Social Security (Up-rating of Benefits) Bill

Chris Stephens Excerpts

2nd reading & 2nd reading: House of Commons & Money resolution & Money resolution: House of Commons
Thursday 1st October 2020 Commons Chamber

[The Secretary of State for Work and Pensions (Dr Thérèse Coffey)]

I beg to move, that the Bill be now read a Second time.

I am pleased to introduce the Social Security (Up-rating of Benefits) Bill. It makes technical changes for one year only that will ensure that state pensions can still potentially be uprated, despite the likely fall in earnings. This will allow the Government to maintain a manifesto commitment to the pensions triple lock policy, providing peace of mind to pensioners about their financial health. It will also allow for potential increases for the poorest pensioners who are in receipt of pension credit, as well as uprating widows’ and widowers’ benefit in industrial death benefit.

As I set out with the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Hexham (Guy Opperman), in our letter to all right hon. and hon. Members last week, each year the Secretary of State for Work and Pensions, my good self, is required by law to conduct a review of certain benefit and pension rates to determine whether they have retained their value in relation to the general level of earnings. If there is a rise, then there is a requirement to uprate the state pension and benefits at least in line with that increase.

In accordance with the usual process, I will undertake that review of social security rates shortly and will report to Parliament on the outcome of the review in November. However, if there has been no increase in the general level of earnings, there are currently no legal powers for the Government to bring forward an uprating order. Since 2011, the Government have used average weekly earnings growth from May to July as the basis for the review. The provisional figure for that period, published by the Office for National Statistics on 15 September 2020, shows a decline in earnings of 1% due to the economic impacts of covid-19. Confirmed figures will be published later this month. Owing to the challenging economic circumstances, average weekly earnings are expected, unfortunately, to show no growth this year. Therefore, this Bill will temporarily amend the Social Security Administration Act 1992 for one year only to grant discretionary powers to increase these rates irrespective of the growth or indeed fall in earnings.

The Bill covers the basic state pension, the new state pension, the standard minimum guarantee in pension credit, and widows’ and widowers’ benefits in industrial death benefit. Those benefits are linked in primary legislation to earnings. The Bill does not extend to benefits that are linked to prices. I will review those under the existing powers in the 1992 Act.

The Bill largely covers reserved matters for Great Britain. On the one element that is devolved to Scotland, Scottish Ministers laid a legislative consent motion, which was passed by the Scottish Parliament yesterday. Under the Social Security Administration (Northern Ireland) Act 1992, the Department for Communities has the power to mirror the uprating order made under the Act that applies in Great Britain. The Northern Ireland Executive can make a corresponding order under their existing power, which mirrors the outcome of the Secretary of State’s review without the need for new primary legislation in Northern Ireland.

The Bill must receive Royal Assent by mid-November to allow the review to be completed. If the Bill does not receive Royal Assent ahead of this deadline, the current legislation will apply, and state pensions will almost certainly remain frozen.

[Chris Stephens (Glasgow South West) (SNP)]

I thank the Secretary of State for giving way; I know that she has other business this afternoon. As well as uprating, many of us in the House have a concern about the lack of uptake of pension credit. Will she tell us what measures her Department will take to ensure that there is a better uptake of that particular benefit?

[Dr Coffey]

The hon. Gentleman raises an important point. We always want to encourage people to take up benefits to which they are entitled. There was an extensive amount of advertising earlier in the year, which was linked into GP surgeries and other public places, in order to encourage that uptake. The changes that the BBC has made in regard to the TV licence has also encouraged some people to take that up. We will continue to try to encourage people to access the benefits to which they are entitled.

If the Bill does not receive Royal Assent ahead of the deadline, the current legislation will apply and it is almost certain that state pensions will remain frozen. The prompt passage of the Bill is essential, which is why I am grateful to the usual channels and the House for expediting this important legislation. In our discussions with the shadow Front-Bench team, we were able to highlight that there has been similar legislation, with a clause in the Welfare Reform Act 2009, to give similar flexibility to the then Secretary of State in consideration of uplifting benefits.

