Social Security (Up-rating of Benefits) Bill
Thursday 1st October 2020
(4 years, 2 months ago)
Commons ChamberSocial Security (Up-rating of Benefits) Act 2020 View all Social Security (Up-rating of Benefits) Act 2020 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 1 October 2020 (PDF) - (1 Oct 2020)
The Secretary of State for Work and Pensions (Dr Thérèse Coffey)
I beg to move, that the Bill be now read a Second time.
I am pleased to introduce the Social Security (Up-rating of Benefits) Bill. It makes technical changes for one year only that will ensure that state pensions can still potentially be uprated, despite the likely fall in earnings. This will allow the Government to maintain a manifesto commitment to the pensions triple lock policy, providing peace of mind to pensioners about their financial health. It will also allow for potential increases for the poorest pensioners who are in receipt of pension credit, as well as uprating widows’ and widowers’ benefit in industrial death benefit.
As I set out with the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Hexham (Guy Opperman), in our letter to all right hon. and hon. Members last week, each year the Secretary of State for Work and Pensions, my good self, is required by law to conduct a review of certain benefit and pension rates to determine whether they have retained their value in relation to the general level of earnings. If there is a rise, then there is a requirement to uprate the state pension and benefits at least in line with that increase.
In accordance with the usual process, I will undertake that review of social security rates shortly and will report to Parliament on the outcome of the review in November. However, if there has been no increase in the general level of earnings, there are currently no legal powers for the Government to bring forward an uprating order. Since 2011, the Government have used average weekly earnings growth from May to July as the basis for the review. The provisional figure for that period, published by the Office for National Statistics on 15 September 2020, shows a decline in earnings of 1% due to the economic impacts of covid-19. Confirmed figures will be published later this month. Owing to the challenging economic circumstances, average weekly earnings are expected, unfortunately, to show no growth this year. Therefore, this Bill will temporarily amend the Social Security Administration Act 1992 for one year only to grant discretionary powers to increase these rates irrespective of the growth or indeed fall in earnings.
The Bill covers the basic state pension, the new state pension, the standard minimum guarantee in pension credit, and widows’ and widowers’ benefits in industrial death benefit. Those benefits are linked in primary legislation to earnings. The Bill does not extend to benefits that are linked to prices. I will review those under the existing powers in the 1992 Act.
The Bill largely covers reserved matters for Great Britain. On the one element that is devolved to Scotland, Scottish Ministers laid a legislative consent motion, which was passed by the Scottish Parliament yesterday. Under the Social Security Administration (Northern Ireland) Act 1992, the Department for Communities has the power to mirror the uprating order made under the Act that applies in Great Britain. The Northern Ireland Executive can make a corresponding order under their existing power, which mirrors the outcome of the Secretary of State’s review without the need for new primary legislation in Northern Ireland.
The Bill must receive Royal Assent by mid-November to allow the review to be completed. If the Bill does not receive Royal Assent ahead of this deadline, the current legislation will apply, and state pensions will almost certainly remain frozen.
Chris Stephens (Glasgow South West) (SNP)
I thank the Secretary of State for giving way; I know that she has other business this afternoon. As well as uprating, many of us in the House have a concern about the lack of uptake of pension credit. Will she tell us what measures her Department will take to ensure that there is a better uptake of that particular benefit?
Dr Coffey
The hon. Gentleman raises an important point. We always want to encourage people to take up benefits to which they are entitled. There was an extensive amount of advertising earlier in the year, which was linked into GP surgeries and other public places, in order to encourage that uptake. The changes that the BBC has made in regard to the TV licence has also encouraged some people to take that up. We will continue to try to encourage people to access the benefits to which they are entitled.
If the Bill does not receive Royal Assent ahead of the deadline, the current legislation will apply and it is almost certain that state pensions will remain frozen. The prompt passage of the Bill is essential, which is why I am grateful to the usual channels and the House for expediting this important legislation. In our discussions with the shadow Front-Bench team, we were able to highlight that there has been similar legislation, with a clause in the Welfare Reform Act 2009, to give similar flexibility to the then Secretary of State in consideration of uplifting benefits.
