I’ve long maintained that George Orwell’s 1984 is such an important work that reading it should be compulsory for every schoolchild over the age of 12. Academics responsible for creating the national curriculum should include Orwell’s classic text and insist it is read every academic year.
Though it is a work of fiction, so much of what Orwell predicted in 1949, four years after he wrote Animal Farm, has, worryingly, come true. Not only does 1984 introduce words and concepts such as doublespeak and newspeak, and accurately predict the advent of dark, menacing (2-way) television screens in every home, it could be argued that he also foresaw the emergence of wokeism.
The book’s principle protagonist, Winston Smith, works in the Records Department at the Ministry of Truth where his job is to rewrite historic documents to match ‘the Party’s’ version of events, a task made easier by Smith’s ability to effectively ‘cancel’ historic characters. Sound familiar? Bear in mind that Orwell was writing this 75 years ago.
Far-sightedness runs through 1984. For example, Orwell’s Doublespeak, which uses ambiguity to disguise or soften a message, is a concept and language since gleefully embraced by politicians of every hew, enabling them to deliberately obscure the true meaning of their words.
Indeed, our elected representatives have become the most accomplished practitioners of doublespeak, as we discovered at the last general election. One of the most notable examples was Labour’s manifesto promise not to “increase taxes on working people, which is why we will not increase National Insurance, the basic, higher or additional rates of income tax, or VAT.”
Although this pledge is by no means a given, there’s a strong probability that the government will adhere to its promise, which is fine if you’re a ‘working person’, but it begs the question, ‘where, then, is the money essential to fund other ambitions promised in the Labour party manifesto actually coming from?’
The answer was provided by new Chancellor Rachel Reeves almost as soon as she walked through the door of 11 Downing Street, whereupon she axed pensioners’ winter fuel allowance. According to the BBC, around 10 million retired people will be affected by the Chancellor’s action: from now on, winter fuel payments will be restricted to those on benefits and pension credit. In truth, Ms Reeves’ decision was never going to trigger mass protests by retirees; most considered the fuel allowance an unexpected, but not vital, Christmas box.
Yet almost as soon as the winter fuel allowance was scrapped, the proposal to establish an £86,000 cap on the amount older people have to pay towards their care, either at home or in a care home, scheduled to be introduced in October, was also ditched.
It’s worth re-iterating that the overwhelming majority of retirees and pensioners are not ‘working people’, merely those who have worked all of their lives to enjoy their autumn years. In the eyes of some politicians, however, income and asset-rich retirees (ie, people who own their own home), have had it too ‘easy’ for too long; in other words, it is they who will provide great chunks of capital with which the government can pursue a multitude of policies.
It will get worse. In addition to losing their winter fuel allowance and being helpless to act as the proposed cap on care costs was abandoned, pensioners can almost certainly expect levels of inheritance tax and capital gains tax to rise significantly. However, the big prize, for the Treasury at least, could be the requirement for retirees to pay National Insurance Contributions (NIC).
At present, retirees’ income generated from savings and investments, property rental income, state pensions and private pensions, plus other social security benefits, remain exempt from NIC. Earnings generated by people above pensionable age are also excluded. However, economists maintain that huge sums could be generated were NIC to be levied on pension income, irrespective of how unfair this would be: why, pensioners will ask, should we be forced to contribute towards a benefit, the state pension, for which we have been paying via NIC throughout our working lives? It’s a legitimate question, but it could fall on deaf ears given Ms Reeves’ undertaking not to burden ‘working people’ with an increase in NIC.
Besides, the counter argument is that we pay no income tax on pension contributions, although we do pay it when the time comes to drawing a pension. Bringing income generated from a private pension into the NIC net is, the argument goes, merely an extension of the same principle.
Following July’s election which confirmed Sir Keir Starmer as Prime Minister, older people have found themselves positioned firmly in the Chancellor’s cross hairs. This was to be expected: after all, the over-65s were the only cohort to overwhelmingly vote Conservative rather than Labour.
Many have already started making provision to improve their finances ahead of what could be a roller coaster ride for Baby Boomers, now considered the ‘too lucky generation’ in some political circles. Accordingly, we can expect to hear a lot more about ‘inter-generational unfairness’ as a justification for targeted tax hikes.
Not surprisingly, the past few weeks have also witnessed a surge in the number of enquiries made regarding equity release as people rush to get their finances in order before the Chancellor’s first Budget speech, scheduled for the end of October. One of the most appealing characteristics of equity release is the end result: the money eventually released from your home’s accumulated wealth is often a significant sum and is completely tax-free.
The equity release process is not dissimilar to buying property, although on average it can be concluded considerably quicker. In the first instance, if you’re an older homeowner, aged 55 and above, speaking with a qualified equity release adviser could prove an astute move. The adviser will describe how the process works with a fully detailed explanation – essential as releasing equity from the home is not for everyone.
The money released via a lifetime mortgage – the most common form of equity release, can be used for any sensible purpose. The most popular is to make home improvements, but also more lifestyle choices such as holidays or a new car. In addition, homeowners may add to their emergency savings which can be sensible for any one-off payments that may be required, or simply to access the savings gradually to support daily living expenses.
This is where an Equity Release Supermarket stands out from the crowd – being a whole of market advice firm with access to every deal and lender across the industry. Hence, if supporting income levels was a priority, products such as drawdown equity release plans could present an option as they allow you to draw ad-hoc payments from a cash reserve facility whenever required.
None the less, as the government focuses its tax-raising attention upon the cohort they consider cash and asset rich, finding a way to legitimately release a potentially substantial tax-free lump sum could prove a godsend to older homeowners.
