Pension Credit Changes

Debate between Ruth George and Chris Stephens

Wednesday 24th April 2019 Westminster Hall

[Chris Stephens (Glasgow South West) (SNP)]

I beg to move,

That this House has considered pension credit changes.

It is a pleasure to see you in the Chair, Mr Davies.

14 January was a pivotal day: not only was there a meaningful vote on Brexit but on that day the Government announced in a written statement that from 15 May 2019 both partners in a couple need to reach state pension age to claim pension credit or pension age housing benefit. That change has been on the statute book since 2012, but the announcement was made quietly through a written ministerial statement on one of the busiest days in Parliament, only four months before it was due to come into effect. Full details of the impact have not yet been published, nor do we have detailed information on how the proposal will operate in a wide range of possible circumstances.

My first question for the Minister is: why was the proposed change made in a written statement and not by a vote of the House? That sets a dangerous precedent—a change put on the statute book two Governments ago, two Parliaments ago, in 2012 is being made now via a written statement instead of another vote in the House.

The Government say that 115,000 mixed-age couples receive pension credit and/or housing benefit. Couples who claim after 14 May could be up to £7,000 worse off compared with a couple claiming now. I will come back to those figures and give some examples. The Department for Work and Pensions estimates that in 2019-20, 15,000 mixed-age couples will be affected by the change. That rises to 30,000 in 2020-21 and 40,000 in 2021-22. In theory, the change applies only to future claimants, but it will also hit any pensioner in a mixed-age couple in receipt of pension credit whose claim is interrupted. As Age Scotland and Age UK point out, couples claiming in the future could be nearly £140 a week worse off than before the change—as I said, an incredible £7,000-per-year cut for some pensioners.

That figure is noteworthy when taken in the context of another one: 40% of people entitled to pension credit do not claim it, whether through lack of knowledge or because of accessibility issues. What are the Government doing to assist such people to take up pension credit, given that alarming figure of 40%?

Age Scotland and Age UK provided me with a figure for an average Glasgow South West constituent in two scenarios, both taking into account state pension, pension credit, housing benefit, council tax reductions, health vouchers and the cold weather payment, and both for a mixed-age couple renting a one-bedroom, council tax band C property, paying rent of £510 a month and receiving state pension of £160 a week.

In the first scenario, the couple would receive total benefits of £395.46 a week, £1,581.84 a month or £19,097.08 a year; the total annual state pension income would be £8,320, so the income lost if no benefits were received and they relied only on some state pension would be £10,777.08. Secondly, the charities investigated how the same couple would fare if they were claiming universal credit, which is already a decisively less generous benefit and has well documented difficulties in claiming and sustaining payments. Even so, they would face a total annual loss of £6,751.24.

Under the universal credit rules, rather than the existing state pension credit situation, older people face a particularly substantial loss of income—a devastating loss, especially for those on low incomes. It is therefore vital that in the first instance we encourage everyone eligible for pension credit to claim it. It is scandalous to think that people would be financially better off if they lived apart than if they lived together.

[Ruth George (High Peak) (Lab)]

I congratulate the hon. Gentleman on securing the debate. He is making a powerful speech. A lot of people who reach pension age are struggling to be able to work, although they may not be able to access disability or sickness benefits because of their condition. Does he agree that this change will affect such couples in particular, many of whom include a WASPI—Women Against State Pension Inequality Campaign—woman unable to claim the state pension or, as part of a couple, pension credit? Those women will be doubly dissatisfied.

[Chris Stephens]

The hon. Lady is absolutely correct. I will come on to the 1950s-born women and the double whammy affecting them. She makes an excellent point about those on benefits and low income and, as she will be aware because we have just come from the Select Committee on Work and Pensions where we were discussing “No DSS” adverts in the private rented sector, the change could have devastating implications for those people too.

Will the Minister therefore accept the calculations from Age UK and Age Scotland? Will he advise us whether there has been a recent equality impact assessment since January’s announcement? I understand that there was an impact assessment back in 2012, but will he tell us whether there has been an updated equality impact assessment on the pension credit change?

