Cost of Living Increases: Pensioners

Jonathan Ashworth Excerpts

Monday 21st March 2022 Commons Chamber

[Jonathan Ashworth (Leicester South) (Lab/Co-op)]

I beg to move,

That this House is concerned that older people and pensioners risk being at the sharp end of the cost of living crisis as a result of spiralling inflation, a lack of Government action on household energy bills, a poorly thought-through tax rise on older people in work and a real-terms reduction to the state pension; notes that the state pension is being cut in real-terms by hundreds of pounds a year and that working pensioners will begin paying the Health and Social Care Levy from next year; regrets that levels of pensioner poverty and pensioner debt have risen over the last decade even before the current cost of living crisis with almost one in five pensioners now living in poverty; and calls upon the Government to cut home energy bills, halt the planned tax rise on working pensioners and ensure older people are protected from the cost of living crisis.

In recent weeks I have had the privilege of travelling the country, and I have heard the most desperate stories from our elderly citizens and retirees trying to cope with the devastating cost of living crisis they face. In Swindon, a woman in her late 60s told me that she now never uses the oven and instead lives off sandwiches and cold meals to avoid the bills associated with switching on the cooker. I met a man who served this country in the RAF but who could not understand why, despite contributing so much to our nation, he has been given so little help as prices rise, energy bills rocket and his fixed income is stretched to the limit. At a food bank in Bury I heard how more and more older people who, wrongly in my view, feel there is shame in asking for handouts and are too proud to ask, now feel they have no choice but to go to a food bank and are now turning up there in ever greater numbers.

Age UK tells the story of Maureen, who says, in desperation:

“The pension goes up by pennies and bills go up by pounds, so the money in my pocket is getting less and less.”

Age UK also quotes Albert:

“I have to choose between eating and staying warm for some hours of the day. I forego social life in order not to fall behind with essential bills”.

These are not one-off stories: in every constituency there are thousands of Maureens and Alberts facing soaring inflation, sky-high energy bills, petrol prices through the roof, and price rises in the shops. The situation is desperate and the prospects are terrifying, and to say this is a struggle to make ends meet does not do justice to the scale of the crisis people are facing.

[Jim Shannon (Strangford) (DUP)]

To back up the right hon. Gentleman’s comments, I point out that 300,000 pensioners and people in Northern Ireland—18% of the population—are in absolute poverty. That is reflected right across the whole of the United Kingdom. Does the right hon. Gentleman agree that this situation has swept across the United Kingdom of Great Britain and Northern Ireland to such an extent that people now, as he rightly says, have to decide whether to eat or heat?

[Jonathan Ashworth]

My hon. Friend—I will call him a friend as a fellow Leicester City fan—speaks, as usual, with passion and eloquence on behalf of his constituents. The poverty we are now facing is so desperate and severe, and the destitution so acute, and it is felt across the whole of the United Kingdom. I hope Ministers respond to the representations we are making tonight, and I hope the Chancellor responds to them on Wednesday.

[Christine Jardine (Edinburgh West) (LD)]

The right hon. Gentleman is making a very good case and illustrating the scale of the problem we face. Does he agree that since we now know that 40% of pensioners in this country will be forced into poverty for up to a year in any nine-year period, the Government should have listened to us when we said earlier in this Session that doing away with the triple lock even temporarily was a rash move, and that pensioners are now paying the price for that?

[Jonathan Ashworth]

The hon. Lady anticipates the meat of my speech and has put her point on the record with typical aplomb and eloquence.

Martin Lewis of Money Saving Expert has warned that he simply has no tools left to advise people on how to manage their finances; he said that people are literally going to have to “starve or freeze.” Let us look at the facts: 2 million pensioners in poverty and the number rising; 200,000 more pensioners falling into poverty in the last year; one in five people of pension age now living in poverty; and 1.4 million older people in England in fuel poverty, with tens of thousands more likely to be pushed into fuel poverty. As we also know that pensioners spend a significant proportion of their income on energy and food and the basic necessities of life, this is the moment when the Government should be helping the Maureens and Alberts in all our constituencies with extra help with the cost of living. But instead of helping those pensioners in every constituency, Ministers broke their promise on the triple lock and are forcing through deep real-terms cuts in the value of the basic state pension. When I meet and speak to pensioners across the country—older people who are struggling—there is deep despair, and indeed bewilderment, that the Government have abandoned them, having promised them so much.

