New ‘summer eating allowance’ hard to stomach for low earning taxpayers

Rishi Sunak on the economy and lessons learnt from the Covid-19 ...

[This is a guest post by Dr Wesley Key, Senior Lecturer in Social Policy at the University of Lincoln.]

The announcement on 8th July 2020 by Chancellor Rishi Sunak that the government will refund 50% of the cost of meals out during Mondays-Wednesdays in August 2020, at an estimated cost to the taxpayer of £500m, will, for many reasons, be hard to stomach for low paid working age taxpayers who cannot afford to eat out themselves. For such people, paying the rent, heating their homes and feeding their children will often leave little or nothing left over for dining out.

This new ‘summer eating allowance’ is likely to disproportionately benefit affluent older people with high levels of disposable income, whose custom typically helps to sustain many eating outlets during the mid-day/afternoon periods of the working week. The very same affluent older people who have qualified, with no means test, for free prescriptions aged 60-plus, for a free TV licence if a household member is aged 75-plus (up to August 2020), for a Winter Fuel Payment if a household member has reached state pension age, and for free local bus travel if they have reached women’s state pension age, regardless of their gender. The very same older people to benefit from the seven-fold rise in UK private pension income during 1977-2016.

Low paid and benefit dependent parents may also wonder why Chancellor Sunak is splashing out such a large sum of taxpayers’ cash, given that it took the efforts of Manchester United footballer Marcus Rashford to change government policy on 16th June 2020 to ensure that children eligible for Free School Meals continued to receive the relevant food vouchers during the elongated summer vacation period. This ‘COVID Summer Food Fund‘ was eventually set up at an estimated cost of £120m, less than a quarter of the cost of Sunak’s ‘Eat out to help out’ scheme, a.k.a. the ‘summer eating allowance.’

In the longer term, when the reality of tax rises and/or spending cuts to pay for the COIVD-19 bailout begins to bite, the government needs to focus on intergenerational fairness and ensure that well off pensioners pay their share of the nation’s debt. It is time that a government made non-poor over-60s purchase their medication via a Prescription Prepayment Certificate (PPC), which in 2020-21 costs younger adults £29.65 for 3 months or £105.90 for 12 months, sums well within the reach of people in receipt of private and state pension payments. It is also time to make employees aged 65-plus pay a tax of the same rate as the employee National Insurance Contributions paid by younger workers, in order for older workers to fully contribute to the funding of the public services that they use more extensively than their younger colleagues. Such moves to cut the benefits received by, and increase the tax taken from, healthy, active people in their 60s and 70s would help to increase the funding of the social care services that are largely used by people aged 80-plus who are no longer able to undertake paid work and are entitled to face lower user charges for the social care that they require to ensure a degree of dignity and independence in old age.

2 thoughts on “New ‘summer eating allowance’ hard to stomach for low earning taxpayers

  1. Wesley Keys jumps on the silly government voucher scheme for half-price meals (upto £10) – on Monday’s, Tuesdays and Wednesdays — to have another kick at the luxurious lifestyles of OAPs in Britain. Believe me, few OAPs are going to risk their lives for a half-price pizza.

    A first point: OAPs have been paying tax and national insurance for 50 years or more. The so-called Young have barely begun to pay any.

    Let’s try a few facts to get some perspective on this spurious idea that Britain’s OAPs live a life of luxury at the expense of the young.

    Under Conservative governments between 1979 and 1997 there was a huge increase in poverty among old-age pensioners: from 13 to 41 per cent living below the poverty line. It is worth pausing to read that again: in the mid-1990s more than 40% of old people in Britain were living in poverty. A new Labour government inherited 2.9 million pensioners living below the poverty line in 1997. This number was gradually reduced to 2.5 million (before housing costs) and 2 million (after housing costs) – still a large number for one of the most affluent nations in the world. An OECD report in 2009 placed Britain 30th in its pension league of 30 member states. In that year only 40 per cent of British pensioners had sufficient income to qualify for income tax.

    These disturbing facts have not prevented politicians and journalists in recent years from circulating a new political narrative in which the old are monopolizing the nation’s wealth at the expense of the young. Sensationalist accounts, widely reviewed and publicised, based on the experience of a privileged minority of university-educated ‘baby boomers’, ignore the vast majority of the old. (See Willets 2010 – and for a rigorous critique Segal 2013) Across the media there have been questions about the affordability of winter fuel allowance, free prescriptions and eye tests and other modest social benefits in which ageism and neoliberalism blend to foment generational divisions. Research suggests that generation by generation across the twentieth century there has been more or less an even balance between taxation paid into the system and lifetime benefits taken out. So there has probably been no significant generational inequity. (See Walker 2002)

    But, as Alan Walker argues, generational conflict has been encouraged in recent years in order to break the welfare system and to divert attention from the real sources of inequality and the real purposes of so-called austerity.

    “The present debate about the costs of an ageing society is not only incredibly narrow
    in its focus, but is also an evidence-free zone. Furthermore, it is confined rigidly in a
    zero-sum austerity formula that has exact parallels with the crude ‘public burden’
    politics of the 1980s. It is assumed widely that older people form a homogenous mass
    of financially secure but unhealthy citizens, who are the only generations to use the
    health and social care services, and who are preventing younger generations from
    gaining access to scarce national resources. Because of this dominant political
    discourse, which combines ageism and neoliberalism, there is no alternative strategy
    under consideration, other than cutting benefits and pensions and forcing people to
    work longer by raising pension ages.” Walker 2012, p.816

    The so-called ‘baby boomers’ — an American term that never sounds right in Britain — have been represented as the ‘welfare generation’ in order to justify neoliberal antagonism towards the welfare state and to recruit justifiably angry young people to ‘reform’ this apparent injustice. Wesley Key adds his voice to this cynical strategy. I hope young people know when they look at their parents and their grandparents that it’s not these people who are responsible for the sorry mess this country is in. Let’s look at the people who are really responsible for falling real wages, widening inequalities, spiralling student debts, shrinking job opportunities and so on.

    SEGAL, L. 2013. Out of Time. The Pleasures and Perils of Ageing. London: Verso

    WALKER, A. 2002. ‘The politics of intergenerational relations’. Zeitschrift für Gerontologie
    und Geriatrie, Band 35, Heft 4, pp. 298-303.

    ______ 2012. ‘The New Ageism.’ Political Quarterly, vol.83, no.4, Oct-Dec.: 812-819.

    WILLETS, D. 2010. The Pinch. How the Baby Boomers took their children’s future – and
    why they should give it back. London: Atlantic Books.

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