Social Security (Up-rating of Benefits) Bill

Baroness Altmann Excerpts

2nd reading
Tuesday 13th October 2020 Grand Committee

[Baroness Altmann (Con)]

My Lords, it is an absolute pleasure to follow the noble Baroness, Lady Stuart of Edgbaston. I am sure noble Lords will join me in congratulating her on her excellent maiden speech. I know that we can look forward to many more thoughtful, powerful and productive contributions from her in the future.

The noble Baroness, Lady Stuart, will leave a footprint in this House—fear not. Her battle for the position of women in politics, business and pensions will continue. The noble Baroness has had such a distinguished career in public service: 20 years as MP for Birmingham Edgbaston, including as Health Minister and on the Joint Intelligence Committee. Now, as chair of Wilton Park, she is dealing with conflict resolution, a skill that I hope will prove particularly valuable in the context of some of the conflicts we encounter in this House—on Brexit, for example. As a non-executive director in the Cabinet Office, she is and will be a real asset to the House. I am delighted to see her here.

It is a pleasure to pay tribute to the noble Baroness, Lady Stuart, whom I met and became friends with through her dear late husband, Derek Scott, with whom I worked on pensions policy in No. 10 when he was the then Prime Minister’s chief economic adviser. Her law degree and her near-PhD on pension issues have definitely stood her in good stead. Like the noble Baroness, Lady Stuart, Derek was personable, intelligent and with a really good sense of humour. All three of us were vehemently opposed to Britain joining the euro. Indeed, his warnings about the dangers of monetary union to European financial stability and the costs of bailing out weaker members such as Greece proved prescient around the time of his tragic death aged just 65 in 2012. I have no doubt that Derek would be so proud of the noble Baroness, Lady Stuart, and all that she has achieved—as, of course, are her sons, Ben and Alastair, and her wider family. I look forward to many more contributions from the noble Baroness, as do all noble Lords, I am sure.

I also pay tribute to the noble Lord, Lord Field of Birkenhead, whose maiden speech we have also heard today. I look forward to many more contributions from the noble Lord, not only on education, apprenticeships, modern slavery and national unity but on today’s subject: pensions and social security. He is, as many others have commented, a legend in his field.

The Bill before us today is vital to protect pensioners. Clearly, using earnings growth for the period May to July 2020 would make it impossible to uprate many important benefits that pensioners rely on. It is right that the Bill gives the Secretary of State discretion to increase the state pensions by an amount considered “appropriate” in light of the economy and other matters. It would be wrong to freeze state pensions in the current environment, especially when so many older people are struggling with the effects of lockdown, restrictions on their daily lives, or having to spend more on care, for example.

The UK state pension is already the lowest in the developed world relative to average earnings. I share the views of the noble Lord, Lord Blunkett, and have called, as he has, for a double lock, increasing by the best of prices or earnings. In fact, as others have said, the triple lock is not just problematic for intergenerational fairness; there is an element of intragenerational unfairness. The triple-lock construct is not entirely suitable for the purpose of preventing poverty in later life. It is more of a political construct than a rational economic policy tool to protect later life. The 2.5% is arbitrary and, in particular, does not apply to pension credit, which has to be increased only in line in with earnings, rather than the triple lock. The triple lock protects only the full basic state pension of £134.25 a week and the full new state pension of £175.20. It does not apply to SERPS or the state second pension. So it benefits the youngest pensioners most, rather than the oldest and poorest. I urge my noble friend the Minister to reassure the Committee that the pension credit will not fall behind the new state pension in any way. I also urge the department to look again at how we protect the oldest and poorest pensioners.

The noble Baroness, Lady Meacher, mentioned the issue of frozen pensions: the 4% of UK pensioners who have no right to an increase in their state pension. I know that this is a difficult issue for the department but it might be one, in the light of the pandemic and of Brexit, that we wish to reconsider.