I have set out that this is a technical but important Bill. The Government have worked hard to protect people of all ages during the pandemic by strengthening the welfare safety net, introducing furlough and income protection schemes, as well as supporting those who have lost their jobs to try to help them get back into work. It is right that we also provide protection to our pensioners. Provided the Bill has passed into law by the time I conduct my annual review next month, those pensions and benefits need not remain frozen next year and we will provide our pensioners with important peace of mind.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
Thank you very much, Madam Deputy Speaker, for calling me to speak on Second Reading of the Bill today. I would like to express my thanks to the Secretary of State and to the hon. Member for Glasgow South West (Chris Stephens) for the discussions the three Front Benchers have had in relation to this legislation.
As with so many things during the coronavirus pandemic, we find ourselves in an unusual situation that calls for an unusual course of action. It is an extremely sad and regrettable consequence of the pandemic that we expect that national earnings will be negative this year. That statistic tells its own story about the hardship many families are facing at the moment. However, the added complication this brings, as the Secretary of State explained, is that when earnings are negative, there is no legal power to increase state pensions at all, and this also affects the standard minimum guarantee in pension credit and some survivors’ benefits in industrial death benefit.
This is due to the drafting of the Social Security Administration Act 1992, and we need to correct that with the legislation before us today. As the Secretary of State said, there is a precedent for this. The previous Labour Government encountered a similar problem following the global financial crisis and brought forward similar legislation. I therefore believe that the correct and constructive course of action today is to ensure the passage of these powers through the House of Commons. It is clearly in the national interest and in the interests of Britain’s pensioners to address this problem.
The Bill is extremely limited in length and in scope, applying only to this financial year. However, I believe this is an appropriate opportunity to seek some information regarding the Department’s intentions in this area. I was pleased to see in the explanatory notes to the Bill that the Government stated they wanted the Bill passed
“to meet its commitment to the Triple Lock.”
In the comments the Secretary of State has made, she has reiterated that commitment, which I very much welcome. Labour believes that everyone deserves financial security in retirement, and we believe the cornerstone of that is a decent state pension, properly indexed to ensure it keeps its value for future generations of pensioners. That is why we will hold the Government to account to ensure that they keep their manifesto promises.
One of the things I find so frustrating in the national conversation about pensions is the way that rising longevity is sometimes presented as a public policy problem, rather than something to be celebrated. For many of us in the Chamber today, our grandparents worked very hard lives, yet had very little by way of retirement. My grandfather, for instance, worked 51 years down the same coalmine, yet never owned his own home or was able to travel abroad. So we should celebrate, as a country, that in a relatively short space of time our expectations of retirement have been transformed, and we should thank those who came before us who founded the national health service, raised the school leaving age and improved health and safety in the workplace, because that increased longevity. It is their legacy, and it is an achievement, rather than a problem.
We know and appreciate that the pandemic poses additional problems for the way in which we calculate how we should uprate pensions. The volatility of earnings in the crisis means that we are likely to be faced by the opposite problem when we are discussing this in future years—when it comes to the calculation, for instance, for 2022. Distortion in the earnings statistics as wages bounce back from their 2020 fall due to furlough and unemployment could create a significant one-off jump in earnings in 2021. I would like to know from the Secretary of State how her Department is planning for this eventuality when calculating the triple lock.
One suggestion, as outlined in a recent report by Lane Clark & Peacock, is that the disruption in earnings statistics could be smoothed by applying the principles of the triple lock over two years instead of one. Its conclusion is that, if this is applied, the most likely outcome would be that the triple lock could be delivered over two years by subsequent increases of 2.5% in both April 2021 and April 2022. I know many people are anxious to know what the Government are planning to do in this scenario. I wonder if the Government could elaborate on what options are being considered, and if there is an intention to continue the triple lock across future years of this Parliament in line with the manifesto commitment from the Government in December last year.
Finally, I would appreciate it if the Minister, when summing up, confirmed the Government’s intentions on the timeline for bringing forward proposals for the annual uprating of all social security benefits. At a time of such significant national economic insecurity, there is understandable anxiety about this. That is the point at which we will be able to have a full and involved debate on the Floor of the House on what is being proposed.
