Pensions and Social Security

Graham Leadbitter Excerpts

Tuesday 10th February 2026 Commons Chamber

[Sir Stephen Timms]

The question of how the tax system operates is a matter for His Majesty’s Treasury rather than for me. However, the hon. Gentleman might take some comfort from the reassurance provided by the Chancellor that those whose only income is the basic or new state pension, without any increments, will not have to pay any income tax in the course of this Parliament. Of course, those who have additional income beyond the state pension often do have a tax liability. The mechanism for how that is applied is a matter for my hon. Friends in His Majesty’s Treasury rather than for me, but I can certainly ensure that his point is passed on to them.

Other components of state pension awards, such as those previously built up under earnings-related state pension schemes, including the additional state pension, will increase by 3.8%, in line with prices. The Government are committed to supporting pensioners on the lowest incomes, so the safety net provided by the pension credit standard minimum guarantee will increase by 4.8%. That means that it will increase from £227.10 to £238 per week for single pensioners, and from £346.60 to £363.25 per week for couples. The maximum amount of pension credit savings credit will increase by 3.8%, in line with prices.

[Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)]

One of the first acts of this Government was to remove the winter fuel payment, before their subsequent partial U-turn. The Prime Minister himself promised assistance for WASPI women, which is manifestly not happening. Both things affect pensioners significantly. When it comes to uprating, the gap between new and old pensions is widening all the time, because although they are going up by the same percentage, they start from different baselines. What are the Government doing to equalise pension levels to prevent that situation from worsening?

--- Later in debate ---

[Debbie Abrahams]

My hon. Friend may not know this, but the Minister and I were on the Work and Pensions Committee when the Joseph Rowntree Foundation and the Trussell Trust presented the case for the essentials. I think there is overwhelming support for such measures, but it is a question of how we do it in a sustainable way. If I may go on and develop my argument a little, he will see that I am moving in his direction.

As we have heard, the new state pension will also increase by 4.8% in April to £241.30 per week, which is in line with the annual increase in the average wage earnings index from last May to September. Briefly, I will explain why it is important that the increase in UC should be above CPI and inflation. Although state support for working-age people and pensioners was fairly similar when annual uprating was first introduced in 1972, the uprating or increase in working-age social security support such as UC in line with inflation has not always happened. In the last 15 years, social security support for working-aged people increased by only 1% between 2013 and 2016, and it was frozen between 2016 and 2020. If anyone wants to look at the changes to inflation over the past 15 years, it makes interesting reading, particularly in 2022-23 and 2023-24, and the increase was far below inflation. As a result, since 2012 benefit levels for working-aged people and their families have lost 8.8% of their value.

The UK’s social protection levels are among the least generous in the OECD. In 2021, the New Economics Foundation estimated that the actual loss in cash terms was equivalent to £14 billion. It also estimated that if spending had been maintained, there would have been 1.5 million fewer people living in poverty. People are often surprised to hear that over the last 20 years or so, the amount of DWP spending as a percentage of GDP—that is acknowledged as the only way we can fairly compare spending—has changed very little: it was 10% in 2005 and 11% in 2025, with the slight increase being accounted for by an increase in spending on pensioners. I think we would all agree that that is the right thing to do. What is alarming is that although poverty levels have been stabilised and will start coming down this year as a result of, for example, the removal of the two-child limit for social security support and the increase in the living wage, the depth of poverty is increasing.

[Graham Leadbitter]

Many things can be done to tackle child poverty. One thing the Scottish Government have done, which has massive backing from the third sector, is introduce a universal child payment. Does the hon. Lady agree that that is potentially the way forward?

[Debbie Abrahams]

I am familiar with the child payment, but I need to understand it in the context of what else is happening in Scotland. I am aware of it, and I think it is an interesting way for Scotland to try to address the issue. We had a meeting with the Children and Young People’s Commissioner Scotland and were impressed with what she was doing, but I will reserve judgment until I understand it a little more in the round.

Only last week, the Joseph Rowntree Foundation published new analysis:

“In 2021-24, the average person in poverty had an income 29% below the poverty line, with the gap up from 23% in 1994-97”.

If we use equivalised figures, that means that couples without children are living on less than £12,500 a year, and couples with two children under 14 get about £17,500 a year. Social security is complex, but looking at deep poverty, as my right hon. Friend the Minister is doing, is important. If we are to avoid the appalling situation with NEETs that we have inherited, that is what we need to do.

Of the 14.2 million people living in poverty identified in JRF’s most recent poverty analysis, 6 million are in severe and persistent poverty, and more than half are disabled or live in a disabled household. Although I recognise the significant moves that this Government have made to address the inadequacy of working-age social security support to tackle the poverty and cost of living crisis that people are experiencing, I personally think we need to be a bit bolder.

As I said last week, I want to see us be clearer about our vision and values, which define what our social security system is for. It is 80 years since the National Insurance Act 1946, which was introduced in response to the Beveridge report and the outcomes and appalling circumstances after the second world war. I believe we need a new social contract that the British people can buy into and that spells out how all the elements of a comprehensive 21st century welfare state work together to deliver for them.

Our social security system, like our NHS, should be there for all of us in our time of need. It should protect us from poverty if we lose our jobs, are born with or acquire health conditions or disabilities, and when we grow old. It should also be there for us if and when we need extra support, become carers and, sadly, lose a loved one, but it cannot work in isolation; it needs to be considered in conjunction with our health and social care, education and skills, and business and employment systems in particular, but there are more.

Without a fit and healthy working-age population, a skilled workforce and a fair employment system providing quality, well-remunerated jobs, our economic productivity is known to fall, and our welfare system as a whole then comes under threat. As an example, Health Equity North’s “Health for Wealth” report shows that improving the health of the north to the same level as the rest of the country would add an extra £18.4 billion to the economy through enhanced productivity while reducing demand on the NHS.

Last year, the Work and Pensions Committee commissioned Health Equity North to report on what income could be generated through increasing returns to work for people in receipt of universal credit by just 5%. Its estimates show that that would yield an extra £20 billion over the life of this Parliament, with a return on investment of between £5.21 and £6.63 for every £1 of employment support invested. That is the way that we will reduce DWP spending and increase growth.

I look forward to seeing how the “Get Britain Working” and “Keep Britain Working” programmes, such as Connect to Work and the vanguards, are expanded. They are fantastic examples of how we can proceed. I was so impressed when I met organisations delivering Connect to Work. The Work and Pensions Committee had a session last week with Sir Charlie Mayfield and small businesses to see how they could be involved in that, and I hope that we can expand and build on this work.