Extract from Lords debate on the Social Security (Up-rating of Benefits) Bill

Elsewhere in our overseas territories our fellow citizens living in places as diverse as Montserrat and the Caribbean and the South Atlantic island of St Helena also have to make do with frozen pensions. Bizarrely, however, this policy does not apply to all 14 overseas territories. For example, those living in Bermuda, 5,800 miles north of the Falklands, and one of the world’s wealthiest places, enjoy the triple lock pension increases that their counterparts in the UK receive. All told, there are around 680 UK pensioners living in UK overseas territories with frozen pensions, even though they have made the same national insurance contributions as their UK peers.

Full debate on Amendment 2

Moved by

Lord Randall of Uxbridge
2: Clause 1, page 1, line 24, at end insert—

“(2C) No power may be exercised under this or any other Act so as to exempt persons not ordinarily resident in Great Britain, but who reside in a country with which there is a reciprocal social security arrangement requiring up-rating, from entitlement to up-rating increases granted by an order made by virtue of subsection (2A).”Member’s explanatory statement

This amendment would ensure that this up-rating applied to all overseas pensioners who reside in a country with a reciprocal social security arrangement, including any whose pensions have previously been frozen in accordance with Government policy.

Lord Randall of Uxbridge (Con) [V]
My Lords, I make no apology for returning to the subject which I raised at Second Reading: the injustice of frozen UK pensions overseas. First, I thank my noble friend the Minister for kindly arranging a meeting with me and some of her officials. I am grateful to her for listening so intently. I understand that she is unlikely to be able to accede to my request in this debate.

This amendment is not the one I should like to have tabled, but the ever-helpful Table Office pointed out that the amendment I wanted to table would not be within the scope of the Bill. I should like to have used the amendment tabled in the other place by the Scottish National Party:

“(2C) No power may be exercised under this or any other Act so as to exempt persons not ordinarily resident in Great Britain from entitlement to up-rating increases granted by an order made by virtue of section (2A) of this Act.”

In his reply, my honourable friend Guy Opperman, the Pensions Minister, rejected the amendment, saying that

“this is a long-standing policy pursued by successive post-war Governments, who have taken the view that priority should be given to those living in the United Kingdom in drawing up expenditure plans for pensioner benefits. There are no plans to change that policy. The up-rating of the state pension is intended to provide support for pensioners who live in the UK.”—[Official Report, Commons, Social Security (Up-rating of Benefits) Bill, 1/10/2020; col. 578.]

His statement was factually incorrect, as we know that uprating exists for those who live outside the UK but only in countries where there is a reciprocal agreement. My amendment seeks to clarify this. I trust that my noble friend can do so this afternoon.

At Second Reading, I followed my noble friend Lord Trenchard. He mentioned the unfair situation with regard to those who have served this country in the Armed Forces. I spoke of my home town of Uxbridge, with its strong RAF connections. Among the several case studies I shall mention this afternoon, I want to recall that of Wing Commander Harry Penny. He was the commanding officer of RAF Uxbridge in his last years in the UK before he emigrated to Australia. Interestingly, when he arrived in Australia, he was encouraged to continue making national insurance voluntary contributions to boost his national insurance record, and so ended up with a full UK pension when he reached 65 in the 1980s. He was never advised that it would be frozen.

As we approach Remembrance Sunday, I am sure that all noble Lords will be aware of the Battle of Kohima, and the deeply moving words from the Kohima memorial will be uttered around the world. Patricia Coulthard was present at the Battle of Kohima, and she is now fighting for veterans who retired abroad and have had their state pensions frozen. Ms Coulthard, who moved to Australia to be near her two children, told our Prime Minister earlier this year that she receives just £46 a week. That payment contrasts with the full state pension in the UK today of £175.20 per week. This amazing 99 year-old lady is just one of the more than 60,000 veterans who also suffer from frozen pensions. Ms Coulthard cared for soldiers who were injured at Dunkirk, before being sent to India, where she served in a jungle field hospital during the Battle of Kohima, in which around 4,000 of the British and Indian forces lost their lives. She suffered malaria, dysentery, fever and pleurisy, but she remembers her comrades and experiences with pride.

