Pre-1997 Pensions: Discretionary Increases
Torsten Bell Excerpts(4 days, 4 hours ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
I am pleased that my hon. Friend the Member for North Durham (Luke Akehurst) has secured the debate on this important matter and thank him for the thoughtful way in which he described the impact on his constituents. He spoke on behalf of many others as well, and in particular those members of the Nissan pension scheme. I join him in praising the persistent campaigners on this issue. He mentioned one organisation in particular—I have met its members, who have been campaigning for many years and have not shown any let-up in their energy during that time.
A period of high inflation and the return of many defined-benefit schemes to surplus has rightfully put up in lights of the situation of members whose pre-1997 benefits are not protected by statutory indexation. That wider debate has rightly featured heavily during the passage of the Pension Schemes Bill. It was also discussed by the Work and Pensions Committee prior to the election. As my hon. Friend said, it was considered in some length here when we debated new clause 22, when we heard many powerful speeches, including from my hon. Friend the Member for Llanelli (Dame Nia Griffith). The right hon. Member for Hereford and South Herefordshire (Jesse Norman), as he said, has been raising the issue for many years, and I have also discussed it with the right hon. Member for New Forest East (Sir Julian Lewis).
I have met many scheme members and their representatives. Recently my hon. Friend the Member for Llanelli and I met three members in Swansea to discuss exactly this issue in a lot of detail. I was grateful for their time and to her for organising that discussion.
I have listened, and I recognise the difficulties faced by some scheme members who can now see their income, their living standards and the quality of their retirement eroded by inflation, as my hon. Friend the Member for North Durham said. It is particularly understandable that members are disappointed when schemes do not award discretionary increases when they are in a strong funding position—that is obviously the change that has happened over the last few years.
As my hon. Friend will know, defined-benefit pension schemes have very different approaches to awarding pre-1997 indexation. The truth is—obviously, we will not be discussing these schemes at length today—most do provide for increases under their scheme rules; others do not allow it or require it at all; and a significant number allow discretionary increases only where there is agreement between both trustees and the sponsoring employer. Those are the cases that we are mainly focusing on in this debate. The result is that, in some cases, when employers are unwilling to support discretionary increases —even when the scheme is in a strong funding position—trustees can effectively be prevented from acting.
Jesse Norman
I will not detain the Minister long. If a group of trustees never pays a discretionary bonus, even though the scheme is in surplus, it starts to look like it is a policy of theirs to discriminate against a subset of their beneficiaries, and I think that is illegal. I would be grateful for his guidance on that.
Torsten Bell
I think there is a slightly harder case, which is examples where schemes had an established practice of paying discretionary increases—my hon. Friend the Member for North Durham mentioned Nissan cases from before the turn of this century, where that was the practice—and that was seen as the norm, and then, for different phases, such as when schemes slipped into deficit, as many did, they stopped and then did not restart when the surplus arrived. That is the case raised here. In many ways, those are the harder cases to understand, and I will come to how we think about such cases as we go forward.
Jesse Norman
I can understand why the Minister thinks those cases are harder; in some respects, they are less hard, because in those cases changes have been made reflecting circumstances. In the cases that I am talking about, there is a policy to discriminate against a settled group of beneficiaries. That is the bit that I think is potentially illegal.
Torsten Bell
I hear the right hon. Member’s point. I am not going to comment on individual legal cases, obviously, but the basis of the distinction at 1997 reflects the decisions taken in 1995 by a previous Conservative Administration to introduce statutory indexation, but not wanting to do that for accruals that had already taken place. The Pensions Act 1995 brought in statutory indexation from 1997 onwards.
We can recognise the underlying reasons for this situation—not retrospectively changing the basis of scheme rules—while sharing Members’ huge frustrations with it. It is why I continue to encourage trustees and sponsoring employers to think carefully about the effect of inflation on member benefits when making decisions. The Pensions Regulator already sets out that trustees should consider specifically—not just generally—the situation of those members and whether the scheme has a history of making such awards.
Pensions legislation sets minimum legal standards that all schemes must meet, and they are designed to strike the balance between fair and workable, and having a stable DB landscape. I completely recognise the case for change that the right hon. Member for New Forest East has made today and in the past. The challenge is that it would be unreasonable to retrospectively change long-standing rules in blanket terms in a way that would put some schemes’ stability at risk, whether that is today by fundamentally changing their funding position, or in future, when we do not know what the world will look like.
Sir Julian Lewis
If the Minister would follow the recommendation of at least giving the trustees the full power to make the decision over discretionary awards and taking it away from the company, one could be pretty sure that if the scheme went into deficit, the trustees would act accordingly.
Torsten Bell
I will come in a second to the point that the right hon. Gentleman is making, which is about where power lies in the system.
Dame Nia Griffith
I thank the Minister for his time in meeting us in Swansea, as well as the time he has spent on this topic here in the House. He mentions the disadvantages of making any sort of blanket legislation, but does he not agree that there are ways we can caveat that, such as applying it when the scheme is in surplus? Does he not recognise that most of these schemes were paying increases until they stopped, either because of financial crisis or because they realised they did not have to? There are options that could be explored. Would he be willing to do that?
Torsten Bell
My hon. Friend has been a powerful campaigner on this issue. I recognise her point about situations where there was a habit of paying discretionary increases in the past. On the question of what we do about it, let me come to the Government’s approach, and then I will perhaps offer two reflections specifically on the points that have been raised on which we might want to continue making progress, even if I cannot satisfy all the demands for instantaneous change today.
So, what are we doing? The reforms introduced in the Pension Schemes Bill will give more trustees of such schemes the flexibility to release surplus. That will help shape the balance of power between trustees and employers when it comes to well-funded schemes. There is not nothing we can do, and the Pension Schemes Bill will make a difference, particularly for the kind of schemes being raised tonight—those which have a surplus today.
The decision to release surplus will remain entirely with the trustees. That will place them in a better position to negotiate benefit improvements as part of any release. It is entirely for trustees, working with the employer, to determine how members may benefit. Let me be really clear: if trustees wish to insist on discretionary pre-1997 indexation as a condition for surplus release, they will be entitled to do so. I expect that many will, given the discussions I have had with them. We are obviously in the early stages of that Bill; it has not passed through Parliament yet. Employers and trustees are thinking through a world where they suddenly find themselves with a surplus, and in many cases are thinking about what that means for the future of their pension scheme. These reforms recognise trustees’ and members’ understandable frustration with the status quo, but also the diverse circumstances of DB schemes.
Let me end with two reflections on the wider contributions that Members have made, particularly my hon. Friend the Member for North Durham, who has brought us here today. First, whatever the scheme rules, there is no excuse for employers not to fully engage with trustees on these decisions and questions, and I have too often heard from members and trustees that employers have not done so. I will take that away to consider what more we can do to make sure there is an open consultation and people are clear about what is going on and how decisions are taken.
Secondly, given the importance of this matter, I recognise that it would be beneficial to develop a clearer understanding of the circumstances, particularly in relation to the issue that has been raised about well-funded schemes are choosing actively not to award discretionary increases, particularly where employer consent is the binding constraint. The Pensions Regulator has been considering how to build its evidence base in this area, and I will talk to it in the weeks and months ahead about what more we can do about that.
I will finish by paying tribute to my hon. Friend and the other right hon. and hon. Members who have participated in this debate, but also to Members who are not here, but have consistently raised this issue with me. In the coming weeks, I will be meeting other Members who have asked me to discuss this with them and their constituents. It is important that we have the chance to discuss these important matters, and I am glad that we have done so.
Question put and agreed to.
Fuel Duty
Torsten Bell Excerpts(5 days, 4 hours ago)
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The Parliamentary Secretary to the Treasury (Torsten Bell)
I beg to move an amendment, to leave out from “House” to the end of the Question and add:
“recognises that, at the Autumn Budget 2025, the Government extended the five pence per litre fuel duty cut for five months and cancelled the inflation linked increase for 2026-27; welcomes that Fuel Finder helps consumers compare prices and encourages competition and that the Government has ensured that all UK petrol filling stations must report prices within 30 minutes of a change; notes that HM Treasury will continue to work with the Competition and Markets Authority on behalf of consumers; and further notes that the Government keeps fuel duty under review and that a rapid de-escalation in the Middle East is the best way to keep prices low at the pump.”
