Social Security (Up-rating of Benefits) Bill — House of Commons, 2020-10-01
Topic: Labor
Wendy Anne Chamberlain (Liberal Democrats, Centre to centre-left): The Secretary of State and other Members have outlined that state pensions rise each year under the triple lock mechanism, which was introduced by the coalition Government and ensures an increase of whichever is the highest of earnings growth, price inflation or 2.5%. As there is expected to be no average growth in earnings between May and July 2019 and May and July 2020, due to the pandemic, the Government have brought forward this welcome Bill to allow a rise to take place. It also allows for an increase in pension credits. However, the Bill does not state a specific rise in the pension; it simply allows the Government to raise it The Liberal Democrats welcome provisions in the Bill that mean all retirees— especially the very poorest, who are claiming pension credits—will see a rise in their benefits. The Government have said that they intend to ensure that the triple lock on the state pension is maintained, but as I said, there is no mention of a specific level of increase in the Bill. It is slightly worrying that the Bill gives the Government the power to raise the state pension but fails to say by how much. If the Government were to raise the state pension by less than 2.5%, they would not be maintaining the triple lock as they have pledged to do. I hope the Minister can explain why there is no such provision in the Bill and commit the Government to at least a 2.5% increase, in line with the triple lock It is fair to say that concerns may be expressed about the Bill in relation to intergenerational fairness. Things have been very difficult for young people, whether as a result of issues with exams, what they are now experiencing at university or for those looking to enter the job market. Pensions expert Ian Browne has stated: "There is a danger that guaranteeing a 2.5 per cent boost to the state pension is perceived to be intergenerationally unfair, given it will provide a considerable boost to pensioners’ income when many others are taking a cut in their pay, working less hours or have lost their jobs altogether." The Liberal Democrats support the triple lock on pensions, and I hope the Government do not intend to abandon it. I acknowledge the concerns but would argue that guaranteeing a strong state pension is becoming increasingly critical. It is clear that many working-age people—especially younger people—are not, and are simply unable to be, saving enough for their retirement, and final salary pension schemes are largely a thing of the past. That means that the state pension will become an increasingly important source of retirement income. We tend to think of pensions as supporting older people, but if we were to abandon the triple lock and give smaller and smaller increases over the next few decades, that would erode the retirement income of those who are only just beginning to enter the workplace. I hope the Minister agrees that maintaining the triple lock is imperative for ensuring that the next generation of retirees enjoy a comfortable income Another reason why the triple lock is welcome is the position of many older women. Many women rely more on the state pension than men do for their retirement income, as women have traditionally found it harder to build up a private pension due to taking a career break to raise children or to care for relatives. Raising the state pension is therefore critical for many women who rely on it and pension credit for the bulk of their income As the shadow Secretary of State, the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), said, although it is not addressed in the Bill, there is a risk that the Government will have to scrap the triple lock next year due to an artificial rise in wages. In normal times, the state pension could be expected to increase by about 3% to 4%, and by a minimum of 2.5%, as per the triple lock rules. Given the disruption caused by the pandemic this year, it is highly unlikely that this increase will be far higher, for reasons outlined by other Members. People have lost their jobs in lockdown and been furloughed. As the lockdown lifts, furlough ends, and as the economy recovers, average wage growth will jump significantly. That will show up in the statistics as a massive wage rise, which would mean that the state pension shoots up too. I hope the Minister will give some indication of the Department’s plan for this largely predictable situation In short, this Bill is largely uncontroversial and to be welcomed, but there are clearly issues ahead. Although it is clearly an expedited Bill that the Government are looking to pass quickly for the next year only, it remains the case that many will not benefit from the uprating being agreed today—for example, overseas pensioners whose pensions have previously been frozen. I note that the hon. Member for Glasgow South West (Chris Stephens) intends to raise those issues in Committee. The pandemic has had a devastating impact on the elderly and most vulnerable in our society. Providing a degree of financial security is vital, but our approach to pensions must also be considered in respect of future generations and addressing historical inequalities.