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State Pension
(2 years ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
David Linden (Glasgow East) (SNP)
On a point of order, Sir Robert. I do not intend this to be an unnecessarily long point of order, but I am aware that the hon. Member for Battersea (Marsha De Cordova) has just arrived in Chamber and will probably take a moment or two to find her notes. I think she has done that now, so I will stop this pointless point of order.
Sir Robert Syms (in the Chair)
Thank you. There are still gentlemen in the House of Commons.
Marsha De Cordova (Battersea) (Lab)
I beg to move,
That this House has considered e-petition 617603, relating to the state pension.
It is a pleasure to serve under your chairmanship, Sir Robert. I thank the hon. Member for Glasgow East (David Linden) for his point of order.
I start by congratulating Michael Thompson on creating the petition, as well as the creators of the six other petitions being debated today. I thank Age UK and Silver Voices for their briefings, and the whole of the Petitions Committee team for all their hard work. The petition calls on the Government to increase the state pension to £380 a week, and to lower the retirement age back to 60. The petition has already been signed by more than 110,000 people.
The current full state pension is £185.15 per week, and the basic state pension is £141.85. Many of us are here today because we believe that the state pension should provide adequate financial support for the 12 million pensioners in the UK, ensuring that they are protected in old age after paying into the system. Given this country’s wealth, we can afford to look after our pensioners. By increasing the state pension or introducing a minimum pension income guarantee, we could lift thousands of pensioners out of poverty.
While financial support is vital, the issue is not just about money. Measures to address pensioner poverty must include a broad range of actions to underwrite acceptable living standards, including support for our wider public services, such as social care to support our pensioners to live independently, and day centres to reduce loneliness and social isolation. On that point, I thank Age UK Wandsworth in my Battersea constituency. I visited last week and met many of the older people who value the services provided by that day centre, but they really want more access to it, more often. More importantly, all of them wanted the state pension to increase.
Poverty and inequality among pensioners are rising, with more than 2 million people in relative poverty. There are many reasons why some are falling into poverty. The first and most urgent is the cost of living crisis. Research by the Centre for Ageing Better found that a further 200,000 elderly people have already been pushed into poverty in the last year, and a recent report by Age UK found that this Christmas will be among the most difficult ever for nearly 3 million older people.
The measly 3% rise in the state pension this financial year was dwarfed by inflation and the intersecting impacts of rocketing food, fuel and energy bills, with the latter alone forecast to rise to £3,000 by next April. After shamefully reneging on their manifesto commitment on the triple lock last year, the Government finally committed to its reinstatement, as well as a cost of living payment for pensioners, in last month’s autumn statement. However, given that neither measure is scheduled to come into force until next year, they will be too little, too late for many who need the support right now. The misery is compounded by cuts to public services and the Government’s U-turn on their social care reforms: 10% of older people will reduce or stop their care in the coming months because of the cost of living crisis.
These causes of poverty only add to the challenges faced by pensioners. Although older people have a higher rate of home ownership than the general population, many are asset rich but cash poor. That means that some are driven to sell their homes to make up for shortfalls in pensions and are pushed into the higher-cost private rented sector.
Inequalities in state pension rates are also dragging the elderly into poverty. Department for Work and Pensions statistics for the 2020 financial year show that less than 10% of all pensioners received the full new top rate of pension—£185.15—and less than a third of those on the old pension receive the full rate.
The rise in the eligibility age for the state pension from 65 to 66 from 2018 has also increased hardship. According to the Institute for Fiscal Studies, more than 700,000 65-year-olds have missed out on entitlements and postponed retirement. The elderly are compelled to remain in the job market, and they simultaneously lack opportunities to increase their income. The Government need to consider targeted support for people who are much older as endemic age discrimination in employment affects their ability to build a work pension or find work to complement their state pension.
The third factor is the pension credit system, which can play an important part in helping to close the pensioner poverty gap, especially for women, disabled people and black, Asian and ethnic minority pensioners. Since Labour introduced the measure, its efficacy has been undermined by low take-up. In its July report, the Work and Pensions Committee stated that
“an estimated further 850,000 eligible households are not claiming Pension Credit worth £1.7 billion a year.”
It strongly recommended that the Government improve the identification of eligible people, streamline the application process and make it more accessible.
