Social Security (Up-rating of Benefits) Bill

Baroness Greengross Excerpts

2nd reading
Wednesday 13th October 2021 Lords Chamber

[Baroness Greengross (CB)]

My Lords, I agree with the Government that the state pension triple lock needs reforming—but not, I am afraid, with these proposals. As many Members will know, I have spent much time recently with colleagues in the Intergenerational Fairness Forum, which I am privileged to chair, considering a new system for funding social care, with the aim of fostering intergenerational cohesion and mutual support across the generations—something I think we all agree would be extremely positive. One of the forum’s recommendations was that the pensions triple lock be replaced permanently by a double lock, whereby it rises in line with average earnings or with inflation, whichever is the highest. We propose that any revenue saved by this measure should be ring-fenced and redeployed to fund social care.

We believe that our proposed double lock is justified because since 2010 the brunt of social security and tax credit changes has been borne by people of working age. We also agree with the House of Commons Work and Pensions Select Committee that, provided the state pension is maintained at the current proportion of average earnings, the aim of the Government to ensure a decent minimum income for people in retirement to underpin private savings will have been achieved. A double lock would also continue to protect people depending on the state pension against any periods of high inflation—a risk that, as we know, we may once again be facing.

We have strongly recommended that, alongside the state pension double lock, the Government should undertake a major social marketing campaign to encourage greater take-up of pension credit by those who are entitled to have it. It is dreadful that the estimated rate of pension credit take-up is just 60% and I hope the Minister will be able to give me an assurance that the Government have concrete plans to improve take-up of this vital benefit.

If these two measures were combined, pensioners living in poverty would be better supported, as they are entitled to be under the pension credit rules, while other pensioners would make a fairer contribution to the burden borne by wider society at a time when public expenditure is constrained. They would also share the benefits of economic growth, when it occurs, by retaining the historical link between pensions and average earnings. This combination of measures supports intergenerational fairness and social cohesion.

Social Security (Up-rating of Benefits) Bill

Baroness Greengross Excerpts

Report stage
Tuesday 2nd November 2021 Lords Chamber

[Baroness Stroud (Con)]

My Lords, I shall speak to Amendment 5 in the name of the noble Baroness, Lady Sherlock. I thank and pay tribute to my noble friend Lord Freud, who I believe did a huge service in putting his weight behind the amendments last week.

This amendment speaks to the impact that changes to social security have on those who are in poverty, and it is that poverty impact which I want to focus on here. I want to put on record my thanks to the Minister for all that she did to work with the Chancellor to ensure that as we stand here today the universal credit taper rate is being lowered to 55% and the work allowance increased by £500. Those who are doing everything they can to ensure that they and their families work themselves out of poverty will benefit hugely from this budgetary intervention.

However, it goes without saying that, as my noble friend Lord Freud has just alluded to, there is a group who will not benefit from this change: those on the standard allowance, those who cannot work, those with sicknesses and disabilities. It is to that group that this House must now turn its attention. Testing this House with inadmissible amendments late at night is not the business for today, but we need to keep our focus on this issue.

The challenges that we and many across this House highlighted were the rising costs of inflation and rising fuel bills at the same time as the removal of the £20 uplift. The NICs increase will not impact on that group. A new Social Security (Uprating of Benefits) Bill is coming to the House shortly. It will cover universal credit and focus on the annual uprating of universal credit in line with inflation. We have an opportunity to argue that this should be in line with where inflation will be at the time when it is laid rather than where it was in September, in order to protect these households. There is also a fund of £500 million that has gone to local authorities to cover the colder months of the year. That should be ring-fenced and allocated to those who are on the standard allowance and unable to work or, better still, put through universal credit for that group.

Speaking specifically to the amendment, one of the reasons why the Government are struggling to deliver poverty impact assessments on pensioner poverty or working-age poverty is that they have yet to decide how they are going to define and measure poverty. This matters, and it is one of the key reasons why they have so frequently walked into trouble on issues of poverty. If only the Government realised that poverty measurement can be their friend and guide. It could have guided them through their decision-making during the pandemic and through the challenges of free school meals. I have heard it said that this cannot be done in real time, but with RTI we are so much closer to being able to measure real-time impacts and make informed choices to protect our most vulnerable people.

