(2 years, 9 months ago)
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Jonathan Ashworth (Leicester South) (Lab/Co-op)
I beg to move,
That this House is concerned that older people and pensioners risk being at the sharp end of the cost of living crisis as a result of spiralling inflation, a lack of Government action on household energy bills, a poorly thought-through tax rise on older people in work and a real-terms reduction to the state pension; notes that the state pension is being cut in real-terms by hundreds of pounds a year and that working pensioners will begin paying the Health and Social Care Levy from next year; regrets that levels of pensioner poverty and pensioner debt have risen over the last decade even before the current cost of living crisis with almost one in five pensioners now living in poverty; and calls upon the Government to cut home energy bills, halt the planned tax rise on working pensioners and ensure older people are protected from the cost of living crisis.
In recent weeks I have had the privilege of travelling the country, and I have heard the most desperate stories from our elderly citizens and retirees trying to cope with the devastating cost of living crisis they face. In Swindon, a woman in her late 60s told me that she now never uses the oven and instead lives off sandwiches and cold meals to avoid the bills associated with switching on the cooker. I met a man who served this country in the RAF but who could not understand why, despite contributing so much to our nation, he has been given so little help as prices rise, energy bills rocket and his fixed income is stretched to the limit. At a food bank in Bury I heard how more and more older people who, wrongly in my view, feel there is shame in asking for handouts and are too proud to ask, now feel they have no choice but to go to a food bank and are now turning up there in ever greater numbers.
Age UK tells the story of Maureen, who says, in desperation:
“The pension goes up by pennies and bills go up by pounds, so the money in my pocket is getting less and less.”
Age UK also quotes Albert:
“I have to choose between eating and staying warm for some hours of the day. I forego social life in order not to fall behind with essential bills”.
These are not one-off stories: in every constituency there are thousands of Maureens and Alberts facing soaring inflation, sky-high energy bills, petrol prices through the roof, and price rises in the shops. The situation is desperate and the prospects are terrifying, and to say this is a struggle to make ends meet does not do justice to the scale of the crisis people are facing.
Jim Shannon (Strangford) (DUP)
To back up the right hon. Gentleman’s comments, I point out that 300,000 pensioners and people in Northern Ireland—18% of the population—are in absolute poverty. That is reflected right across the whole of the United Kingdom. Does the right hon. Gentleman agree that this situation has swept across the United Kingdom of Great Britain and Northern Ireland to such an extent that people now, as he rightly says, have to decide whether to eat or heat?
Jonathan Ashworth
My hon. Friend—I will call him a friend as a fellow Leicester City fan—speaks, as usual, with passion and eloquence on behalf of his constituents. The poverty we are now facing is so desperate and severe, and the destitution so acute, and it is felt across the whole of the United Kingdom. I hope Ministers respond to the representations we are making tonight, and I hope the Chancellor responds to them on Wednesday.
Christine Jardine (Edinburgh West) (LD)
The right hon. Gentleman is making a very good case and illustrating the scale of the problem we face. Does he agree that since we now know that 40% of pensioners in this country will be forced into poverty for up to a year in any nine-year period, the Government should have listened to us when we said earlier in this Session that doing away with the triple lock even temporarily was a rash move, and that pensioners are now paying the price for that?
Jonathan Ashworth
The hon. Lady anticipates the meat of my speech and has put her point on the record with typical aplomb and eloquence.
Martin Lewis of Money Saving Expert has warned that he simply has no tools left to advise people on how to manage their finances; he said that people are literally going to have to “starve or freeze.” Let us look at the facts: 2 million pensioners in poverty and the number rising; 200,000 more pensioners falling into poverty in the last year; one in five people of pension age now living in poverty; and 1.4 million older people in England in fuel poverty, with tens of thousands more likely to be pushed into fuel poverty. As we also know that pensioners spend a significant proportion of their income on energy and food and the basic necessities of life, this is the moment when the Government should be helping the Maureens and Alberts in all our constituencies with extra help with the cost of living. But instead of helping those pensioners in every constituency, Ministers broke their promise on the triple lock and are forcing through deep real-terms cuts in the value of the basic state pension. When I meet and speak to pensioners across the country—older people who are struggling—there is deep despair, and indeed bewilderment, that the Government have abandoned them, having promised them so much.
In the general election campaign, the Prime Minister said:
“We will keep the triple lock, the winter fuel payment, the older person’s bus pass”
to help retirees with the cost of living. Yet just at the moment when pensioners are shivering in the cold, skipping hot meals and anxious and worried about paying the bills, rather than helping retirees with the cost of living, Ministers abandoned the triple lock, a broken promise that the former Conservative Pensions Minister, Baroness Altmann, warned would
“plunge more elderly people into poverty”.
She said:
“With rising energy costs, I fear many of the poorest will be even less able to afford to heat their homes adequately over the winter…To take away their much needed and promised protection, knowing inflation pressures are rising, seems unjustifiable”.
The former Conservative Pensions Minister was absolutely right.
I read recently—in the money section of The Daily Telegraph, no less—that
“pensioners will be worse off after the Chancellor capped the rise in the state pension…this will equate to pensioners taking a real terms cut of £7.45 a week, or £388 a year.”
That is a cut of around £30 a month. These are significant sums of money. Given that the state pension is the biggest source of income for most pensioners, and given that retired women in particular rely on the state pension and other benefits, such as pension credit, for over 60% of their retirement income, it will be retired women again who are disproportionately hit by this deep cut to the basic state pension.
Alan Brown (Kilmarnock and Loudoun) (SNP)
The right hon. Gentleman is absolutely right that it is a disgrace that the Government have broken their triple lock promise. The Red Book shows a transfer of £31 billion over this Parliament from the pockets of pensioners to the Treasury—a disgrace. Given the point he is making, should the Labour motion not have demanded the immediate reinstatement of the triple lock? That is the one thing that I am concerned is missing from the motion we are debating.
Jonathan Ashworth
We are making clear our commitment to the triple lock in the remarks that I am making at the Dispatch Box.
Rachael Maskell (York Central) (Lab/Co-op)
I am grateful to my right hon. Friend for the speech that he is making. When the Government made their decision about the triple lock, we were not facing the energy crisis that we are facing today. Bearing in mind that older people expend at least twice as much energy because they are at home for more hours, and that we are starting to hear of cases of people dying of hypothermia, should not the Government not only reinstate the triple lock but underpin energy bills?
Jonathan Ashworth
My hon. Friend is absolutely right. We have so many pensioners in poverty, and many of them are living in inadequate, cold, damp homes that they cannot afford to heat. We know that we have considerable excess deaths every winter due to issues associated with hypothermia and so on, because so many pensioners live in cold, damp homes. Frankly, that costs the NHS more in the long run, so the economics of this are completely self-defeating.
What was the Government’s justification for breaking the triple lock even though pensioner poverty is increasing, as it was before the pandemic? Ministers said that the £5 billion cost was unaffordable. So the Chancellor took £5 billion off pensioners and then a month later, in his Budget, gave away billions in alcohol duty cuts and cuts to the bank levy—literally making it cheaper for the bankers to booze on bubbly on the back of making pensioners poorer. It is a disgrace.
Let us be clear: the reason Ministers are not increasing the pension sufficiently is not that the Government lack the money, but that they lack the political will. That is why older people are now asking whether the Government will break their promise on the triple lock next year too. Last year, Ministers rejected the 8.3% rise and refused even to explore alternative measures of wage growth, but they insisted that that was a one-off and that they would honour the triple lock throughout this Parliament. The Bank of England warns that inflation could reach 8% this year. I asked the Secretary of State at questions earlier whether she would rule out breaking the triple lock for a second year in a row. She did not give that guarantee at the Dispatch Box, so I ask her again: can she confirm that the triple lock will be honoured for the rest of this Parliament? Does she want to answer that? She did not do so at questions earlier.
The Secretary of State for Work and Pensions (Dr Thérèse Coffey)
The right hon. Gentleman asked multiple questions earlier and I answered at least one of them, but the answer is yes, I do make that commitment.
Jonathan Ashworth
I have secured my first U-turn in the role, Madam Deputy Speaker. Does that not just show that we in the Opposition stand up for Britain’s pensioners? I asked the Secretary of State a very simple question earlier—whether she would commit to the triple lock—and she did not say yes. I am pleased that she has now cleared up the muddle she got herself in earlier, but given the other commitments—[Interruption.] The Pensions Minister—the Under-Secretary of State for Work and Pensions, the hon. Member for Hexham (Guy Opperman)—says Ministers have said it repeatedly, but they all stood on a manifesto saying they were going to keep the triple lock. I say to him that his commitment to the triple lock might not be worth the paper it is written on, given that he broke his manifesto commitment.
While I am talking about the Pensions Minister, he told the House in September, in seeking to justify breaking the triple lock, that the Government would
“ensure pensioners’ spending power is preserved and that they are protected from higher costs of living.”
Does any Tory Member really believe that that ministerial promise has remotely been met? Of course it has not.
Mike Amesbury (Weaver Vale) (Lab)
I wonder whether my right hon. Friend could secure another U-turn from Ministers, on the national insurance rise for working pensioners.
Jonathan Ashworth
My hon. Friend makes a good point. The Pensions Minister, who will sum up the debate later, promised—these are his words—that the Government would preserve pensioners’ spending power and protect them from the higher cost of living. On the same day that the Government broke the triple lock, they introduced the national insurance increase, a proportion of which, for the first time, will be paid by working pensioners. Indeed, a working pensioner on average earnings will lose out by £1,400 over two years. That is not protecting pensioners’ spending power or protecting them from the higher cost of living.
Have pensioners been protected from the higher cost of living through energy bills? Next month, we will see energy bills rise by 54%—£700 on average. In October, there is likely to be another 25% rise. All the Government are offering is a £150 rebate this April—although it is not clear whether they will guarantee that for pensioners who do not pay council tax or who get council tax benefit—followed by a loan that has to be paid back through a £40 levy. That £350, £200 of which has to be paid back, will be totally wiped out by the £388 real-terms cut to the basic state pension. That is not protecting older people from the higher cost of living or preserving their spending power; I suggest it is more like daylight robbery.
We have already said that pensioners are going to be paying more in tax, but what about pension credit, which featured in the exchanges earlier? About 850,000 pensioners eligible for pension credit are going without it. That is £1.7 billion unclaimed—something like £1,900 for every qualifying household that is losing out. As Members across the House have pointed out, pension credit often unlocks other benefits, such as free TV licences—obviously, the Government cut those and changed their financing—council tax benefit and so on. Now Ministers are praying in aid the pension credit guarantee as justification for their real-terms cut in the value of the state pension. They do not mention very often that pension credit was a Labour policy, which they criticised when we introduced it. Indeed, if my memory serves me correctly, they also opposed its precursor, the minimum income guarantee, and even voted against it. They do not mention that, but given that pension credit uptake is so poor, if they drove it up they could lift 440,000 older people out of poverty.
Stephen Timms (East Ham) (Lab)
I very much agree with the point that my right hon. Friend is making. Pension credit, introduced in 2003, has been a powerful lever for tackling pensioner poverty. Does he agree that the Government should set an ambitious target for increasing the take-up of pension credit so that the number of people who benefit substantially increases?
Jonathan Ashworth
Yes, I do. My right hon. Friend, who was a first-class Pensions Minister and Chief Secretary to the Treasury, will remember being at the Government Dispatch Box when shadow Secretaries of State for Work and Pensions from the Tory party criticised pension credit and opposed the minimum income guarantee, saying that it was an extension of means-testing and undermined the universal basic state pension. Now, today, they are using pension credit to justify a £388 real-terms cut in the value of the basic state pension. I hope that the very sensible recommendation by my right hon. Friend, the Chair of the Work and Pensions Committee, is taken up by the Secretary of State, and that she responds to him when she speaks.
