Cost of Living Increases: Pensioners

Emma Hardy Excerpts

Monday 21st March 2022 Commons Chamber

[Dr Coffey]

It will depend to some extent on the individual circumstances. I fully accept that the £200 rebate on energy bills is a phasing of support and I recognise that it is not an entire grant, unlike the £150 council tax discount.

[Emma Hardy (Kingston upon Hull West and Hessle) (Lab)]

Will the Secretary of State give way?

[Dr Coffey]

No, I will not.

The extra support is on top of a range of existing help for pensioners, including: winter fuel payments, which support over 11 million pensioners’ energy bills and is worth about £2 billion every year; cold weather payments, ensuring pensioners in need keep warm during the colder months; and the warm home discount, which we are extending until 2026, including expanding it to more recipients of pension credit, namely those who receive the savings credit element and live in a home with high energy costs. I am conscious that the warm home discount is a spreading of support towards people in this vulnerable cohort, but nevertheless it is thanks to Government intervention that that is the case. As a result, the number of households benefiting from the warm home discount will increase by almost a third, to 3 million—up from nearly 1 million at the moment—with the vast majority getting their payment automatically with no need to apply. Together, I think that will be welcomed by many people, recognising the extra support that people who are not currently eligible today will receive later this year.

[Emma Hardy]

I want to raise a point about prepayment meters. A written question to the Department for Business, Energy and Industrial Strategy—admittedly, this Secretary of State represents a different Department—asked how people on prepayment meters would receive the £200 discount, many of whom happen to be pensioners. The answer, given on 25 February, was:

“BEIS will consult in the spring.”

It seems that the Government do not have a plan for how to refund the money to those on prepayment meters, but I hope that the Secretary of State can update us.

[Dr Coffey]

The hon. Lady asks a valid question. As I have said to the House before, tackling the cost of living and poverty more broadly is shared across Government. Although that may come under our umbrella—recognising our general role in support through the welfare system—my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy leads particularly on items to do with energy and fuel poverty more broadly. I will ask him to contact her.

That leads me on to pension credit, which has been highlighted as a passport to a range of other benefits, including free TV licences, help with council tax and NHS dental treatment. Together, those are making a real difference, reflecting the Government’s commitment to supporting pensioners and continuing the work of successive Governments since 2010—when the Conservatives took office—to tackle and alleviate pensioner poverty.

The facts speak for themselves. The latest figures show that 200,000 fewer pensioners are in absolute poverty than in 2010, with levels of material deprivation having fallen from 10% to 6%, a record low. It is because of our commitment over that time and policies such as the triple lock that, from next month, the full yearly basic state pension will be more than £2,300 higher in cash terms than it was in 2010. In fact, no Government have paid more to pensioners than we will this year: £105 billion alone through the state pension. When we include all the other pensioner benefits, that rises to £129 billion a year.

Our aim over the two years of the pandemic has been to give fairness to pensioners and taxpayers, recognising what has happened with covid. For 2021-22, we protected the value of the state pension by legislating to secure and increase the state pension by 2.5%, despite a decline in earnings and inflation rising by just 0.5%. Had we not acted, the state pension, by law, would have remained frozen. Again, through the Social Security (Up-rating of Benefits) Act 2021, which Parliament passed last November, we legislated to temporarily suspend the earnings part of the triple lock in 2022-23 for one year. As I outlined at the time, that was in response to exceptional circumstances caused by the distorting effects of the pandemic on the earnings statistics.

Pensions will still rise by 3.1% next month. That reflects the inflation index that has been used consistently for many years, so over the past two years, pensions will have risen by a total of 5.6%. Next year, we will return to implementing the triple lock in the usual way for the remainder of the Parliament. I reinforce that full commitment, and whatever the right hon. Member for Leicester South may suggest—he may be trying to score points on politics, which, as the shadow Secretary of State he is absolutely entitled to do—I want to make sure that he avoids scaremongering.

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[Dr Coffey]

The hon. Lady raises a valid point. I know that we have had paid advertising in post offices and in GPs’ waiting areas in the past; doctors often tell us that they do not necessarily like to be attached to benefit claiming and similar matters, but I hear what the hon. Lady says, and my understanding is that we intend to resume that contact. I have also asked the leading pharmacy chains to be involved, because that is often a more regular way in which people get help. We will try different outlets, in addition to those we have tried in the past, to make people more aware of the potential opportunities.

[Emma Hardy]

Will the Secretary of State give way?

[Dr Coffey]

The hon. Lady has already made one intervention, and I want to make some progress.

