Social Security

Neil Gray Excerpts

Monday 5th February 2018 Commons Chamber

[Neil Gray (Airdrie and Shotts) (SNP)]

It is a pleasure to be able to set out the Scottish National party’s position.

You will not be surprised, Madam Deputy Speaker, if I am rather critical this evening, because I have been speaking about the matters covered by the social security order since my election nearly three years ago. Like the annual review of social security payments, the order covers everything from pensions to maternity allowances, but for many people, there is no annual review, because a number of social security benefits are automatically frozen, regardless of the impact on people who need that support to get by, regardless of the rise in household costs, and regardless of widespread opposition to the continuation of the freeze. Jobseeker’s allowance, child and working tax credit, local housing allowance, income support, child benefit, and the work-related activity group element of employment and support allowance have all been frozen. That means that people who are desperately seeking work, families with children, parents who are working hard but receiving poverty pay, and sick or disabled people will see their support frozen, although their household costs have risen significantly in the past year.

In December, the consumer prices index hit 3%, which means that families in and out of work who need the support of the social security system to get by will need to find extra money just to stand still. The Resolution Foundation has calculated that working families with two children will lose £315 a year as a result of the benefit freeze, and the Institute for Fiscal Studies has said that as a result of higher CPI rates, benefit entitlements will be reduced by an average of £450 per year by 2019-20. We know that this is the worst decade for wage growth in 210 years, and that as a result people who are in work but also in receipt of social security support have had their chances cut off at both ends. As costs rise, they cannot rely on work or social security to help them to keep up.

[Mr Jim Cunningham]

Another issue—I am sure that the hon. Gentleman will come to it—is that of the third child and the so-called rape clause. Nothing has been done about that.

[Neil Gray]

I entirely concur with the hon. Gentleman. He is right to draw attention to one of the Government’s most iniquitous and disgraceful policies. As he has said, no action has been forthcoming to address it.

The End Child Poverty coalition has said that it is because of the four-year benefit freeze that more than 50% of children in the UK’s poorest areas are growing up in poverty. Earlier today, at Question Time, the Minister defended the freeze, saying that overturning it would require primary legislation. I say, “Bring us that legislation and let us vote on it.” The evidence clearly shows the damage that is being done, and I would challenge any Government Back Bencher to vote for its continuation in the face of such evidence. It is time to end the freeze and lift children out of poverty.

Apart from anything else, the Government do not need to continue this, even by their own reasoning. Figures obtained by the SNP from the House of Commons Library show that while the four-year benefit freeze introduced by the Tory Government in April 2016 was intended to result in £3.5 billion of cuts by 2019-20, that figure could now be £5.2 billion owing to rising inflation. The decision not to uprate the bereavement support payment in line with inflation is completely unacceptable while the cost of funerals continues to rise at an incredible rate. What is worst is that the DWP’s own statistics show that 75% of recipients of the new combined payment who have children will be worse off, and that the figure rises to 88% for those who are bereaved with children and in work. The resignation of the entire board of the Social Mobility Commission in December should have been seen as the climax of the Government-driven poverty crisis, but today we see it being driven on.

There are some welcome elements in the order. I am glad that Ministers have used their discretion to uprate statutory sick pay, statutory maternity and paternity pay, adoption pay and statutory shared parental pay, all of which will rise by 3%. They may have done so in the light of a report from the European Committee of Social Rights. I quizzed Ministers about that report earlier, but they appeared to know little about what I was talking about. It states that social security provisions for the self-employed, the sick and the unemployed in the UK are “manifestly inadequate”. The UK is now “not in conformity” with a number of legal obligations in the European social charter, which is a legally binding economic and social counterpart of the European convention on human rights.

[Stephen Kerr (Stirling) (Con)]

The hon. Gentleman is making an impassioned speech and I respect his position on these matters, but it is worth asking this question: since 2016, the Scottish Government have had powers to top up reserved benefits—indeed, they have a wide range of powers in relation to welfare matters—so what do the SNP Government in Scotland intend to do in relation to those benefits?

[Neil Gray]

The hon. Gentleman will be aware that the new Scottish social security agency Bill is going through the Scottish Parliament so that we can bring in measures that allow us to make changes to how things are done down here. He will also be aware that we have put in place hundreds of millions of pounds of mitigation spending over the past few years, including to ensure that none of his constituents have to be impacted by the iniquitous bedroom tax.

[Stephen Kerr]

rose—

[Neil Gray]

I think we have heard enough, and I am sure that if the hon. Gentleman wishes to, he can make a speech later.

The order will not do much to make up for the lack of conformity that the European Committee of Social Rights has highlighted, and that Ministers seem so clueless about. Its latest report follows the High Court ruling on the UK Government’s changes to personal independence payments, which said that the system “blatantly discriminates” against people with mental health problems, and a report from the UN saying that Tory benefit cuts “violate human rights”. This Government have another new Secretary of State for Work and Pensions, who has thankfully accepted the High Court ruling on PIP. Perhaps it is time for her to take a fresh look at all the other areas of international criticism as well.

On pensions, Ministers will not be surprised at my disappointment that another year has gone by without any action on frozen pensions or to sort out the state pension inequalities faced by women. Accompanying the order are regulations—they are brought forward annually under the negative procedure—ensuring that the state pension uprating will not apply to people entitled to the pension living in certain countries around the world. My right hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford) and my hon. Friend the Member for Paisley and Renfrewshire South (Mhairi Black) have been pressing the Government on this matter since their election in 2015. It is an injustice that some people, who have earned the right to their pension like everyone else, have their payments frozen at the rate they first received for the rest of their life abroad. It is just not right that the pensions of those who live in some countries continue to rise while those of others are frozen. Some 550,000 British pensioners are affected, who represent 4% of all recipients of the state pension and half of all those drawing their pensions abroad.

