Social Security (Up-rating of Benefits) Bill

Debate between Jonathan Reynolds and Guy Opperman

Consideration of Lords amendments
Monday 15th November 2021 Commons Chamber

[Guy Opperman]

I will make some progress.

It is right that I address these Lords amendments, Madam Deputy Speaker, because, as you rightly outlined, they engage financial privilege in that they interfere with the financial arrangements made by the elected House of Commons. That alone, I respectfully submit, is sufficient reason to disagree with the Lords amendments. However, it is also right that I address directly the point that was made by the House of Lords that invites the Secretary of State to measure earnings as if they were not actually growing by 8.3%. I assure the House that there is no robust way of calculating them as if they were not.

The independent Office for National Statistics has responsibility for producing economic statistics to the highest possible standards. ONS experts investigated whether it was possible to produce a single robust figure for underlying earnings growth that stripped out impacts from the pandemic, and concluded that it was not possible. Alongside the actual earnings growth figures, the ONS suggested a possible indicative range of 3.6% to 5.1%. These figures do not have national statistics status. Indeed, the ONS itself includes heavy caveats on the issue and advises caution in approaching it. The Bank of England also cast doubt on identifying a figure that could be relied on. The ONS said:

“There are a number of ways you can try to strip out these base effects, but no single method everyone would agree on. We have tried a couple of simple approaches…Neither approach is perfect…Our calculations of an underlying rate are there to help users understand base and compositional effects, but…there remains a lot of uncertainty about how best to control for these effects.”

It said that the statistics therefore “need to be” treated “with caution”.

We believe it would be reckless in procedure and in law for this or any other Government to set a precedent for uprating benefits or pensions using a methodology that is not robust and for which there is no consensus. That is why the Government have decided to suspend the earnings link in this year of exceptional and anomalous earnings growth. Instead, we decided to apply a double lock underpinned by the established consumer prices index published and approved by the ONS. This approach was also recommended by the Social Market Foundation and other commentators, and very strongly by this House on Second Reading, Report and Third Reading. That is the legislation that this House passed to the Lords, and that is the legislation I would urge this House to send back to the Lords.

I remind the House that over the two years of the pandemic the Government will have ensured that the pensions covered by this Bill will have increased by much more than prices, by reason of the 2.5% increase last year and the link to CPI this year. In those circumstances, I commend this House to reject the House of Lords amendments and agree that we proceed with this one-year Bill by reason of the pandemic.

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

Whatever else could be said about the House of Lords, it is a place that genuinely contains a great deal of expertise on the subject of pensions. We are fortunate to have that expertise in Parliament and we should be prepared to listen to it. Having studied the exchanges in the Lords, I feel that the Government’s positions on this matter have not held up well under scrutiny, and the debate has moved on considerably since we last discussed it here.

Labour will therefore vote to accept the amendment put forward by the former Conservative Pensions Minister Baroness Altmann, which was well argued and handsomely carried, but which also most closely reflects our own position on these matters. That is to say, we accept, as I have said clearly and repeatedly, the Government’s case that the true figure of earnings growth in the UK is not 8.3%. It would be absurd to maintain that that is what is happening to our constituents’ wages right now. Labour supports the triple lock. We believe the Government’s manifesto commitment should be binding and that the connection to earnings in the uprating decision for this year should remain.

In her remarks, Baroness Altmann made it clear that she was not proposing a specific uprating figure by proposing this amendment. That is important. It seems to me that all Conservative MPs could vote for this amendment, honour their own manifesto commitment, and still address the problem of how the pandemic has distorted the earnings data. It would just require the Government to effectively make an assessment of whether real wage growth is higher or lower than CPI inflation, and, if higher, use that figure.

When we last held a debate on this in the Commons, the Government said that that would not be legally sound, but the Lords debate knocked that down fairly easily. As Baroness Altmann said, for a judicial review to occur, the figure the Government used would have to be found to have been brought about by the Government acting irrationally. That is something we can never rule out with this Government, but it should be more than possible to avoid that. If I may say so, one of the reasons the Government lost this vote so badly in the Lords was their tendency to rely on short-term, inconsistent arguments to bounce from one day’s headlines to another’s.

[Guy Opperman]

The hon. Gentleman criticises the Government for not coming up with a solution, when he is unable in any way to come up with a solution or figure himself, as are the Office for National Statistics, the Bank of England and all other reputable organisations. In fact, the House of Lords did not come up with a figure, so what, pray, if he would enlighten the House, is the precise figure that he would see pensions increase by?