I thank the shadow Secretary of State, the right hon. Member for Basildon and Billericay (Mr Holden), for opening this debate. The Government recognise that fuel costs matter enormously to people right across the country. Fluctuations in pump prices cause fluctuations in working people’s bank balances. The effects are real and, as we have heard, widespread; about 80% of us drive each week. That is why the Government have already taken action to ensure that fuel remains affordable. In November’s Budget, we extended the temporary 5p per litre cut to fuel duty for a further five months. Additionally, we cancelled the inflation-linked increase planned for 2026-27. Our fuel duty changes will save the average motorist over £90. In 2026-27 alone, a van driver will save an average of £100, rising to more than £800 for heavy goods vehicle drivers.
Torsten Bell
I will make a bit of progress, and then I am sure I will give way to the right hon. Gentleman, who is always very enthusiastic. He did actually stand up on this occasion. That is what a learning curve looks like—it is a shame Conservative Front Benchers have not found one in 14 long years.
Torsten Bell
That was not the best; there is much more to come. I am enjoying the enthusiasm.
Sector-specific support continues for the likes of agriculture and horticulture, which retain access to red diesel, after it was withdrawn from most sectors in 2022. Our extension of the temporary 5p fuel duty cut includes a proportionate reduction for rebated fuels, including red diesel.
As the shadow Secretary of State noted, the context is that we are entering the third week of the ongoing conflict in Iran, the effects of which have spread directly across the middle east and indirectly around the world. In responding to that conflict and those effects, the Government’s priority will always be the national interest. The immediate focus is on protecting British nationals in the region, and taking necessary action to defend ourselves and our allies. That is supported by the Chancellor’s decision not just to deliver the biggest uplift in defence spending since the end of the cold war, but to approve access for the Ministry of Defence to the special reserve to deploy additional capabilities to the middle east.
Graham Stuart
I am grateful to the Minister for giving way. With the strait of Hormuz in effect closed, does that not prove the point we have been making for years, which is how important it is for our energy security to have new licences in the North sea? The Minister is known as “Torsten Tax”, so I will ask him about tax. Does he accept that not having new licences in the North sea will lose this country billions in tax revenue—yes or no?
Torsten Bell
Our position is to deliver a stable transition. That was the position of the Conservative party. It is the party that introduced the energy profits levy. [Interruption.] I will answer the question. Gas and energy from the North sea will be part of the energy transition in the UK for some decades to come, as several Members have mentioned. That is why the Chancellor met the industry in recent days, and why we are setting out proposals to allow tiebacks that will help us get gas out of the ground in the near future. Longer-term changes will take significantly longer, but none of what I have heard from Conservative Members is an excuse for rejecting the tens of billions of pounds of renewable energy investment that is important for delivering domestic energy security for this country.
Sir Julian Lewis (New Forest East) (Con)
I like the Minister very much, not least because he represents the Welsh seat of my birth and upbringing, and because I have such respect for him, I am going to try to make the point to him that I have so far made with zero success to the Chancellor of the Exchequer, among others. It is all well and good to talk about the greatest increase in spending on defence since the end of the cold war if we are comparing the post cold war period with what is—shall we say?—a quiet defence period, but we are not. What we need to spend now is not to be compared with what it was like after the end of the cold war, but what it was like during the cold war, and during the cold war we regularly spent between 4.5% and 5% of GDP on defence. If he recognises that there is some merit in that argument, could he try to persuade his colleagues to stop making that false comparison?
Torsten Bell
I thank the right hon. Member for his kind remarks, even if they were driven by geography rather than personality. I will take what I can get in today’s debate! Since we are being kind to each other, I recognise the point he makes about the significant uncertainty we face in this world today. That uncertainty always existed to a significant extent, if we are honest, and I think most Conservative Members realise that defence cuts year after year in the last decade were a mistake—
Torsten Bell
The right hon. Member is nodding. So I would offer that by way of comparison.
Torsten Bell
I will make a bit of progress, and then take some interventions.
As I was saying, we are providing additional capabilities to the middle east, but I want to be clear that the UK will not be drawn into a wider war. We on the Labour Benches have been clear about our approach. We are in the business of protecting British nationals, not of trying to deliver regime change from the air. We need to de-escalate the conflict and we are playing our part in doing so, but the full economic impact of the conflict will of course depend on its severity and duration. Recent events have led to significant increases in oil and gas prices. As of this morning, oil prices remain over $100 per barrel and gas prices at 129p per therm.
Harriet Cross
Yesterday, the Chancellor said it was great that Norway and Canada were increasing their production of oil and gas, and congratulated them doing so. And who could disagree with that—other than, seemingly, herself and the Cabinet? Does the Minister agree that, along the same lines, we should be increasing our production from the North sea and lifting the ban on North sea licences?
Torsten Bell
As I have said, oil and gas will be with us for some time. [Interruption.] Let me finish. That is why the Chancellor met the sector. [Interruption.] I hear all the chuntering from Opposition Members, but I did not hear as much chuntering when we saw a 70% fall in jobs in the North sea on their watch. [Interruption.] That is the truth of what you delivered. Now, on top of that, you are trying to double down. The Conservative party is doubling down on opposing investment in renewable energy, threatening those jobs. The Labour party believes in domestic energy security delivered by a range of sources, including the nuclear that the Conservatives failed to invest in.
Mr Speaker
Order. The Minister has been saying “you”, but I am not responsible for these things; I would not want that responsibility.
Simon Hoare
We see you as responsible for everything, Mr Speaker!
The Minister was clearly right to point out the inflationary cost pressures as a result of the Iranian situation. He might be reminded that the announcement the Chancellor made on the increase in fuel duty predates that situation. Were it not to have been made, and given the impact that we are seeing on, among other things, fuel costs from Iran, would he and the Chancellor be thinking that now is a good time to make an announcement about increasing fuel duty? The world has changed and surely this policy should change as well to reflect the immediacy of the situation.
Torsten Bell
I thank the hon. Member for his question and his invitation to discuss some hypotheticals. I would just point out that it is only next week that the policy of extending the 5p freeze comes into effect. Fuel duty will be frozen until the end of August this year. That is the position as it is. I will turn later to how we think about the future, because that is a fair question, but the policy I am talking about comes into effect next week exactly.
Simon Hoare
There are a huge number of families up and down the country who manage their household budgets incredibly tightly. They will be thinking about whether they can afford a holiday this year and so on. I appreciate that August seems a long way away, but many of those people will be sorting out their budgetary plans now. I am not certain that those “just about managing” families, as we used to call them, can wait until August for any clarity or certainty. Do not play cat and mouse with the British people; take the sensible decision now, and press pause to reflect the dramatic change in circumstances we are seeing.
Torsten Bell
I completely agree with the hon. Member that families up and down the country are worried about what they are seeing on their TV screens about the conflict in the middle east—maybe because they know people directly, but also much more universally about the effect on all of us and on their budgets—and they expect a Government who take a sensible approach, meaning that we protect household finances, which I will come to, as well as the public finances. That means taking decisions based on recognising the unavoidable uncertainty about how the future of the conflict plays out.
Torsten Bell
I am going to make a bit of progress, but I will give way soon, because Members have been very patient.
I was coming on to the fact that we are not in the business of delivering regime change from the air, but we do need to de-escalate the conflict and we will play our part in doing that.
Oil and gas prices remain below the peaks they reached in 2022 following the Russian invasion of Ukraine, but I do not want to hide the fact that, as we have just discussed, these are significant increases. Oil is up by 40% and gas prices have risen by around 64% since the end of February. The movement in energy markets we have already seen are likely to put upward pressure on inflation in the coming months—exactly as we have just discussed—but the ultimate size of the effects is highly uncertain. What is certain is that in the face of them, this Government will take the necessary decisions to help protect both household finances and, as I was just saying, public finances. I want to make it clear that, given the very real uncertainty, the policy and approach we are taking does give an assurance to households about how we will act.
Dr Luke Evans
That is good to hear. As it is under review, it sounds as if, should there be a change, the Government would look to support the British public, and I support that. Is there some kind of framework that the Government are using to make this decision? Is there a trigger point on fuel prices, or on how long petrol prices remain at that level? This relates to the previous question about budgeting. Are the Government using triggers, or is it just finger in the air and wait and see what happens?
Torsten Bell
I understand why the hon. Member is asking that. I would gently point out that the level of petrol prices today is lower than at the time of the election, when the Conservatives had a temporary 5p freeze and explicitly did not include continuing that freeze in their manifesto. I offer that by way of indication of where we are today.
