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A 'Bonfire of the Benefits' should help older people too
Making it pay to work is obviously a great idea, writes Steve Bee. While we’re at it why don’t we see if we can make it pay to save too?
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The 1st of October was Older People’s Day in the UK, a day put aside so we can all ‘recognise the important contribution older people make to society’. Older People’s Day coincided with the United Nations’ International Day of Older Persons, so it’s a trend that’s happening worldwide.
Older People’s Day could over time come to be an annual event that will rank right up there with Mothers’ day, Fathers’ Day and Valentine’s Day. If it ever does it will represent a bonanza for the greetings card companies as we already have 16.5% of the UK population over the age of 65 and within the next 20 years that’s set to shoot up to a staggering 22%.
It’s good, I think, that we have a day set aside each year to reflect on the contribution older people make to our society. One of those contributions, of course, is the tax they pay on the pensions they saved for while they were at work. Some older people also effectively pay for having saved when they were younger by foregoing entitlement to the many means-tested benefits they would have been given if they had not saved at all.
On Older People’s Day the newspapers were full of reports of a so-called ‘bonfire of the benefits’. That referred to the, now likely, scrapping of the plethora of welfare benefits for people of working age and their replacement by a single ‘universal credit’. The idea of this being that it would always pay to work in future.
I hope this is just the start and that soon the Government will consider a bonfire of the benefits that will benefit older people too. At the moment older people have the amazingly complex amalgam of the Basic State Pension, the Graduated Pension, the State earnings-Related Pension, the State Second Pension, Pension Credit, Savings Credit, Guarantee Credit, Housing Benefit and Council-Tax Credit to cope with. Entitlement to various combinations of these can lead to the severe reduction in (or at the extreme, complete loss of) the value of their own private pension savings and company pension scheme benefits. Apart from being fiddly to understand that can also be a bit annoying, to say the least, for people who end up getting caught offside by it.
Making it pay to work is obviously a great idea. Here’s another one; while we’re at it why don’t we see if we can make it pay to save too?
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14 comments so far. Why not have your say?
paul kaye
Oct 03, 2010 at 12:04
if people were NOT TAXED so much there would not be a need for benefits.
so people working and getting benefits should have an ajustment in their tax,simple!
council tax should be abolished and replaced with a local tax, based on income.
people not working should receive a benefit per adult,per child,based on minimum wage less 25%,so it will pay to work!!!!!!!!!!!!!!
report thisCrazy Fists
Oct 03, 2010 at 12:31
How about those who are unemployed or unable to work? Can hardly tax those poor soles less and stop their benefits. Their not earning to start with.
As for replacing council tax with a tax system proportional to income, is not something this government are likely to do. The rich and wealthy will end up paying more, and the low earners less. Hardly a tory policy. It appears from the emergency budget, they wish to widen the gap between the classes.
report thisCrazy Fists
Oct 03, 2010 at 12:33
Sorry, just read that again and bad grammar, I know.
report thisJohn H
Oct 03, 2010 at 12:44
Council tax is the most unfair tax of all. The old poll tax was fair and only scrapped because a noisy miniority kicked up a fuss wanting someone else to pay for their local services. I was really disappointed in Margaret Thatcher who uncharacteristically caved in and scrapped polltax. The only sensible way of paying for local services is to increase income tax overall and pay grants to local authorities in proportion to the area of their patch and the people in it.
report thisCrazy Fists
Oct 03, 2010 at 12:55
Almost agree with you John. But it has got to be inheritance tax as the worst.
report thiszbmag
Oct 03, 2010 at 17:04
I absolutely agree about poll tax. Those who use services should pay for them. so if there are 5 adults living in a house they should pay more than two OAPs - sorry senior citizens living in a house!
report thisJohn H
Oct 03, 2010 at 17:49
You're right Crazy Fists (with a name like that I daren't disagree with you). Seriously though, inheritance tax is even more unfair than Council Tax which is bad enough. I've not heard anything recently about the Conservative proposal to raise the IT threshold to £1M. Have the LibDems talked them out of it I wonder?
report thishughstjust
Oct 03, 2010 at 20:05
For anyone on benefits (other than DLA) being able to work and be better off if only for a day or two's work will stimulate people to get back into work once again - there is a real poverty trap about the existing benefit system. That said, I cannot envisage how any such system can be operated without the fiasco of the family and working tax fiascos.
report thisAnonymous 1 needed this 'off the record'
Oct 04, 2010 at 02:35
A caring society/country can only be judged by the way in which it treats its elderly citizens. We saved all our lives, had our pension raided by Gordon Brown,then Keydata. Paid tax, worked hard, educated our children. Now in our 70's, we are looking for part time work, washing in cold water and dreading winter if the winter allowance is stopped. All the tax credits mentioned above are hard come by with endless form filling. Our student offsping ended up in court because they could not afford the individual poll tax payment when the baliffs arrived for their torn jeans! As for IHT, parents who fought in WW2, bombed out and worked hard had all of their possessions valued down to the last defunct TV, taxed and it is not at 40%only. Take into account that VAT had already been paid on the TV and all their belongings; taxed over the years. You might as well not have bothered being alive. Yes, very unfair. But until you have been in such a position, you will never understand the privation. Now we have leaders of a great country who have never had to work to live, pay very low tax, no IHT and have long holidays. As grandma use to say: Don't do as I do, do as I say
report thisJohn H
Oct 04, 2010 at 08:06
There's definitely a culture, stoked by the previous government, of belittling hard work and encouraging laziness. Examples are the benefits system, Council tax, inheritance tax etc. They all encourage citizens to take life easy and rely on the state to take care. Yet one wonders why some people work hard all their lives, obey the laws, spend sensibly and save for retirement only for the state to take it all away and give it to people who have wasted their lives?
