Cost of Living: Pensioners

Wendy Chamberlain Excerpts

Tuesday 16th January 2024 Commons Chamber

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

There are 2 million older people living in poverty—that is one in six—and another million are sitting just above the poverty line silently struggling to make ends meet. Together, a quarter of older people are in or at risk of being in poverty. In recent years, the phrase “heating or eating” has become shorthand for the cost of living crisis. It rhymes, and it is easy to say, but it is the reality facing too many of our pensioners. Age UK research found that 4.2 million people cut back on food or groceries last year, while a survey by this House’s Petitions Committee of those engaging in petitions on pension levels found that three quarters were worried about affording food.

Health statistics always worsen in the cold winter months, with mortality rising in all parts of the UK last year compared with previously. As we face an even colder winter —in my constituency we often reach minus temperatures overnight—there are real consequences when older people cannot afford to properly heat their homes. The reality is that heating or eating is not a catchphrase, but a decision about survival. It is our duty as policy makers in this place to ask why that is a reality for so many of our older people and to find solutions.

I welcomed the Government’s eventual decision to keep the triple lock this year, but the lack of clarity and uncertainty about that decision appeared to be electorally motivated, and I argue it caused a great deal of anxiety for many older constituents.

[Richard Foord (Tiverton and Honiton) (LD)]

My hon. Friend is talking about the triple lock on pensions. I have heard it said in this House in recent months that the triple lock on pensions was a Conservative proposal, so I went to the Library to find out whether that was true. The 2010 Conservative manifesto talks about

“restoring the link between the basic state pension and average earnings”,

while the 2010 Liberal Democrat manifesto states:

“We will uprate the state pension annually by whichever is the higher of growth in earnings, growth in prices or 2.5 per cent.”

Does she agree with me that the triple lock was a Lib Dem proposal?

[Wendy Chamberlain]

I regularly meet Steve Webb, the former Lib Dem Pensions Minister from the coalition, and I know how hard he worked when in government on this policy, so I entirely agree with my hon. Friend and thank him for his intervention.

The triple lock is of no use to anyone if the Government cannot get their systems working to pay people what they are due. Repeatedly last year we learned of pensioners nearing or reaching pension age trying to top up their national insurance records and seeing their money disappear without a trace. It would appear again some weeks later, but often only after chasing by an MP, an adviser or due to media coverage. That was not just in one or two cases; what became apparent were systemic problems of jammed helplines and hundreds upon hundreds of people losing track of their savings as they paid them over to the Government. Will the Minister tell us what he is doing to resource properly the Future Pension Centre?

[Christine Jardine (Edinburgh West) (LD)]

My hon. Friend is making a strong point and an excellent speech. On savings and topping up national insurance, we hear that about two thirds of those over 64 are dipping into their savings just to keep going. They are cutting down on food, and eating less healthily. Apart from the cruelty shown to pensioners by forcing them into that position, are the Government not short-sighted in not seeing the implications of treating our pensioners so badly for the NHS, the welfare system and social care?

[Wendy Chamberlain]

I think it is reflected across a number of policy areas that we should look in all our services at sufficiency of income, allowing people to live with dignity and respect and knowing that they can cover the essentials, and for pensioners as well as for other age groups.

[Jim Shannon (Strangford) (DUP)]

Further to that point, will the hon. Lady give way?

[Wendy Chamberlain]

I give way to the hon. Member—it is not an Adjournment debate without him.

[Jim Shannon]

I congratulate the hon. Lady, who always brings to the House and Westminster Hall bread-and-butter issues that I support. I am glad to come along and give my support to her tonight. The price of electricity in Northern Ireland is rising by 20%, but pensions are rising by only 8.5%. With similar increases in the cost of meat and veg, it is clear that those comfortable on their pension in 2020 will be substantially less comfortable now. Does she not agree that an investigation into energy prices must take place as people feel that they are being gouged every time they put on their light or gas and feel the pain of prioritising one necessity over another?

[Wendy Chamberlain]

I am grateful to the hon. Member. I agree that many people feel they are being held hostage by the vagaries of energy prices and systems. Although the cap and other measures have gone some way to helping with that, there is no doubt that it is a huge challenge. It also demonstrates why the triple lock remains required.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

While we are on energy prices, I am acutely aware that, as we speak, pensioners in my constituency are having to brave serious snow conditions and, because we have the highest level of fuel poverty anywhere in the country, they will feel literally and metaphorically out in the cold. Does my hon. Friend agree that Ofgem has a role to play in the creation of a social tariff, or even a geographically-based tariff?

