Just one thing: support the elderly

Saga Group tells George Osborne what it wants to hear in the 2012 Budget.

If George Osborne does one thing in his Budget it would be addressing the damaging impact of policy on older people's lives. So, what are the problems and what could the chancellor do to improve things?

Ultra low interest rates and high inflation have hurt older savers trying to live on their income, while quantitative easing has wreaked havoc on our pension system. Annuity rates have fallen sharply since QE started, leaving increasing numbers of pensioners permanently poorer, because once bought, their annuity can never be changed. This is a huge issue as around 450,000 annuities are bought each year. Pensioners who chose income drawdown instead of annuitising have also suffered, because the amount of income they can withdraw each year falls as gilt yields fall.

Those who saved hard and did 'the right thing' are being punished for it, which is dangerous, particularly as council cutbacks are forcing older people needing care to sell their homes, because government never encouraged saving for later life care.

QE's impact on bond yields has damaged our pension funds, increasing deficits by over £90bn. This has forced firms to fund their pension schemes, rather than business expansion and has even bankrupted some companies, leaving scheme members with reduced pensions.

To address these issues, the chancellor could consider the following measures.

Rather than QE gilt-buying, he should use new money to underpin pension fund investment in infrastructure projects. This would benefit pension funds, as infrastructure investing could be an ideal asset for them, offering long-term inflation-linked returns and some upside potential. Coupling this with measures to underpin lending to small firms, again perhaps funded by new QE money, would stimulate the economy and jobs far more than buying gilts.

Issuing longevity gilts (rather than the rumoured 100-year bonds) could improve annuity pricing, pensioner incomes and pension deficits.

The chancellor should change ISA rules to help older savers and allow people to use the full annual allowance for either shares or cash, rather than only half in cash. Pensioners who cannot risk stock market investing should surely be able to have more of their meagre savings income tax-free.

Why not also introduce an additional annual "care ISA" allowance, where the money saved must be used to pay for care (for oneself or someone else). This would start us on the long overdue path of incentivising saving for later life care needs.

Ros Altmann is Director General of Saga Group

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Ros Altmann is director general of Saga Group

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The strange death of boozy Britain: why are young people drinking less?

Ditching alcohol for work.

Whenever horrific tales of the drunken escapades of the youth are reported, one photo reliably gets wheeled out: "bench girl", a young woman lying passed out on a public bench above bottles of booze in Bristol. The image is in urgent need of updating: it is now a decade old. Britain has spent that time moving away from booze.

Individual alcohol consumption in Britain has declined sharply. In 2013, the average person over 15 consumed 9.4 litres of alcohol, 19 per cent less than 2004. As with drugs, the decline in use among the young is particularly notable: the proportion of young adults who are teetotal increased by 40 per cent between 2005 and 2013. But decreased drinking is not only apparent among the young fogeys: 80 per cent of adults are making some effort to drink less, according to a new study by consumer trends agency Future Foundation. No wonder that half of all nightclubs have closed in the last decade. Pubs are also closing down: there are 13 per cent fewer pubs in the UK than in 2002. 

People are too busy vying to get ahead at work to indulge in drinking. A combination of the recession, globalisation and technology has combined to make the work of work more competitive than ever: bad news for alcohol companies. “The cost-benefit analysis for people of going out and getting hammered starts to go out of favour,” says Will Seymour of Future Foundation.

Vincent Dignan is the founder of Magnific, a company that helps tech start-ups. He identifies ditching regular boozing as a turning point in his career. “I noticed a trend of other entrepreneurs drinking three, four or five times a week at different events, while their companies went nowhere,” he says. “I realised I couldn't be just another British guy getting pissed and being mildly hungover while trying to scale a website to a million visitors a month. I feel I have a very slight edge on everyone else. While they're sleeping in, I'm working.” Dignan now only drinks occasionally; he went three months without having a drop of alcohol earlier in the year.

But the decline in booze consumption isn’t only about people becoming more work-driven. There have never been more alternate ways to be entertained than resorting to the bottle. The rise of digital TV, BBC iPlayer and Netflix means most people means that most people have almost limitless choice about what to watch.

Some social lives have also partly migrated online. In many ways this is an unfortunate development, but one upshot has been to reduce alcohol intake. “You don’t need to drink to hang out online,” says Dr James Nicholls, the author of The Politics of Alcohol who now works for Alcohol Concern. 

The sheer cost of boozing also puts people off. Although minimum pricing on booze has not been introduced, a series of taxes have made alcohol more expensive, while a ban on below-cost selling was introduced last year. Across the 28 countries of the EU, only Ireland has higher alcohol and tobacco prices than the UK today; in 1998 prices in the UK were only the fourth most expensive in the EU.

Immigration has also contributed to weaning Britain off booze. The decrease in alcohol consumption “is linked partly to demographic trends: the fall is largest in areas with greater ethnic diversity,” Nicholls says. A third of adults in London, where 37 per cent of the population is foreign born, do not drink alcohol at all, easily the highest of any region in Britain.

The alcohol industry is nothing if not resilient. “By lobbying for lower duty rates, ramping up their marketing and developing new products the big producers are doing their best to make sure the last ten years turn out to be a blip rather than a long term change in culture,” Nicholls says.

But whatever alcohol companies do to fight back against the declining popularity of booze, deep changes in British culture have made booze less attractive. Forget the horrific tales of drunken escapades from Magaluf to the Bullingdon Club. The real story is of the strange death of boozy Britain. 

Tim Wigmore is a contributing writer to the New Statesman and the author of Second XI: Cricket In Its Outposts.