The Parliamentary Under-Secretary of State for Welfare Delivery (Caroline Nokes)
I beg to move,
That the draft Social Security Benefits Up-rating Order 2017, which was laid before this House on 16 January, be approved.
Mr Speaker
With this we shall consider the following motion:
That the draft Guaranteed Minimum Pensions Increase Order 2017, which was laid before this House on 16 January, be approved.
Caroline Nokes
With the leave of the House, and as you have indicated, Mr Speaker, my remarks will cover motions 3 and 4 on the Order Paper. In my view, the provisions in both orders are compatible with the European convention on human rights.
I will first deal with an entirely technical matter that we attend to in this place each year and that I do not imagine we will need to dwell on today. The Guaranteed Minimum Pensions Increase Order 2017 provides for contracted-out benefit schemes to increase members’ guaranteed minimum pensions that accrued between 1988 and 1997 by 1%.
The Social Security Benefits Up-rating Order 2017 reflects the Government’s continuing commitment to increase the basic and new state pension with the triple lock by 2.5%, to increase the pension credit standard minimum guarantee in line with earnings, and to increase benefits to meet additional disability needs and carer benefits in line with prices. The Chancellor reaffirmed this Government’s commitment to the triple lock for the length of this Parliament in his autumn statement on 23 November last year, ensuring that the basic state pension will continue to be uprated by the highest of earnings, prices or 2.5%. This year, the increase in average earnings and the increase in prices were less than the baseline of 2.5%, meaning that the basic state pension will increase by 2.5%. From April 2017, the rate of the basic state pension for a single person will increase by £3 to £122.30 a week. As a result, the basic state pension will be more than £1,200 a year higher from April 2017 compared with April 2010. We estimate that the basic state pension will be around 18.5% of average earnings—one of its highest levels relative to earnings for over two decades.
Last year, the Government introduced the new state pension for people reaching their state pension age from 6 April 2016 onwards, making the system clearer and providing a sustainable foundation for private saving. The Government have previously announced that the triple lock will apply to the full rate of the new state pension for the length of this Parliament. This is the first year that the new state pension will be uprated. As a result, the full rate of the new state pension will also increase by 2.5% this year, meaning that from April 2017 the full rate of the new state pension will increase by £3.90 to £159.55 a week—around 24.2% of average earnings.
We are continuing to take steps to protect the poorest pensioners, including through the pension credit standard minimum guarantee, the means-tested threshold below which pensioner income should not fall. The pension credit standard minimum guarantee will rise in line with average earnings at 2.4%, meaning that from April 2017 the single person threshold of this safety net benefit will rise by £3.75 to £159.35. Pensioner poverty continues to stand at one of the lowest rates since comparable records began.
On the additional state pension, this year state earnings-related pension schemes, the other state second pensions and protected payments in the new state pension will rise in line with prices, by 1%. The Government will continue to ensure that carers and people who face additional costs because of their disability will see their benefits uprated in the usual way, so disability living allowance, attendance allowance, carer’s allowance, incapacity benefit and the personal independence payment will all rise in line with prices, by 1%, from April 2017.
In addition, those disability-related and carer premiums paid with pension credit and working-age benefits will also increase by 1%, as will the employment and support allowance support group component and the limited capability for work and work-related activity element of universal credit.
This Government will be spending an extra £2.5 billion in 2017-18 on uprating benefit and pension rates. With the guaranteed minimum pensions increase order we continue: to maintain our commitment to the triple lock for both the basic and the new state pension for the length of this Parliament; to increase the pension credit standard minimum guarantee by earnings; and to increase benefits that reflect the additional costs that disabled people face as a result of their disability, and carers’ benefits, in line with prices. That includes increases to the disability living allowance, attendance allowance, carer’s allowance, incapacity benefit, the personal independence payment and disability carer premiums.
I commend the orders to the House.
Caroline Nokes
I thank the hon. Members for Oldham East and Saddleworth (Debbie Abrahams) and for Banff and Buchan (Dr Whiteford), speaking from the Opposition Front Benches, for their contributions. I will attempt to address the specific points raised in full.
The Government did respond to the National Audit Office report outlining the online Check your State Pension service, which now delivers personalised information to people many years in advance. The report also acknowledged that the aggregate impacts of the reforms need to be taken into account. Taking account of all elements of the reform, about 75% of people will receive more from the new state pension by 2030 than under the previous systems. There is no statutory requirement for formerly contracted-out pension schemes to increase for those accrued between 1978 and 1988. The Government do not intend to introduce legislation requiring those schemes to index pre-1988 guaranteed minimum pension rights. This needs to be set in context with the changes to the overall pensions landscape. Other aspects of pension reform may offset the loss of indexation—for example, maintaining the triple lock in this Parliament. Since 2011, the basic state pension has risen by £570 a year more than it would had it been uprated by earnings.
Work, not welfare, is the best and most sustainable route out of poverty, which is why our tax and welfare reforms are designed to ensure that work pays and that increased earnings are rewarded, rather than penalised. However, we remain committed to supporting people who cannot work and those with additional needs, which is why the orders provide for an additional £2.5 billion in 2017-18 to increase benefits for pensioners, carers and the additional costs of disability. We have had to make difficult decisions on spending. To protect those with additional needs, we are increasing the ESA support group component in line with the consumer prices index, and will also increase the enhanced disability, severe disability, carer and pensioner premiums.
The Government are committed to building a country that works for everyone, which is why the forthcoming Green Paper will identify and address the root causes of child poverty, building on the new statutory indicators of parental worklessness and children’s educational attainment, which were set out in the Welfare Reform and Work Act 2016.
The hon. Member for Banff and Buchan will be aware that the current policy regarding overseas pensions is a longstanding one of successive Governments that has been in place for almost 70 years. Many Commonwealth countries, including Australia, Canada and New Zealand, have pension systems that take account of overseas pensions as part of their means test. That means that a significant proportion of any increases in the UK state pension would go to the respective Treasuries of those countries. The hon. Lady is, of course, right to point out the issue of British overseas pensioners in other EU member states. Let me reassure her that their rights are part of the negotiation process. The Government are committed to getting the best deal for those pensioners.
The Government will be spending an extra £2.5 billion in 2017-18 on uprating benefit and pension rates. We will be spending over £2.1 billion more on state pensions and pension credit; nearly £0.3 billion more on disabled people and their carers; and £100 million more on people who are unable to work because of sickness or unemployment.
To conclude, the Government are continuing their commitment to the triple lock for both basic and new state pension for the length of this Parliament. We are increasing the pension credit standard minimum guarantee by earnings, and increasing benefits to meet additional disability needs, and carer benefits, by prices. I commend the order to the House.
Question put and agreed to.
Pensions
Resolved,
That the draft Guaranteed Minimum Pensions Increase Order 2017, which was laid before this House on 16 January, be approved.—(Caroline Nokes.)