Pensions Update

Stephen Crabb Excerpts

Tuesday 7th September 2021 Commons Chamber

[Dr Coffey]

I thank the hon. Gentleman for having read the statement and for recognising some of the challenges that we face. I accept that it is his role and that of the Opposition to suggest that the Government are not taking the right course of action. However, this is where I disagree with him. He referred to the earnings link that was dropped in, I think, the late ’70s or early ’80s. It was not reinstated by the Labour party until the late noughties and was not commenced until the coalition Government were in place. That is why we have followed the triple lock policy for the last decade, recognising that we wanted to restore the earnings link and to see an increase in pensions overall. We have made good progress on that, as I set out, with the £2,050 cash-terms increase in just over a decade.

We have used the earnings link since the policy came into effect a decade ago, and we have done this on the same basis. As for trying to mess about with different bits of earnings, the Office for National Statistics produced some data but we did not find it necessarily reliable, in terms of what could be considered as a substantiated basis to make the change. I have made the recommendation to the Government—that has been endorsed today and I hope that the House will endorse it in the forthcoming legislation—to set aside the earnings link, as we did last year, recognising the challenges of covid and the implications that that would have had last year directly on pensioners. There is the same fairness of approach here.

I do not intend, as is usual, to publish legal advice. That legal advice is quite straightforward. I would summarise it as “The best way to introduce this temporary set-aside is through legislation, just as we did last year.” I intend to take this forward on that basis.

As for making comparisons with other countries, I am conscious that we have a substantial amount of occupational pension here. We also have a whole fringe of pensioner benefits alongside it that are not necessarily available in many other countries. Just this year alone, which is about to come to an end, while the pension cost is about £105 billion, we are spending about £129 billion directly on pensioners. We have genuinely shown a measured approach to supporting pensioners during our time in office. We think this is a sensible thing that will be broadly welcomed by the public, recognising the balancing act that we continue to face.

[Stephen Crabb (Preseli Pembrokeshire) (Con)]

Government Members should be incredibly proud of the state pension triple lock. It has transformed the state pension landscape for retired people—no more derisory 75p pension increases, as we saw when Labour was in government—and it has become a key part of the defences that we have built around pensioners to protect them from poverty. Does my right hon. Friend agree that the triple lock that we put in place was never designed for a set of fiscal events of the kind that we have been through over the last 18 months? The difficult decision that she has come to is the right one. When I talk to pensioners in my constituency and elsewhere about the difficult challenges that we face, they understand that. We just need to explain it clearly and with compassion.

[Dr Coffey]

My right hon. Friend is right that the triple lock policy was never anticipated for these extraordinary times. He will know that, as a former Secretary of State. The Lib Dem Pensions Minister, who served a five-year term, has also publicly said again today, as well as recently, that it was simply not designed for this sort of situation. I believe that the pensioners in our country are wise people. They will recognise that a statistical anomaly is not the basis for the uplift this year. Some people will of course be keen to encourage more people to take up pension credit. We estimate that only three in four of the people who could get the benefit are taking it up, in terms of the income guarantee, and we will continue to encourage people to do so. Nevertheless, this is a sensible approach and I thank my right hon. Friend for his support.