I would say, on behalf of myself and my hon. Friends, that when the Government themselves admit that a further 4 million jobs could be lost, any suggestion that benefits for unemployed people could be cut in April would be met with the strongest opposition from these Benches. Today, however, I welcome this Bill to ensure that the Government can fulfil their promise to pensioners. We want to make Britain the best country in the world for people to grow up and a place where retirement is a time of leisure, dignity and fulfilment, however that may come. There is no doubt that this legislation is a requirement of a pension system that can deliver that.
Rob Roberts (Delyn) (Con)
As I recover from my nosebleed from being so high up the call list today, I should say that I do enjoy these sparsely attended debates, which give us all an opportunity to expound a little.
Covid has obviously had a huge impact on all our lives and arguably led to the elderly in our communities having to make some of the biggest sacrifices. During the worst of the pandemic, they rightly shielded to protect themselves and their families. As restrictions have eased, many have provided vital childcare to their children and grandchildren, allowing younger generations to get back to work. As the Government have already provided extensive financial support to many young people in our communities through schemes such as kickstart, it is right that the elderly are not forgotten during this pandemic and that their support mechanisms are reinforced.
I am glad to support the Bill and pleased to hear the Opposition’s keenness to pass it swiftly, as it will provide pensioners with much-needed financial security and stability. It is right that those who have spent much of their life working hard and contributing to the UK economy continue to receive the support they deserve. As other welfare benefits have been strengthened and increased over the past few months, it is only fair that the same principle is applied to state pensions. With nearly a quarter of my constituents in Delyn aged over 65, I know that they will be thankful for the Government’s efforts to ensure with this Bill that pensioners are properly supported, especially after the potentially devastating financial impact of covid.
The Bill rightly allows the Secretary of State to uprate the basic state pension, new state pensions and other benefits for the next tax year. Pensioners should not have to make further sacrifices because of the impacts of covid by seeing their state pension remain at a stagnant level. Instead, we should protect our pensioners and their incomes by ensuring that state pension increases are safeguarded, even if earnings do not increase.
As we have heard from my right hon. Friend the Secretary of State, without this Bill the existing legislation could prevent any state pension increases next year, just when financial support will be needed most, partly to tackle the economic consequences of covid. I commend the foresight of the Department for Work and Pensions in bringing forward the Bill, as many would have simply assumed, as I did, that the triple lock would persist, without realising that the wording in the 1992 Act may preclude that, leaving many pensioners surprised at not receiving their normal annual increase.
The Bill is another good example of the Government following through on their promises to the people of the United Kingdom. The triple lock on pensions, introduced in 2010, is structurally more generous than its predecessor process. It is important to bear in mind that the generosity in the benefit is locked in once supplied, as its effects compound over time. For example, the full basic state pension for an individual this year is almost 9% higher than it would have been had it been CPI indexed in the past decade, and almost 8% higher than if it had been earnings linked. It is therefore a policy that has been of real benefit to pensioners over the past 10 years.
Sadly, however, pensioner poverty is a real and pressing problem facing many of our communities across the whole United Kingdom. The Joseph Rowntree Foundation’s report last year on UK poverty revealed that more than 2 million pensioners are living in poverty or on a low income. That is often due to low benefit take-up. One of the key benefits, mentioned by the hon. Member for Glasgow South West in his intervention, is pension credit, which currently has one of the lowest take-up rates of any income-related benefit, with more than 1 million people missing out. I mentioned that to my right hon. Friend the Leader of the House during last week’s business questions. Statistics provided by Independent Age’s campaign to increase pension credit take-up estimate that more than 1,500 pensioner households in my constituency of Delyn are missing out on a total of £3.2 million.
I pay tribute to the outstanding work of my right hon. Friend the Secretary of State and, indeed, her whole ministerial team, but I urge Ministers to work with charities such as Independent Age to increase the awareness and take-up of much-needed benefits such as pension credit. Although the Bill will help to address the issue of poverty and ensure that pensioners have greater levels of income, more needs to be done to ensure that no pensioner is left behind and that the needs of our senior citizens are fully considered in the Government’s levelling-up agenda. I am sure that my right hon. Friend, along with Treasury Ministers, will in future ensure that there is a serious discussion to be had with regard to intergenerational fairness in the longer term.
