Marsha De Cordova (Battersea) (Lab) I beg to move, That this House
has considered e-petition 617603, relating to the state pension. It
is a pleasure to serve under your chairmanship, Sir Robert. I thank
the hon. Member for Glasgow East (David Linden) for his point of
order. I start by congratulating Michael Thompson on creating the
petition, as well as the creators of the six other petitions being
debated today. I thank Age UK and Silver Voices for their...Request free trial
(Battersea) (Lab)
I beg to move,
That this House has considered e-petition 617603, relating to the
state pension.
It is a pleasure to serve under your chairmanship, Sir Robert. I
thank the hon. Member for Glasgow East () for his point of order.
I start by congratulating Michael Thompson on creating the
petition, as well as the creators of the six other petitions
being debated today. I thank Age UK and Silver Voices for their
briefings, and the whole of the Petitions Committee team for all
their hard work. The petition calls on the Government to increase
the state pension to £380 a week, and to lower the retirement age
back to 60. The petition has already been signed by more than
110,000 people.
The current full state pension is £185.15 per week, and the basic
state pension is £141.85. Many of us are here today because we
believe that the state pension should provide adequate financial
support for the 12 million pensioners in the UK, ensuring that
they are protected in old age after paying into the system. Given
this country’s wealth, we can afford to look after our
pensioners. By increasing the state pension or introducing a
minimum pension income guarantee, we could lift thousands of
pensioners out of poverty.
While financial support is vital, the issue is not just about
money. Measures to address pensioner poverty must include a broad
range of actions to underwrite acceptable living standards,
including support for our wider public services, such as social
care to support our pensioners to live independently, and day
centres to reduce loneliness and social isolation. On that point,
I thank Age UK Wandsworth in my Battersea constituency. I visited
last week and met many of the older people who value the services
provided by that day centre, but they really want more access to
it, more often. More importantly, all of them wanted the state
pension to increase.
Poverty and inequality among pensioners are rising, with more
than 2 million people in relative poverty. There are many reasons
why some are falling into poverty. The first and most urgent is
the cost of living crisis. Research by the Centre for Ageing
Better found that a further 200,000 elderly people have already
been pushed into poverty in the last year, and a recent report by
Age UK found that this Christmas will be among the most difficult
ever for nearly 3 million older people.
The measly 3% rise in the state pension this financial year was
dwarfed by inflation and the intersecting impacts of rocketing
food, fuel and energy bills, with the latter alone forecast to
rise to £3,000 by next April. After shamefully reneging on their
manifesto commitment on the triple lock last year, the Government
finally committed to its reinstatement, as well as a cost of
living payment for pensioners, in last month’s autumn statement.
However, given that neither measure is scheduled to come into
force until next year, they will be too little, too late for many
who need the support right now. The misery is compounded by cuts
to public services and the Government’s U-turn on their social
care reforms: 10% of older people will reduce or stop their care
in the coming months because of the cost of living crisis.
These causes of poverty only add to the challenges faced by
pensioners. Although older people have a higher rate of home
ownership than the general population, many are asset rich but
cash poor. That means that some are driven to sell their homes to
make up for shortfalls in pensions and are pushed into the
higher-cost private rented sector.
Inequalities in state pension rates are also dragging the elderly
into poverty. Department for Work and Pensions statistics for the
2020 financial year show that less than 10% of all pensioners
received the full new top rate of pension—£185.15—and less than a
third of those on the old pension receive the full rate.
The rise in the eligibility age for the state pension from 65 to
66 from 2018 has also increased hardship. According to the
Institute for Fiscal Studies, more than 700,000 65-year-olds have
missed out on entitlements and postponed retirement. The elderly
are compelled to remain in the job market, and they
simultaneously lack opportunities to increase their income. The
Government need to consider targeted support for people who are
much older as endemic age discrimination in employment affects
their ability to build a work pension or find work to complement
their state pension.
The third factor is the pension credit system, which can play an
important part in helping to close the pensioner poverty gap,
especially for women, disabled people and black, Asian and ethnic
minority pensioners. Since Labour introduced the measure, its
efficacy has been undermined by low take-up. In its July report,
the Work and Pensions Committee stated that
“an estimated further 850,000 eligible households are not
claiming Pension Credit worth £1.7 billion a year.”
It strongly recommended that the Government improve the
identification of eligible people, streamline the application
process and make it more accessible.
The risk of pensioner poverty is amplified for women, disabled
people and black, Asian and ethnic minority pensioner groups.