The risk of pensioner poverty is amplified for women, disabled people and black, Asian and ethnic minority pensioner groups. Women disproportionately experience later-life poverty, with the proportion of those suffering rising from 14% to 20% in the eight-year period from 2013. The equivalent figures for men were 12% and 18%. Those figures are expressions of the wider inequalities endured by women. The Women Against State Pension Inequality Campaign highlights a particularly egregious instance of those disparities. The Government have a legal and moral obligation to deliver for the many WASPI women in our constituencies. Pensions, lifetime earnings and national insurance contributions are typically lower for women due to the gender pay gap and caring responsibilities—we are all aware of those factors.
For black, Asian and ethnic minority pensioners, the inequalities are even starker. According to Age UK, 33% of Asian and 30% of black pensioners are in poverty—double the proportion of their white counterparts. Similarly to those faced by women, these inequalities are the expression of lower average wages and labour market discrimination, which translate to less generous state pensions. That has often led to some ethnic minority people earning below the minimum salary threshold for auto-enrolment in workplace pensions. Lowering that threshold would be an easy fix for this injustice; according to a report by The People’s Pension, it would double the enrolment of ethnic minority employees.
Employment and pay disparities also create later-life poverty for disabled pensioners, who are less likely to possess a work pension or a private pension as a result. We know that those effects will be exacerbated by higher living costs of around £600 per month on average for disabled people, including older disabled people.
All that shows emphatically that some pensioners are really struggling. The Government need to look at how they can support them. I hope that the Minister will address the issues I have raised, as well as making reference to the following points. First, the Government talk a lot about tackling pensioner poverty. If they are serious about doing so, why will they not commit to increasing the state pension, or introducing a minimum pension income guarantee for everybody, irrespective of their contribution record, their sex and gender, their age or their marital status?
In the current crisis, the additional cost of living payments announced in last month’s autumn statement clearly will not be enough for some pensioners. Will the Government therefore introduce additional financial support targeted at those pensioners who are most in need?
Have the Government carried out an impact assessment of how the delay caused by the U-turn on social care reform will impact our pensioners? What plans do they have to address the inequality I highlighted of the low percentage of people on the full new state pension rate?
My next point is probably the most crucial; it concerns pension credit. Why will the Government not deliver a take-up campaign to identify eligible pensioners, and introduce a streamlined and accessible application process, so that the pensioners who are entitled to that additional top-up can receive it? Pension credit is there to top up income, and I strongly believe that the Government could be proactive in identifying pensioners who might qualify.
The WASPI women need justice. When will the Government provide compensation for the failings? Will they commit to ensuring that there is a proper, lengthy notice period for any future change to the state pension age?
Will the Government seek to bring down the minimum salary for auto-enrolment to workplace pension schemes? That would increase the participation of under-represented groups, particularly our black, Asian and ethnic minority communities.
We all know, particularly at this time of year, that loneliness and social isolation are key contributors to material deprivation. More investment is needed in public services and the social support networks that are available to older people; in fact, we need an overarching strategy to address that. What are the Government doing to support community and local organisations, such as Age UK Wandsworth in my constituency? It provides a lifeline and vital services to people who live in the local area. I reiterate the point I made earlier: because of the funding available, many can attend that centre only a couple of days a week, but they would like to go three or four times a week. It is unfair that the time they can spend at such centres is being limited.
Finally, I call on the Government to explore alternative ways to fund our pension system. The state pension is unfunded, meaning that its obligations are not underpinned by assets that could generate investment and return. That funding model is implicitly appealed to when the Government object to the rising cost of pensions due to our ageing population and the impact that will have on younger people, although that probably does not apply to any of us in the Chamber, as none of us is very young. [Interruption.] Well, some might be. However, an appreciation of funding models used in other countries could point the way towards a systemic shift that could help fund the state pension system.
We owe it to our elderly and all our pensioners, as well as to the generations that come after us, to be progressive in our thinking and innovative in our approach. We must look at all options to ensure that when people reach their later years they will not fear retirement but embrace it, because they will know that, in the state pension system, there is a safety net in place to support them and they will not be struggling.
Beth Winter (Cynon Valley) (Lab)
Thank you, Sir Robert, for the opportunity to speak. Before I became an MP, I conducted more than 10 years of research on how poverty and inequality affect older people’s inclusion in society, so this subject is a particular interest of mine.