[Jonathan Reynolds]

I am grateful for the Minister’s intervention. I am about to explain why he has got himself and the Government into this position.

[Guy Opperman]

What figure?

[Jonathan Reynolds]

With respect, the Minister just needs to listen to this point. He stands at the Dispatch Box and, like all Ministers, tells us that black is white. For instance, when the Government reacted to the crisis of their own making—when we saw the pumps run dry and the shelves go sparse—they claimed to the country that this was a secret masterplan towards a high-wage economy that they had had all along. Now, we are having to see the Minister and the Government tie themselves in knots again, because he has been sent here to make the case, which we have heard him put very well, that the figure is too distorted and therefore we need this primary legislation, yet—and this is the problem, Minister—according to the Prime Minister, wages are up, workers have never had it so good and that is why the Government can cut £20 a week from universal credit. They are making two completely opposing arguments. We do not even know whether the Government believe that wages are rising faster than inflation. I politely say to the Minister that they cannot expect to have it both ways.

I will repeat a number of points that colleagues may have heard me say before, but I feel they need to be repeated in light of some of the media comments on the Bill. The uprating of the state pension is relevant to millions of pensioners in this country, but it is wrong to present it as an issue of intergenerational unfairness. That is because these decisions are also fundamentally about how we ensure that the state pension is indexed and retains real value for people who are in work today when they come to retire. This Government have been grossly unfair on people of working age, but frankly that is due to the burden of taxes they have inflicted on workers, rather than through the operation of policies such as the triple lock.

I hope the Minister took on board the comments made about pensioner poverty in this House and the other place. The Government’s use of what they call absolute poverty, which in reality is a measure of poverty relative to a fixed line in 2010, is unsatisfactory because not only does it ignore the statistical evidence, which is that pensioner poverty is now rising after it fell considerably under Labour, it also limits a serious debate on the drivers of that rise. The big picture is that the OBR predicts that as a country we will be spending an extra £6 billion a year, year-on-year, on pension-age benefits every year up until 2024-25. That is the year that the forecasts in the welfare trends report go up to, so it will likely continue to rise after that. Pensioner poverty is going up as spending rises substantially. We should be having a much more substantive debate about that, looking at housing costs, energy prices, food and access to good financial and investment advice. The way in which the Government present their own progress means that any real wage growth over the last decade allows them to claim that poverty has declined, so when the Minister says that 200,000 pensioners have been lifted out of poverty since 2010, the reality is that that is a very poor level of performance compared with all previous Governments. Poverty is always relative, because it is a measure of whether someone has the means to live a fulfilling life in the society of which they are a member. That is not just a left-of-centre viewpoint, but one that until recently was accepted by Conservatives, too.

However, to return to the matter at hand, the House of Lords has sent us an amendment that should genuinely command the support of the whole House. It requires the Government to maintain the earnings link in their manifesto promise, while still making allowance for the pandemic. This Government have dragged politics through the gutter in recent weeks, with stories of sleaze, corruption, contracts for donors and second jobs from Caribbean islands. I could go on, but the point is that public trust in this place matters. When the Government muddy our democracy in the way that they have, they cannot then turn to the public and ask voters to simply take them at their word. For public trust to return, the first step has to be for the Government to keep their promises. Today, Labour will therefore support the amendment that would allow the Government to keep their promise on the pensions triple lock.

The Lords have sent us a very reasonable set of measures, and frankly I see no logical reason not to support them if we want to protect the link between earnings and pensions. If the Government are unable to do so, they should admit what is really going on: they are using the pandemic as a smokescreen to scrap the triple lock and pocket the savings. They should cut the obfuscation, keep their promises and vote for the Lords amendments.

Social Security (Up-rating of Benefits) Bill

Debate between Jonathan Reynolds and Guy Opperman

2nd reading & 2nd reading: House of Commons & Money resolution & Money resolution: House of Commons
Thursday 1st October 2020 Commons Chamber

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

I would like to begin by thanking everyone who has spoken in the debate, which has been wide ranging and consensual and has covered a number of topics.

Because this is my first appearance back at the Dispatch Box, Madam Deputy Speaker, I just want to raise a personal matter. This is my first appearance since the demise of my twin boys in late June, and I was genuinely struck by the amazing words of commiseration and support that I received across the House from all colleagues. I am deeply grateful, and I know I speak for my wife on that particular point as well.