The right hon. Member for Leicester South asked about issues relating to state pension underpayment. I give credit to my hon. Friend the pensions Minister, who has rolled up his sleeves and really got stuck in. We have 500 people working on the state payment exercise, and before the end of the year we are aiming to have up to 1,500 people getting on with it. There will be an update after the fiscal statement; we have always said that we would give updates more or less in line with it, so the right hon. Member for Leicester South will have to be slightly patient. This issue has been going on for some considerable time. There was an element of shambles in previous Administrations, which was not helped by the 2008 reforms. I respect the former Minister Steve Webb, but he did not find this element at all in his five years as pensions Minister—not even when he was going through the whole process of creating a brand-new state pension. We are getting on with this element, which was not discovered until recently, and we will get on with the job and sort it out.

When we say that we are committed to tackling pension poverty, we mean it, and we have the track record to back it up. On Wednesday, it will have been two years since we took unprecedented action to lock down the country to protect lives. We invested in vaccines and subsequently rolled out the biggest and most successful vaccination programme in the history of the NHS, prioritising pensioners. Today, as we start inviting the over-75s to get their spring covid booster, we want to encourage pensioners to consider getting the boost to their income that pension credit could provide. With the wider range of financial and other support that we are providing, we are doing our best to help to ease the current cost of living squeeze.

We must unite as a House to get more pensioners to access the support that is available. While I am conscious that many people will think that there is more to do, we can do it only if all MPs in this House make a commitment to their pensioners—I look forward to their doing so—to continue to provide as much information as possible.

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[Emma Hardy (Kingston upon Hull West and Hessle) (Lab)]

When I was little, I grew up next door to a wonderful couple called Marg and Ray. Marg was like a grandma to me. Sometimes when Mum was busy with my younger sister, she used to send me with a box of toys through the hole in the fence to Marg and Ray’s for the day to be looked after by Marg. I remember very distinctly a few times walking with her to the post office where she would go and get her pension, in cash, then coming back and sitting chatting to her in the room where we spent most of our time. There was a big sideboard in there and she would put different parts of cash into different areas of it. When I asked what she was doing, she would say, “That’s the money for my electric bill and that’s the money for this other bill”, separating out all the cash into the different compartments. She was terrified of getting into debt. Although she did not have much money, she never owed anybody anything, and she was fiercely proud of that.

When I was out recently talking to residents in the Pickering ward in Hull, I met some people who reminded me exactly of her. I talked to one elderly lady who told me the same thing about how she had never owed anyone anything. She was fiercely proud of the fact that she would never owe anyone a penny. I was trying to talk her into setting up a direct debit. I said, “If you set up a direct debit for your council tax and your bills, you get them cheaper.” She said, “No, I’m not setting up a direct debit. I couldn’t be owing them that money—I wouldn’t know what was going out each week or each month.” She was absolutely opposed to the idea of having a direct debit even though I was saying that she was paying more for her energy bills because she had a prepayment meter.

I have brought to the Minister’s attention before the issue of people with the least money paying the most—the poverty premium—and I will talk about it briefly now. I have spoken to many elderly people who have prepayment meters because they have a traditional and, I have to say, probably quite right idea that people should not owe money and should pay for what they want up front. It is not a fair system, however, as I have discussed with the Minister in the Treasury Committee; I hope that those conversations will be ongoing about how we can fully address the poverty premium.

A study by Fair By Design has shown that the poverty premium costs the average low-income household an extra £490 a year—that is how expensive it is to be poor. For more than one in 10 of those households, however, it costs an extra £780 a year. It is not a fair system. To give other examples of the poverty premium, it is why people end up paying more for car insurance or life insurance in areas of greater deprivation and why people pay more for credit and for all financial services when they have the least money. Our system is set up at the moment so that the poorer someone is, the more they pay. That is not fair and it is a huge contributing factor to the cost of living issues that pensioners face.

The highest poverty premium in Hull West and Hessle is area-based insurance. Constituents currently pay in total £1.3 million more for their insurance if their postcode is considered higher risk. As I say, I have mentioned that to the Minister before and he acknowledged that there is more to be done. When he comes to the Dispatch Box, I hope that he will talk more about what exactly will take place.

I intervened on the Secretary of State earlier to draw attention to concerns around the prepayment meter and how exactly people will get the £200 back, but there is also an issue with the direct debit. We have a situation in Hull where the money back on council tax was meant to be paid to people through reductions in their direct debit, but, of course, families who are in insecure work—not just pensioners—will face problems: they do not set up direct debits because they cannot guarantee how much money they will have each month.

Although I believe that the Minister is trying to take some actions to address the issue, there is a failure to really understand what life is like for many people who do not have direct debits and who are still scared of debt and use prepayment meters. The failure to design policies that address the poverty premium mean that, once again, the poorest pay the most.