Roger Edwards risked his life for his country in the Falklands War, taking part in some of the conflict’s most hazardous operations, including the SAS raids on Pebble Island and Goose Green and the retaking of South Georgia. Roger is 70 now, and if he lives to a ripe old age, he could potentially end up being out of pocket by as much as £7,000 a year. Mr Edwards, who was born in Wiltshire, did not lose his full pension entitlement because he moved to a foreign country with no connection with the UK. No, he lives in the very place he risked his life for: the Falkland Islands. Yes, it is a UK overseas territory. This means he has full British citizenship. Yet that has not stopped the UK Government freezing his basic state pension. Mr Edwards is not alone. There are 42 people living on those islands with a frozen UK pension, about half of whom are military veterans.

Elsewhere in our overseas territories our fellow citizens living in places as diverse as Montserrat and the Caribbean and the South Atlantic island of St Helena also have to make do with frozen pensions. Bizarrely, however, this policy does not apply to all 14 overseas territories. For example, those living in Bermuda, 5,800 miles north of the Falklands, and one of the world’s wealthiest places, enjoy the triple lock pension increases that their counterparts in the UK receive. All told, there are around 680 UK pensioners living in UK overseas territories with frozen pensions, even though they have made the same national insurance contributions as their UK peers.

That we have pensioners and military veterans such as Patricia Coulthard living on as little as £46 a week is utterly shameful and must serve as a wake-up call to end this callous, cruel and immoral policy without delay. However, it is not just our veterans who suffer this injustice. I have mentioned before that there is deep concern that members of the Windrush generation who spent their working lives in the UK but retired abroad are also losing out through frozen pensions.

I could continue with lots of cases of individuals. Around half a million are so affected. However, I contend that it is only right that every pensioner is more than a number on a spreadsheet in Westminster—or Whitehall, to be more correct—and it is high time that the Government held up their end of the bargain and gave all pensioners the pensions to which they are entitled. Many pensioners said they did not know the situation when they left the country. Today, there is information on GOV.UK about what the effect of going abroad will be on their entitlement. A government spokesperson said:

“The government continues to uprate state pensions overseas where there is a legal requirement to do so—for example in countries where there is a reciprocal agreement that allows for uprating.”

However, it appears that that information has not always been available for those leaving our shores. It is time we changed our policy, as the time-honoured reason given for this shameful state of affairs has been nothing but a blister on this country’s good name for fairness.

I know that appealing to successive Governments to do the right thing has simply not worked. There have sometimes been warm words at best, but certainly no action. I want to suggest to the Government something they could and should do to be more positive about it. How about proactively trying to get reciprocal agreements? Having left the EU seems to be the perfect time to think about it. Apparently, the last time an agreement was signed was in 1992, with Barbados. In 1992, I was still a slim young man selling furniture in Uxbridge, and although, luckily, through the miracle of Zoom your Lordships cannot see my current frame, I am sure you will realise that that was a long time ago. I have changed somewhat, but the Governments of the day still resolutely refuse even to try to rectify this situation. I would say to the Government that I would be happy to be part of any team to get these agreements signed and sealed, and with a substantial number of new ones, perhaps they will concede that all UK pensions abroad should be treated equally and fairly. However, I fear that the will is not there.

I have seen a communication from a Canadian MP, who states:

“I am told that the UK has continually declined overtures to open this issue and that it will not consider the indexation of UK pensions paid into Canada. I understand that a number of Members of Parliament have raised this issue in recent months. Canada first opened the door to this possibility with the UK when the Conservatives were in government in 2013, and the UK declined our offer to enter into negotiations about this.”

I cannot say whether that is the case. Perhaps we can have some clarification on that and, indeed, on whether any other overtures by other countries have been rejected similarly.

In the Second Reading debate it was a great pleasure to hear the maiden speech of the noble Lord, Lord Field of Birkenhead, who, among many of his achievements in the other place, chaired the Select Committee on Social Security. In one of its reports on this issue, under his chairmanship, it was stated that it is a political question, which includes, but is not distinct from, a moral question. As always, the noble Lord put his experienced finger on the button.

