Social Security

Debate between Jim McMahon and Paul Masterton

Monday 4th March 2019 Commons Chamber

[Paul Masterton]

I thank the hon. Lady for that intervention, but I would point out that that is not what the hon. Member for Glasgow Central (Alison Thewliss) actually said.

I want to address the order, which delivers on the triple lock to the state pension and provides an extra £3 billion for pensioners in 2019-20, uprating in line with earnings at 2.6%. The UK has a system whereby today’s taxpayers pay for pensions currently in payment. When people are living healthier lives for longer, spending much greater proportions of our lives in retirement, that is both unfair and unsustainable. The figure has already grown from 26.5% in 1981 to 33.1% in 2013. In 2010, the basic state pension stood at 16% of average earnings. Thanks to the triple lock, it will soon be around one quarter of average earnings. That has contributed to pensioner poverty falling significantly in recent years and the Government can be rightly proud of that. By some estimates, typical pensioner households now have higher incomes than their working-age counterparts. The triple lock has therefore served its purpose, and I would argue that it cannot be maintained indefinitely.

[Jim McMahon]

Does the hon. Gentleman see that as a justification for removing the free TV licence?

[Paul Masterton]

I thank the hon. Gentleman for that point. I will come on to some of the questions about universal pensioner benefits in just a second.

As the hon. Member for Wirral West (Margaret Greenwood) mentioned, all Conservative MPs were elected on a manifesto commitment to replace the triple lock with a double lock of inflation and earnings from 2020. I believe that that was the right policy, and it would of course be more generous than the Cridland review’s recommendation of moving to a simple earnings link. Even this year, we are raising the state pension in line with earnings, because they have risen above the 2.5% floor the triple lock provides. The system should of course provide generous support for vulnerable pensioners, but that support should be properly targeted.

The current universal system means precious public funds are being spent on well-off pensioners. In fact, the richest one fifth of pensioners on average receive a higher weekly income from benefits, including the state pension, than the poorest one fifth. That would be a shocking statistic even without the context of strained public finances. If we are serious about addressing intergenerational unfairness, we must recognise the unfairness of allowing higher income pensioners, many of whom remain in very well-paid employment—for example, as MPs—to retain certain entitlements, while workers on an equivalent income lose their child benefit and their marriage allowance, to give just two examples.

We are building huge levels of intergenerational inequity in this country under the current system that the triple lock, having done what it was designed to do, will only continue to exacerbate. If we want to avoid increasing the burdens on younger workers to fund large transfers of wealth to better-off pensioners, issues around the triple lock and, although they are not in the scope of the measure today, universal benefits need to be addressed. Why are we increasing and providing these benefits to extremely wealthy individuals if it means having to freeze the entitlements for those who are in work and struggling to make ends meet?

I know that the political reality following the experience of the 2017 election meant that that manifesto commitment had to go and that that could easily lead the Conservative party to conclude that it has had its fingers burnt on many of these issues and should steer clear of them in future, but that would be a betrayal of my generation and those to follow. While I, of course, support the uprating order and particularly the increase to the UC work allowances, which many Government Members lobbied very hard for, I hope that the door is not being slammed shut on the grown-up discussion that we all need to have in the House about the triple lock and other universal pensioner benefits in the near future.