[Mr Jim Cunningham]

I agree with the hon. Gentleman about overseas pensions. I am sure he recalls—I think this was last year or the year before—that a number of representatives from different countries came to lobby us about this situation, which has been ongoing for a number of years. I am sure that we have all received many emails on the subject.

--- Later in debate ---

[Neil Gray]

We have indeed, and I am sure I have been copied into the same emails that the hon. Gentleman has received. It is wrong that people still face this glaring injustice, and the new DWP team must look at it again to ensure that there is action upon it.

The DWP must also finally act to rectify another pension injustice: that suffered by women born in the 1950s. The WASPI campaign has been the clearest, most persistent and compelling of the dozens we have seen before us in the last two and a half years. It is a scandal that the UK Government continue to refuse to address this issue, which is not going away.

I turn to the draft Guaranteed Minimum Pensions Increase Order 2018. Under the old state pension system, which was made up of the basic state pension and the state earnings-related pension scheme, people built up their basic element through national insurance contributions, but built up SERPS depending on their circumstances. Some people—doing so themselves, or because their employer did it—were contracted out of SERPS. Contracting out occurred because it allowed both parties—the individual and the employer—to pay reduced national insurance contributions. However, to ensure some standard was maintained, the employer had to guarantee that their company pension would match at least the SERPS the employee would have received if they had not been contracted out. That is the guaranteed minimum pension, or GMP.

The system ran for a number of years between the 1970s and 1990s, but was discontinued by the Labour Government, and now the new state pension works in a completely different way. Complicated rules apply to uprating, depending on when the pension was built up. We know that people will be impacted in different ways, but people who were extensively contracted out may just receive the basic state pension, and for some this might come as a shock.

Clearly this is an extremely complex matter and we know that people are struggling to understand their circumstances. Our main concern regarding the order is that the UK Government ensure that people are adequately informed of the impact of the new state pension on their own pension pots.

Not all those who were contracted out were made fully aware of the impact on their eventual pension pot. While it is good that a minimum guarantee is linked to CPI, there are adverse impacts for some people. We understand that the Government’s changes to the state pension mean that any GMPs that people have accrued between 1978 and 1988 will not be uprated, and that a maximum of 3% each year will be uprated for GMPs built up between 1988 and 1997. This applies to those who have retired after 6 April 2016. Whether or not people benefit depends on their circumstances, and some people will get less money than they expected. People who were contracted out were not necessarily aware of what that meant at the time, or did not necessarily understand its implications, and they certainly could not have anticipated that their retirement income would be impacted by such future changes as the Government have made to the state pension. For those without further savings to fall back on, like many of the WASPI women, this can mean a loss in income. The UK Government should have better communicated the impact of these changes for those who were contracted out.

All in all, what this points to is the urgent need to establish an independent pensions commission. The Government continue to ignore the needs of pensioners, as well as the looming pensions and savings crisis we may well encounter in the future. The Government need to ensure that people’s retirement savings are on a sustainable footing so that future generations can plan for their future. The SNP has long called for the establishment of an independent pensions commission to ensure that employees’ savings are protected and that a more progressive approach to fairer savings is looked at as we move to a period in which defined benefit schemes are becoming a thing of the past and the new state pension begins to take effect. The need for that independent commission is greater than ever.

--- Later in debate ---

[Kit Malthouse]

I will carry on. The service has had 7 million views since February 2016. Notwithstanding that, there is obviously more work to do on communications.

The hon. Member for Airdrie and Shotts (Neil Gray) asked why bereavement support payments have not been uprated. A bereavement support payment is not a cost-of-living benefit and is paid in addition to means-tested benefits to protect the least well off, so it is not necessary to uprate it in line with the cost of living. Unlike bereavement allowance and widowed parent’s allowance, bereavement support payment is paid in addition to other benefits to which the recipient is entitled, helping those on the lowest incomes the most. The hon. Gentleman will know that the up-front payment for those with children has been increased from £2,000 to £3,500.

[Neil Gray]

Will the Minister give way?

[Kit Malthouse]

I will not; I do not really have time and the hon. Gentleman and his friends had plenty to say during the debate.

A wider point was raised by several Members that for me distils the difference between the Government and Opposition on this issue. There seems to be on the Opposition Benches a kind of Stockholm syndrome attachment to the old benefits system, despite the fact that it is obviously a fraud perpetrated on the poor, more often than not designed to keep them poor rather than to give them the tools and ladders to climb so that they can take control of their own lives and financial control of those of their families into the future. I understand and would never seek to doubt Opposition Members’ motivation to do the best by their constituents and the rest of the country, but for some reason they seem to think that that motivation applies only to them, rather than to Government Members as well. I reassure the House that the motivation of every Conservative Member of Parliament is the betterment and welfare of our fellow citizens, which is what the order is designed for. With that, it gives me great pleasure to commend the orders to the House.

Question put and agreed to.

Resolved,

That the draft Social Security Benefits Up-rating Order 2018, which was laid before this House on 15 January, be approved.

Pensions

Resolved,

That the draft Guaranteed Minimum Pensions Increase Order 2018, which was laid before this House on 15 January, be approved.—(Kit Malthouse.)

Smart Meters Bill (Programme) (No. 2)

Ordered,

That the Order of 24 October 2017 (Smart Meters Bill (Programme)) be varied as follows:

(1) Paragraphs (4) and (5) of the Order shall be omitted.

(2) Proceedings on Consideration and any proceedings in legislative grand committee shall (so far as not previously concluded) be brought to a conclusion two hours after the commencement of proceedings on the Motion for this Order.

(3) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion three hours after the commencement of proceedings on the Motion for this Order.—(Richard Harrington.)