Social Security (Up-rating of Benefits) Bill

Debate between Lord Davies of Brixton and Baroness Greengross

Report stage
Tuesday 2nd November 2021 Lords Chamber

[Baroness Greengross (CB)]

My Lords, I support the amendment in the name of the noble Baroness, Lady Altmann. I share with her the many years that we have been working on these issues, and I am anxious that we get the balance right on pension policy.

Amendment 3, which would restore the link between pension uprating and earnings, is essential. This link was removed back in 1980. It resulted in many years of pension rates failing to increase at the same rate as average earnings. At that time, I was at Age Concern England, where we ran campaigns calling for an end to pensioner poverty and for the link with wage movement to be restored. Sadly, when this link was finally restored, in 2011, it was done as part of the triple lock, whereby pensions would increase by average earnings increases, inflation or 2.5%, whichever of the three was the higher. For the last decade, wage movement has been stagnant, and the rate of inflation also quite low. At a time when wages were not increasing, we called on workers to pay for the triple lock, creating, in my view, intergenerational unfairness.

At Second Reading, I spoke about the Intergenerational Fairness Forum report, which made a number of recommendations, including that the triple lock be replaced with a double lock, whereby pensions increase at the rate of average earnings or inflation, whichever is the greater. I refer to my interests as stated in the register, and in particular to my role as president of the Pensions Policy Institute. In 2019, this organisation released a report entitled Generation veXed, which found that people born between 1966 and 1980, who entered the workforce before automatic enrolment and who have worked during a challenging economic climate, have poorer levels of retirement savings when compared with the generation that went before them. This Generation X cohort have been asked to fund the current triple lock, while their ability to save for their own retirement has been, sadly, rather poor.

Retirement policy requires a balance and should not change with each electoral cycle. The situation we find ourselves in today, with the Covid-19 pandemic, is that the Government expect significant wage movement. Of course, this is due not only to the pandemic; it is due also to rising prices caused by Brexit, which will put pressure on employers to increase wages.

Amendment 3 would ensure that the link between pensions and earnings was retained, but it would allow the Secretary of State to make adjustments in situations like the one we face this year. I support the amendment as a sensible solution to the situation we are facing at the present time, but I reiterate my belief that, in future, we should abandon the triple lock and specifically the 2.5% uplift, and instead have a double lock based on earnings and inflation. If in future there is concern that earnings are again not increasing, rather than implement a 2.5% increase for pensions the Government should instead look at their economic and employment policies to ensure that earnings and pensions are both increasing at a decent rate.

[Lord Davies of Brixton (Lab)]

My Lords, I support the amendments in the name of the noble Baroness, Lady Altmann. As I made clear earlier, I am in favour of a somewhat greater increase, but I am glad to have whatever is available. I want to make two additional points.

First, there is a lack of trust in the Government. The one way in which they could assuage that lack of trust is by accepting the noble Baroness’s amendment. They really need to explain to us what the downside is of accepting the amendment. One can understand that they do not want to do it, but they need to tell us the disadvantages of adopting the approach.

My second point is a sort of response to the noble Baroness, Lady Greengross. Characterising this as between generations is a category mistake. It is between people on low incomes and people on high incomes; it is between people without much money and people with wealth. That is the redistribution required. To characterise it in terms of generations is simply wrong.