Pensioner poverty is significant in the UK, and it continues to increase. It is estimated that over 2 million—one in five—older people are living in relative poverty, with the greatest impact on women and other vulnerable groups. The level of pensioner poverty is similar in my country, Wales. The Older People’s Commissioner for Wales—I am very proud that Wales is still, I think, the only nation in the UK to have an older people’s commissioner—along with other organisations, has expressed serious concern about the detrimental impact that the cost of living is having on older people. My constituency had the third highest death rate from covid in the whole of the United Kingdom. That exemplifies the effect that poverty and the industrial legacy of Cynon Valley have on the health and wellbeing of older people.
Just before the summer, I conducted a cost of living survey in Cynon Valley. Nearly nine out of 10 pensioners who responded said that they felt worse off than they did 12 months earlier. Security in retirement was the biggest cause for concern among pensioners. One older person said:
“Us elderly people have worked very hard over the years and we get very little back to survive on.”
I pay tribute to a range of organisations in Wales, including Age Cymru and Age Connects in Cynon Valley, who are doing amazing work with older people, trying to empower them and giving them a voice in our communities.
The petition calls for an increase in the state pension to £380 a week and a reduction in the state pension age to 60, which would be a significant change. However, the demands of the petition open up a debate on where pension levels are set and what is the right age to start receiving the state pension.
At the 2019 election, my right hon. Friend the Member for Hayes and Harlington (John McDonnell), the then shadow Chancellor, rightly sought to deal with state pension inequality for women and offered a major compensation scheme. He said:
“This is an entitlement. This is not a benefit…This is a historic injustice. We have to address it.”
Over 4,000 women in my constituency are affected, and I am working closely with an active group of local women to continue campaigning for justice for the WASPI women. I have continued to support their demand for compensation, through demands for full restitution and through the minimum compensation proposal of the WASPI campaign and the all-party parliamentary group on state pension inequality for women. As we know, the ombudsman has found that there was maladministration, and we are now waiting for the full report to be published and for the recommendations for remedy. We must compensate these women.
The other group of older people I am working closely with in Cynon Valley are former miners. I welcomed the Business, Energy and Industrial Strategy Committee report in 2021, which recommended giving £1.2 billion held in the investment reserve to former miners. It really is regrettable that the Government have rejected the Committee’s recommendations, and I urge them to look at those again. The WASPI women and former mineworkers are examples of pensioners who have been let down—and let down massively—by the UK Government.
More broadly, there is a debate around the level of the state pension. Much is being said about how pensioners’ incomes have been safeguarded, compared with real changes to incomes and social security in recent years. However, pensioner poverty is growing, and the petition demands a significant increase in the state pension. The National Pensioners Convention says that the state pension should be set at 70% of the living wage and above the official poverty level, at £242.55 a week. That is what a pensioner in the Netherlands gets, with an equivalent of more than £250 a week. The petition demands £380 a week, and in Denmark the folkepension for a single pensioner is £370 a week. This can and should be done here. These other countries’ pensions put the demands of the NPC and this petition into perspective—they are not unreasonable demands.
The question about funding these increases is welcome. There are many sources of untaxed wealth that could deliver the revenues to pay for higher pensions. A wealth tax could raise in the region of £260 billion to £300 billion. The country has the money; it is a political choice not to redistribute the wealth of this country to ensure that older people and many millions of other vulnerable people have the money to maintain a basic standard of living. That is a basic human right, and everybody should have that entitlement.
Before I conclude, I will take the opportunity to highlight the fact that a third of those entitled to pension credit—over 750,000 people—do not claim it, although they are entitled to. As my hon. Friend the Member for Battersea (Marsha De Cordova) said, that equates to about £1.7 billion of unclaimed money. I urge the UK Government urgently to take action on this issue. I truly wish that they would pay as much attention to ensuring that people claim what they are entitled as they do to stigmatising people on social security benefits, who are entitled to that money and should have it as a matter of right.
To conclude, pensioner poverty is rising. Combatting it is a question of principle and values. If we are to achieve justice for pensioners, we must take action to deliver it.
Sir Robert Syms (in the Chair)
We now move to the Front Benchers, who normally have 10 minutes or less.
David Linden (Glasgow East) (SNP)
As ever, it is a pleasure to serve under your chairmanship, Sir Robert, and to reply to a debate on behalf of the Scottish National party. I congratulate the hon. Member for Battersea (Marsha De Cordova) on opening the debate, and I commend the hon. Member for Cynon Valley (Beth Winter) on her speech.