We will keep working towards a swift resolution, one that brings stability back to the region, security to Iran’s neighbours and relief to households in the UK, who are understandably worried about the effect of the conflict.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
The Minister rightly talks about household budgets, but the other impact, particularly of the gas price, is industrial energy costs in this country, not least for the ceramics sector, which is gas-dependent rather than electric-dependent. When the Chancellor was asked about gas prices in her statement last week, she pivoted straight to the British industrial competitiveness scheme, which is an electrical subsidy. What is coming down the line to help the gas-intensive sectors, which currently get no relief and which are seeing, as the Minister points out, a huge increase in the price per therm, particularly for those sectors looking to renegotiate their long-term contracts?
Torsten Bell
I thank my hon. Friend for making that point. I regularly discuss exactly the kind of industries he raises today, because he is such a powerful champion on their behalf. Most firms, obviously, will be significantly more hedged than households against changes in prices, but he is absolutely right to say that the effect of energy price rises is very uneven across our industrial base. He is right to highlight energy-intensive industries and what the Government are doing when it comes to the increase in the discount delivered by the supercharger in the coming months and then the BICS in the years ahead. He is also right to make sure that we keep concentrating on this issue in the months ahead, and I am sure I will be talking to him and others about it.
We want the war to end as swiftly and quickly as possible, because the longer it goes on, the more dangerous the situation becomes and the greater the impact on the cost of living back here at home. A rapid de-escalation remains the best way to protect people from further fuel price increases—despite the bluster today, I think that is the goal of everybody sitting in this House—and that requires a return to the diplomatic process. It also means the security of vessels passing through the strait of Hormuz. On that front, the UK will play its part as the global hub of maritime insurance, but I want to be clear, given some of the things that have been said in recent weeks, that this is a complement—not an alternative—to the physical security of vessels.
As the Chancellor said following her call with G7 Finance Ministers last week, we are supporting a co-ordinated release of oil reserves. That has helped to some degree to stabilise international oil markets. We have also asked the Competition and Markets Authority to remain vigilant on price developments for essentials such as road oil and heating oil. On Friday, the Chancellor and the Energy Security and Net Zero Secretary met petrol retailers to make it clear that the Government will not tolerate anyone exploiting the current situation to make excess profits.
Dave Doogan
What evidence did the Chancellor have to suggest there was profiteering in petrol retailing? The Petrol Retailers Association rightly took umbrage at the implication of the Chancellor; I think that did not go quite the way that she thought it would.
Torsten Bell
This Government are showing that we care about the living standards of households up and down the country, and that is exactly what we should be doing. Encouraging all retailers to engage in the fuel finder scheme, which I will come to in a second, is very important. On heating oil, we had heard worrying evidence from people—I suspect the hon. Gentleman has, too, from his constituents—about the behaviour of some suppliers.
To further support competition in the market, we are introducing the fuel finder to ensure that petrol stations publish their live prices. That will make it easier for drivers to choose the lowest price. Since the beginning of February, all UK petrol stations have been asked to report price changes for petrol and diesel within 30 minutes.
Almost 90% of retailers have already registered. Last week, officials were instructed to accelerate the integration of fuel finder into major digital map applications, which will make it easier for drivers to use.
This tool sits alongside action to support households who rely on heating oil, as I just touched on. As the Prime Minister announced earlier this week, the Government will provide an additional £53 million of targeted support for the vulnerable households who would struggle to make an up-front lump sum to top up their tanks.
Dr Luke Evans
It sounds as though this support will be provided through the crisis and resilience fund, which replaces the household support fund. The problem is that many more people will not fall within that, despite seeing the price of heating oil double, if not triple—plus doubling the amount they have to order. What support is there for them? If those figures are going from £500 to £1,500 overnight, that will be a huge impact, and they will not get the £35 from the Government.
Torsten Bell
The hon. Gentleman is right, at least within England: yes, the funding will be delivered via local authorities, through the mechanism that was the household support fund, which becomes the crisis and resilience fund in a few weeks. We have written to local authorities to make it clear that they do not need to wait for the new fund to be in place and can start making commitments today. The decision on exactly who qualifies as vulnerable sits with local authorities, because one thing we have learned is that different parts of the country have different challenges on this issue.
Torsten Bell
I will make a bit of progress; I have already given way to the right hon. Gentleman.
To reflect the highly uneven geographical spread of heating oil reliance, as highlighted by lots of Members in recent weeks, not least those from Northern Ireland and west Wales, the funding will be allocated on the basis of census data, instead of via usual mechanisms.
I have focused so far on laying out the challenge facing the country and our consistent approach to this conflict, but as this is an Opposition day, it would be rude not to talk a little about the Opposition, who have displayed rank opportunism and incoherence. This week, the Leader of the Opposition has said that she is
“concerned that there isn’t a clear plan behind the strikes”,
which is the opposite of what she has been saying for weeks. She welcomed the strikes and the military action that she now says lacked a clear plan. She called for Britain to get involved in the military action that she now admits lacked clear objectives. She says that her leadership is about consistency, but, on this most important of issues, the whole country can see that she is just making it up as she goes along—a cavalier attitude without a second thought for the consequences for households here in the UK. She does not get to wrap herself up in another country’s flag and play politics with a serious conflict and then pretend she never did so once the consequences for those living in the United Kingdom became clear.
Opportunism is the word for the Opposition on fuel duty, too. For all the froth from the shadow Minister, the truth is that the previous Government did not budget for any extension of the 5p cut—they explicitly said that it was temporary. Here is the truth on the level of fuel duty: through their entire 14 years in office—
Torsten Bell
Wait for it; I am going to come to come to those 14 years. The hon. Gentleman is going to regret saying that. Through the Conservatives’ entire 14 years in office, fuel duty was never lower than it is today. In fact, it was higher than it is today for 80% of the time they were in office.
Several hon. Members rose—
Torsten Bell
I absolutely understand why the shadow Minister is looking so worked up; fuel prices matter for everyone, especially those travelling long distances. After all, it is around 270 miles from North West Durham to Billericay—once he found his new constituency, that is. I know it is called a chicken run, but I am assuming he drove.
The Opposition may not be serious, but these are serious times. The cost of living matters. In a few weeks’ time, fuel duty will be 11p lower compared with the plans we inherited from the previous Government. Our action on fuel duty will save the average motorist over £90, on top of the savings from the Government’s fuel finder scheme. We will, of course, continue to keep fuel duty under close review, but it is frozen now and will remain frozen in the months ahead.
Torsten Bell
We will continue to be responsive to a changing world, be responsible in the national interest and with the public finances, and take the necessary decisions to help families with the cost of living. That is this Government’s promise.
Madam Deputy Speaker (Ms Nusrat Ghani)
Well, it was clear that the Minister was not giving way. I call the Liberal Democrat spokesperson.
Oral Answers to Questions
Torsten Bell Excerpts(2 weeks ago)
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Josh Babarinde (Eastbourne) (LD)
The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
I am glad that the hon. Member and I have had the chance to discuss this issue on a number of occasions, and, more importantly, that we had the chance to do so with his constituent Staff Sergeant Pauline Cole, who served our country and campaigned on behalf of other veterans. I know that she has sadly passed away since our meeting, so I wish to put on the record my condolences to her family—not least to her son Les, on whose behalf my hon. Friend the Member for Hemel Hempstead (David Taylor) has been in touch in recent days. As the hon. Member for Eastbourne (Josh Babarinde) is aware, exactly because of the service of our armed forces, £10 per week of any armed forces compensation scheme award is disregarded when calculating pension credit entitlement.
Josh Babarinde
The Minister will remember that Pauline was a veteran who was awarded military compensation for injuries sustained in her service, but that led to her pension credit being cut from £77 a week to £10 a week, because military compensation is considered income by the Department for Work and Pensions. I have introduced Pauline’s law—the Armed Forces Compensation Scheme and War Pension Scheme (Report) Bill—to ask the DWP to correct that injustice and disregard military compensation in those calculations. Will the Minister work with me, and with Pauline’s sons, Les and Simon Haffenden, to conduct a review into the merits of disregarding that income in order to protect our veterans in future?
Torsten Bell
I recognise the powerful arguments that the hon. Member and Pauline made in our meeting. Our position today reflects the balance between recognising service injuries and being consistent across the welfare system. Pension credit is a means-tested benefit, the goal of which is to top up pensioners’ income to a guaranteed minimum level, so in order to ensure consistency, most forms of income—including those he refers to—are taken into account. However, as I said, there is a partial disregard in order to recognise veterans’ service, and the value of lump-sum payments received in respect of personal injury are fully disregarded.
