State Pension Triple Lock

Alan Brown Excerpts

Tuesday 8th November 2022 Commons Chamber

[Jonathan Ashworth]

My hon. Friend has described with great eloquence the real-life impact that this cut will have on our constituents. Although I do not know the particular circumstances of the family she refers to, they may well be reliant on other social security payments, and we have no clarity from the Government about whether they will also be cut in real terms.

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

Does the right hon. Gentleman agree that those other social security payments also need to be uprated in line with inflation? If so, should Labour not have made the motion wider to include that?

[Jonathan Ashworth]

Today’s debate is about the triple lock, but we do agree that payments such as universal credit should be uprated in line with inflation and not suffer a real-terms cut.

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[Mel Stride]

My hon. Friend is entirely right. That is precisely the point I am making. It would be entirely irresponsible for any member of the Government to prejudge or give a running commentary on anything that may appear in that statement.

[Alan Brown]

Can the Secretary of State outline why it would be irresponsible to confirm that the Government are keeping a manifesto commitment and promise?

[Mel Stride]

As I have set out, we are facing what is being called a Budget. It is a major fiscal event and many decisions will be taken within it. It would not be right for a member of the Government at the Dispatch Box to prejudge what may be included in it.

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[Mel Stride]

The hon. Lady asks from a sedentary position why poverty is going up, and I will come to poverty in a moment. There is no doubt that my hon. Friend the Member for Gloucester is right: for a long time the Government have stood up for the interest of pensioners as one of our prime priorities, and we know why. Many pensioners are particularly vulnerable. When economic conditions are difficult—as they are at the moment—it is hard for them to adjust their economic circumstances, to re-engage with the workforce and so on, so it is important that we have that duty.

I turn to poverty. Since 2009-10, 400,000 fewer pensioners are in absolute poverty—before or after housing costs—and the proportion of pensioners in material deprivation has fallen from 10% in 2009-10 to 6% in 2019-20. Over the much longer sweep since 1990, relative poverty has halved, but there is still more to be done.

[Alan Brown]

Does the Secretary of State accept that poverty analysis figures lag real time and that poverty figures are going up? We only have to look at how an estimated 6.7 million households are in fuel poverty. Will he remember that when he stands at the Dispatch Box and talks about figures coming down?

[Mel Stride]

Those figures are simple facts about what has happened to absolute poverty across the period that I quoted.

I turn to an important issue: the economic circumstances in which the country finds itself.

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[Mel Stride]

Mr Speaker, you are a man after my own heart. We are on the same page and I could not agree with you more. Thank you very much indeed for that timely intervention.

That brings me to my closing remarks.

[Alan Brown]

Will the Secretary of State give way?

[Mel Stride]

I will not.

I respect the fact that the right hon. Member for Leicester South brought forward the motion and, to the extent that it underlines the absolute importance of standing up for our pensioners, I welcome it. Government Members will always be there to support pensioners. We always have been in the past, we are now and we always will be.

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

I will pick up some of the Secretary of State’s comments. He started off by trying to claim that there was not much illumination from the shadow Secretary of State’s speech, but we got absolutely no illumination from his speech, either. There is still no clarity on what the Government are going to do. As I said, it is just not adequate to say, “It’s irresponsible to come forward and provide clarity on what is going to happen on the triple lock.” The Secretary of State kept talking about being honest with the public, so he should be honest and tell us what will happen with the triple lock.

The Secretary of State attacked Labour with the old trope about Labour doing borrowing. I am sure that, not that long ago, he was backing the mini-Budget that was all about borrowing to give tax cuts to the rich. That was economic madness. Does he want to come back to the Dispatch Box and apologise for that?

I am happy to support the motion. It is simple and, as it references the Tory manifesto, it should win the entire House’s support—hopefully without the chaos that we witnessed in the Opposition day debate about fracking. I note that that was also the day when the former Prime Minister was questioned at the Dispatch Box by my right hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford); she did her 55th U-turn and said that she would protect the triple lock, so it should be easy for the Government to further confirm that, rather than holding on to the line about waiting until next week.

Last year’s breaking of the triple lock cost each pensioner £520 on average during the cost of living crisis, and the Red Book shows that it will take £30 billion in total from pensioners by 2026-27. At least uprating the state pension this year in line with September’s 10% inflation rate would give certainty of income to its recipients.