In the general election campaign, the Prime Minister said:

“We will keep the triple lock, the winter fuel payment, the older person’s bus pass”

to help retirees with the cost of living. Yet just at the moment when pensioners are shivering in the cold, skipping hot meals and anxious and worried about paying the bills, rather than helping retirees with the cost of living, Ministers abandoned the triple lock, a broken promise that the former Conservative Pensions Minister, Baroness Altmann, warned would

“plunge more elderly people into poverty”.

She said:

“With rising energy costs, I fear many of the poorest will be even less able to afford to heat their homes adequately over the winter…To take away their much needed and promised protection, knowing inflation pressures are rising, seems unjustifiable”.

The former Conservative Pensions Minister was absolutely right.

I read recently—in the money section of The Daily Telegraph, no less—that

“pensioners will be worse off after the Chancellor capped the rise in the state pension…this will equate to pensioners taking a real terms cut of £7.45 a week, or £388 a year.”

That is a cut of around £30 a month. These are significant sums of money. Given that the state pension is the biggest source of income for most pensioners, and given that retired women in particular rely on the state pension and other benefits, such as pension credit, for over 60% of their retirement income, it will be retired women again who are disproportionately hit by this deep cut to the basic state pension.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

The right hon. Gentleman is absolutely right that it is a disgrace that the Government have broken their triple lock promise. The Red Book shows a transfer of £31 billion over this Parliament from the pockets of pensioners to the Treasury—a disgrace. Given the point he is making, should the Labour motion not have demanded the immediate reinstatement of the triple lock? That is the one thing that I am concerned is missing from the motion we are debating.

[Jonathan Ashworth]

We are making clear our commitment to the triple lock in the remarks that I am making at the Dispatch Box.

[Rachael Maskell (York Central) (Lab/Co-op)]

I am grateful to my right hon. Friend for the speech that he is making. When the Government made their decision about the triple lock, we were not facing the energy crisis that we are facing today. Bearing in mind that older people expend at least twice as much energy because they are at home for more hours, and that we are starting to hear of cases of people dying of hypothermia, should not the Government not only reinstate the triple lock but underpin energy bills?

[Jonathan Ashworth]

My hon. Friend is absolutely right. We have so many pensioners in poverty, and many of them are living in inadequate, cold, damp homes that they cannot afford to heat. We know that we have considerable excess deaths every winter due to issues associated with hypothermia and so on, because so many pensioners live in cold, damp homes. Frankly, that costs the NHS more in the long run, so the economics of this are completely self-defeating.

What was the Government’s justification for breaking the triple lock even though pensioner poverty is increasing, as it was before the pandemic? Ministers said that the £5 billion cost was unaffordable. So the Chancellor took £5 billion off pensioners and then a month later, in his Budget, gave away billions in alcohol duty cuts and cuts to the bank levy—literally making it cheaper for the bankers to booze on bubbly on the back of making pensioners poorer. It is a disgrace.

Let us be clear: the reason Ministers are not increasing the pension sufficiently is not that the Government lack the money, but that they lack the political will. That is why older people are now asking whether the Government will break their promise on the triple lock next year too. Last year, Ministers rejected the 8.3% rise and refused even to explore alternative measures of wage growth, but they insisted that that was a one-off and that they would honour the triple lock throughout this Parliament. The Bank of England warns that inflation could reach 8% this year. I asked the Secretary of State at questions earlier whether she would rule out breaking the triple lock for a second year in a row. She did not give that guarantee at the Dispatch Box, so I ask her again: can she confirm that the triple lock will be honoured for the rest of this Parliament? Does she want to answer that? She did not do so at questions earlier.

[The Secretary of State for Work and Pensions (Dr Thérèse Coffey)]

The right hon. Gentleman asked multiple questions earlier and I answered at least one of them, but the answer is yes, I do make that commitment.

[Jonathan Ashworth]

I have secured my first U-turn in the role, Madam Deputy Speaker. Does that not just show that we in the Opposition stand up for Britain’s pensioners? I asked the Secretary of State a very simple question earlier—whether she would commit to the triple lock—and she did not say yes. I am pleased that she has now cleared up the muddle she got herself in earlier, but given the other commitments—[Interruption.] The Pensions Minister—the Under-Secretary of State for Work and Pensions, the hon. Member for Hexham (Guy Opperman)—says Ministers have said it repeatedly, but they all stood on a manifesto saying they were going to keep the triple lock. I say to him that his commitment to the triple lock might not be worth the paper it is written on, given that he broke his manifesto commitment.

While I am talking about the Pensions Minister, he told the House in September, in seeking to justify breaking the triple lock, that the Government would

“ensure pensioners’ spending power is preserved and that they are protected from higher costs of living.”