Moving on, I was struck by the opening point from the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) on the shadow Front Bench, and it is one I think we should all celebrate in this House: rising longevity is a fantastically good thing, and it is a wonderful problem to have. Clearly, there are policy and fiscal issues that follow it, but it is a genuinely good thing that we are addressing.

Even though the House is not well populated today, I am conscious that before me I have a former Pensions Minister from the Department for Work and Pensions—the right hon. Member for East Ham (Stephen Timms), who now chairs the Select Committee. I also think that the hon. Member for Stalybridge and Hyde was a special adviser—

[Jonathan Reynolds]

Not quite.

[Guy Opperman]

He was an adviser—let’s put it that way—to the previous Labour Government, and he is acutely conscious of the issues that we are dealing with today.

Clearly, there is a delightful sense of a cross-party consensus, but I want to address some of the key points that were raised. People clearly wish to make the case on pensioner poverty, and I will address that. One can trade statistics, but material deprivation for pensioners fell from 10% in 2009-10 to 6% in 2018-19. There are 100,000 fewer pensioners in absolute poverty before and after housing costs than in 2009-10. Average pensioner incomes have grown significantly in real terms over the past two decades. Average weekly income in 1994-95 was £165 a week after housing costs; that compared with £320 a week in 2018-19. For 2020-21, we are forecast to spend £126 billion a year on pensioners, including £102 billion on state pension. Colleagues will know that that is a record sum spent by any Government in this House in respect of pensioners.

I will attempt to answer some of the particular points that were fairly made on pension credit. It is again the case, and I should put this on record, that pension credit increased significantly under the coalition and then under this Government, from £132.60 to £173.75 for a single person and from £202.40 to £265.20 for a couple. The take-up of pension credit is something that all would like to see increased. I echo my hon. Friend the Member for Delyn (Rob Roberts) on that; this is the first chance I have had to respond to him in this House, and it is delightful that he is here. He makes the fair point that it is in all our interests that pension credit be increased.

One of my colleagues asked what had been the impact of the BBC decision. There is no totally granular data on that, but I can assist to a degree: the claims for pension credit, which is what we want to see, were dramatically increased as of July 2020 compared with January 2020. There is definitely a massive increase in claims and clearly a filtering through of the acceptance of said claims. I refer hon. Members to the parliamentary question asked by the hon. Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron), PQ 82024. I will ensure that I put a note of the issue on the record in the Library to answer that particular point and expand upon it.

In respect of pension credit, the Secretary of State was right to identify that we had a significant nationwide campaign in the spring of this year, and that the combination of that and the impact of the BBC decision clearly had an impact on greater take-up. The specific causes of the increase in take-up are hard to assess, but there is no doubt that the take-up has been larger.

In respect of the point raised by various hon. Members about working-age benefits, it is right to say that the Government are proud of the fact that they have provided support during the pandemic for those below state pension age, whether through the plan for jobs, with Kickstart now open for bids across Great Britain and doing very well, increasing the standard allowance in universal credit and working tax credit by £1,040 this year, benefiting 4 million families, investing approximately £9 billion of extra support to protect people’s incomes through the pandemic, removing the seven-day waiting requirement for employment and support allowance claims linked to covid-19, or relaxing the universal credit minimum income floor for self-employed people.

As the Secretary of State said to the right hon. Member for East Ham and the Work and Pensions Committee yesterday, that is a matter that is clearly in her mind and that is to be considered by the Secretary of State. I cannot really add or expand upon the answer that she gave, and it would not be appropriate to comment further, because clearly she has to conduct a review and then return to this House to respond to that review.

Having dealt with the specifics, all colleagues have identified that this is an important piece of legislation, without which the state pension would be frozen for a year from April 2021. It makes technical changes to ensure that state pensions can be uprated, providing peace of mind to pensioners regarding their financial health. It is a one-year Bill, so it is not the case that we are considering the matter beyond the first year. Clearly, this arises out of the covid emergency and its impact on earnings, and it would not be appropriate to address the future at this stage. I believe this Bill is a further demonstration of this Government’s action in support of pensioners, and provides them with financial peace of mind in the face of the coronavirus pandemic. I commend it to the House.

Question put and agreed to.

Bill accordingly read a Second time; to stand committed to a Committee of the whole House (Order, this day).

SOCIAL SECURITY (UP-RATING OF BENEFITS) BILL (MONEY)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Social Security (Up-rating of Benefits) Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable under any other Act out of money so provided.—(David T.C. Davies.)

Question agreed to.