The Chancellor, George Osborne, has this week announced the Budget for 2015/16. Mike Smith, joint Head of Public Affairs at Age UK, looks at how the Government’s proposals will affect older people.
Yesterday afternoon the Chancellor, George Osborne, stepped up to the despatch box to deliver the final Budget of this Government. This was always going to be a highly political Budget, with one eye firmly focussed on the election which is now just seven 7 weeks away. At Age UK we were looking out for announcements most likely to impact on older people up and down the country, as well as what was ‘missing’ – proposals we have been calling for which may not have been included.
So what was the main announcement in the Budget affecting older people? The most significant budget announcements for many older people are the pensions reforms for those who have already taken out an annuity. This follows the radical reforms to private pensions set out in last year’s Budget. This time around, the Chancellor announced that from April next year pensioners who already have a pension annuity will be able to sell their annuity income to a third party. This is likely to be welcomed by many older people who have taken out an annuity and feel they may have missed out on the reforms which come into effect in April.
Welcome as this announcement is for many, there is a need to proceed with a degree of caution. For example, this move may open up more people to the risk of scams or action from creditors from which they are currently protected. The Government has stated that they will be consulting on the changes announced today. Age UK would like to see an independent retirement savings commission set up to look at pension savings and income in the round.
While the annuities changes were probably the biggest Budget announcement from Age UK’s perspective, there were number of other significant points for many including a reduction in the lifetime allowance for pension contributions that benefit from tax relief from £1.25 million to £1 million, confirmation that pensions will rise by 2.5%, and additional funding for the Pensions Wise guidance service. You can read a full outline of these and Age UK’s position in our Budget Briefing.
Despite these measures, in many ways the Budget announcement today was also a missed opportunity to address the big issues facing many older people. The Chancellor failed to announce significant new funding for social and health care in light of the hundreds of thousands of older people currently in need of support who don’t receive it. Between 2005/6 and 2013/14 the proportion of people aged 65+ receiving care fell from 15.3% to 9.1%. This means over 380,000 fewer people receiving care than a decade ago at a time when the number in need of care is rising.
It was a missed opportunity to invest new money into home energy efficiency measures which could significantly reduce the number of older people suffering in cold homes. And it was a missed opportunity to announce new measures to increase benefit take up for older people which could help many of the 1.6 million people living in poverty in later life.
With the last big set-piece event of this Parliament now behind us, the attention of the politicians (and Age UK’s Public Affairs Team) will more than ever turn to the looming election on 7 May. Before then the parties will set out their proposals if elected, in their party manifestos and there may well be further announcements impacting on older people that the parties are saving for this opportunity. We will be watching closely.