Brexit-obsessed Britain is no country for more and more old men living in severe poverty

The recently published report, 'Pension Reforms and Old Age Inequalities in Europe' has revealed that the proportion of men and women people living in severe poverty in Britain is five times what it was in 1986 and the largest increase among western European countries,.

Its author, Professor Bernhard Ebbinghaus, of the University of Oxford said that the rise, from 0.9% of the elderly population to around 5%, is attributable to Britain’s state pension system and its low basic payments and means-tested supplements. He told a European Sociological Association Conference that Britain is one of five countries out of 16 that he has studied where there has been an increase in people aged 65 and over who are living in “severe poverty”, which is defined as having an income of 40% or less of the median average.

As the graph shows in the mid-1980s about 1% of those aged 65 and over in Britain were living in severe poverty, putting it equal-lowest in poverty rates of 16 western European countries. In France it was 12% and in Germany 6%. However, by 2008, the proportion had risen to 6%, making Britain fourth-equal highest with Switzerland, Ireland and Spain standing higher. Over the following eight years, the proportion dipped slightly but remained at just under 5%.

Professor Ebbinghaus said Britain compared unfavourably with many other countries : “The lowest poverty rates among older people are found in the relatively generous Dutch basic pensions and Nordic welfare states, while the UK, but also Ireland and Switzerland, with basic old-age security, had the highest poverty rates.”

Why do a larger proportion of old people live in poverty in Britain than in Germany for example ? For the answer you have to go back to the social welfare reforms initiated by the economist and social reformer, William Beveridge and the Labour Government in the 20th century after the Second World War and the reforms in Germany initiated by Chancellor Otto von Bismarck in the 19th century.

The Professor said that Britain "is a good example of the Beveridge-lite systems that have historically failed to combat old-age poverty. These have rather ungenerous basic pensions with means-tested supplements and this reproduces relatively high severe poverty rates among the elderly. British basic pensions are particularly low, 16% of average earnings, and require a long contribution period. Income-tested or means-tested targeted benefits are needed to supplement basic pensions and to lift them out of severe poverty – every sixth British pensioner receives such additional benefits.”

He contrasted the British system, with its flat-rate basic pension, with the “Bismarckian” system used in Germany and several other European countries, where mandatory pension contributions are based on earnings. “A comparative analysis of poverty rates in old age reveals that Beveridge basic security is not always capable of effectively reducing poverty despite the explicit purpose of doing so, while some contributory Bismarckian systems are better suited to reducing poverty, despite focusing on status maintenance.” 

Whatever the reasons, Brexit-obsessed Britain in 2019 is no country for those 5 old people in every 100 who are living in severe poverty.