Of course, Ministers should be moving heaven and earth to drive up take-up, but the Pensions Minister revealed earlier this afternoon that, instead, we have a letter writing campaign. Writing to local newspapers—that is his plan to drive up uptake of pension credit. When pensioners cannot afford their heating bills and cannot afford to eat—when pensioners cannot afford the basic necessities of life—rather than taking action, all he does is write to local newspapers. What is he doing? Is he expecting pensioners to burn the papers to keep themselves warm? I am told he has written to the Leicester Mercury. Well, I have been looking at his local paper, the Hexham Courant. I cannot actually see his letter in it, but I can see that it is warning that
“Thousands in the North East to miss out on automatic £150 rebate…MORE than 320,000 households across the North-East will not automatically receive a £150 council tax rebate…and 40,000 in Northumberland”.
Many of them will be pensioners. May I suggest that he sorts out his own backyard before gracing the pages of my paper, the Leicester Mercury?
There is one other area where I think the Minister needs to show greater urgency in supporting the United Kingdom’s pensioners and I would be grateful if the Secretary of State responded in detail to the points I have made. She will know that the underpayment of the basic state pension to around 135,000 pensioners, the vast majority of whom are women, has been a scandal. I pay tribute to the former Liberal Democrat Pensions Minister, Sir Steve Webb, the Chair of the Work and Pensions Committee, my right hon. Friend the Member for East Ham (Stephen Timms) and the Chair of the Public Accounts Committee, my hon. Friend the Member for Hackney South and Shoreditch (Dame Meg Hillier), who have all shone a light on that.
The Department has allocated £1 billion and estimates that approximately 118,000 pensioners will be traced and could receive around £8,900 by the time the payments are made. So far, so good. But the last time Ministers provided updated figures, in autumn, they had paid out just £60 million to just under 10,000 people, so £900 million is outstanding. When we are in a cost of living crisis, should not the Department be showing greater urgency? When will the other £900 million be paid? The Secretary of State will know that there are stories of the DWP helpline giving inaccurate information and false assurances, forcing pensioners to keep living on less. There is no information available as far as I can see on how lump sums will impact on capital limits and the consequent impact on other entitlements, such as to social care. Divorced women have been excluded from the whole exercise on the basis that it does not think there are enough errors to be worth doing, even though there are cases of divorced women where errors have been made and it has had to pay out thousands in back payments.
Wendy Chamberlain (North East Fife) (LD)
Two weeks ago, during my absence with covid, a private Member’s Bill was presented which called specifically for divorced women to no longer be excluded and receive more than an apology. Will the shadow Secretary of State indicate whether he would support that Bill?
Jonathan Ashworth
Without having read the details, it sounds like a very sensible Bill. I look forward to reading the details. At first sight, it certainly has my strong encouragement.
Jim Shannon
I was doing some research beforehand and I see that there is an older people’s commissioner for Scotland, for Wales and for Northern Ireland, but not one for England. Does the right hon. Gentleman agree with the Age UK campaign for an older people’s commissioner for England? Does he think the Minister should do that? It would help older people in England, so does he think the Government should do it?
Jonathan Ashworth
Typically, the hon. Gentleman, my friend and fellow Leicester City fan, makes a very wise and astute recommendation. I hope the Secretary of State takes it up. It would certainly have my strong encouragement.
I hope the Secretary of State can provide an answer for why divorced women are excluded. It seems utterly unfair, particularly given the desperate cost of living crisis. Secondly, when the Department makes a lump sum payment it is normal to pay interest, so why is it not paying interest on those payments? I encourage the Secretary of State to explain when she is going to get on and fix that. The Chair of the Public Accounts Committee said this process has become a “shameful shambles”. Given the scale of the cost of living crisis, can she tell us when Ministers will finally fix this shameful shambles?
Of course, there are other scandals that need fixing, too. We know about the Allied Steel and Wire steelworkers who have not got their full entitlement, or the thousands of members of the British Steel pension scheme, who incurred massive losses because of failures in pension regulation and protections on this Government’s watch. Whether it is working pensioners, women pensioners, steelworkers or anyone who relies on the state pension as their main source of income, the Government have let them down.
Our retired constituents worked hard all their lives, paid their national insurance, served our country and contributed to our communities. They deserve security and dignity in retirement. Instead, what we get is the state pension cut in real terms, the triple lock abandoned, energy bills unaffordable, pensioner poverty increasing and retirees robbed. We need a plan to get energy bills down and halt the tax rises that are coming, and a plan to ensure that all pensioners are protected from this devastating cost of living crisis. I commend our motion to the House.
The Secretary of State for Work and Pensions (Dr Thérèse Coffey)
It is a pleasure to speak in this debate. To be clear, there have been no U-turns. I am sure that the right hon. Member for Leicester South (Jonathan Ashworth) was not intentionally misleading the House when he suggested there was. I am again happy to put on record that the triple lock will be honoured in the future.
The Government have always supported pensioners and will continue to do so, whether through the significant increase in pension rates since we took office in 2010, or the creation of a new, simpler state pension which is better for women and reduces the need to consider top-ups through pension credit. I recognise the No. 1 concern in many people’s minds right now is the rising cost of living and its impact on their household budgets. The unique set of global circumstances that have come together to drive up inflation are largely factors beyond the control of the Government, such as the knock-on effect of covid on the global supply chain and the impact of Putin’s despicable invasion of Ukraine. These items are set out in a letter from the Governor of the Bank of England to the Chancellor, as the Bank of England is charged with achieving the 2% inflation target.
However, we are taking decisive action to cushion the impact of price rises on people’s pockets, providing £21 billion of support over this year and the next. That is particularly true for people on low and fixed incomes. Help is already on hand through the household support fund, which is still accessible through people’s local council, and we are taking further action on rising household energy bills. The £9 billion energy package announced by the Chancellor last month will benefit the vast majority of households, including pensioners, with a £150 discount on council tax for those living in property bands A to D, or the £144 million discretionary fund that is available through local councils. In addition, the £200 rebate on energy bills this year will help to spread the costs of the expected increase over the next few years. I recognise that that will still need to be repaid.
Alan Brown
Of what the Secretary of State calls the £9 billion package, how much is provided by the Treasury and how much is a loan to consumers that has to be paid back?
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
Will the Secretary of State give way?
Dr Coffey
No, I will not.
The extra support is on top of a range of existing help for pensioners, including: winter fuel payments, which support over 11 million pensioners’ energy bills and is worth about £2 billion every year; cold weather payments, ensuring pensioners in need keep warm during the colder months; and the warm home discount, which we are extending until 2026, including expanding it to more recipients of pension credit, namely those who receive the savings credit element and live in a home with high energy costs. I am conscious that the warm home discount is a spreading of support towards people in this vulnerable cohort, but nevertheless it is thanks to Government intervention that that is the case. As a result, the number of households benefiting from the warm home discount will increase by almost a third, to 3 million—up from nearly 1 million at the moment—with the vast majority getting their payment automatically with no need to apply. Together, I think that will be welcomed by many people, recognising the extra support that people who are not currently eligible today will receive later this year.
Emma Hardy
I want to raise a point about prepayment meters. A written question to the Department for Business, Energy and Industrial Strategy—admittedly, this Secretary of State represents a different Department—asked how people on prepayment meters would receive the £200 discount, many of whom happen to be pensioners. The answer, given on 25 February, was:
“BEIS will consult in the spring.”
It seems that the Government do not have a plan for how to refund the money to those on prepayment meters, but I hope that the Secretary of State can update us.
Dr Coffey
The hon. Lady asks a valid question. As I have said to the House before, tackling the cost of living and poverty more broadly is shared across Government. Although that may come under our umbrella—recognising our general role in support through the welfare system—my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy leads particularly on items to do with energy and fuel poverty more broadly. I will ask him to contact her.
That leads me on to pension credit, which has been highlighted as a passport to a range of other benefits, including free TV licences, help with council tax and NHS dental treatment. Together, those are making a real difference, reflecting the Government’s commitment to supporting pensioners and continuing the work of successive Governments since 2010—when the Conservatives took office—to tackle and alleviate pensioner poverty.
The facts speak for themselves. The latest figures show that 200,000 fewer pensioners are in absolute poverty than in 2010, with levels of material deprivation having fallen from 10% to 6%, a record low. It is because of our commitment over that time and policies such as the triple lock that, from next month, the full yearly basic state pension will be more than £2,300 higher in cash terms than it was in 2010. In fact, no Government have paid more to pensioners than we will this year: £105 billion alone through the state pension. When we include all the other pensioner benefits, that rises to £129 billion a year.
Our aim over the two years of the pandemic has been to give fairness to pensioners and taxpayers, recognising what has happened with covid. For 2021-22, we protected the value of the state pension by legislating to secure and increase the state pension by 2.5%, despite a decline in earnings and inflation rising by just 0.5%. Had we not acted, the state pension, by law, would have remained frozen. Again, through the Social Security (Up-rating of Benefits) Act 2021, which Parliament passed last November, we legislated to temporarily suspend the earnings part of the triple lock in 2022-23 for one year. As I outlined at the time, that was in response to exceptional circumstances caused by the distorting effects of the pandemic on the earnings statistics.
Pensions will still rise by 3.1% next month. That reflects the inflation index that has been used consistently for many years, so over the past two years, pensions will have risen by a total of 5.6%. Next year, we will return to implementing the triple lock in the usual way for the remainder of the Parliament. I reinforce that full commitment, and whatever the right hon. Member for Leicester South may suggest—he may be trying to score points on politics, which, as the shadow Secretary of State he is absolutely entitled to do—I want to make sure that he avoids scaremongering.
Alan Brown
I welcome the Secretary of State’s commitment to reinstating the triple lock. Given that the Chancellor said this time that 8% was unaffordable and that that was £30 billion that we could not afford, is she saying that if inflation is at 8% when the Government do the measurement, they suddenly can afford to pay the £30 billion to pensioners?
Dr Coffey
I am not aware of any Minister trying to say to people that we did this because it was unaffordable. As a result of the pandemic, there was a statistical anomaly relating to earnings. We also understand the balance relating to intergenerational fairness, as has been outlined. At the time, however, we very much highlighted the statistical anomaly.
As a result of our actions, I believe that the state pension continues to be a strong foundation from which people can build additional savings for their retirement. We are seeing a thriving private and workplace pensions market, fuelled by the success of automatic enrolment, which transformed pension savings for more than 10.5 million workers. That is creating even firmer foundations for a robust pension system to ensure that not just today’s pensioners, but those of future generations are protected and supported. I know that, as a country, we will continue to build on the progress that we have made over the last 12 years under Conservative Governments, so that in the next 12 years, and in decades to come, pensioners will be able to enjoy a secure and dignified retirement.
We also know that a minority of pensioners choose to stay working beyond the standard retirement age. They do not pay the standard employees’ national insurance on their earnings, even though employers do if they earn above the threshold. As for the NHS and social care levy being introduced through national insurance, it is appropriate for anyone working at all, including pensioners, to contribute, bearing in mind that they will do so only if their earnings are at or above the regular threshold. I believe that will be about £190 a week, which is close to nearly £10,000 in earnings a year.
Peter Gibson (Darlington) (Con)
My right hon. Friend rightly points out that many pensioners are indeed working. What does she have to say about how the announced increase in the living wage to £9.50 will benefit pensioners?
Dr Coffey
Any uplift in the national living wage is welcome to anybody still working. Our normal practice on standard national insurance for employees is that once someone reaches pension age, their take-home pay will be automatically higher than somebody else under the age of retirement, if they are doing the same job on the same salary. However, this levy is important to make sure that we get the funding for the NHS backlogs and for the future stability of the social care system.
Let me turn to pension credit. We have heard about the success of the private pensions sector and some of the uplift for people who are still working. It is good for those still saving for their futures, but understandably, the House wants to know what we are doing for the poorest pensioners now. We had a bit of a history lesson about how pension credit was introduced under the Labour Government in 2003, as the right hon. Member for Leicester South said. Let us go back a bit earlier in history: it was only a few years beforehand that the Labour Administration raised pensions by 75p. I think the House will probably recognise that pension credit was introduced directly as a consequence of the impact of what happened with that very modest increase in pensions.
