Cost of Living Increases: Pensioners

Nigel Mills Excerpts

Monday 21st March 2022 Commons Chamber

[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to speak in this debate. We should reiterate the points we have been making since the uprating orders. It is clear that, for people living on a fixed income like a pension, with no prospect of earning any more, a state pension increase of 3% is not going to be enough to get them all the way through until April 2023. The Government are going to have to find a way to do more to help people over the next 15 months; otherwise, they simply will not be able to make ends meet.

I regret that the motion does not set out specific policies that the Opposition would like the Government to introduce. Instead, it gives a slightly convoluted tour through history, but I think that the Government’s record of support for pensioners over the past 12 years is pretty good, with the new single-tier state pension and the triple lock. Over the past decade, I do not recall there being many calls for more support for people over retirement age. The demands have been, probably quite rightly, on behalf of people of working age. Equally, I am not convinced that it is logical to say that somebody over the state pension age who is still working should pay a lower tax rate than a young person with a young family who is trying to pay a mortgage and all the bills. People who are still earning after retirement should not pay national insurance on their state pension or other pensions, but I am not convinced that it is sensible that they do not pay it on earnings over £9,000 year. We need to find money to pay for bills and for more social care, which will no doubt be used by people over the state pension age before those of working age. I am not sure that that is the right tack to set our face against.

I want to talk about two practical things that the Government could do to help over the next 15 months or so. The first is on pension credit, which has been discussed. We clearly need to ensure that all those who are entitled to it are getting it, but I am not sure why the Government have set their face against a target. In any large organisation, we usually find that what gets measured gets done and that when there is a target, people will try to achieve it. I understand that there is reluctance because we might not hit the target and that that is embarrassing when we measure it, but I think that the embarrassment is far less than the effect of not getting a substantial increase in pension credit take-up. During the pandemic, when the then Health and Social Care Secretary set his target for 200,000 tests a day, it got done by the end of that month, and he himself would say that without having set that stretch target, it would not have got done. Let us have that target. Let us work out what is realistic and reasonable, and then drive the system to achieve it. I think that would help make serious progress.

The second thing that the Government should look at is how to give people on a pension more income before April 2023. The Chancellor seems to like doing one-off payments. I understand that. If we think it is a short-term blip of a crisis, the effects of which might go to into reverse, that can be done quite quickly, with no long-lasting spending effect. The danger, however, is that all those things do not get put on the pension—they do not get indexed every year—and in effect they are worth less money as time goes on. I am afraid that I am not convinced that the increase in bills is going to be a short-term, six-month problem. We all wish that that were the case, but it would probably require a change of regime in Russia, with a new, friendly, democratic and unsanctioned regime giving us free access to their gas at the price we used to pay. I think that assumption is for the birds, so the Government need to have a different plan. On the basis that they probably cannot now increase the pension by more in April, my suggestion is that if inflation is still running at this level in October, they should do a half-yearly pension increase, of perhaps half what is forecast for next April. That would give people a bit more on their pension, up front, for six months. It will cost more money, but it will be only a six-month thing, so it will be an acceleration of the rise people are going to get next year. If they are going to get 8% next April because their energy and food bills have shot up before next winter, give them some or all of that rise before next winter so that they have a fighting chance of being able to get through next winter. That would be a simple thing for the Government to do.

It is tempting to say, “We can wait to the autumn to make that decision”, but part of the reason we are in this mess is that we have had to use September’s inflation number to drive the April state pension increase. If that logic is true and we have to have six months’ warning, we have to use March’s inflation to have a pension rise in October, so we are going to have to make a decision next month. I urge the Chancellor to say to pensioners in the spring statement, “We understand how hard this will be for you. If this problem persists, before next winter we will give you some extra money through a state pension rise of a few more per cent. to give you a bit more money so that you do not have to be saving and penny-pinching. You will have enough to heat and eat through next winter. We will find a way to do that.” I urge the Chancellor to do that on Wednesday.