Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2021

Lord German Excerpts

Monday 8th February 2021 Grand Committee

[Lord German (LD) [V]]

My Lords, I will address the NIC contribution matters in these regulations. I would have addressed the working tax credit point just made by the noble Lord, Lord Blunkett, but rather than repeating the point I will simply say “and I” and add amplification to it.

The standard uprating by CPI has been applied and, as this was only 0.5% last September, it has made only a minor difference on the current overall architecture of the NIC regime. There are bigger and wider issues concerning the NIC regime, but I will address and raise some issues relating to Covid, Brexit and international agreements with the Minister. Of course, these regulations concern social security matters.

The pandemic has produced many headaches for the administration of small companies in particular. Apart from their struggles to simply survive, the administrative burden of reporting and making payments to HMRC for their employee liabilities has continued. For many this has always been a challenge in terms of time and administration, but for small companies the administrative complication of furloughing employees is now added to that. Can the Minister update the Committee on how these extra administrative matters relating to submissions to HMRC have been managed? Has any extra help been provided to these small companies where the structure of their staffing has been so dramatically and sometimes irregularly affected?

I wish to explore a wider issue of the consequences of Brexit. Many UK citizens living and working in the European Union have seen their status changed. However, Article 30 of the EU withdrawal agreement gives social security rights where UK citizens were resident in the EU on 31 December 2020. The regulations on these rights are complicated and complex, but essentially, where an individual falls within the scope of the regulations established as a result of the EU withdrawal agreement, is in receipt of a UK state pension and resides in an EU member state, their state pension will be uprated in line with those in the United Kingdom. It is not clear to me, so perhaps the Minister could confirm either in writing or at the end of the debate, whether continuing NIC payments will also contribute to an uprated pension once it becomes payable when an individual UK citizen chose to live in an EU member state after 31 December 2020.

Regardless of this situation, I think the Minister would agree that a UK citizen living in an EU member state will, under most conditions, see their UK state pension uprated. This is an important principle: in most circumstances, as a result of a negotiated reciprocal agreement, the UK state pension will be uprated as if that person living in an EU member state was receiving their pension in the UK. The NIC eligibility for a state pension, using the individual’s contribution record and the criteria in these regulations, will mean a regular uprated pension, regardless of whether they are in the EU or the UK. The decision to follow this very sensible path was a result of a reciprocal agreement negotiated and agreed by the UK with the EU.

I am sure that the Minister will be well aware of the problem for overseas British pensioners, many of whom have not seen their state pension values uprated since their arrival in another country and all of whom fulfilled the NIC contribution record necessary for accruing a UK state pension. One such example is Anne Puckridge, whom I have met. Anne served the UK in all three Armed Forces, but despite a full contributions record she now lives on a pension of less than half of what it would be if it had been uprated as if she were living in the UK. Anne moved to Canada to be near her daughter.

The Government of Canada have now written formally to the UK Government with a request for a reciprocal social security agreement that will cover the uprating of pensions. The UK’s policy is dishonourable and long standing. With the chance to negotiate a reciprocal deal, will the UK now take up the Canadian Government’s offer? There are too many like Anne Puckridge in Canada, and the UK has let them down. This offer from the Canadian Government is a chance to put things right. I hope that the Minister will take this matter back to the Government to press for a reciprocal arrangement, just as they have done with the EU. Every time the matter has been raised in this House it has been referred back to the Treasury, which says that it is too expensive. Now there is a chance, with a Government in another country with whom we have a good and friendly relationship, to start to put this matter right for people such as Anne Puckridge. I hope that the Minister will be able to reassure me that this issue will be considered.