However, today is a day to say thank you to the Government for their investment in the lives of those who are in work and on low wages, but also to ask them to be watchful for the poverty impacts on those who cannot work—those with disabilities, children and pensioners—and to take action where vulnerability is visible.

[Baroness Greengross (CB)]

My Lords, I support these amendments as they support the very poorest and most vulnerable people of pension age, who are going to face the same rising costs of living as everyone else. When we come to group 3, I hope to speak in more depth about what I believe should happen with overall pension policy, but for this group, I want to focus on the most vulnerable.

When I headed up Age Concern England, we ran many campaigns calling for an end to pensioner poverty—a problem that sadly still exists today. Part of the problem is the low uptake of pension credit, something that the noble Baroness, Lady Altmann, has worked tirelessly on, building support across the House. These two amendments would ensure that, at a time when we are likely to face rising prices, our most vulnerable pensioners are supported.

[Baroness Janke (LD)]

My Lords, as many noble Lords have said today, these amendments are about pensioner poverty. I thank the noble Baronesses, Lady Altmann and Lady Sherlock, for tabling them and for presenting so clearly their purpose.

As others have said, we are often told that pensioners are well off and do not need the protection of the triple lock. Certainly, many pensioners with private pensions are well off by previous standards, but because of this we should not forget about the more than 2 million pensioners living in poverty, many of whom are older pensioners with more severe needs and higher heating costs. These people are dependent on the state pension and it is essential that we protect its value if they are not to be put in even more poverty.

I very much welcome what the noble Lord, Lord Freud, and the noble Baroness, Lady Stroud, have said. I thank them for their campaign and courage, and for the ways they have managed to alleviate some of the suffering due to the inadequate safety net that we have heard described. I am sure that we on this side of the House would welcome the reforms that the noble Lord, Lord Freud, talked about, and the focus of the noble Baroness, Lady Stroud, on poverty and in particular those who have not been helped by the Budget. We look forward to working with them on that.

As many other noble Lords have said, inflation is going to be higher than 3%, if we are to believe all the forecasts. We know that pensioners, and older pensioners in particular, spend more time at home and feel the cold more, and that energy bills are a higher share of their household incomes. In the light of the soaring costs of energy alone, there is good reason to believe that the proposed increase here is not only inadequate but a real-terms cut.

I will speak to Amendment 5, on the impact assessment, which is another that I have signed; the noble Baroness, Lady Sherlock, talked about it, as have others. In our late-night debate on Tuesday, we heard about the failure of the Government to really assess the impact of some of their measures and, in particular, about their use of regulations—from the noble Lord, Lord Hodgson, the chair of the Secondary Legislation Scrutiny Committee. We also heard about the lack of scrutiny of fundamental policy changes which seriously affect people’s lives. I very much hope that the Government will take on board the need for these impact assessments and have positive evidence before we inflict swingeing cuts and policies on large numbers of the population who are, in general, the most vulnerable.

To conclude, I will say a few words about women pensioners, referred to in Amendment 5. Many of us are aware of the injustices suffered by women, many of whom have not had the opportunity to amass a private pension because they have been unpaid carers for many years. Many of these women are dependent on the state pension and are among the poorest pensioners. I hope that the Government will take account of this and act on this injustice, by making sure that we have proper impact assessments and that evidence is brought to us when we are making these decisions.

--- Later in debate ---

[Baroness Wheatcroft (CB)]

My Lords, I put my name to these two amendments for all the reasons that have just been outlined by the noble Baroness, Lady Altmann, and others who have spoken. It seems absolutely the right thing to do, on behalf of 12 million pensioners, to ask the other place to think again, after it spent just two and a half hours considering how to penalise 12 million people in this country.

