Social Security and Pensions Debate
Full Debate: Read Full DebateSammy Wilson
Main Page: Sammy Wilson (Democratic Unionist Party - East Antrim)Department Debates - View all Sammy Wilson's debates with the Department for Work and Pensions
(2 years, 6 months ago)
Commons ChamberIt is a pleasure to follow the hon. Member for Strangford (Jim Shannon). Like all hon. Members, he highlighted the fact that the Government need to do more to deal with the cost of living crisis. It was characteristically optimistic of him to look forward to the Minister’s response; I have a funny feeling that we will not get much out of the Minister in that regard.
Of the two draft orders, I will concentrate first on the Guaranteed Minimum Pensions Increase Order. It is relatively straightforward, on one level; it will ensure that those on contracted-out pensions get an uplift in their contributions made between 1988 and 1997. Effectively, that seems to be a formality that happens every year. The percentage increase is capped at 3%, which makes me think that we have to consider whether that 3% rate is valid now. What happens if inflation remains rampant? That needs to be considered.
In preparing for the debate, I was concerned to read that as part of the transition to the single-tier pension in 2016, the DWP estimated that 50,000 people would lose out with guaranteed minimum pensions. In 2019, the Parliamentary and Health Service Ombudsman published a report stating that the DWP had not provided clear and accurate information that some pension holders could face negative long-term impacts on their pensions and their income. The Government responded in 2021 and developed a new factsheet. In developing that factsheet, how much discussion did they have with the PHSO and third-sector organisations? When will we see the review into its usage? As the right hon. Member for East Ham (Stephen Timms) pointed out, people are having difficulty accessing the factsheet. How many people have suffered negative consequences and what are the Government doing to assess that?
It is clear from the failings on the guaranteed minimum pension and the communications around that, the WASPI women and the botched communications with them, the pensions underpayments and the late payment of pensions once people reach state pension age that the pensions system has a long way to go before it is remotely close to being fit for purpose.
With those observations, I will turn to pensions in general, in terms of the social security uprating. I know that the Minister will probably dismiss most contributions from the Opposition, but as others have said, he would do well to listen to the excellent contributions from the hon. Members for Waveney (Peter Aldous) and for Amber Valley (Nigel Mills). They should be a warning to the Government that more needs to be done.
UK pensions are the least generous in north-west Europe when compared with the average wage. That was confirmed by analysis undertaken by the House of Commons Library last year. When that is the case and when we have a cost of living crisis, it defies logic that the Tories think this is the time to break the triple lock guarantee on pensions and to break it in terms of the link with earnings.
As other Members have said, the CPI figure being applied is outdated, but I suspect it was also understated, considering the work done by Jack Monroe and the fact that the Office for National Statistics is saying that it will revise how it calculates CPI and inflation with regard to food. The 3.1% was probably an understatement at the time, and it has since been superseded.
One of the original arguments the Government put forward for not linking pensions to the increase in wages was that wages had increased unusually because of the pandemic, when people were out of work and then went back into work. We now know that it is not just wages that have gone up; prices have gone up as well. That is having a real impact on pensioners and people on low incomes.
Absolutely; food prices have gone up and the energy price cap is now circa £2,000. The Government are not doing enough to mitigate the effect of that price cap. The reality is that earnings are not reflecting the cost of living demands. That is the whole point of earnings increasing. It therefore makes no sense to break that link.
What we have from the Tory Government is a Budget that is based on taking money from the pockets of pensioners, and this week they have not done enough to address the energy cost crisis. They are doing very little. A £200 loan to people is insufficient. It is just another burden for bill payers to pay back. Even if people get the £150 council tax rebate on top of the £200 loan, the energy cap is going up by £700. That is a long way short of meeting people’s requirements. Even when the rebates are taken off the price cap, people will be paying a net cost of £1,600 on their energy bills. That is a 40% increase. For those who have to pay the full cap, it is a 70% increase in energy prices in the last few months.
Pensioners are already struggling to make ends meet, and now they face this further erosion of their pension, while everything else is going up. As other Members have said, inflation is at its highest rate for 30 years and could go as high as 7%. Why oh why, in that context, do the Government think it is right to break their manifesto commitment on pensions? The Pensions Minister argues that pensions are increasing compared with this year, but the Red Book for the October Budget clearly states that breaking the triple lock is costing pensioners £520 a year. The Treasury will save £5.4 billion in financial year 2022-23 and a total of more than £30 billion in this Parliament. So the Chancellor is clearly balancing the books on the backs of pensioners. The concern is: is this a precedent? If the Government do not like any part of the triple lock, will they say, “We’ll ditch that bit of the triple lock, but we’ll return to it in the future. Don’t worry—it’s just a one-off”? A precedent has been set. The reality is, the triple lock is crucial in ensuring that the state pension continues to rise to reflect the increasing cost of living. Removing it deprives pensioners of vital income to ensure dignity and fairness in retirement. Research by the House of Commons Library shows that nearly 1 million pensioners in Scotland will be directly impacted by the cut.
The Government’s own statistics on households below average income show that, under Tory rule, UK pensioner poverty has risen to a 15-year high, with 2.1 million UK pensioners now classed as living in poverty once housing costs are allowed for. That is an increase of 200,000 on 2018-19, yet today the Pensions Minister had the brass neck to stand at the Dispatch Box and say that pension poverty has gone down under their watch. It is the exact opposite. These figures are based on the here and now—before the increase in the energy price cap kicks in—so it is clear that, unfortunately, the 2.1 million figure will dramatically increase. National Energy Action estimates that the increase in the price cap to £2,000 will result in between 5.5 million and 6.5 million households across the UK being fuel-poor.
One way in which the Government can help alleviate pensioner poverty is by ensuring that those eligible for pension credit are receiving it. We know that only about six in 10 of those who are entitled to it actually claim it, so the Government save £4 billion a year in unclaimed pension credit. If we look at the savings they are making through breaking the triple lock and what they hold back in pension credit, that is £10 billion this coming financial year alone, which could easily be in pensioners’ pockets. As my hon. Friend the Member for Glasgow East (David Linden) said, when pensioners have that money in their pockets, it gets recirculated in local businesses because they need to spend that money on household essentials.
Research commissioned by Independent Age estimated that full take-up of pension credit could lift 440,000 older people out of poverty. When will the Government tackle that? I am less concerned about debating the 3.1% uplift in pension credit aspect—it is more important that people who are due pension credit actually get it. The Government must do everything they can to ensure that that happens. They speak about information campaigns, but, if they are serious about increasing pension credit uptake, how much money have they set aside for campaigning, information and working with third-sector organisations to ensure that people access pension credit? How much money have the Government set aside in the Budget as regards the hoped for increase, because they will clearly need to make more money available to pay that out?
Another cohort of pensioners is living in poverty: those who live abroad and are hampered by frozen pensions overseas. Many of them are veterans. It seems absurd that, when the Tories argued for giving lifetime votes to expats living abroad, they always used the brave veteran who fought for the UK and gave service in the armed forces as an example of someone who deserves a vote for life, yet they will not reward those veterans with a pension that allows them to live in dignity.