Ed i to r ia l

The credit crunch – the potential impact on older people

For many people throughout the world, the events

in the financial markets over the last year have

been highly significant and in some instances have

led to major changes in their way of life, almost all

of which have been detrimental. However, some

groups have been more seriously affected than

others and one of these is our older population,

many of whom are on fixed incomes with little or

no scope to improve their financial position.

It has been suggested that up to 80% of people

over the age of 55 years have reduced their

expenditure. With inflation in the UK currently

running at more than 5% it appears that the over-

75s have been particularly hardest hit with the very

sharp increases in food and utility prices. Inflation

for these older groups is much higher than the

headline rate as they spend a much higher pro-

portion of their budget on basic food items. In one

of the papers in this issue, Sadamori et al report

that a suitable type of diet is very important in

maintaining an adequate nutritional status in el-

derly patients with dementia. Carers will be well

aware that food prices are in fact up by at least 9%

with dairy products even higher at 17%. Add to

this, increases in utility bills of 11% and, if they

manage to run a car, petrol pump prices have been

up by 20%. This latter increase is particularly sa-

vage as in many instances public transport is very

limited even if it is free in many countries for

pensioners, and older people depend on their cars

to enable them to have some form of indepen-

dence. It is interesting to note that in much of the

media, one of the pieces of advice that is repeatedly

given to help people in dealing with the credit

crunch and the increase in the cost of living is to

reduce their household expenditure. That is of

course very sound advice, but for some groups,

notably the elderly, there is very little to reduce as

many are at base level anyway and there is nothing

else which they can reasonably cut out.

One issue which has yet to be resolved is the

need for older adults to receive all the benefits to

which they are entitled when they retire. It has

been suggested that over 150 000 pensioners in

Scotland could improve their financial position by

£100 per month, 180 000 are not claiming council

tax benefits and 125 000 are not seeking housing

benefit. In the UK as a whole, there is £4.6 billion

in unclaimed benefits and allowances of which

between £385 and £575 million could be claimed

by Scotland’s one million pensioners.

Unfortunately many are defeated by the com-

plexity of the system in order to receive these

entitlements and David Manion, Chief Executive of

Age Concern Scotland has stated that ‘the problem is

widespread in normal times, but with the credit

crunch and rising prices, it has become acute’. Also

there is concern that legislation changes on a reg-

ular basis and this creates difficulties for many

groups, but particularly older people, knowing

what to claim when to claim and then how to claim

what is due to them. In fact, approximately a third

of those who should be receiving support are failing

to claim as they don’t know they are able to or

because they don’t want to be seen to be ‘living off

the state’. If that is not enough, the government

has restricted the period for claiming any backdated

pension credit from 1 year to 3 months.

Age Concern has also stated that around two-

thirds of pensioners are reducing the amount that

they spend on gas and electricity with around 50%

intending to make economies with regard to their

heating this winter. There is serious concern that

many older people will use unsafe and potentially

lethal old heaters and electric blankets and one

local authority has already seen a significant in-

crease in the number of fatalities as a result. Also

more than two million of them live in poverty and

around 3.5 million are suffering from ‘fuel pov-

erty’, defined as the situation where more than

10% of a person’s income is spent on power and

heating their house. With regard to the latter issue,

Help the Aged and Friends of the Earth have taken the

UK government to court as they believe that it has

not done all that it should to meet its fuel poverty

targets. The Energy Conservation Act 2000 and the

Fuel Poverty Strategy requires the UK government

to end fuel poverty for vulnerable households by

2010 and for the rest of the population by 2016.

There are also serious concerns that previous en-

ergy watchdogs have been subsumed into a new

body and the number of cases that it will contested

will be substantially reduced. It has been reported

(The Independent, 05.10.08) that an estimated nine

out of 10 of staff in one of the groups, who spec-

ialised in dealing with excessive fuel bills, have

been made redundant. An elderly person has been

reported as stating that he now only turns on his

heating every second day otherwise he would not

be able to meet his bills. One can only hope that

with oil prices now down to less than $65 a barrel

compared to a previous high of $147 an equivalent

� 2008 The Author

Journal compilation � 2008 The Gerodontology Association and Blackwell Munksgaard Ltd, Gerodontology 2008; 25: 197–198 197

reduction in utility bills and petrol pump prices will

follow. However, it seems that the various com-

panies involved are very quick to raise prices to

meet their ‘costs’ but that when the commodity

price eventually falls, the subsequent reductions

are somewhat slower in taking effect.

The other consideration must be the state of

people’s pensions. Scottish Widows 2008 Pension

Index has reported that half the people in the

country are not saving enough for when they re-

tired, 40% feeling that they are worse off now than

they were five years ago and many saying that they

will not be able to make any contribution to their

retirement if the cost of living and the level of job

insecurity remains as it is now. One country has

taken extreme measures to help its difficult finan-

cial situation by nationalising the £29 billion pri-

vate pension funds. Argentina has stated that this is

to ‘protect’ pensions but many are concerned as to

whether the funds will ever become available

again. It can only be hoped that other countries do

not follow suit.

Another area that has been affected by the

current financial situation is the charities that

provide support to vulnerable groups of the

population including older people especially those

on fixed incomes and living alone. The Charity

Commission has found that around a quarter of

charities have seen a significant increase in de-

mand for their services. This has been particularly

in the areas of health, care for the elderly and

social services. However, the key issue is that

charities themselves have seen their costs rise by

more than a half and therefore they have less

funds available to spend in supporting others

even if donations remain as they are. The latter

has become a major factor with some charities

believing that with the general public having

difficulties with the credit crunch, the financial

situation could get worse.

‘Indeed the idols I have loved so long

Have done my credit in this world much wrong

Have drowned my glory in a shallow cup

And sold my reputation for a song’

The Rubaiyat of Omar Khayyam (1859)

James P. Newton

Editor

� 2008 The Author

198 Journal compilation � 2008 The Gerodontology Association and Blackwell Munksgaard Ltd, Gerodontology 2008; 25: 197–198

198 Editorial