However, we should also look at the reality. If the triple lock is reinstated and pensions are uplifted, we are actually almost celebrating not cutting pensions in real terms in the Budget. That is how desperate things are. If that is the measure of compassionate conservativism—not making further cuts to pensions—then it shows the reality of where we are with this Government.

In terms of inflation in the here and now, we know from the Office for National Statistics that tea is up 46%, pasta is up 60% and bread is up 38%. The price of budget food in supermarkets is up an astonishing 17% in the year to September. On energy costs, the average bill, based on the previous cap, was £1,100 a year just a year and a half ago. Now, with the so-called energy guarantee, we are supposed to be pleased that bills are now, on average, £2,500 per year during the winter period.

For the Energy Prices Act 2022, the Government’s own figures estimated that energy bills would go up on average to £4,400 without the support package. That is almost 50% of an average state pension. Given that it is perfectly obvious that pensioners are more likely to use more energy than an average household, it is not just the triple lock that needs to be reinstated; we need this Government to come forward with confirmation of what the future energy support package will be for those who need it. The Secretary of State talked about protecting the most vulnerable. Well, they need to know what is happening with energy going forward as well.

In Scotland, average usage already means that bills are in the order of £3,300 per annum even with the current energy support package, so for people on fixed incomes it really is unaffordable.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

I am grateful to my hon. Friend, who is telling it like it is for people in their homes just now. He is talking about energy costs. That does not include those people, including pensioners, who live off the gas grid and are therefore paying far, far more than those he is quoting.

[Alan Brown]

I agree wholeheartedly with my hon. Friend. The £100 payment to those off gas grid is almost an insult, because it does nothing to help them fill their oil tanks.

In a similar vein on inflation, petrol prices are still massively up compared with recent years. I drive an Insignia, which is not a huge car, but last week it still cost me over £100 to fill the petrol tank. That is clearly unaffordable for those on a fixed income, and it would account for 55% of one week’s full pension.

When we look at the UK in the round, we see that it is one of the most unequal countries in the world. Unfortunately, that inequality continues during retirement. The Gini coefficient shows that the UK is 14th out of 14 north-west European countries. It is the same for the S80:S20 quintile share ratio; when we compare the ratio of the poorest to the richest, the UK has by far the worst ratio and is again 14th out of 14. Scandinavian countries—all small, independent countries—lead the way on these measures.

Poorer pay and lower incomes for those struggling also means that later on in life they are less likely to have private pensions and so are reliant on the UK state pension. Again, the UK state pension fails in comparison with those of other countries. When we look at the proportion of earnings derived from state pensions, the UK sits 30th out of 37 OECD countries. I understand that there is an argument that it can be good to move away from dependence on state pensions, but the UK is clearly among outlier countries near the bottom of the pile, and way below the OECD average. Many people are using occupational pensions and capital as sources of income, but that increases inequality in pension age for those without access to such means.

If we look at the UK’s flat pension rate and compare it with other countries that pay a flat rate—Ireland, Denmark and the Netherlands—we see that the UK rate is again lower and fails in comparison. If we look at state pension expenditure compared to a country’s GDP, we see that the UK is again way below the OECD average and is ranked 28th out of 38 countries. Ministers might say that those measures can be somewhat subjective, but the UK trails in each one, so there is a common theme. One other measure is the replacement rate that compares all sources of pension income versus previous earnings. On this measure, the UK, with an average over 10% less than those of the EU27 and the OECD, is ranked 19th out of 37, so still in the bottom half of the table.

As I have stated, this means that inequality in the UK continues into retirement and the UK has the 12th highest pensioner poverty rate out of 35 countries measured by the OECD. What that means, if we turn that around, is that in terms of disposable income to support a standard of living for those aged 66-plus, the UK is ranked 24th out of 35 countries, while Iceland, Denmark and Norway occupy the top spots. Ireland is in eighth place. And those statistics are based on comparisons before the UK broke the triple lock and the link to earnings last year. It is absolutely critical that the triple lock is restored. Independent Age emphasises that:

“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”.

One additional income support measure is pension credit, but we know that take-up levels are still too low—the Secretary of State acknowledged that. Previous research commissioned by Independent Age estimated that full take-up of pension credit could lift 440,000 older people out of poverty. So when will that be tackled by the Government? The unclaimed £4 billion in pension credit could make the lives of hundreds of thousands of pensioners more bearable. It is also money that would then be recirculated within local economies as it is spent on vital household needs.