Does any Tory Member really believe that that ministerial promise has remotely been met? Of course it has not.

[Mike Amesbury (Weaver Vale) (Lab)]

I wonder whether my right hon. Friend could secure another U-turn from Ministers, on the national insurance rise for working pensioners.

[Jonathan Ashworth]

My hon. Friend makes a good point. The Pensions Minister, who will sum up the debate later, promised—these are his words—that the Government would preserve pensioners’ spending power and protect them from the higher cost of living. On the same day that the Government broke the triple lock, they introduced the national insurance increase, a proportion of which, for the first time, will be paid by working pensioners. Indeed, a working pensioner on average earnings will lose out by £1,400 over two years. That is not protecting pensioners’ spending power or protecting them from the higher cost of living.

Have pensioners been protected from the higher cost of living through energy bills? Next month, we will see energy bills rise by 54%—£700 on average. In October, there is likely to be another 25% rise. All the Government are offering is a £150 rebate this April—although it is not clear whether they will guarantee that for pensioners who do not pay council tax or who get council tax benefit—followed by a loan that has to be paid back through a £40 levy. That £350, £200 of which has to be paid back, will be totally wiped out by the £388 real-terms cut to the basic state pension. That is not protecting older people from the higher cost of living or preserving their spending power; I suggest it is more like daylight robbery.

We have already said that pensioners are going to be paying more in tax, but what about pension credit, which featured in the exchanges earlier? About 850,000 pensioners eligible for pension credit are going without it. That is £1.7 billion unclaimed—something like £1,900 for every qualifying household that is losing out. As Members across the House have pointed out, pension credit often unlocks other benefits, such as free TV licences—obviously, the Government cut those and changed their financing—council tax benefit and so on. Now Ministers are praying in aid the pension credit guarantee as justification for their real-terms cut in the value of the state pension. They do not mention very often that pension credit was a Labour policy, which they criticised when we introduced it. Indeed, if my memory serves me correctly, they also opposed its precursor, the minimum income guarantee, and even voted against it. They do not mention that, but given that pension credit uptake is so poor, if they drove it up they could lift 440,000 older people out of poverty.

[Stephen Timms (East Ham) (Lab)]

I very much agree with the point that my right hon. Friend is making. Pension credit, introduced in 2003, has been a powerful lever for tackling pensioner poverty. Does he agree that the Government should set an ambitious target for increasing the take-up of pension credit so that the number of people who benefit substantially increases?

[Jonathan Ashworth]

Yes, I do. My right hon. Friend, who was a first-class Pensions Minister and Chief Secretary to the Treasury, will remember being at the Government Dispatch Box when shadow Secretaries of State for Work and Pensions from the Tory party criticised pension credit and opposed the minimum income guarantee, saying that it was an extension of means-testing and undermined the universal basic state pension. Now, today, they are using pension credit to justify a £388 real-terms cut in the value of the basic state pension. I hope that the very sensible recommendation by my right hon. Friend, the Chair of the Work and Pensions Committee, is taken up by the Secretary of State, and that she responds to him when she speaks.

Of course, Ministers should be moving heaven and earth to drive up take-up, but the Pensions Minister revealed earlier this afternoon that, instead, we have a letter writing campaign. Writing to local newspapers—that is his plan to drive up uptake of pension credit. When pensioners cannot afford their heating bills and cannot afford to eat—when pensioners cannot afford the basic necessities of life—rather than taking action, all he does is write to local newspapers. What is he doing? Is he expecting pensioners to burn the papers to keep themselves warm? I am told he has written to the Leicester Mercury. Well, I have been looking at his local paper, the Hexham Courant. I cannot actually see his letter in it, but I can see that it is warning that

“Thousands in the North East to miss out on automatic £150 rebate…MORE than 320,000 households across the North-East will not automatically receive a £150 council tax rebate…and 40,000 in Northumberland”.

Many of them will be pensioners. May I suggest that he sorts out his own backyard before gracing the pages of my paper, the Leicester Mercury?

There is one other area where I think the Minister needs to show greater urgency in supporting the United Kingdom’s pensioners and I would be grateful if the Secretary of State responded in detail to the points I have made. She will know that the underpayment of the basic state pension to around 135,000 pensioners, the vast majority of whom are women, has been a scandal. I pay tribute to the former Liberal Democrat Pensions Minister, Sir Steve Webb, the Chair of the Work and Pensions Committee, my right hon. Friend the Member for East Ham (Stephen Timms) and the Chair of the Public Accounts Committee, my hon. Friend the Member for Hackney South and Shoreditch (Dame Meg Hillier), who have all shone a light on that.

