Social Security (Up-rating of Benefits) Bill

Baroness Bennett of Manor Castle Excerpts

Committee stage
Tuesday 26th October 2021 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I begin by apologising to your Lordships for not taking part in Second Reading due to the volume of Bills currently before your Lordships’ House.

I will be very brief. I rise to offer the Green group’s support for the intention of all these amendments. I express my pleasure in following the noble Baroness, Lady Drake, and stress her point that we are not talking about a contest between generations here. There are some very poor people among our older communities, and they deserve not to live in poverty, but that does not mean taking money away from the young. I also stress the point made by the noble Baroness, Lady Wheatcroft, about how pensioner poverty is rising and that we should have a society where no pensioner is living in poverty.

I particularly want to address Amendment 3, which is the one I would most like to have attached my name to, had there been space. It is crucial: pension credit gets so many people to at least a basically decent, not awful, standard of living, but the fact is that that is useful only if you actually get it. I had a conversation—or a debate—with the Minister about a year ago. At that stage, the rate of pension credit take-up was 60%; that meant about a million pensioners were not receiving pension credit who would have been entitled to it. That was money the Government were not paying out—about £3 billion. It was estimated that it was costing the NHS and social care a spend of £4 billion. So not paying pension credit is actually costing the Government money. Can the Minister now—or later in writing, sharing it with other Peers—update me, a year later, on whether those figures still hold? Have the Government planned, as they did not plan a year ago, a programme to promote pension credit to ensure that those who are entitled to it take it up?

[Baroness Janke (LD)]

My Lords, as the noble Baroness, Lady Bennett, says, all these amendments seek to protect pensioners against price increases during a temporary suspension of the triple lock. I very much welcome the proposals made in Amendments 1, 2 and 3, and particularly welcome the proposal to include pension credit in the link with earnings.

I want to speak to Amendment 4 in my name, which seeks to base the uplift on the predicted increase as forecast by the Bank of England for April 2022. My amendment proposes that, as the pension increase will be in April 2022 and the previous pension increase was in April 2021, the best measure would surely be price increases between those two dates.

Circumstances have changed considerably since the Bill completed its passage through the Commons, including rising costs, rising inflation, unreliability of supply chains and the various pressures brought about by those circumstances. While we do not know what inflation will be by next April, there is plenty of reason to think that it will be higher than currently—that is sadly what the Bank of England thinks. For example, the energy cap went up 12% on 1 October, and is expected to go up again next April. I do not think the Government should be happy that these cost rises are not included in the inflation figure that they have used.

We know that pensioners, and older pensioners in particular, tend to spend more time at home and feel the cold more, and so energy bills tend to be a higher share of their household budgets. Given soaring energy costs, pensioner inflation is likely to be higher than average inflation. This is another reason to think that just linking to September’s average figure, when setting the state pension rate, is the answer to the wrong question. I know that some Members will think that using a forecast is not as robust as using an outturn, but this legislation is only for one year, so really we are not setting a precedent. In fact, I am reliably informed that, in the 1980s, the DWP used to use forecast inflation for benefit uprating.

Mention was made in the previous debate of the need to implement the new rates as quickly as possible. This really does not take as long, in this day and age; there are processes in place to make it much easier. Surely it would not take long for the preferred body—the Bank of England or the OBR—to come up with an inflation forecast; presumably the Budget will bring new inflation forecasts in any case.

If the Government are committed to protecting pensioners against rising prices when they set the pension in 2022, they should see that this is a more transparent, easily understood method of ensuring that pensioners are protected against the expected rise in prices, costs and pressures in the year ahead.

--- Later in debate ---

[Lord Davies of Brixton (Lab)]

My Lords, I am pleased to speak in support of my noble friend Lord Sikka and in favour of retaining the existing legislative provisions by leaving out Clause 1 entirely. As the noble Baroness said, it is about whether Clause 1 should appear in the Bill at all. Clearly, to leave it out would vitiate the entire Bill but it would invite the House of Commons to think again, which is the primary role of this House. The intention now is to enable those of us who believe it would be reasonable and right to go for the full 8.3% increase that the Government have stated is the appropriate figure to debate it.

