Elderly face inflation of 7 per cent as fuel bills soar

Millions of pensioners will have to cope with an inflation rate three times higher than everyone else this year, a report warned yesterday.

Their cost of living will increase by at least 7 per cent, it said, largely because they spend a much higher proportion of their income on food and energy bills, which are rising rapidly.

These typically account for as much as a third of their money.

The study, from the Newcastle Building Society, admits that even the 7 per cent figure, which is the highest rise in the cost of living of any age group, may be conservative.

It said all consumers would be affected by the soaring cost of essentials such as heating, water and food.

But the worst affected will be pensioners on the basic state pension, currently £87.30 a week.

This will go up by 3.8 per cent in April, but at the same time some bills will rise by up to 27 per cent.

Bob Mottershead, a retail sales executive at Newcastle Building Society, said: "Our findings paint a bleak picture for pensioners this year.

"The rising cost of living is undoubtedly a concern for us all, but it is those in later years who suffer the most.

"For the many relying on the basic state pension, these increases could negatively impact on their everyday quality of life."

Mervyn Kohler, of Help the Aged, said: "It will mean that people are cutting back on food and turning off the electricity."

Energy firms such as British Gas and NPower have raised prices by up to 27 per cent in recent weeks, pushing many annual bills past £1,000.

Consumer groups criticised the timing, as families use about 40 per cent of their annual gas consumption and 30 per cent of electricity between January and March.

A spokesman for Energywatch said: "Pensioners and others on low and fixed incomes are bearing the full force of the impact of these horrendous rises in energy bills."

Pensioners also lose out because many do not take advantage of cheaper online tariffs, which could save them up to £300 a year.

Many either do not have an email address, are too nervous to switch to an online tariff, or feel loyal to local "gas and electricity boards", according to Energywatch.

Other bills are also rising. The cost of a typical basket of groceries has soared by 12 per cent in a year, while average council tax bills in England will hit £1,145 in April - more than double the cost when Labour came to power in 1997.

The rising cost of living is forcing a record 1.2million pensioners to keep working beyond the normal retirement age.

•HOW SUPER-RICH DODGE £13bn TAXES

Some of the richest people in Britain escape £13billion in taxes every year, a report will claim this week.

It says the biggest victims are those on the state pension, who could be given a 20 per cent increase with the revenue.

This would mean a pensioner would get £105 a week, rather than £87.30.

The report by the TUC, which will be published on Friday, highlights many devices the super-rich use to avoid paying taxes.

It estimates controversial 'non-domicile' rules allow them to avoid about £3.8billion of taxes.

A typical 'non-dom' is a foreigner who lives in London. Someone with this status --of which there are 114,000 - only pays tax on earnings made in this country.

It means a secretary can find herself paying more tax than her millionaire boss.

About £3.2billion is lost from 'income shifting', typically putting money in a wife's name. Other loopholes and clever accounting make up the remaining £6billion.

TUC general secretary Brendan Barber said: 'It looks like tax has become optional for a small group of the super-rich.'

Mike Warburton, of the accountants Grant Thornton, said many would simply leave Britain if they had to pay more tax.