I am glad to be a member of the Conservative and Unionist party, which is a party for all and is supporting individuals throughout the United Kingdom regardless of age, whether that be helping young people into new jobs via the kickstart scheme, providing free access to college courses to increase the skills of the workforce, or, through this Bill, bringing peace of mind to pensioners about their financial security.
Chris Stephens (Glasgow South West) (SNP)
It is a pleasure to follow the hon. Member for Delyn (Rob Roberts). I will be picking up on similar themes to those he mentioned.
We welcome this Bill, as it enables the uprating of the state pension and pension credit despite a fall in earnings. We would expect the Government to uprate them accordingly and ensure that everyone can benefit. As the Secretary of State said, the purpose is to ensure that we meet the standard minimum guarantee in pension credit and other benefits. According to the Office for National Statistics, earnings fell by 0.1% in the three months to July 2020 as a result of the coronavirus pandemic. The Government have said that they are committed to ensuring that the Bill will allow them to meet the requirements of the triple lock. We would certainly expect that. The triple lock was a manifesto commitment from the Government, but it was very much supported across the House.
Without this Bill, the existing legislation would mean that the Secretary of State would probably not be able to increase the relevant benefit and pension rates. They would remain frozen, as happened in 2016-17 when the consumer prices index in the 12 months to September 2015 showed a negative growth rate of 0.1%. We therefore certainly welcome the Bill. As the Secretary of State indicated, it also applies to industrial death benefit, which falls within the legislative competence of the Scottish Parliament, where there has been an agreement with a legislative consent motion. The Scottish Government are committed to expediting the timetable to match that of the Government here.
The Institute for Fiscal Studies has warned that unemployment shocks to older workers, many of whom have lost their jobs or will do so when the furlough scheme ends, could have severe implications for individuals’ retirement savings, and therefore long-term effects on their living standards in retirement. We should be very wary of that going forward, not just in discussing this Bill.
On pension credit, we encourage the Government to look at ways of ensuring that there is uptake of that benefit. There are really alarming statistics from the charity Independent Age about the numbers of pensioners who could be in poverty. We really want to ensure that pensioners are kept out of poverty by increasing uptake. I press the Government, once again, to look at as many imaginative and creative ways as they can to ensure that pension credit is taken up, because the statistics, not just in my constituency but in every constituency across the UK, are pretty alarming. I have tried holding constituency events myself to make sure that the benefit is taken up. The Under-Secretary of State, the hon. Member for Hexham (Guy Opperman), knows that I have raised the issue of uptake of pension credit with him many times.
We start from the principle that just as the national health service was created to protect all in time of need, the social security system should do the same. I encourage the Government to ensure that the £20 uplift to universal credit remains permanent and is extended to all legacy benefits. There are some really dire predictions. The Trussell Trust forecasts that food bank use could surge by a staggering 61% in the coming months, which would be equivalent to 846,000 parcels being given out. Behind these statistics are families hit by the pandemic and in desperate need of support.
Finally, I would like to take this opportunity—I am sure that the Minister would think it remiss of me not to do so—to suggest that the social security system should be fully devolved to the Scottish Parliament, where we would make sure that the job was done. The Scottish Parliament has now initiated the Scottish child payment, which will be open for applications in November, with the first payments to start in February 2021, providing low-income families with an additional £10 a week initially for each child under the age of six. We will be supporting the Bill on Second Reading, but I look forward to proposing some amendments in Committee.
Stephen Timms (East Ham) (Lab)
I agree with the case that the Secretary of State has made: that the Bill is needed because in all likelihood there will be no growth in earnings this year. In those circumstances, it is right for the Government to take the action needed, as we are doing this afternoon, to increase the state pension and linked benefits, including the standard minimum guarantee in pension credit.