The triple lock has come in for some criticism. It does not enjoy universal support. I understand some of those criticisms and perhaps, in a perfect world, it should not be necessary. We would like to live in a world where pensioners would simply share in the same increases in living standards as those enjoyed by the working population. This is not where we are. For me, the triple lock serves a dual purpose. First, it is needed to protect pensioners’ living standards. Secondly, and in some ways more importantly, it is a way of increasing the flat-rate benefits towards a more adequate level. I am glad to say that I do not have to expound at length on that point because the case has been made so clearly by my noble friend Lady Drake. It is an accelerator which will project the basic pension to a more adequate level.

What is clear is that it is not at an adequate level at present, which is why what is described as the “ratchet effect” of the triple lock is so important; of course, the same would be true of a double lock, based on prices and earnings, which is why we shall return in a moment to the important role of the 2.5% element. Introduced as a political fix at a time when inflation was somewhat higher than it has been for most of the last decade, it has turned out to be of real benefit to pensioners.

As was so clearly explained by my noble friend Lady Drake, the job of the triple lock is not just to protect pensioners in relation to earnings and prices; it is, over time, to achieve real increase in their incomes when measured against either of these indices. As I have said before, it is an inherent feature of the triple lock, not a bug. Whether you agree depends on whether you think the state basic pension or the new state pension are currently high enough. If you think they are, you might consider that we do not need the triple lock, but if you want to see them increase, as I do, the triple lock has a proven track record of gaining ground on that objective. The triple lock may not be pretty, but experience has shown us that it works. During periods when the triple lock—or, in the case in the long-distant past of the 1974-79 Labour Government, a double lock—has applied, we have seen a consistent incremental move of the state flat-rate pension towards a more adequate level.

The element of the triple lock that has attracted most criticism, not least from my noble friend Lady Lister, is the 2.5% minimum increase. It has been said that it is arbitrary and without any justification. Maybe, but so are many other figures in legislation. When we analyse the real increase that pensioners have benefited from since 2011 with the triple lock, almost half the improvement has been due to the 2.5% element. To me, that in itself justifies its inclusion. Does anyone here believe that the basic state pension should be 18% of earnings rather than 19%? It might not sound like much but, to the poorest pensioners, everything counts.

Perhaps we need a debate about what level of flat-rate state pension we need and what the target should be when we have a ratchet effect. I would favour a commission to address the issue, building on the work of the earlier Pensions Commission, which set out the present structure of pension provision in this country. The commission itself did not feel able to specify with any precision what the basic pension should be in earnings terms, but the structure it established depends as much on the level of the flat-rate element as it does on the pension produced by automatic enrolment. I am pleased, therefore, to see that more work is being done in this area, through initiatives such as those from the Living Wage Foundation and the Pension and Lifetime Savings Association, with its retirement living standards.

Particularly given the hour, now is not the time to have a full-scale debate on the conclusions of that work, although it would be valuable to do so when appropriate. What is clear from the work that has been undertaken is that 19% is not nearly enough; it is well short even of the 26% that was attained back in 1979. These benefits are not just inadequate; there is a long way to go before they can become adequate. Consequently, we definitely still need a triple lock and its ratchet effect, and I would be prepared to see something better and faster replace it. That brings us to the increases due in 2022, as determined by this Bill. I believe that we can and should stick to the triple lock, as provided in the legislation, which means the 8.3% increase. Taking the increases to be made in 2021, 2022 and 2023, this provides an ideal opportunity to achieve a significant increase in flat-rate pensions towards a more adequate level in the longer term, which can only be a good thing.

It will no doubt be pointed out that this would have to be paid for, with the figure of £5 billion per annum being quoted. My noble friend Lord Sikka has dealt with that but, for the purposes of today’s debate, I simply say that I support increases in general taxation on those with the broadest shoulders to meet this clear social need, with the obvious target of equalising what I still think of, in the old terminology, as unearned income, rather than earned income. I believe that this would best be done by the restoration of the Treasury’s supplement to the National Insurance Fund, for which there is already provision in legislation.

