CPI/RPI Pensions Uprating

Debate between John McDonnell and Derek Twigg

Thursday 1st March 2012 Commons Chamber

[John McDonnell]

Yes, I will deal with that point now. The Government’s decision to move from RPI to CPI was taken at an early stage after the election. It was basically a decision to make pensioners in those pension schemes pay for the economic crisis. That was the policy decision that the Government made. Thus, the very people who made no contribution to causing the crisis will now have to pay for it by cuts in their pensions—the one thing they hoped was secure in their lives. I view that as unacceptable by any standards of fairness and equity. As my hon. Friend says, it is incredibly short-term.

We know from surveys of existing contributors to pension schemes that the combination of significantly increased contributions and cuts in pensions payments means that many people are now questioning whether to remain in their pension scheme, while others are wondering whether to join it at all.

[Derek Twigg (Halton) (Lab)]

I congratulate my hon. Friend on securing this debate and tabling the motion. My Halton constituency is the 27th most deprived, and I know that my hon. Friend has deprivation in his constituency. Is it not constituencies like ours, where people living on low incomes strive all their lives to put some money aside for pensions, that are going to be impacted most by this draconian measure?

[John McDonnell]

Those most in need and those who saved the most will be the mostly greatly affected. My hon. Friend’s constituency, like mine, is a working-class constituency in which many people suffer from deprivation. They will now suffer that deprivation long into their retirement as a result of this measure.

To return to the point raised by my hon. Friend the Member for North Ayrshire and Arran (Katy Clark) about the impact on the stability of future schemes, it is quite clear that if fewer people are saving for their retirement, there will be a greater cost to the Exchequer as more people become dependent on means-tested benefits. Similarly, if fewer people are paying into the schemes, it will put those schemes at risk—thus thrusting many more on to state benefits. As I said, this decision is so short-term.