Pensioners and Winter Fuel Payments

Cathy Jamieson Excerpts

Tuesday 22nd November 2011 Commons Chamber

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

I thank the right hon. Member for Belfast North (Mr Dodds) and his colleagues for bringing this important matter before the House today. The debate is extremely timely, as we are at that point in the year when pensioners are already worrying about what the coming winter weather has in store for them. In my constituency—and in the right hon. Gentleman’s too, no doubt, since he is just across the water from me—we are already experiencing rather colder weather than we have here in London.

All of us on the Opposition Benches know, and many on the Government Benches also know, although they may not openly admit it, that people are feeling the squeeze of rising prices. They are increasingly worried about the basic costs of living, particularly food and fuel prices. With unemployment at its highest level for 17 years, and more women out of work than at any time since 1988, more and more people are struggling to make ends meet.

The real problem is that this out-of-touch Government seem to have no idea what it is like for ordinary people who are trying desperately to keep their heads above water. It is time that out-of-touch Ministers realised how tough things are for pensioners right now and how their policies are making things even harder. This year, pensioners are facing not just a double whammy, which was referred to earlier, but a triple whammy of higher VAT, soaring energy prices and what is effectively a cut to the amount of money that they receive in their pockets to assist with winter fuel payments.

I do not think that the Government understand why people are so outraged that the energy companies can increase their profit margins eight times over at the same time as every household in the country is seeing their bills go sky high. The “Plug the Debt” campaign launched by Consumer Focus and Citizens Advice has highlighted:

“The average energy bill has risen by over 21% since autumn 2010 from £1,069 per year to £1,273.”

I have heard the Minister say that that is only a pound a week, or a small amount, and £200 a year might not mean much to the well-off or the millionaire, but believe me it is a huge amount for a pensioner household with a fixed income, where every penny is a prisoner.

[Andrea Leadsom (South Northamptonshire) (Con)]

Is it the Opposition’s policy to reverse the decrease from £250 to £200 a year that they proposed and increase it back to £250?

[Cathy Jamieson]

I will spend some time dealing with that point during the course of the debate, but I want to say at the outset that it is time this Government took responsibility for their actions, rather than constantly blaming someone else for unpopular decisions.

[Mr David Hamilton]

Last week a Mr and Mrs Watt visited my constituency surgery. They do not make the distinction when losing that £50. They believed that they had a promise of £250. When £50 is taken off, a technical argument about whether or not that £50 is there is inappropriate. I also wish to point out that when the winter fuel allowance was first introduced—before some Members came into this place—it was temporary for the first few years and then we made it permanent. This Government could have done exactly the same.

[Cathy Jamieson]

I am sure that Mr and Mrs Watt are fairly typical of many of the pensioners we all see in our surgeries. It is not only my hon. Friend’s constituents who see this as a cut. The charity director of Age UK said earlier this year:

“While the uplift was billed as a temporary measure, renewed annually, for those older people struggling to pay fuel bills, this is a question of semantics and they will view the measure as a cut.”

Pensioners view the measure as a cut as less money is going into their pockets.

I know from my hon. Friend the shadow Secretary of State for Northern Ireland, as was mentioned earlier in the debate, that the average household energy bill is around 14% higher in Northern Ireland than in England and Wales. In the 21st century, it is absolutely shocking that around 1,300 are estimated to have died from cold weather-related illnesses in Northern Ireland last year.

I must also gently point out to the Minister and other Government Members that, although advising consumers to shop around and switch suppliers might make sense to some people, many of the pensioners I have spoken to find the range of tariffs and options on standing charges completely baffling. If people do not have access to the internet and the price comparison sites that the better-off might use, where are they to start? Pensioners do not want the hassle of complicated forms and do not always trust advice given over the phone, particularly after the bad publicity about people feeling under pressure to switch suppliers.

I heard what the Minister said about there being an 0800 number to call for advice. I do not know whether he has sat with constituents and tried—[Interruption.] He mentions pension credit, but I do not know whether he has sat with constituents who use a range of advice lines and sometimes find them difficult to use. They might be pensioners who are unused to speaking in detail over the phone and find it an off-putting experience. It is important that people can have face-to-face advice and I would welcome any effort he can make in that regard.

I also want to mention briefly those who are off-grid, and there are similarities between Scotland and Northern Ireland, particularly in rural areas. It is not so simple for people in those areas to shop around, although some helpful work has been done, for example, in ensuring that there are co-operative ways for communities to come together to purchase fuel. I hope that that is something the Government will support.

With consumer prices index inflation at 5.2%, pensioners on low and fixed incomes are among the most tightly squeezed, and again Age UK states that

“older people have experienced a rate of inflation on average 5% above headline measures and this is, in part, because the proportion of their income spent on food and fuel is higher than for other age groups.”