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a pleasure to follow the noble Lords, Lord Sikka and Lord Davies of Brixton. Given the hour, I will be brief. I very much endorse the comments of the noble Lord, Lord Davies, about this Clause 1 stand part debate seeking to ask the other place to think again, and indeed to ask your Lordships’ House to debate this.

I would be more radical than either noble Lord who preceded me. I believe that the state pension should be set at a level where no pensioner is living in poverty—that is looking at the relative poverty levels, as outlined and widely discussed by the noble Baroness, Lady Lister. That would mean abolishing the contributory principle. Our debate tonight has demonstrated how discriminatory and actively massively unfair that is—because, as worked through now, it largely acknowledges only contributions through paid work. We know that many people, particularly women, make huge contributions to our entire society and future through care, community work and other activities which are simply not recognised in our pension system. This is leaving huge numbers, particularly of women, in a state of living that our whole society should regard as not acceptable.

I agree again with the noble Lord, Lord Davies, that the triple lock is far from perfect. We have talked about heating costs. Of course, another way in which we have very much failed our pensioners is the quality of the housing stock that they are living in. Reference has been made to the quality of council housing, but we also have a huge problem with more and more pensioners now living in private housing due to the huge privatisation of our housing stock through right to buy. Those people are living in extremely poor conditions and are placed in very difficult circumstances in that housing.

I agree with the noble Lord, Lord Sikka, that the cost of not going forward with ending the triple lock for this year—£4.7 billion—is very modest in the overall scheme of things. We have bailed out the banks. When Covid-19 hit, we bailed out many businesses. Surely we should look to bail out our pensioners.

I finish by noting that, when we talk about £14 a week, I agree with the noble Lord, Lord Sikka. There is a relatively small number of people in our society for whom £14 a week is small change, but there are very large numbers of people and pensioners for whom it is literally a matter of life and death. I invite noble Lords to consider our excess winter deaths, many of which occur among pensioners.

[Baroness Sherlock (Lab)]

I will be very brief. I thank my noble friend Lord Sikka for introducing this debate. We all share an underlying concern about the living conditions for poorer pensioners. I will not dwell on pensioner poverty; I made a perfectly long—arguably overlong—speech on the last group of amendments about this very subject.

Because the Bill has only two clauses and Clause 2 is the commencement clause, I suspect that, in coming back, the Minister will be tempted to focus on the fact that this may be regarded as a wrecking amendment because it would remove the entire contents of the Bill. We on this side accept that there is a difficulty in looking at and using the data for the earnings measure without adjustment, so that is not the position that we are in. I encourage her, when she responds, to answer and speak to the underlying concerns about pensioner poverty that have been expressed noble Lords, and perhaps give some assurance to the House about how the Government will tackle that, as well as looking at the immediate issue.

--- Later in debate ---

[Lord Crisp (CB)]

My Lords, I, too, congratulate the noble Baroness, Lady Stroud, for bringing this amendment to the House, together with the noble Lord, Lord Freud, and other noble Lords. They have done it in entirely the appropriate way, in recognition that there is a Budget tomorrow and other opportunities to take this whole debate forward. I have been very struck by the arguments on both sides and how well they were balanced and expressed. But I take the point of the noble Lord, Lord Hodgson, that the rules may not be quite as clear cut as they appear to be, that people will bend, expand or do something with the envelope as they see fit, and that this area needs much more discussion. I particularly agree with him on the planning laws, for example.

I want to make one substantive point which I do not think has been made yet, about the effect of this cut on health. I spent a lot of time recently in some of the poorer communities in the country working on health. In doing so, I have recognised, as we all have, the fragility of some people’s lives and the balances they need to strike to make things work. This may well knock many people on into poverty, as the noble Baroness has said. It will have an impact on physical and mental health and on other public services, and it will be damaging in the long term for society, not just for the people involved.

We have already heard one great paradox: how costly it is to be poor, and how you pay more. There is another great paradox, which is that quite a lot of cost-saving measures end up costing other budgets rather more.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise to make three brief points. I wish first to join other noble Lords in paying tribute to the noble Baroness, Lady Stroud, who has shown real bravery and great leadership this evening in moving these amendments from the Government Benches, and to the noble Lord, Lord Freud, for doing likewise. I commend the others who have supported them.