Before I get into the substance of my speech, I want to note that my remarks today are my first since returning to the SNP Front Bench. I pay tribute to the hard work and dedication of my hon. Friend the Member for Aberdeen North (Kirsty Blackman), who as my party’s spokesperson on work and pensions repeatedly held the British Government to account, fought for the poorest in society and highlighted the sheer inadequacy of the UK’s social security system. She will be a tough act to follow, and I wish her well in her new position as Cabinet Office spokesperson—a role I am sure she will thrive in.
The petition that triggered this debate calls for an increase to the state pension and for us to reduce the state pension age to 60. I will come to the appalling financial inadequacies of the state pension in a moment, but I will first address the age at which people become eligible. We are by no means outliers among developed nations in having an ageing population, which presents the state with many problems to solve in terms of service provision and many fiscal challenges.
As we debate this issue, every one of us in this room should be mindful of the fact that not all jobs are the same. As we sit here in the luxurious comfort of a palace, people out there are carrying out manual labour jobs—indeed, some today in sub-zero conditions. Sir Robert, you and I may not think that we will be ready to retire at 60, but many others will, so I believe that a balance must be struck. Although, for practical reasons, the Scottish National party cannot support reducing the retirement age to 60, the notion that the pension age needs to go up and up, as a simple solution to the British Government’s problems, is both cruel and unrealistic.
It feels like little has changed at the Department for Work and Pensions since I last shadowed this brief. The British Government continue their heartless policies, the cost of living crisis ravages on, and it is the poorest and most vulnerable who bear the brunt of the hardship. As I was preparing for today’s debate, I found myself despairing, because for me, as a Scottish nationalist, Westminster often feels like groundhog day, and no more so than when we are looking at the policies of the Department for Work and Pensions.
I find myself today critiquing the same Tory policies that I criticised last year. It seems that the DWP’s strategy for addressing the cost of living crisis is largely to shove its fingers in its ears and just hope that inflation comes down. Despite that, the cost of living crisis continues to spiral out of control and inflation has risen to 11.1%—a 41-year high. The cost of essential family goods has risen sharply over the past year, and the Office for Budget Responsibility predicts that average household disposable incomes will fall by 7% this year and next.
Food banks, such as Glasgow NE Foodbank in my constituency, are struggling to keep up with the rising demand. Across the constituency, I have heard food bank volunteers say that many people are, sadly, using food banks for the very first time—I was surprised to hear from one volunteer that a family who had previously donated to the food bank were now forced to use it themselves.
One thing I reflected on when I previously held this brief was that we as politicians are used to talking regularly about child poverty, but some of us find it a lot less natural and a lot more embarrassing—we wince a lot more—to talk about pensioner poverty, which is something that we do not give enough focus. However, as Independent Age has emphasised, with
“more than 2 million pensioners already living in poverty and the cost-of-living crisis hitting hard, we know people are being forced to make impossible choices on how to cut back to be able to afford heating, electricity and food.”
As Christmas approaches, research by Age UK has shown how frightened older people are about surviving the next few months, with a significant number this year anticipating a more solitary and lonely Christmas period than usual. Age UK’s polling also found that more than one in five older people are already reducing or stopping their spending on medication or specialist foods, or expect to do so in the coming months, and that one in seven is skipping meals or expects to do so in the same period.
I have genuine respect for the Minister, and I know that she will say that the cost of living crisis has come about as a result of Vladimir Putin’s invasion of Ukraine, but it is not solely because of Putin’s invasion of Ukraine or, indeed, the economic hangover from the coronavirus pandemic. I would certainly argue, and I am sure others would as well, that the touchpaper was lit on the cost of living crisis 12 years ago, when a Government that Scotland did not vote for embarked on a brutal assault via Tory austerity. I am afraid that that has been exacerbated by Brexit—something else that people in Scotland did not consent to.
The UK has one of the lowest state pensions in north-western Europe, and after a decade of Tory austerity cuts, pensioner poverty is now on the rise. Some 85% of social security and the state pension itself is reserved to this institution and the British Government, so Scotland has little say in this hugely important policy area. SNP MPs have campaigned vehemently for the Tories to maintain the triple lock. Only after multiple U-turns and breaking their manifesto pledge last year—and after a very unhealthy dose of uncertainty for pensioners across these islands—did the British Government finally retain the triple lock.
However, the suspension of the triple lock in 2021 shows that Scotland does not have the powers to prevent Tory cuts for pensioners. The suspension ended up costing each pensioner £520 on average during the cost of living crisis. Additionally, the Scottish Government under the current devolved settlement have no power to raise the state pension, as Ministers know fine well, although some often like to pretend otherwise.