[David Linden]

Does my hon. Friend think that banks have a role to play? Given that the vast majority of pensioners receive their pension payments from the Department for Work and Pensions into their bank accounts, banks have the ability to identify where payments are coming from and the amount. Does he agree that there is an opportunity for banks to play a role in promoting pension credit?

[Alan Brown]

That is a very good point. I agree with my hon. Friend that that is an ideal way of managing that. I urge the Secretary of State to take heed of that intervention and work with banks and other organisations to try to increase pension credit take-up.

In terms of pension policies, of course I have to refer to the WASPI—Women Against State Pension Inequality Campaign—scandal and the fact that the Government are still not moving forward on fast and fair compensation, given that the Parliamentary and Health Service Ombudsman found there was maladministration. The PHSO made it clear that the Government do not have to wait for the end of its investigation to take action to remedy this injustice.

There is also the frozen pensions scandal, whereby whether your pension gets uprated or not is arbitrary, depending on which country you reside in. It is also scandalous that the UK Government have yet again rejected offers from the Canadian Government to enter into reciprocal arrangements. I urge the Secretary of State to reconsider that and engage in meaningful talks with the Canadian Government.

All those aspects show that the state pension in the UK is not the safety net we are told it is. It shows clearly that the Better Together mantra of staying in the UK to protect pensions in Scotland was a cruelly false premise. Indeed, with private pensions nearly collapsing after the Tory mini-Budget, that claim looks even more ridiculous. It also shows that when Gordon Brown, at a Better Together event, said:

“Our UK welfare state offers better protection for pensioners, disabled and the unemployed”,

he was, frankly, lying.

[Madam Deputy Speaker (Dame Eleanor Laing)]

Order. It would be better if the hon. Gentleman found other words—perhaps a little gentler—rather than those he has just used.

[Alan Brown]

I take your point, Madam Deputy Speaker, but of course I was not referring to any hon. Member in this place.

[Madam Deputy Speaker]

Order. I fully appreciate that and the hon. Gentleman is technically correct, but I take the view that anyone who has been a right hon. Member, and held a most senior position in this place, should be treated with respect even after they have left. A different form of words would therefore be appreciated.

[Alan Brown]

Thank you, Madam Deputy Speaker. I respectfully say that his comments were misleading because, as I have outlined, the UK pension is not as good as it is made out to be and is one of the poorest in north-west Europe.

Moving on, it is little wonder that the Scottish Government have been publishing papers comparing the UK to comparator countries for an independent Scotland. Scotland has a lower pensioner poverty rate than the rest of the UK at present, but we want to do much better than that. We want to match or better the comparator countries, reduce inequality during working life, and allow a more dignified and enjoyable retirement for all. We no longer want to be left here hoping, yet again, that Westminster will make the right decisions on such measures as the triple lock. We want to do things for the betterment of the citizens of Scotland.

[Kevin Foster (Torbay) (Con)]

This is my first Opposition day speech in a while and I welcome the opportunity to speak on an issue that is so important for Torbay. It will perhaps be unlike some of my previous speeches in that, first, I am not following the hon. Member for Strangford (Jim Shannon), and secondly—I see the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Mid Sussex (Mims Davies), on the Front Bench—this will not be quite as thorough an analysis of the issue as some have occasionally enjoyed from me on a Friday. It is a particular pleasure to see the Secretary of State on the Front Bench; I know that he will be a doughty champion for our beautiful county and its people, and that he will ensure that the most vulnerable are protected.

Turning to the motion, it is fascinating to see the huge enthusiasm from Labour Members for our 2019 manifesto. I cannot remember the same enthusiasm three years ago, when they were not that enthusiastic to have a general election in the first place. This measure was a key part of the pledges that we made. We have heard some knockabout today, but we have to remind ourselves that the pension triple lock was introduced in 2010 and not before. For the 13 years prior to that, pensions had been linked to the rise in inflation and in prices, rather than the position adopted under the triple lock.

We know why we introduced the triple lock. As has been referred to, the inspiration came from the 75p increase some years earlier. It aimed to give a clear sense of the direction in which state pensions would go. It would either be in line with prices, as was done previously, or earnings—by reinstating a link to those—or it would be a minimum of 2.5%, providing clarity for those looking ahead to their retirement. As that was done in a simple way, it meant that pensions would be protected against price shocks and that they would keep pace with earnings as they went up. Since 2010, the level of the basic state pension has gone up by £2,300.

