Cost of Living Increases: Pensioners

Drew Hendry Excerpts

Monday 21st March 2022 Commons Chamber

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is kind of a pleasure to follow the Secretary of State, but I have to say, not for the first time, that I am a wee bit puzzled, because she seemed to be responding to a different debate from the one we are having. The shadow Secretary of State, the right hon. Member for Leicester South (Jonathan Ashworth), set out some clear and harrowing examples of people who are really struggling, yet the Secretary of State gave a pre-prepared speech about a secure and dignified retirement tomorrow, ignoring the here and now.

Talking about how this Government have paid the most in pensions ever does not cut it. Those statistics are fine, but they do not help pensioners who are really struggling. That point needs to be taken on board. I asked about the £9 billion package that the Secretary of State cited, but she was not sure how much of it was Treasury-funded and how much was a loan to bill payers. I can tell her that out of that £9 billion, roughly £5.6 billion is just a loan to bill payers that will have to be paid back—bill payers who include struggling pensioners.

On pension credit, the Secretary of State picked up on what the pensions Minister—the Under-Secretary of State, the hon. Member for Hexham (Guy Opperman)—said earlier, bragging about how the Government are writing to local papers. When the shadow Secretary of State called them out on it, however, the Minister shouted, “Oh, we’ve done that for years!” If it has been done for years and there is still £4 billion of unclaimed pension credit, it is clearly not working. It is quite clear that another strategy is needed to make sure that there is a far greater uptake of pension credit, which can then be a passport to other benefits.

I welcome this debate. The motion combines the key issues for pensioners in the ongoing cost of living crisis: rising energy costs, real-terms cuts to pensions and, for older people in work, the health and social care levy. Where I disagree slightly with the shadow Secretary of State, which is why I intervened on him, is that I think that the motion could have been stronger in explicitly demanding the reinstatement of the pensions triple lock.

Earlier today, the pensions Minister stated that pensioner poverty has fallen, but as I tried to point out, the Government’s own statistics on households below average income show that UK pension poverty has risen to a 15-year high under Tory rule. Some 2.1 million UK pensioners—18%—are now living in poverty after housing costs, an increase of 200,000 people on 2018-19. Sadly, that was the figure before the latest energy cap rise was announced, so it will massively increase unless there is proper Government intervention. It is worrying that the Minister is trying to argue something different; either he is ignorant of the facts or he does not care. The Government really need to pay attention and start intervening.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

My hon. Friend is making a terrific point about the poverty that is affecting pensioners just now. Does he agree that the effect is disproportionately felt by pensioners living in off-gas grid households? Last year, heating fuel was 42p a litre; it is now £1.25 a litre and rising. There is going to be a really dramatic effect on pensioners in those areas.

[Alan Brown]

I completely agree. I thank my hon. Friend for highlighting that point; he has been at the forefront of the campaign to highlight the effects of increased energy costs on those who are off the gas grid. That threefold increase in fuel costs is completely unsustainable and really does lead people to the choice between heating and eating.

Let us look at conventional households covered by the energy cap. Next month, the cost of energy for the average household will have increased by 75% compared with April 2021, a rise of more than £800 a year. Pensioners spend more time in their homes and are more likely to feel the effects of cold or damp, so increased energy costs disproportionally hit the elderly. Not being able to afford to heat their homes puts their health more at risk. There are already something like 10,000 premature deaths a year due to fuel poverty, and that was before the huge energy cost increases. It is truly shameful that in an energy-rich country, or group of nations, people are dying prematurely because they cannot afford to heat their homes.

National Energy Action has estimated that the cap increase will have caused a 33% increase in fuel poverty rates. If this rise continues without Government interventions, come October we will be looking at some 8 million fuel-poor households in the UK, with perhaps between 2.5 million and 3 million of those households containing pensioners. When we look beyond the phrase “heating or eating”, we see that the grim reality for people faced with that choice is starving or freezing or suffering in damp houses, and that brings us back to the possibility of more people dying prematurely. It is truly shameful.

The interventions that the Government have announced to date clearly do not go far enough. Even worse, the removal of the triple lock is taking more than £500 a year from the pockets of pensioners, as the Government’s own Red Book demonstrates. Earlier today and this evening, Tory Ministers were arguing that wage increases were a false measurement owing to the partial recovery from covid. They have used that to justify breaking the triple lock. Just four months on, however, we have evidence that a much larger pension increase than 3.1% is required. The facts are clear: the spring statement in two days’ time will provide the one opportunity to reinstate the triple lock, or at least, as a bare minimum, to introduce a mechanism for increasing pensions by 6.1% in line with the current rate of inflation and what the Scottish Government are doing with benefits.

