Poorest pensioners miss out on £1,000 a year in benefits

At least three quarters of a million of Britain's poorest pensioners are missing out on more than £1,000 a year in unclaimed benefits, Whitehall's spending watchdog will reveal today. The damning report by the National Audit Office (NAO) also found that the latest figures on benefit take-up are worse under Labour than under the last Tory government.

Up to £1.8bn was unclaimed across all income-related benefits in 1999-2000, the most recent year for which figures are available, leaving many short of money for food, heating and transport.

In a blow to Gordon Brown's drive to target the poorest pensioners with means-tested benefits, the NAO found that the elderly failed to claim because the current system was too complex, stigmatising and badly administered.

NAO officials urged ministers to increase take-up rates by offering face-to-face advice in GPs' surgeries, post offices and other places pensioners visit regularly. The research found that the poorest and most vulnerable were the least likely to use the new phonelines and internet services being promoted heavily by the Department for Work and Pensions.

The study, the most comprehensive of its kind, found that up to 770,000 of the two million households entitled to the minimum income guarantee (MIG) do not claim the benefit. As the figures refer only to households, the number of pensioners missing out will be even higher.

MIG was introduced by Labour to replace income support for older people, with big increases aimed at the poorest in society. Some £6bn extra has been made available to pensioners since 1997.

But the NAO found that many more older people could have benefited and the 770,000 households missed out on an average of £22 a week extra, or £1,144 a year, in 1999-2000.

Embarrassingly for ministers, the latest take-up rates are worse than under the final year of the last Tory government. The total number of pensioners failing to claim income support, housing benefit and council tax benefit was 2.4 million in 1999-2000, compared with 2.2 million in 1996-97.

Sir John Bourn, head of the NAO, called for the Government to set "stretching" targets for take-up of its new pension credit, which replaces MIG from next year.

David Willetts, the shadow Work and Pensions Secretary, said: "This report undermines the whole philosophy of ever more means testing, on which the Government's welfare programme rests."

Age Concern and Help the Aged welcomed the study, claiming that it confirmed that means testing often excluded the very people it was meant to help.

A spokeswoman for the Department for Work and Pensions said that overall much more money was made available to pensioners.

* More than half of the children in inner London are living below the Government's official poverty line. Some 53 per cent of children in inner London, and 41 per cent of all London children, are in households with less than 60 per cent of the national average income, a Greater London Authority study found.