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Before the general election, former prime minister Rishi Sunak was asked on TV why he “hated pensioners”. After her recent speech in parliament, the same question might be directed at Chancellor Rachel Reeves. She has launched an assault on pensioners in England and Wales akin to the classic boxing “one-two”.
First, the jab: it would not be possible to implement an £86,000 cap on the costs adults would have to pay towards their social care. This was swiftly followed by the cross punch: Reeves announcing the “difficult decision that those not in receipt of pension credit or certain other means-tested benefits will no longer receive the winter fuel payment”.
Unlike the NHS (which is free at the point of delivery), social care has been means-tested since 1948. The most expensive part of care relates to people living in care homes. It has long been agreed by politicians that the system requires fundamental reform, but the can has been kicked down the road for at least 25 years.
In 1997, Tony Blair promised to end the system where older people were forced to sell their homes to pay for their care. He set up a royal commission, which promised free personal care (but people still had to pay for accommodation).
However, Blair changed his mind when informed about the cost, although free personal care was introduced in Scotland for adults aged over 65 in 2002. The Tory-Liberal Democrat coalition government also set up a commission, headed by Sir Andrew Dilnot, which suggested in 2011 that a cap should be set on payments at about £35,000. The government incorporated the cap (at a far less generous £72,000) in the 2014 Care Act, but failed to implement it.
Boris Johnson promised he had a plan for social care in his first speech as prime minister in 2019, which turned out to be a reheated version of the Dilnot proposal and was also never implemented.
Now, despite being confirmed by shadow health secretary Wes Streeting during the general election campaign, it is this cap, which the previous government planned, that Reeves has abandoned. Dilnot, the architect of the cap, called the decision a “tragedy”, declaring that “we’ve failed another generation of families”. It has been estimated that one in seven face social care costs of £100,000.
Some of those condemning having to pay for healthcare in the US might wish to consider that many people pay large sums of money for social care in Britain.
## Winter fuel payments to be means-tested
On the move to means-test winter fuel payments rather than continue to give them to all pensioners, the Treasury justifies its decision by arguing that “this will better target support for heating costs at those who need it”.
This is perfectly true, but targeting or means testing has traditionally been supported by the political right, and not Labour. For example, the right-leaning Institute of Economic Affairs was broadly supportive, stating that “The new Chancellor also appears willing to take tough decisions to save taxpayers’ money, such as ending winter fuel payments for better-off pensioners.”
Conversely, the political left has tended to favour universalism for a number of reasons. The concept of means-testing was often associated with the hated Poor Law before the welfare state of 1948. The 1945 Labour government generally brought in universalism such as the National Health Service rather than restricting health care to the poorest groups, which is the position in the US.
So, we have Labour government increasing means-testing, which you might expect from the Conservatives. Indeed, current Labour members (including Reeves) criticised this themselves when it was rumoured that former prime minister Rishi Sunak was considering it.
Moreover, there is the problem of the cliff edge, where people just above the limit for benefits feel the harshest edges of the policy. An estimated 800,000 who are eligible do not claim pension credit, and so will not receive winter fuel payments, as you will have to receive pension credit to then qualify for the payments. Pension credit is a benefit that people of retirement age on low incomes (less than £218 a week as an individual, or £332 a week as a couple) can claim.
As former Conservative pensions minister Ros Altmann has calculated, for the oldest pensioners (aged over 80), who do not claim pension credit, the removal of the payments is equivalent to a 3.3% cut in their pensions.
The effect of this would be worse than a decision to drop the “triple lock” on pensions, meaning that instead of a minimum increase of 2.5% in the basic state pension payments from next April, some pensioners have an immediate reduction. As SNP MP, Pete Wishart put it in the debate following Reeves’s announcement: “Does cutting winter fuel payments to all pensioners not seem and feel like Tory austerity?”
The largest savings identified in the recent Treasury audit ordered by Labour are associated with these two measures aimed at older people. The document states that “the government will change the way public services are delivered by embedding a mission-led approach”, but it looks as if the mission is to take money away from pensioners.
Martin Powell does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
