Pensions Uprating (UK Pensioners Living Overseas)

Debate between Peter Bottomley and Mhairi Black

Wednesday 11th May 2016 Commons Chamber

[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.