Pensions and Social Security

Baroness Primarolo Excerpts

Thursday 23rd February 2012 Commons Chamber

[Madam Deputy Speaker (Dawn Primarolo)]

I understand that for the convenience of the House, motions 1 to 3 are to be taken together.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I beg to move,

That the draft Pensions Act 2008 (Abolition of Protected Rights) (Consequential Amendments) (No. 2) (Amendment) Order 2012, which was laid before this House on 30 January, be approved.

[Madam Deputy Speaker]

With this we shall take the following motions, on pensions and on social security:

That the draft Guaranteed Minimum Pensions Increase Order 2012, which was laid before this House on 30 January, be approved.

That the draft Social Security Benefits Up-rating Order 2012, which was laid before this House on 30 January, be approved.

[Steve Webb]

The draft Guaranteed Minimum Pensions Increase Order 2012 provides for contracted-out defined-benefit schemes to increase their members’ guaranteed minimum pensions that accrued between 1988 and 1997 by 3%. Increases are capped at that level when price inflation exceeds 3%. That, of course, is an entirely technical matter that we attend to on an annual basis, and not something that I imagine we shall need to dwell on today.

The second, smaller draft order comes about for a sequence of reasons. The Pensions Acts 2007 and 2008 gave the Government the power to abolish contracting out on a defined-contribution basis. A written ministerial statement set the point of abolition as 6 April 2012. In June 2011, the House debated and approved the Pensions Act 2008 (Abolition of Protected Rights) (Consequential Amendments) (No. 2) Order 2011, which makes consequential amendments to primary legislation, consistent with the abolition of defined-contribution contracting out. At the time of that debate, a minor defect in the operation of article 3 of the 2011 draft order came to light. I therefore made it clear to the House that I would return with a further amending order before the 2011 order came into force.

Accordingly, the Pensions Act 2008 (Abolition of Protected Rights) (Consequential Amendments) (No. 2) Order 2012 will remove the exclusion of protected rights payments from what counts as income for the purposes of income payments orders made under section 310 of the Insolvency Act 1986, and from the scope of section 159 of the Pension Schemes Act 1993, which provides that guaranteed minimum pensions and protected rights payments cannot be assigned or charged. The draft order will bring consistency with our original policy intention, namely that the tracking of protected rights should cease after the abolition of defined-contribution contracting out.

--- Later in debate ---

[Dr Whiteford]

Obviously I cannot speak for the Northern Ireland Member who raised the issue pertaining to his constituents, but as I represent a rural constituency in which people pay excess prices for their fuel and often have no access to social tariffs, I am very concerned about that as well.

The underlying issue, which I raised with the Minister, is that older people and people with disabilities who spend a lot of time in their houses are increasingly more affected by inflation than those of us who spend most of our day outside our homes. Both the Office for National Statistics and the Institute for Fiscal Studies have pointed out that older people experience inflation at a higher rate than the rest of us, as do people on low incomes. The evidence is there. What concerns me is that CPI does not measure accurately the actual experience of people’s costs, which are higher than either CPI or RPI—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I remind the hon. Lady that she is making an intervention, not a speech—yet.

Before the hon. Member for Truro and Falmouth (Sarah Newton) resumes her own speech, may I point out to her that we are discussing uprating orders, not projects in Cornwall, however fantastic they are. She must make her speech relevant to the uprating orders, not to future grant applications for very worthy projects in her constituency.

[Sarah Newton]

I entirely take those points on board, Madam Deputy Speaker. I hope that the House will forgive my enthusiasm for the excellent work that is being done in my constituency. I will now confine my comments to the subject of the debate, but I beg your indulgence, Madam Deputy Speaker: I should like to respond to the comments made by the hon. Member for Banff and Buchan (Dr Whiteford) by touching slightly on the issue of the costs of heating a home. They are part of the cost of inflation, which obviously has something to do with the pension upratings.

As the Minister has acknowledged, it is difficult to come up with a measure that truly reflects the costs of individual households. People with disabilities and pensioners will often be at home for many more hours in the day than other people, and will also need to keep their homes warmer, because as people age their bodies are less able to regulate temperature. That is a well-known fact. However, I feel that the efforts that the Government are making, and especially the move towards flat-rate pensions of £140 a week, will start to provide people with a reliable amount of income with which they will be able to afford to heat their homes.

