CHAPTER 7: AGEING AND CONSUMPTION |
7.1. The relationship between consumer spending and
age falls well within the remit of our inquiry, but the need to
concentrate on a limited number of topics has meant that we have
not dealt in detail with the impact of ageing on spending patterns.
We do, however, have evidence that suggests some degree of market
failure and discrimination. That gives rise to several questions
that we feel we have a duty to raise. In particular, we feel that
this is an aspect that the competition authorities should address.
7.2. People's consumption habits change with age.
This is true of both the goods and services people buy and the
places in which they buy them. Some of the changes are connected
with preferences and needs, and others are dependent on circumstances.
7.3. The circumstances are frequently economic in
nature, the obvious example being that the scale and source of
incomes varies with age. Also, of course, retired people have
more leisure, and may demand more leisure goods. But it is important
not to ignore the change in non-economic circumstances, such as
the probability of living with dependants, or of being dependent
on others. Above all, of course, average health status deteriorates
with age, although most older persons remain fit and active.
7.4. The subject of age discrimination in retail
markets was raised by representatives of Age Concern (Q292), who
referred to the difficulties that older persons experience in
hiring cars, and argued that those difficulties were the result
of discrimination. They also referred to insurance companies whose
premiums for homes and their contents are set too high for older,
poorer people. Age Concern has worked to rectify this failure
of the market, and has successfully entered the insurance market
(QQ293, 296). Age Concern also said that firms that sell products
such as information technology equipment and motor cars rarely
address their designs or their marketing at older consumers. Its
representatives claimed that businesses do not fully recognise
the purchasing power of older people and exaggerate the risks
involved in selling to them in the case of, for example, travel
and motor insurance, and therefore forgo possible profitable sales.
7.5. A particular problem that confronts some older
people is the location of shops. To the extent that shops are
concentrated in places that require access by motor cars, this
will produce difficulties for those who can no longer drive, and
will make them dependent on others. The problem is exacerbated
if in rural areas, for example, local shops are disappearing and
public transport is infrequent or non-existent. Supermarkets often
sell a wider range of products at lower prices than independent
high street shops, and in so far as older people find access to
out-of-town supermarkets difficult, they are likely to face a
higher overall cost of living than that of the population at large.
Given the restricted mobility of some older people, a matter of
greatest importance to them is the possible disappearance of local
retail pharmacies, to be replaced by pharmacies in supermarkets.
7.6. References to these problems are to be found
in the Competition Commission report Supermarkets and the
Office of Fair Trading report The control of entry regulations
and retail pharmacy services in the UK. The Competition Commission
took evidence from Age Concern, and states: "A decline in
smaller retail outlets serving a local community could be especially
detrimental to elderly people, some of whom may rely on them for
a lifeline of interaction
We raise elsewhere in this chapter
a number of supermarket practices that bear on access to groceries
by low-income and elderly consumers".
7.7. The OFT report on pharmacy services recommended
that the control of entry regulations for community pharmacies
should be ended.
Objections were raised to easing entry on the grounds that doing
so might reduce the viability of high-street pharmacies and adversely
affect older people. The Government rejected the full thrust of
the OFT's recommendations, saying in a parliamentary statement:
"We do not believe that simple deregulation is the best way
to achieve our aims. The OFT made a strong case that the current
control of entry rules impede competition and reduce benefits
for consumers. But given the current shortage of pharmacists,
which will persist for some years until measures which we as a
government are taking increase supply, and the Government's desire
to see pharmacies given a new and strong role in the modern NHS,
the Government does not believe that this is the time to move
to a fully deregulated system. It therefore intends to move cautiously
in the direction recommended by the OFT."
7.8. Because we have not explored these questions
in the detail they deserve, we do not make any substantive recommendations
relating to them. Instead we draw the attention of the Office
of Fair Trading and the Competition Commission to the possible
existence of discrimination and market failure as it affects older
7.9. One last example of apparent market failure
which arises in the public sector relates to the age limit on
the availability of student loans. Presumably the age limit is
based on the assumption that entrance to higher education must
be judged in narrow economic terms, and is not valuable in its
own right. It is perhaps assumed that older undergraduates and
post graduates will not re-enter the labour force and earn an
income high enough to repay the loan. Such an assumption is contrary
to the Government's stated policy goal of increasing the economic
participation of older persons. Furthermore, it should be noted
that younger age groups also contain people who will neither re-enter
the labour force nor earn enough to repay the loan.
7.10. We conclude that the restriction of student
loans to people below the age of 54 is blatant discrimination.
7.11. We recommend that the Department for Education
and Skills should explain why age discrimination exists in the
provision of student loans.
81 Competition Commission, Supermarkets (2000),
Volume 2, p 311, and Volume 1, p 55 Back
Office of Fair Trading, The control of entry regulations and
retail pharmacy services in the UK (2003), p 6 Back
Parliamentary statement on community pharmacies, July 2003, www.dti.gov.uk Back