[Wendy Chamberlain]

One challenge in my right hon. Friend’s constituency is the number of his constituents who are off grid. We know that there is a lack of regulation in the sector off grid. One other challenge for the Government in responding to energy price fluctuations was getting a lot of money out to many people easily, and administrative issues materialised for those off grid. Many of them have still not seen the money to which they are entitled. We need to look at better regulation of our energy system.

I was talking about the Future Pension Centre and the challenges experienced by many constituents across the UK in topping up their pensions. I tabled a presentation Bill on the issue to extend the deadline and was glad that the Government took that up. In responding, will the Minister tell us what discussions he is having with His Majesty’s Revenue and Customs about making its systems align and function properly? If those systems were working as they should, many constituents would not have a gap to fill in the first instance. Will he consider implementing a proper receipting system so that older people have proof of payment as they do with any other transaction?

We know that errors by the Department for Work and Pensions are all too commonplace; we need only to look at the experience of the WASPI women—the Women Against State Pension Inequality—to see that. Those women, through no fault of their own, lost their ability to plan for their retirements. They lost their financial autonomy. Many of them continue to live in poverty, while others have sadly died without seeing any compensation.

I know that we are all awaiting the final report of the ombudsman setting out its recommendations for compensation for the WASPI women, but in the meantime will the Minister agree to meet me to discuss the next steps? He and I worked successfully together on the all-party parliamentary group on ending the need for food banks before he took on his current role, and I hope that we can do so again.

I return to pension income and want to raise pension credit with the Minister. This top-up benefit is the simplest tool at the Government’s disposal to lift pensioners out of poverty. It feels like every year we have a new attempt at increasing uptake with a fancy leaflet or other information campaign. I am sure we all go to the drop-ins, have our pictures taken and share them with our constituents, but pension credit take-up remains stuck at 63%, which suggests that the campaigns simply are not working. Pensioners either do not know about the benefit or do not realise they are eligible, or some struggle with the stigma of being seen to claim it.

I have been in this role for more than three years, and I have spent a lot of time having conversations about how to improve uptake. Clearly, an annual leaflet is not doing the trick. We need a long-term strategy on pension credit uptake with two key focuses: how we share data to identify people eligible for pension benefit, and how we target them efficiently and effectively so that they actually claim it and do not feel stigmatised?

[Jim Shannon]

The hon. Lady makes a critical point. When I talk to pensioners in my constituency, I always ask what benefits they are on. I always mention carer’s allowance if they do not receive disability living allowance, and I always mention pension credit. In many cases, they are not on it. How do we make a better system? I suggest, with great respect, that maybe the Department needs to physically go to those people and introduce it to them. Many people are proud, independent and do not want to take it up because they think they should not, but they should. They worked hard all their days and paid their tax and national insurance, and it is time for payback.

--- Later in debate ---

[Wendy Chamberlain]

Stigma is definitely a part of it, but some think they do not qualify as they have a sufficiency of income that would result in their being rejected. I always say to them that even if it is only 50p, it is worth doing because of the passporting benefits. We have seen this challenge around child benefit. Having not seen an increase in the thresholds, we are in a ludicrous situation where if a single earner earns over £60,000, the household is not entitled to it. The challenge is that if the non-earning parent does not apply, they do not get their national insurance contributions for their pension. Why would people apply for something that they do not think they are entitled to? We must do more to make it easier for people to get what they are entitled to. They do not want to end up 20 years down the line finding out that they do not have full pension contributions, because we know that topping it up is quite challenging, as I have talked about.

Going back to pension credit, perhaps once the Minister’s Department has published the results of last summer’s trials of targeting recipients of housing benefit, he could give us an update on the outcome of the trial to see whether that might work for pension credit, and what lessons can be learned. Missing out on pension credit has serious implications beyond the credit itself. As I mentioned, it is the main passporting benefit for older people for cost of living payments. While we focus on a long-term strategy for pension credit, will the Minister consider extending entitlement to those payments to older people in receipt of housing benefit and council tax reduction, for example? I suspect that if they are eligible for those things, they are probably eligible for pension credit.

Before I move on to long-term strategies to tackle pension poverty, I want to raise one more benefit-related point. This is not strictly in his portfolio, but will the Minister commit to providing the House with an update on the future of the household support fund? I know from English colleagues that there is significant distress at the prospect of its not being renewed in March.

