Our first blog post of the week looks at the findings from Age UK’s latest Chief Economist report. It focuses on the key economic aspects in the lives of many older people in the UK: inequality and poverty, and benefit take-up.
Almost 60 years ago, Peter Townsend studied the lives of older people in East London and wrote:
The object of national assistance is largely to make up income, on test of means, to a subsistence level… A general definition of need is incorporated in its scale rates, and these are applied to individual circumstances, with certain discretionary disregards and allowances. The sums are intended to cover food, fuel and light, clothing, and household sundries, beside rent, and sometimes, after investigation, small additions are made for laundry, domestic help, or special diet. This definition of ‘subsistence’, on such evidence as exists, appears to be completely unrealistic.
You would be forgiven if, after reading Age UK’s latest Chief Economist Report, you concluded that not much has changed over all those years. Because, though the material aspects of the lives of older people in the country, whether in East London or East Belfast, have undeniably improved since then – thanks in a great part to the way initially ploughed by Eleanor Rathbone MP and the Old People’s Welfare Committee, Age UK’s predecessor, the current state of poverty among older people still looks dismal and grim as much as what it was like in Bethnal Green in yesteryear.
What makes things worse is that these are older people living in the UK in 2015, a country in the top places of the world rankings of economic development (23rd by GDP per head according to the World Bank) or quality of life (11th in the 2014 Global AgeWatch Index). But how bad is the situation?
I found that after deducting housing costs from their income, 4.8 million pensioners are left with so little that they can’t take a holiday away from home; 2.7 million cannot go out socially at least once a month; 1.2 million who cannot replace a cooker if it broke down; and so on, unnervingly on…
Inequality among older people
The report also tracked the incomes of the top 10 per cent richest pensioner households and the bottom 10 per cent –the ‘haves’ and ‘have nots’ if you like- since 1994/95. The incomes for both groups were growing more or less at the same pace until in 2004/05, the poorest pensioners started to see their income levels shrink (after adjusting for inflation). Richest pensioners have experienced a freefall in their incomes only since 2009/10, and not by as much over the last two years. So, inequality among older people has grown since 2004 and, starting in 2011/12 it seems to have grown again.
Of course, it is not just a question of rates of change but of pounds sterling. The average income of the poorest 10 per cent amounted to £156 a week in 2012/13 –down from £165.26 in 2010/11. Not surprisingly, 140,000 pensioners can’t afford even one daily filling meal. You read it: one hundred and forty thousand older people.
According to the Department for Work and Pensions, in 2013/14, 770,000 people who were entitled to the Guarantee Credit had not taken up this benefit, missing out on £2.59 billion–about £3,380 a year per entitled non-recipient. Including those missing out on the Savings Credit element of the Pension Credit and on Housing Benefit, I estimated that pensioners (the vast majority of whom are those most in need) have foregone £3,680 million in 2013/14.
The reasons why many older people do not take-up benefits they are entitled to are well-known: a mix of lack of information, social isolation, language and administrative barriers, mental and physical ill-health, stigmatisation, etc. It is easy to see how these factors compound each other and lower benefits contribute to even more social isolation, poorer health, and so on. Local Age UKs are providing advice and raising awareness so that take-up may increase. But the onus is neither upon charitable organisations nor, by any means, older people themselves, but upon the government. More needs be done. Take-up must go up.
A great British economist in the 19th century, Alfred Marshall, once said that economists should keep their heads cool and their hearts warm. Let me tell you, it’s not easy to crunch the numbers, run the computer scripts, and analyse the results whilst my blood perilously reaches boiling point.