John Cooper (Dumfries and Galloway) (Con)
The Parliamentary Secretary to the Treasury (Torsten Bell)
The yearly amount of the full new state pension is projected to rise by about £2,100 a year over the current Parliament. That reflects the Government’s commitment to the triple lock for the duration of the Parliament. Payments of both the basic and new state pensions will increase by 4.8% in a few weeks’ time, boosting pensioners’ incomes by up to £575 a year.
Peter Prinsley
I declare an interest, in that I receive a state pension. [Hon. Members: “No! No way!”] We welcome the Government’s commitment to the triple lock, but some pensioners in my constituency continue to live in poverty and isolation, and are in need of food banks. What specific measures can the Government take to reduce social isolation and tackle poverty in this group of people?
Torsten Bell
I thank my hon. Friend for his question—and for the shocking news of his age. He is absolutely right to highlight both these issues. Pensioner poverty halved under the last Labour Government, but it has risen more recently. That is why it is so important that, as well as increasing the state pension, we have put in place the biggest-ever take-up campaign for pension credit and focused on the cost of essentials—most importantly, energy, where new measures will come into place in the next few weeks.
My hon. Friend is also right to focus not just on poverty, but on isolation. I am sure that all Members of the House, when we are out knocking on doors at the weekend, meet some younger, but also some older, constituents who are too isolated. They might not be happy to see the Member who comes to knock on their door, but they might be. Whatever people think about politicians knocking on their doors, we all have organisations and charities in our constituencies—such as Age Cymru in Wales and, I am sure, many in my hon. Friend’s constituency—that do important work in tackling isolation among all our communities.
Sir Edward Leigh (Gainsborough) (Con)
I declare a similar interest to that of the hon. Member for Bury St Edmunds and Stowmarket (Peter Prinsley). I read this weekend that if we grapple with the increase in pensions and benefits, we might be able to afford 15 new frigates. It is easy for Opposition Members to attack in-work benefits; it is more difficult to question the state pension. Has the Minister seen the paper from the Institute for Fiscal Studies that says we should consider moving to a smoothed earnings link for state pensions, which would ensure that they never fall in real terms but, in the long term, always rise with earnings? He will not give me an answer now, but perhaps he can write to me about how we are going to buttress the long-term sustainability of the state pension.
Torsten Bell
The right hon. Member is right to recognise the challenge. We have around 12 million pensioners at the moment, but that will rise to 18 million over the next 50 years. Our view is that having the triple lock drive above-inflation increases, on average, among pensioners is the right thing to do for this Parliament. That is why we set it out in our manifesto, and that is what is driving the increases in the state pension. When it comes to affording the cost of frigates, I merely point him to the fact that defence spending under this Government is higher in every year than it was in a single year under the Conservative party.
Mark Garnier (Wyre Forest) (Con)
Helping millions of people ensure financial security in their retirement is a cornerstone of the Minister’s Department, but in the Government’s first 18 months, they have disincentivised pension savings by introducing inheritance tax on pensions, removing pensions from their lifetime ISA reforms, forcing pension trustees into mandation and, most recently, introducing a cap on salary sacrifice savings incentives. Through their actions, this Government are pushing people to be more reliant on the state pension, rather than encouraging people to take control of their own financial future. Which will be the next Government U-turn: cancelling mandation, or abandoning salary sacrifice caps?
Torsten Bell
That was just a bit sad, because the U-turn that we are seeing is from the hon. Member, who declined to vote against the Pensions Schemes Bill at Second Reading and on Report. I will quote him back to himself. He told me that “the Minister”—that is me—
“will be pleased to hear that there is cross-party consensus on many of the planned changes.”
[Interruption.] Wait a second. He then got even more excited—back in his reasonable days, before he had been leant on by the “looney tunes” who will wander off to Reform—and told us that
“we broadly support the measures in the Bill”.—[Official Report, 7 July 2025; Vol. 770, c. 722-723.]
The U-turn has been done by the hon. Member, who has let himself down.
Luke Akehurst (North Durham) (Lab)
Helen Whately (Faversham and Mid Kent) (Con)
Madam Deputy Speaker, you are no doubt familiar with the dramatic principle of Chekhov’s gun: if there is a gun on the wall in the first act, it will be fired by the final scene. Ministers say that the mandation power in the Pension Schemes Bill is merely a backstop that they do not intend to use, but once they have a power in law like a gun on the wall, how long will that intention last? Will the Secretary of State make a commitment to the House that the mandation gun will never be fired at the expense of UK pension savers?
The Parliamentary Secretary to the Treasury (Torsten Bell)
I thank the hon. Lady for her question. She will know that the industry itself set out in the Mansion House accord that it thinks there needs to be change in the pattern of investment in our largest defined contribution schemes. It says that because it is in the interests of savers, and that is why the previous hon. Member for Hexham, the longest-lasting Conservative Pensions Minister, labelled it a good thing. All the Pension Schemes Bill does is put in place the mechanism to make sure that change, which the industry has said is in the interest of members, actually happens.
Helen Whately
Given that the savings of millions of people are at stake, I am disappointed that the Secretary of State did not rise to answer this important question. The Pensions Minister needs to stop conflating the voluntary Mansion House agreement with changing the law to give Government the power to direct pension fund investments. The two are not the same. Both the Association of British Insurers and Pensions UK are urging the Government to drop the mandation power from the Bill. The Pensions Minister has a tendency to think he always knows best, but he is not always right; apparently, the Ed stone was his idea. Let us not have people’s retirements savings suffer the same fate as the quest of the right hon. Member for Doncaster North (Ed Miliband) to become Prime Minister. The Government should not be giving themselves control over how people’s retirement savings are invested, but that is what mandation does. I am against it, the pensions sector is against it, and savers are against it. Will he listen and change tack?
Torsten Bell
The hon. Lady is going to be absolutely furious when she finds out what those on the Opposition Front Bench did when the Pensions Schemes Bill came through this House. There is all this sound and fury now, but, when it came to choosing whether to vote against the very power she now says is incredibly dangerous, she went for a snooze on both Second and Third Reading. She is going to be even angrier when she finds out what her right hon. Friends the Members for Salisbury (John Glen) and for Godalming and Ash (Sir Jeremy Hunt) have called for, which is the mandation of pensions schemes in the UK to invest—
Madam Deputy Speaker (Judith Cummins)
Order. I remind Members and Ministers that this is topical questions—we should have short questions and short answers.
Mr Joshua Reynolds (Maidenhead) (LD)
Torsten Bell
The hon. Gentleman will be aware that the policy on overseas uprating is long standing under Governments of all parties, including the Liberal Democrat coalition Government. I am not going to make promises that will not be delivered. We will not be changing that policy in the near future.
Liam Conlon (Beckenham and Penge) (Lab)
Today, The Guardian published an article showing that up to 13,000 survivors of Ireland’s mother and baby homes living in Britain today could lose their compensation payments if they accept the redress scheme from the Irish Government. My campaign for Philomena’s law is backed by public figures including Dara Ó Briain, Siobhán McSweeney and Steve Coogan. It would resolve the issue by ensuring that the payments are ringfenced. Will the Secretary of State consider the merits of the case and agree to meet me to discuss it further?
AEA Technology Pension Scheme
Torsten Bell Excerpts(3 weeks, 4 days ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
I congratulate the hon. Member for Didcot and Wantage (Olly Glover) on securing today’s debate, and endorse his opening remarks about the general importance of pensions. We should all think that, but Pensions Ministers should certainly endorse wholeheartedly what he said. He and I have discussed this issue on a number of occasions, and he has spoken clearly and passionately about it today, as always. We all absolutely understand why it has such resonance, particularly for his constituents.
I express my sympathy for all the AEAT pension scheme members. All of us would hate to see our employer enter administration and our pension scheme enter the Pension Protection Fund. I meet a wide range of individuals who have been through that exact experience, and many of them rightly bring the same kind of passion to their cases as he has done. That is particularly true of many of those with pre-1997 accrued pensions, as was the case for many members of this scheme.