Women disproportionately experience later-life poverty, with the
proportion of those suffering rising from 14% to 20% in the
eight-year period from 2013. The equivalent figures for men were
12% and 18%. Those figures are expressions of the wider
inequalities endured by women. The Women Against State Pension
Inequality Campaign highlights a particularly egregious instance
of those disparities. The Government have a legal and moral
obligation to deliver for the many WASPI women in our
constituencies. Pensions, lifetime earnings and national
insurance contributions are typically lower for women due to the
gender pay gap and caring responsibilities—we are all aware of
those factors.
For black, Asian and ethnic minority pensioners, the inequalities
are even starker. According to Age UK, 33% of Asian and 30% of
black pensioners are in poverty—double the proportion of their
white counterparts. Similarly to those faced by women, these
inequalities are the expression of lower average wages and labour
market discrimination, which translate to less generous state
pensions. That has often led to some ethnic minority people
earning below the minimum salary threshold for auto-enrolment in
workplace pensions. Lowering that threshold would be an easy fix
for this injustice; according to a report by The People’s Pension it
would double the enrolment of ethnic minority employees.
Employment and pay disparities also create later-life poverty for
disabled pensioners, who are less likely to possess a work
pension or a private pension as a result. We know that those
effects will be exacerbated by higher living costs of around £600
per month on average for disabled people, including older
disabled people.
All that shows emphatically that some pensioners are really
struggling. The Government need to look at how they can support
them. I hope that the Minister will address the issues I have
raised, as well as making reference to the following points.
First, the Government talk a lot about tackling pensioner
poverty. If they are serious about doing so, why will they not
commit to increasing the state pension, or introducing a minimum
pension income guarantee for everybody, irrespective of their
contribution record, their sex and gender, their age or their
marital status?
In the current crisis, the additional cost of living payments
announced in last month’s autumn statement clearly will not be
enough for some pensioners. Will the Government therefore
introduce additional financial support targeted at those
pensioners who are most in need?
Have the Government carried out an impact assessment of how the
delay caused by the U-turn on social care reform will impact our
pensioners? What plans do they have to address the inequality I
highlighted of the low percentage of people on the full new state
pension rate?
My next point is probably the most crucial; it concerns pension
credit. Why will the Government not deliver a take-up campaign to
identify eligible pensioners, and introduce a streamlined and
accessible application process, so that the pensioners who are
entitled to that additional top-up can receive it? Pension credit
is there to top up income, and I strongly believe that the
Government could be proactive in identifying pensioners who might
qualify.
The WASPI women need justice. When will the Government provide
compensation for the failings? Will they commit to ensuring that
there is a proper, lengthy notice period for any future change to
the state pension age?
Will the Government seek to bring down the minimum salary for
auto-enrolment to workplace pension schemes? That would increase
the participation of under-represented groups, particularly our
black, Asian and ethnic minority communities.
We all know, particularly at this time of year, that loneliness
and social isolation are key contributors to material
deprivation. More investment is needed in public services and the
social support networks that are available to older people; in
fact, we need an overarching strategy to address that. What are
the Government doing to support community and local
organisations, such as Age UK Wandsworth in my constituency? It
provides a lifeline and vital services to people who live in the
local area. I reiterate the point I made earlier: because of the
funding available, many can attend that centre only a couple of
days a week, but they would like to go three or four times a
week. It is unfair that the time they can spend at such centres
is being limited.
Finally, I call on the Government to explore alternative ways to
fund our pension system. The state pension is unfunded, meaning
that its obligations are not underpinned by assets that could
generate investment and return. That funding model is implicitly
appealed to when the Government object to the rising cost of
pensions due to our ageing population and the impact that will
have on younger people, although that probably does not apply to
any of us in the Chamber, as none of us is very young.
[Interruption.] Well, some might be. However, an appreciation of
funding models used in other countries could point the way
towards a systemic shift that could help fund the state pension
system.
We owe it to our elderly and all our pensioners, as well as to
the generations that come after us, to be progressive in our
thinking and innovative in our approach. We must look at all
options to ensure that when people reach their later years they
will not fear retirement but embrace it, because they will know
that, in the state pension system, there is a safety net in place
to support them and they will not be struggling.
4.46pm
(Cynon Valley) (Lab)
Thank you, Sir Robert, for the opportunity to speak. Before I
became an MP, I conducted more than 10 years of research on how
poverty and inequality affect older people’s inclusion in
society, so this subject is a particular interest of mine.
Pensioner poverty is significant in the UK, and it continues to
increase. It is estimated that over 2 million—one in five—older
people are living in relative poverty, with the greatest impact
on women and other vulnerable groups. The level of pensioner
poverty is similar in my country, Wales. The Older People’s
Commissioner for Wales—I am very proud that Wales is still, I
think, the only nation in the UK to have an older people’s
commissioner—along with other organisations, has expressed
serious concern about the detrimental impact that the cost of
living is having on older people. My constituency had the third
highest death rate from covid in the whole of the United Kingdom.
