Pensions Uprating (UK Pensioners Living Overseas)

Angela Rayner Excerpts

Wednesday 11th May 2016 Commons Chamber

[Angela Rayner (Ashton-under-Lyne) (Lab)]

I congratulate the hon. Members for Ross, Skye and Lochaber (Ian Blackford) and for Motherwell and Wishaw (Marion Fellows), and my hon. Friend the Member for Vauxhall (Kate Hoey) on securing the debate. I thank all hon. Members taking part in it. They have already made some significant contributions.

My party leader has spoken eloquently on this issue in the past, having previously served on the all-party group. Frozen pensions seem even more of a problem today in the context of the rich and wealthy hiding their money in overseas tax havens. Many of my constituents have grandparents and parents who answered our Governments’ calls after the war to come to rebuild our country. Many of those pensioners have been long-standing public servants and have even fought for our country. They have paid national insurance for many, if not all, of their working lives and played by the rules.

Since 1981, however, it has been the position that where a person is not “ordinarily resident” in the UK there is no entitlement to an annual increase in retirement pension. The Government recently reaffirmed this in the debate on 26 January where the Minister stated:

“As hon. Members will be aware, the state pension is payable worldwide, but upratings for people who are not ordinarily resident in Great Britain are generally restricted to people living in the European economic area, Switzerland, Gibraltar or countries with which there is a reciprocal agreement that provides for uprating.”—[Official Report, Second Delegated Legislation Committee, 26 January 2016; c. 4.]

Cost has been cited as a determining factor in continuing to freeze pensions, and the House of Commons Library puts that in the region of £500 million a year. However, the proposal of partial uprating has an estimated up-front cost of just £37 million—small in Government spending terms—and this option offers an affordable and expeditious policy alternative. I and my party are keen to review the research by the International Consortium of British Pensioners and the National Pensioners Convention that suggests a partial way forward that is cost neutral to the Exchequer. We want to be bold in our response, and also credible. Indeed, I am aware that the right hon. Member for West Dorset (Mr Letwin) has made a commitment to look into this proposal on behalf of the Government.

As somebody relatively new to this brief, I believe it is worth taking a fresh look at the current arrangements, as the logic is just not there. Arrangements have been made with some countries and not others. While one British pensioner in the USA gets an uprated pension, a pensioner in neighbouring Canada has theirs frozen. The Government should review the impact of this policy. Labour is calling for a full equalities and impact assessment of the freeze in overseas state pensions, as well as a country-by-country analysis of the number of people affected. I recently met the ICBP and the NPC, and we discussed the impact of the freeze in overseas state pensions. Many Members have spoken passionately about the individual impacts, such as in the case of Rita Young being kept away from her family, mentioned by the hon. Member for Ross, Skye and Lochaber.

The Government have told us half the story, but Ministers must be forthcoming about the impact of this policy. For example, the vast majority of those affected live in Canada or Australia, two countries where the pensions system is means-tested. The previous Pensions Minister said that, as a result, uprating the pensions of British citizens living in those countries would, in effect, mean a transfer to the Canadian and Australian exchequers, and the pensioners themselves would not necessarily be any better off. I would welcome further details from the Government about the number of British pensioners living in countries where the pensions system are not means-tested. I would be grateful if the Minister could give the House that information today or write to me. How many British pensioners live in countries where the pensions system is not means-tested, and by how much are they losing out? Echoing the request made earlier, have the countries in which they live approached the UK Government for a reciprocal agreement similar to that which we have with the United States, and if so, on what grounds were those agreements refused? Overall, will the Minister give us an estimate of the cost to the Exchequer of uprating for British pensioners living in countries where the pensions system is not means-tested?

I am keen to listen, learn and work with stakeholders such as the all-party parliamentary group to find a solution that is credible, affordable and fair. Members across the House will, like me, have received emails and correspondence from many overseas pensioners who will be watching this debate. I hope they take from it the message that Members from across this House value the contribution that they have made to our great country and will continue to work across parties to seek a fair way forward.