Social Security (Up-rating of Benefits) Bill — House of Lords, 2021-11-02
Topic: Social Welfare
Rosalind Altmann (Conservative, Centre-right): My Lords, I rise to speak to Amendments 1 and 7 in my name and those of cross-party Peers—the noble Baronesses, Lady Wheatcroft and Lady Janke, and the noble Lord, Lord Hain—to whom I am extremely grateful for their support, and also to support Amendment 5. I declare my interest as set out in the register, and I am honoured to speak in this debate in your Lordships’ House. This Bill will affect every pensioner in the UK, but in speaking to Amendments 1 and 7, I am focusing on what sometimes seems like an underclass in British society: the poorest pensioners. Amendment 1 seeks to exclude from this Bill the application of its measures to the pension credit minimum income guarantee. This is what the poorest pensioners in our land rely upon. It is a means-tested benefit, and it is not a king’s ransom. We are talking about £177.10 a week Pensioner poverty was already rising even before the pandemic. It is a myth that pensioners are all well off. The charity Independent Age, and figures from Age UK, show that pensioner poverty remains a significant social issue, too often skirted over by commentators. Already, more than half of single pensioners, mostly women, live in fuel poverty, while 13% of older households live in extreme fuel poverty. Those numbers will undoubtedly grow if the Bill is passed without amendment, especially as rising energy costs are hitting so many with massive increases in their bills. Official figures show that one-quarter of pensioners were in poverty in 2002, when pension credit was introduced. That proportion fell significantly thereafter, reaching a low of around 13%, but it has been rising in recent years to 16% in 2018 and 18% in 2019, even before the impact of the pandemic and the measures we are debating today Pension credit has never been covered by the triple lock. It has always had only earnings uprating in legislation. The Bill removes that as well. Pension credit has helped alleviate pensioner poverty, but the benefits are being unwound. Partly, this is because the take-up of pension credit has been stuck at a very low level. Forty percent of those entitled are generally too proud to claim, and try to make ends meet without having to go through a means-tested claim. But the Bill sweeps away vital earnings protection, replacing it with just a 3.1% figure, which reflects the consumer prices index that was reported for September this year, and which is actually an artificially low figure. The Budget confirmed that inflation is rising, with 4%-plus expected and the Chancellor warning of higher figures. The OBR suggests that inflation is likely to rise to 4.4% and could be significantly higher Amendment 1 will exclude the pension credit from the Bill and retain its earnings protection. I am not planning to divide the House on this amendment, but I may return to this issue on Amendment 7 if Amendments 3 and 4 are not accepted. Amendment 7 permits the Government to adjust the measure of earnings used to uprate the pension credit to allow for what I certainly agree, and I think most commentators would as well, are the exceptional factors that distorted the number released for average weekly earnings, which was the traditional figure used of 8.1% This measure is the biggest spending reduction or cost saving in the Budget. The Treasury will save £5.4 billion in 2022-23, £5.8 billion the year after, £6.1 billion the year after that, and so on. This is money that is being taken away from pensioners. Too often, Chancellors have eyed state pensions or pensioners as a tempting target to raid when they need to find large sums of money. This is about large numbers of people, but for each person, we are not talking about large sums However, this should not be about money. It is about people and the social welfare system. It is about trust in politicians and in our social welfare system as a whole. It is about millions of people who are often out of sight but struggling in 21st century Britain on the lowest state pension in the developed world. The pension credit level, which is lower than the new state pension, has not yet recovered to the level that the basic state pension sat at in 1979, when the earnings link was first removed. That started the whittling away of pensioner incomes and the rise in pensioner poverty What does it say about our country if the elderly are used to help fund Budget reductions in alcohol duty and bank taxation? Amendment 1 is about important protections for the poorest pensioners. I will return with more details on a wider level with Amendment 3, which deals with the breaking of a manifesto commitment. I also urge noble Lords to listen to this debate and to think very carefully about what this House is for. The other place dealt with these issues in two and a half hours, with very little debate. It was presented as a fait accompli. In truth, the other place was slightly misled. On 20 September, when this Bill was placed before them, MPs were given this assurance: "This Bill will ensure that a temporary statistical anomaly in wages does not unfairly track across into pensions, while also preserving the spending power of pensioners and protecting them from increases in the cost of living."—[Official Report, Commons, 20/9/21; col. 62.] Perhaps that was almost believable in September, but since then, with the sharp rises in the costs of essentials and the statements in the Budget which confirm that 3.1% CPI is an exceptionally low figure, it is no longer an appropriate basis on which to vote this through There is also an argument being used that the Government cannot use the earnings figure of around 8% because it is too high and is distorted by the pandemic. Apparently, there is no robustly agreed methodology to adjust that figure for the pandemic. It strains credulity that, with the legions of statisticians and actuaries at the Government’s disposal, it is not possible to produce a reliable, adjusted figure that accounts for the pandemic. However, if that is indeed the case, the OBR and the ONS helpfully have produced their own statistics which could perhaps be used as the basis of such a re-estimation of average earnings Amendment 7 explicitly permits the Government to use an adjusted figure for 2022-23. It is put in place to meet the objections that apparently there was concern that the Government could be legally challenged should they use an adjusted figure. This measure in Amendment 7 would ensure that unless a figure was used that is entirely irrational, such a judicial review is unlikely to proceed I hope that we will have a good debate on these measures and can send them back to the other place for reconsideration on the basis of much fuller and more accurate information. I beg to move.