How Lib Dem Plans Will Benefit Pensioners

It is often said that you should judge societies by how they treat their vulnerable – the young, the sick, the elderly.

We are not doing terribly well on that score at the moment. Pensioners in particular have have taken a battering over the last three decades. In 1980 the Tories cut the link between pensions and earnings, and pensioners have seen their incomes savagely reduced as a result.

Expectations that our senior citizens might be better treated by a Labour government have, sadly, not been fulfilled. The current government’s attitude has been really pitiful – few pensioners will forget their derisory 75p increase in April 2000 (which the Tories did not oppose).

Let’s take a look at some of the issues which directly affect pensioners’ lives.

At the top of the list must be the level of support offered by the state (currently the worst in western Europe). The Conservatives, having broken the link between the pension and earnings, tied pensions to prices throughout their 18 years in office. They have now apparently done a u-turn, calling for a restoration of the earnings link – for one Parliament only. Whilst they have obviously adopted this approach for opportunistic reasons, a sensible person might doubt their long-term commitment to the state pension. Apart from anything else, the current value of the pension is so low that merely linking it to earnings would add only £7 to the pension by the end of a Parliament.

The Liberal Democrats propose a substantial across-the-board increase in the pension, focused on older pensioners, which will bring immediate benefits to many of the most needy pensioners in the country.

In addition to our plans to increase the state pension, we have two further major proposals which will be of benefit to pensioners.

The first is to abolish the unfair council tax, which hits pensioners who have worked hard and saved hard especially harshly. Replacing the council tax with a local tax related to ability to pay would benefit the vast majority of pensioners. The only indication of a fledgling Conservative policy is Oliver Letwin’s statement that the Tories would increase the revenue councils raised locally and keep council tax. Unless the Conservative Shadow Chancellor can explain himself, this implies the Tories could double council tax. By doubling council tax, the Conservatives would take us back to the days of the unfair poll tax (one of Michael Howard’s less brilliant ideas). It really is time the Tories junked their bizarre addiction to unfair taxes.

The Audit Commission has called the Council Tax system ‘fundamentally flawed’. It is deeply regressive – a pensioner can pay as much as a cabinet minister. Local Income Tax is a fair, efficient, tried and tested method of local taxation. It is already used in many other countries around the world and works very well. Most importantly it is directly related to the ability to pay. Liberal Democrat plans for LIT will be a huge advance for most people – 70 % will pay less or be unaffected.

We also believe that long-term care costs should be met for all pensioners without facing a means-test or being forced to sell their home.

Better pensions, scrapping the Council Tax, free long-term care – there can be no doubt that these policies would benefit pensioners enormously. But, significant though such direct help may be, it is worth looking at the bigger picture – how would our other policies affect pensioners?

Let’s start with our proposal to tax incomes in excess of £100,000. According to Government figures this would raise £4.7 billion, which the Liberal Democrats would dedicate to our two key policies – the abolition of university tuition fees at a cost of up to £2 billion; and the provision of free long-term personal care to the elderly, costing £1 billion. The balance of funding left over would be directed to local government.

This tax increase for those most able to pay would affect pensioners in several ways. First, the provision of free long-term care would be a relief to many. Secondly, the funds directed to local government would enable us to scrap the unfair Council Tax which is such a burden to so many pensioners.

But in the long term, the abolition of university tuition fees would affect pensioners just as much. Liberal Democrats value education, and we believe that a well-educated society will benefit each and every one of us. Today’s students are tomorrow’s wealth creators and tax payers, the people who will be underwriting future pensions.

It may be worth having a very quick look at current Conservative plans for future spending while we’re here.

The Tories, under Michael Howard’s leadership, have already committed themselves to 40,000 more police officers, more money for pensions, more road building, more spending on health and education, and more on defence. (Not to mention an unidentified offshore island for asylum seekers … and tax cuts.) Where will the extra money come from? Mr Letwin continues to duck all the difficult choices. The idea that it might be possible to increase spending on key services, reduce taxes and improve the budget position simultaneously is ridiculous. Slashing the Home Office and Transport budgets will mean less police to tackle rising violent crime and the further decay of our roads and railways. Mr Letwin can’t explain exactly what the Civil Service will do less of. His proposals are nothing more than a vague aspiration to be nice to everybody.

But one thing we can be sure of: rising crime, deteriorating public transport, a two-tier health service, a poorly educated work force – none of these can be of any conceivable benefit to pensioners.