Social Security (Up-rating of Benefits) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateMonday 20th September 2021
(2 years, 7 months ago)
Commons ChamberSocial Security (Up-rating of Benefits) Act 2021 View all Social Security (Up-rating of Benefits) Act 2021 Debates Read Hansard Text Amendment Paper: Committee of the whole House Amendments as at 20 September 2021 - large print - (20 Sep 2021)
19:01 - The House divided: - Ayes: 59 / Noes: 303 - Question accordingly negatived.
19:17 - The House divided: - Ayes: 300 / Noes: 55 - Question accordingly agreed to.
The Secretary of State for Work and Pensions (Dr Thérèse Coffey)
I beg to move, That the Bill be now read a Second time.
Each year I am required to undertake a review of social security rates to consider whether benefits have kept pace with inflation or an increase in earnings. I will undertake that review shortly, and will report to Parliament in November. The Bill refers to how I will undertake the review.
As set out in the Social Security Administration Act 1992, there are four benefits for which there is a direct link with earnings: the basic state pension, the new state pension, the standard minimum guarantee in pension credit, and survivors’ benefits in industrial death benefit. That last benefit is devolved to Scotland, and I can confirm that we have received the legislative consent motion that is necessary. I must emphasise that the Bill does not extend to other benefits, including universal credit, where the uprating review is linked to prices.
Normally, I have a specific reference period to consider earnings growth as part of my review. That same earnings reference period has been used for the last decade. In preparing for the review last year, with regard to that reference period, we anticipated and saw an unprecedented fall in average earnings as a result of the covid restrictions that we introduced to protect lives—especially those of the most vulnerable, including many pensioners—and to protect the NHS. That was why we changed the law for one year to set aside the earnings link. Otherwise, state pensions would have remain frozen. I then made the assessment, and awarded an uprating of 2.5%, which was higher than the then inflation rate of 0.5%.
As I prepare for this year’s review, the economic context is very different from last year’s, as our economy and businesses have reopened following our successful vaccination programme and unprecedented support for businesses and households. Millions of people have moved off furlough and back into work, and we are witnessing a surge in the labour market, with over a million job vacancies. The combination of those factors has resulted in a distorting effect on wages, with a statistical anomaly.
Confirmed figures will be published in October, but provisional figures from the Office for National Statistics show an increase in earnings of 8.3%, more than two percentage points higher than at any time over the last two decades. Given that this statistical spike in earnings is due to a covid-related distortion, I am seeking the agreement of Parliament to again set aside the earnings link for just one more year, 2022-23. I have put provision in the Bill to award the higher of inflation or 2.5%, applying in effect, again, a double-lock policy. The triple-lock policy will be applied in the usual way from next year for the remainder of the Parliament. This approach has been strongly recommended by external commentators, including Sir Steve Webb, who was the Liberal Democrat Pensions Minister for the lifetime of the coalition Government. While it has come as no surprise to most of us in the House, I was disappointed by the amendment tabled by the Liberal Democrats, finding their latest bandwagon to jump on. They really should listen to Sir Steve, who probably knows more about pensions than anybody in the Liberal Democrats.
This Government are committed to ensuring that older people can enjoy their retirement with security, dignity and respect, and since 2010 the full yearly basic state pension has increased by more than £2,050 in cash terms. There are now 200,000 fewer pensioners in absolute poverty, both before and after housing costs, than in 2009-10. I am proud of our record on support for pensioners and of the action we took last year to ensure that pensioners’ incomes continue to increase. This Bill will ensure that a temporary statistical anomaly in wages does not unfairly track across into pensions, while also preserving the spending power of pensioners and protecting them from increases in the cost of living. I commend the Bill to the House.
David Linden
I am grateful to the hon. Gentleman for finding the time to come to the House of Commons this evening; I know he will be balancing his obligations—
David Linden
The Minister chunters from a sedentary position. I outlined earlier in my speech that we want pensions much more in line with those of, for example, Austria and Luxembourg. I hope that that answers the question.
The SNP will vote to reject this legislation, but in the passing of this Bill tonight we will see yet another Better Together myth burst: that pensioners are somehow protected by Mother Britannia. To be blunt, to allow the Bill to proceed tonight will not only violate the contract offered to voters by the Prime Minister in 2019—and, indeed, by the hon. Member for Moray—which won a handsome majority in this place, but make a mockery of the no campaign’s claim that Scotland remaining in this broken Union is the best deal for UK pensioners when it is patently not.
The SNP will vote to reject this legislation, but in truth we all know that the democratic deficit throughout these islands means that Scotland’s MPs will be outvoted when we try to protect pensioners’ incomes. That is why the only way to truly tackle the plight of pensioner poverty is with Scottish independence, because Westminster is not working and we need to retire from this United Kingdom.