Like other Members, I want to say a few words about pension credit, because it has proved a very effective tool for reducing pensioner poverty since it was introduced in October 2003. The hon. Members for Glasgow South West (Chris Stephens) and for Delyn (Rob Roberts) were quite right to ask about the take-up of pension credit. I heard the answer that the Secretary of State gave the hon. Member for Glasgow South West, and I would be interested to know what the outcome of those efforts has been. She made an interesting point about what the BBC has done. Does the Minister have any information on whether those changes have led to increased take-up of pension credit? The most recent figures, for 2017-18, show that only six in 10 of those eligible were claiming it, and only 70% of the total amount of pension credit that could have been claimed was in fact being claimed.
Beyond the measures in the Bill, it would be helpful to hear a little more about what further plans the Government have to tackle pensioner poverty. The Social Metrics Commission, chaired by the noble Baroness Stroud in the other place, estimated in its 2020 report that 1.3 million pension-age adults are living in poverty, and the Government’s own figures for pensioners living in relative poverty after housing costs is higher still, at 1.9 million.
The number of pensioners living in poverty had fallen substantially, thanks largely to the introduction of pension credit. However, as others have rightly reminded us, over the past five years or so those numbers have started to go in the wrong direction. That is reflected in the Social Metrics Commission’s measurements. The Joseph Rowntree Foundation—the hon. Member for Delyn drew attention to its “UK Poverty 2019-20” report—makes the point that:
“For years, pensioner poverty decreased across the UK, but now those that are single, have non-white ethnicity or have a landlord, are seeing increases.”
The hon. Member for Delyn quoted the troubling rate of pensioner poverty that we are seeing at the moment, with about 2 million UK pensioners living in poverty, with the highest rate of pensioner poverty in London, at 23%. The Bill will ensure that pensioners’ incomes rise during a period of no increase in earnings, or possibly even a fall in the value of earnings.
I welcome the fact that the Government are taking these steps, but it is not only pensioners we need to be concerned about, as other Members have mentioned already. What will the Government be doing for people of working age who are facing rising unemployment and loss of income? Is there a risk that, on its own, the Bill will exacerbate existing intergenerational unfairness? We are debating the Second Reading of the Social Security (Up-rating of Benefits) Bill, but there are some benefits up-rating matters that the Bill does not address. The Social Metrics Commission’s 2020 report estimated that 8.5 million people of working age are living in families in poverty, and concluded:
“The older you are, the less likely you are to be in poverty. 33% of children aged four and under are in poverty, compared to 23% of those aged between 40 and 44 and 10% of those aged 75 and over.”
The Select Committee, in its first report in this Parliament—on the DWP’s response to the coronavirus outbreak—welcomed the £20 a week increase in the rate of universal credit at the start of the pandemic. The Secretary of State has already referred to that increase, which was introduced to last for a year. The Committee recommended:
“now that the initial surge of Universal Credit claims has mostly been handled, the Department should immediately seek to increase the rates of relevant legacy benefits by the equivalent amount. This increase should be backdated to April 2020, as recommended by the independent Social Security Advisory Committee.”
Sadly, that recommendation on a unanimous basis by the Select Committee, and the recommendation by the Social Security Advisory Committee, have not been adopted by the Government. It is quite unusual for the Government to ignore a recommendation, which is largely technical in character, brought forward by the Social Security Advisory Committee. In their response to the Select Committee, the Government simply made the point that those other benefits
“were increased by 1.7% in April 2020 as part of the annual up-rating exercise”.
They went on to say that the Department has
“no plans to increase these benefits further at this stage.”
The Secretary of State does have the power to uprate those benefits at her discretion and I very much hope that she will.
I welcome the provisions in the Bill, but pensioners must not be the only people we are concerned about. We need to consider the interests of working age people as well. After such a long freeze in working-age benefits, there is a very strong case for making the £20 a week increase permanent, as was pointed out by over 50 organisations brought together by the Joseph Rowntree Foundation yesterday. The Select Committee has been reflecting on that in its current inquiry on the five-week wait for universal credit, on which we will be publishing a report in the coming weeks.
