Double the old-age pension now and restore the link


If the link between pensions and earnings were restored today, those of Britain’s poverty-stricken elderly who have only their pensions to live on would receive an extra £30 a week each. This would be enough to provide at least proper heating for the 40,000 plus old people who are dying of hypothermia or cold-related illness every year in Britain – this rich imperialist country. The scandalous plight of many of Britain’s elderly has given rise to a vigorous campaign to improve their conditions.

The campaign has received considerable support among the union movement, and has been taken up even by some of the most notorious class-collaborationist union leaders. Hence the motion proposed at the Labour Party Conference this year by Rodney Bickerstaffe, the leader of Unison, calling for an “

immediate and substantial increase in the basic pension”

and a link to

“for example, average earnings or inflation, whichever is greater”.

Hence the fact that this resolution was passed, in the teeth of opposition by the Blairite section of the Party, by a majority of 60.21%. Prime Minister Blair has, needless to say, made it clear that he has not the slightest intention of responding to this call made by his own Party.

Nevertheless, in view of the fact that pensioners account for no less than 25% of the electorate, and that there has to be an election within less than two years, some concessions have been authorised. There is likely to be an above-inflation rise in the pension from next April by possibly £5 a week or more. The minimum income guarantee for pensioners is to rise from £78.45 a week to £90, i.e., means tested-benefit will be available, if applied for, to make up every pensioner’s income to £90 a week. These rises fall far short of the earnings-related pensions for which hundreds of thousands of today’s pensioners paid higher national insurance during the years when they worked. Moreover, although at first sight it may seem fair enough to ‘target’ increased provision to the most destitute, in practice the paperwork involved in applying for this means-tested benefit defeats many of the pensioners theoretically entitled to it. Many never become aware of their entitlement. Currently no fewer than half a millon pensioners fail to claim the ‘Minimum Income Guarantee’ to which they are entitled.

Two further points should be made. Firstly, people should be entitled to enjoy the extra benefits of savings accumulated for the purpose of being able to afford little extras in old age without having their savings hijacked to make up deficiencies in basic state pension. The latter should surely be sufficient to meet all of a person’s basic necessities. Secondly, pensioners have often paid contributions throughout their working lives for the purpose of receiving their pensions. Even relatively rich old people should be entitled to the benefit they have paid for. If they feel they don’t need the money, nobody is forcing them to collect it. The decision should be theirs. It is far better that pensioners should be failing to collect their pensions because they are too rich to bother than that they should be, as at present, failing to collect entitlements through poverty, infirmity and lack of information.

It is often used as an excuse for starving our pensioners that Britain ‘cannot afford’ to pay pensioners enough to live on (let alone provide other essential welfare services for them). A number of concrete facts give lie to this claim.

To start with, Britain’s pension is the lowest in Europe (with the exception of Portugal – where pensioners may nonetheless be relatively better off because of cheaper prices, lower heating needs and in the provision of non-cash benefits). If other European countries give their pensioners a better deal, why can’t Britain? Of course, the answer comes that Britain’s economic prosperity is due to the low level of its public spending. What, however, is the point of Britain having a ‘booming economy’ if so many of its people live in dire poverty? What possible desire could the poor and the destitute have for supporting this ‘booming economy’ if it does them no good!

Secondly, the amount currently spent in Britain on pensions is hardly breaking the bank. It is equivalent only to some 3.5% of GDP (£33 billion). It currently stands at a mere 15% of average earnings and, if it remains linked to prices rather than earnings, this percentage is projected to decline to 8% in 40 years’ time (see Richard Disney, ‘The European Way of Ageing’,

Financial Times,

10 October 2000).

Is it not curious that while average earnings are, we are constantly being told, increasing by leaps and bounds, the gap between the rich and the poor is widening, with the effect that 40% of British children are now living below the poverty line along with a substantial proportion of pensioners, who are dying of cold and malnutrition?

Richard Disney, however, remarks:

If the UK’s basic state pension remains linked to prices, the pension will decline as a proportion of earnings from about 15% now to 8% in 40 years’ time. But the alternative, of linking the pension to earnings, is also unpalatable in the long run. Expenditure on National Insurance benefits, of which the basic state pension comprises 70% of the total, currently costs 5.5% of GDP. By linking to earnings, this proportion would rise to more than 8% of GDP during the next 40 years”.

Bearing in mind that the beneficiaries of national insurance benefits constitute not just the elderly, but also the disabled and the short-term unemployed, who between them constitute a very substantial proportion of the population, an expenditure of 8% of GDP does not seem excessive. But in addition, we must ask ourselves why it is that earnings are rising faster than prices, and are expected to continue doing so? Could it not be argued that since pensioners’ purchasing power is going to remain constant, there is no real reason for them to complain just because RELATIVELY to others they are not so well off. It seems clear that the main reason earnings are rising is that the social wage is declining in relation to the pay packet. Workers are getting less by way of social wage, but more in their pay packets. The growth of poverty demonstrates that what is being lost in the social wage is far greater than what is gained in the pay packet. A major loss in terms of the social wage is the provision one receives in old age, both in terms of pension and in terms of social benefits such as medical care, and help of all kinds when one can no longer take care of oneself. Old people receiving the ‘same’ pension in relation to prices, receive a great deal less social support than they ever did. For instance, there has been widespread closure of old people’s homes, and, to the extent they still operate, old people are increasingly being forced to sell their homes to pay for such care, or lack of it, as they receive in them.

The miserly level of British pensions, and the woeful inadequacy of social services provided to the elderly, are a reflection of the slashing of the British social wage – itself a reflection of the terminal crisis of the capitalist economic system. To compete effectively in a world market overcrowded with sellers but extremely short of buyers as a result of the rampant escalation of world poverty, capitalists must pare costs to the bone. The easiest costs to pare are the social benefits paid for through taxation. In this way, capitalists’ profits can be enhanced by lower tax bills. Because even low-paid workers pay taxes they can ill afford, they are readily mobilised by the rich, along with better-off sections of the working class, to support the call for tax cuts and to ‘forget’ that a consequence of these tax cuts will be that the government will find it ‘cannot afford’ to pay decent pensions, or, for that matter, to provide the funding to health, housing and education provision that are necessary to aintain a universally decent standard of service. We must not be taken in by the belief that tax cuts benefit us. We must demand that there should be tax INCREASES, but that these should fall on the wealthy. Taxation policy must be aimed at narrowing the currently widening gap between the rich and the poor.

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