Wendy Chamberlain (North East Fife) (LD)
I beg to move an amendment, to leave out from “That” to the end of the Question and add:
“this House, while recognising the extraordinary circumstances of the covid-19 pandemic, declines to give a Second Reading to the Social Security (Up-rating of Benefits) Bill because it represents a broken manifesto commitment made by the Government at the last General Election, fails to address the impact of the pandemic on the two million pensioners living in poverty and fails to increase key benefits, such as making permanent the uplift to Universal Credit.”
The Government are on track to break yet another of their manifesto promises. It is another example of how this Government are willing to turn their back on people living in poverty—now it is pensioners, but next month it will be those on universal credit.
The Liberal Democrats want Britain to be the best place in which to live and to retire, but, frankly, we all accept that it is far from that. People who have worked hard and paid taxes all their lives deserve a comfortable retirement when the time comes. It was our party that was instrumental in putting the triple lock in place, providing a lifeline to millions of pensioners who had seen increases as derisory and as low as 75p per year.
When pensions were only pegged to price inflation, their real value shrunk to one of the lowest in the developed world. We all deserve to live in dignity, to be able to afford food and heating, and to be able to live a life with some meaning or enjoyment, and reaching retirement age does not and should not change that.
There are more than 18,000 people in my constituency claiming the state pension, which is over 20% of the local population. They have worked, paid taxes, raised families, and built communities, and I want them to know that they are visible. The Conservative party clearly does not feel the same about their local pensioners, with the 20 hardest hit constituencies all being represented by Conservative Members. The Secretary of State’s own constituency is the fifth most affected by this broken manifesto commitment.
We all accept that we have lived in exceptional times over the past 18 months, and that earnings growth this year is out of the ordinary, but the big picture here is that this Government are refusing to take any action to lift any group out of poverty. The refusal to do so highlights the hollowness of the phrase “levelling up”. They are cutting universal credit, taking away vital income from 5.5 million households, and pushing thousands of families further into poverty. They have refused throughout to increase legacy benefits at all, ignoring the needs of recipients who are disproportionately disabled. Technical issues were given as the reason for this, but, 18 months on, a lack of appetite seems to be the more obvious case.
The decision to increase national insurance is a further tax on young people, on working people—those who have already been hit the hardest by the pandemic. We know that people are willing to make sacrifices when it is needed—we have seen that during the pandemic—but a part of that must be seeing that we all follow the same rules. There must be a fairness in what is being asked of us. There cannot be one rule for them and one rule for us, which, sadly, is what we see time and again from this Government.
This Government’s habit of breaking their promises makes me very wary of this Bill. We might be told that this change is just for one year, but they also promised no increase in tax in their manifesto and they have just increased national insurance.
Guy Opperman
I am listening with great interest to the hon. Lady’s speech. I just want to know whether she agrees with Sir Steve Webb, the esteemed former Pensions Minister, who, for five years, represented her party in this House and who indicated on 16 June that he strongly supported the sort of change that the Government propose tonight, but that she opposes.
Wendy Chamberlain
I thank the Minister for his intervention. I am grateful to have the opportunity to respond to him, especially as the Secretary of State did not give me that opportunity.
I agree that we have seen extraordinary circumstances over the past 12 months, including significant increases in wages, causing this anomaly, but what this Bill fails to do—I will have this conversation with my friend, Steve Webb—is help those of working age in poverty through maintaining universal credit, or pensioners themselves.
The Bill has only two clauses and five subsections. It fails to address any of the problems with the state pension, or to assess the impact of suspending the triple lock. There are already 2 million pensioners living in poverty, the majority of whom are women and/or from black and Asian communities. This Bill ignores them and the disproportionate impact that suspending the triple lock will have on people already struggling. The promises made by a party in their manifesto matter. It is the essence of the mandate that they claim.
Just last week, during the urgent question on transport, the Transport Secretary welcomed increases in wages and hoped that they continued and were sustained. That is the whole point of the triple lock; it is about helping pensions to keep up with the cost of living.
Women have already been left behind when it comes to the state pension, with those born in the 1950s—the WASPI women—being unfairly penalised by the Department for Work and Pensions’ failure to properly notify them about the change in pension age. Women who had worked hard and planned for retirement suddenly found themselves without either. With women more likely to rely on the state pension than men, this policy is another damaging blow.
Last year, I talked about the importance of the triple lock for intergenerational fairness. This Bill is not just of interest to those of state pension age. Unless we truly trust that this Government will keep their promise—and there is no evidence to show that this will be any different from the other broken promises over the past two years—this will impact everyone. Jobs for life and final salary pensions are a thing of the past. It is harder than it has been in recent memory to get on to the housing ladder. It is fair and right that young people today are able to look ahead to a state pension, but if we return to the days of minimal increases to pensions, they will be impacted, too.