The Department has allocated £1 billion and estimates that approximately 118,000 pensioners will be traced and could receive around £8,900 by the time the payments are made. So far, so good. But the last time Ministers provided updated figures, in autumn, they had paid out just £60 million to just under 10,000 people, so £900 million is outstanding. When we are in a cost of living crisis, should not the Department be showing greater urgency? When will the other £900 million be paid? The Secretary of State will know that there are stories of the DWP helpline giving inaccurate information and false assurances, forcing pensioners to keep living on less. There is no information available as far as I can see on how lump sums will impact on capital limits and the consequent impact on other entitlements, such as to social care. Divorced women have been excluded from the whole exercise on the basis that it does not think there are enough errors to be worth doing, even though there are cases of divorced women where errors have been made and it has had to pay out thousands in back payments.

[Wendy Chamberlain (North East Fife) (LD)]

Two weeks ago, during my absence with covid, a private Member’s Bill was presented which called specifically for divorced women to no longer be excluded and receive more than an apology. Will the shadow Secretary of State indicate whether he would support that Bill?

[Jonathan Ashworth]

Without having read the details, it sounds like a very sensible Bill. I look forward to reading the details. At first sight, it certainly has my strong encouragement.

[Jim Shannon]

I was doing some research beforehand and I see that there is an older people’s commissioner for Scotland, for Wales and for Northern Ireland, but not one for England. Does the right hon. Gentleman agree with the Age UK campaign for an older people’s commissioner for England? Does he think the Minister should do that? It would help older people in England, so does he think the Government should do it?

[Jonathan Ashworth]

Typically, the hon. Gentleman, my friend and fellow Leicester City fan, makes a very wise and astute recommendation. I hope the Secretary of State takes it up. It would certainly have my strong encouragement.

I hope the Secretary of State can provide an answer for why divorced women are excluded. It seems utterly unfair, particularly given the desperate cost of living crisis. Secondly, when the Department makes a lump sum payment it is normal to pay interest, so why is it not paying interest on those payments? I encourage the Secretary of State to explain when she is going to get on and fix that. The Chair of the Public Accounts Committee said this process has become a “shameful shambles”. Given the scale of the cost of living crisis, can she tell us when Ministers will finally fix this shameful shambles?

Of course, there are other scandals that need fixing, too. We know about the Allied Steel and Wire steelworkers who have not got their full entitlement, or the thousands of members of the British Steel pension scheme, who incurred massive losses because of failures in pension regulation and protections on this Government’s watch. Whether it is working pensioners, women pensioners, steelworkers or anyone who relies on the state pension as their main source of income, the Government have let them down.

Our retired constituents worked hard all their lives, paid their national insurance, served our country and contributed to our communities. They deserve security and dignity in retirement. Instead, what we get is the state pension cut in real terms, the triple lock abandoned, energy bills unaffordable, pensioner poverty increasing and retirees robbed. We need a plan to get energy bills down and halt the tax rises that are coming, and a plan to ensure that all pensioners are protected from this devastating cost of living crisis. I commend our motion to the House.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

With a mother who was a Llewelyn by birth, I am under tremendous pressure with this speech. I will attempt to address in some detail the points that the hon. Member for Cynon Valley (Beth Winter) made.

This year, we will spend more than £129 billion on the state pension and the benefits accrued for pensioners in Great Britain. We have never supported our pensioners with more in this country. That figure includes more than £105 billion on state pension, £5 billion on pension credit, £2 billion on winter fuel payments, £325,000 on cold weather payments so far this winter and £144 million on the warm home discount payments last year.

Before I get into the meat of the debate, may I address one key point? The spring booster campaign was announced today. It is utterly vital that Ministers send out the message from this Dispatch Box that we really want the 5 million people at whom the campaign is targeted to take up the vaccine, which is being offered to adults over the age of 75, care home residents and the most vulnerable over-12s—those who, like me and several other Members of this House, are immunocompromised. Approximately 600,000 people will be sent invitations over this coming week, as I understand it, and 5 million people will ultimately be contacted. I urge everyone, primarily the pensioners with whom we are all concerned today, to apply and to come forward when asked.

[Jonathan Ashworth]

In a cross-party spirit, may I endorse what the hon. Gentleman says? I shadowed the Department of Health and Social Care for many years, and I completely agree. I want the message to go out across the country that there is no division: everybody who needs the vaccine should get it. I encourage my constituents, his constituents and all hon. Members’ constituents to come forward for the vaccine.