The measure also has to be seen in the light of other changes, such as the end of opting out and the introduction of the new state pension, which is clearer about what people will get when they retire. As has been touched on, it allows more years in which, for example, someone is bringing up children to count towards the state pension. The changes were about making what people have clearer and simpler so that they can plan in their retirement.

That was very welcome in Torbay. Those commitments were probably a reason why a seat that was held by another party for 18 years is solidly Conservative again. Most pensioners and those who vote in Torbay are realistic people. They recognise the impact of the pandemic last year and the odd outcomes it produced for earnings—for example, in the previous year when earnings went down, and last year when earnings jumped up. The double lock was therefore introduced for one year last year, using the CPI rate for the increase in the state pension.

Some people say, “If inflation was good enough to be the rate of increase last year, it should be good enough this year, not least given the impacts we are seeing on prices.” I accept that there is a need for balance and the Secretary of State’s point that he cannot pre-empt what will be said next week. We cannot have a running commentary in the run-up to a fiscal event, with a different Department every day ruling something in or out, or putting something in or out. I take his point, but those of us who are not on the Front Bench can make our comments more freely about the outcome that we would like next week.

On the position in Torbay, the Secretary of State was right to highlight other benefits and support that is being offered to pensioners. The second cost of living payments are starting today, not just for pensioners; I think 16,300 families in Torbay will start to get that payment, taking the total up to £650. Members have rightly touched on the energy price guarantee, which helps to cap the price being paid for energy. On top of that, there were such things as the council tax rebate earlier this year. Councils have discretionary funding to apply that to those in band E and above when they have particular pressures. Therefore, when we discuss the triple lock and the state pension, we have to consider some of the other support. Of course, I have not mentioned the £400 per household energy bill discount from which pensioners will innately benefit.

It is interesting to hear people making comparisons with other countries and talking about wanting to emulate some of them. I would be interested to hear whether SNP Members would like to emulate the situation in many European countries whereby, although the position on the pension might be different, pensioners have to pay certain medical charges and there are social care levies applied to pension income and taxes that would not be paid here. Certainly, many services that are provided free at the point of use and point of need under the NHS are charged for in other jurisdictions. If we make comparisons and say we want to emulate other countries, we need to be conscious of what we are arguing we should emulate. We can do more to help people to get pension credit.

[Alan Brown]

I used a whole suite of comparators to make my point, and the key thing is that the UK has the 12th highest poverty rate out of 35 countries. That is shameful, is it not?

[Kevin Foster]

The hon. Gentleman made the point in his speech that he was looking to emulate the packages given to pensioners in other countries. If he wants to emulate them, he should look at what those packages include, such as charges for medical services and tax rates that we do not charge here. The council tax rebate of £150 did a lot for my constituents. As for whether that applies in Scotland, that is a devolved matter.

On the triple lock, the rise in prices has hit many people. Many people over the state retirement age are unlikely to have the type of options that others may have to meet some of the rising costs. It is therefore vital that we look to honour our pledge to them. I accept that that pledge cannot be made immediately today, but I look forward to hearing further clarity on that next week.

About £4.7 million of pension credit went unclaimed in Torbay last year. That could have gone to some of the poorest households in the bay. When the Minister sums up, I would be interested to hear about the Government’s thoughts on that issue, particularly when so much data is available. The era of people filling in paper forms or going to a post office with a pension book is long gone. The vast majority of that is done through electronic means. This is about what could be done to fill the gap so that more people can get the support to which they are entitled, not least because once someone is assessed as being eligible for pension credit, it opens the door to a range of other benefits and support.

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[The Parliamentary Under-Secretary of State for Work and Pensions (Laura Trott)]

I thank all hon. Members for their valuable contributions to the debate.

Since 2010, pensioner incomes have gone up, absolute pensioner poverty has gone down and we have corrected the historic inequalities towards women in the state pension. That is a record that we on the Government Benches can be proud of. The decision on how to uprate state pension for this year is taken by the Secretary of State at the same time as the uprating decision on all benefits for those of working age and over state pension age.

[Alan Brown]

The Minister is repeating what the Secretary of State said earlier about pensioner poverty going down. The reality is that it is down only on old statistics. Pensioner poverty is increasing. Fuel poverty is increasing. So will the Government update the House on what the true figures on poverty are in the UK?

[Laura Trott]

We absolutely recognise that this is a very difficult time for pensioners. That is why we put a substantial package of support in place, which I will come on to later.