The hon. Member is right to say that there was a particular focus on securing better indexation at the point of transfer, so I can understand why these pensioners feel that they have not secured what they had hoped for. It is also particularly true for those with accrued public sector pensions that transferred into private sector schemes at the point of privatisation. We are discussing one of them today, but it is far from the only one—Carillion is obviously the highest-profile case in the recent past. That can no longer happen, given the changes that have been put in place. At the point of privatisation, we will no longer see accrued pension rights transferred into private sector schemes. This is a real issue, but that exact situation cannot occur in future.
As we have heard, this matter has a long and complex history. The company was privatised 30 years ago, in 1996. On the hon. Member’s questions about the value at transfer, the reassurance I can offer—I know it will not be enough for his constituents and others who have raised the case with him—is that the transfer value was agreed by the trustees. It was not proposed by the firm or the Government at the point of transfer, and the financial assumptions that underpinned it were common at the time.
Unfortunately, as we have heard, AEAT entered administration in 2012, which resulted in its pension fund scheme entering the PPF. Of course, that was when the Liberal Democrat and Conservative coalition Government were in office. It is not for me to speak for the coalition Government, who included a Liberal Democrat Pensions Minister, but they responded to the grievances raised by pension scheme members by maintaining that all legal obligations had been fulfilled and that the safety net existed through the PPF. I understand that that is not the position of the hon. Member, but it was the position of the Liberal Democrat and Conservative coalition Government at the time.
The hon. Member has raised two big-picture concerns, to which I will try to do some justice. One is about the income levels that scheme members are living on, which is the most immediate and important thing, and the other is about the consideration of this case by appropriate bodies. On the first of those, AEAT members receive compensation from the PPF, which is a well-established compensation scheme that provides a vital safety net. I do not want to underplay that, because the world before the PPF saw members exposed to much more risk in the case of insolvency. We do not want to underplay the importance of the PPF compensation route, but there have been concerns about the lack of indexation of pensions accrued before 1997, which in this case applies to all the pensions accrued prior to privatisation.
Unlike previous Governments, we have listened to those concerns and are acting. The Government have brought forward legislation in the form of the Pension Schemes Bill, which the hon. Member mentioned. It will introduce annual increases to compensation payments that relate to pensions built up before 6 April 1997 where the schemes provided for this. I can confirm that AEAT members will benefit from the changes to the PPF, because their scheme provided for such indexation, as we have discussed. That will make a real difference in the years ahead by making sure that we do not see further erosion of the value of their pensions due to inflation.
Turning to the second issue raised, the hon. Member is aware that this matter has been considered by a range of different Government and parliamentary bodies since the insolvency in 2012. That includes the Public Accounts Committee inquiry, which he mentioned. All I would say is that the first recommendation of that inquiry was that we address the issue of pre-1997 indexation within the PPF. The answer to his first question is that we have taken those inquiries seriously. That is one of the contributing factors to our acting now, unlike previous Governments, to address the issue of pre-1997 indexation in the PPF.
This issue has been debated twice previously in Parliament, although it is a decade since it was last discussed, so I am sure scheme members will be glad to see the hon. Member bringing it back before Parliament. It has obviously been raised in other debates. Most recently, I have been involved in discussions of it during the passage of the Pension Schemes Bill, during which hon. Members on both sides of the House raised it, including on Report on the Floor of the House just a matter of months ago.
Multiple ombudsmen have considered specific complaints —the hon. Member is right to say that they have considered specific complaints, not the case as a whole—and in the majority of those cases, they have come to a view, not said that it is out of scope. One did such a thing, but in general they have considered the specific complaints raised and brought them to a resolution, although obviously not always in the in the way that some people would prefer.
More generally, my reflection is that I understand the temptation to call for more reviews in this case, because scheme members—and I have spoken to some myself—do not feel fairly treated. I understand that, and it is right that hon. Members come to the House to raise such effects on their constituents in debates like today’s. However, the Government’s view is that the best thing we can do is not to promise further reviews, but to act. The most important way in which we can act, given the circumstances, is by addressing the lack of pre-1997 indexation for AEAT members.
Olly Glover
I understand what the Minister is saying about pre-1997 indexation, but that is not the primary issue. The calculations by the campaigners about the difference this makes to their losses is that it is trivial—very small. I do not have the exact percentage, but it is probably a 5% difference, or something along those lines. I am very happy to share that with the Minister. That does not address the key issue, which is that Government guidance was incorrect at the time, and that led people to make decisions on the basis of wrong information. I suggest to the Minister that pre-1997 indexation is a different issue.
Torsten Bell
I recognise the point the hon. Member is making, which is that the nature of insolvency and entering into the PPF will have made more of a difference than future PPF accruals. However, had a previous Government—for example, the one that included the Liberal Democrats—introduced pre-1997 indexation a decade back, it would have made significantly more than a 5% difference. That would have made a very large difference to the pensions that AEAT members are living on today.
I am responsible for what the Government are doing about indexation now, and it is a lot more than 5%, because even in just the last years inflation has been running at particularly high levels. I do not agree with the hon. Member’s calculation, but I do agree with him that that is definitely not the entire story. I totally understand that members’ feeling about the advice they received back in the 1990s is at the core of their view that they should never have been in a situation where their pensions were transferred out of the public sector in the first place, and he is right to say that that issue is different from the indexation that occurs within the PPF.
I am merely pointing out that the reviews the hon. Member has mentioned, including that of the Public Accounts Committee, focused on the issue of indexation. My best bet is that, if the Government were not acting on this issue, it would have been one of the issues he raised with us here today, but he is completely right to say that it is not everything. I have said what we are doing to address the lack of indexation: we are acting where previous Governments failed to do so, and acting because we can all put ourselves in the shoes of pensioners who have not seen their pension incomes live up to what they were expecting, through no fault of their own.
Let me close by again congratulating the hon. Member on securing this debate and for giving us the opportunity to speak on such an important subject. I appreciate that I cannot and have not offered everything that he and, indeed, AEAT scheme members would want, but this Government are making real, concrete changes to better protect the pensions of those members from inflation in the years to come. That cannot right all of their feelings about what has happened in the past, but as I say, this Government are choosing to act rather than promising another review in the months and years ahead.
Question put and agreed to.
Charter for Budget Responsibility
Torsten Bell Excerpts(3 weeks, 6 days ago)
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The Parliamentary Secretary to the Treasury (Torsten Bell)
I beg to move,
That the Charter for Budget Responsibility: Autumn 2025, which was laid before this House on 23 February, be approved.
The motion relates to the UK’s fiscal framework. It is a framework that matters: it guides fiscal policy and provides both transparency and accountability. Since coming into office, this Government have reformed the fiscal framework and, more broadly, set the public finances on a sustainable footing. At the autumn Budget, that included doubling the buffer against our fiscal rules, providing more certainty and stability for taxpayers and businesses. This is a core part of a wider economic strategy that includes Budget measures to reduce inflation, pushing down on the cost of living. All this helps to push down on interest rates and give businesses the confidence to invest. This is the right plan, and things are moving in the right direction. Just last week, we learned that January saw a £30.4 billion public finance surplus, the highest monthly surplus on record.
This is all supported by our reforms to the fiscal framework. We have reset the fiscal rules to reprioritise public investment and introduced a fiscal lock to ensure that Governments cannot sideline the Office for Budget Responsibility, as we sadly saw in the last Parliament. We are also committed to delivering one fiscal event a year, delivering on our manifesto and bringing the UK in line with the vast majority of advanced economies. At the Budget, the Chancellor announced plans to strengthen that commitment. We are doing so by drawing on recommendations from the International Monetary Fund’s article IV report last summer. The IMF made the case that fiscal policy stability would be aided by ensuring that the fiscal rules would only be assessed once a year. We agree, so this Government are legislating to ensure that this is the case.
To deliver this change, we are updating the two core parts of the fiscal framework. First, we are updating the primary legislation, the Budget Responsibility and National Audit Act 2011, via the Finance (No. 2) Bill. Clause 251 of that Bill provides for one fiscal rules assessment per financial year. We are also updating the secondary legislation, the charter for Budget responsibility, which is the subject of today’s debate. The updated charter reinforces the change in the Finance (No. 2) Bill. It makes no changes to the fiscal rules, but ensures that those rules should only be assessed once per financial year. Specifically, it removes the requirement in chapter 4 of the charter for the OBR to conduct a fiscal rules assessment alongside any forecast. This will ensure that we can reduce the number of fiscal rules assessments per year without any reduction in fiscal transparency.