I have set out that this is a technical but important Bill. The Government have worked hard to protect people of all ages during the pandemic by strengthening the welfare safety net, introducing furlough and income protection schemes, as well as supporting those who have lost their jobs to try to help them get back into work. It is right that we also provide protection to our pensioners. Provided the Bill has passed into law by the time I conduct my annual review next month, those pensions and benefits need not remain frozen next year and we will provide our pensioners with important peace of mind.

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[Chris Stephens (Glasgow South West) (SNP)]

It is a pleasure to follow the hon. Member for Delyn (Rob Roberts). I will be picking up on similar themes to those he mentioned.

We welcome this Bill, as it enables the uprating of the state pension and pension credit despite a fall in earnings. We would expect the Government to uprate them accordingly and ensure that everyone can benefit. As the Secretary of State said, the purpose is to ensure that we meet the standard minimum guarantee in pension credit and other benefits. According to the Office for National Statistics, earnings fell by 0.1% in the three months to July 2020 as a result of the coronavirus pandemic. The Government have said that they are committed to ensuring that the Bill will allow them to meet the requirements of the triple lock. We would certainly expect that. The triple lock was a manifesto commitment from the Government, but it was very much supported across the House.

Without this Bill, the existing legislation would mean that the Secretary of State would probably not be able to increase the relevant benefit and pension rates. They would remain frozen, as happened in 2016-17 when the consumer prices index in the 12 months to September 2015 showed a negative growth rate of 0.1%. We therefore certainly welcome the Bill. As the Secretary of State indicated, it also applies to industrial death benefit, which falls within the legislative competence of the Scottish Parliament, where there has been an agreement with a legislative consent motion. The Scottish Government are committed to expediting the timetable to match that of the Government here.

The Institute for Fiscal Studies has warned that unemployment shocks to older workers, many of whom have lost their jobs or will do so when the furlough scheme ends, could have severe implications for individuals’ retirement savings, and therefore long-term effects on their living standards in retirement. We should be very wary of that going forward, not just in discussing this Bill.

On pension credit, we encourage the Government to look at ways of ensuring that there is uptake of that benefit. There are really alarming statistics from the charity Independent Age about the numbers of pensioners who could be in poverty. We really want to ensure that pensioners are kept out of poverty by increasing uptake. I press the Government, once again, to look at as many imaginative and creative ways as they can to ensure that pension credit is taken up, because the statistics, not just in my constituency but in every constituency across the UK, are pretty alarming. I have tried holding constituency events myself to make sure that the benefit is taken up. The Under-Secretary of State, the hon. Member for Hexham (Guy Opperman), knows that I have raised the issue of uptake of pension credit with him many times.

We start from the principle that just as the national health service was created to protect all in time of need, the social security system should do the same. I encourage the Government to ensure that the £20 uplift to universal credit remains permanent and is extended to all legacy benefits. There are some really dire predictions. The Trussell Trust forecasts that food bank use could surge by a staggering 61% in the coming months, which would be equivalent to 846,000 parcels being given out. Behind these statistics are families hit by the pandemic and in desperate need of support.

Finally, I would like to take this opportunity—I am sure that the Minister would think it remiss of me not to do so—to suggest that the social security system should be fully devolved to the Scottish Parliament, where we would make sure that the job was done. The Scottish Parliament has now initiated the Scottish child payment, which will be open for applications in November, with the first payments to start in February 2021, providing low-income families with an additional £10 a week initially for each child under the age of six. We will be supporting the Bill on Second Reading, but I look forward to proposing some amendments in Committee.

Social Security (Up-rating of Benefits) Bill

Chris Stephens Excerpts

Committee stage & Committee: 1st sitting & Committee: 1st sitting: House of Commons & Report stage & Report stage: House of Commons
Thursday 1st October 2020 Commons Chamber

[Chris Stephens (Glasgow South West) (SNP)]

I beg to move amendment 1, page 1, line 10, leave out from “State” to the end of line 15 and insert—

“shall lay before Parliament the draft of an order which increases each of the amounts referred to in subsection (1) above by a percentage no less than—

(a) the difference between the general level of earnings at the beginning of the period under review and the general level of earnings at the end of that period, or

(b) the difference between the general level of prices at the beginning of the period under review and the general level of prices at the end of that period, or

(c) 2.5%,

(none) whichever is the greater.”