That exemplifies the effect that poverty and the industrial
legacy of Cynon Valley have on the health and wellbeing of older
people.
Just before the summer, I conducted a cost of living survey in
Cynon Valley. Nearly nine out of 10 pensioners who responded said
that they felt worse off than they did 12 months earlier.
Security in retirement was the biggest cause for concern among
pensioners. One older person said:
“Us elderly people have worked very hard over the years and we
get very little back to survive on.”
I pay tribute to a range of organisations in Wales, including Age
Cymru and Age Connects in Cynon Valley, who are doing amazing
work with older people, trying to empower them and giving them a
voice in our communities.
The petition calls for an increase in the state pension to £380 a
week and a reduction in the state pension age to 60, which would
be a significant change. However, the demands of the petition
open up a debate on where pension levels are set and what is the
right age to start receiving the state pension.
At the 2019 election, my right hon. Friend the Member for Hayes
and Harlington (), the then shadow
Chancellor, rightly sought to deal with state pension inequality
for women and offered a major compensation scheme. He said:
“This is an entitlement. This is not a benefit…This is a historic
injustice. We have to address it.”
Over 4,000 women in my constituency are affected, and I am
working closely with an active group of local women to continue
campaigning for justice for the WASPI women. I have continued to
support their demand for compensation, through demands for full
restitution and through the minimum compensation proposal of the
WASPI campaign and the all-party parliamentary group on state
pension inequality for women. As we know, the ombudsman has found
that there was maladministration, and we are now waiting for the
full report to be published and for the recommendations for
remedy. We must compensate these women.
The other group of older people I am working closely with in
Cynon Valley are former miners. I welcomed the Business, Energy
and Industrial Strategy Committee report in 2021, which
recommended giving £1.2 billion held in the investment reserve to
former miners. It really is regrettable that the Government have
rejected the Committee’s recommendations, and I urge them to look
at those again. The WASPI women and former mineworkers are
examples of pensioners who have been let down—and let down
massively—by the UK Government.
More broadly, there is a debate around the level of the state
pension. Much is being said about how pensioners’ incomes have
been safeguarded, compared with real changes to incomes and
social security in recent years. However, pensioner poverty is
growing, and the petition demands a significant increase in the
state pension. The National Pensioners Convention says that the
state pension should be set at 70% of the living wage and above
the official poverty level, at £242.55 a week. That is what a
pensioner in the Netherlands gets, with an equivalent of more
than £250 a week. The petition demands £380 a week, and in
Denmark the folkepension for a single pensioner is £370 a week.
This can and should be done here. These other countries’ pensions
put the demands of the NPC and this petition into
perspective—they are not unreasonable demands.
The question about funding these increases is welcome. There are
many sources of untaxed wealth that could deliver the revenues to
pay for higher pensions. A wealth tax could raise in the region
of £260 billion to £300 billion. The country has the money; it is
a political choice not to redistribute the wealth of this country
to ensure that older people and many millions of other vulnerable
people have the money to maintain a basic standard of living.
That is a basic human right, and everybody should have that
entitlement.
Before I conclude, I will take the opportunity to highlight the
fact that a third of those entitled to pension credit—over
750,000 people—do not claim it, although they are entitled to. As
my hon. Friend the Member for Battersea () said, that equates to
about £1.7 billion of unclaimed money. I urge the UK Government
urgently to take action on this issue. I truly wish that they
would pay as much attention to ensuring that people claim what
they are entitled as they do to stigmatising people on social
security benefits, who are entitled to that money and should have
it as a matter of right.
To conclude, pensioner poverty is rising. Combatting it is a
question of principle and values. If we are to achieve justice
for pensioners, we must take action to deliver it.
(in the Chair)
We now move to the Front Benchers, who normally have 10 minutes
or less.
4.53pm
(Glasgow East) (SNP)
As ever, it is a pleasure to serve under your chairmanship, Sir
Robert, and to reply to a debate on behalf of the Scottish
National party. I congratulate the hon. Member for Battersea
() on opening the debate,
and I commend the hon. Member for Cynon Valley () on her speech.
Before I get into the substance of my speech, I want to note that
my remarks today are my first since returning to the SNP Front
Bench. I pay tribute to the hard work and dedication of my hon.
