Pensioners: Grey lobby fury as Brown drops £200 council tax allowance

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Pensioners groups condemned the Budget as 'terrible' for the elderly last night after Gordon Brown dropped a £200 payment to ease the cost of the council tax and froze the winter fuel allowance.

Joe Harris, general secretary of the National Pensioners Convention claimed the average pensioner would be at least £265 worse off this year as a result of rising council tax and energy bills. "It's absolutely outrageous that in a country with one of the strongest economies in the developed world, pensioners are being asked to shoulder a cut in their income," he said.

The one-off council tax payment of £200 was promised as a pre-election sweetener for pensioners. It was given to pensioners last year with their winter fuel allowance, providing pensioners with a pre-Christmas bonus of £400 in cash. However, in spite of the council tax rising on average by 4.5 per cent, nearly double the inflation rate, yesterday's Budget failed to provide any extra cash to help pensioners pay their council tax bills.

Treasury officials said the Chancellor had not closed off the option of providing extra help for pensioners after the forthcoming pensions white paper and reforms of the council tax to ease the burden on those with low fixed incomes. "They may be some bridging payment before the reform of council tax," said a senior Treasury source.

Age Concern slammed the Budget as "another missed opportunity". Gordon Lishman, Age Concern's Director-General, said: "This is a terrible tenth Budget for today's and tomorrow's pensioners. It beggars belief that the Chancellor has denied pensioners any extra help this year with their council tax bills, just as a new round of bills is set to cause anxiety for millions." He said council tax was a huge financial burden for many pensioners who are living on a low, fixed incomes. "We urgently need a fairer system of taxation in place of council tax which is linked to people's ability to pay," he said.

The chairman of the Local Government Association, Sir Sandy Bruce Lockhart, said: "It will be with dismay that hard-pressed pensioners will look at the Chancellor's failure to renew his commitment to the £200 council tax pensioner payment."

Pensioners' groups also criticised the Chancellor for failing to set out Government support for Lord Turner's recommendations on pensions reform. They called for a basic state pension of at least £114 per week.

The reforms of the pension system were thrown in doubt by a disagreement between the Chancellor, Tony Blair and John Hutton, the Pensions Secretary. Mr Hutton proposed a bigger basic state pension indexed to earnings, as pensioners' groups have been demanding paid for with a rise in the pension age and higher taxes. However, Mr Brown rejected the proposals at a meeting in Downing Street with the Prime Minister and Mr Hutton, seeking instead to peg the rise in the state pension to 3 per cent a year until 2020. That would be higher than the inflation-linked rises currently provided but far lower than a link with earnings would deliver.

The National Pensioners Convention, whose past president is Rodney Bickerstaffe, the former union leader, said that while Mr Brown " carries on fudging, 2.5 million older people are living below the poverty line and the basic state pension is set to rise by £2.20 to just £84.25 a week."

The Chancellor also announced additional aid for councils to implement the promise made last year to provide pensioners with free off-peak bus travel from 2008 at a cost of £250m a year.

Case Study, Pensioner: 'I am unimpressed. It was a cop out'

By Oliver Duff

Pat Turner, 71, retired as a secretary for British Gas in 1993.

Lives Southampton, near her daughters, 47 and 37. Her son, 48, lives in Luton. She has five grandchildren.

Income State pension of £93.76 a week and a British Gas pension of £263.24 a month. Last year she received £400 relief towards her council tax and fuel. Has to supplement her income with redundancy savings.

Outgoings £104.24 a month mortgage repayment and £265 utility and food bills. Council tax costs £741.65 a year. Drives 50 miles a week to collect her grandson from school.

Politics Labour Party member until last year's general election, when she left because of Labour's "poor treatment" of pensioners. Would not vote Lib Dem or Tory.

Hopes for the Budget Although council tax and fuel relief payments would be better than nothing, she would prefer to see an increase in the basic state pension. Also for the basic state pension to be linked to average earnings, not prices. Increase in NHS spending to cut waiting times for elderly patients. No rise in fuel duty, which would threaten her mobility.

Effect of Budget Because Gordon Brown removed the £200 council tax benefit, she is £78 worse off, despite a tiny increase in her state pension.

Reaction "This could have a significant impact - I have got to find the money from somewhere, probably from my savings. I was unimpressed by Gordon Brown. He just glossed over pensioners by saying they were going to be dealt with in a white paper. It was a cop-out. My problem is not about money so much; it's their attitude towards us. Labour has a terrible disregard for pensioners. The council tax relief last year was just a blatant, unashamed election bribe. It is despicable. There will be demonstrations over rising council tax. Some of us are considering withholding our payments. I really am prepared to go to prison over this, I am so cross about it."

* Treasury Budget site

* Chancellor's Statement in full