The SNP has continually implored Ministers to devote a larger percentage of GDP to state pensions and indeed to pensioner benefits. The British Government are allowing £1.7 billion of pension credit to go unclaimed during the cost of living crisis. We know that pension credit is a vital lifeline for many older people, but only seven in 10 of those eligible claim the money that they are fully entitled to. The British Government must introduce a full take-up strategy for reserved benefits, including pension credit, as the Scottish Government have done in respect of devolved benefits. I genuinely welcome the conversation I had with the Minister before the debate, when we said that we would discuss this issue offline.
The Conservative Government have a rather long track record in picking the pockets of our pensioners: from the WASPI women and the triple lock to the low take-up of pension credit, the frozen pensions of overseas pensioners, many of whom are veterans, and the scrapping of free TV licences for the over-75s, the list goes on and on. This Government have very much been found wanting in terms of their record on pensioners.
Only with full powers over pensions can the Scottish Government at least remedy these injustices. In an independent Scotland pensioners could be protected from Westminster austerity. We in the SNP want Scotland to be the best place to grow old—a place where retirement means dignity and fairness for all. I know that adhering to manifestos or, in some cases, leadership election pledges is a bit of a quaint novelty for the two biggest parties in this House. However, my party’s 2019 manifesto committed me and my colleagues to continue advocating for a fairer pensions system and to oppose plans to increase the state pension age beyond 66.
Alongside that, we will continue to call on the British Government to establish an independent saving and pension commission to ensure that pension policies are fit for purpose and genuinely reflect the demographic needs of the different parts of these islands. I am struck by the fact that the life expectancy in Kensington and Chelsea is very different from that in my own constituency.
Of course, all of this is predicated on Ministers in Whitehall listening to the voices of those that Scottish voters send to this House—something the Government have a poor track record on. Therefore, the only way to ensure that our pensioners grow old with dignity is for Scotland to become an independent country, with powers to protect pensioners and ensure that they live their final days in prosperity, not poverty.
Matt Rodda (Reading East) (Lab)
It is a pleasure to serve under your chairmanship, Sir Robert. I thank my hon. Friend the Member for Battersea (Marsha De Cordova) for her work on this important issue. I also thank other hon. Members who have spoken in the debate. Above all, I want to thank the hundreds of thousands of people from across the country who signed the petition that led to this debate. Constituents have expressed their concern for older people, so it is right that we consider this matter today.
Pensioners face the worst cost of living crisis for over 40 years. The cost of food and fuel is up, and the cost of living as a whole is going up. Yet, at the same time, support for pensioners is failing to keep up with the severe pressure on older people. Those who have worked hard and contributed all their lives deserve to receive a decent state pension in retirement. The official Opposition support the triple lock and have repeatedly called for the state pension to rise in line with it during the last two years, but the Government’s approach has fallen well short of what is expected by pensioners and the country as a whole.
I will set out the scale of the cost of living crisis and then address the Government’s failure in this regard. It is clear that this crisis is the worst squeeze on the incomes of families and pensioners since the 1970s. Sadly, inflation has hit over 10%—something unheard of in living memory. The situation facing people on low and fixed incomes is particularly difficult. Pensioners and others on modest incomes spend more of their disposable income on food and fuel, the prices of which have increased to a far greater extent than those of other goods. The prices of staples such as bread, cereals, tea, meat, dairy produce and eggs have all risen rapidly, and some have increased by far more than the headline rate of 10%. As is well known, the same is true of energy. Not only has the price of gas risen dramatically, but so has the price of electricity and heating oil. In the meantime the Government have dithered and delayed, and put off addressing these important issues.
I turn to the Government’s poor record and to the lack of—indeed, the delays to—support for poor pensioners. Despite raising the state pension in line with the triple lock being a manifesto pledge, Ministers repeatedly failed to meet that commitment. Last year the Government said that earnings appeared to have grown by a larger amount, because the return to work after furlough created the impression that earnings had increased by 8%. They used that as an excuse for disapplying the triple lock, preventing pensioners from getting the rise in the state pension that they clearly deserved. We repeatedly challenged the Government, but they simply would not listen to our concerns.
To make matters worse, this year Ministers refused for months to commit to increasing the state pension in line with inflation. Campaigners repeatedly pressed them on the issue, and the official Opposition raised the matter in Parliament a number of times. As a result of the Government’s dither and delay, pensioners were left wondering what would happen to them at a time when they were facing a very difficult winter. After months of delay, and considerable pressure and stress for older people, Ministers eventually confirmed at the autumn statement that the state pension would rise in line with inflation. Those failures and persistent delays let pensioners down badly, so I hope the Minister will find time to apologise for them when she replies.