I dispute the claim of the Minister’s colleague, the Minister for Disabled People, Health and Work, the hon. Member for Mid Sussex (Mims Davies), in a written response to me yesterday, that pensioner poverty is falling. It is not. The claim was based on statistics before housing costs, which is distinctly disingenuous. Increasingly, pensioners face high housing costs, as more continue to rent privately into older age. Twice as many rent now than a decade ago—a trend set to continue as it is harder for young people to get on to the housing ladder.

We must tackle the poverty immediately in front of us, but we must look at long-term drivers of poverty among pensioners and stop this trend in its tracks. There are two parts to that: ensuring that people enter retirement sufficiently equipped, and ensuring that no one falls into poverty after ending their working life. Ultimately, our experience during our working life determines what happens to us when we retire. If someone has to take time out of work or only works part-time because of ill health, child rearing or caring, they will be substantially worse off in retirement. Those last two reasons are incredibly gendered, with women more likely to miss out on savings for their retirement.

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

It was right earlier to highlight the benefits of the coalition Government introducing the triple lock, which this year will mean an uptick of between £650 and £1,000 for pensioners. The coalition Government also introduced mandatory pension contributions and pension pots from employers. Does hon. Lady not think that that is the sort of long-term planning that will make a difference to help this generation to be in a better place financially when they retire?

[Wendy Chamberlain]

I assume the hon. Gentleman is referring to automatic enrolment; if he waits, I will mention that. I will not let it go amiss.

Returning briefly to the gender pay gap, the Government’s own research puts the gender pensions gap at 35%. I would argue that we could call it the caring gender gap, because life is arguably more complicated for retirees with caring responsibilities. I am not just thinking about older couples who increasingly rely on each other as their health starts to deteriorate, but people who move into retirement while carrying on caring for their adult children or for other family members.

Constituents have written to me to protest about the injustice of having lost out on the opportunity to build up retirement savings and now, moving into pension age, losing their carers allowance but still continuing to provide unpaid care to their loved ones while others in their cohort settle into a more comfortable retirement. I would like to see a comprehensive plan from the Government, across Departments, to tackle that unfairness. Are there ways of bringing unpaid carers into auto-enrolment through a credit scheme? Could we increase the employer contribution to auto-enrolment to help to build the savings of those in low-paid work? How can we encourage more carers back into the workplace?

I was proud to pass the Carer’s Leave Act 2023, but that is not enough. We need policies on issues such as staying-in-touch days and we need a carer’s allowance that incentivises work. I look forward to meeting a colleague of the Minister on just that. There is definitely an education piece here. Auto-enrolment was an incredible policy, but it also means that people do not really think about their pensions. The Money and Pensions Service estimates that 22 million people say they do not know enough to plan for their retirement, while Department for Work and Pensions research last year found that attitudes to pensions are

“characterised by detachment, fear and complacency”.

I think that those views would be represented in this place, too, when I think about the different things I did before I came to this place and the different pension pots I have.

I understand that planning for retirement is difficult and complicated unless you are an actuary or a financial specialist. I can hear the response of my teenage children if I try to bring it up at home or see the eyes glaze over on the doorstep, but people do care about the result of not engaging. My challenge for the Minister is to bridge that gap and change our culture so that people knowing about their pension is normal, and not scary but a standard part of people’s financial planning and education.

I am interested to hear the Minister’s ideas, but I will put to him just one that keeps coming up when I speak with experts and stakeholders. Will he consider a trial to test the impact of automatically booking savers for pensions guidance appointments when they turn 50? Let us try to make it easy, because lots of things can happen in retirement: your health can change, you could be bereaved or divorced, you could become a carer. The economy could be crashed, causing a sustained cost of living crisis. To try to understand drivers of poverty among older people, Independent Age followed the outcomes for a cohort of pensioners who entered state pension age above the poverty line. Within 10 years almost half had fallen into poverty. Something else is clearly happening that we need to understand. I have talked about a lot of different moving parts in the overall pension and poverty landscape, but what we need—what older people need—is a comprehensive plan.

I will end by asking the Minister this: will he consider a cross-Government review of what support an older person needs to stay out of poverty? Will he bring Westminster up to the standards of other nations and support a Westminster commissioner for older people and ageing? I would like to get something done and I am sure that the Minister would too. I look forward to hearing his response.