Cost of Living Increases: Pensioners

Peter Gibson Excerpts

Monday 21st March 2022 Commons Chamber

[Dr Coffey]

I am not aware of any Minister trying to say to people that we did this because it was unaffordable. As a result of the pandemic, there was a statistical anomaly relating to earnings. We also understand the balance relating to intergenerational fairness, as has been outlined. At the time, however, we very much highlighted the statistical anomaly.

As a result of our actions, I believe that the state pension continues to be a strong foundation from which people can build additional savings for their retirement. We are seeing a thriving private and workplace pensions market, fuelled by the success of automatic enrolment, which transformed pension savings for more than 10.5 million workers. That is creating even firmer foundations for a robust pension system to ensure that not just today’s pensioners, but those of future generations are protected and supported. I know that, as a country, we will continue to build on the progress that we have made over the last 12 years under Conservative Governments, so that in the next 12 years, and in decades to come, pensioners will be able to enjoy a secure and dignified retirement.

We also know that a minority of pensioners choose to stay working beyond the standard retirement age. They do not pay the standard employees’ national insurance on their earnings, even though employers do if they earn above the threshold. As for the NHS and social care levy being introduced through national insurance, it is appropriate for anyone working at all, including pensioners, to contribute, bearing in mind that they will do so only if their earnings are at or above the regular threshold. I believe that will be about £190 a week, which is close to nearly £10,000 in earnings a year.

[Peter Gibson (Darlington) (Con)]

My right hon. Friend rightly points out that many pensioners are indeed working. What does she have to say about how the announced increase in the living wage to £9.50 will benefit pensioners?

[Dr Coffey]

Any uplift in the national living wage is welcome to anybody still working. Our normal practice on standard national insurance for employees is that once someone reaches pension age, their take-home pay will be automatically higher than somebody else under the age of retirement, if they are doing the same job on the same salary. However, this levy is important to make sure that we get the funding for the NHS backlogs and for the future stability of the social care system.

Let me turn to pension credit. We have heard about the success of the private pensions sector and some of the uplift for people who are still working. It is good for those still saving for their futures, but understandably, the House wants to know what we are doing for the poorest pensioners now. We had a bit of a history lesson about how pension credit was introduced under the Labour Government in 2003, as the right hon. Member for Leicester South said. Let us go back a bit earlier in history: it was only a few years beforehand that the Labour Administration raised pensions by 75p. I think the House will probably recognise that pension credit was introduced directly as a consequence of the impact of what happened with that very modest increase in pensions.

Various funds have been open to pensioners in the past year, including the household support fund, and I encourage people to approach their local council for support.

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[Peter Gibson (Darlington) (Con)]

I hope that I can stick to the time limit, Mr Deputy Speaker. I know that you will ensure I do.

The global pandemic and the increase in wholesale energy costs have put an enormous strain on household budgets, and I believe that the Government have provided a strong package of measures to mitigate the effects, delicately balancing support for the economy and for our pensioners. However, I feel that this debate is a little premature bearing in mind that we are hearing from the Chancellor in two days’ time.

We have provided a package of £9.1 billion to help households across the UK with the cost of their energy bills, building on cold weather payments, winter fuel payments and the warm home discount. As the Secretary of State said, that builds on other support, including the £150 council tax rebate, the £200 smoothing payment, and the £150 million being given to local authorities to help those in properties outside bands A to D.

Alongside that, pension credit offers a real helping hand with living costs for people on low incomes, and we know that it is chronically underclaimed. In Darlington, almost £4 million is unclaimed, and I am doing all I can to support increasing take-up. I am delighted to hear that the Minister has written to all the local newspapers, and I hope that he sent letters to the Darlington & Stockton Times and The Northern Echo to ensure that take-up increases in my constituency. Let us not forget that pension credit is the doorway to other benefits, such as a free TV licence and cold weather payments.