The Government have failed pensioners on a number of other matters relating to the state pension—for example, pension credit and some of the problems relating to the energy price guarantee. I want to raise those related issues, because both policies should be offering far more help than they do at present.
Pension credit tops up the incomes of some of the most vulnerable pensioners, who receive a particularly modest income. However, about 1 million pensioners who are entitled to the benefit are not claiming it. Will the Minister explain why the Government are still failing on this matter? What more can be done to ensure that pensioners claim pension credit to raise their incomes, as they deserve?
Although help is now available with heating costs, there are gaps in the scheme—not least that it will be scaled back next year. In the meantime, payments for some pensioners in rented accommodation are still not being passed on by landlords. Concerns have been raised in my constituency, and I am sure Members across the House have experienced the same issue. I hope the Minister will respond to that point.
Time is pressing, but I want once again to thank the members of the public who signed the petition, as well as my hon. Friend the Member for Battersea, who spoke so eloquently, and other Members from across the House. I look forward to the Minister’s reply.
The Parliamentary Under-Secretary of State for Work and Pensions (Laura Trott)
It is a pleasure to serve under your chairmanship, Sir Robert. I thank all hon. Members for their valuable contributions, and the hon. Member for Battersea (Marsha De Cordova) for opening the debate.
The Government disagree with the petition’s proposed approach. It makes two suggestions: to increase the state pension and to lower the retirement age. I will first address the proposal to increase the state pension to £380 a week. That would equate pensioner income with the national living wage in 2022-23. However, the national living wage and the state pension are two very different provisions, with distinct purposes. A direct comparison cannot be drawn between the levels of the two. The national living wage aims to protect low-income workers and to provide an incentive to work, by ensuring that workers benefit from being employed. However, most pensioners have already left the labour market. Comparisons made in the e-petition between headline state pension amounts and the national living wage do not consider the full package of state measures available to support people in retirement or the fact that pensioners do not pay national insurance or into a pension scheme through automatic enrolment.
We need to be clear with the public that a state pension of £380 per week for every UK pensioner would be unaffordable. It would mean an annual cost of up to £251 billion if it was applied for 2022-23. That compares to the £110 billion we are currently forecast to spend on the state pension. In the UK we have a system of state and private pensions, which jointly provide an income for people in retirement. Most people will have a private or occupational pension on top of the state pension. In the 2021 financial year, the average net income of all pensioners was £361 per week, after housing costs. Crucially, the Government also provide around £67 billion each year in tax relief to boost private retirement savings. It is important to consider all aspects of Government support for retirement, rather than solely the state pension amount.
The Government are committed to ensuring that the state pension continues to provide the foundations for people’s retirement income, and we are proud of the assistance we have given pensioners since 2010. Since 2010, the full yearly amount of the basic state pension has risen by over £2,300 in cash terms. That is £720 more than if it had been uprated by prices, and £570 more than if it had been uprated by earnings.
As all hon. Members here today recognise, the Government have announced plans to apply the triple lock this year. It was announced, according to the normal parliamentary timetable, that from April the state pension will be over £3,000 per year higher in cash terms, which is double what it was in 2010, £790 more than if it had been uprated by prices, and £945 more than if it had been uprated by earnings.
Pension credit has come up a lot today, as it should. Pension credit provides vital additional financial support by topping up the state pension and other retirement incomes. The hon. Member for Battersea referred to the minimum income guarantee, which is what we put in place to ensure that pensioners do not fall below a certain base. It also acts as a gateway to other help, including assistance with rent, council tax, NHS prescriptions and heating bills. Of immediate importance, it is a gateway to the additional cost of living payments we are paying to those on qualifying means-tested benefits. There is more that we need to do to link that up with other information that the Government have. I will be pleased to work with Opposition Members, as well as the hon. Member for Glasgow East (David Linden), in order to try to make that happen.
We have taken direct action when pensioners have needed it, both through the pandemic and now with the rising cost of living. That includes the £650 cost of living payment, paid in two instalments, to help those on pension credit with the rising cost of living. As we all know—and I would like to emphasise this again—it is not too late for pensioners who are not already getting pension credit to qualify for the second instalment. That is because a claim for pension credit can be backdated for up to three months, provided the entitlement conditions are met throughout that time. To ensure that a successful backdated claim falls within the qualifying period for the second cost of living payment, we are urging people to claim pension credit as soon as possible, and by no later than 18 December.