Friend the Member for Aberdeen North (), who as my party’s
spokesperson on work and pensions repeatedly held the British
Government to account, fought for the poorest in society and
highlighted the sheer inadequacy of the UK’s social security
system. She will be a tough act to follow, and I wish her well in
her new position as Cabinet Office spokesperson—a role I am sure
she will thrive in.
The petition that triggered this debate calls for an increase to
the state pension and for us to reduce the state pension age to
60. I will come to the appalling financial inadequacies of the
state pension in a moment, but I will first address the age at
which people become eligible. We are by no means outliers among
developed nations in having an ageing population, which presents
the state with many problems to solve in terms of service
provision and many fiscal challenges.
As we debate this issue, every one of us in this room should be
mindful of the fact that not all jobs are the same. As we sit
here in the luxurious comfort of a palace, people out there are
carrying out manual labour jobs—indeed, some today in sub-zero
conditions. Sir Robert, you and I may not think that we will be
ready to retire at 60, but many others will, so I believe that a
balance must be struck. Although, for practical reasons, the
Scottish National party cannot support reducing the retirement
age to 60, the notion that the pension age needs to go up and up,
as a simple solution to the British Government’s problems, is
both cruel and unrealistic.
It feels like little has changed at the Department for Work and
Pensions since I last shadowed this brief. The British Government
continue their heartless policies, the cost of living crisis
ravages on, and it is the poorest and most vulnerable who bear
the brunt of the hardship. As I was preparing for today’s debate,
I found myself despairing, because for me, as a Scottish
nationalist, Westminster often feels like groundhog day, and no
more so than when we are looking at the policies of the
Department for Work and Pensions.
I find myself today critiquing the same Tory policies that I
criticised last year. It seems that the DWP’s strategy for
addressing the cost of living crisis is largely to shove its
fingers in its ears and just hope that inflation comes down.
Despite that, the cost of living crisis continues to spiral out
of control and inflation has risen to 11.1%—a 41-year high. The
cost of essential family goods has risen sharply over the past
year, and the Office for Budget Responsibility predicts that
average household disposable incomes will fall by 7% this year
and next.
Food banks, such as Glasgow NE Foodbank in my constituency, are
struggling to keep up with the rising demand. Across the
constituency, I have heard food bank volunteers say that many
people are, sadly, using food banks for the very first time—I was
surprised to hear from one volunteer that a family who had
previously donated to the food bank were now forced to use it
themselves.
One thing I reflected on when I previously held this brief was
that we as politicians are used to talking regularly about child
poverty, but some of us find it a lot less natural and a lot more
embarrassing—we wince a lot more—to talk about pensioner poverty,
which is something that we do not give enough focus. However, as
Independent Age has emphasised, with
“more than 2 million pensioners already living in poverty and the
cost-of-living crisis hitting hard, we know people are being
forced to make impossible choices on how to cut back to be able
to afford heating, electricity and food.”
As Christmas approaches, research by Age UK has shown how
frightened older people are about surviving the next few months,
with a significant number this year anticipating a more solitary
and lonely Christmas period than usual. Age UK’s polling also
found that more than one in five older people are already
reducing or stopping their spending on medication or specialist
foods, or expect to do so in the coming months, and that one in
seven is skipping meals or expects to do so in the same
period.
I have genuine respect for the Minister, and I know that she will
say that the cost of living crisis has come about as a result of
Vladimir Putin’s invasion of Ukraine, but it is not solely
because of Putin’s invasion of Ukraine or, indeed, the economic
hangover from the coronavirus pandemic. I would certainly argue,
and I am sure others would as well, that the touchpaper was lit
on the cost of living crisis 12 years ago, when a Government that
Scotland did not vote for embarked on a brutal assault via Tory
austerity. I am afraid that that has been exacerbated by
Brexit—something else that people in Scotland did not consent
to.
The UK has one of the lowest state pensions in north-western
Europe, and after a decade of Tory austerity cuts, pensioner
poverty is now on the rise. Some 85% of social security and the
state pension itself is reserved to this institution and the
British Government, so Scotland has little say in this hugely
important policy area. SNP MPs have campaigned vehemently for the
Tories to maintain the triple lock. Only after multiple U-turns
and breaking their manifesto pledge last year—and after a very
unhealthy dose of uncertainty for pensioners across these
islands—did the British Government finally retain the triple
lock.
However, the suspension of the triple lock in 2021 shows that
Scotland does not have the powers to prevent Tory cuts for
pensioners. The suspension ended up costing each pensioner £520
on average during the cost of living crisis. Additionally, the
Scottish Government under the current devolved settlement have no
power to raise the state pension, as Ministers know fine well,
although some often like to pretend otherwise.