Various funds have been open to pensioners in the past year, including the household support fund, and I encourage people to approach their local council for support.
Stephen Timms
As the Secretary of State knows, about a third of those who are eligible for pension credit do not receive it at the moment. She told us earlier that there is an action plan to improve that. Will she publish that action plan and include in it an ambitious target for increasing the take-up of pension credit?
Dr Coffey
The Chair of the Work and Pensions Committee slightly pre-empts where I am heading with pension credit in my speech.
On the household support fund, within the lifetime of the Government, we have introduced a higher basic state pension so that, increasingly, pensioners are not required to resort to applying for pension credit. However, pension credit, the pension financial safety net, is helping to support those with the lowest retirement incomes. Worth on average over £3,000 a year, some 1.4 million pensioners already claim it, receiving collectively an extra £5 billion in support. As I mentioned, given that pension credit is a passport to other financial help, we want to make sure that everyone who is entitled to it claims it.
Our estimate of pension credit take-up is based on a combination of what information we have on pensioner income and analysis from the family resources survey. That suggests that more people can claim than is the case now, particularly for those eligible for the savings credit element, where we have the lowest take-up. The Minister responsible for pensions, the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Hexham (Guy Opperman), and my noble Friend the Minister in the Lords—Baroness Stedman-Scott—have been striving to increase take-up. They undertook a big awareness day last year and they are continuing that work. This is the plan, I say to hon. Gentlemen.
We will continue to promote the take-up of pension credit. As has been highlighted, the Minister responsible for pensions, my hon. Friend the Member for Hexham, has raised awareness through local newspapers. We will send 11 million leaflets to pensioners with their annual state pension uprating letter and we will continue to work with the BBC, financial institutions, Age UK and many other organisations to raise awareness. The latest estimates show that uptake is increasing. We know from internal management information that the number of new applications last year is estimated to have been 30% higher than in 2019, so our efforts are working. I hope that this latest effort will also bear fruit.
Rachael Maskell
I chair the all-party parliamentary group for ageing and older people, which has just had an inquiry into the matter. One thing we suggested was that, since a lot of older people visit their GP at some point, GPs should be active in asking their patients whether they are eligible for pension credit. That would help them to claim the benefits that they should be able to attain.
Dr Coffey
The hon. Lady raises a valid point. I know that we have had paid advertising in post offices and in GPs’ waiting areas in the past; doctors often tell us that they do not necessarily like to be attached to benefit claiming and similar matters, but I hear what the hon. Lady says, and my understanding is that we intend to resume that contact. I have also asked the leading pharmacy chains to be involved, because that is often a more regular way in which people get help. We will try different outlets, in addition to those we have tried in the past, to make people more aware of the potential opportunities.
Dr Coffey
The hon. Lady has already made one intervention, and I want to make some progress.
The right hon. Member for Leicester South asked about issues relating to state pension underpayment. I give credit to my hon. Friend the pensions Minister, who has rolled up his sleeves and really got stuck in. We have 500 people working on the state payment exercise, and before the end of the year we are aiming to have up to 1,500 people getting on with it. There will be an update after the fiscal statement; we have always said that we would give updates more or less in line with it, so the right hon. Member for Leicester South will have to be slightly patient. This issue has been going on for some considerable time. There was an element of shambles in previous Administrations, which was not helped by the 2008 reforms. I respect the former Minister Steve Webb, but he did not find this element at all in his five years as pensions Minister—not even when he was going through the whole process of creating a brand-new state pension. We are getting on with this element, which was not discovered until recently, and we will get on with the job and sort it out.
When we say that we are committed to tackling pension poverty, we mean it, and we have the track record to back it up. On Wednesday, it will have been two years since we took unprecedented action to lock down the country to protect lives. We invested in vaccines and subsequently rolled out the biggest and most successful vaccination programme in the history of the NHS, prioritising pensioners. Today, as we start inviting the over-75s to get their spring covid booster, we want to encourage pensioners to consider getting the boost to their income that pension credit could provide. With the wider range of financial and other support that we are providing, we are doing our best to help to ease the current cost of living squeeze.
We must unite as a House to get more pensioners to access the support that is available. While I am conscious that many people will think that there is more to do, we can do it only if all MPs in this House make a commitment to their pensioners—I look forward to their doing so—to continue to provide as much information as possible.
Several hon. Members rose—
Mr Deputy Speaker (Mr Nigel Evans)
Order. Hon. Members can see how many colleagues want to participate in the debate, so from the outset they should be thinking about keeping their contributions to about five minutes.
Alan Brown (Kilmarnock and Loudoun) (SNP)
It is kind of a pleasure to follow the Secretary of State, but I have to say, not for the first time, that I am a wee bit puzzled, because she seemed to be responding to a different debate from the one we are having. The shadow Secretary of State, the right hon. Member for Leicester South (Jonathan Ashworth), set out some clear and harrowing examples of people who are really struggling, yet the Secretary of State gave a pre-prepared speech about a secure and dignified retirement tomorrow, ignoring the here and now.
Talking about how this Government have paid the most in pensions ever does not cut it. Those statistics are fine, but they do not help pensioners who are really struggling. That point needs to be taken on board. I asked about the £9 billion package that the Secretary of State cited, but she was not sure how much of it was Treasury-funded and how much was a loan to bill payers. I can tell her that out of that £9 billion, roughly £5.6 billion is just a loan to bill payers that will have to be paid back—bill payers who include struggling pensioners.
On pension credit, the Secretary of State picked up on what the pensions Minister—the Under-Secretary of State, the hon. Member for Hexham (Guy Opperman)—said earlier, bragging about how the Government are writing to local papers. When the shadow Secretary of State called them out on it, however, the Minister shouted, “Oh, we’ve done that for years!” If it has been done for years and there is still £4 billion of unclaimed pension credit, it is clearly not working. It is quite clear that another strategy is needed to make sure that there is a far greater uptake of pension credit, which can then be a passport to other benefits.
I welcome this debate. The motion combines the key issues for pensioners in the ongoing cost of living crisis: rising energy costs, real-terms cuts to pensions and, for older people in work, the health and social care levy. Where I disagree slightly with the shadow Secretary of State, which is why I intervened on him, is that I think that the motion could have been stronger in explicitly demanding the reinstatement of the pensions triple lock.
Earlier today, the pensions Minister stated that pensioner poverty has fallen, but as I tried to point out, the Government’s own statistics on households below average income show that UK pension poverty has risen to a 15-year high under Tory rule. Some 2.1 million UK pensioners—18%—are now living in poverty after housing costs, an increase of 200,000 people on 2018-19. Sadly, that was the figure before the latest energy cap rise was announced, so it will massively increase unless there is proper Government intervention. It is worrying that the Minister is trying to argue something different; either he is ignorant of the facts or he does not care. The Government really need to pay attention and start intervening.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
My hon. Friend is making a terrific point about the poverty that is affecting pensioners just now. Does he agree that the effect is disproportionately felt by pensioners living in off-gas grid households? Last year, heating fuel was 42p a litre; it is now £1.25 a litre and rising. There is going to be a really dramatic effect on pensioners in those areas.
Alan Brown
I completely agree. I thank my hon. Friend for highlighting that point; he has been at the forefront of the campaign to highlight the effects of increased energy costs on those who are off the gas grid. That threefold increase in fuel costs is completely unsustainable and really does lead people to the choice between heating and eating.
Let us look at conventional households covered by the energy cap. Next month, the cost of energy for the average household will have increased by 75% compared with April 2021, a rise of more than £800 a year. Pensioners spend more time in their homes and are more likely to feel the effects of cold or damp, so increased energy costs disproportionally hit the elderly. Not being able to afford to heat their homes puts their health more at risk. There are already something like 10,000 premature deaths a year due to fuel poverty, and that was before the huge energy cost increases. It is truly shameful that in an energy-rich country, or group of nations, people are dying prematurely because they cannot afford to heat their homes.
National Energy Action has estimated that the cap increase will have caused a 33% increase in fuel poverty rates. If this rise continues without Government interventions, come October we will be looking at some 8 million fuel-poor households in the UK, with perhaps between 2.5 million and 3 million of those households containing pensioners. When we look beyond the phrase “heating or eating”, we see that the grim reality for people faced with that choice is starving or freezing or suffering in damp houses, and that brings us back to the possibility of more people dying prematurely. It is truly shameful.
The interventions that the Government have announced to date clearly do not go far enough. Even worse, the removal of the triple lock is taking more than £500 a year from the pockets of pensioners, as the Government’s own Red Book demonstrates. Earlier today and this evening, Tory Ministers were arguing that wage increases were a false measurement owing to the partial recovery from covid. They have used that to justify breaking the triple lock. Just four months on, however, we have evidence that a much larger pension increase than 3.1% is required. The facts are clear: the spring statement in two days’ time will provide the one opportunity to reinstate the triple lock, or at least, as a bare minimum, to introduce a mechanism for increasing pensions by 6.1% in line with the current rate of inflation and what the Scottish Government are doing with benefits.
It was good to hear the Secretary of State guarantee that if inflation is at 7% or 8% later in the year, at the point when calculations are being made for the purpose of future uprating, pensions will rise by that amount. I hope that the Government stick to that, and it is not just bluster at the Dispatch Box. We all know who pulls the strings; it tends to be the Chancellor, so I hope that the Secretary of State is lobbying the Chancellor, because we know that inflation is not going to go down any time soon.
While I am talking about inadequate measures, let me point out that the £150 rebate on council tax will not catch all pensioner households in terms of bandings; and, as the shadow Secretary of State said, many pensioners living alone or in receipt of pension credit already receive a full or partial council tax discount, and are therefore unlikely to benefit from the new council tax rebate measure unless the Government do something about it. Making others who have avoided debt all their lives take out a £200 loan to pay back later is also morally wrong. That loan should be converted to a grant for all, and certainly, as the bare minimum, for pensioners and those on benefits.
The Secretary of State spoke about the warm home discount, but, as she knows, the Government put no money into that scheme, although too many Ministers do not even understand that; it is actually paid for by other bill payers. While I welcome the extension of the discount to 3 million households, only 10% more pensioners will receive it. The Government should extend it further, but, in doing so, should provide some direct funding rather than imposing the funding on other bill payers. They should also consider extending the energy company obligation scheme so that more homes become energy-efficient, but that too should involve direct funding rather than other bill payers having to foot the bill.
Apart from the £150 funded rebate, the only direct Government intervention to date on energy has been the allocation of £1.7 billion for the development of Sizewell C. Not content with Hinkley Point C being the most expensive power station in the world, the Tories are determined to build another more expensive one. In their own impact assessment for the Nuclear Energy (Financing) Bill, the upper estimate of the capital and financing costs of the Sizewell C development is £63 billion. How will that help people who need energy costs to come down? And why did Labour vote to commit bill payers to that amount for a new nuclear power station? The money could be spent so much more wisely. There really needs to be a rethink on this nuclear policy.
There are other cost increases to be considered. For instance, the cost of food is rocketing.
Jerome Mayhew (Broadland) (Con)
I note the hon. Gentleman’s opposition to the gaining of low-carbon energy from nuclear. He has also told us that this is an energy-rich country. What does he think the Government should do with the Cambo oilfield? Should we open it up to reduce energy prices for pensioners?
Alan Brown
The hon. Gentleman is not comparing like with like. Cambo means more fossil fuel extraction, and there needs to be a proper assessment to establish whether this could be done in a way that is compatible with net zero. That is a test that the Government are refusing to apply. Apart from that, they should be investing much more in floating offshore wind, in tidal stream, in which Scotland leads the world, and in pumped- storage hydro, which is a dispatchable low-carbon technology. That scheme is ready to go, but the Government have not agreed a pricing mechanism. Then there is carbon capture and storage at Peterhead, in which respect Scottish customers have been let down again. So much more could be done in energy, and it would not cover even a portion of that £63 billion that has been allocated to nuclear. More energy efficiency reduces demand, and therefore reduces the need for new power generation. I hope I have answered the hon. Gentleman’s question.
