DEFINING PENSIONER POVERTY
16. Of the 11 million pensioners in this country,
how many can be classed as poor? The experts from whom we received
evidence were reluctant to give a definition of what constitutes
poverty. Mr Andrew Dilnot told us, "if we assert that we
have been able to define a particular level as being the poverty
level, we have almost certainly misled ourselves."
Mr Tom Ross, of the Pension Provision Group, set up by Government
in 1997 to take an independent look at pension trends, told us
"this is a very difficult subject and one thing we do think
is that there is no one definition."
17. In its strategy for tackling poverty and social
exclusion, set out in Opportunity for all,
the Government's working definition of poverty was a relative
one: people with incomes below 60% of the median. On this definition,
over one in four pensioner households were living in poverty in
1997-98, in the region of 2.75 million households.
Of these, the DSS said that only one in five were receiving Income
Support. Another fifth were entitled to Income Support but not
receiving it; a further fifth had savings over £8000 and
were therefore not eligible for Income Support; and over half
had income higher than their Income Support level, but of these
half had less than £20 excess income.
The National Pensioners Convention's evidence
was that half of all single pensioners had income after housing
costs at best only a few pounds above income support levels.
18. There was broad agreement that it was essential
to measure the relative incomes of older people against those
of society as a whole, on the basis that their living standards
could not be viewed in isolation but had to be measured against
those of the rest of the population.
Age Concern argued that, whilst this approach was important, it
did not measure whether the actual incomes people had were sufficient
to avoid poverty and social exclusion. Age Concern had therefore
proposed a 'minimum income standard' for older people, designed
to measure the level of income needed to support a 'low cost but
adequate' living standard. Ms Sally West of Age Concern explained
that the low cost but adequate living standard was set at a level
above absolute poverty; it recognised that in addition to the
need for basic food, warmth and shelter, people also needed enough
to be able to participate in their local communities.
In the words of Baroness Greengross, "our physical needs
are matched by our social needs and our emotional needs."
19. Work carried out by the Family Budget Unit (FBU)
for Age Concern has drawn on a wide variety of sources of information
to price the budget needed for a low cost but adequate standard
of living, examining costs of food, housing, fuel, transport,
clothing, personal care, household goods and services, and basic
leisure and other costs, such as presents for grandchildren and
a drink in the pub. Sources of information included survey information,
discussion groups with older people across the country, and information
on defined standards, for example nutritional standards.
Based on the FBU research, Age Concern have proposed that a single
pensioner needs at least £90 a week and a couple £135
a week (plus rent and council tax) to avoid living in poverty.
An estimated 52% of single pensioners, and 24% of couples had
net incomes after housing costs of less than these amounts.
The evidence provided by the FBU and Age Concern made a strong
impression on the Committee and members felt that this approach
could be a more transparent and rational way of assessing and
tackling pensioner poverty.
20. By either definition of poverty, both the level
of the basic state retirement pension and the level set by Government
as the trigger for means-tested assistance through Income Support
are below the poverty line. The Minister of State for Social Security,
Jeff Rooker, was refreshingly frank about the inadequacy of the
MIG level. He admitted, "if you ask me could I live on £78.45,
no, I could not...I do not think £78.45 is enough...The £78.45
is a safety net...It is the bottom. There is nothing lower than
The Minister was asked to explain why, in particular, the level
of the means-tested safety net - the MIG - was set at the level
it was. His answer was that there was no intrinsic logic to the
figures which had been set:
"I used to question the DSS when I was in opposition
about this, how the figures are constructed...The only answer
I give you is the way it was uprated from the previous figure...It
has grown like topsy over the years. I do not think anybody has
ever said, 'This is the way it is calculated.'"
21. Despite the Minister's own admission that current
rates of benefit for pensioners are too low, he said that there
were no plans for his Department to carry out its own research
into the adequacy of benefit rates for pensioners in meeting pensioners'
He did not take issue with Age Concern's £90 per week figure.
He said, "I have not come to challenge that Age Concern figure.
I cannot spell it out any clearer than that."
This is despite the fact that, in seeking to tackle the problems
of today's pensioners, the Government has set itself indicators
of success which measure not only a reduction in the proportion
of older people with relatively low incomes, but also a reduction
in the proportion of older people with low incomes in an absolute
22. Ms Holly Sutherland told us, "I think it
is mistaken to try and find a single definition [of poverty].
If one is concerned about actual elderly people living out there
one needs to have a range of definitions and a range of different
ways of looking at the issue."
We agree. A relative approach is necessary to monitor how pensioners
are fairing in relation to the rest of the population. It is also
essential to have a measure - based on objective research rather
than subjective opinion - of how much pensioners actually need
to live on. The Minister has said that the current level of the
MIG is not enough (and, indeed, that he could not live on that
but we are not satisfied that the Government is doing enough to
ascertain what is a decent minimum income standard for
pensioners. Such a standard is needed, not least in order to measure
the Government's progress in raising pensioners' incomes to at
least this level. The evidence is clear and harrowing. Whether
in relative or absolute terms, too many of our older citizens
are suffering from poverty. This is not acceptable in an affluent
industrialised society and is a reflection of the extent to which
social policy since the war has failed to address the problem
of pensioner poverty. We recommend that the Government should
commission research to establish a minimum income standard
for households over pension age in both absolute and relative
terms, and that such research should be conducted at regular intervals
to inform the Government's progress in countering poverty and
social exclusion among older people. We return to this issue
below in our recommendations in this Report.
30 Q 174. Back
Q 113. Back
Opportunity for all - Tackling poverty and social exclusion,
Cm 4445, 1999. Back
Ev., pp. 79-80, para 15. Back
Ev., p. 32, paras 2.1 and 2.2. Back
See, for example, Ms Holly Sutherland, Q 202. Back
Q 3. Back
Ev., p. 11. Back
Age Concern, Ev., p. 4, para 4.8. Back
Q 251. Back
Q 252. Back
Q 253. Back
Q 256. Back
Opportunity for all - Tackling poverty and social exclusion,
box 5.5, p. 127, Cm 4445, 1999. Back
Q 202. Back
Q 251. Back