Pensions: Triple Lock

Baroness Scott of Bybrook Excerpts

Wednesday 16th March 2022 Lords Chamber

[Baroness Bryan of Partick]

To ask Her Majesty’s Government what assessment they have made of the impact that the suspension of the triple lock on pensions will have on the lives of pensioners.

[Baroness Scott of Bybrook (Con)]

My Lords, during the passage of the Social Security (Up-rating of Benefits) Act 2021, which suspended the earnings link for state pensions uprating for one year, the Government published an impact assessment. The one-year suspension of the triple lock was in response to the extraordinary economic circumstances at the time, and the Government are committed to applying the triple lock as usual from 2023-24 and for the remainder of this Parliament.

[Baroness Bryan of Partick (Lab)]

I thank the Minister for the reply, although telling us that they were looking in their rear-view mirror when making these decisions is not very helpful. We were told at the time that the suspension was justified because 8% inflation was unthinkable. Can the Minister tell us what the inflation rate on household energy is expected to be next month? Can she also perhaps tell us what the inflation rate on budget brands of food is likely to be and, most importantly, how she expects people on state pensions to stay warm and fed?

[Baroness Scott of Bybrook (Con)]

My Lords, I cannot look into a crystal ball and give those figures but they will come out. We know that they are much higher than we ever expected at that time, which is due to global rather than domestic issues. The important thing with this is that the Secretary of State has to undertake an annual review of benefits and pensions, and the CPI in the year to September is the latest figure that they can use to allow sufficient time for the required legislation and operational changes before new rates can be introduced in the new financial year. As I mentioned on a previous Question, because it had to be done at that time, the Government looked at the pressures on the budgets of families and pensioners and made the changes that I spoke about earlier.

[Baroness Eaton (Con)]

My Lords, what are the Government doing to increase the take-up of pension credits?

[Baroness Scott of Bybrook (Con)]

I thank my noble friend for that question because pension credits are important, particularly for very vulnerable pensioners and those on very low incomes. At the moment, there are about 1.4 million people claiming around £5 billion in pension credit but only about 73% of the people who should be taking it up are doing so. The important thing is that we have to continue to raise awareness. We have put out many letters to pensioners while encouraging them, through the press and social media, to take this up because it is money that is sitting there and should be in their pockets.

[Baroness Meacher (CB)]

My Lords, I fully understand why the Government have had to cancel or suspend the triple lock this year. I also understand that the whole population will take a hit from the inflation increase. I am not sure whether this figure is available but, if it is, can the Minister tell the House what percentage increase in pensions there will be this year, to provide some compensation to pensioners for the huge inflation rate that we all anticipate?

[Baroness Scott of Bybrook (Con)]

I cannot give the figure for that but am very happy to find somebody who can. I will let not only the noble Baroness but the House know it.

[Baroness Janke (LD)]

My Lords, figures show that one in five pensioners in the UK are living in poverty, while 1.3 million retirees are undernourished and 25,000 die each year due to the cold weather. The Minister spoke about extraordinary changes in economic circumstances. Given these and the massive increase in energy costs, what additional support will the Government be providing for pensioners, who suffer particularly when energy costs are high?

[Baroness Scott of Bybrook (Con)]

My Lords, I am conscious that I spoke about households with families before but all the money that the Government are giving for families is available as well to pensioners. The full annual amount of the state pension is worth over £2,300 more in cash terms now than it was in 2010. More than that, about 1.4 million of the most vulnerable pensioners also receive, as we have heard, £5 billion of pension credit. We know it is difficult out there. We are giving money to pensioners through our energy relief costs and living standards costs. We will continue to keep an eye on it and do what we can to increase their budgets.

[Lord Mackenzie of Framwellgate (Non-Afl)]

My Lords, it seems to me that this is a perfect storm and I support the noble Baroness, Lady Bryan, in her Question. There is going to be a real reduction in the income of the vulnerable elderly at a time when, on all fronts, the cost of living is going to go through the roof. Can the Minister give some words of comfort to those members of communities who are not just about managing but are manifestly not managing in the autumn of their years and having to choose between eating and heating?

[Baroness Scott of Bybrook (Con)]

Yes, I can. I think it is up to everybody in communities to support our older population in making sure that they are aware of what they can get. There is the basic state pension and, as I said, there is pension credit, but there are also things such as free bus passes, free prescriptions, winter fuel payments and cold weather payments. All these things are available to help the budgets of these very vulnerable people and it is important—and, I feel, important for the department—to make sure that everybody is getting everything they are entitled to.

[Baroness Wheatcroft (CB)]

My Lords, while many pensioners live on the breadline, quite a few do not and many of those are still in work. Would it not make sense for them to pay the full rate of national insurance and give people who are not in work more help?

[Baroness Scott of Bybrook (Con)]

Of course, they will pay the new rate of national insurance for the National Health Service and social care. I think it is right that they do so if they continue to work, so I agree partly with the noble Baroness.

[Baroness Bennett of Manor Castle (GP)]

My Lords, following up on pension credits, given that the percentage uptake is creeping up very slowly and surveys show that 60% of eligible people who are not receiving it are reluctant to ask for help, is it not time to look again at auto-enrolment? I know this was seen to have failed a decade ago, but digitalisation of records has moved on a lot since then and people should not have to ask—they should just get the money.

[Baroness Scott of Bybrook (Con)]

Yes, I accept what the noble Baroness says and I will take that back to the department. The rate is creeping up; it is at 73% now. We just need to work harder at that as this is money that belongs to those people.

[Lord Sikka (Lab)]

My Lords, I would like to debunk the Minister’s statement that somehow the Budget did not permit the Government an increase in pensions, especially as the Government gave a £4 billion tax cut to the bankers. The national insurance fund had a surplus of about £43 billion, more than enough to fund the triple lock. In addition, if the Government had wanted, they could have got more, for example by taxing capital gains at the same rate as earned income and charging national insurance on the same. That would be another £25 billion. Will the Minister admit that the real problem is that the Government are choosing to inflict hardship on our pensioners? It is a political choice, not an economic necessity.

[Baroness Scott of Bybrook (Con)]

No, I do not agree with the noble Lord. For a start, there is no surplus in the fund that can be simply drawn on. The Government Actuary’s Department recommends that a surplus is kept in the national insurance fund to cover day-to-day variations in spend and the surplus is lent to the Government while that happens. It cannot simply be spent again. The money is invested, it is ring-fenced and there is no question of the Government being in a position to use this facility to extract money from the fund as an extra source of revenue.

[Lord Davies of Brixton (Lab)]

The Minister quoted what the Government Actuary said. The surplus in the fund will be heading towards 60% but the surplus recommended by the Government Actuary is 16%. That is a difference of more than 40% of the fund. There is the money there.

[Baroness Scott of Bybrook (Con)]

I have no answer to that but I will make sure I get one. I assure noble Lords that the fund cannot be used for the purposes that have been put forward.