Simon Little, Home & Capital’s business development director, said: “Many elderly people just couldn’t believe the government figures saying that inflation was as low as 2.5%. People who live on a low and fixed income know only too well that their purses and wallets are increasingly stretched by the soaring cost of gas and electricity, and many staple food items that are going up in price very sharply.”
Indeed, the average increase in gas prices in 2008 among the top six UK energy companies was over 15% and one of them put through a 17.2% rise. Electricity prices were not far behind.
Little said: “It’s been calculated the average energy bill for a British consumer is now well over £1,000. As we all know, older people tend to feel the cold and are often at home all day, so they inevitably use more energy, particularly if they live in an older property without modern energy-saving devices such as double glazing and loft insulation.”
Furthermore, the poorest energy customers, who are often on pre-payment meters and don’t benefit from lower rates for online or direct debit customers, can end up paying as much as £330 extra, according to consumer watchdog Energywatch.
Little continued: “A disproportionate part of older people’s income is spent on gas and electricity – especially those who rely mostly on the state pension and have little or no other income. With the state pension of £87.30 per week equating to less than £4,540 per year (plus the winter fuel payment of £200), in some cases a pensioner would need to spend a quarter of that just on gas and electricity. That’s before you even think about the huge increases in basic foods like butter, bread, eggs, flour and milk (up by more than 20% in less than a year according to a Tory party report), and this April’s hikes in council tax. The real inflation rate for retired people is closer to 10% than 5%”.
As the cost of living spirals, Home & Capital said some retired homeowners may struggle to find the cash to keep their homes in good repair and afford those extras to make their lives more comfortable.
Little concluded: “Often they have paid off most or all of their mortgage, but suffer from a meagre income. In the olden days, retired people sometimes took in lodgers in their spare room – but changing social habits and the ready availability of buy-to-let properties have largely put a stop to that.
“In such circumstances, retired people should do two things. One is make sure they claim all the government support they are entitled to, such as pension credit, help with council tax, and health and disability benefits. Second, they should consider using the equity in their homes to raise a lump sum or an income, either by downsizing or entering into an equity release plan. Homeowners who are asset rich and income poor should get expert advice and consider all the options open to them.”