It is only right that the link to earnings which was part of the manifesto promises should be preserved. In 1979, the Government of Margaret Thatcher abandoned that link. It was restored again in 2011, but the effects live on and, today, pensions are still below their relationship to earnings in 1979. The argument that this is a one-off does not hold water.

I will not repeat the argument that I used in the first group of amendments, save to say that this is not the time when we should make our pensioners poorer; when we can afford, apparently, to make bankers richer, and enable them to drink more champagne as they fly on short-haul flights in the UK, we really need to think again about whether pensioners should be made poorer. Make no mistake about it: the way inflation is headed, pensioners will be poorer.

The Minister talked about the CPI, but she was looking backwards. It is no good telling pensioners what prices have been; when we are talking about the money they will get in the future, the conversation needs to relate to where prices are going. Prices are going up much faster than the rate by which we are talking about raising pensioner income. For those reasons, it is absolutely right that this House should ask the other place to think again.

[Baroness Greengross (CB)]

My Lords, I support the amendment in the name of the noble Baroness, Lady Altmann. I share with her the many years that we have been working on these issues, and I am anxious that we get the balance right on pension policy.

Amendment 3, which would restore the link between pension uprating and earnings, is essential. This link was removed back in 1980. It resulted in many years of pension rates failing to increase at the same rate as average earnings. At that time, I was at Age Concern England, where we ran campaigns calling for an end to pensioner poverty and for the link with wage movement to be restored. Sadly, when this link was finally restored, in 2011, it was done as part of the triple lock, whereby pensions would increase by average earnings increases, inflation or 2.5%, whichever of the three was the higher. For the last decade, wage movement has been stagnant, and the rate of inflation also quite low. At a time when wages were not increasing, we called on workers to pay for the triple lock, creating, in my view, intergenerational unfairness.

At Second Reading, I spoke about the Intergenerational Fairness Forum report, which made a number of recommendations, including that the triple lock be replaced with a double lock, whereby pensions increase at the rate of average earnings or inflation, whichever is the greater. I refer to my interests as stated in the register, and in particular to my role as president of the Pensions Policy Institute. In 2019, this organisation released a report entitled Generation veXed, which found that people born between 1966 and 1980, who entered the workforce before automatic enrolment and who have worked during a challenging economic climate, have poorer levels of retirement savings when compared with the generation that went before them. This Generation X cohort have been asked to fund the current triple lock, while their ability to save for their own retirement has been, sadly, rather poor.

Retirement policy requires a balance and should not change with each electoral cycle. The situation we find ourselves in today, with the Covid-19 pandemic, is that the Government expect significant wage movement. Of course, this is due not only to the pandemic; it is due also to rising prices caused by Brexit, which will put pressure on employers to increase wages.

Amendment 3 would ensure that the link between pensions and earnings was retained, but it would allow the Secretary of State to make adjustments in situations like the one we face this year. I support the amendment as a sensible solution to the situation we are facing at the present time, but I reiterate my belief that, in future, we should abandon the triple lock and specifically the 2.5% uplift, and instead have a double lock based on earnings and inflation. If in future there is concern that earnings are again not increasing, rather than implement a 2.5% increase for pensions the Government should instead look at their economic and employment policies to ensure that earnings and pensions are both increasing at a decent rate.

[Lord Davies of Brixton (Lab)]

My Lords, I support the amendments in the name of the noble Baroness, Lady Altmann. As I made clear earlier, I am in favour of a somewhat greater increase, but I am glad to have whatever is available. I want to make two additional points.

First, there is a lack of trust in the Government. The one way in which they could assuage that lack of trust is by accepting the noble Baroness’s amendment. They really need to explain to us what the downside is of accepting the amendment. One can understand that they do not want to do it, but they need to tell us the disadvantages of adopting the approach.

My second point is a sort of response to the noble Baroness, Lady Greengross. Characterising this as between generations is a category mistake. It is between people on low incomes and people on high incomes; it is between people without much money and people with wealth. That is the redistribution required. To characterise it in terms of generations is simply wrong.