Learning Center
Plans & pricing Sign in
Sign Out

the governments spending review


									         …NPC BRIEFING No.13 … NPC BRIEFING No.13… NPC BRIEFING No.13…

                     B U D G E T                  2 0 0 0
 Something old, something new, something borrowed, something blue.

The 1st Millennium Budget on March           The 10p tax rate on savings will
21 showed the Chancellor in a mood of         mean 1½ million pensioners paying
sober ebullience. As the build-up to the      tax at half the previous rate.
General Election begins, the govern-
ment has committed some of its surplus       Since the late 1980s, pensioners
to extra public spending, while keeping       with between £3-8,000 in savings
some back, perhaps for next year.             has lost some of their income
                                              support, and have not been eligible
THE OVERALL PICTURE                           with higher savings. The Savings
In his Budget presentation, Gordon            Limits are now to rise to £6,000
Brown said that, despite fears of             (lower) and £12,000 (higher).
recession, the economy was growing
steadily and inflation was now at 2.2%.      Winter Fuel Payments are to rise
His forecast was that growth in the next      by £50 to £150 next winter. 600,000
year would rise to between 2.75 and           older people will also benefit from
3.25%. The budget was no longer in            heat-installation programmes.
deficit but had a surplus of £12 billion.
                                             From 1 November all over 75s will
A boost for the NHS was announced -           receive a Free TV Licence worth
an extra £2 billion, an increase of 35%       £104. Those turning 75 with an
over 5 years (7.6% GDP), closing the          unexpired licence will get a rebate.
gap with average health spending in
Europe. Plus £1 billion for education        The Minimum Income Guarantee
and £285 million ‘to fight crime’.            will rise in line with earnings again
                                              next year - to £82 per week for a
And a new investment of £280 million          single pensioner, £90 for those over
in transport, including public transport      80; £127 for couples, £137 over 80.
and rural areas. This was followed by
an announcement later in the week that       Consultation in the next Parliament
£14 million would be used to abolish          on a new Pensioners Credit, so eg
the £5 bus pass for pensioners to             an older pensioner with an income
enable them to receive concessionary          of less than £100 a week or a couple
fares throughout the country, as              on less than £150 may qualify for a
proposed in the current Transport Bill.       credit to raise their income.
ALSO FOR PENSIONERS                         The Chancellor reckoned that by April
Gordon Brown spoke of society’s             next year 1 million pensioners would be
obligations to the ‘very poor               £20 a week better off than in 1997. He
pensioners’, those above benefit levels     also said social security spending will
with savings at risk, and the better-off    grow by less than 1% this parliament
on fixed incomes. He had this to offer:-    compared with nearly 4% in the last.
                                            The next two years will see a £4 billion
 Pensioner Tax Allowances will be          saving in DSS spending.
  set this year at £5,790 - £6,050 for
  those over 75, to add to their            NPC REACTIONS
  Married Couples Allowances. Thus          Something old? The government is not
  nearly 6 million pensioners will not      shy of telling a good story twice. Many
  pay tax.                                  of the announcements were old news -


