Social Security and Pensions

Alan Brown Excerpts

Monday 7th February 2022 Commons Chamber

[David Rutley]

As I have been setting out in my opening remarks, we are taking forward this step in combination with a raft of other measures to help residents in this country face the challenges ahead. In fact, as part of the three-point plan, we have a £200 discount on energy bills this autumn for domestic electricity customers in Great Britain that will be repaid automatically over the next five years. There is a £150 non-repayable rebate on council tax bills for households in bands A to D in England; that is 80% of households. Of course, there is £144 million of discretionary funding for local authorities to support households who need support but are not eligible for the council tax rebate.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Will the Minister give way?

[David Rutley]

I have given way enough for now—[Interruption.] I am about to make a point. The devolved Administrations are receiving around £715 million in funding through the Barnett formula in the usual way. That support is on top of an existing package of measures. The winter fuel payments will be made to 11 million pensioners this winter, ensuring that older people have the security and dignity that they deserve. Cold weather payments of £25 a week help people in receipt of certain income related benefits to meet the additional costs of heating during periods of unseasonable severe cold weather, and we plan to extend the warm home discount until 2026 and, from 2022-23 onwards, expand that scheme, increasing the value of the rebates from £140 to £150 to help an extra 780,000 pensioners and low-income families with their energy bills.

[Alan Brown]

The Minister has spoken about the Barnett consequentials. Is it correct that the Scottish Government are getting only £220 million in Barnett consequentials from the new measures announced—the £150 rebate—which does not compare very well with the £3 billion in additional oil and gas revenues that this Government are getting over this year and next year, or the £6 billion over the lifetime of the Parliament? Surely, much more could be done to help people right across the UK with the increased money the Treasury is bringing in.

[David Rutley]

As I have said, I think that a sum of the order of £715 million will be given to the Scottish Government in this particular measure.

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[David Rutley]

My hon. Friend is a doughty champion on this front, but all we are doing on these particular pensions is following a well-worn line in Government policy over many years.

[Alan Brown]

Will the Minister give way?

[David Rutley]

No, I have given away enough on these points, and I want to get on to pensioners more generally, if the hon. Gentleman does not mind.

The UK Government increased funding for the devolved Administrations on the household support elements accordingly, with an extra £41 million for the Scottish Government, £25 million for the Welsh Government and £14 million for the Northern Ireland Executive.

The state pension is the foundation of support for older people. With this order, the basic state pension will rise to £141.85 per week for a single person. This means that the full yearly basic state pension will increase to £2,300 a year higher in cash terms than in April 2010. The full rate of the new state pension will increase to £185.15 a week. Additional state pensions, as well as protected payments in the new state pension, will rise by 3.1%. This increase means that over the two years of the pandemic the basic and new state pensions will have increased by 5.6%, while CPI, in the two years to September 2021, was 3.6%. Finally, the pension credit standard minimum guarantee for a single pensioner will increase to £182.60 a week, and the rate for a couple will rise to £278.70 a week.

The Government are committed to ensuring that people have security and dignity in retirement. In 2020, when average earnings declined, the new and basic state pensions would have frozen, had the Government not introduced the Social Security (Up-rating of Benefits) Act 2020. Instead, those pensions increased by 2.5%, despite CPI being 0.5%. This provided extra financial stability for pensioners during a difficult time. After two unique years of troughs and peaks in earnings growth due to the pandemic, the Government took action to protect pensioners and taxpayers by smoothing the increases to these pensions. The Government remain committed to implementing the triple lock in the usual way for the remainder of the Parliament.

The Guaranteed Minimum Pensions Increase Order is an annual provision that affords a degree of inflation protection for the guaranteed minimum pension part of the occupational pension that was built up between 1988 and 1997. The guaranteed minimum pension that is in payment must be increased in line with the general level of prices or 3%, whichever is less. The relevant comparator is the consumer prices index for the year to September 2021, which was 3.1%. This order therefore specifies that the rate of guaranteed minimum pensions is to be increased by 3%, in line with primary legislation. These orders provide protection for pensioners and people in receipt of state benefits, and I commend them to the House.

