Published on 2 Jan 2013

Pensioner payments surge above record £100bn

An uncomfortable truth for Britain right now is exemplified by this story on the Daily Telegraph website.  

The story is right, welfare payments are heading for a record high of £208bn this year before surging to £224bn by 2017/18.

It is a lot of money, that many will feel could be better returned to taxpayers, or spent to boost job creation. Obviously it feeds into the current fevered debate about benefits.

Intriguingly, however, the record will be attained in the coming years because of payments not to work-shy “scroungers” but to pensioners.

The majority of what is termed the “welfare bill” goes on payments to pensioners. This House of Commons  note  shows that the number is 53 per cent of that £208bn, which works out at £110bn – £98bn is not spent on pensioners: jobless, disabled, families etc.

Even more interestingly, the proportion paid in pensioner payments will increase in the next half decade to 56 per cent of the total bill. Now a quick bit of maths -56 per cent of £224bn is £126bn.

Annual increase of £16bn

That’s a £16bn annual increase in cash payments to pensioners by 2017/18.

It accounts for ALL of the increase in the headline number to £224bn. Yes, the non-pensioner cash funding for benefits available in 2017/18 will again be £98bn. Clearly this amounts to a sharp real drop.

In the government’s austerity plans, it continues to make allocative decisions about winners and losers.

Now pensioners will argue that they should not be lumped in with benefit recipients. A pension is not a benefit. But pension credits, fuel allowances, and other freebies, do come out of this budget.

A far more interesting headline from the HoC report would be that last year “pensioner payments top record £100bn, responsible for surge in social security bill”. Many pensioners are poor.

Savings verboten?

Plenty that receive free bus passes, TV licenses, and winter fuel payments are far richer than many of the squeezed recipients in the £98bn pot. So why is even talking about savings from this pot of cash verboten? 

At the very least, if you strip out pensioner payments the headline number shows that welfare payments are declining in real terms. It should not be a surprise.

It is what happens in a recovery, when welfare is being squeezed. Indeed the other intriguing number in the House of Commons report is the welfare/GDP assessment.

Britain entered the financial crisis devoting 10.9 per cent of GDP to “welfare” broadly defined.

Tony Blair inherited a level of 11 per cent from John Major.

(Plausibly you might have expected that proportion to fall in the good times, or for the benefit bill not to rise in line with the economy).

 However, it is fair to say that Labour devoted to welfare, a share of the economy greater than it inherited, only after the 2008 crisis struck.

The prime minister promises freebies to older voters who have gained disproportionately from the asset price increases arising from QE (though this should be balanced by low annuity returns and saving rates).

Follow @faisalislam on Twitter.

12 reader comments

  1. dennis says:

    might be a good idea to knock on a few doors and ask to speak to some of these recipients think you may find they no longer live in this country but the money goes into their bank just the same,

  2. benf says:

    Faisal – you are the only mainstream commentator who cares about young people.

    How can it be that the Telegraph article doesn’t even contain the word pensioner? The whole way this is going is deeply sinister. It’s coordinated. Young people in the UK have no chance. The establishment know they don’t understand pensions (the education system makes sure of this) – they won’t find out they are being abused until it’s too late.

    Why not put this in Channel 4 news also? In the past you have put a number of items on your blog that are the truth about what is happening to young people – why not put it to a wider audience? Are you concerned it will be very bad news for you?

    ps the housing propaganda in the Telegraph and the BBC this past week has been *insane*

    1. e says:

      Who’s a “tax payer” no really, who precisely is Faisal talking about? And what does he mean by cash payments? What other types of “payments” are there? Pensioners vote, but consider also, they are a dying breed; as things stand, campaign to remove their accrued benefits at your peril….

      Divide and rule, divide and rule, and so on and so on……….

  3. Philip says:

    These figures need to be shouted from the rooftops. They nail a series of IDS & Tory party lies and misleading statements. I thought that the spin & misleading statistics record held by the previous government couldn’t be broken, but this governemnt has achieved it with ease within 3 years

  4. Andrew Dundas says:

    There’s a simple explanation (a no-brainer) about why Pensioners get more benefits and in excess of the value of our lifetime NIC payments. And also why benefits for youngsters are being cut: from unemployment support to University fees and College cutbacks.
    What is that explanation?
    Simple. Pensioners turnout to vote in elections. Youngsters do not.
    So. If you were an ambitious political at any level, who would you pay extra benefits to? To people who generally don’t vote, or the ones who do so consistently: pensioners!

