Pensions and Social Security

Ian Paisley Excerpts

Thursday 23rd February 2012 Commons Chamber

[Steve Webb]

There was indeed. My carefully structured speech is falling to ribbons. I was about to come to that achievement.

[Ian Paisley (North Antrim) (DUP)]

Although I understand the point about the real increase in the state pension from £102.15 to £107.45, I do not consider it something to be doing cartwheels about. In reality, it will not have a major impact on the lives of the elderly across this nation, especially given that just a few weeks ago, the House removed £100 from the winter fuel allowance. Effectively, the oldest pensioners are £50 a year worse off, not better off. I think that we have to get real. This is not enough.

[Steve Webb]

Let me address that issue directly. Any pensioner will say that the basic state pension is the most important thing to them: they like the winter fuel payment and they like the means-tested benefit—well, they do not always like it but it is valued by those who receive it—but a decent state pension has been the clarion cry of pensioners for decades. For 30 years, pensions have fallen, year on year, relative to earnings, and consequently the ability of the basic state pension to do its job of replacing earnings has been falling for 30 years. We have reversed that.

The pension will now rise at least in line with earnings, but in years such as this, when price rises are higher than earnings increases, it will rise by more. So the position of pensioners relative to people in work has been improved by this uprating statement. Can we go further? Yes. And we will, because under the triple lock, over a typical retirement, someone retiring this year will gain £13,000 of retirement pension over and above RPI. Can we fix 30 years of decline in a single year? No, of course not, but we can focus the money on the thing that pensioners value the most—the basic state pension.

As I have mentioned, with the triple guarantee protecting the value of the basic state pension in the longer term, the average pensioner retiring this year on a full—I should have said that—pension will gain about £13,000 compared to the old price link.

I shall turn to the additional state pensions, which are commonly referred to as SERPS—state earnings-related pension scheme. In April 2010, just before the start of this Parliament, the uprating was based on the year to September 2009, when RPI was negative. That means that in April 2010 the previous Government froze SERPS—I assume they thought that pensioners had not experienced inflation the preceding year. In April 2011, however, we increased SERPS by 3.1%, and this year SERPS, as well as the basic state pension, will rise by the full 5.2%. That means that the total state pension increase for someone with a full basic pension and average additional pension will be around £6.70 a week, or £348 a year.

When it comes to the standard minimum guarantee in pension credit, the legislation requires only that an increase be at least in line with the growth in average earnings, so that over the long term the poorest pensioners see their incomes rise in line with the income of the working-age population. As my hon. Friend the Member for North East Hertfordshire (Oliver Heald) said, however, this year the relevant earnings index stood at just 2.8%. We judged it unacceptable for the poorest pensioners on the guarantee credit to receive the smallest cash increase of all. Our aim was to ensure that the poorest pensioners received an increase in line with the cash increase to the basic state pension.

As a result, the order increases the single person’s rate of the standard minimum guarantee by £5.35, taking it to £142.70 per week from April 2012. To help manage expenditure, we have funded the above-earnings increase to the standard minimum guarantee by increasing the savings credit threshold, which means that those with higher levels of income could see less of an increase. However, given the increase to the basic state pension, no one should have a lower weekly income as a result of uprating. This approach enables us to target resources for the poorest pensioners on the guarantee credit.

I shall turn briefly to working-age benefits. The coalition will ensure that the value of other social security benefits is maintained, through a 5.2% rise, even in these tough economic times. That means, for disabled people above and below pension age, through disability living allowance and attendance allowance, an increase of 5.2%; for people of working age who are not fit for work, through employment and support allowance, an increase of 5.2%; and for people who have lost their job through no fault of their own, through jobseeker’s allowance, an increase of 5.2%. These increases will ensure that the most vulnerable people in society are protected and that those looking for work get the support they need to move into the labour market.

The order gives real support to protect people against price increases. At a time when the nation’s finances are under severe pressure, the Government will spend an extra £6.6 billion in 2012-13 to protect people against cost of living increases. I cannot help observing that, if someone spends too much time in the DWP, lots of zeros tend to make them glaze over, but this is £6.6 billion of help for some of the most vulnerable people in the country: £4.5 billion more on pensioners; over £1 billion more on disabled people and their carers; and over £1 billion more on people unable to work through sickness or unemployment.

We have protected the triple lock, thereby securing the largest ever cash rise in the basic state pension; we have uprated the pension credit so that the poorest pensioners benefit from the triple lock; and we have uprated working age benefits by 5.2%, thereby protecting the real incomes of the poorest. I have outlined the coalition Government’s firm commitment to ensuring that even in these difficult times no one is left behind, and I commend these orders to the House.

--- Later in debate ---

[Stephen Timms]

Of course, that is indeed the effect of the mechanism that the Government have chosen. I would simply point out to the hon. Gentleman that if the previous method was still in place, there would be a higher increase in the basic state pension than the Minister has announced today.

[Ian Paisley]

The right hon. Gentleman has mentioned the triple lock, which interests me and which applies only to the basic state pension. A number of charities, such as Age Concern and others, have contacted me about this issue. They argue that the Government should apply the triple guarantee to other elements of the state pension, including the additional pension allowance. Does he agree that that would make good sense?

[Stephen Timms]

That is a matter that the Minister may well want to comment on in his response to this debate. In my view, the triple lock is certainly not the wonderful device that the Government maintain it is. As I have said, it is leading to a lower uprating of the basic state pension in the year ahead than if the RPI mechanism was still being used.

--- Later in debate ---

[Stephen Timms]

I deny being naughty. I am simply making the point that the Government have been telling pensioners that they are now in a wonderful new era, thanks to the triple lock, yet it had to be overridden in the first year it was supposed to be in place because it was not delivering an adequate increase. I am not persuaded that the degree of confidence that Conservative Members believe to have been bestowed on pensioners is a reality.

[Ian Paisley]

Far be it from me to encourage the right hon. Gentleman to be naughty, but is there not a certainty that pensioners—those over 80 in particular—are now going to be £50 a year worse off because of the loss of the winter fuel allowance additional payment?