Whatever the Government’s conclusions on that, I put it to the Secretary of State at the Select Committee yesterday that it would surely be inconceivable for Ministers to cut everybody’s benefit by £20 a week in April before the pandemic was even over. The Secretary of State told me that she is still in “active discussions” with the Treasury over this subject. I suspect that everyone in the Chamber wishes her well in those discussions. We will certainly all be eager to learn the outcome.
Let me reiterate the call made unanimously by the Select Committee that the £20 a week increase should also apply to legacy benefits such as jobseeker’s allowance, and employment and support allowance. In our view, it is wrong to have a big discrepancy between the incomes of two people in otherwise identical circumstances based merely on the historical accident of which benefit they happen to be claiming. The rates were the same at the start of the pandemic; they should be the same now.
The main argument at the time for not increasing the legacy benefits was that it would take some time to implement on the rather creaking computer systems through which those benefits are administered. I understand the difficulty, but if work to do that had started in April, the increase could have been implemented around about now. There should certainly be no delay in getting on with implementing it now.
I welcome the measures in the Bill to address the uprating of benefits, but there are some other benefit uprating matters not in the Bill that also require urgent attention.
Wendy Chamberlain (North East Fife) (LD)
The Secretary of State and other Members have outlined that state pensions rise each year under the triple lock mechanism, which was introduced by the coalition Government and ensures an increase of whichever is the highest of earnings growth, price inflation or 2.5%. As there is expected to be no average growth in earnings between May and July 2019 and May and July 2020, due to the pandemic, the Government have brought forward this welcome Bill to allow a rise to take place. It also allows for an increase in pension credits. However, the Bill does not state a specific rise in the pension; it simply allows the Government to raise it.
The Liberal Democrats welcome provisions in the Bill that mean all retirees— especially the very poorest, who are claiming pension credits—will see a rise in their benefits. The Government have said that they intend to ensure that the triple lock on the state pension is maintained, but as I said, there is no mention of a specific level of increase in the Bill. It is slightly worrying that the Bill gives the Government the power to raise the state pension but fails to say by how much. If the Government were to raise the state pension by less than 2.5%, they would not be maintaining the triple lock as they have pledged to do. I hope the Minister can explain why there is no such provision in the Bill and commit the Government to at least a 2.5% increase, in line with the triple lock.
It is fair to say that concerns may be expressed about the Bill in relation to intergenerational fairness. Things have been very difficult for young people, whether as a result of issues with exams, what they are now experiencing at university or for those looking to enter the job market. Pensions expert Ian Browne has stated:
“There is a danger that guaranteeing a 2.5 per cent boost to the state pension is perceived to be intergenerationally unfair, given it will provide a considerable boost to pensioners’ income when many others are taking a cut in their pay, working less hours or have lost their jobs altogether.”
The Liberal Democrats support the triple lock on pensions, and I hope the Government do not intend to abandon it. I acknowledge the concerns but would argue that guaranteeing a strong state pension is becoming increasingly critical. It is clear that many working-age people—especially younger people—are not, and are simply unable to be, saving enough for their retirement, and final salary pension schemes are largely a thing of the past. That means that the state pension will become an increasingly important source of retirement income. We tend to think of pensions as supporting older people, but if we were to abandon the triple lock and give smaller and smaller increases over the next few decades, that would erode the retirement income of those who are only just beginning to enter the workplace. I hope the Minister agrees that maintaining the triple lock is imperative for ensuring that the next generation of retirees enjoy a comfortable income.
Another reason why the triple lock is welcome is the position of many older women. Many women rely more on the state pension than men do for their retirement income, as women have traditionally found it harder to build up a private pension due to taking a career break to raise children or to care for relatives. Raising the state pension is therefore critical for many women who rely on it and pension credit for the bulk of their income.
As the shadow Secretary of State, the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), said, although it is not addressed in the Bill, there is a risk that the Government will have to scrap the triple lock next year due to an artificial rise in wages. In normal times, the state pension could be expected to increase by about 3% to 4%, and by a minimum of 2.5%, as per the triple lock rules. Given the disruption caused by the pandemic this year, it is highly unlikely that this increase will be far higher, for reasons outlined by other Members. People have lost their jobs in lockdown and been furloughed. As the lockdown lifts, furlough ends, and as the economy recovers, average wage growth will jump significantly. That will show up in the statistics as a massive wage rise, which would mean that the state pension shoots up too. I hope the Minister will give some indication of the Department’s plan for this largely predictable situation.