Our levelling-up White Paper announced the creation of a new taskforce to look at ways to provide greater security, choice and quality for housing for older people, planning for the future to ensure that pensioners are comfortable in their homes during their retirement. More widely, we have a strong record of delivering for pensioners. Since 2010, the state pension has increased by 35% when, in the same period, inflation measured 22% and wages increased by 27%. This year alone we are spending £129 billion on pensioners—more than any other Government—allowing us to reduce absolute pensioner poverty by 200,000 people across the country. In-work pensioners will also benefit from the increase in the national living wage—a benefit of almost £1,000 a year for nearly 2 million people.

Under the last Labour Government, pensioners suffered. We had the fourth-highest level in Europe of pensioner poverty among the over-65s. The level of the state pension stagnated, and they had no long-term plan for pensioners. This Government are delivering for pensioners, and I know that they will continue to do so long into the future.

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[Guy Opperman]

The right hon. Gentleman does himself credit with what he says. Much as he did as shadow Secretary of State for Health and Social Care, he seeks cross-party ground where it is right and proper, which I support and really appreciate. We need to get that message across.

I thank all colleagues who have contributed today. As the Secretary of State set out, we are experiencing a period of increasing consumer demand that, together with disruptions to global supply chains and the impact of the war in Ukraine, is definitely placing a strain on household and other finances. The Government recognise that inflation is rising; together with the Bank of England, we are closely monitoring the situation.

I applaud the many Members across the House who have put in detailed recommendations to the Chancellor for the spring statement. I am sure that those on the Treasury Bench have been listening most carefully. In the intervening period, we have taken significant steps to ease the financial pressures by providing a support package worth billions of pounds during this fiscal year and the next.

The state pension is clearly the foundation of support for older people. Over the last two years, the basic and new state pension will have increased by more than 5.6%, taking into account the 2.5% rise this year and the 3.1% rise from this April. There has been much discussion of pension credit, which continues to provide invaluable financial support to approximately 1.4 million vulnerable pensioners. We want all pensioners to claim it.

[Peter Gibson]

My hon. Friend has had the opportunity to raise the matter of pension credit at the Dispatch Box on several occasions today. What advice can he give Members across the House on engagement with our constituents to raise the profile of that valuable benefit, which opens up the gateway to other benefits and help for pensioners? What help is available from the Department to Members across the House?

[Guy Opperman]

My hon. Friend is right to raise the issue. A bit like with the jab, we are all responsible for making the case to our constituents that there is huge benefit in what is in reality a passport to several hundred pounds a month—potentially £3,000-plus a year. The stats are extraordinarily good. When we took office in 2010, the take-up was 70%; it is now up to 77%. Obviously we want it to go higher. The take-up figure for guarantee credit is up to 73%, and internal management information suggests that in the 12 months to December 2021, the number of new claims for pension credit was about 30% higher than the figure for the 12 months to December 2019.

My hon. Friend specifically asked what the Government could do. There are a number of things that we have been doing for some time. We set up the pension credit taskforce to work with key stakeholders such as charities—including Age UK, which many Members rightly mentioned and whose representatives we have met several times—the Local Government Association, Virgin Money, and several of the banks. The energy company Centrica is involved, and ITV and the BBC have a key role to play in raising awareness, ensuring that we have greater knowledge of pension credit and that our constituents are aware that the opportunity is out there.

As the Secretary of State said, 11 million letters about the state pension uprating were sent out—that has never been done before—along with copies of the pension credit information factsheet containing information for pensioners so that they could apply. That, too, seems to be making a difference. There was a pension credit awareness day last June, when we worked with the BBC throughout the country. We also worked with the other stakeholders, including Age UK, with which we formed a specific partnership. We have been making the case to local papers: we wrote to all of them on three occasions last year, we did it again this year, and we will continue to do it. Individual Members of Parliament can do a fantastic amount in making the case to their local communities, working with their citizens advice bureaux and Christians Against Poverty groups. Mention has been made today of the older persons fairs, which have been very successful in individual constituencies and have made a big difference to pension credit take-up.