I also ask my noble friend to look at other benefit upratings which are particularly important. One that I have commented on before is bereavement benefits; in particular, having an allowance for children that lasts longer than 18 months and disregards their parental status.

Finally, I ask my noble friend to consider particularly the position of women, the disabled and the lowest earners; in particular, the older women trying to live on far less than the full pension, even though they are entitled to a share of their former spouse’s pension after either divorce or bereavement. Could my noble friend update the Committee on the work being carried out in the department to identify what has gone wrong with the system which is meant to ensure that women receiving below the minimum have their pensions increased when their spouse reaches his state pension age, and whether remedial measures are about to be put in place?

Social Security (Up-rating of Benefits) Bill

Baroness Altmann Excerpts

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Tuesday 27th October 2020 Lords Chamber

[Lord Addington (LD)]

My Lords, this is nothing more than a probing amendment to clarify the Government’s thinking. There is a commitment that the Government will uprate pensions and other benefits in line with practice. However, the economic situation may not trigger that increase via the triple lock and so we do not know what will happen. Without it being stated that that will automatically be in place through the triple lock, we do not know quite what the Government’s intentions are for this year. And what happens next year? What is going on? Some information on the Government’s ongoing intentions would help here.

In the middle of the coronavirus crisis, we sometimes forget that there will probably be a world afterwards. I am not sure whether this is being glass-half-full on this occasion, but are we committed to the triple-lock or something like it? We should look at this issue, or at least pay half an eye to it, because of generational fairness, which is the idea floating at the back of this debate. This Government, and others, I hope, must ask: are we going to continue to make sure that the basic pension is enough to live on and will be a little more than it is now in the future? That might encourage people to buy in.

I look forward to the Minister’s reply and thank her for pointing out before I rose to my feet, with her devastating and scything charm, the slight change to my explanatory statement, in which I originally got the wrong year. I seek the Government’s thinking on this. It is an opportunity for the Minister to provide clarity on the process that will apply if the economic situation does not respond in line with the legislation. I beg to move.

[Baroness Altmann (Con)]

My Lords, I thank the noble Lord, Lord Addington, for his explanation of the amendment and echo his request for some clarity from my noble friend the Minister. Is she able to give us an idea of the Government’s thinking on the future uprating of pensions?

Clause 1, before proposed subsection (2A), relates to the basic pension and the standard minimum guarantee. At the moment, the triple lock does not apply to the standard minimum guarantee and pension credit. Were the amendment to be inserted, it would ensure that the poorest pensioners, who are normally those we might wish to protect the most, would get the benefit of the full triple lock. The overall issue on which I should like clarification from my noble friend is whether she can give us an idea of the Government’s thinking on the 2.5% element of the triple lock. Is that likely to continue in the light of what is happening in the rest of the economy? If so, is there any thinking within the department on ensuring that the pension credit is also uprated by the full 2.5%?

I congratulate my noble friend on pointing out what I was going to mention about the relevant 2021-22 tax year. The thrust of this probing amendment is of interest to the Committee and I look forward to her response.

[Baroness Janke (LD) [V]]

My Lords, I too welcome the amendment of my noble friend Lord Addington. We are all interested to hear the Government’s thinking, particularly on the future of the triple lock. I am sure that we all welcome their commitment to the undertakings in their manifesto and are pleased to see the Bill. However, in recent months, a lot of doubt have been shared regarding the triple lock’s future. Some people have said to me that there seems to be an almost systematic picking at the seams of the triple lock. With the Chancellor under pressure due to the economic implications of the pandemic, we would like some reassurance from the Minister that the Government are committed to ensuring that the pension keeps its value.

The state pension is particularly important to give the poorest pensioners confidence. Everyone is suffering under the pandemic but there is no doubt that the poorest are suffering worst. We would like to know the Government’s thinking for the future. Will there be a commitment in the Bill to keep the 2.5%, as well as transparency and clarity to reassure those pensioners who are particularly dependent on the state pension? I look forward to the Minister’s reply.