This amendment would require the Secretary of State to up-rate the benefits to which this Act applies in accordance with the “triple lock” of the higher of increases in prices, increases in earnings or 2.5%.

[The First Deputy Chairman of Ways and Means]

With this it will be convenient to discuss the following:

Amendment 2, page 1, line 23, at end insert—

“(2C) No draft order laid before Parliament under section (2A) above may be made in the form of the draft until the Secretary of State has laid before Parliament a report containing an assessment of the impact of its effect on levels of poverty.

(2D) The assessment required by paragraph 2C shall, in particular, consider the impact on levels of poverty in—

(a) Scotland, and

(b) Wales.”

 

This amendment would require the Secretary of State to lay before Parliament an assessment of the impact of the up-rating on levels of poverty, including in Scotland and Wales.

Amendment 3, page 1, line 23, at end insert—

“(2C) No draft order laid before Parliament under section (2A) above may be made in the form of the draft until the Secretary of State has laid before Parliament a report containing an assessment of its impact on persons not ordinarily resident in Great Britain, including the impact of exempting any such persons from entitlement to up-rating increases granted by the order.”

This amendment would require the Secretary of State to lay before Parliament an assessment of the impact on those overseas pensioners whose pensions are frozen in accordance with Government policy.

Amendment 4, in clause 1, page 1, line 23, at end insert—

“(2C) No power may be exercised under this or any other Act so as to exempt persons not ordinarily resident in Great Britain from entitlement to up-rating increases granted by an order made by virtue of section (2A) of this Act.”

This amendment would ensure that this up-rating applied to all overseas pensioners, including those whose pensions have previously been frozen in accordance with Government policy.

Amendment 5, page 1, line 23, at end insert—

“(2C) No draft order laid before Parliament under section (2A) above may be made in the form of the draft until the Secretary of State has laid before Parliament a report containing an assessment of its impact on those affected by the changes in the state pension age made by the Pensions Act 1995 and the Pensions Act 2011; and that assessment shall, in particular, consider the impact on women born between 6 April 1950 and 5 April 1960.”

This amendment would require the Secretary of State to lay before Parliament an assessment of the impact of the up-rating on those whose state pension age was changed by the Pensions Acts 1995 and 2011, including in particular the group known as the “WASPI women”.

Clause stand part.

Clause 2 stand part.

[Chris Stephens]

It is good to see that social distancing is being applied at all times. It was remiss of me not to welcome the Pensions Minister back to his place. I did send him a private message, and thoughts of him and his wife and family are very much with us all in this House. I do welcome him back.

These are five non-controversial amendments, which I hope— [Interruption.] We seem to have a laugh already from the Minister. I do not know why. He has obviously not read these non-controversial amendments. We have tabled some probing amendments and look forward to his response.

The first amendment is a theme that was picked up on Second Reading by the hon. Member for North East Fife (Wendy Chamberlain), which is to ensure that the triple lock is applied in legislation. The Government would have to give an explicit commitment to maintain the triple lock for the year ahead. The amendment seems to speak very much for itself.

Amendment 2 asks for an assessment on poverty, which again was picked up on Second Reading. It is certainly our view that the Government are overseeing some brutal benefit cuts, which have exacerbated poverty, and we require a proper impact assessment of the proposed uprating and the impact that has on poverty levels in each of the devolved nations.

Previous UK Budgets have introduced some fairly punitive cuts to social security—certainly the most punitive in recent memory—and we are starting to see an active reversal of reducing and fighting poverty. The Social Metrics Commission report, which was referred to at an earlier stage, notes that prior to the outbreak 14.4 million people in the UK were already living in poverty, including 33% of children, 22% of all working-age adults and 11% of pension-age adults. The largest employment impacts of covid have been felt by those in the deepest poverty, with many at risk of falling deeper into poverty as a result of job losses, reduced hours or reduced pay. We have tabled amendment 2 to provide for that impact assessment.