This Government are absolutely committed to the OBR’s independence, and to its vital role in providing regular assessments of the economy and the public finances. The OBR will continue to publish a second five-year forecast in the spring, which will aid transparency and inform the Debt Management Office’s financing remit, but the Government will not normally respond with fiscal policy. I look forward to seeing a few more Members of this House at the next of these forecasts, the spring forecast, a week today. I recommend that this House approves the updated charter, and I commend the motion to the House.
Madam Deputy Speaker (Judith Cummins)
I call the shadow Chief Secretary to the Treasury.
Torsten Bell
I thank the two Front-Bench spokespeople, one of whom spoke admirably briefly. I will not repeat the case for these changes, given that we have heard that both opposition parties are happy to support the Government’s changes to the charter, so I will just respond directly to the questions.
I say to the Lib Dems spokesperson that it is always good to hear anybody praising Sweden in any debate. On the questions about scrutiny, I do not think he gives enough credit to his hon. Friends on the Finance Bill, who have spent many hours scrutinising the policies, and I am sure they would be upset to hear his lack of faith in them today. Directly on his question about transparency, I think that is important, and that is why we are maintaining the two forecasts a year, despite there being only one fiscal event.
The Opposition spokesperson asked why we are making these changes now, and the answer is that in our manifesto we committed to one fiscal event a year. The IMF has come forward with sensible recommendations to reinforce that, and we are just responding to the IMF’s recommendations. He asked a question about the range contained in the previous charter, and that has been removed because it applied only at the spring forecast, and we are no longer carrying out a fiscal assessment at the spring forecasts. He asked about the IFS report suggesting a dashboard rather than fiscal rules. I can tell him that there will be no change to the fiscal rules, although I obviously always enjoy reading any think-tank’s reports, and I would point out that we have already doubled the headroom against the fiscal rules.
More importantly, I was sad to hear the Opposition spokesperson’s remarks more generally, because I always enjoy his normal perkiness, at least outside this Chamber, but he has turned into a gloomster.
Torsten Bell
He is a total gloomster. He has totally ignored the record monthly surplus for the public finances. He has ignored the fact that wages are up, business investment is up and GDP has grown the fastest of any European G7 economy. He has ignored the fact that GDP per capita grew in 2025, after flatlining in the last year of the Tory Government and falling during the previous Parliament. He has ignored inflation falling and interest rates falling. I think it is right for the gloomster to be gloomy about his party’s prospects, but not to be gloomy about the UK economy. On that basis, I commend this motion to the House.
Question put and agreed to.
Draft Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2026 Draft
Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2026
Torsten Bell Excerpts(1 month, 1 week ago)
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The Parliamentary Secretary to the Treasury (Torsten Bell)
I beg to move,
That the Committee has considered the draft Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2026.
The Chair
With this it will be convenient to consider the draft Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2026.
Torsten Bell
The instruments that we are debating today seek to increase the value of one-off lump sum payments made under two no-fault compensation schemes administered by the Department through the Pneumoconiosis etc. (Workers’ Compensation) Act 1979 and the Child Maintenance and Other Payments Act 2008. Although there is no statutory requirement to increase these rates in line with prices, there has long been cross-party consensus that we should do so. The Government therefore intend to increase the value of lump sum awards by 3.8%, in line with the September 2025 consumer prices index. These new rates will apply to those who first become entitled to a payment from 1 April 2026. That also means that the increase will once again be in line with the proposed increases to industrial injuries disablement benefit as part of the main social security uprating provisions for 2026-27, debated on the Floor of the House yesterday.
By way of background, the 1979 Act scheme provides a single lump sum compensation payment to eligible people with the diseases covered by the scheme. That includes pneumoconiosis and diffuse mesothelioma. It was designed to cover people who were unable to claim damages from employers because, for example, they had gone out of business, and people who have not brought any action against another party for damages. To be eligible for a lump sum award, a claimant must be awarded industrial injuries disablement benefit for a disease covered by the 1979 Act scheme.
The 2008 Act scheme was introduced to provide compensation to people diagnosed with mesothelioma who were unable to claim compensation under the 1979 Act. That may have been because they were self-employed or because their exposure to asbestos was not due to their work. The 2008 Act scheme provides no-fault support to sufferers of diffuse mesothelioma quickly at a time of their greatest need. To recognise the suffering that these diseases can bring to the whole family, claims can be made to either scheme by a dependant, if the person with the disease sadly passes away before being able to make a claim.
I am sure that all hon. Members will join me in recognising the continued importance of the compensation schemes offered by the 1979 and 2008 Acts. Finally, I am required to confirm that these provisions are compatible with the European convention on human rights, and I am happy to do so. I commend the increases to the payment rates under these two schemes to the Committee and ask for approval to implement.
Torsten Bell
I thank the Opposition for their support for the regulations. I will not reiterate what I said in the opening beyond fully endorsing the case made by the Opposition about the importance of these payments and their uprating. Hon. Members will know that these schemes are only a part of the way that the Government provide support and compensation to people suffering from these diseases. The industrial injuries disablement benefit provides weekly payments as well, which are important for those who have had an industrial accident or developed certain diseases, including those covered by the lump sum compensation schemes that we are talking about today.
On the point about the nature of these diseases being caused by dust exposure, it is important to spell out the importance of the work of the Health and Safety Executive on the prevention front, and of the NHS in providing support to those who have had a diagnosis of these diseases. On the point made by the hon. Member for Wyre Forest about the importance of early diagnosis when possible, given the nature of these diseases, I want to refer hon. Members to the work of the national lung cancer screening programme, which exists precisely for that purpose.
We all believe that cross-party support on this measure is important—it continues as it has since 2010. It is an important part of how we provide support to individuals living with these diseases and their families. I commend the regulations to the Committee.
Question put and agreed to.
DRAFT PNEUMOCONIOSIS ETC. (WORKERS’ COMPENSATION) (PAYMENT OF CLAIMS) (AMENDMENT) REGULATIONS 2026
Resolved,
That the Committee has considered the draft Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2026.—(Torsten Bell.)
Charter for Budget Responsibility
Torsten Bell Excerpts(1 month, 3 weeks ago)
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The Parliamentary Secretary to the Treasury (Torsten Bell)
At Budget 2025, the Government strengthened the fiscal framework in order to deliver on their commitment to holding one major fiscal event per year, supporting the economy with greater policy certainty.
Responding to recommendations made by the International Monetary Fund, the Government set out that they would legislate to ensure that the Office for Budget Responsibility assesses performance against the fiscal rules once a year at the Budget.
The Finance (No. 2) Bill includes an amendment to the Budget Responsibility and National Audit Act 2011, the underlying primary legislation that sets out the requirement for fiscal rules assessments.
The draft “Charter for Budget Responsibility: Autumn 2025” has been published on gov.uk. The charter already set out the Government’s commitment to hold one major fiscal event per year. This update to the charter makes technical changes to deliver the policy announced at Budget 2025 relating to fiscal rules assessments, complementing the changes being made to the Budget Responsibility and National Audit Act. The updated charter will be laid before Parliament, and a debate and vote will be scheduled in due course.
A copy of the document is available here: https://www.gov.uk/government/publications/draft-charter-for-budget-responsibility-autumn-2025
[HCWS1275]
Oral Answers to Questions
Torsten Bell Excerpts(1 month, 3 weeks ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
As the Secretary of State set out on 11 November 2025, we are retaking the decision made in December 2024 as it relates to the communications on state pension age. We will update the House on the decision as soon as a conclusion is reached.
Mr Dillon
I was one of 100 MPs who signed a cross-party letter calling on the Government to take action for WASPI women. Such is the strength of feeling in my constituency that I am regularly contacted about this issue. In the Government’s determination, are they planning to consult with the Women Against State Pension Inequality Campaign, especially if they are minded to deny 1950s-born women their lived experience again?
Torsten Bell
I know that hon. Members across the House will have been contacted by constituents who have been affected, and many of us will also have family members who have been affected. As I said, we will update the House as soon as a conclusion is reached. We have committed in public to doing so within three months of the decision in December, which means a decision will be reported to the House before the beginning of March.
I gently say that we need to be clear about what is at stake here: this decision relates narrowly to the question of the communication of the state pension age changes. For many women, including many of my constituents, the issue they are actually most focused on is the increase, and the acceleration in the increase, in the state pension age that was put in place by the coalition Government, which not a single Lib Dem MP voted against back in 2011. I think we should be clear about that, and I am sure that the hon. Gentleman will be clear on that with his constituents when they raise the matter with him.