eg the 10p tax rate, tv licences, heat-       government’s agenda. The gap between
installation, even the NHS boost.             MIG and the state pension (rising in
                                              line with prices) is turning from a crack
Older people need Health Services, so         into a chasm. So how can ministers
extra funding is welcome. The question        continue to assert that the state pension
is, when will improvements in hospitals       remains the ‘bedrock’ of the system?
and primary care be evident? The same
can be said of the money to fight crime,      CONCLUSION
an issue of concern to pensioners.            The government’s anxiety about
                                              pensioners is shared by the public in a
The abolition of the £5 Bus Pass fee          recent Guardian/ICM survey putting
signals progress in the NPC’s campaign        pensioners second on the list of
for free travel for all pensioners.           spending priorities. Thus the numerous
                                              government measures and repeated
Higher Tax Allowances and the 10p             claims about how much better off
tax starting rate, when put alongside         pensioners have become since 1997.
other fiscal changes - eg the abolition
of the Married Couples Allowance for          But the latest figure produced during
new pensioners (a loss of £518 pa) -          the budget speech - 1 million £20 a
mean winners and losers. More                 week better off - refer only to the very
pensioners may not pay tax but many           poor not those just coping. Such claims
would prefer to!                              take no account of cost of living rises,
                                              notably the average national rise of 6%
Raising the Savings Limits was long-          in Council Tax predicted in a recent
overdue but will not take effect for          CIPFA survey for local government.
another year. And the crucial decision
on the Royal Commission on Long               Something borrowed? The budget
Term Care proposal that nursing care          surplus is rising, as is the National
should be free will not be made till the      Insurance Fund surplus - estimated to
July Spending Review. Meanwhile the           be £10.5 billion in 2001/2. So what is
numbers of older people selling their         the government doing with pensioners’
homes to pay for care will increase.          N.I. contributions built up over many
Extra Winter Fuel money only adds £1
per week, and the bills include VAT.          Something blue? MIG? Pensioners’
Still, it reveals a nostalgia for Old         Credit? Means-tested Income Support
Labour’s belief in the fairness and           by other names, as favoured by the last
simplicity of universal benefits!             administration. The Labour government
                                              is still ignoring the demands of the
Free TV Licences for over 75s leave           pensioners’ movement for a significant
other pensioners paying the above-            increase in the basic state pension and a
inflation licence increase, and the NPC       restoration of the earnings link. It is
will continue to urge its abolition for all   affordable. It would be just. A golden
pensioners - cost per year £463 million.      opportunity to make amends has been
                                              wasted. The NPC campaign continues.
Something new? Consultation on a new
Pensioners Credit appears radical and                                             March 2000
promising, but will this only be for the       ……..................................………………………………..
‘older pensioner’ referred to?
                                                                     National Pensioners Convention,
More crucially, this proposal, coupled                                Head Office, 9 Arkwright Road
with the further earnings-related rise in           (npc logo)                     London NW3 6AB
the Minimum Income Guarantee                                                      Tel: 020 7431 9820
(MIG) is further proof of the                                                    Fax: 020 7431 9830

           …NPC BRIEFING No.13 … NPC BRIEFING No.13… NPC BRIEFING No.13…

                                                    More details from Milburn later that pm. He
                                                    talked of funding new drugs, more for
NOTES ON NHS ITEM IN BUDGET                         coronary and cancer care, and more for
                                                    ‘intermediate’ care between hospitals and hom
Originally written…

A boost for the NHS was announced - an              Comment…
extra £2 billion, an increase of 35% over 5
years (7.6% GDP), closing the gap with              As 2/3 hospital in-patients now over 65, older
average health spending in Europe.                  people should benefit from extra resources

To add some of this…                                but how soon will it come on-stream?

The Chancellor said in his statement that…          Blair has indicated approval for spending NHS
                                                    money on private treatement if the NHS can’t
The NHS was already scheduled to have a £2.9        provide - anything to cut down waiting lists.
billion increase this April.
                                                    Extra beds will be needed for next winter -
That figure is being raised, partly by the £300     easier to find as beds already moth-balled.
million in tobacco revenue promised last
autumn.                                             But you can’t unmothball nurses. Brown has
                                                    promised an extra 10,000 nurses in two years
Plus the extra £2.billion (as above), making a      but the RCN estimates 17,000 vacancies.
total rise next year of £4.9 billion.
                                                    If re long-term care, the government is to fund
So total spending up from £45.1 billion to          ‘nursing care’ however defined, estimate is
£49.3 billion this year to next year (2001/2?) to   that £600 million will be needed.
£54.2 billion
                                                    NHS Confederation has said that government
ie over next five years a cash increase of 50%,     drive may prove that NHS worth saving, but
a real increase of 35%.                             only if the ‘culture’ changes…

The next day in the Commons Blair identified
five challenges that the extra and new money
could go on…

Partnership between primary/ hospital health
spending plus social services etc.
Performance challenges to raise standards
(£660 million of the new £2 billion to health
authorities, trusts and primary care groups.
Health professionals should have more flexible
training and working practices between them
Better practices for patient care, esp re waiting
More attention to preventative health

           …NPC BRIEFING No.13 … NPC BRIEFING No.13… NPC BRIEFING No.13…

To top