Amendments 3 and 4 deal with the issue of frozen pensions. UK pensioners deserve a full uprated state pension, wherever they choose to live. Due to the historical arbitrary bilateral agreements between the UK and other countries around the world, some UK pensioners who live overseas do not have their state pension payments uprated every year. That means that their pension is frozen at the level at which they first received it for the rest of their lives abroad. As of August 2019, that affected over 5,110 UK pensioners, who we believe are being adversely affected by the UK Government’s frozen pension policy. Pensioners who have paid the required national insurance contributions during their working lives in expectation of a decent basic pension and retirement find themselves on incomes that fall in real terms year on year. Pensioners will now face ending their days in poverty because they choose to live in the wrong country, in most cases without any knowledge of the implications of their choice for their pension.

In our view the state pension is a right, not a privilege. UK pensioners who have paid their fair share of national insurance contributions should not have to suffer simply because successive Governments have failed to establish bilateral agreements with certain countries. Therefore, we are asking that amendments 3 and 4 be agreed. I also refer hon. Members to the frozen pensions campaign, of which many hon. Members are members.

Amendment 5 relates to 1950s-born women, an issue that I am sure the Pensions Minister would be disappointed if I did not mention. As a previous Speaker of this House advised in 2015, persistence is not a vice. The amendment would require the Government to publish an assessment of the impact of uprating on those whose state pension age was changed by the Pensions Acts 1995 and 2011, including in particular 1950s-born women, or WASPI—Women Against State Pension Inequality Campaign—women, as they are known.

The numbers of ’50s-born women and men claiming working-age benefits has rocketed, and they should have been receiving their state pension. This is a double whammy, with those with occupational defined-contribution pensions to fill the gap being squeezed even further. Those claiming benefits find themselves having lost Government support in many cases, excluded either due to gaps in national insurance contributions, because of low-paid, precarious work, or because of other parts of household income. We are very aware of the history of 1950s-born women and the inequality they have faced throughout many parts of their lives. They now find themselves discriminated against on the basis of so-called equality, while those losing their jobs or seeking work are being further disadvantaged by an unequal playing field and a shrinking job market.

I look forward to hearing the Minister’s response to our amendments.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I thank the hon. Member for Glasgow South West (Chris Stephens) for tabling these amendments, which I would describe as probing amendments to have a wider conversation—perhaps “uncontroversial” is too dramatic a description of what we are discussing today.

On amendment 1, to be fair, the Government have given a clear indication in the opening remarks to this debate of their direction of travel and their commitment to the triple lock this year. It is perhaps worth putting on record the figures from the Library, because I see so much commentary on social media and in the press about affordability. As the Minister said earlier, rounded to the nearest billion, this year this country will spend £102 billion on the state pension—not benefits for pensioners, but the state pension. If we had not operated triple lock from 2011, but had just a double lock of prices or earnings, that figure would be around £100 billion. No one would describe a couple of billion pounds as an insignificant amount of money, but in the context of the UK pensions bill it is 1.2% less. If we had no lock and had simply increased the state pension by earnings since 2011, the bill would be £96 billion, which is £5.5 billion less. However, the crucial point is that that is in the context of the worst earnings growth over the last decade that this country has really ever seen—certainly the worst in modern times. Crucially, that would have meant pensioners becoming worse off, because pensions would not have kept up with prices—something that I think no one here would have been happy to see.

I think we all have to acknowledge that the UK state pension is relatively low by international standards. I am not taking a cheap political pop, and it is appropriate to say that the system is obviously much better when we consider it alongside the NHS, because in some pension systems people have to cover their healthcare costs, and we also have top-ups such as pension credit. The overall system is also clearly much better when we factor in private pensions. However, our basic state pension is relatively low compared with other countries. For instance, a typical woman retiring today will still look to the state pension for over half her retirement income. That is a significant point to bear in mind.

As we have heard, when the coalition Government introduced the pensions reforms that came into effect in 2016, the triple lock was a fundamental part of the calculations for the system. The deal was that people would have to retire later and that some people would not be able to create a state pension that was as high as they could previously have done, but that everyone would get a proper index-linked pension at 67, 68 or 69.

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[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

I thank colleagues for their contributions and will respond briefly because I accept that these are probing amendments. I will most definitely not take up the opportunity to refight the 2019 election with the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), because, frankly, that is probably somewhere he does not wish to go.