The SNP has continually implored Ministers to devote a larger
percentage of GDP to state pensions and indeed to pensioner
benefits. The British Government are allowing £1.7 billion of
pension credit to go unclaimed during the cost of living crisis.
We know that pension credit is a vital lifeline for many older
people, but only seven in 10 of those eligible claim the money
that they are fully entitled to. The British Government must
introduce a full take-up strategy for reserved benefits,
including pension credit, as the Scottish Government have done in
respect of devolved benefits. I genuinely welcome the
conversation I had with the Minister before the debate, when we
said that we would discuss this issue offline.
The Conservative Government have a rather long track record in
picking the pockets of our pensioners: from the WASPI women and
the triple lock to the low take-up of pension credit, the frozen
pensions of overseas pensioners, many of whom are veterans, and
the scrapping of free TV licences for the over-75s, the list goes
on and on. This Government have very much been found wanting in
terms of their record on pensioners.
Only with full powers over pensions can the Scottish Government
at least remedy these injustices. In an independent Scotland
pensioners could be protected from Westminster austerity. We in
the SNP want Scotland to be the best place to grow old—a place
where retirement means dignity and fairness for all. I know that
adhering to manifestos or, in some cases, leadership election
pledges is a bit of a quaint novelty for the two biggest parties
in this House. However, my party’s 2019 manifesto committed me
and my colleagues to continue advocating for a fairer pensions
system and to oppose plans to increase the state pension age
beyond 66.
Alongside that, we will continue to call on the British
Government to establish an independent saving and pension
commission to ensure that pension policies are fit for purpose
and genuinely reflect the demographic needs of the different
parts of these islands. I am struck by the fact that the life
expectancy in Kensington and Chelsea is very different from that
in my own constituency.
Of course, all of this is predicated on Ministers in Whitehall
listening to the voices of those that Scottish voters send to
this House—something the Government have a poor track record on.
Therefore, the only way to ensure that our pensioners grow old
with dignity is for Scotland to become an independent country,
with powers to protect pensioners and ensure that they live their
final days in prosperity, not poverty.
5.03pm
(Reading East) (Lab)
It is a pleasure to serve under your chairmanship, Sir Robert. I
thank my hon. Friend the Member for Battersea () for her work on this
important issue. I also thank other hon. Members who have spoken
in the debate. Above all, I want to thank the hundreds of
thousands of people from across the country who signed the
petition that led to this debate. Constituents have expressed
their concern for older people, so it is right that we consider
this matter today.
Pensioners face the worst cost of living crisis for over 40
years. The cost of food and fuel is up, and the cost of living as
a whole is going up. Yet, at the same time, support for
pensioners is failing to keep up with the severe pressure on
older people. Those who have worked hard and contributed all
their lives deserve to receive a decent state pension in
retirement. The official Opposition support the triple lock and
have repeatedly called for the state pension to rise in line with
it during the last two years, but the Government’s approach has
fallen well short of what is expected by pensioners and the
country as a whole.
I will set out the scale of the cost of living crisis and then
address the Government’s failure in this regard. It is clear that
this crisis is the worst squeeze on the incomes of families and
pensioners since the 1970s. Sadly, inflation has hit over
10%—something unheard of in living memory. The situation facing
people on low and fixed incomes is particularly difficult.
Pensioners and others on modest incomes spend more of their
disposable income on food and fuel, the prices of which have
increased to a far greater extent than those of other goods. The
prices of staples such as bread, cereals, tea, meat, dairy
produce and eggs have all risen rapidly, and some have increased
by far more than the headline rate of 10%. As is well known, the
same is true of energy. Not only has the price of gas risen
dramatically, but so has the price of electricity and heating
oil. In the meantime the Government have dithered and delayed,
and put off addressing these important issues.
I turn to the Government’s poor record and to the lack of—indeed,
the delays to—support for poor pensioners. Despite raising the
state pension in line with the triple lock being a manifesto
pledge, Ministers repeatedly failed to meet that commitment. Last
year the Government said that earnings appeared to have grown by
a larger amount, because the return to work after furlough
created the impression that earnings had increased by 8%. They
used that as an excuse for disapplying the triple lock,
preventing pensioners from getting the rise in the state pension
that they clearly deserved. We repeatedly challenged the
Government, but they simply would not listen to our concerns.
To make matters worse, this year Ministers refused for months to
commit to increasing the state pension in line with inflation.
Campaigners repeatedly pressed them on the issue, and the
official Opposition raised the matter in Parliament a number of
times. As a result of the Government’s dither and delay,
pensioners were left wondering what would happen to them at a
time when they were facing a very difficult winter. After months
of delay, and considerable pressure and stress for older people,
Ministers eventually confirmed at the autumn statement that the
state pension would rise in line with inflation. Those failures
and persistent delays let pensioners down badly, so I hope the
Minister will find time to apologise for them when she
replies.