Alan Brown
Yes!
Returning to fossil fuel, obviously petrol and diesel prices have increased massively at the pump. They have gone up by between 35p and 40p a litre compared with a year ago—a 30% increase. That also means that while people struggle to run their cars, VAT returns to the Treasury have increased massively. The current rates compared with last year mean that the Treasury is getting something like £3 billion a year extra in VAT returns, but that should be recirculated to support hard-pressed people, especially pensioners. It seems that the Chancellor may respond to calls to cut fuel duty, but if he does, he will be demonstrating the folly of a 12-year duty freeze. When we had lower prices, that was the time when bolder action could have been taken to raise fuel duty, so that when fuel prices increased in the way they have, fuel duty could have been decreased. That would have created a much smoother curve, instead of peaks and troughs, and the Treasury would have had a far more stable income as well.
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
I am just trying to understand the hon. Gentleman’s policy. Is it genuinely his policy to raise fuel duty? That is the impression he has just given.
Alan Brown
I repeat that the time to be bold and increase fuel duty would have been when fuel prices were at a record low. That would not have had the same impact on people’s pockets. The current rise is unsustainable—[Interruption.] The Minister did not listen to what I said. This here-and-now policy from the Government is unsuitable; it should involve bolder long-term planning. Had they raised fuel duty earlier when prices were lower, they could have reinvested the revenue in public transport and in creating money for a rainy day, like right now.
Drew Hendry
Is it not a fact that pensioners and other people could have been helped greatly in this fuel crisis, had the Government listened and introduced a fuel duty regulator, which would have regulated the price and ensured that fuel was affordable for people just now?
Alan Brown
Absolutely. My hon. Friend has made my point much better than I was making it myself, and I appreciate that. A fuel duty regulator is exactly what would have given better stability for the Treasury and for people’s pockets.
Looking at other windfalls the Treasury receives, we see a VAT windfall from the £800 increase in average household bills. That is well over another £1 billion coming into the Treasury coffers. The Treasury is also benefiting from increased oil and gas revenues. The last Budget predicted an extra £6 billion in oil and gas revenues in this Parliament compared with the March 2021 Budget, but given the sustained period of increased prices, that £6 billion will prove to be an underestimate. That is more money that should have been reinvested.
I know that Labour has targeted a windfall tax on the oil and gas companies, but that sounds a wee bit like raiding the one traditional cash cow. Why do we not, as the SNP motion suggested last week, look at this in the round? Why do we not target all sectors or companies that have benefited disproportionately from the pandemic, and in particular the new-start companies and the Tory crony companies that were awarded PPE contracts and that have realised record profits since? That is a real obscenity that should be targeted. Anyone who has read Private Eye and seen the eye-watering sums that those companies have made should be truly horrified.
I want to highlight some additional measures in Scotland where the SNP Government are providing mitigation for pensioners, but even the powers the Scottish Government have are nowhere near enough to make the transformational changes that we want. Older people in Scotland get their bus passes at the age of 60, instead of having to wait until the state pension age. They also have universal free prescriptions and are more likely to have had targeted energy efficiency measures for their homes. All charitable organisations in this sector, as well as the energy companies themselves, want the UK Government to follow the lead of the Scottish Government in making energy efficiency a national infrastructure programme. The low-income winter heating assistance will give around 400,000 low-income households a guaranteed £50 payment every winter instead of the complicated UK cold weather payment of just £25.
Guy Opperman
I am just trying to understand the hon. Gentleman’s speech. Is it still SNP policy that, post-independence, the rest of the UK would have to pay for Scottish pensions? He seems to be unclear on that, and I just want to be utterly clear.
Alan Brown
I am not sure how I can have been unclear when I have not mentioned it. The Minister is listening to a different speech—that is simply not what I have in front of me. This is very interesting. First, on day one of independence, Scotland can afford pensions. Right now, we collect about £11.5 billion in national insurance contributions. Pension payments are about £8.5 billion, so that is a £3 billion surplus right away to cover other payments from national insurance contributions. On day one, we can afford it. If we are supposed to be a Union of equals, it is very strange that we are being told not, “Stay with us because we value you,” but, “Stay with us because we are threatening you.” A DWP official publication from 2014 says that there is an historical precedent for dealing with this, with historical credits being built up in pension payments. So in 2014 the DWP actually stated that there is a solution, but obviously the Minister has conveniently forgotten that.
Perhaps this is a good time to finish. The Minister’s intervention shows that after 315 years of the Union, Scotland needs full independence as a means of counteracting this present-time dystopia, which Labour has also recognised and sought to address today.
Nigel Mills (Amber Valley) (Con)
It is a pleasure to speak in this debate. We should reiterate the points we have been making since the uprating orders. It is clear that, for people living on a fixed income like a pension, with no prospect of earning any more, a state pension increase of 3% is not going to be enough to get them all the way through until April 2023. The Government are going to have to find a way to do more to help people over the next 15 months; otherwise, they simply will not be able to make ends meet.
I regret that the motion does not set out specific policies that the Opposition would like the Government to introduce. Instead, it gives a slightly convoluted tour through history, but I think that the Government’s record of support for pensioners over the past 12 years is pretty good, with the new single-tier state pension and the triple lock. Over the past decade, I do not recall there being many calls for more support for people over retirement age. The demands have been, probably quite rightly, on behalf of people of working age. Equally, I am not convinced that it is logical to say that somebody over the state pension age who is still working should pay a lower tax rate than a young person with a young family who is trying to pay a mortgage and all the bills. People who are still earning after retirement should not pay national insurance on their state pension or other pensions, but I am not convinced that it is sensible that they do not pay it on earnings over £9,000 year. We need to find money to pay for bills and for more social care, which will no doubt be used by people over the state pension age before those of working age. I am not sure that that is the right tack to set our face against.
I want to talk about two practical things that the Government could do to help over the next 15 months or so. The first is on pension credit, which has been discussed. We clearly need to ensure that all those who are entitled to it are getting it, but I am not sure why the Government have set their face against a target. In any large organisation, we usually find that what gets measured gets done and that when there is a target, people will try to achieve it. I understand that there is reluctance because we might not hit the target and that that is embarrassing when we measure it, but I think that the embarrassment is far less than the effect of not getting a substantial increase in pension credit take-up. During the pandemic, when the then Health and Social Care Secretary set his target for 200,000 tests a day, it got done by the end of that month, and he himself would say that without having set that stretch target, it would not have got done. Let us have that target. Let us work out what is realistic and reasonable, and then drive the system to achieve it. I think that would help make serious progress.
The second thing that the Government should look at is how to give people on a pension more income before April 2023. The Chancellor seems to like doing one-off payments. I understand that. If we think it is a short-term blip of a crisis, the effects of which might go to into reverse, that can be done quite quickly, with no long-lasting spending effect. The danger, however, is that all those things do not get put on the pension—they do not get indexed every year—and in effect they are worth less money as time goes on. I am afraid that I am not convinced that the increase in bills is going to be a short-term, six-month problem. We all wish that that were the case, but it would probably require a change of regime in Russia, with a new, friendly, democratic and unsanctioned regime giving us free access to their gas at the price we used to pay. I think that assumption is for the birds, so the Government need to have a different plan. On the basis that they probably cannot now increase the pension by more in April, my suggestion is that if inflation is still running at this level in October, they should do a half-yearly pension increase, of perhaps half what is forecast for next April. That would give people a bit more on their pension, up front, for six months. It will cost more money, but it will be only a six-month thing, so it will be an acceleration of the rise people are going to get next year. If they are going to get 8% next April because their energy and food bills have shot up before next winter, give them some or all of that rise before next winter so that they have a fighting chance of being able to get through next winter. That would be a simple thing for the Government to do.
It is tempting to say, “We can wait to the autumn to make that decision”, but part of the reason we are in this mess is that we have had to use September’s inflation number to drive the April state pension increase. If that logic is true and we have to have six months’ warning, we have to use March’s inflation to have a pension rise in October, so we are going to have to make a decision next month. I urge the Chancellor to say to pensioners in the spring statement, “We understand how hard this will be for you. If this problem persists, before next winter we will give you some extra money through a state pension rise of a few more per cent. to give you a bit more money so that you do not have to be saving and penny-pinching. You will have enough to heat and eat through next winter. We will find a way to do that.” I urge the Chancellor to do that on Wednesday.
Cat Smith (Lancaster and Fleetwood) (Lab)
Thank you for calling me so early in the debate, Mr Deputy Speaker. I want to begin by talking about energy bills and putting on record my thanks to Helen and Joanna at the North Lancashire citizens advice bureau, whom I spoke to today specifically about energy bills for my older constituents. I thank them and all the other staff at the CAB, who support my constituents right across Lancaster and Fleetwood on a whole matter of issues, as people often feel they have nowhere else to go.
On energy bills, one thing that has not been mentioned much is something that affects my rural constituents. I have been approached in the past couple of weeks by a couple in the Ellel area of Lancaster who have turned off their oil-fired heating as there is no price cap on heating oil and with the prices of oil trebling they have been left particularly vulnerable. Often such people are in poorly insulated houses off the grid, and I call on the Minister to do something to support rural pensioners who are feeling this acutely.
These issues are not just being faced in the rural areas of my constituency. A pensioner I was speaking to on Russell Grange Lane in Fleetwood, a much more urban area, is struggling with the rising energy bills. By way of an example, let me say that she lives alone and is receiving the state pension, and her gas bill has risen recently from £85 a month to £114 a month. That is an increase of 34%, but her pension is going to rise by only 3.1%, or about £5.50. She is really concerned about how she is going to be able to afford food, as food prices are going up, and whether she is going to be able to make ends meet. Pensioners spend twice as much of their money on energy bills as the under-30s, so this is a cost felt acutely by pensioners.
Helen told me that we are now in the worst situation since she joined the CAB in 1992. She said that in most cases there was almost nothing they could do to help clients whose benefits or pensions are not enough to live off and that they could only refer them for emergency food parcels. They have then exhausted that limited charitable help available. That is probably reflected right across the country. I do not think that Lancaster and Fleetwood is particularly unique in experiencing that. What has changed in the six years I have represented the constituency is the number of pensioners approaching me to say how much they are struggling. I have noticed that increasing in the past couple of years and, in particular, in the past couple of weeks. A man approached me in Macbeth Road to tell me that he felt utterly betrayed by the breaking of the triple lock on pensions and how it means that his pension will not keep up with rising costs. People feel like this not just about energy costs and pensions, but about, for example, the betrayal on the TV licence for the over-75s, which was a point raised recently with me by a constituent from Agnew Road.
With almost one in five pensioners living in poverty—of course, that will be many more if this Government do not take action—I will continue to support my constituents as best as I can, as will my local food banks, the citizens advice bureaux, churches and charities such as Age UK Lancashire. I will do things such as promote the awareness of pension credit. With around 850,000 older people currently missing out on that benefit, many of them will be in my Lancaster and Fleetwood constituency, and I will do what I can to raise awareness.
As Martin Lewis said on television yesterday, we can only do so much to try to teach people to save money if the amounts are getting smaller, bills are going up and petrol prices are rising, because the rest, frankly, is politics. I wanted to speak in this evening’s debate to highlight the fact that this effect has been felt right across my constituency, from the urban Warren area of Fleetwood right through to rural areas in Ellel just outside Lancaster, which makes me think that it is probably being felt right across the country. We now need Government action to tackle pensioner poverty, which is acute and real.
Several hon. Members rose—
Mr Deputy Speaker (Mr Nigel Evans)
Order. I will try to get everybody in with relatively equal time, so I am dropping the time limit to four minutes.
