State Pension Triple Lock

Stephen Timms Excerpts

Tuesday 8th November 2022 Commons Chamber

[Mel Stride]

As I have set out, we are facing what is being called a Budget. It is a major fiscal event and many decisions will be taken within it. It would not be right for a member of the Government at the Dispatch Box to prejudge what may be included in it.

[Sir Stephen Timms (East Ham) (Lab)]

I welcome the Secretary of State to his first Department for Work and Pensions debate. Surely he is not suggesting that the current Prime Minister was irresponsible when he said last May that the triple lock would be honoured for next April. Will he confirm that, if the triple lock is not honoured for next April, it will be almost without precedent, going back 50 years or more, for the state pension not to be uprated at least in line with inflation?

[Mel Stride]

I welcome the question from the Chair of the Work and Pensions Committee. As a former Pensions Minister, he will know that, in the situation we are in at the moment, right hard up against a major fiscal event that is about to set out major tax and spending decisions, it would simply not be right, as I have said on countless occasions, for any member of the Government to prejudge and pre-empt the measures that the Chancellor will be coming forward with.

--- Later in debate ---

[Sir Stephen Timms (East Ham) (Lab)]

I am pleased to follow the hon. Member for Torbay (Kevin Foster). I thank him for the help he gave me when he was a Minister, and I agree with what he says about pension credit. I think the key is probably for local government to work more closely with central Government, because local councils have the pensioner income data to work out whether pensioners are entitled to pension credit. If we could improve co-operation, judgments could be made much more automatically.

I agree with my right hon. Friend the Member for Leicester South (Jonathan Ashworth) that this debate is happening only because of the catastrophic Government blunders in September. Before then, there was no issue; there was a very clear commitment from the then Chancellor, who is now Prime Minister, that the triple lock would be honoured. Unfortunately, what happened in September has created the very difficult situation that the Secretary of State rightly described.

It is important to remember that there has already been a big real-terms fall this year in the value not only of the state pension, but of working-age benefits, which were increased by 3.1% in April when inflation was at nearly 10%. That was justified at the time on the basis that that is how the usual uprating formula works: pensions and benefits are uprated in April by the rate of inflation in the previous September. The then Chancellor acknowledged that the effects would need to be addressed next April, so he gave an assurance in May that the same formula would be applied again for next April’s uprating. We now know that pensions and benefits will be uprated by 10.1%, which was the rate of inflation in September.

On pensions, as we have been reminded, there is also a Conservative manifesto commitment. As I said in my intervention on the Secretary of State, if the promise on pensions is not kept next April and pensions are instead uprated by less than the rate of inflation, it will be almost without precedent.

Since 1977, there has been a statutory obligation, defined in a variety of ways, to uprate in line with inflation. It has been honoured every year since then except 1986, when the rate of inflation was 1.1% and the decision was made to uprate the state pension by 1%—0.1 percentage points less. Apart from that, there has been uprating by at least the rate of inflation every single year. To depart from that approach now, on the scale that has apparently been considered recently, would be absolutely without precedent in 50 years. In November 1980, inflation was at 16.5%; the state pension was uprated by 16.5%. In April 1991, inflation was at 10.9%; the state pension was uprated by 10.9%.

It is clear why there has been that commitment all the way through: because people who have given a lifetime of work and have retired from working have already made their contribution, so there is nothing that they can do to make up the difference if the value of their state pension falls. I think we all recognise that there is an obligation on the state—a social contract—to maintain the value of the state pension. That contract should not be breached as a result of the Government making catastrophic errors in their management of the economy in September.

The considerations with working-age benefits are different. They have also been sharply reduced in real terms this year, but over the years they have frequently not been uprated in line with inflation. As a cumulative result, according to the Library, they are now at their lowest level in real terms in the 40 years since 1982-83. Trussell Trust food banks gave out 2.1 million emergency food parcels in 2021-22; they gave out 60,000 in 2010-11. They have reported that demand in August and September this year was 46% higher than last year. Why is the economy failing so many people? How many more are the Government willing to push into destitution?

The annual family resources survey has started to collect data on food insecurity to get a handle on what is going on with food banks. We now have results for the first two years, 2019-20 and 2020-21; the Secretary of State and I had an exchange about them at Work and Pensions questions recently. Food insecurity among universal credit claimants fell from 43% in 2019-20 to 27% in 2020-21, reflecting the £20 universal credit uplift introduced in March 2020, just between those two financial years. Now that that has been taken away, food insecurity will have shot up again. We will have to raise the level of universal credit to address the current mass dependence on charitable food banks.

[Tahir Ali (Birmingham, Hall Green) (Lab)]

Does my right hon. Friend agree that it is outrageous that we now have more branches of food banks than of McDonald’s?

[Sir Stephen Timms]

It is a great shame on us all that so many people are dependent on charitable food banks, and the numbers are still rising. We certainly must not fail to uprate social security, universal credit and pensions in line with inflation in April, because otherwise there will be yet another big surge in demand. That is why it is so important for the Prime Minister to honour the promise that he made as Chancellor.

There is one more uprating we need that cannot be ignored. The benefit cap was introduced in 2012. At the time, it was based on the level of median earnings. It has never been uprated. It has changed only once: in 2016, it was reduced. Its value has lost any connection with the earnings level to which it was supposed to be linked when it was introduced. If it is not uprated next April, whatever level of uprating is decided on, thousands more families will crash into the cap for the first time and many will have to start going to a food bank to keep themselves alive.

It is time to recognise that mass food bank dependence is not inevitable. We can turn back from this. We can do much better than this. In the decisions announced next week, we must—at the very least—not make things worse.

[Several hon. Members rose—]