A huge problem at present is that people do not claim benefits that could make a real difference to them. Pensioners are the people who most need the benefits, but they are also least likely to claim them. That applies particularly to the group to whom the hon. Member for Banff and Buchan referred—people in their eighties. Theirs is a proud generation, a generation that has fought and lived through the war and we owe them a great deal. They are very stoic and very proud, and they find it difficult to apply for the benefits to which they are entitled. I think we all have an important job to do in speaking with one voice and saying to people of that generation that they have earned the right to claim those benefits. There should be no stigma, and we must make it as easy as possible for them to claim. I urge anybody who knows an older person whom they feel may be struggling to make sure they are claiming the benefits to which they are entitled. The Government have been doing a lot to simplify the application process and to make information more widely available, and there are also wonderful charities and organisations, including the National Association of Citizens Advice Bureaux, that are doing just that.

I am very proud to support the Government on these measures. There has long been great uncertainty about what will happen to the state pension. With the upratings and the triple lock, there is now certainty. There is a commitment to making the state pension the cornerstone of planning for retirement. As the Minister said, we cannot right the wrongs of the last decade in one fell swoop, especially as we are facing the most difficult financial situation in a generation, but the message that today’s measures and commitment send out is that people can plan for the future as they can have confidence in respect of their pension. That is very important.

The right hon. Member for East Ham (Stephen Timms) rightly said that we should consider the upratings in a broader context. I had the great privilege of serving on the Welfare Reform Bill Committee, and I think his description of the broader context of how we are supporting pensioners was not sufficiently generous. What is of most importance for pensioners and their families is both having enough income to live on and the safe knowledge that there will be an NHS for them when they need it. Elderly people are far and away the largest users of the NHS, and it is hugely helpful to them that this Government committed not to cut NHS expenditure—whereas the Labour party said it would do that, and would have done so in this Parliament. The fact that we are finally linking social care and the whole range of other services that elderly people and their families need to be able to have the quality of life and independence they want—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. We are talking about pensions and benefits uprating. We are not having a wider debate on all the Government’s policies. The hon. Lady must refer specifically to the measures discussed by the Minister when introducing this debate.

[Sarah Newton]

The shadow Minister, the right hon. Member for East Ham, referred to the wider context of these measures, and I was merely responding to his comments. I shall, however, now desist from referring to the range of policies that the Government are putting in place to support elderly people and their families.

I support the Government’s measures. They constitute a huge step in the right direction and I am very proud that my Government are honouring their commitment and delivering a decent level of income for pensioners and people living with disabilities in retirement. I urge Opposition Members to desist from misrepresenting what the Government are doing, especially for people with disabilities and pensions, as that is creating fear and anxiety. That is why there are 100,000 signatories to the petition. If the people who signed it knew the truth, they would not have done so. It makes me very angry that people are contacting me because they have been needlessly frightened by Opposition scaremongering that, somehow, the Government are going to take away the benefits for disabled people and slash the benefits for pensioners. As the Minister has made clear today, nothing is further from the truth.

Let us have a constructive Opposition. The people of this country want a constructive Opposition who join the Government in tackling the difficult decisions of the day. They want the Opposition to stop this dangerous party political point scoring.

--- Later in debate ---

[Sarah Newton]

I completely disagree with the suggestion that we are targeting the most vulnerable people, but my question to you is: can you remind the House what happened to the gap between the richest and poorest people in this society under Labour?

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I would love to answer that question, but I am prevented from doing so. The hon. Lady knows that she is not supposed to address the Chair in that way. In responding to her point, I hope that the hon. Member for North Ayrshire and Arran (Katy Clark) will come back to discussion of the uprating order.

[Katy Clark]

I am very grateful for that, Madam Deputy Speaker.

The impact of the changes to benefits and pensions uprating will be similar to the impact on wages that is being seen at the moment, whereby the incomes of the lowest paid are decreasing in real terms; the change from RPI to CPI means, as I have said, that the rate of increase in the incomes of those on the lowest incomes will reduce. I am sure that many of the hon. Lady’s constituents will come to see her to discuss benefit issues over the forthcoming period, and the impact of all this will become clear over a long period of time. It will have an impact on the communities we represent.