The Secretary of State for Work and Pensions (Dr Thérèse Coffey)
I beg to move, that the Bill be now read a Second time.
I am pleased to introduce the Social Security (Up-rating of Benefits) Bill. It makes technical changes for one year only that will ensure that state pensions can still potentially be uprated, despite the likely fall in earnings. This will allow the Government to maintain a manifesto commitment to the pensions triple lock policy, providing peace of mind to pensioners about their financial health. It will also allow for potential increases for the poorest pensioners who are in receipt of pension credit, as well as uprating widows’ and widowers’ benefit in industrial death benefit.
As I set out with the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Hexham (Guy Opperman), in our letter to all right hon. and hon. Members last week, each year the Secretary of State for Work and Pensions, my good self, is required by law to conduct a review of certain benefit and pension rates to determine whether they have retained their value in relation to the general level of earnings. If there is a rise, then there is a requirement to uprate the state pension and benefits at least in line with that increase.
In accordance with the usual process, I will undertake that review of social security rates shortly and will report to Parliament on the outcome of the review in November. However, if there has been no increase in the general level of earnings, there are currently no legal powers for the Government to bring forward an uprating order. Since 2011, the Government have used average weekly earnings growth from May to July as the basis for the review. The provisional figure for that period, published by the Office for National Statistics on 15 September 2020, shows a decline in earnings of 1% due to the economic impacts of covid-19. Confirmed figures will be published later this month. Owing to the challenging economic circumstances, average weekly earnings are expected, unfortunately, to show no growth this year. Therefore, this Bill will temporarily amend the Social Security Administration Act 1992 for one year only to grant discretionary powers to increase these rates irrespective of the growth or indeed fall in earnings.
The Bill covers the basic state pension, the new state pension, the standard minimum guarantee in pension credit, and widows’ and widowers’ benefits in industrial death benefit. Those benefits are linked in primary legislation to earnings. The Bill does not extend to benefits that are linked to prices. I will review those under the existing powers in the 1992 Act.
The Bill largely covers reserved matters for Great Britain. On the one element that is devolved to Scotland, Scottish Ministers laid a legislative consent motion, which was passed by the Scottish Parliament yesterday. Under the Social Security Administration (Northern Ireland) Act 1992, the Department for Communities has the power to mirror the uprating order made under the Act that applies in Great Britain. The Northern Ireland Executive can make a corresponding order under their existing power, which mirrors the outcome of the Secretary of State’s review without the need for new primary legislation in Northern Ireland.
The Bill must receive Royal Assent by mid-November to allow the review to be completed. If the Bill does not receive Royal Assent ahead of this deadline, the current legislation will apply, and state pensions will almost certainly remain frozen.