I feel I have detained the House long enough on this, but I would like to ask whether Civil Service pensions are similarly frozen. Indeed, are those of Members of Parliament frozen? I wonder whether if any of my former colleagues decided to emigrate for whatever reason—I know that one or two of them threaten to do it periodically—they would be so pleased if they knew that their pensions would be frozen. Are service pensions the same? Perhaps my noble friend can find the answer to that and see whether it is just the state pension that discriminates in this way.

I add that if a UK pensioner returns to the UK for a holiday or some other reason, for the period that they are here, the pension will be paid at the updated sum—assuming, of course, that they contact the pension centre. Again, this discriminates against those who are too elderly to travel and those who cannot afford it, the very people we should be fully supporting.

This issue has been around for far too long, and it is about time that we as a Parliament and a nation decided that it should be resolved and that discrimination in our pension system should be abolished for all time.

Baroness Janke (LD) [V]
I thank the noble Lord for his interesting and eloquent speech. I remember that at Second Reading he was equally impassioned, and it is very good that he has put this amendment down. On the face of it, the policy seems extremely unjust, unfair, inconsistent and totally unjustifiable. Can the Minister give us more of an explanation of how it happened? It seems like some kind of anomaly. How many pensioners are affected in total? What is the future outlook? What would be the implications if this amendment were to be agreed to? I, too, looked at the debate in the other place, and I found the Minister’s response dismissive and completely uninformative, so it would be very good if we could have a bit more information about this current situation.

The noble Lord mentioned veterans in particular. It again seems completely unjust and completely lacking in any kind of compassion or gratitude for what those people have done for their country. Again, perhaps we could be allowed to know how many of these people are veterans.

The noble Lord mentioned government reciprocal agreements. That is right, but again, you need the political will, and whether that is there seems in doubt.

This certainly is a moral question. Here, I would like to mention the fact that many UK citizens are not allowed to vote, unlike in other countries. For example, France has an MP for citizens living abroad. I feel that if these people were able to exercise their vote, there might be a bit more political will to do justice for them all.

5.00 pm

Baroness Sherlock (Lab) [V]
My Lords, I thank the noble Lord, Lord Randall of Uxbridge, for explaining his amendment to us. He is a strong advocate for this cause and I am very sympathetic to the position in which many pensioners find themselves. However, it is a difficult issue, which successive Governments have struggled to resolve.

Perhaps I may ask the Minister some specific questions. First, we have heard that 500,000 people living in other countries are affected in this way. Can the Minister confirm that figure? How much does she believe that it would now cost to change the rules?

Secondly, the noble Lord, Lord Randall, both today and at Second Reading, highlighted two particularly difficult sets of cases. The first was the position of veterans. Today, he mentioned Harry Penny, Roger Edwards, Patricia Coulthard and others, and I am still thinking about Anne Puckridge, whom he mentioned at Second Reading—the 95 year-old World War II veteran whose pension was frozen when she moved to Canada at the age of 76 to be near her family. It is hard to see the justice in those who fought for this country being denied the pensions that they earned simply because they moved abroad to be with their families in their later years and did not realise what would happen. Do the Government know how many veterans are in this position?

The noble Lord also mentioned at Second Reading the case of Monica Phillips, who emigrated to the UK in 1959 as part of the Windrush generation. After 37 years working here, she returned to Antigua to look after her mum and her pension was then frozen. Again, do the Government know how many of the Windrush generation are affected by this measure? Have they looked into it?

Thirdly, the noble Lord, Lord Randall, also raised today the issue of reciprocal agreements in the wake of Brexit. I have to say to him that I have pursued that issue for some time but have got precisely nowhere. All that Ministers will ever say is that they hope to get a deal, so the position will be as set out in the negotiating documents. However, I will be very interested to see whether he gets any more information than I have been able to obtain.

This issue is so difficult because so many people assume that their pension is determined by what they pay in national insurance contributions rather than where they live when they retire. Therefore, can the Minister assure the Committee that the position is now made abundantly clear to all pensioners, especially as they approach pension age? I look forward to her reply.

Baroness Stedman-Scott (Con)
My Lords, I turn to the amendment to Clause 1 tabled by my noble friend Lord Randall of Uxbridge. As he is aware, it would in practice have no effect because it simply commits the Government to uprating UK state pensions, as they do now.