The harsh reality is that, instead of supporting pensioners, this Government’s actions are making life even tougher— [Interruption.] Right on cue, the Minister starts again the usual orchestrated chorus from Government Members, attacking the previous Government rather than looking at what his Government are doing today.

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

On the additional costs of food and fuel, is it not really beholden on the Government to realise that those are the areas where pensioners, in particular, feel the pinch? We are in a situation whereby many pensioners say that it is a matter of either heating or eating, so the Government should adjust not their philosophy but the reality of life to the fact that these inflationary measures are hitting pensioners, who do not have the money or the resources to back up the costs when they come in with the bills that they have to pay.

[Cathy Jamieson]

My hon. Friend makes an important point. Many pensioners do not want to admit the financial difficulty that they are in. Often, they try to hide it from their family, friends and local community, so they go behind closed doors and curtains, do not put the heating on for fear of the huge bills that may come in, and choose at times when their money is tight to cut down on nutritious food and other essential items. That is the stark reality for many pensioners living in our communities today, and it is time that the Government realised that they have to take responsibility for their own decisions.

The Government have to take responsibility for their actions and face up to the consequences, so let us take a look at the facts. I am sure that I will get more sedentary comments from Government Members, but it is important to remind people that the UK economy has flatlined over the past year, with just 0.5% growth well before the eurozone crisis, which cannot therefore be entirely to blame for choking off recovery. In the European Union, only Greece, Portugal and Cyprus have grown more slowly than the UK, and the United States has grown more than three times as fast as us over the past 12 months.

The Government’s mistaken decision to raise VAT to 20% in January has hit pensioners hard. Estimates are that it will cost a pensioner couple on average £275 a year, and I return to my earlier point: that may seem like a small amount to some Members; it is not a small amount for someone who is facing the rise in prices, trying to make every penny go that bit further and facing such difficulties every day.

We know that the Government’s policies are hurting ordinary people, because we hear it every day from constituents, as my hon. Friend the Member for Midlothian (Mr Hamilton) said, so we, like the right hon. Member for Belfast North who moved the motion, believe that the Government should look again at the impact of their polices on winter fuel payments and on VAT, which in combination have hit pensioners hard.

The Government have the opportunity to ease the squeeze on pensioners, and they should take it by temporarily reversing the VAT rise. At the very least, they could do so immediately and put that £275 back into the pockets of pensioners.

When Labour introduced winter fuel payments, it did so as part of a drive to help tackle fuel poverty among pensioners, and I accept that some Government Members genuinely want to see the problem tackled. The payments were specifically designed to give older people the reassurance that they could afford to heat their homes in winter—and do so in a way that would allow them to continue to buy their food and to pay the rest of their bills.

At the time there was, and indeed there has been since, criticism that the winter fuel allowance was not targeted in the way that some anti-poverty organisations might have wished. Some people wanted the allowance to go further, and others wanted different groups of people included, but we know from research by the Institute for Fiscal Studies that households receiving the winter fuel payment are almost 14 times more likely to spend the money on fuel than they are if their incomes are increased in other ways. That is quite important, and the IFS specifically stated:

“Households receiving the Winter Fuel Payment spend 41% of it on fuel even though there is no obligation to do so. When the same households receive additional income which is not labelled in any way, they spend just 3% of it on fuel. To put it another way, simply increase the income of a pensioner household by £100 and they will increase their spending on fuel by £3. Label that increase a ‘Winter Fuel Payment’ and £41 will go on fuel.”

Indeed, the IFS went further by stating:

“The winter fuel payment was introduced to encourage older households to spend more on heating in the winter. Remarkably it appears to have had just that effect.”

To be fair to the Government, at least for a moment, they do seem, to be fair—

[The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller)]

“They do seem to be fair.”

[Cathy Jamieson]

On one or two things, and on this point the Government do seem to have moved on from the days when some people who are now in prominent Government positions thought that winter fuel payments were “gimmicks”. To be fair again to the Pensions Minister, back in May he answered a written parliamentary question by stating:

“The winter fuel payment provides a significant contribution to an older person’s winter fuel costs and provides vital reassurance that people can afford to turn up their heating.”—[Official Report, 23 May 2011; Vol. 528, c. 493W.]

Today, he seemed to suggest that he still agrees with that in principle, and I am glad to hear it, although I disagree with him on whether the amount of money going into pensioners’ pockets has been cut.

The coalition agreement, which has been referred to, states:

“We will protect key benefits for older people such as the winter fuel allowance”.

Most reasonable people reading that statement or hearing those words coming from the mouths of Ministers might reasonably have expected the coalition to have protected all winter fuel payments. They were certainly the words that people heard in the run-up to the election, but as we know the winter fuel payment will be £50 lower this year than it was in each of the last three years for eligible households aged 60 or over, and £100 lower for those aged 80 or over. The Department for Work and Pensions estimates that 9 million households benefit from the winter fuel payment, so 9 million households will be worse off this winter.