In 2010, a woman aged 60 and her partner aged 65 would both have been entitled to their state pension and both been considered pensioners for pension credit. From 15 May 2019, they will have to wait an extra six years to be in that position. In essence, the change will impose a financial penalty on pensioners who have a younger partner. That is why some WASPI women in Glasgow refer to the change as the “toy boy tax”, as well as the “age gap tax”.

According to the Joseph Rowntree Foundation, one in six pensioners in the UK already live in poverty. This Government policy will mean that many pensioners might find themselves in the position of being financially better off if they split up with or lived apart from their partner. Pensioners should not be put in a position where it would be better living alone.

As the hon. Member for High Peak (Ruth George) outlined, the policy change will adversely affect women born during the 1950s—precisely the group impacted by other Government decisions to raise the state pension age. Anyone hit by that double whammy will be entitled to feel especially aggrieved, and I can tell the hon. Lady and the Minister that certainly in my constituency the campaigners for the 1950s-born women do feel especially aggrieved by the change and regard it as a double whammy.

The public will be left with little faith in the Government and their ability to deliver pension justice for women born in the 1950s. The Women’s Budget Group states that

“pension credit is the single most important poverty alleviation mechanism for older people that we have in this country”.

The Government should make time for a new debate and a vote on the change, given that the decision was made seven years ago—two Parliaments ago. Rather than just enforcing the change, it is time to have another debate and vote.

According to OECD figures, the UK has the lowest state pension in the developed world; the change will only increase discrepancies. The Joseph Rowntree Foundation’s “UK Poverty 2018” report highlighted the fact that previous falls in pensioner poverty were in part due to the introduction of pension credit. Universal credit will not adequately meet the needs of a household of retirement age because of the strict requirements for seeking work, such as signing on at the jobcentre, qualifying as an unpaid carer or proving inability to work. Changes should be immediately introduced to ensure that older people do not suffer as a result. The policy change will be seen as a stealth tax on ageing couples on low incomes.

The Department for Work and Pensions has confirmed that it expects to save almost £1.1 billion over the next five years due to the changes. Tom McPhail, head of policy at Hargreaves Lansdown, commented that

“the impact on individuals and their household spending will amount to hundreds or even thousands of pounds per year and for some it could present real problems”.

The meagre savings that the Government will make from the policy change will not match the disastrous consequences that will ensue. If the change is not abandoned, it is anticipated that there will be a consequential increase in demand for support from the Scottish welfare fund, which provides crisis grants to families and people in Scotland on low incomes.

Pensioners could face a heavy financial penalty for having a younger partner. That could affect the health and well-being of those affected and is likely to increase the number of older people living in poverty. Pensioners should not be put in a situation where they could be better off living alone and claiming pension credit than living as part of a couple and receiving universal credit. The change could put pressure on existing relationships. Although the intention is to protect those receiving pensioner benefits before 15 May, they could lose their entitlement if their circumstances change, even if only for one day.

[Ruth George]

Does the hon. Gentleman share my concern that thousands of pensioner couples are affected but unaware? I highlighted to the Minister before the recess my concern that the gov.uk calculator incorrectly shows people that they cannot claim pension credit when, in fact, they are entitled to it.

[Chris Stephens]

The hon. Lady makes an excellent point; the lack of information has been a real issue, particularly for women born in the 1950s, many of whom did not receive letters about the pension changes. I have previously joked that I would be more likely to find a golden ticket in a Wonka bar than find a woman who received a letter about the pension changes.

The universal credit system was designed for people of working age, not pensioners. For example, it includes no additional support for a couple where one member is not expected to work because they are over state pension age.

I thank hon. Members for attending the debate. The pension change is a toy boy tax for many; it is certainly an age gap tax. I look forward to the Minister’s response. I hope he will tell me that the changes will be paused so that we can vote in the House on whether they should take place.

NHS Pay

Debate between Ruth George and Chris Stephens

Wednesday 13th September 2017 Commons Chamber

[Chris Stephens (Glasgow South West) (SNP)]

As the Member of Parliament with the highest percentage of workers in public sector employment in the UK, I will be supporting the motion today in the name of the shadow Front-Bench team.

