| Raise the pensions of the poorest |
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It is quite astonishing how quiescent are most of our pensioners, how accepting of their lot, when they have been treated so unjustly by successive British governments in the last 30 years. Strip away all the complicating factors in pension comparisons and the fact is that Britain has long had the lowest basic pension in Western Europe, a figure way below our own official poverty line and even further below the level it would have reached had Thatcher not abolished the pension/earnings link. At that time the pension was approximately 25% of average earnings. Now it is 16 per cent. Making up that difference would mean increasing the basic state pension to some £150 a week, roughly what the lowest comparable minimum pension was in Germany 8 years ago. The government should now commit itself to a rapid phased increase in the basic state pension up to £150 per week for a single pensioner, over a three year period, with the earnings link restored immediately. Means-testing would automatically be eliminated. The additions to the basic state pension should be rolled up in the new pension figure, with pension credits and the winter fuel payments included in the new higher basic state pension payment. Additional payments in winter could simply be achieved by dividing the annual pension figure up into 13 months with some double payments in December and January. So, how should we pay for this new higher pension? There is currently a substantial surplus in the National Insurance fund and this could be used to cushion the initial shock. Clearly contributions would have to rise too and lifting the upper earnings cap on National Insurance contributions, with a standard percentage contribution all the way up the income scale would be a useful start. But other income from tax revenues would be needed too. Much higher income taxes on the rich – and lower taxes on the poor – have been long overdue. Now is the time to go further on this front. If the government wishes to fill up the yawning gap in consumer demand to prevent recession becoming depression, giving significant extra income to the least well off – such as basic state pensioners - is an obvious and necessary step. Those on low incomes generally spend all their income and therefore boost demand immediately on receipt of any additional income. More importantly, though, we have a moral duty to address pensioner poverty. The measures above would do that in the most obvious way. To deal with poverty - when all else fails - try money! |
