Social Security (Up-rating of Benefits) Bill

Duncan Baker Excerpts

Consideration of Lords amendments
Monday 15th November 2021 Commons Chamber

[Jonathan Reynolds]

With respect, the Minister just needs to listen to this point. He stands at the Dispatch Box and, like all Ministers, tells us that black is white. For instance, when the Government reacted to the crisis of their own making—when we saw the pumps run dry and the shelves go sparse—they claimed to the country that this was a secret masterplan towards a high-wage economy that they had had all along. Now, we are having to see the Minister and the Government tie themselves in knots again, because he has been sent here to make the case, which we have heard him put very well, that the figure is too distorted and therefore we need this primary legislation, yet—and this is the problem, Minister—according to the Prime Minister, wages are up, workers have never had it so good and that is why the Government can cut £20 a week from universal credit. They are making two completely opposing arguments. We do not even know whether the Government believe that wages are rising faster than inflation. I politely say to the Minister that they cannot expect to have it both ways.

I will repeat a number of points that colleagues may have heard me say before, but I feel they need to be repeated in light of some of the media comments on the Bill. The uprating of the state pension is relevant to millions of pensioners in this country, but it is wrong to present it as an issue of intergenerational unfairness. That is because these decisions are also fundamentally about how we ensure that the state pension is indexed and retains real value for people who are in work today when they come to retire. This Government have been grossly unfair on people of working age, but frankly that is due to the burden of taxes they have inflicted on workers, rather than through the operation of policies such as the triple lock.

I hope the Minister took on board the comments made about pensioner poverty in this House and the other place. The Government’s use of what they call absolute poverty, which in reality is a measure of poverty relative to a fixed line in 2010, is unsatisfactory because not only does it ignore the statistical evidence, which is that pensioner poverty is now rising after it fell considerably under Labour, it also limits a serious debate on the drivers of that rise. The big picture is that the OBR predicts that as a country we will be spending an extra £6 billion a year, year-on-year, on pension-age benefits every year up until 2024-25. That is the year that the forecasts in the welfare trends report go up to, so it will likely continue to rise after that. Pensioner poverty is going up as spending rises substantially. We should be having a much more substantive debate about that, looking at housing costs, energy prices, food and access to good financial and investment advice. The way in which the Government present their own progress means that any real wage growth over the last decade allows them to claim that poverty has declined, so when the Minister says that 200,000 pensioners have been lifted out of poverty since 2010, the reality is that that is a very poor level of performance compared with all previous Governments. Poverty is always relative, because it is a measure of whether someone has the means to live a fulfilling life in the society of which they are a member. That is not just a left-of-centre viewpoint, but one that until recently was accepted by Conservatives, too.

However, to return to the matter at hand, the House of Lords has sent us an amendment that should genuinely command the support of the whole House. It requires the Government to maintain the earnings link in their manifesto promise, while still making allowance for the pandemic. This Government have dragged politics through the gutter in recent weeks, with stories of sleaze, corruption, contracts for donors and second jobs from Caribbean islands. I could go on, but the point is that public trust in this place matters. When the Government muddy our democracy in the way that they have, they cannot then turn to the public and ask voters to simply take them at their word. For public trust to return, the first step has to be for the Government to keep their promises. Today, Labour will therefore support the amendment that would allow the Government to keep their promise on the pensions triple lock.

The Lords have sent us a very reasonable set of measures, and frankly I see no logical reason not to support them if we want to protect the link between earnings and pensions. If the Government are unable to do so, they should admit what is really going on: they are using the pandemic as a smokescreen to scrap the triple lock and pocket the savings. They should cut the obfuscation, keep their promises and vote for the Lords amendments.

[Duncan Baker (North Norfolk) (Con)]

As the MP for North Norfolk, which has some of the highest numbers of older people in the country, you can understand, Madam Deputy Speaker, why I want to speak briefly in this debate. First, we have come back to basics. I was a finance director and a chartered accountant before I came into this place, so I have a reasonable grasp of statistics, and it is fair to say that this Government have, to the tune of around £400 billion, safeguarded the country through a pandemic that no one ever expected. Not only that, but the national debt sits at some £2.2 trillion, so it is understandable that we are sitting here this evening being extremely careful and prudent about what we do with our public finances.