The Government’s public sector pay policy can best be described by the Glasgow word “guddle”. Translation: a tangled mess. The Government, seeking to deflect criticism, and no doubt as a direct result of tricky doorstep conversations in the election, yesterday announced a policy that was spun as ending the public sector pay cap. It was no such thing, however, and instantly attracted criticism from the very set of workers they were hoping to silence. The Prison Officers Association correctly pointed out that the so-called increase on offer would amount to a real-terms pay cut since inflation had just hit 2.9 %.

The title of this Opposition day debate is “NHS Pay”, and it is right that today there is a focus on a vital set of workers providing life-saving services, but I feel that the whole subject of public sector pay cannot be debated in a silo and in the context of one particular set of workers without reference to others. This week at the TUC conference, all the public sector unions came together in a collective call for parity and fairness in pay awards, not selective cherry picking.

I come from a public sector background and a trade union, Unison, that has always recognised that not rewarding and supporting public service workers properly is a political choice. It is a choice that the Government are trying to avoid being called out on, as from time to time token efforts are made to imply they understand and value public service. The Prime Minister told the Tory party conference last year:

“Our economy should work for everyone, but if your pay has stagnated for several years in a row and fixed items of spending keep going up, it doesn’t feel like it’s working for you.”

That sounds good, but it is at odds with the very heart of Conservatism and the shareholder mentality that puts pounds and profits before a public sector ethos. The privatisation of public services is a case in point. Turning public assets into private shareholdings, rather than investing in quality, and targeting public sector pay for quick savings is a hallmark of every Tory Government. I was a public sector worker under John Major’s Government when they, too, had a public sector pay cap.

We would not be having this debate if the Government really valued public service workers and recognised that although many could earn more in the private sector, they have chosen to contribute their skills to helping others. The systematic punishment inflicted on them year on year by a Government who have chosen to make public sector workers pay the price for the failings of the private sector when the economy crashed in 2008 is morally unjust and unfair and has tested their patience to the limit.

I strongly believe that cuts to public sector pay is an issue that affects everyone—not just the workers, their families and service users but the wider community and local businesses. Local economies suffer when wages are held down and jobs are lost, and given the scale of the money involved, this is also a national economic issue. The TUC has produced an excellent report, “Lift the Cap”, that outlines in detail the knock-on economic impact on local economies through wages being systematically depressed.

How can the national economic picture be anything other than bleak if hundreds of thousands of people are on a low-pay subsistence existence and struggling to afford the basics, never mind boost consumer spending, without plunging even further into debt? All the time the cost of living is rising and hitting low-paid workers hardest, especially on energy and transport costs. The question is not: can we afford it? I advocate turning that miserable ideological argument on its head to say that we cannot not afford it. Paying public sector workers properly works for everyone: it generates tax revenues, reduces social security spending and creates jobs in the private and voluntary sectors.

I am concerned about the Government’s direction of travel in making announcements on police and prison officer pay over that of other public sector jobs. There is a danger that they are targeting professions dominated by men and not dealing with those public services where employment is dominated by women. I would like to hear from the Minister how they plan to tackle that issue. There is a risk of the gender pay gap increasing if the Government do not get their public sector pay policy correct.

[Ruth George (High Peak) (Lab)]

I agree with the hon. Gentleman’s comments about the Government seeking to divide public services between those with more men and those with more women. That said, regarding the increase in police pay, an officer in my constituency wrote to me that it was only a 1% increase with a 1% bonus and that they did not get it on their overtime or shift allowances, and that it felt like another kick in the teeth, because it was being sold as 2%.

[Chris Stephens]

That is a fair point. Two years ago, three months after I was elected, I received a 10% pay increase followed by another uplift of 1.3% last year. As a trade unionist, I believe in a rate for the job and in accepting independent pay review processes, so I donated to local charities following the pay rise. It sticks in my craw, however, that there appears to be one rule for MPs and another for public servants. How much more must it offend my constituents?

Every Member who has spoken today against raising public sector pay while having accepted their own increase must have a different set of values, and they are entitled to their views. Equally, however, their low-paid public sector constituents are entitled to pass judgement on them, and no doubt they will draw their own conclusions. I say: lift the cap, lift it now and fund it properly.