Pensioners and Winter Fuel Payments

Maria Miller Excerpts

Tuesday 22nd November 2011 Commons Chamber

[Cathy Jamieson]

My hon. Friend makes an important point. Many pensioners do not want to admit the financial difficulty that they are in. Often, they try to hide it from their family, friends and local community, so they go behind closed doors and curtains, do not put the heating on for fear of the huge bills that may come in, and choose at times when their money is tight to cut down on nutritious food and other essential items. That is the stark reality for many pensioners living in our communities today, and it is time that the Government realised that they have to take responsibility for their own decisions.

The Government have to take responsibility for their actions and face up to the consequences, so let us take a look at the facts. I am sure that I will get more sedentary comments from Government Members, but it is important to remind people that the UK economy has flatlined over the past year, with just 0.5% growth well before the eurozone crisis, which cannot therefore be entirely to blame for choking off recovery. In the European Union, only Greece, Portugal and Cyprus have grown more slowly than the UK, and the United States has grown more than three times as fast as us over the past 12 months.

The Government’s mistaken decision to raise VAT to 20% in January has hit pensioners hard. Estimates are that it will cost a pensioner couple on average £275 a year, and I return to my earlier point: that may seem like a small amount to some Members; it is not a small amount for someone who is facing the rise in prices, trying to make every penny go that bit further and facing such difficulties every day.

We know that the Government’s policies are hurting ordinary people, because we hear it every day from constituents, as my hon. Friend the Member for Midlothian (Mr Hamilton) said, so we, like the right hon. Member for Belfast North who moved the motion, believe that the Government should look again at the impact of their polices on winter fuel payments and on VAT, which in combination have hit pensioners hard.

The Government have the opportunity to ease the squeeze on pensioners, and they should take it by temporarily reversing the VAT rise. At the very least, they could do so immediately and put that £275 back into the pockets of pensioners.

When Labour introduced winter fuel payments, it did so as part of a drive to help tackle fuel poverty among pensioners, and I accept that some Government Members genuinely want to see the problem tackled. The payments were specifically designed to give older people the reassurance that they could afford to heat their homes in winter—and do so in a way that would allow them to continue to buy their food and to pay the rest of their bills.

At the time there was, and indeed there has been since, criticism that the winter fuel allowance was not targeted in the way that some anti-poverty organisations might have wished. Some people wanted the allowance to go further, and others wanted different groups of people included, but we know from research by the Institute for Fiscal Studies that households receiving the winter fuel payment are almost 14 times more likely to spend the money on fuel than they are if their incomes are increased in other ways. That is quite important, and the IFS specifically stated:

“Households receiving the Winter Fuel Payment spend 41% of it on fuel even though there is no obligation to do so. When the same households receive additional income which is not labelled in any way, they spend just 3% of it on fuel. To put it another way, simply increase the income of a pensioner household by £100 and they will increase their spending on fuel by £3. Label that increase a ‘Winter Fuel Payment’ and £41 will go on fuel.”

Indeed, the IFS went further by stating:

“The winter fuel payment was introduced to encourage older households to spend more on heating in the winter. Remarkably it appears to have had just that effect.”

To be fair to the Government, at least for a moment, they do seem, to be fair—

[The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller)]

“They do seem to be fair.”

[Cathy Jamieson]

On one or two things, and on this point the Government do seem to have moved on from the days when some people who are now in prominent Government positions thought that winter fuel payments were “gimmicks”. To be fair again to the Pensions Minister, back in May he answered a written parliamentary question by stating:

“The winter fuel payment provides a significant contribution to an older person’s winter fuel costs and provides vital reassurance that people can afford to turn up their heating.”—[Official Report, 23 May 2011; Vol. 528, c. 493W.]

Today, he seemed to suggest that he still agrees with that in principle, and I am glad to hear it, although I disagree with him on whether the amount of money going into pensioners’ pockets has been cut.

The coalition agreement, which has been referred to, states:

“We will protect key benefits for older people such as the winter fuel allowance”.

Most reasonable people reading that statement or hearing those words coming from the mouths of Ministers might reasonably have expected the coalition to have protected all winter fuel payments. They were certainly the words that people heard in the run-up to the election, but as we know the winter fuel payment will be £50 lower this year than it was in each of the last three years for eligible households aged 60 or over, and £100 lower for those aged 80 or over. The Department for Work and Pensions estimates that 9 million households benefit from the winter fuel payment, so 9 million households will be worse off this winter.

People will no doubt seek to make the usual criticisms of the former Labour Government at this point, but when Labour left office no decision had been taken, and it was absolutely in the Chancellor’s power to continue with the extra payment, as Labour Chancellors had in previous years. It is therefore absolutely wrong for any Government Member to say that the decision was taken by the previous Government; the decision to axe the additional payment was taken by this coalition Government —no one else.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller)]

I thank Opposition Members for raising this important subject. We have had a lively debate.

Let me begin by emphasising that the coalition Government take the issue of pensioner poverty very seriously. Our record demonstrates that. We pay more than £2 billion in winter fuel payments, and we pay it to more than 12.5 million pensioners, including more than 300,000 in Northern Ireland last year. The payments go to pensioners regardless of their income, and most do not even have to make a claim. I think that Members on both sides of the House agree that the winter fuel payment makes a real difference, ensuring that pensioners can turn up their heating in the knowledge that they will receive the help they need in order to meet their heavy winter bills.

