, other than in the most exceptional circumstances.

With the statement that many older people are having to manage on very tight budgets that preclude many of even the small luxuries in life I am in complete agreement. It is the heating/eating choice that I do not understand.

I would like to see WFB abolished, but only if it was replaced by a £4.00 a week rise in the state pension. In other words instead as getting it as a patronising add on, it is incorporated into our State Pension as of right.

merlotgran Thu 28-Nov-13 22:53:02

I think the WFA is welcomed as a kind of 'saving' by many pensioners. It's paid in the autumn when fuel bills rise but if it is incorporated into the state pension there will be no little 'nest egg' to help with the winter bills.

Do pensioners who really need it regard it as a patronising add on? hmm

FlicketyB Thu 28-Nov-13 22:59:21

Most pensioners I know pay fuel bills by monthly direct debit.

FlicketyB Thu 28-Nov-13 23:07:57

I should have said that I think all the add ons, whether WFA, bus passes or free prescriptions, are patronising. They all suggest that as old people we can not be trusted to budget our expenditure but need to be given little ring fenced amounts for specific purposes that are good for us, like keeping warm, visiting our family and friends (by bus) or taking prescribed medication, in case we otherwise spend the money on bingo and tonic wine.

I would prefer to see the value of the lot of them totalled up, averaged and then replaced with a rise in the basic State Pension to the same average amount. Then if I decide to spend my money on fags, mags and rags and then cannot afford a bus to visit my friends and families or turn on the heating, then that is my choice. I was quite able to make these decisions for myself before I reached pensionable age, why is it considered that I lost that ability as soon as I reached retirement age?

merlotgran Thu 28-Nov-13 23:08:29

So they can then spend their 'nest egg' on Christmas.

Ana Thu 28-Nov-13 23:12:59

£144.50 a week is less than £8,000 p.a., far less than the income some Gransnetters who have posted on this thread are concerned about managing on.

Yes, I can believe that some pensioners have to ration either their fuel usage or their food.

Charleygirl Thu 28-Nov-13 23:18:33

I feel that the £10 Christmas bonus costs a lot more per head to administer. Why can it not be added to the WFA? Less admin.

mollie65 Fri 29-Nov-13 07:30:41

ana that 8K per annum is without having to pay any tax or council tax,
It gives you free boilers/insulation, pays your rent , mortgage payments, and the added benefits of cold weather payments etc. and it is not FAR LESS - by any stretch if you take the fact that out of the 12K probably £1200 is spent on council tax etc. and the bit above the state pension is there by dint of us paying into a private pension or SERPs.
and don't forget that a couple on pension credit get £225 a week plus all the add-ons.
can you not see that an extra £4 on the state pension will be taxable and will be double for pensioner couple households (they will get £4 per week EACH) so single pensioner households will lose out again and that is who I am talking about. Household income of 12K after tax does not go very far - why do you find that difficult to understand. It is not about heating or eating - it is about doing without a holiday each year and being very very careful.

FlicketyB Fri 29-Nov-13 08:54:19

Yes, but my original comment was very narrowly defined to cover only the heating/eating comments. What is more I have fully agreed that on the larger scale, the amount of money many poorer pensioners receive is inadequate. Anyway poorer pensioners do not receive enough to be tax payers so an increase in pension will not affect this.

You cannot have it both ways, believe that women should not be treated as mere appendages of their husbands/partners and then complain if as individuals they receive the same amount per capita in state pension as women (or men) in single person households. I worked most of my adult life, always paid the full stamp, never the cut price, cut benefit, married women's rate, and the pension I receive is one I earned and contributed to.