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[Nigel Mills]

I absolutely agree that asking people to live without enough money to heat their houses and to eat creates all manner of knock-on consequences that will inevitably end up costing the taxpayer money in the long run. It should not be a big challenge or a contentious point of debate to want to ensure that the benefits we are giving the poorest in society are enough for them to live on, so I cannot see why we would not publish periodic analysis just to check that everything is in working order.

We should remember that many millions of people cannot go and get a different job or work a few extra hours to make up the difference. They cannot work, they are retired or they are not in work—they have no chance to earn an income, so what we give them is what they get, and we need to make sure that it is sufficient.

[Alan Brown]

The hon. Gentleman is making an excellent speech and a very good point. Ministers sometimes concentrate too much on the number of job vacancies across the country, as if somehow they can all magically be filled, but the point is that not everybody can fill those jobs. There are demographics and geography at play—it is not as if people can just uproot themselves and move to get another low-paid job somewhere else. The Government really need a better understanding of where the vacancies are, with skills and training programmes targeted at filling vacancies in the long term.

[Nigel Mills]

The hon. Gentleman is absolutely right: we cannot expect somebody to move hundreds of miles in that situation. Equally, anybody who can work should work, and should be supported and given the training to do that when it is in their best interests. I do not meet many people who can work but do not want to; I think most people who can work with the right support are very keen to.

I will vote for the draft orders tonight. I think our choice is a 3% rise or nothing, so it seems slightly self-defeating to vote against them, but I ask the Government not to take the House’s approval as a sign that it agrees with the position we are in. The Government could use their discretion and make the increase higher than inflation if they wanted to, just as they have chosen many times to make it lower than inflation. We knew that this problem was coming; it has not turned up in the last fortnight and got us chasing around.

I am not even asking for something that would be a long-term cost. All we would be doing is bringing forward to this year the rise we would give people next year, so that they have it in time to pay their higher bills, rather than six months after getting them. That is the impact of the calculation that we do, and if we do not get it right, we will be putting people in an impossible situation.

The idea of having a welfare system that we can control so we can give people transparency and up-front certainty is that it is there to give them the support they need. We cannot keep filling holes with discretionary, complicated schemes that people may or may not find about, that are done differently by councils all around the country, and that may or may not exist in the long term. The whole idea of a universal credit system was that it would be a benefit that rolls everything into one and gives people the support they need. By doing all these occasional one-off top-up schemes, we are admitting that the main benefit is not in the right place.

I urge the Government to take a step back, to remember our core purpose of giving people enough to live on—not luxuriously or hugely generously, but with a decent standard of living—and to be absolutely sure that they have achieved that and are still achieving it. If they have any doubts, they must do the work to publish it and prove it, and if we need to fix it, let us get on with fixing it.

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[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is a pleasure to follow the hon. Member for Strangford (Jim Shannon). Like all hon. Members, he highlighted the fact that the Government need to do more to deal with the cost of living crisis. It was characteristically optimistic of him to look forward to the Minister’s response; I have a funny feeling that we will not get much out of the Minister in that regard.

Of the two draft orders, I will concentrate first on the Guaranteed Minimum Pensions Increase Order. It is relatively straightforward, on one level; it will ensure that those on contracted-out pensions get an uplift in their contributions made between 1988 and 1997. Effectively, that seems to be a formality that happens every year. The percentage increase is capped at 3%, which makes me think that we have to consider whether that 3% rate is valid now. What happens if inflation remains rampant? That needs to be considered.

In preparing for the debate, I was concerned to read that as part of the transition to the single-tier pension in 2016, the DWP estimated that 50,000 people would lose out with guaranteed minimum pensions. In 2019, the Parliamentary and Health Service Ombudsman published a report stating that the DWP had not provided clear and accurate information that some pension holders could face negative long-term impacts on their pensions and their income. The Government responded in 2021 and developed a new factsheet. In developing that factsheet, how much discussion did they have with the PHSO and third-sector organisations? When will we see the review into its usage? As the right hon. Member for East Ham (Stephen Timms) pointed out, people are having difficulty accessing the factsheet. How many people have suffered negative consequences and what are the Government doing to assess that?