Peter Gibson (Darlington) (Con)
I hope that I can stick to the time limit, Mr Deputy Speaker. I know that you will ensure I do.
The global pandemic and the increase in wholesale energy costs have put an enormous strain on household budgets, and I believe that the Government have provided a strong package of measures to mitigate the effects, delicately balancing support for the economy and for our pensioners. However, I feel that this debate is a little premature bearing in mind that we are hearing from the Chancellor in two days’ time.
We have provided a package of £9.1 billion to help households across the UK with the cost of their energy bills, building on cold weather payments, winter fuel payments and the warm home discount. As the Secretary of State said, that builds on other support, including the £150 council tax rebate, the £200 smoothing payment, and the £150 million being given to local authorities to help those in properties outside bands A to D.
Alongside that, pension credit offers a real helping hand with living costs for people on low incomes, and we know that it is chronically underclaimed. In Darlington, almost £4 million is unclaimed, and I am doing all I can to support increasing take-up. I am delighted to hear that the Minister has written to all the local newspapers, and I hope that he sent letters to the Darlington & Stockton Times and The Northern Echo to ensure that take-up increases in my constituency. Let us not forget that pension credit is the doorway to other benefits, such as a free TV licence and cold weather payments.
Our levelling-up White Paper announced the creation of a new taskforce to look at ways to provide greater security, choice and quality for housing for older people, planning for the future to ensure that pensioners are comfortable in their homes during their retirement. More widely, we have a strong record of delivering for pensioners. Since 2010, the state pension has increased by 35% when, in the same period, inflation measured 22% and wages increased by 27%. This year alone we are spending £129 billion on pensioners—more than any other Government—allowing us to reduce absolute pensioner poverty by 200,000 people across the country. In-work pensioners will also benefit from the increase in the national living wage—a benefit of almost £1,000 a year for nearly 2 million people.
Under the last Labour Government, pensioners suffered. We had the fourth-highest level in Europe of pensioner poverty among the over-65s. The level of the state pension stagnated, and they had no long-term plan for pensioners. This Government are delivering for pensioners, and I know that they will continue to do so long into the future.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
The respected Joseph Rowntree Foundation annual poverty report shows increasing poverty over people’s life course—children, working age adults and pensioners. Both the JRF and the Equality and Human Rights Commission say that the key determinant of this rise in poverty is our inadequate social security system, which has been decimated over the last 12 years. The safety net that should be there for all of us in our time of need, providing dignity in retirement, is failing us—it just is not there—and it was doing so before the energy crisis.
Professor Sir Michael Marmot has identified the declining value of social security support and the lack of protection that this provides as contributing to the fall in life expectancy of those on the lowest incomes. More than 14.5 million people in this country are living in relative poverty—that is more than one in five of us—and using the JRF figures we see pensioner poverty increasing by 500,000 since 2010 to 2 million.
Pensioners living on their own, predominantly women, are particularly at risk of poverty. They account for 1.2 million of the 2 million pensioners living in poverty, and we see an associated decline in women’s life expectancy and healthy life expectancy. I hope the Government will bear that in mind as they embark on their consultation on the state pension age. I know the Pensions Minister feels this keenly, but I offer a gentle reminder that groups representing women born in the 1950s estimate that between 2010 and 2020 more than 80,000 older women died before becoming eligible for their state pension, after their pension age was increased from 60 to 66, catching many unawares.
In the remaining time available to me, I want to talk about disabled people living in poverty. The report published last year by the all-party group on health in all policies, which I was involved in developing, shows the savage impact of a slew of social security policies on disabled people in particular. The EHRC estimates that disabled families have lost £3 out of every £10, and similar figures have been produced by the Disability Benefits Consortium. As we know, we have record levels of in-work poverty—work no longer protects people from poverty—but what about those who cannot work because of sickness or disability? We must never forget that nine out of 10 disabilities are acquired. It could happen to any of us. We could be walking down the road and have an accident, or we could contract an illness. In a civilised society that is one of the richest in the world, one would expect that, just as we have the NHS, we would have the disability protection that that affluence affords, but we do not.
The social security cuts and the extra costs people face by virtue of their disability mean that disabled people are the most likely to live in poverty. Of the 14 million disabled people in this country, a third are living in poverty. Where is the adequate system for them?
Mr Deputy Speaker (Mr Nigel Evans)
Order. Sorry, but we are under pressure of time. The wind-ups will begin no later than 9.40 pm, and anyone who has participated in the debate is expected to be here for them.
Jerome Mayhew (Broadland) (Con)
Last Saturday, like many hon. Members across the House, I was undertaking street surgeries and knocking on doors in my constituency. I spoke to several tens of pensioners, and it is absolutely right to say that the cost of living crisis is very much an issue, but it was also noticeable that people understand and recognise the causes of the crisis—the post-covid supply bottlenecks and, increasingly, the price that we all have to pay to support Ukraine and stand up to Russian aggression. I found universal support for the Government’s strong position and recognition that if we do not stand up to President Putin now, we will only make him stronger and ourselves weaker.
Although residents understand the causes, that does not make the cost of living crisis any less real, particularly in rural areas such as mine in Broadland where car transport is a necessity and homes are often heated by oil. People on fixed incomes are most vulnerable to inflation, which is why the Conservative Government over the past decade have done so much to raise pensions from the lows of the last Labour Government. In 2010, Labour spent £70 billion on pensions. The Conservatives have increased that by £35 billion—a 35% increase—while inflation, at 22%, amounts to a 13% real terms increase. Average earnings have been outstripped by pensions growth by 8% during this period. It is the case that state pensions are now at their highest, relative to earnings, for 24 years. It is so different from Labour, famous for its 75p increase in pensions.
Pensions are not just state pensions. Some 88% of all eligible employees are now participating in a private pension. That is not by chance; it is as a direct result of innovative Government policy. Pre auto-enrolment, fewer than 50% of workers benefited from an additional pension. Because of Government intervention an additional £28.4 billion has been saved every year since 2012 and continuing, raising living standards for pensioners of the future.
The Government are not just relying on years of pension increases, but are taking further steps to help pensioners with increased energy costs. We have already heard about the cold weather payment scheme, which provides £25 per cold weather week for those on pension credit, income support, income-based jobseekers’ allowance, income-related employment and support allowance or universal credit.
We have heard about the warm home discount, with an additional payment of £150 increased to 3 million households most in need. We have also heard about a reduction in council tax of £150 this year for council tax bands A to D, and the £200 of delayed payments for energy bills this autumn to help flatten the impact of the spike in energy prices. Then there is £144 million of discretionary fund. The two councils in my patch are considering applying that to oil heating support.
In addition to all those schemes, we know about the pension credits, which are guaranteed to top up weekly income to the equivalent of £9,200 a year. It is very heartening to hear the Government’s strenuous efforts to increase the take-up of that scheme. We have the spring statement later this week. I, like many others, am hopeful that there will be additional assistance with the cost of living, particularly for pensioners and particularly for rural areas, such as the one that I am lucky enough to represent.
I know that the Chancellor will continue to do all he can to support pensioners and others on lower incomes. If he does so, he will be building on a decade of support by Conservative Governments.
Beth Winter (Cynon Valley) (Lab)
I rise to speak in favour of the motion, which clearly highlights the fact that older people and pensioners are really at the sharp end of the Tory cost of living crisis, and that they urgently need Government assistance. There are 2.1 million pensioners living in poverty, and there has been an increase in older people’s poverty from 13% to 18%, according to most recent data.
We also know that pensioners are more likely to live in fuel poverty. Age UK reported that, by October of this year, pensioners could be using up to 20% of their income on fuel.
Taiwo Owatemi (Coventry North West) (Lab)
My hon. Friend is making an excellent point on the impact of energy bills on pensioners. Pensioners in my constituency of Coventry North West are having to spend twice as much on their energy bills compared with those under 30. Does she agree that this Conservative Government need to do much more to support pensioners to weather the storm of this horrible cost of living crisis?
Beth Winter
I fully agree with my hon. Friend. Indeed, this Government have an absolutely appalling record. It is financial punishment for older people. I never cease to make reference to the fact that behind these statistics are real people. In my constituency in Cynon Valley, older people are disproportionately affected by the cost of living crisis. We have an older housing stock—terraced housing—and high levels of health inequality.
To add insult to injury, two of the campaigns I am involved with in my constituency show that older people are being short-changed by billions of pounds. I refer to the Women Against State Pension Inequality campaign and the Mineworkers Pension Scheme. I thank in particular Mi Morgan and her husband in Cilfynydd in my constituency, who work tirelessly on the Mineworkers Pension Scheme campaign, and Dilys Jouvenat, who leads the WASPI campaign back home in Cynon Valley.
People who have helped all their lives to build this country and their communities are suffering, and this Government are not responding to their needs. The cost of living crisis is driven by the Tories’ betrayal of their manifesto pledge to maintain the triple lock and by the regressive tax increases on working pensioners. Perhaps most importantly, it is being driven by inflation outstripping salaries, social security and pension payments, and all that is happening on the Tory Government’s watch.
On national insurance, under the Chancellor’s plans, around 1.3 million working pensioners will be asked to pay the health and social care levy through national insurance. Labour is calling on the Government to halt their poorly-thought-through tax rises, particularly when there are people with broader shoulders who could take the burden that must be borne.
Worst of all, the Tories have chosen to impose a real-terms cut to state pensions this April by sticking to last September’s rate of inflation, which was 3.1%. We know the rate of inflation is likely to be much higher than that. That is why last month in this Chamber I warned that the proposed pensioner up-rating order would increase the level of pensioner poverty in this country, and supported the Child Poverty Action Group, the Joseph Rowntree Foundation and other organisations that called for a 6% increase—and indeed we need an even higher increase now, given the likely coming rise in inflation. The 3.1% increase in pensions is an absolute insult to older people in our country.
I will quicky refer to what is happening in Wales, where the Welsh Government are trying to take action. In their recent budget, they extended eligibility criteria for the winter fuel scheme to more people, which has been welcomed by groups such as the Bevan Foundation. The Older People’s Commissioner for Wales has announced an action plan: in addition to extending the eligibility criteria, she says we must maintain that for the second payment due later this year, and that we need a plan published for increasing the take-up of pension credit. Recently the Welsh Affairs Committee, on which I sit, published a report on the benefits system in Wales, noting that much greater awareness raising of people’s entitlements to benefits is needed, because a total of £1.7 billion in pension credit went unclaimed last year.
The UK Government must take urgent action. Some of the things they could do include increasing their financial offer to cushion the rise in energy bills through a windfall tax on those who can afford it, cutting VAT on energy bills and cutting the national insurance rise. The 3.1% rise in pensions, when the Bank of England is hinting that inflation may hit 10%, tells us all we need to know. The Chancellor must act this week. I urge hon. Members to support this motion.
Mr Deputy Speaker (Mr Nigel Evans)
One person has withdrawn unexpectedly, so I think we are able to go back to five minutes. Ian Byrne, it is Christmas.
Ian Byrne (Liverpool, West Derby) (Lab)
Thank you, Mr Deputy Speaker.
The fear being felt across this nation is palpable. Millions, including pensioners, are worried about whether they will freeze or starve in their homes. In the fifth richest country in the world, how has this injustice been allowed to happen? That is the position so many face, due to political choices taken in this House. Shamefully, the figures show that one in five pensioners in the UK is living in poverty, 1.3 million retirees are undernourished and 25,000 die each year due to cold weather.
Food and energy bills are rising at the highest rates in 30 years. It is immoral that the Government have chosen this moment to force through a real-terms cut to the state pension of £388 this year—a state pension, let us remember, that is already one of the least supportive by international comparison. In November, I asked the Minister:
“What impact assessment has the Department for Work and Pensions made of scrapping the triple lock, and how many more pensioners in Liverpool, West Derby will be living in poverty and unable to afford food as a result?”—[Official Report, 8 November 2021; Vol. 703, c. 16.]