In short, this Bill is largely uncontroversial and to be welcomed, but there are clearly issues ahead. Although it is clearly an expedited Bill that the Government are looking to pass quickly for the next year only, it remains the case that many will not benefit from the uprating being agreed today—for example, overseas pensioners whose pensions have previously been frozen. I note that the hon. Member for Glasgow South West (Chris Stephens) intends to raise those issues in Committee. The pandemic has had a devastating impact on the elderly and most vulnerable in our society. Providing a degree of financial security is vital, but our approach to pensions must also be considered in respect of future generations and addressing historical inequalities.
Jonathan Reynolds
With the leave of the House, I will briefly respond to the debate on behalf of the Opposition. It is not often that we have more speakers than clauses in the legislation before us, but I very much appreciate Members’ contributions. The hon. Member for Delyn (Rob Roberts) was right to highlight the impact of the pandemic on older people. I do not like the intergenerational aspect that is sometimes put on this crisis. It has affected all groups in society in different ways, and in particular, we all feel strongly about the burden in relation to care homes. Indeed, many of us would quite like to see parents and grandparents when the opportunity hopefully arises again.
The hon. Member for Glasgow South West (Chris Stephens) made many good points. I agree with him on the take-up of pension credit and the issues around that. Longer term, my preference would be that the new state pension apparatus that was set up in the last Parliament becomes such a satisfactory minimum that pension credit becomes a residual benefit and we do not have the issues that we do around pensioner poverty.
I also very much recognise and agree with the hon. Gentleman’s comments on legacy benefits. As my right hon. Friend the Member for East Ham (Stephen Timms), the Chair of the Select Committee, said, the issue was always given as the time it would take to do the uprating. We are now well into the pandemic and beyond the point where that could have come online had the Government chosen to act.
The wider comments from my right hon. Friend were very welcome. He spoke about pension credit, and it is important to say that it was a conscious choice of the Government post-1997 to address the huge issue of pensioner poverty that had built up; that is what the majority of resources at that point went into. There should not be an automatic linkage between retirement and poverty, as was the case at the end of the 1990s. As ever, I very much welcome all the work the Select Committee has done into the impact of the current crisis on the social security system, and the wider points that have been made.
The hon. Member for North East Fife (Wendy Chamberlain) strongly supported the triple lock, which I agree with. She made a crucial point on intergenerational fairness, and it was one I was going to make at Committee stage, but I will make it now. Often, in the media commentary around this issue, the intergenerational point is made without reference to the fact that we are not just talking about the level of increase for pensioners today, although someone who has just entered retirement will hopefully, in a very good way, now experience that uprating for several years. We are really talking about what the level of the state pension will be by the time today’s workers retire. That was very much the modelling behind the changes that were made to the single-tier basic state pension. The increase in the retirement age made the overall package of spending on the state pension a reduction overall in order to make it, in the words of the coalition Government at the time, more sustainable. That is an important point to remember when we are talking about cost and the impact on different generations of the changes we are talking about today.
Overall, however, there is rightly a clear consensus in the Chamber for Second Reading to proceed, and I very much welcome the contributions that have been made.
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
I would like to begin by thanking everyone who has spoken in the debate, which has been wide ranging and consensual and has covered a number of topics.
Because this is my first appearance back at the Dispatch Box, Madam Deputy Speaker, I just want to raise a personal matter. This is my first appearance since the demise of my twin boys in late June, and I was genuinely struck by the amazing words of commiseration and support that I received across the House from all colleagues. I am deeply grateful, and I know I speak for my wife on that particular point as well.
Moving on, I was struck by the opening point from the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) on the shadow Front Bench, and it is one I think we should all celebrate in this House: rising longevity is a fantastically good thing, and it is a wonderful problem to have. Clearly, there are policy and fiscal issues that follow it, but it is a genuinely good thing that we are addressing.