Sarah Dyke
There are more than 8,000 WASPI women across Glastonbury and Somerton, including Miriam from Martock, who has lost a staggering £50,000 because of the maladministration of state pension ages changes. Because she was unable to work, she was forced to sell her home and live on released capital; now, aged 70, she has rejoined the workforce. Miriam and women like her deserve fairness. Will the Minister commit to properly compensating 1950s-born women, and will the Government consult with the Parliamentary and Health Service Ombudsman before finalising their response?
Torsten Bell
I know that many of our sympathies would be with Miriam. Many Members have constituents who face challenges in the years running up to the state pension age and who are, for whatever reason, unable to work.
The hon. Lady has rather made the point that I just set out, though. She talks about losses of £50,000 or £60,000, which I also see in letters from constituents, but that does not relate to the issue of communication of the state pension age. What she is referring to—the increase and acceleration in the state pension age—was put in place by a Liberal Democrat Government, and not a single Liberal Democrat MP voted against it. It is important to be clear about what is and is not part of the PHSO’s investigation. As I say, it is very important that we take these issues seriously. We should not have seen an acceleration of the state pension age where some women were only given five years’ notice, but that was put in place by the coalition Government. We will not be making those mistakes.
Chris Vince (Harlow) (Lab/Co-op)
Mr Speaker, can I offer my deepest sympathies for your recent injury?
I pay tribute to the WASPI women in my constituency for their tireless campaigning on this issue. Will the Minister outline the difference that his Department and this Labour Government are making to all pensioners in Harlow?
Torsten Bell
Mr Speaker will not be on camera right now since I am speaking, but I can reassure the whole world that he is very much still with us. We all hope that that will be the case for some time to come, but when he does decide to become a pensioner, he will, like all pensioners, have the full support of the Government. We are bringing down waiting lists, which is benefiting pensioners right across the country. The biggest single disgrace facing older generations across the UK today is the state of our NHS, and that is why this Government are investing in bringing down waiting lists month after month after month.
Mark Garnier (Wyre Forest) (Con)
Thank you, Mr Speaker—I had better add my sympathies for your poor leg to those of the hon. Member for Harlow (Chris Vince).
The Labour party has performed, frankly, a spectacular U-turn on its support for WASPI women, but now it finds itself bogged down in judicial reviews and accusations of incompetence. If the Government cannot even deliver literally nothing for the WASPI women without messing up, what hope is there for them delivering wider welfare reforms?
Torsten Bell
I simply cannot let the hon. Member off on this. It was the Conservatives who made the decisions on accelerating the state pension age and in some cases gave women around five years’ notice or less of the increase. That was a choice made by the Conservative party. This Government are considering a report from the ombudsman that the Conservatives left sitting on their desks and refused to make a decision on—and we are going to make a decision.
Steve Darling (Torbay) (LD)
Prior to the Government’s decision not to grant compensation to WASPI women, there was a disturbing lack of engagement with the ombudsman. Since then, the ombudsman has been able to gain access to the paused action plan, but only after leaving their electronic device at the door. Is the Minister comfortable with the way that this trusted civil servant has been treated?
Torsten Bell
The ombudsman is an important part of the systems that we have in place to make sure that the administration of public services is done in the right way. The hon. Member will know that our permanent secretary met the ombudsman before Christmas. A draft of the action plan that he refers to was shared with her in order to provide her with reassurance that progress was being made on it. As he will be aware, the work on the action plan has been stopped because it was an intrinsic part of remedy set out in the case last year. As I have said, the Secretary of State is considering the evidence in the round, and we will report back to the House as soon as a decision is taken.
Mr Gagan Mohindra (South West Hertfordshire) (Con)
Dr Luke Evans (Hinckley and Bosworth) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
It has been confirmed that those whose income is only the basic level of the basic state pension or the new state pension will not be required to pay tax next year, because the level of personal allowance has been set above the level of the new state pension. What the Chancellor said at the Budget was that in future years we will make sure that no pensioner will be required to fill in a self-assessment form, or indeed a simple self-assessment form, for any tax that is due because the new state pension level is above that of the personal allowance.
Dame Nia Griffith (Llanelli) (Lab)
A constituent of mine disclosed full details of her change in circumstances to the Department, but although the Department admitted it was its mistake—it had received that information and had repeatedly failed to update its records—it still sent her a very threatening letter. Although I fully support the need to protect the public purse, would the appropriate Minister agree to meet me to discuss how the Department could improve its updating procedures, reduce the occurrence of overpayments, and treat claimants more considerately when they have received overpayments through no fault of their own?
National Insurance Contributions (Employer Pensions Contributions) Bill
Torsten Bell ExcerptsWednesday 21st January 2026
(2 months ago)
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Mark Garnier
I completely agree. That is a fundamental problem. We are doing completely the wrong thing for people who want to do the right thing. We are disincentivising people taking responsibility for their future at a time when the state pension is coming under a lot of pressure. It is expected in 11 or 12 years, I think, that less money will be paid into the pension schemes pot than is withdrawn by those of us who are approaching retirement—I declare an interest, in my own case.
Torsten Bell
I thank the hon. Member for Wyre Forest (Mark Garnier) for the reminder of the excellent debate we had before the Christmas break. I thank him and the hon. Member for Witney (Charlie Maynard) for their contributions. I will briefly reiterate the case for the three short and perfectly formed clauses of this Bill before focusing my remarks on the hon. Members’ amendments.
As hon. Members know, this reform was inevitable. We have had a detailed discussion of the last Government’s secret plan to implement a very similar proposal—the “secret plan” label came from the Conservative party, not Government Front Benchers—and the cost of pensions salary sacrifice was due to almost treble, from £2.8 billion in 2017 to £8 billion by 2030. That is the equivalent of the cost of the Royal Air Force. The status quo is also hard to defend when low earners and the 4.4 million self-employed people across the UK are entirely excluded, reinforcing the point made by my hon. Friend the Member for Harlow (Chris Vince).
Steve Darling (Torbay) (LD)
The Minister will recall our many happy hours together in Committee on the Pension Schemes Bill. One of the issues that the Liberal Democrats raised was the need for an MOT for people as they approach pension age, to see how their pension is going and test its adequacy. Does the Minister accept that putting these stark restrictions in place will significantly restrict the ability of somebody who realises that they are running out of time to make additional contributions to their pension to get to a better place? Would he consider extra flexibility, so that people could perhaps use 10-year allowances in three years?
The Second Deputy Chairman
Order. I remind Members that the scope of this Bill is very narrow indeed, and we really ought not to be bringing in new concepts.
Torsten Bell
Thank you, Ms Nokes. I will follow your advice, but will try to respond to some of the hon. Member’s points when I address the question of how we have gone about making the changes that this Bill introduces.
As I have said, change is inevitable, but it is important to take a pragmatic approach, which is my answer to the hon. Member for Torbay (Steve Darling). The Bill is pragmatic in that it continues to allow £2,000 to be salary sacrificed free of any NICs charge, ensuring that 95% of those earning £30,000 or less will be entirely unaffected. It is pragmatic in that it gives employers and the industry four years to prepare.
Chris Vince
The Minister has said that the cost to the Exchequer of the salary sacrifice scheme is going to triple by the end of this decade. Does he agree that that is unsustainable for the Treasury, and also that we in this Chamber have to get real? The reason why people in my constituency of Harlow cannot even begin to think about pensions or savings is that they are living day to day. What this Government need to do is tackle the cost of living crisis, and that is what they are doing.
Torsten Bell
In a shock move, I entirely agree with my hon. Friend. Members of those parties who have said that they intend to vote against this Bill today cannot keep coming to this Chamber, day after day, calling for additional spending in more areas, while opposing any means of raising taxes. [Interruption.] Well, you have raised the welfare budget, and without trying—
The Second Deputy Chairman
Order. First, I have not raised anything. Secondly, we are not here to debate the welfare budget. This is a very narrow Bill with limited scope. The Minister can listen to the same strictures I have given to other Members.
Torsten Bell
I am listening to every word of your strictures, Ms Nokes. This Bill is also pragmatic by providing time to adjust and by ensuring that saving into a pension remains hugely tax-advantaged. I say gently to Members who do not agree with the detail of this Bill that they should be careful not to give the impression to savers or those not saving that there is not already a strong financial incentive to continue pension saving in exactly the way people have been doing. Clause 1 provides for that pragmatic approach in Great Britain. Clause 2 does the same for Northern Ireland, and clause 3 provides for the territorial extent and start date of these measures.