It was good to hear the Secretary of State guarantee that if inflation is at 7% or 8% later in the year, at the point when calculations are being made for the purpose of future uprating, pensions will rise by that amount. I hope that the Government stick to that, and it is not just bluster at the Dispatch Box. We all know who pulls the strings; it tends to be the Chancellor, so I hope that the Secretary of State is lobbying the Chancellor, because we know that inflation is not going to go down any time soon.

While I am talking about inadequate measures, let me point out that the £150 rebate on council tax will not catch all pensioner households in terms of bandings; and, as the shadow Secretary of State said, many pensioners living alone or in receipt of pension credit already receive a full or partial council tax discount, and are therefore unlikely to benefit from the new council tax rebate measure unless the Government do something about it. Making others who have avoided debt all their lives take out a £200 loan to pay back later is also morally wrong. That loan should be converted to a grant for all, and certainly, as the bare minimum, for pensioners and those on benefits.

The Secretary of State spoke about the warm home discount, but, as she knows, the Government put no money into that scheme, although too many Ministers do not even understand that; it is actually paid for by other bill payers. While I welcome the extension of the discount to 3 million households, only 10% more pensioners will receive it. The Government should extend it further, but, in doing so, should provide some direct funding rather than imposing the funding on other bill payers. They should also consider extending the energy company obligation scheme so that more homes become energy-efficient, but that too should involve direct funding rather than other bill payers having to foot the bill.

Apart from the £150 funded rebate, the only direct Government intervention to date on energy has been the allocation of £1.7 billion for the development of Sizewell C. Not content with Hinkley Point C being the most expensive power station in the world, the Tories are determined to build another more expensive one. In their own impact assessment for the Nuclear Energy (Financing) Bill, the upper estimate of the capital and financing costs of the Sizewell C development is £63 billion. How will that help people who need energy costs to come down? And why did Labour vote to commit bill payers to that amount for a new nuclear power station? The money could be spent so much more wisely. There really needs to be a rethink on this nuclear policy.

There are other cost increases to be considered. For instance, the cost of food is rocketing.

--- Later in debate ---

[Alan Brown]

I repeat that the time to be bold and increase fuel duty would have been when fuel prices were at a record low. That would not have had the same impact on people’s pockets. The current rise is unsustainable—[Interruption.] The Minister did not listen to what I said. This here-and-now policy from the Government is unsuitable; it should involve bolder long-term planning. Had they raised fuel duty earlier when prices were lower, they could have reinvested the revenue in public transport and in creating money for a rainy day, like right now.

[Drew Hendry]

Is it not a fact that pensioners and other people could have been helped greatly in this fuel crisis, had the Government listened and introduced a fuel duty regulator, which would have regulated the price and ensured that fuel was affordable for people just now?

[Alan Brown]

Absolutely. My hon. Friend has made my point much better than I was making it myself, and I appreciate that. A fuel duty regulator is exactly what would have given better stability for the Treasury and for people’s pockets.

Looking at other windfalls the Treasury receives, we see a VAT windfall from the £800 increase in average household bills. That is well over another £1 billion coming into the Treasury coffers. The Treasury is also benefiting from increased oil and gas revenues. The last Budget predicted an extra £6 billion in oil and gas revenues in this Parliament compared with the March 2021 Budget, but given the sustained period of increased prices, that £6 billion will prove to be an underestimate. That is more money that should have been reinvested.

I know that Labour has targeted a windfall tax on the oil and gas companies, but that sounds a wee bit like raiding the one traditional cash cow. Why do we not, as the SNP motion suggested last week, look at this in the round? Why do we not target all sectors or companies that have benefited disproportionately from the pandemic, and in particular the new-start companies and the Tory crony companies that were awarded PPE contracts and that have realised record profits since? That is a real obscenity that should be targeted. Anyone who has read Private Eye and seen the eye-watering sums that those companies have made should be truly horrified.

I want to highlight some additional measures in Scotland where the SNP Government are providing mitigation for pensioners, but even the powers the Scottish Government have are nowhere near enough to make the transformational changes that we want. Older people in Scotland get their bus passes at the age of 60, instead of having to wait until the state pension age. They also have universal free prescriptions and are more likely to have had targeted energy efficiency measures for their homes. All charitable organisations in this sector, as well as the energy companies themselves, want the UK Government to follow the lead of the Scottish Government in making energy efficiency a national infrastructure programme. The low-income winter heating assistance will give around 400,000 low-income households a guaranteed £50 payment every winter instead of the complicated UK cold weather payment of just £25.