London’s underground trains could never be seriously depicted as friendly, social hubs, affable places where you’re always likely to strike up conversation with some of the capital’s most cordial folk. I discovered this years ago. After graduating from university, I landed a job in London, working as a trainee accountant for a major US firm. The post-work trek back to my shared digs could be a chore, a 55-minute underground journey comprising two trains followed by a mile-and-a-half walk from the station to home.
Most of the train journeys were conducted in a cold, cheerless silence. Aside from the rustle of an Evening Standard, the train’s quietness was all-pervasive; few fellow passengers lifted their head to make eye contact, fewer still actually spoke, the majority preferring to bury their heads in a book or a newspaper.
Things haven’t changed. I was in London earlier this month, criss-crossing the city to attend a handful of meetings and I can confirm that, certainly when they’re on the Tube, today’s underground passengers have not morphed into a gregarious, convivial bunch. Today’s train travellers are kept absolutely quiet, either by playing with their mobile phones or donning headphones, several of which had a frustrating tendency to leak tinny-sounding ‘music’ for fellow-travellers’ delectation.
There was, however, an exception in this sea of apparent calm: two chatty, grey-haired couples arranged themselves at the end of the carriage, clearly enjoying life as they undertook a day trip around the capital.
It didn’t take much to discover what this jolly foursome had planned. “We’ve just received our Freedom Passes,” exclaimed a smiling chap named Michael (“call me Mike”). His wife, Rita, added further information: “They’re absolutely great,” she announced, “we can go anywhere on the underground, especially now we have the time. All four of us are retired, you see.”
I spent the next 10 minutes (around four stops) listening to their plans to visit a small selection of landmarks before stopping for lunch. “We’ll see how far we get and pick up from there when we’re next in town,” advised Mike, who added for around the tenth time that the quartet’s Freedom Passes were issued free of charge.
The Freedom Pass was introduced more than a half century ago, offering free travel on London buses to retirees. Over the years, its scope has expanded dramatically; in addition to free bus travel, the pass now offers pensioners no-cost journeys on the underground, London overground, DLR and National Rail trains, among other concessions.
An estimated 1.5 million Londoners are entitled to claim their Freedom Pass or, for those on the cusp of retirement, a 60+ Oyster card and claim a similarly impressive list of travel benefits.
Not everyone is as delighted about these cards as Mike, Rita and their mates. It’s estimated that the Freedom Pass will cost almost £500 million a year by 2030, while the 60+ Oyster card will add a further £185 million in annual costs by the end of next year.
‘London Councils’, the group that represents London’s 30-plus boroughs, maintains that the concessions are unaffordable. The body would prefer to have distribution of the card means tested and the qualifying age raised.
Other commentators believe the concessionary travel cards fall into the same category as the Winter Fuel Allowance, arguing that they should be distributed only to those who receive pension credits and genuinely struggle with London’s public transport costs.
We’ve grown accustomed to hearing and reading of opposition to a raft of benefits allocated to those in their 60s and older; moreover, I suspect that this vociferous opposition will continue to grow progressively louder.
In several cases, this has already happened. Late last year, for example, the respected Policy Exchange (PE) think tank published a report called Beyond our Means: A Plan to Tame Public Spending which focused on specific areas where the organisation believe public spending could be tamed.
Recent surges in state spending on welfare, health, pensions and on debt interest are to blame, say the PE. Aside from debt interest, an area which requires co-operation from countries and other investors that have lent money to the UK, the other three sectors require urgent attention. Space determines that we must focus upon the one area most likely to be of interest to readers, ie pensions.
In short, Beyond our Means declares that the Triple Lock, under which the state pension is calculated, (it’s the higher of inflation, the rise in average earnings and 2.5%) should be scrapped. Thereafter, pension levels should be frozen for three years, ie an effective cut, after which they should rise in line with the annual Consumer Price Index (CPI).
Any real cut in their annual income would inflict financial harm hundreds of thousands, possibly millions, of retirees, although the PE admits there is no pain-free way to address this Government’s parlous financial plight. By way of balance, the body maintains that in return for a substantial cut in public spending taxes may be cut – not the other way around - and perhaps more generous pension provision would once again be on offer. But don’t hold your breath.
I doubt serious opposition to free public transport for retirees or the provision of half-decent state pensions existed at the turn of the century. Nevertheless, times are tough and, as I’ve said here before, because pensioners are a disjointed and fragmented body, they’re considered an ‘easy touch’ when politicians want to take something from them. Let’s face it, they’re unlikely to glue themselves to a motorway by way of protesting against the withdrawal of a Freedom Pass or 60+ Oyster card. And if the Government tampers with the Triple Lock, or takes a scalpel to other retiree-focused benefits, what will pensioners’ reaction be?
So, what’s to be done?
Let’s assume that the Government will, over the next few years, possibly sooner, ‘amend’ how pensions and other benefits are calculated by raising the retirement age (certain), scrapping the Triple Lock (certain), and withdrawing free travel concessions (almost certain). Prior to what some older citizens might call a ‘nightmare scenario’, it would be extremely prudent for many people to make alternative provision to plug what could be a glaring gap in their personal finances.
One way in which this could be achieved is for homeowners aged 55 and above to access and liberate a percentage of the wealth accumulated in their property, usually over many years.
The equity released is typically paid to the homeowner as a tax-free lump sum. With the most popular option - a lifetime mortgage - the homeowner continues to own the property. The money can be used flexibly, for example to enhance retirement income, make home improvements, or help family, depending on individual circumstances.
Equity release is not everyone’s cup of tea (what is?), but for far-sighted homeowners who see the writing on the wall, and expect retirees to experience greater financial pain, accessing a proportion of their property wealth could provide an important financial lifeline. It would definitely generate enough for older homeowners to enjoy as many trips as they want in and around London – just don’t expect to fall into conversation when you take the Tube.