There are inequalities in the current system. I cannot benefit from the free bus pass because I get travel sick on buses and anyway live in a rural area and our buses do not go where I need to get to. My health is good so I do not benefit from regular free prescriptions. This is my argument. Many people cannot benefit from the extras currently on offer for reasons beyond their control so getting rid of them and turning them into a flat rate increase in pension, which should also be recognised with an equal hike in the minimum income/Pension Credit Rate will not be anymore penalising, if at all, than the current system.

ps Sat 30-Nov-13 18:14:34

I'm totally confused now as I have no idea where the figures being quoted are from. Where does the £144.50 pension for a single person come from? I thought the basic state pension was £110.15 maximun currently. Agreed some pensioners may have a SERPS element added and even a graduated earnings element added but the state pension is £110.15 per week. And, why do pensioners not pay council tax? I'm a pensioner and I certainly do pay council tax albeit with a 25% reduction for being a single occupier. I also pay tax and receive no benefits other than free prescriptions, eye tests (I think), free bus pass and Winter fuel payment (which has just arrived). I would love to be enlightened as if I do not need to pay council tax I would want to know why I am and claim a refund. Any enlightenement would be greatly appreciated.

Ana Sat 30-Nov-13 18:39:44

I'm confused by mollie65's rather heated reply to me. I was responding to Flickety's post in which she said she did not understand the heating/eating choice, not making some wild assertion that pensioners on an income of £12,000 p.a. have it easy! confused

Nonnie Sat 30-Nov-13 19:09:08

I read a few days ago that we should keep our living areas at 70° and our bedrooms at 64° which I would find too warm and quite expensive. I don't understand these figures as I suspect that most pensioners were brought up, as I was, without central heating and find such temperatures oppressive. Perhaps if you are immobile it makes sense but most of us are not. Maybe this is why some think we should be able to manage on less and others disagree?

FlicketyB Sat 30-Nov-13 19:10:14

ps The figures come from the Government website and do not apply to the State Pension but to the minimum income that pensioners are guaranteed through the Pension Credit system if their total income from all other sources (including state pension and occupational pensions) is less than the figures I gave. I worked as a Benefit Advisor form some years and completed Pension credit applications for many older people, especially women, on basic state pension and below.

Ditto not paying council tax, this does not apply to all pensioners but it does apply to pensioners on low incomes. For the purposes of pensioners this is defined as an income so low that you qualify for pension credit at the guarantee level. At this level you will get all your council tax and all your rent covered by Housing Benefit and Council tax benefit.

If you are just above that level you will get part of it paid. The two benefits taper out as your income gets larger and depending on what your rent and council tax is. I estimate that someone above retirement age with an income of around £250 could still get some help with rent and council tax depending on the how much they pay in rent and council tax. So if your income is around that level it is worth applying for it, the worst that can happen is you find you are not entitled to it

ps Sat 30-Nov-13 19:25:53

FlicketyB It would certainly be nice to have all the add ons consolidated into a single pension payment but I don't think it will happen as the option to cancel the bus pass, winter fuel payment, eye test and prescription charge is always available to any administration wishing to balance the books. If it was consolidated it would be almost political suicide to reduce the pension, albeit that will be the case (for some) when the flat rate is introduced in 2016. Also the prescription charge waiver is, I would imagine, a life saver for some not benefiting from good health as perhaps you and I do. Some drugs cost the earth, in some cases, I would imagine, far in excess of the maximum any form of state pension could pay. A difficult dilema for any government but one which will be returned to frequently in the future as moves are made to reduce the expenditure on the elderly population. I dread to think what some pseudo whizz in the cabinet office will one day come up with to solve the problem - perhaps compulsory euthanasia once we have reached 3 score years and 10. Hopefully not but it would not surprise me. Alternatively a state pension retirement age of 75 to 78 might also do the trick. Heaven forbid, I just cannot imagine a PE teacher or Firefighter at 75 years of age.

ps Sat 30-Nov-13 19:35:01

FlicketyB Our posts crossed. Thank you for the info, sadly I qualify for nothing and do not pay rent but do pay council tax in addition to income tax. My home is my own. Oh well, never mind but thank you again.

FlicketyB Sat 30-Nov-13 19:39:10

Ps. the flat rate pension will not be retrospective. It will only apply to those retiring after the introduction date. Those of us already receiving a state pension will continue to receive our pension on the same basis as we get it now.

If free prescriptions ended and was subsumed as an extra amount on the pension, those of us getting medication would be paying just the standard prescription charge, regardless of the cost of drugs we were taking. Those taking a lot of medications could buy a prescription season ticket as those under pensionable age do now.