My second point is constitutional and builds on what the noble Lord, Lord Hodgson, said. Noble Lords may know from history that there has been a real shift in attitudes towards innovation. In the Middle Ages, innovation was a slur, a way of attacking people, whereas in the modern world we think of it as being a wonderful thing. The Government like to celebrate innovations. We have seen lots of innovations in our constitution from the Government, but they do not seem to like what they see as other people’s innovations— even though the noble Baroness, Lady Stroud, clearly set out a number of precedents to show that what she and others are doing here is not an innovation at all.

I want to go back a considerable number of hours to the Environment Bill. Noble Lords who have covered both Bills may have seen the noble Duke, the Duke of Wellington, a Cross-Bencher and hereditary Peer, lead a very cross-party charge, to the point where the Government eventually reversed their position—crucially, after there had been a huge public outcry about water treatment and water companies dumping sewage into our rivers and oceans.

This is a weird situation arising from our dysfunctional constitution and centuries of historical accident; but it was the House of Lords that enabled the people to speak and express their views in a way that eventually changed the minds of MPs. Were your Lordships’ House to go forward from this point and enable these debates, I have no doubt that the people of this country, the voters, would speak loudly and clearly through social media, letters and phone calls to their MPs about their very strong views on the £20 universal credit uplift. Your Lordships’ House could have the opportunity to make that happen. That, I would argue, would be intensely democratic.

My third point is very brief. The Minister, sitting beside the Leader of the House, knows that the circumstances of universal credit, its inadequacy, low wages, insecure employment and zero-hours contracts have given me many opportunities to plague her by talking about a universal basic income. The noble Baroness, Lady Lister, and many others have made hugely powerful points about the dreadful human impacts of the cut to universal credit, but I ask your Lordships to consider whether you believe in the human right to life. The right to life implies access to food, shelter, heating in winter and the basics of security, and that is what this amendment is about. We are talking about basic universal human rights, and that surely has to be a matter for your Lordships’ House.

[Lord Porter of Spalding (Con)]

My Lords, I have not spoken in this House for close on two years—18 months at least—through Covid. I was not intending to speak today because of the Environment Bill coming through and the things that I personally disagree with that were in it, which none of us has covered.

I have listened to my noble friends on this side in bringing forward this amendment. I understand the argument that this is the wrong place to bring through a technical argument that is in the wrong place, but, surely, we have all said that taking money away from our poorest people at this point in time and in where our communities are going is the wrong thing to do. We all know that the £20 uplift was a temporary arrangement to get our poorest people through Covid. As a country, we have not got through Covid; we are in the worst part of Covid’s impacts on our community. So I am hopeful that tomorrow the Chancellor, because he cares about our people in our country, will bring in some measures that alleviate the worst impacts of Covid on our poorest people.

But we cannot overturn all of those rules and regulations that all of you clever people understand about how this place is supposed to work. We cannot break the rules to introduce an amendment that cannot be bolted on, or else we will turn every piece of legislation into a Christmas tree. I will be the worst person in this House for doing this. Every time that you bring something through that I do not like the look of, I will put another bauble on it. That is what we are risking tonight.

I am pleased that my noble friends, who passionately care about this issue, have said that they will not press this to a Division. We must be ready to give a voice to the people outside of this Chamber, if the Government do not understand the seriousness of that return to a previous set of benefits. I will not call it a cut because it is not one; it was a temporary bringing in of alleviation for a problem. The problem has not gone away, and we must try to convince the Government that they need to slowly reduce that alleviation or, at least, re-evaluate what universal credit is supposed to be about. It is supposed to be about making sure that everyone has a decent standard of living and that, if they can work, they go to work and work harder to get more money: “If you can’t work, don’t go to work; we will look after you. But if you don’t want to go to work, we won’t look after you.” That surely has to be part of that conversation. The benefit bill should be for those who need us most. They are our friends, neighbours and families; we should look after them.

I do not see that 11.45 pm is the right time to speak much longer, even though it is the first time that I have spoken for a long time. I am sorry.