The Government have failed pensioners on a number of other
matters relating to the state pension—for example, pension credit
and some of the problems relating to the energy price guarantee.
I want to raise those related issues, because both policies
should be offering far more help than they do at present.
Pension credit tops up the incomes of some of the most vulnerable
pensioners, who receive a particularly modest income. However,
about 1 million pensioners who are entitled to the benefit are
not claiming it. Will the Minister explain why the Government are
still failing on this matter? What more can be done to ensure
that pensioners claim pension credit to raise their incomes, as
they deserve?
Although help is now available with heating costs, there are gaps
in the scheme—not least that it will be scaled back next year. In
the meantime, payments for some pensioners in rented
accommodation are still not being passed on by landlords.
Concerns have been raised in my constituency, and I am sure
Members across the House have experienced the same issue. I hope
the Minister will respond to that point.
Time is pressing, but I want once again to thank the members of
the public who signed the petition, as well as my hon. Friend the
Member for Battersea, who spoke so eloquently, and other Members
from across the House. I look forward to the Minister’s
reply.
5.09pm
The Parliamentary Under-Secretary of State for Work and Pensions
()
It is a pleasure to serve under your chairmanship, Sir Robert. I
thank all hon. Members for their valuable contributions, and the
hon. Member for Battersea () for opening the
debate.
The Government disagree with the petition’s proposed approach. It
makes two suggestions: to increase the state pension and to lower
the retirement age. I will first address the proposal to increase
the state pension to £380 a week. That would equate pensioner
income with the national living wage in 2022-23. However, the
national living wage and the state pension are two very different
provisions, with distinct purposes. A direct comparison cannot be
drawn between the levels of the two. The national living wage
aims to protect low-income workers and to provide an incentive to
work, by ensuring that workers benefit from being employed.
However, most pensioners have already left the labour market.
Comparisons made in the e-petition between headline state pension
amounts and the national living wage do not consider the full
package of state measures available to support people in
retirement or the fact that pensioners do not pay national
insurance or into a pension scheme through automatic
enrolment.
We need to be clear with the public that a state pension of £380
per week for every UK pensioner would be unaffordable. It would
mean an annual cost of up to £251 billion if it was applied for
2022-23. That compares to the £110 billion we are currently
forecast to spend on the state pension. In the UK we have a
system of state and private pensions, which jointly provide an
income for people in retirement. Most people will have a private
or occupational pension on top of the state pension. In the 2021
financial year, the average net income of all pensioners was £361
per week, after housing costs. Crucially, the Government also
provide around £67 billion each year in tax relief to boost
private retirement savings. It is important to consider all
aspects of Government support for retirement, rather than solely
the state pension amount.
The Government are committed to ensuring that the state pension
continues to provide the foundations for people’s retirement
income, and we are proud of the assistance we have given
pensioners since 2010. Since 2010, the full yearly amount of the
basic state pension has risen by over £2,300 in cash terms. That
is £720 more than if it had been uprated by prices, and £570 more
than if it had been uprated by earnings.
As all hon. Members here today recognise, the Government have
announced plans to apply the triple lock this year. It was
announced, according to the normal parliamentary timetable, that
from April the state pension will be over £3,000 per year higher
in cash terms, which is double what it was in 2010, £790 more
than if it had been uprated by prices, and £945 more than if it
had been uprated by earnings.
Pension credit has come up a lot today, as it should. Pension
credit provides vital additional financial support by topping up
the state pension and other retirement incomes. The hon. Member
for Battersea referred to the minimum income guarantee, which is
what we put in place to ensure that pensioners do not fall below
a certain base. It also acts as a gateway to other help,
including assistance with rent, council tax, NHS prescriptions
and heating bills. Of immediate importance, it is a gateway to
the additional cost of living payments we are paying to those on
qualifying means-tested benefits. There is more that we need to
do to link that up with other information that the Government
have. I will be pleased to work with Opposition Members, as well
as the hon. Member for Glasgow East (), in order to try to make
that happen.
We have taken direct action when pensioners have needed it, both
through the pandemic and now with the rising cost of living. That
includes the £650 cost of living payment, paid in two
instalments, to help those on pension credit with the rising cost
of living. As we all know—and I would like to emphasise this
again—it is not too late for pensioners who are not already
getting pension credit to qualify for the second instalment. That
is because a claim for pension credit can be backdated for up to
three months, provided the entitlement conditions are met
throughout that time. To ensure that a successful backdated claim
falls within the qualifying period for the second cost of living
payment, we are urging people to claim pension credit as soon as
possible, and by no later than 18 December.