David Linden
I appreciate that the Minister will not necessarily have the figures to hand, but would she be willing to write to me with information on how much the Government are spending on, for example, billboard campaigns and radio advertising to encourage pensioners to take part—in the same way they do with the levelling-up campaign?
Laura Trott
I would be more than happy to do so. I know that we spent £1.2 million over the summer. I have signed off a campaign for this winter, with more coming after Christmas, but I will write to the hon. Gentleman with the exact amounts.
That leads me nicely on to the hon. Member for Battersea, who referred to the take-up campaign. We have had a huge take-up campaign over the summer, and we have done one recently as well. We have further communication planned. It is something I am very focused on, and I would like to work with all hon. Members who are interested to ensure that it happens.
Marsha De Cordova
Is any work being done to measure the impact of the summer campaign on the take-up of pension credit? Going forward, I am very happy to work with the Minister on this.
Laura Trott
We know that claims for pension credit have tripled since the summer. On average, we used to get 2,000 claims a week—that has gone up to 6,000. The seven out of 10 figure that everybody uses comes from the family resources survey, which was last done in 2019-20, which has caused the difficulty with exact details on eligibility. Because of the pandemic, the survey has not been repeated, and there is an 18-month delay on the figures. It is very difficult to get up-to-date data on actual eligibility levels, which is something that we need to address over the longer term. In the interim, though, we have the numbers of people who are making the claims through the line, which, as I have said, have gone up threefold.
Matt Rodda
Could the Minister explore the issue of pensioners who do not have English as their first language and other hard-to-reach groups whom Government information often struggles to reach? There have been success stories in the past where particular approaches have worked with some minority groups. Perhaps the Minister could write to me and other colleagues present on that matter.
Laura Trott
I am very happy to do so. If there are any specific approaches the hon. Gentleman thinks the Government should be taking, I am very open to any ideas he may have and would happily take them forward.
The £650 cost of living payment is one of a number of measures in the Government’s £37 billion cost of living support package, which will ensure that the most vulnerable households will receive at least £1,200 this year. The package also includes a £400 reduction on energy bills for all domestic electricity customers over the coming months, plus a £150 council tax rebate for 85% of all UK households.
In addition to the steps we have taken to address the cost of living for pensioners, we have also made long-term reforms to the state pension and introduced automatic enrolment to boost private saving. In 2016, the Government introduced the new state pension, which forms a clear foundation for individuals’ private savings to provide the retirement they want. At the heart of its design, we sought to correct some historic unfairness in the previous system, in particular for women, self-employed people and lower-paid workers. More than 3 million women are set to receive an average of £550 more a year by 2030. State pension outcomes are also expected to equalise for men and women by the early 2040s—more than a decade earlier than they would have aligned under the old system.
I want to pause here to mention pensioner poverty, which was brought up by a number of hon. Members. I know it is something we all care deeply about. The Government are committed to action that helps to alleviate the levels of pensioner poverty. We are forecast to spend more than £134 billion on benefits for pensioners in 2022-23, which amounts to 5.4% of GDP and includes spending on the state pension that is forecast to be over £110 billion in 2022-23. Thankfully, there are 400,000 fewer pensioners in absolute poverty, both before and after housing costs, than in 2009-10, but there is, of course, always more to do.
Automatic enrolment, as mentioned by the hon. Member for Cynon Valley (Beth Winter), is transforming private saving. More than 10.7 million people have been automatically enrolled into a workplace pension and more than 2 million employers have complied with their duties to date. This has helped to supply around an additional £33 billion into pensions savings in real terms in 2021 compared to 2012. I want to bring up the findings of the 2017 review of measures for automatic enrolment, as the hon. Member for Battersea mentioned her support for the lower earnings limit. The 2017 review of automatic enrolment set out the ambition to enable people to save more and to start saving earlier by abolishing the lower earnings limit and reducing the qualifying age for automatic enrolment to 18 by the mid-2020s. We have always been clear that changes would be made in a way and at a time that are affordable, balancing the needs of savers, employers and taxpayers, and the Government are absolutely still committed to that.
Together, the new state pension, automatic enrolment to workplace pensions and the safety net of pension credit will provide a robust system for pensioners for decades to come. A number of Members talked about international comparisons; OECD rankings show that, thanks to this Government’s reforms, the UK pensions systems will provide future workers with income replacement rates comparable to the OECD average and higher than countries such as Switzerland, Norway and Germany.
