FIRST IT WAS THE UNEMPLOYED AND THE SICK: NOW THEY ARE OUT TO GET OLD PEOPLE

I'm obliged to "Arbroath" for pointing me in the direction of this story in the Indy about pensioners' benefits.


I felt it was worth a comment because it's actually quite a complicated issue.


Before the last UK election Mr Cameron was forced to make a statement by, if I remember rightly, a Sky journalist who asked him if it was true (as suggested by labour) that he would cut benefits to pensioners. In super election mode Cameron said that he rarely called any one a liar but that Labour were liars. It was something he felt VERY strongly about. He would keep benefits exactly the way he inherited them.

Which kind of boxed him into a corner, and one which I suspect his party wasn't terribly happy about.


It is debatable if Cameron has kept his promise. Winter fuel payments have been reduced from what they were, but the Tory/Liberal argument is that Labour had put them up temporarily and they were due to reduce in any case. (It strikes me too, that there has been some reduction in the amount allowed for subsidised bus fares in England, but I can't be sure about that.)


However, a close friend of the prime minister and party moderniser Nick Boles has recommended that benefits like prescription charges (England only)  bus passes (free in Scotland, subsided in England) free tv licence for the over 75s, and winter fuel payments (universal across the islands) should be available to only the poorer pensioners.


This of course doesn't seem unreasonable, depending whether or not you agree with universal benefits or not.

I'm undecided. I can see the advantages of means testing, and if the money saved on the rich were to be ploughed back into the poor, then that would make some sense. Of course, it will not be. This is Britain.


The thing that made me feel a little disquieted was this paragraph from the Indy's story:


"The Chancellor, George Osborne, the Work and Pensions Secretary, Iain Duncan Smith, and the Deputy Prime Minister, Nick Clegg, are prepared to bring in changes before 2015, arguing that old people should play their part in clearing the deficit."


What? It seems to me that it must have escaped the notice of these very rich men that pensioners are very definitely already playing their part in the deficit reduction plan (although as the deficit keeps rising I wonder that it can any longer be called that). 

Firstly many relatively poor pensioners have some savings, upon which they are now receiving insultingly small rates of interest, far far lower than the rate of inflation. So they see their hard saved money losing value by the day. Yet they dare not spend it because they have no way to replace it, and getting old without a small amount to fall back on is a frightening prospect. Keeping the interest rates low may have helped people with mortgages; it has hurt the nation's savers.


The half baked, useless and incredibly expensive quantitative easing programme in which hundreds of billions of pounds have been poured into the banks, has, it seems to me, done nothing to improve the situation for anyone other than fat cat bankers. What it has done is take billions out of pensions. The bankers cheating on Libor Rates has also cost pension funds dearly. In short people negotiating a pension deal at the moment are in for a sad shock, as the future they might have planned based on pension estimate of 3 years ago, will now be but a dream. 


As Osborne, Clegg and Duncan-Smith will never have to worry about the odd million, they may not have bothered to noticed this.

Means testing can be a useful tool in getting money to where it is most wanted, but it also has disadvantages. 


Firstly it is expensive. Everyone's income, from all sources, and family circumstantial must be verified and staff all over the country would initially have a massive job to do this. But, of course, there will be hundreds of thousands of changes of circumstances every week as people die, have dependants move in and out, spend some of their savings, get extra money from wills (or whatever), have pension changes...and so on There is a huge potential for error, and of course for cheating (yes, some old people cheat).


The second problem is that some things can be means tested on a sliding scale.  A winter fuel allowance for example could be paid in full to someone with £7,000 or less income, and not paid at all to someone on £10,000 or more. In between a sliding proportion of the allowance could be paid. This is a fair way to work.


But you can't do that with a bus pass, so you will have an inevitable cut off point at which people, had they eared but 1p less a month would have been entitled to whatever the deal is in their respective countries. However, as their income stands, they get nothing! Very unfair.

Interestingly, I have yet to hear about MPs taking about reducing the incredibly generous pension they receive; ministers no longer being allowed a redundancy package when they are sacked or forced to resign, given that they already have a well paid job of MP...or expenses as a lord;  nor indeed any reduction in the once-again incredibly generous allowances given to elected and non elected members; or the subsidised meals and drinks in their bars.


Why is that? Should they not be taking part in helping to reduce the deficit?

WHAT....NICK CLEGG FOR THE SECOND TIME TODAY?

The deputy prime minister has suggested getting rid of some universal pensioners' benefits and replacing them with means tested equivalents. Interesting ideas maybe, but fraught with difficulties.


One of the benefits he talks about is the over 60s bus pass, a scheme  administered separately in Scotland (with a better and more generous conditions). If things get really tough, it might be something for Mr Swinney to look into.


There are always problems with means testing. 


Firstly you have to rely on people being honest about their income and what they have in the bank. Not everyone does that, and checking it is difficult and expensive. 


Secondly you have to decide a cut-off point. And with a bus pass there can be no sliding scale of entitlement, as there is with some other entitlements. At some point you are entitled to the pass, and 1p a week more and you are not. That has the potential to create a lot of trouble.


And thirdly, there is the cost of staffing the administration of the scheme in every town. It might be done at the same time as Council Tax rebates, but these rebates come stop at a very low level. People well under the poverty line pay full council tax. The limit would have to be set higher. And what about the  people who do not pay council tax.

Be thankful you don't have to heat this: Oh wait, you do.

The advantages of the bus passes, at least in Scotland, are numerous. They give poorer pensioners the opportunity to get out of the house and meet friends or their families, something many of them would not be able to do if they had to pay the exorbitant fares of today's privatised and deregulated buses. 


Getting out of the house is a big boost to older people, many of whom live alone and don't get anything like enough exercise or company. And, as I've said before, it substantially reduces winter heating bills.


I've heard some better off people complain that it is a waste of money to give them these benefits. They don't need them. Unfortunately, that said, a lot of them just accept them.


So, I'm getting behind the SAGA campaign in appealing to people who get a bonus around Christmas to donate it to a charity that will help other people, not so fortunate, to pay their fuel bills this winter. And at the same time I'll appeal to rich pensioners not to use the free bus pass if they can afford the ticket. Every ticket issued costs the government (you and me) money. 


Finally, I'd suggest that we investigate the effects of raising the threshold of  these benefits which currently start at the age of 60, following the increase in the female pension age, and/or issuing them only to those who have actually retired. At the moment there are people going to work every day using their bus pass! If it saves substantial sums, maybe we should do that.