The electorate, as we have seen many times before, will forgive a Government many things, but they will not forgive a Government being reckless with the public finances. We have to understand that, much as we would like to increase pensioners’ pay, every 1% increase costs the Exchequer a billion pounds. To put that in perspective, with an increase of some 8% to 9%, we are looking at an increase of some £8 billion to £9 billion. I can therefore see entirely how that would sit when we have to look in the eye of a prison officer, a police officer, a teacher, a firefighter or any other public sector worker who has seen their pay frozen for the past year. That is the real context. It is about fairness and a statistical anomaly caused by the dip, coming off furlough on to 100% pay and when the ONS statistics were taken. It has given rise to this one-off statistical anomaly.

What the House of Lords has proposed is sensible, and I took that to the Secretary of State to ask whether we could do something to still honour the framework of the triple lock, while ensuring that we have a sensible parameter to measure it by. The answer that came back was exactly the same as the one the excellent Minister just gave: we need a robust metric. We cannot just move the goalposts and cherry-pick a point in time because the argument does not fit at the moment. Many of my constituents have written to me about this issue, and when a detailed reply has gone back to them, a great number understand why we have this one-off double lock.

In summing up, I say two things to the Minister. First, woe betide us if we do not honour the triple lock next year. We have some of the best public finances recovery in the G7, as the Chancellor said the other week, so we must get back to giving our pensioners the pay increases they absolutely deserve, because they have paid in all their lives. Secondly, it would be wonderful to go into the next election with the resounding message that our pensions are good, honest pensions that people have earned all their lives, at a level that people can be proud of compared with Europe. Too often, our pensioners feel that is not necessarily the case. I would like the Minister to ensure that we put our pensioners at the front of the queue as we come out of this pandemic. I wholly understand what he has said this evening. I will be rejecting the Lords amendment, because it is sensible to maintain the public purse in the best possible way at a time like this, so that our country can rebound from where we are at the moment.

[David Linden (Glasgow East) (SNP)]

It is a pleasure to follow the hon. Member for North Norfolk (Duncan Baker), who spoke about the risks of throwing a billion pounds about here and there. I know he was not in the previous Parliament, when the Government were propped up by the Democratic Unionist party, but I recall them having no great difficulty finding a billion pounds down the back of the sofa. Indeed, I think the hon. Member for Strangford (Jim Shannon) was worth about £100 million, which is probably more than Messi.

Unlike the Minister, I am glad to see the Bill back in the House this evening, because the amendments passed by their lordships give the Government an opportunity to perform a U-turn with ermine grace and charm. Before it went back to the other place, the Bill as originally drafted facilitated the British Government breaking yet another manifesto commitment, namely the pensions triple lock, which I remind the House all parties in this Chamber committed to at the election fewer than two years ago. Thankfully, the Bill was amended in the other place, and I am grateful to Baroness Altmann for Lords amendments 1 and 2, which seek to restore the earnings link.

As we are relatively short on time, I will not go over some of the meatier issues that I outlined on Second Reading, including the Government’s repeated breach of their manifesto commitments, the worrying trends in pensioner poverty, pension comparisons with OECD countries and the—at best—disappointing lack of action on pre-existing equalities that are baked into our pension system. In speaking in favour of the Lords amendments, I will outline why the SNP continues to vote to respect its 2019 election manifesto commitment and why the Budget has changed things, which may result in more Opposition Members voting tonight than on Second Reading.

The Minister will have familiarised himself with the House of Lords Official Report, but in the interests of completeness and for the benefit of Hansard, I remind the House of what Baroness Altmann said on the cost of living crisis, which affects all the constituents we seek to represent in this House. She reminded the other place of the Government’s view that

“the 3.1% figure would still protect against rises in the cost of living.”—[Official Report, House of Lords, 2 November 2021; Vol. 815, c. 1140.]

She quoted the Under-Secretary of State for Work and Pensions, the hon. Member for Hexham (Guy Opperman) who said that that figure

“will ensure that pensioners’ spending power is preserved and that they are protected from the higher cost of living”.—[Official Report, 20 September 2021; Vol. 701, c. 86.]

However, the goalposts have moved, and the fiscal outlook is much bleaker. The Chancellor conceded in the Budget that inflation in September was already at 3.1% and would rise further. The Office for Budget Responsibility has gone further, predicting that consumer prices index inflation will reach 4.4% next year. It went on to say that inflation

“could hit the highest rate seen in the UK for three decades”,

which the House will know is about 7.5%. In reality, the Bank of England’s chief economist is forecasting 5%. To be blunt, the facts have changed and the Government must now change their position at least to reflect the fiscal outlook, if not to respect their manifesto commitment.

Pensioners across these islands are not immune from rising energy and food costs, and we know that inflation is biting hard for some of the most vulnerable people in our constituencies as we approach a harsh winter. Last month, energy bills rose by 12%, and food bills have also risen, so the Government must think again.