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BeeHive  >  BeeLines  >  2008  >  Sep  >  Funny Money

Funny Money

Once numbers get above everyday levels we seem to struggle to understand them. That’s my opinion anyway. I mean, most people know that £1,000 is not that much for a car, but also know that £50 would be a bit steep for a bacon sandwich. We’ve all got a general idea of the relative value of money at the level that it affects us. We need to have really or we’d be all over the place with our personal finances.

But the bigger numbers get, the harder it is for us to get our heads round what’s what with them. Here’s an example; on the BBC website today¹ I discovered that the increase in the level at which stamp duty is charged (apparently that’s being changed today from £125,000 to £175,000 for a year) will come at an estimated cost of £600 million. From the Times this morning² I also noted that the total cost of the bail-out package being aimed at the ailing housing market today will be around £1 billion. A Google search³ reveals that £675 million of Lottery money will be ‘diverted’ to the 2012 Olympic Games in London. They’re all big numbers that’re hard to get your head around. Numbers like that just leave my head swimming to be honest. But then I just read something else that’s helped me to put these big numbers in perspective.

The thing I read was a press release that’s just been put out by the Department for Work and Pensions⁴ aimed at getting more elderly people to claim the means-tested benefits they’re entitled to. The Pension Credit is one of those entitlements and there are loads of others. In that DWP release there is a quote by Help the Aged who say that around £5 billion a year is left unclaimed by the elderly. That’s £5 billion sloshing around in the Government’s coffers that people either don’t bother to claim, or maybe don’t know they’re entitled to, or even if they do know may not know how to go about claiming it. £5 billion a year is roughly £100 million a week (according to my calculator) that elderly citizens in the UK are entitled to, but don’t claim for whatever reason. £100 million pounds every week!

Six weeks of that and you’ve got enough to pay for the Stamp Duty changes announced today, or almost match the Lottery funding of the Olympics. Ten weeks and you’d cover the cost of the total package being put together to kick-start the housing market. That’s the best way, I think, of understanding what big numbers mean; put them side-by-side with other things so comparisons can be made; it’s what we do in everyday life with motor cars and bacon sandwiches. The £2.7 billion⁵ that’s been made available for putting right the tax losses due to increasing the 10 pence tax band to 20 pence (remember all that fuss earlier in the year?) equates to just 27 weeks’ unclaimed benefits by the elderly.

Why did the DWP issue its press release about unclaimed entitlements? Well, they think it’s vital that people claim money that’s rightfully theirs, that’s why. The release says so. Also, as regular BeeLine readers will know, there’s a drop-dead date coming up on 6^th October this year when the backdating rules are being changed for those who wake up and claim their rightful entitlements. At the moment people making a claim are entitled to twelve months worth of back-payments, but that’s changing from 6^th October to just three months. So, if everyone claimed what’s rightfully theirs today they’d be in for a collective windfall of £5 billion, or enough to fund the putting right of the 10 pence tax debacle nearly twice over. But if they leave it until after 6^th October before they wake up and smell the coffee they’ll only be in for £1.25 billion. Sure, that’s enough to almost match the Lottery Olympics funding and pay for the change to Stamp Duty at the same time and not an amount to be sniffed at, but it’s not as good as paying for the 10 pence tax thing almost twice is it? That’s the way to look at it.

Something else I noticed in the DWP release that I hadn’t previously twigged is that there’s an online Pension Credit Calculator  that people can go to and see if they’re entitled to claim and there’s a free phone number (0800 99 1234) that can now be used for people to claim Pension Credit if they like. There’re also numbers for claiming Council Tax Benefit and Housing Benefit and a load of the other means-tested stuff that you can get hold of by clicking on the following link to the DWP press release and looking through the notes that accompany it; that link’s here: Over 60s – Don't miss out on extra cash.

If you know anyone who’s maybe not claiming their rightful entitlements maybe you could point them in the direction of the calculator and the free phone services. To my mind it seems just so weird that our media stories today are full of stuff about the 10 pence tax payouts, the change to Stamp Duty and the whole thing about rekindling the embers of the housing market and funding the coming Olympics, but there’s no word at all about the fact that pensioners are losing out on £100,000,000 each and every week. Plain crazy, isn’t it?

2 September 2008

Sources:

1. BBC "Stamp duty axed below £175,000" 2 September 2008
2. Times Online "Brown announces stamp duty holiday in housing package" 2 September 2008
3. Department for Culture and Sport "Olympic Lottery Funding Order Laid Before Parliament" 25 October 2007
4. DWP "Over 60s - don't miss out on extra cash" 26 August 2008
5. Times Online "Gordon Brown pays £2.7 billion to end 10p tax crisis" 14 May 2008.

 

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