I will turn more substantively to the amendments tabled by the shadow Minister and the hon. Member for Witney. At one level, I was glad to see amendments 5 and 6 tabled by the shadow Minister, which aim to exempt basic rate taxpayers. It shows the Opposition, as part of the secret plan that I mentioned earlier, accepting the inevitability of change and instead grappling with what the right pragmatic version of that looks like. In many ways, the amendments aim to deliver the same objective as the £2,000 cap, which, as I said, will mean that 95% of those earning less than £30,000 are unaffected, as are the vast majority of basic rate taxpayers.
Sir Ashley Fox (Bridgwater) (Con)
Can the Minister explain what is pragmatic about withdrawing a 2p in the pound tax relief from a higher rate taxpayer without a student loan, while withdrawing a 17p in the pound tax relief from a basic rate taxpayer who happens to have a student loan?
Torsten Bell
The pragmatic approach is to allow people to continue with salary sacrifice up to £2,000 and to not bring in the measure for four years, so that people have time to adjust. Opposition Members will need to justify wanting to spend more than is being spent on the Royal Air Force on that—I sat through Prime Minister’s questions today, and I heard people calling for more defence spending—while not being able to live up to what that requires, which is taking seriously that we spend tax reliefs effectively. For everybody, there will still be a strong tax incentive to save into their pension.
Taking the approach that the Opposition propose, rather than our proposed cap, would likely be impossible to implement in practice and add unnecessary complexity. That is not least because employers would in many cases not know which employees would end up being basic rate taxpayers. They certainly would not know for sure until the end of the financial year, or at least late on into it.
Amendments 7 and 8 would uprate the cap by inflation. The Government have set out our policy intent for a £2,000 cap to be introduced in April 2029, with the timing driven by the desire to give everyone time to adjust. In that context, it does not make sense to index that cap ahead of 2029. Our view is that the future level of the cap in the next decade and beyond is for Budgets in those decades—or at least significantly closer to them. I know that Members are keen to start debating the 2031 Budget, but having heard from Ms Nokes, I think we should leave that for another day.
Our approach is consistent with the one that this House has taken under Governments of all three main parties, which is to have key elements of the pension tax system that are not routinely indexed, including the annual allowance. It is of course right that this and all Governments will want to keep the cap under review to ensure that it continues to meet the objectives we have set out today.
Several of the new clauses probe at the impact of the changes. The Government have published a tax information and impact note alongside the Bill. It sets out the impact of the policy on the Exchequer, the economy and individuals and businesses. It also provides an overview of the equality impacts.
New clauses 1 and 2 focus on SMEs. I have heard suggestions—this has been gently hinted at today—that SMEs are more likely to be affected. The opposite is true. Only 39% of employers offer pension salary sacrifices, and small businesses are less likely to do so than larger businesses. Indeed, the status quo puts SMEs at a disadvantage relative to their larger competitors, which is the opposite of the point that the hon. Member for Witney wanted to make.
New clause 3 focuses on marginal tax rates, but the changes in the Bill do not directly affect a person’s marginal tax. Those wanting to make pension contributions to keep their taxable income below a certain level can continue to do so, and I have read much misleading commentary on that point.
New clause 4 proposes an impact assessment of the changes before they take effect and five years after. I again commend the hon. Member for Wyre Forest, who is showing admirable zeal for supporting the argument that I made on Second Reading that any responsible Government should keep the £500 billion of tax reliefs under review to ensure that they are delivering efficiently on their objectives. That is the exact thought pattern that identified this relief as needing reform. I look forward to the shadow Minister changing his mind and supporting our measures. The Government should and will continue to keep this and all taxes and tax reliefs under review, rather than singling this particular relief out via primary legislation.
I turn briefly to new clauses 5 and 6, which focus on the impact on pension savings. I can reassure the Committee that the Office for Budget Responsibility has set out that it does not expect any material impact on savings as a result of the Budget 2025 tax changes. I hope that these remarks reassure Members on the points that their amendments have raised. I commend the Bill to the Committee.
Question put, That the amendment be made.
Torsten Bell
I beg to move, That the Bill be now read the Third time.
The Bill amends the Social Security Contributions and Benefits Act 1992, creating a power to apply employer and employee national insurance contributions on salary sacrifice pension contributions above £2,000 a year from April 2029. Reform of this type, as I have said, was inevitable. The cost to the Exchequer of salary sacrifice pension schemes was due to almost treble by 2030 without reform. The Government are taking a pragmatic and balanced approach to that reform: first, by introducing a cap so that ordinary workers are, in the vast majority of cases, unaffected; secondly, by giving employers, employees and providers a long lead-in time, so that everybody has plenty of time to prepare; and thirdly, by ensuring that saving into a pension, including via salary sacrifice, remains hugely tax-advantageous. The Government continue to provide over £70 billion of income tax and national insurance relief on pension contributions each year. Employer pension contributions will remain the most tax-advantaged part of the system.
In this debate and others on pensions, we have heard strong cross-party consensus that greater pension adequacy is important. We all look at the forecasts for private pension income and see that they show lower private pension income on average for those retiring in 2050 relative to those retiring today. That is not an acceptable place to be. Answering that question is the job of the Pensions Commission, which we have put in place with cross-party support. It is rightly examining the question of retirement income adequacy and fairness. I gently note that those groups that we all agree are under-saving for retirement, such as low earners and the self-employed, are precluded from using salary sacrifice or are much less likely to use it than other groups.
Part of what we are doing through the Bill is delivering badly needed reforms to the tax system alongside other measures from the Budget. These measures are what it takes to keep waiting lists falling, cut borrowing and cut energy bills in the years ahead. Those who do not wish to support changes like these cannot have it both ways and call for additional spending, additional support on energy bills and the rest.
More generally, it is important that we all consider the effectiveness of tax reliefs in the system, which cost a cumulative £500 billion a year. If we defend the status quo, even in the face of tax reliefs, which are hard to justify and whose costs are rising significantly, that means that higher taxes for everybody else. We are not prepared to see that happen.
Indeed, I am sure that in their hearts the Opposition parties also believe that these reforms are necessary. As a test of that, I invite the shadow Minister to stand up and commit to reversing the changes if—though it is very unlikely—the Conservatives ever happen to form a Government again. I am 100% sure that he will not do that, because he knows that these changes need to be made. On the basis of what should be cross-party support, I commend the Bill to the House.
Work and Pensions
Torsten Bell Excerpts(2 months, 1 week ago)
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Torsten Bell
Government amendments 55 to 86 relate to clauses 100 and 107 of the Bill, on the validity of certain alterations to salary-related contracted-out pension schemes—more often referred to as the Virgin Media case.
[Official Report, 3 December 2025; Vol. 776, c. 1042.]
Written correction submitted by the Under-Secretary of State for Work and Pensions, the hon. Member for Swansea West (Torsten Bell):
Torsten Bell
Government amendments 55 to 86 relate to clauses 100 to 107 of the Bill, on the validity of certain alterations to salary-related contracted-out pension schemes—more often referred to as the Virgin Media case.
Torsten Bell
The Budget last week confirmed the transfer of the full £2.5 billion-worth of reserves.
[Official Report, 3 December 2025; Vol. 776, c. 1042.]
Written correction submitted by the Under-Secretary of State for Work and Pensions, the hon. Member for Swansea West (Torsten Bell):
Torsten Bell
The Budget last week confirmed the transfer of the full £2.3 billion-worth of reserves.
Torsten Bell
The hon. Member for Caerfyrddin (Ann Davies) asked how many people will benefit from the change to the PPF indexation and how many will not benefit. The answer is that 250,000 members will benefit and 90,000 will not benefit, because their schemes did not provide for indexation in the scheme rules in the first place. I hope that answers the question she raised.
[Official Report, 3 December 2025; Vol. 776, c. 1081.]
Written correction submitted by the Under-Secretary of State for Work and Pensions, the hon. Member for Swansea West (Torsten Bell):
Torsten Bell
The hon. Member for Caerfyrddin (Ann Davies) asked how many people will benefit from the change to the PPF indexation and how many will not benefit. The answer is that over 250,000 members will benefit and up to 90,000 may not benefit, because their schemes did not provide for indexation in the scheme rules in the first place. I hope that answers the question she raised.