I strongly support help for those who are genuinely in difficulty through no fault of their own but I draw the line at helping people who can work but don't, intentionally unmarried mothers, people with imaginary bad backs, criminals, etc, etc. Ian Duncan Smith seems to be thinking on the right lines but the left leaning LibDems will no doubt get all steamed up.
There's no doubt that pensioers are being hammered with rising VAT, council tax and inheritance tax. On top of all that; reduced pensions thanks to Gordon Brown.
report thisGlen McKeown
Oct 04, 2010 at 11:50
Like life, the concepts postulated by Steve Bee are riddled with complexity.
For example, his central theme appears to be related to savings, but the main part of the article relates to state benefits. The interaction between savings and state benefits hits hardest those who are least able to save. This tie up may be an irritant to others but not a catastrophe. Yet it is most likely those “others” who are using this web site to blog their irritations, so even the response is distorted as an analysis of the fundamental problems. That is not to imply that their responses are not perfectly valid, merely that they are likely to come from a particular section of society.
Society has changed dramatically in the last 20 years, and it is possible that our basic tenants of what is acceptable need a fundamental overhaul.
But what I see in the debate is a regurgitation of the prejudices, built on newspaper headlines, of the last 100 years. If society were as bad as some people believe it is we would have gone to the wall a long time ago.
We have a fundamentally decent society, with some problems - just as we, and every other country, has always had. There are many shades of opinion on how to tackle those problems. It is unlikely that anyone is actually “right” because society changes so quickly that yesterdays “right” is tomorrows “catastrophe”. It would be nice if suggestions and debate were based on facts and not prejudices.
In the past Steve Bee has provided a lot on information on the interplay between savings and State Benefits - why don’t we use that information as the basis for a sensible debate. And why do other people not bring their facts to the table - it may highlight were the true problems lie.
report thisBernard
Oct 04, 2010 at 16:24
Who cares to remember us - I'm 85. From 1939, aged 14, I was evacuated for four years 200 miles from my home in London. Education a muddle - try doing homework in a room in someone else's house. Imagine, if you can, no TV and no radio, no car. Within four months of leaving school in 1943, into the army for four years. Returned to postwar Britain, bankrupt, still with rationing. When I worked, income tax was at 7s (35p) in the pound. Purchase tax at 33 1/3% on many luxury - ha ha) goods. Worked hard and denied ourselves to help kids. Saved for retirement. Civil servants get average of £100 a week extra for cost of living in London - not pensioners, though our costs are higher - no DIY any more, so we must pay London rates for everything done in the house.
And now no interest on our savings - with a deputy governor of the Bank of England saying we should not save but spend. HIs name is Mr Bean
Global warning fanatics deny us 100watt bulbs; so even with Glaucoma we're forced to live in dim lighting, while office blocks blaze all night and football is played under flood lights.
We were brought up to make the best of things, not to grumble - how else get though the war? It used to be said that we won -for what?
Politicians - don't make me laugh. We've seen our country taken from us as a deliberate policy to get votes from immigrants
And now - my council tax bill is high because in this London borough there are 31,000 adults (voters) who pay no council tax.
Just ponder, everyone, what we we achieved in 1939 with no child benefit - no income credit - no NHS - no bus or tram passes - no help with heating - no housing benefit - no health and safety.
Could we do it again? Or would everyone go on strike?
report thisCrazy Fists
Oct 04, 2010 at 18:21
Hello Bernard,
I read your post with great interest. I can only imagine what life was like back following the depression of the war. However, I can understand your anger towards the general attitude of modern Britain.
It has its greatness, and also its flaws. Don't even get me started on society, credits, benefits etc. (Although a necessary evil). But the HNS system, that the Labour Party started, is the one thing that makes us the envy of most developed countries. It is the largest employer in the UK and has always flourished under Labour and been punnished under the Tories. This time will be no different. The waiting lists have been dramatically reduced, but this will not be the case for much longer. Infact, with the cirrcus act governing at the moment, it is the only thing that will increase.
TV licensing payments, winter fuel bill payments, and disability allowance are all in the firing line. Along with VAT hikes, this will only effect two classes of people; the low income and the working class.
I was appalled at the way my Grandfather was treated having given so much to his country. You ask, 'Could we do it again?'...... Not a chance. State of society means no heart, and if we had one, there would be some regulation in Brussels stopping us. (Who who are going to tell us how to run our country even more, with Cameron signing an even greater number of powers to them)
So, I take my hat of to you Bernard, and you are welcome to my shirt also.
Live long and well.
report thisIvanhoe
Oct 07, 2010 at 14:26
Again, what we have here is throwing crumbs to the thousands, and we are falling for it like we always do.
Poll tax, like council tax, was and is an unjust tax because neither were, and are, based on ability to pay, and anybody says differently is bonkers.
Thatcher wanted to change the way communities were funded, away from much higher rates of income tax, to much higher rates of "local" tax under initally the poll tax, but now council tax.
So, what we have had since the 80's is, a "devolution of local communities" from the "role of what the State" used to provide prior to Thatcher", and put all local services throughout Britain's communities onto poll tax / council tax, and therefore localising vital services across Britain.
As far as pensioners are concerned, this is the generation who have by longevity alone paid more into the State system than anybody else, but have been made to live on a meagre state pension and means tested handouts since Thatcher broke the link with earnings in 1980.
Todate millions of UK pensioners live in poverty, and we under pensionable aged people do nothinhg about it.
Britain has indeed lost it's soul, as have our political parties, and I dont believe we will ever get it back.
Greed, and self interest rule Britain now, all aided and abbetted by a largely politically uneducated British public.
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