Pensions Uprating (UK Pensioners Living Overseas)

Mhairi Black Excerpts

Wednesday 11th May 2016 Commons Chamber

[Mhairi Black (Paisley and Renfrewshire South) (SNP)]

I thank my hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford) for securing this debate.

It is fair to say that, given my youthfulness, prior to last year I did not have a great understanding of pensions. But the more I look into the different issues, the more bizarre the world of pensions seems to get. I thank the hon. Member for North Thanet (Sir Roger Gale) for mentioning the fact that we are not at the WASPI meeting because we are in this Chamber debating this issue. He made an interesting point, which is in fact one reason why I find this debate incredibly bizarre. He said that the Government claim to have received legal advice that raises fears that people will be able to claim for back payments. But legal advice received by the International Consortium of British Pensioners from Blackstone Chambers contradicts that.

The Minister said that many pensioners overseas whose pensions are frozen are compensated through means-tested benefits in their country of residence and implied that unfreezing those pensions would make savings for foreign Governments at the expense of the UK taxpayer. But again, when we look at the facts, the ICBP’s recent review of the countries with the largest numbers of British pensioners with frozen pensions shows that that is simply not the case. The vast majority of pensioners would benefit greatly from an uprating in full.

That brings me to the person who my hon. Friend the Member for Ross, Skye and Lochaber mentioned, Anne Puckridge, the former college lecturer, who is now 91 years of age. She worked in the UK all her life, then moved to Canada to be with her daughter and grandchildren. Fourteen years on, Anne, who served as an intelligence officer in the Women’s Royal Naval Service during the second world war, is struggling to live on a frozen pension of £75.50, which is what she was entitled to when she moved. As my hon. Friend pointed out, she now fears that she will be forced to move back to Britain to be able to survive. He gave us some telling quotes. She has said:

“It’s the small things, and the injustice, that is really getting to me…I value my independence, but I can’t go on living on the breadline and I don’t want to inflict this on my family.”

That is telling. She is not asking for millions here—she does not want to raid the bank. She is asking for the extra 20 or 30 quid that she is entitled to after she paid into the system all her working life. Anne went on to say—this is perhaps the part that gives us most insight:

“As well as ever-increasingly poverty, I feel a sense of stress and shame, which is affecting my health.”

I looked through the various briefings on this issue and the previous debates there have been, for years now—as the Minister rightly pointed out, this debate has been going on since probably after world war two. In 1981, the line from the Government was not far off what the Minister said today. They said that they could not, unfortunately, unfreeze the pensions because that was incompatible with the Government’s policy of containing the long-term cost of the social security system to ensure that it remained affordable. This is an incredibly cynical point—I am getting used to those in here, so I thought I may as well join in—but it concerns the real lunacy of the argument about cost. Instead of giving people who have paid into the system all their life the £20 or £30 extra that people in the UK get and to which they are entitled, we are saying, “We’re not going to give you that money, but you can go and live abroad, make yourself ill through poverty, worry and the stress of having to come home. When you are forced to return to Britain, don’t worry, we’ll foot the bill for the NHS and everything else.” The argument about cost does not stand up—costs will increase when pensioners who have been made ill through stress or whatever, have to come back in order to survive.

[Alan Brown]

Yet again, my hon. Friend is making a powerful argument. Does not another nonsense argument about cost concern the reciprocal arrangement that is needed, given that Canadians in this country can get the full state pension from their country but British pensioners cannot get it in Canada? This is not about protecting social security in this country, because a reciprocal arrangement could easily be put in place. We are supposed to have the best social security system in the world, so the argument about cost is nonsense given that the Canadians can afford to pay for their citizens in this country.

[Mhairi Black]

I could not agree more with my hon. Friend, and I will touch on our relationship with Canada in a minute. My argument is supported by a 2010 study by Oxford Economics, which used Government statistics to show that a pensioner who permanently leaves the UK saves it £4,300 a year in NHS usage and other social security benefits. We are placing an increasing workload and cost on to the NHS and other public bodies—the very bodies that we are simultaneously using as part of the argument to continue with frozen pensions. It makes no sense.

The third reason often given by the Government for this measure is that there could be some sort of legal or political backlash, but that is not the case. This issue has been debated for years, and Annette Carson made a legal challenge against the Government on the basis of discrimination. She said that because she was in South Africa, which does not have a reciprocal deal with the UK, her pension was frozen, whereas if she had moved to an EU country—or a country with such a deal—she would have had an uprated pension. The judge ruled that she lost the case and that there was no discrimination, but he noted just how ludicrous the system is, and how much confusion there is about it. He ruled that it was a political, rather than judicial, decision, which shows how crazy these plans are—the hon. Member for Worthing West (Sir Peter Bottomley) used that word previously.

Any pensioner who moves within the EU or the European economic area gets an increase, and the UK has reciprocal agreements with 16 countries. As the hon. Member for Vauxhall (Kate Hoey) pointed out, our agreements with Canada, New Zealand and Australia do not allow for uprating, yet those three countries are home to 80% of overseas residents who do not receive upratings.

I agree with everything that the hon. Member for Broxbourne (Mr Walker) said about choice and how that has to work both ways with the Government. The Minister said that pensioners can choose whether to go to country A that has a deal, or country B that does not, but that does not add up. Surely true freedom would allow someone to choose freely where they want to go, knowing that they have paid in all their life and will now get that back. It is not for the Government to put a hindrance on where people can choose to spend the pension that they have built up over their lifetime.

[Sir Peter Bottomley]

The hon. Lady has not put forward this idea directly, so perhaps I should say it out loud. Perhaps if New Zealand, Australia, South Africa, Canada and others applied to join the EU, people would get that uprating and we would solve the problem.

[Mhairi Black]

That is an interesting point, but we will wait and see how things go in the summer.

Everything that has been mentioned in this debate touches on a deeper, more fundamental problem within pensions as a whole under this and previous Governments—that of inconsistency. We tell people to pay national insurance for a pension and to save for a fulfilling, free and happy retirement—but only in certain places. We tell people that we will give them greater freedom, that they can be trusted with their pensions, and that we will give them greater choice and allow them to take their pensions early—but we will not give them the freedom to move anywhere with that pension. Deals are made to uprate pensions in some countries, but not others; people are given the vote in some countries, but the Government are not prepared to pay out for their pension. It does not make sense. Everything seems to be convoluted and conflicting.

My hon. Friend the Member for Ross, Skye and Lochaber mentioned what the Chancellor said about being supportive of change when he was in opposition, but the House of Commons Library shows that the then shadow Pensions Minister explained that the Conservatives had “considerable sympathy” with those affected. The Prime Minister stated in a letter that the Government do not feel that they can change anything in times of austerity—“How can we unfreeze those pensions when people in the UK are being asked to make sacrifices?” However, in the wake of recent events—whether the saga of the Panama papers or the shambolic deal with Google—it is clear that the Government are asking the wrong people to make sacrifices, and it is worth reminding the Minister that all the sympathy in the world will not pay the bills.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Several Members have asked the Minister to speak again, so with leave of the House I call Mr Vara.