I was not given an answer, so I ask again on their behalf: what impact assessment has been made? I would like to touch on the impact of the cost of living crisis on the 5,360 women in Liverpool, West Derby who were affected by the changes made to the women’s state pension age by the Pensions Act 1995, 4,000 of whom were further affected by the Pensions Act 2011, which accelerated the increases to ages 65 and 66. It is clear from the correspondence I have received and from speaking to people in our area just how much hurt has been caused by the actions of the DWP, as women who were paying in with the expectation of a set retirement date had that taken away from them without proper notice.
Guy Opperman
I notice that the hon. Gentleman jumped through the 13 years of the Labour Government on state pension age increases when there was the same policy, including a pensions Act that raised the state pension. With great respect, this Government and the coalition Government have increased the state pension exactly in line with the policies of the Labour Government in the 13 years that they were in power. There is no difference.
Ian Byrne
I thank the Minister for that intervention. I will go on to the issue of full restitution shortly.
The harm caused by this situation goes beyond just financial matters. Many women who are facing this unjust situation have faced huge disruption to their lives, their wellbeing, their work and their plans for themselves and their families—and now the cost of living crisis has worsened this dire situation even further. I would like to read out some of the correspondence I have received from women affected. One said:
“As a single parent with a dependent child and caring for elderly parents, it was terrible to discover the huge financial loss caused by the Government removing my state pension for 6 years with no notice. Near destitution was the result, despite me and my employers paying National Insurance contributions for 45 years.”
Another email said:
“I like millions of other 50’s women never received an official letter from the state informing me that the pension age was changing and allowing me time to build up a private pension, which I never had. All my money went towards paying a mortgage as no council houses were ever available. Rightly or wrongly, I chose not work when my children were born so that I could spend as much time with them as possible while they were young. My plans for the future were to retire at 60 and finally spend time with my Mother, time that my siblings and I never had growing up as she was always working. The Government robbed me, not just financially but in so many other ways.”
It is unacceptable that the Government have so far refused to act to right this wrong. I urge Members in all parts of the House to support my early-day motion 906 on providing full financial restitution to women born in the 1950s.
Pensioner poverty is a political choice, fuel poverty is a political choice, and hunger is a political choice: all choices made by this Government that could be reversed if Conservative Members had the political will to do so. Let us hope they start this week with the Chancellor’s spring statement.
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
When I was little, I grew up next door to a wonderful couple called Marg and Ray. Marg was like a grandma to me. Sometimes when Mum was busy with my younger sister, she used to send me with a box of toys through the hole in the fence to Marg and Ray’s for the day to be looked after by Marg. I remember very distinctly a few times walking with her to the post office where she would go and get her pension, in cash, then coming back and sitting chatting to her in the room where we spent most of our time. There was a big sideboard in there and she would put different parts of cash into different areas of it. When I asked what she was doing, she would say, “That’s the money for my electric bill and that’s the money for this other bill”, separating out all the cash into the different compartments. She was terrified of getting into debt. Although she did not have much money, she never owed anybody anything, and she was fiercely proud of that.
When I was out recently talking to residents in the Pickering ward in Hull, I met some people who reminded me exactly of her. I talked to one elderly lady who told me the same thing about how she had never owed anyone anything. She was fiercely proud of the fact that she would never owe anyone a penny. I was trying to talk her into setting up a direct debit. I said, “If you set up a direct debit for your council tax and your bills, you get them cheaper.” She said, “No, I’m not setting up a direct debit. I couldn’t be owing them that money—I wouldn’t know what was going out each week or each month.” She was absolutely opposed to the idea of having a direct debit even though I was saying that she was paying more for her energy bills because she had a prepayment meter.
I have brought to the Minister’s attention before the issue of people with the least money paying the most—the poverty premium—and I will talk about it briefly now. I have spoken to many elderly people who have prepayment meters because they have a traditional and, I have to say, probably quite right idea that people should not owe money and should pay for what they want up front. It is not a fair system, however, as I have discussed with the Minister in the Treasury Committee; I hope that those conversations will be ongoing about how we can fully address the poverty premium.
A study by Fair By Design has shown that the poverty premium costs the average low-income household an extra £490 a year—that is how expensive it is to be poor. For more than one in 10 of those households, however, it costs an extra £780 a year. It is not a fair system. To give other examples of the poverty premium, it is why people end up paying more for car insurance or life insurance in areas of greater deprivation and why people pay more for credit and for all financial services when they have the least money. Our system is set up at the moment so that the poorer someone is, the more they pay. That is not fair and it is a huge contributing factor to the cost of living issues that pensioners face.
The highest poverty premium in Hull West and Hessle is area-based insurance. Constituents currently pay in total £1.3 million more for their insurance if their postcode is considered higher risk. As I say, I have mentioned that to the Minister before and he acknowledged that there is more to be done. When he comes to the Dispatch Box, I hope that he will talk more about what exactly will take place.
I intervened on the Secretary of State earlier to draw attention to concerns around the prepayment meter and how exactly people will get the £200 back, but there is also an issue with the direct debit. We have a situation in Hull where the money back on council tax was meant to be paid to people through reductions in their direct debit, but, of course, families who are in insecure work—not just pensioners—will face problems: they do not set up direct debits because they cannot guarantee how much money they will have each month.
Although I believe that the Minister is trying to take some actions to address the issue, there is a failure to really understand what life is like for many people who do not have direct debits and who are still scared of debt and use prepayment meters. The failure to design policies that address the poverty premium mean that, once again, the poorest pay the most.
Helen Morgan (North Shropshire) (LD)
Increasing numbers of pensioners in my constituency have been reaching out to me in recent weeks, because they face the real choice of heating or eating. It seems unfair that while some businesses have made enormous profits from the pandemic and the energy price hike, individuals face financial ruin for exactly the same reasons.
A retired couple in my constituency wrote to tell me that the combined impact of removing the triple lock on pensions, the increase in energy prices, and the Conservative-led Shropshire Council’s maximum 4.9% council tax rise this year means that they can no longer afford to heat and eat. They worked throughout their adulthood before retiring, but their energy bill has increased from £960 a year to more than £2,400. Every week, there are stories of people from all parts of society reporting the same issues, such as that they can afford to heat only one room of their house and they are experiencing damp inside. Citizens Advice has even told me that it has had someone who is afraid to boil the kettle for a cup of tea because their financial situation is so precarious.
In more rural parts of Britain, as hon. Members have said, there is an additional element to the energy cost crisis: people whose homes are off grid or rely on oil or liquefied petroleum gas to heat them are not protected by the energy price cap. They have to pay huge amounts up front to fill their tanks and in addition, there are now shortages of heating oil and rationing. I have constituents in their 70s who have no access to heating or hot water, let alone the means to pay for the fuel if it were available. We desperately need the energy price cap to be extended to heating oil and LPG to protect people who live in isolated areas.
It is not all about energy either. Elderly residents in rural communities are most likely to be isolated without access to a car or public transport and without a computer to shop online. Research by Citizens Advice Shropshire shows that a basket of essential items is up to two and a half times more expensive in a local village shop than in a town-based supermarket, so our pensioners are being hit really hard by this cost of living crisis. It is so extensive this time around that it is hitting households who have not previously faced fuel poverty, and those who, sadly, are only too used it are seeing a crisis like never before.
It is just not right that this is being allowed to continue while companies that extract oil and gas reap billions as a result of what, for them, are purely lucky circumstances. It is desperately unfair. Tax, benefits and pensions should be fair, and should be used to protect the vulnerable. That is why I support, among other measures, a windfall tax on oil and gas companies and a temporary reduction in the rate of VAT, and I welcome the Secretary of State’s statement earlier that the Government will honour their own manifesto commitment to reinstate the triple lock on pensions.
It is also essential for the Government to take more effective action to ensure that those who are eligible for pension credit are aware of that fact and are able to access it. As many people have mentioned, it is estimated that more than £1.5 billion goes unclaimed every year, and yet it is a key to unlock all sorts of other essential benefits. Surely it should now be a priority to ensure that all of those who are eligible are accessing all of the help available to them. Every day that goes by is another day of deep concern for our pensioners. I think the time to act for them was months ago, but I hope the Chancellor has a set of meaningful measures to announce in his statement on Wednesday, because although it may already be too late, I hope it is not too little for North Shropshire’s pensioners.
Several hon. Members rose—
Mr Deputy Speaker (Mr Nigel Evans)
Order. I do apologise, Wendy. I hinted that you would have come in a bit earlier, so you may as well come in now—my error.
Wendy Chamberlain (North East Fife) (LD)
That is very kind of you, Mr Deputy Speaker.
Before Christmas, a constituent reached out to me to tell me about his mother. She had recently died, and when dealing with her affairs, he was distraught to discover that she had died with no money in the bank and with unpaid bills stacking up. She had worked hard, paid into the system and raised her family, and what she was left with was not enough. Of course, there was nothing I could do for his mother, though he was obviously extremely distraught to think that she had experienced that anxiety in the latter days of her life, but he wanted me to be aware of the cost pressures that pensioners face and to do what I could to stop older people ending up in the same position.
We know that my constituent’s mother is far from the only pensioner to have had to live in poverty and make the choice between heating or eating. That sounds like a cliché, but I am the co-chair of the all-party parliamentary group on ending the need for food banks, and we hear in our inquiry sessions of people going without. They do not have the patience or the time to wait for the Chancellor’s statement. For many, the Government’s recent actions have pushed them over the edge, with the real-terms cut to the state pension by abandoning the triple lock and the failure to respond to the cost of living crisis.
In her opening remarks, the Secretary of State said two things. She said that the triple lock had been paused because the pandemic had caused an unexpected, unplanned or out-of-the-ordinary increase in inflation, but that the cost of living crisis was due to multiple factors. Can we just accept that covid is one of multiple factors that has caused the cost of living crisis?
I have always said that the state pension is not just about pensioners now; it is about people in the future. Young people who cannot get on to the property ladder, cannot get a mortgage or are in insecure employment need to know that there is a state pension for them in the future that will support them. This evening, I was at the Gingerbread single-parent family reception downstairs, and it was pointed out to me that many single parents do not qualify for auto-enrolment because they do not earn enough. That is another reason why it is even more important that the state pension is viable if private pensions are not going to be there to support people in the future.
Research by Independent Age has shown that, in 2018-19, only 60% of those entitled to pension credit were receiving it. If those extra 40% of people were reached, 440,000 pensioners would be lifted out of poverty, as others have mentioned. I was pleased that a recent DWP response to a written question of mine said that it was currently estimating that there had been a 30% increase in new claims in 2021 compared with 2020, or approximately 31,000 new claims. However, that figure does not tell us if any of those claims come from pensioners in older age groups who were already missing out on pension credit, or if they are from people newly reaching pension age. We know that there are 80,000 more people reaching pension age each year than the year before, so a figure of 31,000 could just mean that 49,000 are not receiving it when they are entitled to do so. There does not seem to be targeted awareness-raising. We have agreed across this House that we must do as much as possible to ensure that those who qualify for pension credit get it. I want to understand what the Department for Work and Pensions can do to upgrade its systems and identify those who might be eligible or potentially assess broad geographical areas where there are low take-up rates. What is it doing to ensure its messaging is reaching those it needs to reach, and is it conducting any critical analysis?
We know some groups are especially likely to be in poverty in later life and that is linked to underpayment of pensions. My friend and former colleague the former Liberal Democrats pensions Minister Steve Webb has been mentioned this evening and I am grateful to him for his work around that. However, as has been mentioned this evening, divorced women are explicitly being excluded from the LEAP—legal entitlements and administrative practice—exercise. Dealing with pensions on divorce is incredibly complicated—such as the allocation of one person’s potential future pension rights to another’s. It is hard to understand why the Department thinks there can have been no error in the payment of pensions under these complicated arrangements considering some of the basic errors made in other areas. My hon. Friend the Member for Chesham and Amersham (Sarah Green) presented a private Member’s Bill on my behalf just two weeks ago while I was off with covid; it would include divorced women in this exercise. I ask the Minister to consider supporting my Bill, or to set out either this evening or in the fiscal statement why he will not do so.