However, my noble friend spoke passionately at Second Reading, and again with great passion and commitment today. He eloquently shared with us the case studies of people impacted by the lack of reciprocal arrangements and the freezing of pensions. The long-standing policy of successive Governments for over 70 years has been that UK state pensions are payable worldwide and are uprated in countries overseas where there is a legal requirement to do so—for example, in countries where the UK has a reciprocal agreement that requires uprating. I look forward to the debate on the issue but, first, I would like to make some points about our reciprocal agreements with other countries.

The UK has reciprocal agreements with several countries, and most of these require uprating. There are only two reciprocal agreements which do not allow for uprating: those with Canada and New Zealand. A similar agreement existed with Australia until early 2001, when the Australian Government withdrew from it. Unlike the UK, Canada and New Zealand have residence-based state pensions. The reciprocal agreements with them broadly allow for periods of residence, employment or contributions in one country to be considered as periods of residence, et cetera, in the other for the purposes of entitlement to a state pension.

The systems in New Zealand and Canada are also means-tested to some extent. For example, New Zealand takes overseas pensions fully into account in its superannuation schemes. New Zealand law also requires that notional income is calculated if a pensioner does not claim his or her state pension from an overseas country. This means that any future state pension increases would be taken into account and the moneys would go to the respective Treasuries, so pensioners on the lowest incomes are unlikely to benefit from increases in their UK state pension. It might also mean an increased tax bill for some overseas residents and the loss of their welfare benefits in their chosen country of residence. This Government believe that our responsibility is to pensioners living in this country, rather than effectively making payments to other Treasuries.

The agreements with Canada and New Zealand were negotiated and agreed some time ago. The pattern of the UK’s reciprocal agreements with other countries is historic. It is based in part on Commonwealth ties but also on the political context at the time of concluding the agreement. That gives rise to inconsistencies. For example, we have an agreement with some Caribbean countries, such as Jamaica, but not with others. The agreement with Jamaica requires uprating. It has been suggested by some that uprating could form part of discussions on future free trade agreements—for example, with Australia and Canada. However, state pensions are not in scope of free trade agreements.

There are no plans to change the policy on uprating UK state pensions overseas. The Government have not entered into a new reciprocal social security agreement since 1992, as my noble friend Lord Randall referred to, and have no plans to enter into new agreements.

The noble Baroness, Lady Sherlock, asked about the number of pensioners living in frozen-rate countries. It is approximately 500,000. I regret that I do not have any numbers for veterans.

My noble friend Lord Randall raised, as did other noble Lords, the question of a moral obligation to rectify this anomaly. The policy on this issue is long-standing, as I have already said, and one of successive Governments. It has been in place for some 70 years and, although I know this will disappoint noble Lords, there are no plans to change it.

My noble friend and the noble Baroness, Lady Sherlock, talked about the impacts on the Windrush generation. UK state pensions are payable worldwide to eligible people based on their NI record. I regret to tell the noble Baroness that we do not know the number of people affected among the Windrush community.

My noble friend Lord Randall asked about pensioners who are resident overseas who have paid their NI contributions, so pensions payable abroad should be fully indexed. The rate of contribution paid is never earned entitlement to the indexation of pensions payable abroad. This reflects the fact that the UK scheme is primarily designed for those living in the UK.

My noble friend Lord Randall raised the issue of consistency across countries, and a particular point about Canada. Canada has a bilateral agreement with the UK that does not cover uprating. The UK sought a reciprocal agreement with Canada that included uprating, but this was rejected as legislation prevented Canada paying its pensions overseas.

My noble friend Lord Randall and other noble Lords raised the issue of the Government’s moral duty to uprate state pensions overseas. The decision to move abroad is voluntary and remains a personal choice, dependent on the circumstances of the individual. For a number of years, advice has been provided to the public that the UK state pension is not uprated overseas except where there is a legal requirement to do so.

Given that the amendment states that any uprating order made under the Bill would uprate abroad in cases where there was already a legal requirement to do so, I urge my noble friend to withdraw it because it has no practical effect, given that the Government are already required to do that in law. However, I welcome the opportunity he has presented to debate the broader issue of uprating overseas.