People will no doubt seek to make the usual criticisms of the former Labour Government at this point, but when Labour left office no decision had been taken, and it was absolutely in the Chancellor’s power to continue with the extra payment, as Labour Chancellors had in previous years. It is therefore absolutely wrong for any Government Member to say that the decision was taken by the previous Government; the decision to axe the additional payment was taken by this coalition Government —no one else.

[Steve Webb]

Leaving aside the fact that the shadow Work and Pensions Secretary was the man who left the note saying, “There’s no money left,” I must ask, if the previous Government planned to keep the winter fuel payment at £250, why did they not set the money aside in their Budget plans?

[Cathy Jamieson]

The decision was taken year on year, and it would have been entirely open to a new Government —indeed, if a Labour Government had been elected, there would have been the option—to look at the measure year on year, so no matter how many times Ministers raise the issue, they cannot get away from the fact that the very people who decided not to go ahead with the payment are the coalition Government.

I am astonished to hear the Minister seemingly suggest that this Government had to follow everything that the previous, Labour Government did. If that had been the case, we would still have had a future jobs fund, and perhaps youth unemployment would not be rocketing. No one wants to intervene on that point, so perhaps we will hear more from the Under-Secretary in her winding-up speech. Rather than harking back to the past, it is time that this out-of-touch Government came back to reality and dealt with the real-life issues facing today’s pensioners.

Let me give the last word on this to the voice of pensioners. Speaking about the Chancellor’s decision to axe the additional payments, Dot Gibson from the National Pensioners Convention has said:

“It’s a shabby way to treat Britain’s older generation. If we really are all in this together, why is he going to take £100 off the winter fuel allowance for the oldest members of society at a time when fuel bills are rising and winter deaths amongst older people are a national scandal? He should be ashamed of his behaviour”.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller)]

I thank Opposition Members for raising this important subject. We have had a lively debate.

Let me begin by emphasising that the coalition Government take the issue of pensioner poverty very seriously. Our record demonstrates that. We pay more than £2 billion in winter fuel payments, and we pay it to more than 12.5 million pensioners, including more than 300,000 in Northern Ireland last year. The payments go to pensioners regardless of their income, and most do not even have to make a claim. I think that Members on both sides of the House agree that the winter fuel payment makes a real difference, ensuring that pensioners can turn up their heating in the knowledge that they will receive the help they need in order to meet their heavy winter bills.

It is regrettable that the last Administration decided not to provide for a temporary increase to become permanent—to last beyond the year of a general election. People can draw their own conclusions about why a temporary increase in winter fuel payments extended in the year running up to a general election but not beyond. It is most telling that the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson), who spoke for the Opposition, failed to pledge to make concrete the previous Government’s temporary increase. I say that because she is a shadow Treasury Minister and if she does not know whether the Opposition would make that permanent, who would?

[Cathy Jamieson]

Will the Minister accept that it is time that this Government took responsibility for their actions? The decision whether to pay this increase is entirely down to this Government, and it would be irresponsible for anyone on the Government Benches to suggest otherwise. It was not the previous Government but this Government who took the decision on this budget.

[Maria Miller]

I think the House will draw its own conclusions from the fact that the hon. Lady again failed to take the opportunity to make clear what the Labour party’s policy is on this issue. The coalition Government have made permanent the increase in the cold weather payment from £8.50 to £25. Again, hon. Members on both sides of the House will be pleased to hear that that money is going to the most vulnerable of our constituents. Some 2.7 million pensioner households receiving pension credit also receive the cold weather payment.

The coalition Government are taking real steps to protect pensioners, which is why one of our first actions was to restore the earnings link with the basic state pension. We also gave a triple guarantee that pensions will be increased by the highest of growth in average earnings, price increases or 2.5%. Pension credit is also available for those who have low incomes, and we have continued key support for older people such as free NHS prescriptions, travel concessions and free television licences. For the longer term, we will need to help prevent people from retiring into poverty. Again, our actions are speaking louder than mere words, through the automatic enrolment in workplace pensions.

Hon. Members have made a strong case as to why fuel poverty is a real issue for many vulnerable people, including pensioners living in Northern Ireland. The differences in Northern Ireland are clear, and hon. Members have made that point in this debate. That is why Northern Ireland receives not only the support from pension credits, winter fuel payments and cold weather payments, which are provided for the rest of the UK, but a block grant of some £10.4 billion in funding for the Executive to address the particular priorities of Democratic Unionist party Members and other Northern Ireland Members. That money goes along with some £6 billion to pay for the cost of social security and pensions. We should not forget that Northern Ireland receives almost 25% more in spend per head of population than England, in recognition of the real issues that individuals living in Northern Ireland face.