Social Security (Up-rating of Benefits) Bill

Jonathan Reynolds Excerpts

Committee stage & Committee: 1st sitting & Committee: 1st sitting: House of Commons & Report stage & Report stage: House of Commons
Thursday 1st October 2020 Commons Chamber

[Chris Stephens]

It is good to see that social distancing is being applied at all times. It was remiss of me not to welcome the Pensions Minister back to his place. I did send him a private message, and thoughts of him and his wife and family are very much with us all in this House. I do welcome him back.

These are five non-controversial amendments, which I hope— [Interruption.] We seem to have a laugh already from the Minister. I do not know why. He has obviously not read these non-controversial amendments. We have tabled some probing amendments and look forward to his response.

The first amendment is a theme that was picked up on Second Reading by the hon. Member for North East Fife (Wendy Chamberlain), which is to ensure that the triple lock is applied in legislation. The Government would have to give an explicit commitment to maintain the triple lock for the year ahead. The amendment seems to speak very much for itself.

Amendment 2 asks for an assessment on poverty, which again was picked up on Second Reading. It is certainly our view that the Government are overseeing some brutal benefit cuts, which have exacerbated poverty, and we require a proper impact assessment of the proposed uprating and the impact that has on poverty levels in each of the devolved nations.

Previous UK Budgets have introduced some fairly punitive cuts to social security—certainly the most punitive in recent memory—and we are starting to see an active reversal of reducing and fighting poverty. The Social Metrics Commission report, which was referred to at an earlier stage, notes that prior to the outbreak 14.4 million people in the UK were already living in poverty, including 33% of children, 22% of all working-age adults and 11% of pension-age adults. The largest employment impacts of covid have been felt by those in the deepest poverty, with many at risk of falling deeper into poverty as a result of job losses, reduced hours or reduced pay. We have tabled amendment 2 to provide for that impact assessment.

Amendments 3 and 4 deal with the issue of frozen pensions. UK pensioners deserve a full uprated state pension, wherever they choose to live. Due to the historical arbitrary bilateral agreements between the UK and other countries around the world, some UK pensioners who live overseas do not have their state pension payments uprated every year. That means that their pension is frozen at the level at which they first received it for the rest of their lives abroad. As of August 2019, that affected over 5,110 UK pensioners, who we believe are being adversely affected by the UK Government’s frozen pension policy. Pensioners who have paid the required national insurance contributions during their working lives in expectation of a decent basic pension and retirement find themselves on incomes that fall in real terms year on year. Pensioners will now face ending their days in poverty because they choose to live in the wrong country, in most cases without any knowledge of the implications of their choice for their pension.

In our view the state pension is a right, not a privilege. UK pensioners who have paid their fair share of national insurance contributions should not have to suffer simply because successive Governments have failed to establish bilateral agreements with certain countries. Therefore, we are asking that amendments 3 and 4 be agreed. I also refer hon. Members to the frozen pensions campaign, of which many hon. Members are members.

Amendment 5 relates to 1950s-born women, an issue that I am sure the Pensions Minister would be disappointed if I did not mention. As a previous Speaker of this House advised in 2015, persistence is not a vice. The amendment would require the Government to publish an assessment of the impact of uprating on those whose state pension age was changed by the Pensions Acts 1995 and 2011, including in particular 1950s-born women, or WASPI—Women Against State Pension Inequality Campaign—women, as they are known.

The numbers of ’50s-born women and men claiming working-age benefits has rocketed, and they should have been receiving their state pension. This is a double whammy, with those with occupational defined-contribution pensions to fill the gap being squeezed even further. Those claiming benefits find themselves having lost Government support in many cases, excluded either due to gaps in national insurance contributions, because of low-paid, precarious work, or because of other parts of household income. We are very aware of the history of 1950s-born women and the inequality they have faced throughout many parts of their lives. They now find themselves discriminated against on the basis of so-called equality, while those losing their jobs or seeking work are being further disadvantaged by an unequal playing field and a shrinking job market.

I look forward to hearing the Minister’s response to our amendments.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I thank the hon. Member for Glasgow South West (Chris Stephens) for tabling these amendments, which I would describe as probing amendments to have a wider conversation—perhaps “uncontroversial” is too dramatic a description of what we are discussing today.

On amendment 1, to be fair, the Government have given a clear indication in the opening remarks to this debate of their direction of travel and their commitment to the triple lock this year. It is perhaps worth putting on record the figures from the Library, because I see so much commentary on social media and in the press about affordability. As the Minister said earlier, rounded to the nearest billion, this year this country will spend £102 billion on the state pension—not benefits for pensioners, but the state pension. If we had not operated triple lock from 2011, but had just a double lock of prices or earnings, that figure would be around £100 billion. No one would describe a couple of billion pounds as an insignificant amount of money, but in the context of the UK pensions bill it is 1.2% less. If we had no lock and had simply increased the state pension by earnings since 2011, the bill would be £96 billion, which is £5.5 billion less. However, the crucial point is that that is in the context of the worst earnings growth over the last decade that this country has really ever seen—certainly the worst in modern times. Crucially, that would have meant pensioners becoming worse off, because pensions would not have kept up with prices—something that I think no one here would have been happy to see.

I think we all have to acknowledge that the UK state pension is relatively low by international standards. I am not taking a cheap political pop, and it is appropriate to say that the system is obviously much better when we consider it alongside the NHS, because in some pension systems people have to cover their healthcare costs, and we also have top-ups such as pension credit. The overall system is also clearly much better when we factor in private pensions. However, our basic state pension is relatively low compared with other countries. For instance, a typical woman retiring today will still look to the state pension for over half her retirement income. That is a significant point to bear in mind.

As we have heard, when the coalition Government introduced the pensions reforms that came into effect in 2016, the triple lock was a fundamental part of the calculations for the system. The deal was that people would have to retire later and that some people would not be able to create a state pension that was as high as they could previously have done, but that everyone would get a proper index-linked pension at 67, 68 or 69.