Bills are increasing dramatically now. It has taken 35 years for underpayments of some state pensions to be identified, but pensioners on the poverty line cannot wait that long. The Government must now act to address this crisis both historically in terms of their own failings and given the current cost of living crisis.
Claudia Webbe (Leicester East) (Ind)
Older people and pensioners are being disproportionately affected by the Government’s cost of living crisis. Office for National Statistics research shows that pensioner households are having to spend more per week than other age groups. With the energy price cap increasing and protections decreasing, a typical pensioner household’s bills will be fourfold what they were, just to keep warm. The ONS also found that a higher proportion of older people live in the least energy-efficient houses.
In September 2021, the Government announced that they intended to remove the earnings link to the state pension triple lock and downgrade to a double lock of prices or 2.5%, as they say they are unwilling to increase the state pension given the economic pressures of the pandemic being felt by other sectors of society. Today the Government say there will be no U-turn. They should properly clarify their position; they should commit to the triple lock now—not next year, now.
The Government uprated the state pension this April by 3.1%, less than half the forecast rate of inflation for this year. For an individual in receipt of the full state pension the reduction is nearly £400 a year in real terms. Rather than levelling down the state pension due to the cost of living crisis that they themselves are responsible for, the Government should abandon their zero-sum economic mindset, reinstate the triple lock and level up their economic support to all demographics, including full restitution to women born in the 1950s who have lost their pensions from the age of 60. And of course all of this should be funded through taxation on corporations and the super-rich.
From the 2023-24 financial year, around 1.3 million working pensioners will be asked to pay the health and social care levy, a 1.25% tax hike. Across the UK, there are around 1.3 million working pensioners who could face paying the levy, including 91,100 in the east midlands. This Government only raise funds by squeezing the struggling many, while allowing the astronomical wealth of the few to grow continually. The Government should scrap the national insurance hike and replace it with a wealth tax. Shamefully, after 12 years of Conservative government, there are half a million more pensioners living in poverty; the figure increased from 1.65 million in 2010 to over 2.1 million in 2020. The rate of pensioner poverty rose from 14% in 2010 to over 18% in the year before the pandemic. Age UK has also warned that an estimated 150,000 additional pensioner households are likely to be pushed into fuel poverty this winter, taking the number of fuel-poor older households to over 1.1 million this spring.
It is intolerable that the Government have presided over the normalisation of widespread pensioner poverty. They must act now to end the cost of living crisis and prevent the further impoverishment of older people and pensioners.
Kim Johnson (Liverpool, Riverside) (Lab)
It is clear from the absence of Conservative Members that this Government do not care about pensioner poverty, but even before the pandemic, people in Liverpool, Riverside and constituencies across the country faced significant financial difficulties, with the roll-out of universal credit, the impact of the bedroom tax, the increase in unscrupulous employers using precarious zero-hours contracts, and the stagnation in welfare benefits and pensions. It is a sad indictment of this nation that our pensioners now face the prospect of real-terms reductions in their state pension, with cuts of hundreds of pounds a year.
The Government, having failed to take action on household energy bills, now propose to make people take out a loan—to be spread over five years—to cover the spiralling cost. That is wholly unacceptable. Pensioners face the prospect of a crippling cost of living crisis, with petrol, food and energy bills skyrocketing, and an increase in food banks.
While inflation is set to increase to over 8% and home energy bills to skyrocket by more than 50%, what have this Government chosen to do? Have they chosen to go after the billionaires, or the oil and gas giants, which tell people to wrap up in layers or hug a cat to keep warm? No, they have chosen to place the burden on those least likely to be able to afford it. This Government have once again chosen to attack the worst off, offering a pitiful 3.1% increase to pensioners and those on benefits.
Twelve years of austerity cuts—a political decision—have meant that one in five pensioners is living in poverty and half a million more are living in debt. They are living in poorly insulated homes and paying more for energy on prepayment meters, which means that the small amount of money they have has to stretch further. My constituency has some of the highest levels of in-work poverty in the country, and almost one in five people in my constituency is over 60.
The cost of living crisis is impacting constituents in Liverpool, Riverside, with 85% experiencing more expensive energy bills and nearly 70% paying more for fuel and transport. Nearly one third of the constituents I represent have lost income due to the cut in universal credit. The 54% increase in fuel costs will push more constituents into financial crisis at a time when the profits of gas and oil giants have soared. Can the Minister tell us what is stopping the Government capping energy price rises, as France has, at 4%?
The condition of housing stock is a real concern. One in five homes headed by someone aged 60 or older is so poor that it impacts their health and wellbeing. Last year, almost 9,000 people died in England and Wales because their homes were too cold and damp. We are the fifth richest country in the world; elderly people should not be dying because they are unable to heat their homes. Everyone deserves to grow old in dignity, but here, in the fifth richest country in the world, we are forcing the oldest generations into desperate poverty and making them choose between heating and eating. The Government must choose to protect the people they are here to serve, and not the wealthy companies that have benefited financially through the pandemic. Will the Minister commit to Labour’s plan for a windfall tax on energy giants to ensure the cost of living crisis is borne by those with the broadest shoulders?
The Minister mentioned earlier that the Government are doing their best, but their best clearly is not good enough. They need to accept the catastrophe they are causing, tax the billionaires and energy giants to cushion the living costs of those most in need, and reinstate the triple lock immediately. The ugly truth of the matter is that thousands of people will not survive the cost of living crisis unless the Government act immediately.
Rachel Hopkins (Luton South) (Lab)
Pensioners across the country are on the brink of financial hardship. Currently, nearly one in five pensioners—2 million people—live in poverty and over half a million have been forced into debt over the past decade. The number of older people renting rather than owning their homes has reached an all-time high. At its heart, this is a class issue. The most vulnerable people are left to suffer. It is a class issue exacerbated by over a decade of Tory rule. The public share the utter indignation of those of us on the Opposition Benches: more than 80% of respondents to a YouGov poll commissioned by the Centre for Ageing Better stated that the Government are failing to ensure a decent life for older people.
My constituents and the wider public recognise the increased hardship for what it is: a political choice by this Conservative Government. Spiralling inflation, soaring energy bills, rising petrol prices, a real-terms cut to the state pension and a tax rise on working pensioners—this toxic combination will have a devastating impact on pensioners’ living standards, and threaten the health and wellbeing of those most vulnerable. The Government’s state pension real-terms cut alone will mean that individual pensioners will be £222 worse off per year and couples £335 worse off per year.
Abandoning the pension triple lock in the midst of the cost of living crisis is irresponsible policy making. That is before we even consider the energy crisis, which will disproportionately impact older people as they are more likely to live in the least energy efficient homes. According to House of Commons Library estimates, the energy price cap, which has already gone up by 12%, may increase significantly more to 29% in April. This would mean energy bills increasing by around £341 a year per person for a typical household aged 65 and over. Working pensioners are likely to be £1,400 worse off over the next two years due to a mix of soaring prices, a tax hike and a lower state pension. That is 1,170,000 working pensioners across the east of England out of pocket. Even before the pandemic, 40% of over-50s had savings of £3,000 or less. What are the Government doing to ensure that older people will not be forced to run down their savings during this cost of living crisis?
The Conservative party seems incapable of devising solutions to fix the cost of living crisis. Older people across the country need concrete action in Wednesday’s spring statement. Without a plan, the Government will knowingly leave older people exposed to the crisis. They must consider measures like those in Labour’s plan, which would cut household energy bills by up to £600, scrap the unfair tax hike and commit to protecting pensioners’ financial situations in the long term. After a lifetime of contributing to our country, older people deserve security and prosperity.
Matt Rodda (Reading East) (Lab)
It is a pleasure to sum up in today’s important debate on behalf of the official Opposition.
I would like to start by thanking Members from across the House who have spoken in today’s debate. I thank the hon. Member for Kilmarnock and Loudoun (Alan Brown) for pointing out the pressure on pensioners. The hon. Member for Amber Valley (Nigel Mills) spoke about the need for more Government help, which I thought was telling from a Government Member. My hon. Friend the Member for Lancaster and Fleetwood (Cat Smith) spoke movingly about the high energy costs for residents living away from the gas grid. The hon. Member for Darlington (Peter Gibson) talked about the need for a long-term plan for pensioners. My hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) talked about the pressure on disabled people—obviously, many pensioners are disabled. The hon. Member for Broadland (Jerome Mayhew) talked about the cost of living crisis. My hon. Friend the Member for Cynon Valley (Beth Winter)—I hope I have pronounced her constituency correctly—spoke about the need for urgent help for pensioners.
My hon. Friend the Member for Liverpool, West Derby (Ian Byrne) talked clearly about the way that pensioners are living in poverty in his seat and across the country. My hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy) spoke particularly movingly about a whole generation of pensioners. That brought to mind figures from my childhood, and I am sure that we were all touched by her speech.
The hon. Member for North Shropshire (Helen Morgan) spoke about her local pensioners, and the hon. Member for North East Fife (Wendy Chamberlain) talked about pensioners having to choose between heating and eating. The hon. Member for Leicester East (Claudia Webbe) spoke about pensioners having to pay more to keep warm, and my hon. Friend the Member for Liverpool, Riverside (Kim Johnson) mentioned the real-terms cut to the state pension. Finally, my hon. Friend the Member for Luton South (Rachel Hopkins) spoke about the most vulnerable people being left to suffer by the Government.
As my right hon. Friend the Member for Leicester South (Jonathan Ashworth), the shadow Secretary of State, said, pensioners who have worked hard and paid in all their lives now face an unprecedented cost of living crisis. Food prices are up, energy prices are up and the cost of living is going up. The cost of living is a crisis made in Downing Street, but, sadly, it is felt on every street across this country. Pensioners are at the sharp end, facing the inevitable choice of having to pay for heating or eating. Not since the 1970s have pensioners faced a fall in their standard of living as great as the one that faces them in the next few months.
As I am sure we all agree, the recent events in Ukraine have been absolutely shocking. However, this cost of living crisis predates Putin’s war and his vicious attack on the Ukrainian people. The atrocities unfolding in Europe have brought into stark relief the need for the UK to radically address our energy security. However, it was clear in the autumn that food and fuel prices were rising steeply, yet the Government actually made matters worse, despite all the warning signs. The Prime Minister and the Chancellor decided to break the pension triple lock, breaking their manifesto commitment and betraying the people who are now struggling to pay their weekly food bills.
To add insult to injury, the Government failed to cut energy bills even when it was clear that a windfall tax would have provided the cash to ease heating bills for pensioners. Energy giants are enjoying record profits and see their companies as a “cash machine” at the same time as pensioners face the toughest of choices. We have to ask ourselves: what do the Government have against pensioners? Why is the plight of our pensioners not worthy of intervention by the Government? How can they do so little when we know the consequences will be so dire for so many older people?
Perhaps the Prime Minister and the Chancellor were distracted by the Government’s internal instability following the revelations about parties at No. 10 during last year’s lockdown. Or perhaps they just failed to grasp what it is like to cope on a modest income, as many colleagues mentioned so eloquently today. For whatever reason, I am afraid that the Government have simply failed our pensioners at the very time when pensioners most needed their help.
My right hon. Friend the shadow Secretary of State summed up well the sorry state that we find ourselves in today. Two million pensioners are living in poverty and that number will only grow because of the choices made by this Government. Some 1.4 million older people are fuel-poor. The scrapping of the triple lock has robbed pensioners of £30 a month, which is a significant amount for people on a fixed income. Energy bills are rising by 54% already and are likely to increase by a staggering further 25% in October. Some 1.3 million working pensioners will be dragged back into taxation though a national insurance rise that will pick their pockets to fund a health and social care levy.
Pensioners are being hit very hard.