Let me turn to the second suggestion: decreasing the state pension age to 60. The Government have no plans to reverse changes to the state pension age. Previous reforms have focused on maintaining the right balance between affordability, the sustainability of the state pension and fairness between generations. Changes to state pension age were made through a series of Acts, and by successive Governments, from 1995 onwards. Those reforms followed public consultations and extensive debates in both Houses of Parliament. The state pension is funded through the national insurance and tax contributions of the current working-age population. Like increasing the state pension, reducing the state pension age to 60 would massively increase the tax burden on the current working-age population and carry significant cost.
David Linden
I wonder whether the Minister might put on record the point that she just confirmed. In the debate on Scottish independence, Unionist campaigners often talk about how the UK somehow furnishes pensions. However, as the Minister just pointed out, the state pension is funded by ongoing national insurance contributions each and every day, which rather bursts the myth that is made by the Better Together campaign in Scotland.
Laura Trott
State pension entitlement is obviously built up through contributions over a period of time, but equally there is a huge burden on the state, and that has to be met at a given point. As we have discussed, pension pots are funded widely by both the working-age population and people later in life.
The Government previously estimated that, had we not increased the state pension age for both men and women, the total additional cost to taxpayers—in 2018-19 prices—would have been around £215 billion for the period from 2010-11 to 2025-26. Lowering the state pension age is clearly unaffordable, and would place an ever-increasing and unfair burden on taxpayers. That would not be right, particularly as life expectancy continues to rise.
A number of hon. Members mentioned the Parliamentary and Health Service Ombudsman. The PHSO is undertaking a multi-stage process, and it has not given its final findings on the overall investigation. If the PHSO finds injustice, it will move on to stage 3 and consider any recommendations. The DWP will wait before taking any further steps.
The UK has an ageing population and workforce. The proportion of people aged 50 years and over compared to those aged 16 and over is projected to increase from 42% in 2010 to nearly 50% by 2035. That is nearly 29 million more people. Older workers will bring a wealth of skills and experience to the workplace, and they are vital to the economy. By working for longer, older people have the opportunity to improve their retirement income and benefit from the social engagement that employment brings. The hon. Member for Battersea was absolutely right that we need to support workers in later life, and BEIS is working on exactly that.
In conclusion, I welcome today’s debate and acknowledge the proposals set out in the e-petition. As I have mentioned, the Government provide wide-ranging measures to support people in retirement. Our recent announcement of plans to apply the triple lock this year demonstrates our commitment to providing a strong foundation of support for pensioners.
Marsha De Cordova
I thank my hon. Friend the Member for Cynon Valley (Beth Winter) for her incredible speech, which shone a light on the impact of pensioner poverty in her own constituency. She brings a wealth of experience and knowledge to these debates. I thank the petitioners—it is because of them that we are here—and the tens of thousands of people who signed the petition. No one should ignore pensioner poverty, but we are having this debate because many pensioners are not being supported.
We are in a cost of living crisis, and the Government have talked about the support that is being provided, but we have to be aware that some of the targeted support will go only to people in receipt of a qualifying benefit—pension credit or some sort of housing support. People on a state pension who do not get any top-ups will probably not qualify for that additional support, so that places an additional challenge on their finances. That is what I was talking about when I said that there should be additional targeted support.
All hon. Members mentioned pension credit take-up. It is right that the Government are doing take-up campaigns, because that will help to alleviate some of the challenges that many face.
This has been a good debate. I strongly believe that we have to support pensioners and those in greater need. Although we cannot see the Government increasing the state pension to £380 a week, we need to look at some sort of minimum income standard for pensioners.
The Minister did not address the point about streamlining the application process and making it more accessible. I hope she will take that back, because it was a recommendation from the Work and Pensions Committee. It is important that people are able to claim that aspect of social security. If the process is not streamlined, accessible and easy to use, it will deter people, particularly those whose first language is not English and disabled people who are unable to access the forms. I hope that, in their activities around pension credit take-up, the Government consider that issue. I highlighted the inequalities within certain groups—women, disabled people and ethnic minority communities—particularly around auto-enrolment, so I am pleased that that is still on the Government’s radar.
I thank everybody for being part of this debate. I only wish there were more people here, but I appreciate that it is probably due to the travel challenges that many are facing.
Question put and agreed to.
Resolved,
That this House has considered e-petition 617603, relating to the state pension.