It is clear from the failings on the guaranteed minimum pension and the communications around that, the WASPI women and the botched communications with them, the pensions underpayments and the late payment of pensions once people reach state pension age that the pensions system has a long way to go before it is remotely close to being fit for purpose.

With those observations, I will turn to pensions in general, in terms of the social security uprating. I know that the Minister will probably dismiss most contributions from the Opposition, but as others have said, he would do well to listen to the excellent contributions from the hon. Members for Waveney (Peter Aldous) and for Amber Valley (Nigel Mills). They should be a warning to the Government that more needs to be done.

UK pensions are the least generous in north-west Europe when compared with the average wage. That was confirmed by analysis undertaken by the House of Commons Library last year. When that is the case and when we have a cost of living crisis, it defies logic that the Tories think this is the time to break the triple lock guarantee on pensions and to break it in terms of the link with earnings.

As other Members have said, the CPI figure being applied is outdated, but I suspect it was also understated, considering the work done by Jack Monroe and the fact that the Office for National Statistics is saying that it will revise how it calculates CPI and inflation with regard to food. The 3.1% was probably an understatement at the time, and it has since been superseded.

[Sammy Wilson (East Antrim) (DUP)]

One of the original arguments the Government put forward for not linking pensions to the increase in wages was that wages had increased unusually because of the pandemic, when people were out of work and then went back into work. We now know that it is not just wages that have gone up; prices have gone up as well. That is having a real impact on pensioners and people on low incomes.

[Alan Brown]

Absolutely; food prices have gone up and the energy price cap is now circa £2,000. The Government are not doing enough to mitigate the effect of that price cap. The reality is that earnings are not reflecting the cost of living demands. That is the whole point of earnings increasing. It therefore makes no sense to break that link.

What we have from the Tory Government is a Budget that is based on taking money from the pockets of pensioners, and this week they have not done enough to address the energy cost crisis. They are doing very little. A £200 loan to people is insufficient. It is just another burden for bill payers to pay back. Even if people get the £150 council tax rebate on top of the £200 loan, the energy cap is going up by £700. That is a long way short of meeting people’s requirements. Even when the rebates are taken off the price cap, people will be paying a net cost of £1,600 on their energy bills. That is a 40% increase. For those who have to pay the full cap, it is a 70% increase in energy prices in the last few months.

Pensioners are already struggling to make ends meet, and now they face this further erosion of their pension, while everything else is going up. As other Members have said, inflation is at its highest rate for 30 years and could go as high as 7%. Why oh why, in that context, do the Government think it is right to break their manifesto commitment on pensions? The Pensions Minister argues that pensions are increasing compared with this year, but the Red Book for the October Budget clearly states that breaking the triple lock is costing pensioners £520 a year. The Treasury will save £5.4 billion in financial year 2022-23 and a total of more than £30 billion in this Parliament. So the Chancellor is clearly balancing the books on the backs of pensioners. The concern is: is this a precedent? If the Government do not like any part of the triple lock, will they say, “We’ll ditch that bit of the triple lock, but we’ll return to it in the future. Don’t worry—it’s just a one-off”? A precedent has been set. The reality is, the triple lock is crucial in ensuring that the state pension continues to rise to reflect the increasing cost of living. Removing it deprives pensioners of vital income to ensure dignity and fairness in retirement. Research by the House of Commons Library shows that nearly 1 million pensioners in Scotland will be directly impacted by the cut.

The Government’s own statistics on households below average income show that, under Tory rule, UK pensioner poverty has risen to a 15-year high, with 2.1 million UK pensioners now classed as living in poverty once housing costs are allowed for. That is an increase of 200,000 on 2018-19, yet today the Pensions Minister had the brass neck to stand at the Dispatch Box and say that pension poverty has gone down under their watch. It is the exact opposite. These figures are based on the here and now—before the increase in the energy price cap kicks in—so it is clear that, unfortunately, the 2.1 million figure will dramatically increase. National Energy Action estimates that the increase in the price cap to £2,000 will result in between 5.5 million and 6.5 million households across the UK being fuel-poor.