I appreciate that the Minister will not necessarily have the
figures to hand, but would she be willing to write to me with
information on how much the Government are spending on, for
example, billboard campaigns and radio advertising to encourage
pensioners to take part—in the same way they do with the
levelling-up campaign?
I would be more than happy to do so. I know that we spent £1.2
million over the summer. I have signed off a campaign for this
winter, with more coming after Christmas, but I will write to the
hon. Gentleman with the exact amounts.
That leads me nicely on to the hon. Member for Battersea, who
referred to the take-up campaign. We have had a huge take-up
campaign over the summer, and we have done one recently as well.
We have further communication planned. It is something I am very
focused on, and I would like to work with all hon. Members who
are interested to ensure that it happens.
Is any work being done to measure the impact of the summer
campaign on the take-up of pension credit? Going forward, I am
very happy to work with the Minister on this.
We know that claims for pension credit have tripled since the
summer. On average, we used to get 2,000 claims a week—that has
gone up to 6,000. The seven out of 10 figure that everybody uses
comes from the family resources survey, which was last done in
2019-20, which has caused the difficulty with exact details on
eligibility. Because of the pandemic, the survey has not been
repeated, and there is an 18-month delay on the figures. It is
very difficult to get up-to-date data on actual eligibility
levels, which is something that we need to address over the
longer term. In the interim, though, we have the numbers of
people who are making the claims through the line, which, as I
have said, have gone up threefold.
Could the Minister explore the issue of pensioners who do not
have English as their first language and other hard-to-reach
groups whom Government information often struggles to reach?
There have been success stories in the past where particular
approaches have worked with some minority groups. Perhaps the
Minister could write to me and other colleagues present on that
matter.
I am very happy to do so. If there are any specific approaches
the hon. Gentleman thinks the Government should be taking, I am
very open to any ideas he may have and would happily take them
forward.
The £650 cost of living payment is one of a number of measures in
the Government’s £37 billion cost of living support package,
which will ensure that the most vulnerable households will
receive at least £1,200 this year. The package also includes a
£400 reduction on energy bills for all domestic electricity
customers over the coming months, plus a £150 council tax rebate
for 85% of all UK households.
In addition to the steps we have taken to address the cost of
living for pensioners, we have also made long-term reforms to the
state pension and introduced automatic enrolment to boost private
saving. In 2016, the Government introduced the new state pension,
which forms a clear foundation for individuals’ private savings
to provide the retirement they want. At the heart of its design,
we sought to correct some historic unfairness in the previous
system, in particular for women, self-employed people and
lower-paid workers. More than 3 million women are set to receive
an average of £550 more a year by 2030. State pension outcomes
are also expected to equalise for men and women by the early
2040s—more than a decade earlier than they would have aligned
under the old system.
I want to pause here to mention pensioner poverty, which was
brought up by a number of hon. Members. I know it is something we
all care deeply about. The Government are committed to action
that helps to alleviate the levels of pensioner poverty. We are
forecast to spend more than £134 billion on benefits for
pensioners in 2022-23, which amounts to 5.4% of GDP and includes
spending on the state pension that is forecast to be over £110
billion in 2022-23. Thankfully, there are 400,000 fewer
pensioners in absolute poverty, both before and after housing
costs, than in 2009-10, but there is, of course, always more to
do.
Automatic enrolment, as mentioned by the hon. Member for Cynon
Valley (), is transforming private
saving. More than 10.7 million people have been automatically
enrolled into a workplace pension and more than 2 million
employers have complied with their duties to date. This has
helped to supply around an additional £33 billion into pensions
savings in real terms in 2021 compared to 2012. I want to bring
up the findings of the 2017 review of measures for automatic
enrolment, as the hon. Member for Battersea mentioned her support
for the lower earnings limit. The 2017 review of automatic
enrolment set out the ambition to enable people to save more and
to start saving earlier by abolishing the lower earnings limit
and reducing the qualifying age for automatic enrolment to 18 by
the mid-2020s. We have always been clear that changes would be
made in a way and at a time that are affordable, balancing the
needs of savers, employers and taxpayers, and the Government are
absolutely still committed to that.
Together, the new state pension, automatic enrolment to workplace
pensions and the safety net of pension credit will provide a
robust system for pensioners for decades to come. A number of
Members talked about international comparisons; OECD rankings
show that, thanks to this Government’s reforms, the UK pensions
systems will provide future workers with income replacement rates
comparable to the OECD average and higher than countries such as
Switzerland, Norway and Germany.