The Secretary of State set out, when opening the debate, that the results of his uprating review will be announced alongside the autumn statement on 17 November. To nobody’s surprise, I will not be pre-empting the outcome of that review today. However, reflecting the debate this afternoon, it is important to highlight how pensioners have been supported since 2010.

The yearly amount of the basic state pension has risen by over £2,300 in cash terms, rightly highlighted during the debate by my hon. Friends the Members for South Cambridgeshire (Anthony Browne), for Torbay (Kevin Foster) and for Heywood and Middleton (Chris Clarkson). Average weekly pensioner incomes have increased by 12% in real terms and as a result absolute pensioner poverty has fallen by 400,000 since 2010.

We are forecast to spend over £134 billion on benefits for pensioners in 2022-23. That amounts to 5.4% of GDP.

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[Laura Trott]

I will make a bit of progress; I have been quite generous on interventions.

We know that the coming months will be tough for everyone, but especially for pensioners. I thank all hon. Members who have raised cases on behalf of their constituents. The Government fully understand the difficulties that pensioners will face this winter and will stand by those in the most need. That is why the Government have made substantial support available for pensioners struggling with the cost of living this winter. As my hon. Friends the Members for Wantage (David Johnston) and for Gloucester (Richard Graham) pointed out, we have not heard much from the Labour Front-Bench team today about what their plan would be for this winter.

We have a plan that includes the £650 cost of living payment for those on pension credit to help with the rising cost of living. There is a £400 reduction on energy bills for all domestic electricity customers over the coming months and the £150 council tax rebate received by 85% of all UK households. Those on state pension will also receive an increased £500 winter fuel payment if they are under 80 or a £600 winter fuel payment if they are 80 or over. In total, that will mean that all pensioners receiving the state pension could receive up to £850 of additional support in the coming months and that pensioners on the lowest income who are claiming means-tested benefits will receive up to £1,500.

[Alan Brown]

Will the Minister give way?

[Laura Trott]

I will make a bit of progress and then come back to the hon. Gentleman.

Pension credit was raised by a number of Members, including the hon. Member for Kilmarnock and Loudoun (Alan Brown), my hon. Friend the Member for Torbay, the right hon. Member for East Ham (Sir Stephen Timms), the hon. Member for Birmingham, Erdington (Mrs Hamilton), my hon. Friend the Member for Rother Valley and the hon. Members for Arfon (Hywel Williams) and for Wirral West (Margaret Greenwood). My predecessor—the Minister for Employment, my hon. Friend the Member for Hexham (Guy Opperman)—put in a huge amount of work to increase awareness of pension credit. We have seen a significant increase in the number of claims, peaking at a 275% increase year on year during pension credit awareness week in June. We know, however, that only seven out of 10 people who are eligible to claim it do so. That means that £3,300 of additional support is not being claimed by around 850,000 households. Clearly, it would make a significant difference if even some of that money—totalling £1.7 billion—made its way into the pockets of the poorest pensioners.

The benefit of pension credit is that, as many Members have mentioned, it passports to an array of additional support, even when a person’s entitlement is very small. A pension credit recipient will receive a TV licence if they are over the age of 75 and get access to housing benefit and council tax support. The second half of the Government’s cost of living support—worth £324—will also be paid to all pension credit recipients. However, time is running out for those who have not yet claimed pension credit. The crucial date is 18 December. If someone claims pension credit by then and is eligible for the maximum three-month backdating, they will receive £324 of support to which they are entitled. It is therefore essential that all of us here urge our constituents to visit the pension credit page of gov.uk or to call the number listed to check eligibility of claim.

On automatic enrolment, the right hon. Member for East Ham and my hon. Friend the Member for Torbay raised an interesting idea. From the information that I have, the Government do not have the data to be able to do it, but I will definitely explore further the point about local government and what more we can do with data.

[Alan Brown]

The Minister spoke about the extra support for pensioners—I think she said it was £850. Does she realise that that does not even cover the increase in the average energy bill, which has gone up from £1,100 to £2,500? More importantly, what does she think energy bills will be when the Government’s support ends come April?

[Laura Trott]

That does not include the energy price guarantee.

As the Secretary of State set out to the House and as I said at the start of my speech, we cannot pre-empt the fiscal statement, but it is the Conservatives who have increased the state pension, it was the Conservatives who introduced automatic enrolment and it is the Conservatives who have reduced absolute pensioner poverty. This Government have always protected and will always protect the most vulnerable: that has been our track record since 2010, and that is what we will continue to do.

Question put.