It is regrettable that the last Administration decided not to provide for a temporary increase to become permanent—to last beyond the year of a general election. People can draw their own conclusions about why a temporary increase in winter fuel payments extended in the year running up to a general election but not beyond. It is most telling that the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson), who spoke for the Opposition, failed to pledge to make concrete the previous Government’s temporary increase. I say that because she is a shadow Treasury Minister and if she does not know whether the Opposition would make that permanent, who would?

[Cathy Jamieson]

Will the Minister accept that it is time that this Government took responsibility for their actions? The decision whether to pay this increase is entirely down to this Government, and it would be irresponsible for anyone on the Government Benches to suggest otherwise. It was not the previous Government but this Government who took the decision on this budget.

[Maria Miller]

I think the House will draw its own conclusions from the fact that the hon. Lady again failed to take the opportunity to make clear what the Labour party’s policy is on this issue. The coalition Government have made permanent the increase in the cold weather payment from £8.50 to £25. Again, hon. Members on both sides of the House will be pleased to hear that that money is going to the most vulnerable of our constituents. Some 2.7 million pensioner households receiving pension credit also receive the cold weather payment.

The coalition Government are taking real steps to protect pensioners, which is why one of our first actions was to restore the earnings link with the basic state pension. We also gave a triple guarantee that pensions will be increased by the highest of growth in average earnings, price increases or 2.5%. Pension credit is also available for those who have low incomes, and we have continued key support for older people such as free NHS prescriptions, travel concessions and free television licences. For the longer term, we will need to help prevent people from retiring into poverty. Again, our actions are speaking louder than mere words, through the automatic enrolment in workplace pensions.

Hon. Members have made a strong case as to why fuel poverty is a real issue for many vulnerable people, including pensioners living in Northern Ireland. The differences in Northern Ireland are clear, and hon. Members have made that point in this debate. That is why Northern Ireland receives not only the support from pension credits, winter fuel payments and cold weather payments, which are provided for the rest of the UK, but a block grant of some £10.4 billion in funding for the Executive to address the particular priorities of Democratic Unionist party Members and other Northern Ireland Members. That money goes along with some £6 billion to pay for the cost of social security and pensions. We should not forget that Northern Ireland receives almost 25% more in spend per head of population than England, in recognition of the real issues that individuals living in Northern Ireland face.

[Mr Dodds]

The Minister makes a very valid point, but will she also acknowledge that, as we have highlighted in this debate, the people have horrendously higher needs in Northern Ireland, which arise because of ill health, fuel poverty and so on? Our energy prices are also much higher than those in the rest of the United Kingdom, so what she says needs to be put into perspective.

[Maria Miller]

I understand the point that the right hon. Gentleman is making. Indeed, that is why the block grant is so sizeable, and it is important that we recognise that.

Although we clearly want to address these issues here in Westminster, it is important that we work closely with colleagues in the Northern Ireland Executive. As the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb), mentioned, I was in Belfast only last week meeting the Minister for Social Development to discuss child poverty issues in particular. Addressing fuel poverty is a devolved matter for the Northern Ireland Executive, and they are well placed to determine what measures should be in place to meet local needs. Hon. Members will be aware that earlier this year Northern Ireland launched its own fuel poverty strategy, which set out key areas for improving the situation for local people. I hope that after today’s debate the Executive may consider some of the initiatives in England and Great Britain, particularly the obligation on energy suppliers, which could well be other ways to improve things over the water.

We heard important contributions from right hon. and hon. Members across the House today, but there have been some puzzling absences. Where is the shadow Minister for older people? Where is the shadow Secretary of State for Work and Pensions? We welcome the hon. Member for Kilmarnock and Loudoun, but she is the shadow Financial Secretary—perhaps that is telling in terms of how the Opposition are dealing with this issue.

The right hon. Member for Belfast North (Mr Dodds) made a number of important points, and he talked about benefit take-up. I hope that he can bring himself to support the work that my Department is doing, through the introduction of universal credit, to improve the working age take-up of benefits. That is slightly different from the issue we are discussing today relating to pensioners, but it will make an important contribution.

The hon. Member for Kilmarnock and Loudoun made a number of important points, and I thank her for that. The very existence of the winter fuel payment does help with people’s mental housekeeping and reassures older people that they can afford to turn up the heating, as she recognised in her contribution. However, I must say to her that tackling fuel poverty in Northern Ireland is a matter for the Northern Ireland Executive. We have to make sure that those important devolved matters are dealt with at a local level. As I said, she was not clear about the Labour party’s stance on the winter fuel payment, but perhaps she will clarify it in the closing stages of this debate—or perhaps she will not.

The Minister of State talked about the importance of prioritising those most in need and he highlighted the fact that we have reversed Labour’s cut to the cold weather payments. My hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) highlighted the fact that we are dealing with a complex set of factors. I have to be careful now, because I think that I have to correct the hon. Member for South Antrim (Dr McCrea). He said that we were cutting support for the most vulnerable but that is absolutely not the case. We are reversing Labour’s proposed cuts to the cold—

[Mr Dodds]

claimed to move the closure (Standing Order No. 36).

Question put forthwith, That the Question be now put.

Question agreed to.

Main Question accordingly put.