I am asking the House to support the amendment tabled by the Liberal Democrats for all the reasons that I have outlined. While there is no doubt that the pandemic has required exceptional measures, this Bill was an opportunity for the Government to support poorer pensioners and to right previous wrongs, and it is an opportunity that they have ignored. Why is there no impact assessment on how this will affect groups already disadvantaged under the pension system? I hope the Minister will address that in his closing remarks. Why do the Government continue to ignore the needs and wants of ordinary people, and why do they think that anyone will trust their word given what has happened over the past few weeks?
The public deserve better than these broken promises, better than this Government, and the 2 million pensioners living in poverty certainly deserve better than this Bill.
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
I thank the 13 colleagues who have contributed to a wide-ranging debate. The Bill makes technical changes to set aside the earnings link for 2022-23. We will instead increase the relevant pensions and benefits by at least the higher of inflation or 2.5%. This approach will ensure that pensioners’ spending power is preserved and that they are protected from the higher cost of living, but it will also take into account the difficult decisions elsewhere across public spending.
The practical reality is that many issues were raised tonight, not least pensioner poverty. I would respectfully remind the House that pensioner poverty is going down, not up. As a result of the triple lock since 2010, the full yearly basic state pension has increased by £2,050 in cash terms. There are 200,000 fewer pensioners in absolute poverty, both before and after housing costs, as compared with 2009-10, and material deprivation—an alternative way of measuring poverty—is at an all-time low of 6% of pensioners.
Guy Opperman
One second.
It is worth reminding ourselves that the spending on state pension used to be £99 per person, and less than £60 billion in total—when in fact the right hon. Gentleman was the Pensions Minister under the Labour Government. Those figures are now up to £137 or to £179, and to £105 billion.
Stephen Timms
I am very grateful to the Minister for giving way, and I am delighted he is still in his post. He talked about pensioner poverty, but rather idiosyncratically, he is using the absolute measure. The much more widely used measure is the relative measure of poverty, on which the analysis of Independent Age is based, and on that much more widely used measure, pensioner poverty is of course going up.
Guy Opperman
I am not going to repeat the points I have made, but I manifestly disagree with the right hon. Gentleman. I would point out that we could add on the £24 billion of top-ups that this Government put forward over and above the £105 billion of state pension, so with respect we are in disagreement. There is also a significant degree of support for winter fuel, NHS prescriptions, free eye tests, the over-75s free TV licence and a variety of other matters.
Guy Opperman
No, not for the moment.
SNP Members raised many points, and I want to address them. No mention was made, surprisingly, of the powers under sections 24, 26 and 28 of the Scotland Act 2016, which give the Scottish Government the ability to intervene on such matters, should they wish to do so, including the WASPI matters. No mention was made in answer to my hon. Friend the Member for Moray (Douglas Ross), who asked what currency an independent Scottish pension would be paid in. No mention was made of the ability to pay Scottish pensions upon independence, because of course answer there is none.
Reference was made to pension credit take-up, and I want to address the points made.
Guy Opperman
I am about to answer the points the hon. Lady raised specifically, if she will bear with me.
Pension credit take-up was raised. We are doing a variety of things on that, including the pension credit awareness day in June, the engagement with the BBC—I met its chief executive only last week—the stakeholder roundtable in May, and the working group established with all the key partners in this matter, let alone the various other ways in which we have changed things and the over 11 million communications to pensioners up and down the country. The Government are proud of their record.
Guy Opperman
I will give way to the hon. Gentleman for the last time, because I respect him so much.
Jim Shannon
I appreciate the Minister’s response tonight in relation to pension credit, but in Northern Ireland 15% of pensioners are consistently in fuel poverty and poverty overall. Is the Minister prepared to give extra emphasis to Northern Ireland and help us beat that pensioner poverty?
Guy Opperman
I am reminded by the Secretary of State that that is a transferred matter, and the hon. Gentleman will be aware that pension credit take-up is increasing, as is the amount of pension credit going to individuals.
I must turn briefly to the reasoned amendment, which was put forward by a solitary Lib Dem—admittedly, there are not many of them in 2021 so I understand that. It used to be a serious party—a party that understood the fiscal pressures facing Government. Now, to be blunt, it is being reduced to a party of protest, with, it seemed to me, about 15% of its MPs conducting their party conference in the backroom of a Travelodge somewhere on a business park. The practical reality is that the party of Asquith, Gladstone, even Ashdown, is now putting forward something devoid of ideas. It is a party of protest. and we do not agree with it in any way.
We are proud of the fact that last year, when we had no obligation to do so, we took the dramatic and important decision to raise the state pension by 2.5%. We will be raising the state pension by prices or 2.5% when this Bill passes, and pensioners will be protected on an ongoing basis, so I commend the Bill to the House.
Question put, That the amendment be made.