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Research published today shows that, for a typical pensioner couple in England, one third of the increase in their ...
Research published today shows that, for a typical pensioner couple in England, one third of the increase in their basic state pension since 1997 has been snatched back in higher council taxes. For a typical single pensioner, 40% of their pension has been lost.

Caroline Spelman, shadow secretary of state for local & devolved government affairs, said: 'I am growing increasingly concerned about the impact of soaring council taxes on pensioners who are on fixed incomes. What Gordon Brown has added to the state pension, one third has been snatched back in council tax alone for a pensioner couple. For a single pensioner, 40% has been grabbed back.

'Conservatives are pledging to end the spiral of soaring local taxes by reviewing Labour's fiddled local funding, axing unnecessary red-tape and regulations, and stop placing un-funded burdens on local councils.'

David Willetts MP, shadow secretary of state for work & pensions, in a document entitled 'Let down by Labour on pensions', today also outlined Conservative plans to help today's and tomorrow's pensioners. He explained: 'Pensioners have been let down by Labour. Pension schemes are in crisis and annuities have halved. Pensioners council tax bills have also shot up since Labour took over. All that Labour have done in the midst of this crisis is spread intrusive means testing to more and more pensioners.

'But there is a better way. Conservatives are committed to reversing the spread of means testing by increasing the basic state pension by earnings, not prices. This can take a million pensioners off the means test in our first term of government. We are also committed to creating better rewards for saving so that once more, people can enjoy dignity and security in retirement.'


Failing council tax benefit and means-testing

When council tax was established, a system of council tax benefit was created to ensure that t hose on low incomes received support to help pay their council tax bills. Yet the government's increased use of means-tested benefits and complex application forms has resulted in reduced take-up of council tax benefit, resulting in those on lower incomes are paying higher council taxes.

-Fewer than two in three eligible pensioners now claim the council tax benefit to which they are entitled, compared to three out of four in 1998. (source: DWP, Income Related Benefits Estimates of Take-up, 2001-02, February 2004, and ibid, 1998-99. Rates over these years have fallen from 74.5% to 64.5%).

-Pensions credit is also extraordinarily complicated and two million of those entitled do not claim. It is that the poorest pensioners are those who are least likely to get the benefits they are entitled to. The government have proclaimed that 2.9 million people were claiming Pensions Credit (DWP, 21 April 2004), yet this is 2 million less than the total 4.9 million eligible.

Conservative policy on pensions

Conservatives are committed to reviving funded pensions by reducing company regulations and creating new incentives to save. We will also lift a million pensioners off means-tested benefits in our first term by raising the basic state pension by earnings not prices.

By linking the pension to earnings the next Conservative government would increase the single person's pension by£7 a week, and for a couple by£11 a week, on top of price inflation over four years. This will free a million pensioners from means-testing in our first term of government. Our proposal is carefully costed. Nearly half of the funds come from the off-setting savings gained from taking pensioners off the expensive-to-administer means test. We will also use money saved from welfare reform - we will scrap the costly and failing New Deal unemployment programme.

Change in council tax vs. Pensions

The year-on-year changes in the basic state pension can be compared with the change in cou ncil tax, using the average Band D rate as the benchmark for a typical household. Single pensioners receive a lower state pension, but benefit from a 25%council tax discount if living alone.

The tables to accompany this release are available here.

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