On the probing amendment on the triple lock, this is a matter, as was rightly highlighted by the hon. Gentleman, that the Secretary of State herself was pretty unequivocal about. I also welcome his analysis and appreciation that the state pension should not be viewed in isolation, because, quite clearly, it is one element of the various supported benefits that are available—whether a national health service, free at the point of delivery, or the support that is now going through with automatic enrolment, a cross-party policy developed by the Labour party and the Turner commission. Various Ministers in the Labour Government had brought that policy forward as part of the coalition, and it was then implemented by the Conservative Government. That has clearly had an impact, as has, obviously, the expansion of pension credit, and it should be seen in the round rather than on its own in that particular context.

Clearly, the key policy has been the increase in the basic state pension and the fact that we are now £1,900 larger than we were in 2010. Clearly, this is a matter that all parties in this House are supporting on an ongoing basis. I submit with respect that it is entirely appropriate that the Secretary of State should be allowed to bring forward this legislation, as the House seems to deem fit, and should conduct the uprating review and then come back to this House, as she is required to do, and debate the matter in this House.

The issue of pensioner poverty leads me into amendment 5 in respect of the women against state pension inequality. It is unquestionably difficult to predict future poverty rates when one is assessing an impact. The Bill is an enabling piece of legislation. It is not a piece of legislation that then implements a particular policy. There is also a danger with trying to accurately predict future poverty rates, when one is looking at an individual policy and an individual part of a Bill. For example, the published predictions of the Resolution Foundation, which were cited by colleagues earlier on, suggested that relative child poverty after housing costs would increase in 2017-18 when they actually fell. The Institute for Fiscal Studies has not published projections of poverty since 2017.

Let me turn now to the other amendments submitted by the hon. Member for Glasgow South West (Chris Stephens). In respect of the assessment in amendment 3, I submit that there is a “be careful what you wish for” approach. The assessment is unnecessary and, in reality, unfeasible. The reality is that the UK state pension is payable worldwide and given that the socioeconomic conditions of each country vary enormously, it is simply unfeasible to produce a meaningful assessment of the uprating policy’s impact on overseas recipients, and—this is the crucial point—notwithstanding issues regarding feasibility, the timetable for laying a draft order for uprating does not allow for an assessment to be made. If there were to be an assessment, and the amendment was successful, the reality is that that assessment would not be made in time—by November 2020—with the consequence that the state pension would be frozen. I most definitely suggest, with great respect, that that assessment would be a negative idea for all the pensioners who are seeking an increase, potentially by reason of this legislation.

On amendment 4, this is a long-standing policy pursued by successive post-war Governments, who have taken the view that priority should be given to those living in the United Kingdom in drawing up expenditure plans for pensioner benefits. There are no plans to change that policy. The up-rating of the state pension is intended to provide support for pensioners who live in the UK.

I turn to the perennial issue that the hon. Gentleman seeks to raise—I do not diminish the fact that he wishes to raise it, as did the hon. Member for Stalybridge and Hyde from the Opposition Front Bench—in respect of the changes to the state pension increase, which were, of course, supported for 13 years by the Labour Government when they were in power and, in fact, were enhanced by the 2007 Act. It is not the Government’s intention to amend the 1995 Act, the 2007 Act or the 2011 Act. Clearly, if the Scottish Government wish to act, sections 24, 26 and 28 of the Scotland Act 2016 give powers to the Scottish Government to intervene in Holyrood if they choose to do so. We would certainly resist any changes in this Parliament.

I take the point made by the hon. Member for Stalybridge and Hyde about the 2019 election and the debate on that matter, but since then, there has been the Court of Appeal’s decision in respect of the court case, which unequivocally found for this Government, the coalition Government, the Labour Government and the Conservative Government, dating back to 1995 on all issues on these grounds, including notice. With respect, I believe that the matter should rest there.

The long and the short of it is that I would resist the amendments, and I invite the hon. Member for Glasgow South West, with due respect, not to press them.

[Chris Stephens]

I would love to say that I am shocked and stunned that the Government have not accepted any of the amendments, but that would perhaps be an oversell. As the Minister said, they are probing amendments. He will be well aware that we will return to these topics, and I invite Members of the other place perhaps to pick them up when they discuss the Bill. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

The Deputy Speaker resumed the Chair.

Bill reported, without amendment.

Bill read the Third time and passed.