Today’s debate has been an important opportunity to raise the very serious cost of living crisis now facing our pensioners.
Matt Rodda
I am afraid that I am out of time. Every Member of the House will have constituents for whom the next few months will be filled with worry about bills. We owe so much to our pensioners. They have worked so very hard and paid in all their lives, raised their families and given so much to our communities. So far, the Prime Minister and the Chancellor have failed to listen to pensioners and they have failed to take any meaningful action to help them at this very difficult time. Theirs is a record that they should be ashamed of: the state pension cut; the triple lock abandoned; energy bills up; food bills up; and pensioner poverty up.
The Minister now has a chance to set out what real help the Government are going to offer our pensioners. I hope that he takes this opportunity to show that the Government listen and understand. He has the opportunity, here and now, to give pensioners peace of mind in their most desperate hour of need. Pensioners need to know that help is available. We need urgent action now—please. It is clear that only Labour will help older people, and I commend the motion to the House.
Mr Deputy Speaker (Mr Nigel Evans)
I have heard “Cynon Valley” pronounced in so many different ways over the past 30 years. You pronounced it perfectly.
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
With a mother who was a Llewelyn by birth, I am under tremendous pressure with this speech. I will attempt to address in some detail the points that the hon. Member for Cynon Valley (Beth Winter) made.
This year, we will spend more than £129 billion on the state pension and the benefits accrued for pensioners in Great Britain. We have never supported our pensioners with more in this country. That figure includes more than £105 billion on state pension, £5 billion on pension credit, £2 billion on winter fuel payments, £325,000 on cold weather payments so far this winter and £144 million on the warm home discount payments last year.
Before I get into the meat of the debate, may I address one key point? The spring booster campaign was announced today. It is utterly vital that Ministers send out the message from this Dispatch Box that we really want the 5 million people at whom the campaign is targeted to take up the vaccine, which is being offered to adults over the age of 75, care home residents and the most vulnerable over-12s—those who, like me and several other Members of this House, are immunocompromised. Approximately 600,000 people will be sent invitations over this coming week, as I understand it, and 5 million people will ultimately be contacted. I urge everyone, primarily the pensioners with whom we are all concerned today, to apply and to come forward when asked.
Jonathan Ashworth
In a cross-party spirit, may I endorse what the hon. Gentleman says? I shadowed the Department of Health and Social Care for many years, and I completely agree. I want the message to go out across the country that there is no division: everybody who needs the vaccine should get it. I encourage my constituents, his constituents and all hon. Members’ constituents to come forward for the vaccine.
Guy Opperman
The right hon. Gentleman does himself credit with what he says. Much as he did as shadow Secretary of State for Health and Social Care, he seeks cross-party ground where it is right and proper, which I support and really appreciate. We need to get that message across.
I thank all colleagues who have contributed today. As the Secretary of State set out, we are experiencing a period of increasing consumer demand that, together with disruptions to global supply chains and the impact of the war in Ukraine, is definitely placing a strain on household and other finances. The Government recognise that inflation is rising; together with the Bank of England, we are closely monitoring the situation.
I applaud the many Members across the House who have put in detailed recommendations to the Chancellor for the spring statement. I am sure that those on the Treasury Bench have been listening most carefully. In the intervening period, we have taken significant steps to ease the financial pressures by providing a support package worth billions of pounds during this fiscal year and the next.
The state pension is clearly the foundation of support for older people. Over the last two years, the basic and new state pension will have increased by more than 5.6%, taking into account the 2.5% rise this year and the 3.1% rise from this April. There has been much discussion of pension credit, which continues to provide invaluable financial support to approximately 1.4 million vulnerable pensioners. We want all pensioners to claim it.
Peter Gibson
My hon. Friend has had the opportunity to raise the matter of pension credit at the Dispatch Box on several occasions today. What advice can he give Members across the House on engagement with our constituents to raise the profile of that valuable benefit, which opens up the gateway to other benefits and help for pensioners? What help is available from the Department to Members across the House?
Guy Opperman
My hon. Friend is right to raise the issue. A bit like with the jab, we are all responsible for making the case to our constituents that there is huge benefit in what is in reality a passport to several hundred pounds a month—potentially £3,000-plus a year. The stats are extraordinarily good. When we took office in 2010, the take-up was 70%; it is now up to 77%. Obviously we want it to go higher. The take-up figure for guarantee credit is up to 73%, and internal management information suggests that in the 12 months to December 2021, the number of new claims for pension credit was about 30% higher than the figure for the 12 months to December 2019.
My hon. Friend specifically asked what the Government could do. There are a number of things that we have been doing for some time. We set up the pension credit taskforce to work with key stakeholders such as charities—including Age UK, which many Members rightly mentioned and whose representatives we have met several times—the Local Government Association, Virgin Money, and several of the banks. The energy company Centrica is involved, and ITV and the BBC have a key role to play in raising awareness, ensuring that we have greater knowledge of pension credit and that our constituents are aware that the opportunity is out there.
As the Secretary of State said, 11 million letters about the state pension uprating were sent out—that has never been done before—along with copies of the pension credit information factsheet containing information for pensioners so that they could apply. That, too, seems to be making a difference. There was a pension credit awareness day last June, when we worked with the BBC throughout the country. We also worked with the other stakeholders, including Age UK, with which we formed a specific partnership. We have been making the case to local papers: we wrote to all of them on three occasions last year, we did it again this year, and we will continue to do it. Individual Members of Parliament can do a fantastic amount in making the case to their local communities, working with their citizens advice bureaux and Christians Against Poverty groups. Mention has been made today of the older persons fairs, which have been very successful in individual constituencies and have made a big difference to pension credit take-up.
Guy Opperman
I will give way to the hon. Gentleman, because he allowed me to intervene on his speech.
Alan Brown
How much extra money do the Government set aside each year on the assumption that there will be a greater uptake of pension credit, and what happens if that sum is not used? Does the Minister agree that any money that is not used for pension credit should be recirculated to support elderly people?
Guy Opperman
I can answer that question easily. There is no limit whatsoever. This is a means-tested benefit which was set up by Gordon Brown. If there were a 100% take-up, the Government would pay. If the take-up is 70%, the Government pay.
I was going to address some of the comments made by the hon. Gentleman in his interesting speech. I genuinely felt that it was the policy of his party to raise fuel duty, which is certainly an interesting approach to cost of living difficulties. He made no mention of the powers conferred by sections 24, 26 and 28 of the Scotland Act 2016 and the capability of his Government to intervene if they should choose to do so—which, to be fair, they have done. The hon. Gentleman shrugs his shoulders and heaves a sigh, but he probably does that when he tries to analyse and understand the policy of that humble merchant banker-crofter the right hon. Member for Ross, Skye and Lochaber (Ian Blackford), whose approach to the state pension is something that we all struggle to comprehend.
I did test the hon. Gentleman by asking him what genuinely was the Scottish National party policy on the state pension in the unlikely event that the Scottish people were unwise enough to choose independence. Is it the old policy that was agreed previously, or is it the new policy of his leader in Westminster that the rest of the UK should pay for this? I genuinely do not understand, and I think one of the reasons why the popularity of independence is falling in Scotland is the fact that the leadership that the hon. Gentleman so strongly supports are not making the case in any way whatsoever.
The arguments of the hon. Members for Cynon Valley, for Liverpool, West Derby (Ian Byrne) and for Leicester East (Claudia Webbe) centred on the issue of the state pension age. Let me say, with respect, that that is a matter that has been determined by successive Governments. As I pointed out earlier, this Government continued, as did the coalition Government, the policy of the Labour Government under Tony Blair and Gordon Brown. I realise that no one is a Blairite any more, but those 13 years saw exactly the same policy. The arguments put forward on that issue were comprehensively rejected by the Court of Appeal.
The situation in respect of energy prices has been addressed in detail by the Secretary of State, but it is right to make the point that the key intervention was announced by the Chancellor on 3 February with a £9.1 billion energy bill rebate, and there is in excess of £12 billion of support over this financial year and the next to ease cost of living pressures. We have set out in sufficient detail the £200 rebate for households, the £150 non-repayable council tax rebate for all households in bands A to D, and the fact that local authorities will in addition have access to £144 million of discretionary funding to support households in need, regardless of their council tax band.
Alex Sobel
I spoke to my constituent Maggie Stead today. Maggie has been diagnosed with chronic lymphocytic leukaemia. She told me that she cannot afford her rising bills on her state pension, and that she sits at home in her hat, scarf and gloves and eats only one meal a day. I am doing everything I can to help Maggie. What can the Minister tell me to tell her about how we can support her, given the ever-increasing energy bills that she cannot afford?
Guy Opperman
Quite clearly she should be contacting her local authority, because several million pounds has been set aside for individual councils up and down the country so that they have the capability to intervene for such constituents. Obviously I would hope the hon. Gentleman has advised her to apply for pension credit, which could unleash £3,000-plus for her, and although I cannot comment on individual circumstances, I presume she will qualify for the winter fuel payment, which runs to £2 billion, the cold weather support payment and the various other supports that exist, including the warm home discount scheme, where payments will increase from £150 in 2022-23, with spending rising from £354 million to £475 million. Pensioner households are able to access the £144 million of discretionary funding from local authorities to support households who need support but are ineligible for council tax rebates.
My hon. Friend the Member for Amber Valley (Nigel Mills) rightly defended the record of the coalition and of this Conservative Government. I will just briefly remind the House that the change to the state pension that has been taking place under the coalition—to be fair to our Liberal Democratic colleagues—and the Conservative Government has been absolutely transformational. There has been a 35% increase in the state pension, with massively enhanced figures going forward. Without a shadow of a doubt the triple lock, which the right hon. Member for Leicester South (Jonathan Ashworth) never mentioned, has had an impact. Not once in any of the 13 years of the Labour Government did they have a triple lock—not once. Gordon Brown famously raised the state pension by 75p in 1999, so I will take no lessons on that from Labour.
My hon. Friend the Member for Darlington (Peter Gibson) is a brilliant champion for his local area, and he was right to say that pensioner poverty has decreased under this Government—
Guy Opperman
Yes, it has. I am terribly sorry to have to point out that on this particular point the hon. Gentleman is utterly wrong. The number of pensioners living in absolute poverty has fallen. There are now 200,000 fewer pensioners in absolute poverty, both before and after housing costs, than there were in 2009-10.
My hon. Friend the Member for Broadland (Jerome Mayhew) made a very good speech and was right to mention the impact of the Ukraine conflict. He was also right to talk about automatic enrolment, which has transformed private pensions in his constituency, with 2,150 employers supporting 9,000 employees who are saving 8%. That is a cross-party, cross-Government implementation of real impact to address pensioner poverty on a long-term basis. It is a 20-year policy that is transforming this particular situation.
This Government are committed to ensuring that people have security and dignity in retirement. We have recognised and acted on the concerns of pensioners struggling with the cost of living, and we will continue to spend £129 billion on pensioner benefits this year, which includes the £105 billion on the state pension. Obviously there is also the £9.1 billion energy rebate pack and the £2 billion on winter fuel payments and the warm homes discount scheme. I strongly urge the House not to accept this Labour motion.
Question put and agreed to.
Resolved.
That this House is concerned that older people and pensioners risk being at the sharp end of the cost of living crisis as a result of spiralling inflation, a lack of Government action on household energy bills, a poorly thought-through tax rise on older people in work and a real-terms reduction to the state pension; notes that the state pension is being cut in real-terms by hundreds of pounds a year and that working pensioners will begin paying the Health and Social Care Levy from next year; regrets that levels of pensioner poverty and pensioner debt have risen over the last decade even before the current cost of living crisis with almost one in five pensioners now living in poverty; and calls upon the Government to cut home energy bills, halt the planned tax rise on working pensioners and ensure older people are protected from the cost of living crisis.
Mr Deputy Speaker (Mr Nigel Evans)
Minister, your pronunciation of “Cynon Valley” was very good as well.