[Guy Opperman]

The right hon. Gentleman does himself credit with what he says. Much as he did as shadow Secretary of State for Health and Social Care, he seeks cross-party ground where it is right and proper, which I support and really appreciate. We need to get that message across.

I thank all colleagues who have contributed today. As the Secretary of State set out, we are experiencing a period of increasing consumer demand that, together with disruptions to global supply chains and the impact of the war in Ukraine, is definitely placing a strain on household and other finances. The Government recognise that inflation is rising; together with the Bank of England, we are closely monitoring the situation.

I applaud the many Members across the House who have put in detailed recommendations to the Chancellor for the spring statement. I am sure that those on the Treasury Bench have been listening most carefully. In the intervening period, we have taken significant steps to ease the financial pressures by providing a support package worth billions of pounds during this fiscal year and the next.

The state pension is clearly the foundation of support for older people. Over the last two years, the basic and new state pension will have increased by more than 5.6%, taking into account the 2.5% rise this year and the 3.1% rise from this April. There has been much discussion of pension credit, which continues to provide invaluable financial support to approximately 1.4 million vulnerable pensioners. We want all pensioners to claim it.

--- Later in debate ---

[Guy Opperman]

Quite clearly she should be contacting her local authority, because several million pounds has been set aside for individual councils up and down the country so that they have the capability to intervene for such constituents. Obviously I would hope the hon. Gentleman has advised her to apply for pension credit, which could unleash £3,000-plus for her, and although I cannot comment on individual circumstances, I presume she will qualify for the winter fuel payment, which runs to £2 billion, the cold weather support payment and the various other supports that exist, including the warm home discount scheme, where payments will increase from £150 in 2022-23, with spending rising from £354 million to £475 million. Pensioner households are able to access the £144 million of discretionary funding from local authorities to support households who need support but are ineligible for council tax rebates.

My hon. Friend the Member for Amber Valley (Nigel Mills) rightly defended the record of the coalition and of this Conservative Government. I will just briefly remind the House that the change to the state pension that has been taking place under the coalition—to be fair to our Liberal Democratic colleagues—and the Conservative Government has been absolutely transformational. There has been a 35% increase in the state pension, with massively enhanced figures going forward. Without a shadow of a doubt the triple lock, which the right hon. Member for Leicester South (Jonathan Ashworth) never mentioned, has had an impact. Not once in any of the 13 years of the Labour Government did they have a triple lock—not once. Gordon Brown famously raised the state pension by 75p in 1999, so I will take no lessons on that from Labour.

My hon. Friend the Member for Darlington (Peter Gibson) is a brilliant champion for his local area, and he was right to say that pensioner poverty has decreased under this Government—

[Jonathan Ashworth]

No, it has not.

[Guy Opperman]

Yes, it has. I am terribly sorry to have to point out that on this particular point the hon. Gentleman is utterly wrong. The number of pensioners living in absolute poverty has fallen. There are now 200,000 fewer pensioners in absolute poverty, both before and after housing costs, than there were in 2009-10.

My hon. Friend the Member for Broadland (Jerome Mayhew) made a very good speech and was right to mention the impact of the Ukraine conflict. He was also right to talk about automatic enrolment, which has transformed private pensions in his constituency, with 2,150 employers supporting 9,000 employees who are saving 8%. That is a cross-party, cross-Government implementation of real impact to address pensioner poverty on a long-term basis. It is a 20-year policy that is transforming this particular situation.

This Government are committed to ensuring that people have security and dignity in retirement. We have recognised and acted on the concerns of pensioners struggling with the cost of living, and we will continue to spend £129 billion on pensioner benefits this year, which includes the £105 billion on the state pension. Obviously there is also the £9.1 billion energy rebate pack and the £2 billion on winter fuel payments and the warm homes discount scheme. I strongly urge the House not to accept this Labour motion.

Question put and agreed to.

Resolved.

That this House is concerned that older people and pensioners risk being at the sharp end of the cost of living crisis as a result of spiralling inflation, a lack of Government action on household energy bills, a poorly thought-through tax rise on older people in work and a real-terms reduction to the state pension; notes that the state pension is being cut in real-terms by hundreds of pounds a year and that working pensioners will begin paying the Health and Social Care Levy from next year; regrets that levels of pensioner poverty and pensioner debt have risen over the last decade even before the current cost of living crisis with almost one in five pensioners now living in poverty; and calls upon the Government to cut home energy bills, halt the planned tax rise on working pensioners and ensure older people are protected from the cost of living crisis.