Even though the House is not well populated today, I am conscious that before me I have a former Pensions Minister from the Department for Work and Pensions—the right hon. Member for East Ham (Stephen Timms), who now chairs the Select Committee. I also think that the hon. Member for Stalybridge and Hyde was a special adviser—
Guy Opperman
He was an adviser—let’s put it that way—to the previous Labour Government, and he is acutely conscious of the issues that we are dealing with today.
Clearly, there is a delightful sense of a cross-party consensus, but I want to address some of the key points that were raised. People clearly wish to make the case on pensioner poverty, and I will address that. One can trade statistics, but material deprivation for pensioners fell from 10% in 2009-10 to 6% in 2018-19. There are 100,000 fewer pensioners in absolute poverty before and after housing costs than in 2009-10. Average pensioner incomes have grown significantly in real terms over the past two decades. Average weekly income in 1994-95 was £165 a week after housing costs; that compared with £320 a week in 2018-19. For 2020-21, we are forecast to spend £126 billion a year on pensioners, including £102 billion on state pension. Colleagues will know that that is a record sum spent by any Government in this House in respect of pensioners.
I will attempt to answer some of the particular points that were fairly made on pension credit. It is again the case, and I should put this on record, that pension credit increased significantly under the coalition and then under this Government, from £132.60 to £173.75 for a single person and from £202.40 to £265.20 for a couple. The take-up of pension credit is something that all would like to see increased. I echo my hon. Friend the Member for Delyn (Rob Roberts) on that; this is the first chance I have had to respond to him in this House, and it is delightful that he is here. He makes the fair point that it is in all our interests that pension credit be increased.
One of my colleagues asked what had been the impact of the BBC decision. There is no totally granular data on that, but I can assist to a degree: the claims for pension credit, which is what we want to see, were dramatically increased as of July 2020 compared with January 2020. There is definitely a massive increase in claims and clearly a filtering through of the acceptance of said claims. I refer hon. Members to the parliamentary question asked by the hon. Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron), PQ 82024. I will ensure that I put a note of the issue on the record in the Library to answer that particular point and expand upon it.
In respect of pension credit, the Secretary of State was right to identify that we had a significant nationwide campaign in the spring of this year, and that the combination of that and the impact of the BBC decision clearly had an impact on greater take-up. The specific causes of the increase in take-up are hard to assess, but there is no doubt that the take-up has been larger.
In respect of the point raised by various hon. Members about working-age benefits, it is right to say that the Government are proud of the fact that they have provided support during the pandemic for those below state pension age, whether through the plan for jobs, with Kickstart now open for bids across Great Britain and doing very well, increasing the standard allowance in universal credit and working tax credit by £1,040 this year, benefiting 4 million families, investing approximately £9 billion of extra support to protect people’s incomes through the pandemic, removing the seven-day waiting requirement for employment and support allowance claims linked to covid-19, or relaxing the universal credit minimum income floor for self-employed people.
As the Secretary of State said to the right hon. Member for East Ham and the Work and Pensions Committee yesterday, that is a matter that is clearly in her mind and that is to be considered by the Secretary of State. I cannot really add or expand upon the answer that she gave, and it would not be appropriate to comment further, because clearly she has to conduct a review and then return to this House to respond to that review.
Having dealt with the specifics, all colleagues have identified that this is an important piece of legislation, without which the state pension would be frozen for a year from April 2021. It makes technical changes to ensure that state pensions can be uprated, providing peace of mind to pensioners regarding their financial health. It is a one-year Bill, so it is not the case that we are considering the matter beyond the first year. Clearly, this arises out of the covid emergency and its impact on earnings, and it would not be appropriate to address the future at this stage. I believe this Bill is a further demonstration of this Government’s action in support of pensioners, and provides them with financial peace of mind in the face of the coronavirus pandemic. I commend it to the House.
Question put and agreed to.
Bill accordingly read a Second time; to stand committed to a Committee of the whole House (Order, this day).
SOCIAL SECURITY (UP-RATING OF BENEFITS) BILL (MONEY)
Queen’s recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Social Security (Up-rating of Benefits) Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable under any other Act out of money so provided.—(David T.C. Davies.)
Question agreed to.