THE DILEMMA FOR PENSIONERS AND WHAT GOVERNMENT CAN DO ABOUT IT

One hundred and four years ago and thanks to a Welsh Chancellor of the Exchequer, the British Government granted the first pensions to its citizens who, when David Lloyd George was in charge of the nation's finances, had to be men of ‘good character’ over the age of 70 who had not been in the workhouse.

Since then, all of us have become eligible for a state pension when we reach retirement age but are our older generation better off?

Ironically, perhaps, the five shillings paid out in 1909 was, according to pensioners support groups, equivalent to 25 per cent of the average earnings. Compare that to the situation today where the state pension is equivalent to only 17 per cent of an individual’s average pay.

In such a situation, it is probably not surprising to find that many pensioners are now going back to work to supplement what they get from the state.

The latest data showed that in the last three years, the numbers of adults aged sixty-five years or older who are in employment in Wales has increased by 28 per cent and currently account for 60 per cent of the increase in employment for the period 2009-2012.

Other factors have also probably influenced this trend.

First of all, it is clear that pensioners are not getting much from their savings as, thanks to the lowest interest rates in history, the interest on savings accumulated throughout a lifetime of hard work is currently at a record low.

Secondly, for those lucky enough to have private pensions, the actual value of pension funds have fallen dramatically, meaning that many will have to wait until the stock market recovers to get any decent return on their retirement income.

Finally, an increasing number still have to pay off debts with a recent report showing that one in five pensioners are in the red on the day they retire, owing an average of £31,000. In fact, hundreds of thousands of pounds are still outstanding on interest-only mortgages due to the fact that many endowments, thanks to the recent financial crisis, simply failed to deliver the returns promised.

In addition, the insurance company Prudential estimated recently that people planning to retire this year expect to be living off the lowest average incomes recorded in six years, with those retirees being expected to be around £3,400 a year worse off than workers who retired in 2008.

However, it is those on the basic state pension of £110.15 per week who face the biggest challenges, especially in paying basic bills. Indeed, it is worth noting that whereas the average annual spend on gas and electricity for the over-65s was an average of £669 in 2005, it had risen soared to £1,356 last year, representing nearly a quarter of what they get from the state pension.

Given this, is it really surprising that many are facing a difficult choice between going hungry and keeping warm, resulting in greater incidences of cold-related illnesses?

We are supposed to be living in a civilised advanced economy and yet in 2012, there were over 20,000 excess winter deaths of older people in the UK, higher than in any other European country.

One can only imagine the horror of the figures that will be released after the bitterly cold spring we are currently experiencing.

And with Wales having a higher proportion of older people than the rest of the UK, the situation is probably even worse here. Indeed, it is estimated that over 100,000 pensioners in Wales will have turned turning off their central heating during the recent cold spell.

Perhaps the answer with this annual problem lies with using the ability of the public sector as a purchaser. For example, if the UK and Assembly Governments examined how they could ensure discounted purchases of electricity and gas, then both could provide these services at a vastly reduced rate for those receiving the state pension.

Given that all governments of the last fifty years seem to have conveniently ignored this issue, such a solution to deliver a ‘pensioners’ tariff’ would ensure that politicians, rather than spouting the usual empty rhetoric about the importance of looking after the older generation in our society, actually acted and used the massive purchasing power of Government to do something positive that will improve the standard of living of those who need it the most.

A FUTURE FOR WYLFA B?

As we all know from the excellent coverage in the Daily Post during the last few days, the business community in North Wales remains shell-shocked at the decision by the German energy companies RWE npower and E-ON to pull out of plans to build an £8 billion new nuclear reactor at Wylfa B in Anglesey.

With the county consistently rated as one of the poorest areas in the UK, the development was seen as the panacea for its lack of economic opportunities, with experts estimating that it had the potential to contribute over £2 billion to the economy over the next fifteen years, creating 5,000 construction jobs and 800 direct jobs at the new power station.

More importantly, it would have given Wales, and Anglesey, the opportunity to become a major centre of expertise in the sector through the creation of value added projects around the new development. For example, helping to create an energy technology park around the power station and ensuring that the skilled workforce needed for its construction are sourced locally were just two simple examples of how the project could have created additional benefit for the Anglesey economy. It would have also enabled Bangor University to become an international centre of research and development excellence in this sector.

But despite the bad news, local and national politicians remain convinced that new investors can be attracted to the site. There does not seem to be any specific technical or economic rationale for withdrawal with insiders suggesting that political pressure may have been the main factor in the decision to pull out of not only plans for Wylfa, but other nuclear developments in the UK. In fact, with the German government recently stating that it would abandon any new nuclear power plants within its own borders, many have been expecting that country’s energy companies to pull out of any new developments in the nuclear industry.

The quality of the project itself was emphasised by the chief executive of RWE npower, who went on record to make the point that not only was Wales one of the "most attractive" new nuclear sites across Europe but that any new investor would be able to build on the work that the current consortium had put together during the last three years.

Another positive development from this story is that both the Welsh Government and the UK Government have now co-operated closely to try and deal with this issue. After recent wranglings between Cardiff Bay and Westminster, they have come together to save a project that could create thousands of jobs within an economic blackspot.

Of course, this was not always the case and during the last administration, there was a difference of opinion between the Economic Development Minister, who supported Wylfa B, and the Environment Minister who was diametrically opposed and even called for a public inquiry into any new nuclear facilities in Wales. Certainly, such confusion did not help engender a coherent governmental approach to the development.

Indeed, Carwyn Jones’ positive comments last week on the project were to be welcomed, as was the news that he had already held urgent talks with the UK energy secretary to try and secure new investors for the project. Therefore, perhaps the one silver lining in the Wylfa B story from last week is that we may see greater co-operation between the two governments and a more cohesive and joined up “Team Wales’ approach that sees any political differences put aside in favour of economic imperatives. Certainly, with the prosperity of the Welsh economy continuing to fall relative to many other parts of Europe, such co-operation is vital for the future of our nation.

Daily Post column April 2nd 2012.