    1. benf says:

      Hi

      can’t reply to your later post so this one will do.

      There is zero point in voting. Both the Tories and Labour have a bidding auction for the boomers at the expense of the long term. Politicians know they will vote in their own interests rather than the country as a whole. Why bother having elections? Both parties will run a massive deficit to satisfy the short-term view of the majority which will eventually end in the UK calling in the IMF, or just printing like mad.

      I’ll be voting in a way. I’m voting with my feet – emigrating. Taking lots and lots of tax with me. You guys can keep the overpriced sheds that are known as homes in the UK. Enjoy the default – it’s coming.

      All the best to Faisal – one of the few UK journalists who “gets it” IMHO.

  5. IGiveUp says:

    Poor pensioners, generally speaking, are previously poor citizens that have now reached retirement age. Sad, but true. Most pensioners are not poor at all, but are still able to receive State Charity because it is not means tested. I know, because I am one of them, so is my wife, and so are most of my friends/acquaintences.

    The Winter Fuel Allowance is extraordinarily generous. All the Bus Pass holders I know leave their nearly new cars at home to travel around for free.

    If I was a youngster looking for my first job, or seeking decent training for one, (or disabled, or sick, or just made redundant) I would be seriously annoyed by the squandering of the nation’s money on the ‘haves’. just because they happen to have an influential vote.

    Time for a new political initiative, with full participation by the younger generation. Get angry!

  6. benf says:

    Andrew Dundas – they have the demographic advantage. If a similar % of young people and pensioners voted the pensioners would win. This has been worked out by both politicians and pensioners. And by the young who are disenfranchised which further hurts the turnout.

    Democracy is not in place for the tyranny of the majority. What you describe is little more than mob rule. People of all ages must vote responsibly for the good of the nation and the unborn. What we are getting is the last rape and plunder of the country in an inexorable downward spiral. It’s utterly disgusting to see.

    When demographics are imbalanced conscience must act as the short circuit. Do pensioners have any conscience?

    1. Andrew Dundas says:

      Hello Gary,
      What I’m describing is what exists, not what I like or approve of.
      But it is a fact that young people have a much lower propensity to vote in elections. Moreover, both the ‘marked register’ that lists electors who actually voted and survey evidence shows that young people do not vote as regularly as pensioners. All political parties know these stats. Yet young people tell me that it’s not worth voting, ’cause it doesn’t change anything! How wrong can anyone be?
      Which is why I urge young voters – especially the 18 to 35 year olds – to get out and complete a ballot paper. Because otherwise you’re providing a strong incentive to politicians who want to keep their jobs to favour extra welfare pay for pensioners.

      If you don’t vote, you’ll be screwed.

  7. Gary says:

    Faisal,

    I appreciate how you are willing to indicate a very-long press repression that pensioners are a much higher burden of the entire Welfare Budget. However this myth of the £100,000 Claimants has been debunked in spite of Mr Duncan-Smith. Mr Andrew Dundas has shared the reason behind the higher costs for the children and pensioners. It assures their vote for the Tories.

    I’m 46 and for the past 5 years have been suffering from Idiopathic Familial Dystonia-Parkinsonism throughout my entire body, with a case of Hydrocephalus caused by a former neighbour that slammed my head against a brick wall. I can no longer write, sit up comfortably, have bouts of narcolepsy, seizures, lost my voice, and soon my vision. Pain so intense many would rather die than endure.

    I worked hard until this, and I am not some work-shy “scroungers”, as you boldly proclaim. Do try to abstain from negatively generalising stereotypes, please. I would expect your appreciation on how words hurt people, especially when we are hit the hardest.

  8. Andrew Dundas says:

    Today’s announcement of a big cut in overall pensions – but not until a new government is installed after the 2015 election – was expected. But that doesn’t mean the losers who’re mostly men won’t object to this outright sexism.
    The European judges have already over-ruled 27 european parliaments and the EU parliament by insisting that men’s pension funds MUST transfer >20% of their pension savings to women. [the Court also ruled that women must subsidise men’s car insurance premiums. How daft is that?]
    Now even HMG has ruled that men’s pensions shall be further reduced by cancelling most of their their SERPS savings. It’s worth noting that no public sector workers in superann will suffer any pension reduction.
    So that slashing of men’s pensions may become an issue in 2015 election discussions!

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