Gordon Brown’s pre-budget statement 8th November 2000

Article by Tony Lynes published in “One in 5”, the Newsletter of the Southwark Pensioners Centre, December 2000

Across the river…

The solemn and normally silent expanse of Westminster Hall – the oldest part of the Houses of Parliament – was for once extremely noisy when many hundreds of pensioners from all parts of the country arrived on 7 November to lobby their MPs and listen to speeches by, among others, Barbara Castle and Tony Booth. Before the lobby, the National Pensioners Convention had presented a petition to Buckingham Palace, demanding a big pension increase and future rises in line with average earnings, and a rally of pensioners had taken place in the Methodist Central Hall. Southwark Pensioners were present in strength throughout, with aptly worded placards, some of which asked “Who knows more about budgeting – Gordon Brown or a pensioner?”

The Chancellor’s reply to that question came the following day, in his pre-budget statement to the House of Commons. Clearly anxious to bury the shame of last April’s 75p pension increase before the election campaign starts, Mr Brown announced that the pension would rise next April by £5 a week for a single pensioner and £8 for a couple – a bigger percentage increase than either prices or earnings – with a further above-inflation increase the following year. To add icing to the cake, this year’s winter fuel payment will be £200 instead of the £150 previously announced, and pensioners on income support (the so-called minimum income guarantee or MIG) are to get an extra boost in their weekly income. Finally – but not until 2003 – a new scheme called the Pension Credit will be introduced, giving an extra boost to those with incomes above (but not too far above) the basic state pension.

The not-so-good news is in the small print – so small that hardly anyone has noticed it. First, the link between the basic pension and average earnings will not be restored – from 2003 on, the pension will again rise only in line with prices. Secondly, the £200 fuel payment is for one year only; next year, with the election out of the way, it will go down to £150. Thirdly, Gordon Brown’s boast that the MIG “will be raised in April by £14 a week” is true only for pensioners aged under 75. Older pensioners are to lose the higher income support rates, now worth £2.40 a week for those aged 75-79 and £7.60 for the over-80s; so a single pensioner over 80 on income support will not get a £14 rise but only £6.20 a week.

As for the Pension Credit – well, it’s too complicated to explain in a few words, it won’t start until 2003, and by then it may look very different. From what has been announced so far, however, two things are clear. First, it will make a real difference to those with incomes around income support level: a single pensioner with an income of £100 stands to gain about £14 a week. Secondly, the credit will be means-tested and will increase enormously the number of pensioners subject to means-testing: about half of all pensioner households will qualify, compared with about one in five on income support now. The extra money will be welcome to those who get it, but many people will question whether this is the right way to raise pensioners’ incomes.

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