Pension Credit and Cost of Living Support Grant

Matt Rodda Excerpts

Wednesday 26th October 2022 Westminster Hall

[Matt Rodda (Reading East) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Dowd. I congratulate the hon. Member for Glasgow North East (Anne McLaughlin) on securing the debate, and I thank everybody who has spoken on this important subject.

Families and pensioners across the country face an unprecedented cost of living crisis. They need help and support at this difficult time, and it is important that questions be asked about the nature of the Government response. I turn first to the scale of the cost of living crisis. There is no doubt that we face a crisis, the like of which has not been seen since at least the 1950s. Costs faced by families and pensioners have risen dramatically: the cost of energy is going up, the cost of food is going up, and the overall cost of living is going up.

I want to focus on some specifics, including the recent data on inflation. We learned yesterday that everyday foods have risen by over 10%, which hits pensioners and others on low incomes very hard. For example, the price of a loaf of bread has risen by 37.6%, and the cost of tea has risen by 46%. These are dramatic rises that show the importance of pension credit. The benefit was designed to help pensioners on very modest incomes, and it is an important legacy of Gordon Brown’s leadership, both at the Treasury and as the UK’s Prime Minister, during the last Labour Government. The current Government are failing to encourage sufficient take-up of this important benefit, and we should bear in mind that many of the recipients of pension credit are women, while others are disabled.

As discussed earlier, nearly 1 million pensioners are eligible for this important benefit but go without it at the moment. That is a total of £1.7 billion unclaimed—to put it another way, that is £1,900 for every qualifying household missing out. It is a staggering sum of money that could make a real difference. This is particularly important because pension credit unlocks other benefits, such as free TV licences for the over-75s. Questions to the Department for Work and Pensions have revealed that the Department is spending approximately £1.2 million on increasing the take-up of pension credit, yet it is still failing to achieve a sufficient level of awareness, as we have heard. A Labour Government would treat this issue very seriously. It would be one of the key priorities for the Department, and we would work really hard to encourage take-up.

In the remaining time available to me, I ask the Minister three questions. As we have heard, there is a lot that the Government should be explaining. First, what is the Government’s plan to support pensioners and working families, in both the short and long term? Secondly, how will the Government control inflation and bring down the spiralling cost of living after causing this cost of living crisis? Thirdly, how will Ministers increase the take-up of pension credit for those who urgently need it? I hope the Minister is able to respond to those questions, and to the other points made in the debate. I ask him to commit in writing to responding to me on this issue.

I appreciate that time is pressing and the Minister needs to respond. Let me reiterate the scale of the crisis that we face, and the need for a clear and consistent response. I urge the Government to do a much better job of encouraging take-up of this very important benefit.

[The Parliamentary Under-Secretary of State for Work and Pensions (Alex Burghart)]

It is a real pleasure to serve under your chairmanship, Mr Dowd. I hope that hon. Members will forgive me; I am losing my voice, but I will try to speak as clearly as I can into the microphone. I thank the hon. Member for Glasgow North East (Anne McLaughlin) for securing this important debate on an important subject. I pay tribute to her campaigning work, because helping people to realise the benefits to which they are entitled helps everybody in society. I know she understands that.

My Department will always welcome opportunities to explain what we are already doing to support pensioners. We know the importance of ensuring that people up and down the country are looked after, post retirement. This topic is particularly pertinent given the recent increase in the cost of living. We are taking this challenge incredibly seriously, which is why we have spent more than £37 billion this year on cost of living support, as well as delivering on the energy price guarantee.

This financial year, total expenditure on benefits for pensioners will be well over £134 billion, which represents about 5.4% of GDP. This high investment ensures that the basis of our safety net for pensioners—the full yearly basic state pension—remains strong. It has brought the British state pension in line with that in other OECD countries. The amount that we provide is higher than it is in countries such as Switzerland, Norway and Germany. One of the major successes of this Government, auto-enrolment, has led to over 10.7 million extra employees paying into a workplace pension, so that they can save for a safe and secure future. The issue is particularly pertinent today, because it is the 10th anniversary of auto-enrolment.

[Matt Rodda]

Would the Minister like to pay tribute to the last Labour Government for designing the policy?

[Alex Burghart]

I certainly pay tribute to the last Labour Government, as well as the Pensions Commission, which had cross-party support, and the support of organisations such as the Centre for Social Justice, which I used to work for. Steve Webb, formerly of the Liberal Democrats, also contributed to that work. It was, however, the coalition Government, led by the Conservatives, and my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith), when he was Secretary of State for Work and Pensions, who made it happen. All that good work has had a demonstrable effect: in 2021, 400,000 fewer pensioners were in absolute poverty than when the Conservatives came to power. That is a remarkable achievement of which we are rightly proud.

To complement the state pension, pension credit—mentioned a number of times in this debate—offers an extra layer of support for people over state pension age and on a low income. Pension credit provides an invaluable top-up to a person’s state pension, ensuring that single pensioners receive a minimum of £182.60 per week and couples receive at least £278.70 per week. Crucially, as other hon. Members have mentioned, pension credit acts as a passport to other help, including for rent, council tax and heating.

A comprehensive benefit package including pension credit is only worth while if claimants access the support. We are aware that, historically, take-up of pension credit has been too low. To increase pension credit awareness, in April we launched a comprehensive paid advertising campaign, including a promotional video fronted by Len Goodman of “Strictly Come Dancing” and my predecessor, my hon. Friend the Member for Hexham (Guy Opperman), who did so much in his five years in the job to improve opportunities for people planning for their pensions and claiming them. That campaign has now been viewed well over a million times. The campaign further focused on encouraging the private sector to help drive up claims and reach those who may be reticent about claiming pension credit.

As the hon. Member for Glasgow North East said, no one should feel ashamed about claiming this money. The reason why we have it is so that people can come forward and take it. We want them to have it. Success for us is 100% of people claiming it. I do not think she was implying that the Government sought to stigmatise people who claim benefits—we absolutely do not. We have created a benefits system that is designed as a safety net to support the most disadvantaged in society, but also to help people who are capable of work to move into work.