Budget 2013: did the Chancellor deliver for older people?

Following statements from the Chancellor prior to the budget, it seemed that older people were due to benefit from significant changes to the future funding structures of social care and pensions. However, following the Chancellor’s statement there is little new to celebrate.

The main point of interest for pensioners was confirmation that the implementation of the cap on social care costs (the ‘Dilnot’ reforms) and the introduction of the single-tier state pension will both be brought forward to 2016-17. From April 2016, there will be a cap of £72,000 on the costs of care, and the upper threshold limit for the residential care means test will be increased to £118,000.

440x210_pound-coinsWhilst we welcome the earlier implementation of the care costs cap and the higher upper means test threshold from April 2016, this will do nothing to help the 800,000 older people who need help with everyday tasks but receive no formal state support. Since 2010/11, in real terms £700 million has been cut from local authority spending on social care. Although the Government has provided additional investment for social care over the course of this parliament, it has not been enough to halt the downwards spiral in care funding. As a result, 85 per cent of local authorities now provide care only to people with substantial or critical needs.

The future of social care is one of the most important issues facing the country. All too often the NHS and families are left to pick up the pieces when older people fail in their struggle to cope alone, which makes no moral or financial sense.

The Chancellor also confirmed that the Government will bring forward implementation of the single-tier state pension to 2016-17 (it will not affect current pensioners). When the single tier pension is fully introduced the current basic and additional pensions will be replaced by a single pension worth around £144 a week in today’s prices.

While Age UK supports the aims of state pension reform, the Government offered no proposals to improve pensions for current pensioners or to reduce pensioner poverty which currently stands at 1.7 million. Older people who are drivers, particularly in rural areas, will be relieved that the 1.89 pence per litre fuel duty increase that was due to take effect on 1 September 2013 has been cancelled. However, in spite of a raft of energy announcements, the one Age UK was looking for – significant investment to improve the energy efficiency of Britain’s housing stock and cut the thousands of deaths each year from cold – was missing.

Find out what the 2013 Budget means for you 

Read Age UK’s full Budget briefing 

10 responses to “Budget 2013: did the Chancellor deliver for older people?

  1. pierrepierpont

    The new flat rate pension was originally going to be introduced in 2015, then they changed it to 2017 and now it has changed again to 2016. What will it be next week? Increased uncertainty does not help in retirement planning. Of course, the flat rate pension will not help any existing pensioners which is a severe fault in the proposals. Also the cohort of women born in 1952/53 rapid increase in their pension age has not been addressed adequately.

  2. I am confused. Does this mean that pension credit will be abolished because if it does this will be a significant reduction in money each week for pensioners

    • ageukpublicaffairs

      No, Pension Credit will not be abolished. It and other means-tested benefits will continue to provide a safety net but the savings credit element of Pension Credit will be abolished. (Savings credit provides extra support to people with modest levels of savings or pensions.)

      • pierrepierpont

        @ ageukpublicaffairs – I thought one of the main reasons for the flat rate pension was to simplify the existing pension system, like additional payments to pensioners via Pension Credit Guarantee, etc. If they are going to retain the PCG, won’t the savings be made smaller? Is there anywhere that we can see the official version of this retention of the PCG? I must say, it does look like the wheels are starting to fall off this bill already. To be introduced initially in 2015, then 2017, then 2016. Minimum number of years was 11 years, then 1 year and now between 7 and 10 years. Maximum number of years required – was 44 years, then 30 years, now 35 years. All this indecision and uncertainty makes it difficult to plan for retirement.

      • ageukpublicaffairs

        Thanks for your question Pierre. Information on the impact of the reforms, including the impact on Pension Credit, is given on the DWP website at http://www.dwp.gov.uk/docs/draft-pensions-bill-summary-of-impacts.pdf

      • Thank you so much for that information. For some time I have been trying to find out whether pension credit was going to be abolished without success. I can now feel a little more secure about the future.

  3. pierrepierpont

    I think the theory is that the Pension Credit Guarantee system will be abolished to help fund the new flat rate of pension. However, clearly there are some people, who will not have paid sufficient NI contributions to give them anywhere near the flat rate maximum pension, so there will have to be “transitional arrangements” to deal with that, if not “permanent arrangements”. So they will have to continue with the PCG and will not have all of it to help fund the flat rate pension. Of course, the PCG will still exist for pensioners who qualify under the pre 2016 state pension arrangements. The simple pension system is starting to get more complicated all the time.

  4. Bringing the date forward to 2016 means a few extra will get the higher Basic Pension of £144 pw, together with Auto Enrolment benefits, whereas many many more people retired before this year, in the same option comparison, will receive only £107.45pw together with paid for SERPS or private pension. This is disgaceful, because existing pensioners lose £1900pa and DWP try to make out they are doing us a favour. Please keep on at Govt, because this is unfair

  5. In April 2013 the state pension will go up to £110.14 per week.

    There will not be any “auto enrolment benefits” because the system has only been introduced and by the time 2016 comes along, there will be virtually nothing there that could have been saved. The government will benefit hugely to the tune of £5.5 billion per year by bringing the implementation date forward one year because the flat rate pension system will mean that employers and employees can no longer get the benefit of discounted National Insurance contributions through “contracting out” their pensions which will be abolished. All for them, none for us.

    • The Basic may go up to £110.14 in April 2013, but in comparison. the £144.00 will go up the same percentage. Its always something retiring B4 2016, but nothing for us with full NI contributions

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