Cost of Living Increases: Pensioners

Wendy Chamberlain Excerpts

Monday 21st March 2022 Commons Chamber

[Jonathan Ashworth]

Yes, I do. My right hon. Friend, who was a first-class Pensions Minister and Chief Secretary to the Treasury, will remember being at the Government Dispatch Box when shadow Secretaries of State for Work and Pensions from the Tory party criticised pension credit and opposed the minimum income guarantee, saying that it was an extension of means-testing and undermined the universal basic state pension. Now, today, they are using pension credit to justify a £388 real-terms cut in the value of the basic state pension. I hope that the very sensible recommendation by my right hon. Friend, the Chair of the Work and Pensions Committee, is taken up by the Secretary of State, and that she responds to him when she speaks.

Of course, Ministers should be moving heaven and earth to drive up take-up, but the Pensions Minister revealed earlier this afternoon that, instead, we have a letter writing campaign. Writing to local newspapers—that is his plan to drive up uptake of pension credit. When pensioners cannot afford their heating bills and cannot afford to eat—when pensioners cannot afford the basic necessities of life—rather than taking action, all he does is write to local newspapers. What is he doing? Is he expecting pensioners to burn the papers to keep themselves warm? I am told he has written to the Leicester Mercury. Well, I have been looking at his local paper, the Hexham Courant. I cannot actually see his letter in it, but I can see that it is warning that

“Thousands in the North East to miss out on automatic £150 rebate…MORE than 320,000 households across the North-East will not automatically receive a £150 council tax rebate…and 40,000 in Northumberland”.

Many of them will be pensioners. May I suggest that he sorts out his own backyard before gracing the pages of my paper, the Leicester Mercury?

There is one other area where I think the Minister needs to show greater urgency in supporting the United Kingdom’s pensioners and I would be grateful if the Secretary of State responded in detail to the points I have made. She will know that the underpayment of the basic state pension to around 135,000 pensioners, the vast majority of whom are women, has been a scandal. I pay tribute to the former Liberal Democrat Pensions Minister, Sir Steve Webb, the Chair of the Work and Pensions Committee, my right hon. Friend the Member for East Ham (Stephen Timms) and the Chair of the Public Accounts Committee, my hon. Friend the Member for Hackney South and Shoreditch (Dame Meg Hillier), who have all shone a light on that.

The Department has allocated £1 billion and estimates that approximately 118,000 pensioners will be traced and could receive around £8,900 by the time the payments are made. So far, so good. But the last time Ministers provided updated figures, in autumn, they had paid out just £60 million to just under 10,000 people, so £900 million is outstanding. When we are in a cost of living crisis, should not the Department be showing greater urgency? When will the other £900 million be paid? The Secretary of State will know that there are stories of the DWP helpline giving inaccurate information and false assurances, forcing pensioners to keep living on less. There is no information available as far as I can see on how lump sums will impact on capital limits and the consequent impact on other entitlements, such as to social care. Divorced women have been excluded from the whole exercise on the basis that it does not think there are enough errors to be worth doing, even though there are cases of divorced women where errors have been made and it has had to pay out thousands in back payments.

[Wendy Chamberlain (North East Fife) (LD)]

Two weeks ago, during my absence with covid, a private Member’s Bill was presented which called specifically for divorced women to no longer be excluded and receive more than an apology. Will the shadow Secretary of State indicate whether he would support that Bill?

[Jonathan Ashworth]

Without having read the details, it sounds like a very sensible Bill. I look forward to reading the details. At first sight, it certainly has my strong encouragement.

--- Later in debate ---

[Wendy Chamberlain (North East Fife) (LD)]

That is very kind of you, Mr Deputy Speaker.

Before Christmas, a constituent reached out to me to tell me about his mother. She had recently died, and when dealing with her affairs, he was distraught to discover that she had died with no money in the bank and with unpaid bills stacking up. She had worked hard, paid into the system and raised her family, and what she was left with was not enough. Of course, there was nothing I could do for his mother, though he was obviously extremely distraught to think that she had experienced that anxiety in the latter days of her life, but he wanted me to be aware of the cost pressures that pensioners face and to do what I could to stop older people ending up in the same position.

We know that my constituent’s mother is far from the only pensioner to have had to live in poverty and make the choice between heating or eating. That sounds like a cliché, but I am the co-chair of the all-party parliamentary group on ending the need for food banks, and we hear in our inquiry sessions of people going without. They do not have the patience or the time to wait for the Chancellor’s statement. For many, the Government’s recent actions have pushed them over the edge, with the real-terms cut to the state pension by abandoning the triple lock and the failure to respond to the cost of living crisis.

In her opening remarks, the Secretary of State said two things. She said that the triple lock had been paused because the pandemic had caused an unexpected, unplanned or out-of-the-ordinary increase in inflation, but that the cost of living crisis was due to multiple factors. Can we just accept that covid is one of multiple factors that has caused the cost of living crisis?

I have always said that the state pension is not just about pensioners now; it is about people in the future. Young people who cannot get on to the property ladder, cannot get a mortgage or are in insecure employment need to know that there is a state pension for them in the future that will support them. This evening, I was at the Gingerbread single-parent family reception downstairs, and it was pointed out to me that many single parents do not qualify for auto-enrolment because they do not earn enough. That is another reason why it is even more important that the state pension is viable if private pensions are not going to be there to support people in the future.

Research by Independent Age has shown that, in 2018-19, only 60% of those entitled to pension credit were receiving it. If those extra 40% of people were reached, 440,000 pensioners would be lifted out of poverty, as others have mentioned. I was pleased that a recent DWP response to a written question of mine said that it was currently estimating that there had been a 30% increase in new claims in 2021 compared with 2020, or approximately 31,000 new claims. However, that figure does not tell us if any of those claims come from pensioners in older age groups who were already missing out on pension credit, or if they are from people newly reaching pension age. We know that there are 80,000 more people reaching pension age each year than the year before, so a figure of 31,000 could just mean that 49,000 are not receiving it when they are entitled to do so. There does not seem to be targeted awareness-raising. We have agreed across this House that we must do as much as possible to ensure that those who qualify for pension credit get it. I want to understand what the Department for Work and Pensions can do to upgrade its systems and identify those who might be eligible or potentially assess broad geographical areas where there are low take-up rates. What is it doing to ensure its messaging is reaching those it needs to reach, and is it conducting any critical analysis?

We know some groups are especially likely to be in poverty in later life and that is linked to underpayment of pensions. My friend and former colleague the former Liberal Democrats pensions Minister Steve Webb has been mentioned this evening and I am grateful to him for his work around that. However, as has been mentioned this evening, divorced women are explicitly being excluded from the LEAP—legal entitlements and administrative practice—exercise. Dealing with pensions on divorce is incredibly complicated—such as the allocation of one person’s potential future pension rights to another’s. It is hard to understand why the Department thinks there can have been no error in the payment of pensions under these complicated arrangements considering some of the basic errors made in other areas. My hon. Friend the Member for Chesham and Amersham (Sarah Green) presented a private Member’s Bill on my behalf just two weeks ago while I was off with covid; it would include divorced women in this exercise. I ask the Minister to consider supporting my Bill, or to set out either this evening or in the fiscal statement why he will not do so.

Bills are increasing dramatically now. It has taken 35 years for underpayments of some state pensions to be identified, but pensioners on the poverty line cannot wait that long. The Government must now act to address this crisis both historically in terms of their own failings and given the current cost of living crisis.