One way in which the Government can help alleviate pensioner poverty is by ensuring that those eligible for pension credit are receiving it. We know that only about six in 10 of those who are entitled to it actually claim it, so the Government save £4 billion a year in unclaimed pension credit. If we look at the savings they are making through breaking the triple lock and what they hold back in pension credit, that is £10 billion this coming financial year alone, which could easily be in pensioners’ pockets. As my hon. Friend the Member for Glasgow East (David Linden) said, when pensioners have that money in their pockets, it gets recirculated in local businesses because they need to spend that money on household essentials.

Research commissioned by Independent Age estimated that full take-up of pension credit could lift 440,000 older people out of poverty. When will the Government tackle that? I am less concerned about debating the 3.1% uplift in pension credit aspect—it is more important that people who are due pension credit actually get it. The Government must do everything they can to ensure that that happens. They speak about information campaigns, but, if they are serious about increasing pension credit uptake, how much money have they set aside for campaigning, information and working with third-sector organisations to ensure that people access pension credit? How much money have the Government set aside in the Budget as regards the hoped for increase, because they will clearly need to make more money available to pay that out?

Another cohort of pensioners is living in poverty: those who live abroad and are hampered by frozen pensions overseas. Many of them are veterans. It seems absurd that, when the Tories argued for giving lifetime votes to expats living abroad, they always used the brave veteran who fought for the UK and gave service in the armed forces as an example of someone who deserves a vote for life, yet they will not reward those veterans with a pension that allows them to live in dignity.

[David Linden]

The Government are not just giving overseas pensioners the right to vote but changing legislation to allow overseas pensioners the right to donate to election campaigns. So the Government are quite happy to take those pensioners’ money, but they are not happy to give those pensioners the money that they paid in.

[Alan Brown]

That is a valid point that highlights the Government’s complete hypocrisy. We can only hope that enough overseas pensioners use their vote the right way and send the Government a message. It is kind of absurd. Not only is it demeaning when people living abroad do not have enough money to live on, potentially after giving service in the armed forces, but some are forced to sell their homes and move back to the UK. The irony is that that brings increased health costs. If the Government are being purely financial about it, not giving people the standard of living that they are due does not even save them the money they think it does.

One other aspect of that, in terms of reciprocal agreements on overseas pensions, is that the Canadian Government have offered to work with the UK Government to get a reciprocal agreement to resolve that issue in Canada. So why are the Government not moving forward on that and working with the Canadian Government?

There is one other key policy that the SNP has long been campaigning for. It is calling on the UK Government to establish an independent savings and pensions commission to ensure that pension policies are fit for purpose and reflect the demographic needs of different parts of the UK. One aspect of pensions that raised its head over the weekend was the Better Together rehash of 2014, and how the UK will not honour its commitments to pensioners in an independent Scotland. It seems extraordinary to me that we are in a so-called Union of equals, yet threats are being made about pensions. It is shameful that Scottish Labour once again want to be all over this. It seems that the UK Government want to argue that they can ignore all those contributions from Scotland in terms of income tax and national insurance, and will withhold pension obligations, yet they expect an independent Scotland to take on a share of the debt that the UK Government have built up—that has never been built up by any Scottish Government. That is a complete paradox and it makes no sense.

[Douglas Ross (Moray) (Con)]

Will the hon. Gentleman give way?

[Alan Brown]

I am not giving way to someone who came two hours late into a three-hour debate. [Interruption.] As one of my colleagues says, if a person came in that late to the jobcentre, they would be sanctioned. For me, the examples I have given say it all about the so-called most successful political Union: one where after 315 years, we still hear the mantra about needing to level up. Surely that Union is broken if there is an argument for levelling up.

I will now turn to policies, and the question of where the money to implement paying a much higher pension, for example, could come from. Comparing the November Budget with the March Budget, the Red Book showed that oil and gas revenues are going to bring in £6 billion extra over this Parliament. It is predicted that VAT receipts could increase by £40 billion, and we know that the Treasury is continuing to get extra VAT from energy bills and from petrol, from extra fuel duties, so it is raking in money compared with where it thought it would be. It is high time that it reinvested that money to provide support for people in this cost of living crisis, instead of just continuing to take, take, take. That is why, for me, the reality is that only with the full powers of independence can we protect Scotland’s pensioners, eradicate poverty and finally begin to build a more progressive nation.