Let me turn to the second suggestion: decreasing the state
pension age to 60. The Government have no plans to reverse
changes to the state pension age. Previous reforms have focused
on maintaining the right balance between affordability, the
sustainability of the state pension and fairness between
generations. Changes to state pension age were made through a
series of Acts, and by successive Governments, from 1995 onwards.
Those reforms followed public consultations and extensive debates
in both Houses of Parliament. The state pension is funded through
the national insurance and tax contributions of the current
working-age population. Like increasing the state pension,
reducing the state pension age to 60 would massively increase the
tax burden on the current working-age population and carry
significant cost.
I wonder whether the Minister might put on record the point that
she just confirmed. In the debate on Scottish independence,
Unionist campaigners often talk about how the UK somehow
furnishes pensions. However, as the Minister just pointed out,
the state pension is funded by ongoing national insurance
contributions each and every day, which rather bursts the myth
that is made by the Better Together campaign in Scotland.
State pension entitlement is obviously built up through
contributions over a period of time, but equally there is a huge
burden on the state, and that has to be met at a given point. As
we have discussed, pension pots are funded widely by both the
working-age population and people later in life.
The Government previously estimated that, had we not increased
the state pension age for both men and women, the total
additional cost to taxpayers—in 2018-19 prices—would have been
around £215 billion for the period from 2010-11 to 2025-26.
Lowering the state pension age is clearly unaffordable, and would
place an ever-increasing and unfair burden on taxpayers. That
would not be right, particularly as life expectancy continues to
rise.
A number of hon. Members mentioned the Parliamentary and Health
Service Ombudsman. The PHSO is undertaking a multi-stage process,
and it has not given its final findings on the overall
investigation. If the PHSO finds injustice, it will move on to
stage 3 and consider any recommendations. The DWP will wait
before taking any further steps.
The UK has an ageing population and workforce. The proportion of
people aged 50 years and over compared to those aged 16 and over
is projected to increase from 42% in 2010 to nearly 50% by 2035.
That is nearly 29 million more people. Older workers will bring a
wealth of skills and experience to the workplace, and they are
vital to the economy. By working for longer, older people have
the opportunity to improve their retirement income and benefit
from the social engagement that employment brings. The hon.
Member for Battersea was absolutely right that we need to support
workers in later life, and BEIS is working on exactly that.
In conclusion, I welcome today’s debate and acknowledge the
proposals set out in the e-petition. As I have mentioned, the
Government provide wide-ranging measures to support people in
retirement. Our recent announcement of plans to apply the triple
lock this year demonstrates our commitment to providing a strong
foundation of support for pensioners.
5.23pm
I thank my hon. Friend the Member for Cynon Valley () for her incredible speech,
which shone a light on the impact of pensioner poverty in her own
constituency. She brings a wealth of experience and knowledge to
these debates. I thank the petitioners—it is because of them that
we are here—and the tens of thousands of people who signed the
petition. No one should ignore pensioner poverty, but we are
having this debate because many pensioners are not being
supported.
We are in a cost of living crisis, and the Government have talked
about the support that is being provided, but we have to be aware
that some of the targeted support will go only to people in
receipt of a qualifying benefit—pension credit or some sort of
housing support. People on a state pension who do not get any
top-ups will probably not qualify for that additional support, so
that places an additional challenge on their finances. That is
what I was talking about when I said that there should be
additional targeted support.
All hon. Members mentioned pension credit take-up. It is right
that the Government are doing take-up campaigns, because that
will help to alleviate some of the challenges that many face.
This has been a good debate. I strongly believe that we have to
support pensioners and those in greater need. Although we cannot
see the Government increasing the state pension to £380 a week,
we need to look at some sort of minimum income standard for
pensioners.
The Minister did not address the point about streamlining the
application process and making it more accessible. I hope she
will take that back, because it was a recommendation from the
Work and Pensions Committee. It is important that people are able
to claim that aspect of social security. If the process is not
streamlined, accessible and easy to use, it will deter people,
particularly those whose first language is not English and
disabled people who are unable to access the forms. I hope that,
in their activities around pension credit take-up, the Government
consider that issue. I highlighted the inequalities within
certain groups—women, disabled people and ethnic minority
communities—particularly around auto-enrolment, so I am pleased
that that is still on the Government’s radar.
I thank everybody for being part of this debate. I only wish
there were more people here, but I appreciate that it is probably
due to the travel challenges that many are facing.
Question put and agreed to.
Resolved,
That this House has considered e-petition 617603, relating to the
state pension.
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