Pensions Uprating (UK Pensioners Living Overseas)

Roger Gale Excerpts

Wednesday 11th May 2016 Commons Chamber

[Sir Roger Gale (North Thanet) (Con)]

I, too, congratulate the hon. Member for Ross, Skye and Lochaber (Ian Blackford) on his good fortune in securing this debate. I also congratulate him on his election to officership of the all-party WASPI group. Perhaps in that capacity he will be good enough to write to my constituents who expect me to be at its meeting today to explain why both he and I are here rather than upstairs.

Hon. Members on both sides of the House as chairman of the all-party parliamentary group on frozen British pensions, might be surprised that my name is not on the motion. The reason is merely that it is technically flawed, as my hon. Friend the Minister and, I think, the hon. Gentleman recognised. However, that should not be allowed to diminish in any way its thrust, which is very simple. For that reason, I do not want to detain the House for very long.

This is about an injustice that was perpetrated just post-war and has continued ever since under successive Governments. The point has been made, but let us make it again: it is absurd that a pensioner living in Canada on one side of the Niagara falls has a frozen pension, while a pensioner living in the United States, 500 yards or so away on the other side of the river, does not have a frozen pension. There is no equity, no sense and no logic in that whatsoever.

It has been said, slightly incorrectly, that a lot of these people have paid national insurance contributions and should therefore be getting their pensions. We all need to recognise that national insurance is not a funded pension scheme. Unlike a private pension scheme, which is fully funded, NI is not—it contributes to a number of benefits. Nevertheless, throughout their working lives, very many of these now-elderly people who are being shoddily treated have not only paid national insurance contributions but paid their taxes to the United Kingdom, served the United Kingdom, and, in some cases, served the United Kingdom in the armed forces. If, in retirement, having paid their dues all their working lives, they wish then to join friends or family in another country, why should they not be able to do so and take their pensions with them?

As we have heard, there is another restriction on movement. A significant number of Commonwealth immigrants who came to the United Kingdom in the 1950s and 1960s, became established here, worked here, regard themselves as British and have paid their dues all their working lives, would like now, in old age, to return to the Caribbean, for example, but feel that they are being prevented from doing so because they are afraid that their pensions will be frozen and they will not be able to afford to live in the country of their birth. I believe that is morally wrong.

Another downside to all this is that we are in danger of generating a cadre of pensioners who will be coming back to the United Kingdom, like the 90-year-old in Canada who may have to abandon his partner who has dementia and come back here because he cannot afford to live. If they do so, there will be a cost to our health services and our social services. That needs to be taken into account by the Department for Work and Pensions and the Treasury.

On expats living particularly in France and Spain but throughout the European Union, one potentially very serious issue has been touched on but skated over. If—I hope we do not—the United Kingdom votes to leave the European Union, there is no guarantee that those pensioners will continue to have their pensions uprated. Following the cessation of the winter fuel payment, on the slightly spurious grounds that Guadeloupe, Martinique and one or two other places are part of metropolitan France and that it is therefore appropriate to remove that benefit from those living there, a lot of these pensioners are not, as is popularly described, rich retirees living on yachts in the Mediterranean drinking gin; they are struggling. They will come home, because they will not have anywhere else to go. I suspect that the trickle of people doing so will turn into a torrent if we leave the European Union. It is no good the Brexit people saying we will negotiate unilateral agreements. With 27 countries? Okay, it may be mainly France and Spain, but we would also have to consider Italy, Greece and some of the other 26 member states dotted around the European Union. It is a very real issue that the DWP and the Treasury will have to face.

The all-party group recognises the very real difficulties involved in resolving a problem that has been allowed to build up over many years. With great respect to my hon. Friend the Minister, it is facile to say that successive Governments have done this. Successive Governments have, but successive Governments have been wrong, and it is time we put the injustice right. There has to be a way of addressing the issue.

John Markham, Jim Tilley and others from the International Consortium of British Pensioners have met the Cabinet Office and proposed what I believe to be a sensible solution. I understand entirely that the Treasury is very afraid—this is not a DWP issue, really—that if an inch is given, a mile will be taken in the law courts by people who will seek recompense for the last 40 years. That, of course, could add up to a considerable amount of money. We have to move forward, however. We cannot honourably stay where we are, so John Markham and his colleagues, along with the all-party group, have suggested to the Chancellor of the Duchy of Lancaster that there should be an uprating based on receipt of today’s pensions. If somebody had their pension frozen 20 years ago when they left the United Kingdom, and many have, they would be uprated at that figure, not at today’s figure. That would be a pittance—a pitiful sum of money—but it would be a step in the right direction. Gradually, over time, it would resolve the problem and we would accept the principle that those pensions should be uprated in line with inflation year on year, which is the right principle.

Following receipt of John Markham’s paper, the Chancellor of the Duchy of Lancaster has looked at it and construed that more information is needed. That I accept. The pensioners are not expert in all these matters, although they are pretty good. My understanding is that the Chancellor of the Duchy of Lancaster has been in touch with John Markham and referred the matter back to him. He is now assembling the further information that is required to enable the Office for Budget Responsibility to consider the matter.

The DWP, the Treasury, the Cabinet Office and the Prime Minister all have to recognise this. If we do not address the problem, there will certainly be a moral cost, because we are wrong. There will also be a financial cost, on two fronts, because pensioners who cannot afford to live overseas will come home and pensioners who want to retire overseas will not go. At the end of the day, that will be a cost to the social services budget.

When my hon. Friend comes to respond, if he is granted the leave of the House to do so—I assume that he will be—I would like him simply to say that he recognises the problem, and that he understands that there has to be a way forward. There has to be a solution. I mean no disrespect to him, but I suspect that this is slightly above his pay grade; it is certainly above mine. I want this Conservative Government to have the pride and the courage to give people who are in retirement overseas the dignity that they deserve.