Social Security (Up-rating of Benefits) Bill

Baroness Lister of Burtersett Excerpts

Report stage
Tuesday 2nd November 2021 Lords Chamber

[Baroness Wheatcroft (CB)]

My Lords, I have put my name to Amendments 1 and 7 in this group, as well as to Amendments 3 and 4 which will be debated later. I am delighted to follow the noble Lord, Lord Rooker. He spoke sanely about what these amendments would do and why they should do it.

The noble Baroness, Lady Altmann, made the case very clearly. There are 2 million pensioners living in poverty and 1 million in extreme poverty. Noble Lords need to know that this Bill would put more people in this position. We should not be passing it unamended.

I find the arguments against our amendments pitifully thin—I am sorry, but I do. I remind the House that, in Committee, the Minister, who wants to do the right thing, said:

“The Government’s triple lock manifesto commitment remains in place”.—[Official Report, 26/10/21; col. 738.]


I know that that is a reference to the fact that we are told that the suspension will be for only one year, but that is not good enough. If you suspend the earnings lock for one year, the cumulative effect goes on, so the commitment is lost.

The commitment was to keep the earnings lock in place because earnings might well be greater than inflation—particularly CPI inflation—and there is no doubt that that will be the case. After all, the Government keep telling us that they want a high-wage economy. But they do not seem to want higher increases for pensioners. We know that, in most cases, these people’s spending is very curtailed. It goes predominantly on fuel and on food. Those are constituents of the CPI, but they are not in the same proportion as they are in pensioners’ spending. Therefore, increases in fuel and food prices hit pensioners harder.

I am still bemused as to how, in Committee, the Minister was able to tell us that,

“we are not currently expecting widespread, significant and sustained increases in consumer food prices in the coming months”.—[Official Report, 26/10/21; col. 740.]

I do not know what she knows, but the supermarkets certainly are. These price rises are already coming through. They are not yet fully reflected in the CPI, but we know that prices in the shops are going up. And the more that wages go up in this new, high-wage economy where we are encouraging drivers of HGVs to demand more money—which the Government say they deserve—the more this will feed through into increased food prices.

We need to make sure that our pensioners can eat. I do not want to be responsible for pensioners going hungry —or even hungrier than they have been in the past—and I do not believe that the Minister does either. It is imperative that we do what should not be beyond the wit of any Government and come up with a number that approximates effectively to where underlying earnings have gone in the last year. I have every confidence that the ONS can do this. Indeed, CPI is not quite as robust as the Minister would have us believe; it is often adjusted after a few months, or even a year, because a lot of numbers have to be adjusted as new information comes through. We could come up with an adjusted earnings figure which would enable the Government to maintain their manifesto commitment, which I am sure it would really like to do. It would enable the rest of us to ensure that pensioners –those on pension credit, as well those on the basic pension—lead a slightly better life. This is all part of the levelling-up agenda.

[Baroness Lister of Burtersett (Lab)]

My Lords, in speaking briefly in support of Amendment 5, although I also support the other amendments in this group, I will spare noble Lords the full lecture on the use of relative and so-called absolute poverty measures that I gave in Committee. As the Minister completely ignored the point in her response to that group of amendments in Committee, I return to it now. In discussing an assessment of the Bill’s impact on pensioner poverty—which is certainly necessary—we should be clear how we measure poverty.

When mentioning poverty, the Minister constantly uses the so-called “absolute measure”, and no doubt she has been briefed to do so today. I say so-called because it is better described as an anchored measure, anchored to the poverty line in 2010-11 adjusted for inflation, but taking no account of changes in living standards in the intervening period. In doing so, she ignores what has happened using the more commonly used relative measure, which is part of the suite of official measures.

--- Later in debate ---

[Baroness Altmann (Con)]

My Lords, I rise to move Amendment 3 and give notice that I intend to divide the House on this amendment. I am enormously grateful for the support of colleagues across the House, including the noble Baronesses, Lady Wheatcroft and Lady Janke, and the noble Lord, Lord Hain. I am, of course, grateful to my noble friend and the officials who have engaged with us over the past weeks on this Bill. However, I still believe that these amendments are necessary. Amendment 3 would retain the earnings link uprating for the state pension triple lock rather than removing it as the Bill proposes.

I appeal to noble Lords on these Benches, as well as across the House, to recognise that these amendments are seeking to protect a solemn manifesto commitment made at the 2019 general election. Amendment 3 would preserve the important social security principle and the triple-lock promise of protection for the basic and new state pensions against rises in average earnings. Amendment 4 is consequential on Amendment 3. It was accepted by the Whips yesterday but, if the Minister does not agree, I ask her to confirm that and explain why she might not accept it when she responds. It would permit the Secretary of State to adjust the traditional average weekly earnings statistics produced by the Office for National Statistics, which have been used for uprating in past years, for the effect of the pandemic, which has upwardly biased the figures.

This Bill was perhaps not necessary. In the Social Security Administration Act 1992, which we are being asked to revise through the Bill, Section 150A (8) explicitly allows the earnings statistics to be adjusted. The legislation states that when reviewing how to uprate the state pension each year:

“the Secretary of State shall estimate the general level of earnings in such manner as he thinks fit.”

So this is not a question of having to use the 8.3% earnings statistic.

When Members of the other place voted on this Bill to abandon the manifesto pledge to 12 million citizens, they did so on three bases which I believe are flawed. First, they were led to believe that no alternative was available to using the 8.3% figure but, as I have just demonstrated, the Act would permit that in any case. However, to be helpful, we have laid Amendment 4, which explicitly states that, for the year 2022-23, should the Government believe that the earnings figures are distorted, they may adjust for the effect of the pandemic.

The second basis was that the other place was told that the 3.1% figure would still protect against rises in the cost of living. Indeed, when summing up, the Minister said that the so-called double lock of CPI or 2.5%

“will ensure that pensioners’ spending power is preserved and that they are protected from the higher cost of living”.—[Official Report, Commons, 2/9/21; col. 86.]

This also does not stand up to scrutiny. Since that debate, the inflation outlook has significantly deteriorated, but on further examination it is clear that September’s 3.1% CPI figure was downwardly biased by the effects of the pandemic. For example, there was a sharp fall in hotel and restaurant costs, as well as in household services, which hardly form a major part of most pensioners’ budgets. In his Budget speech, the Chancellor said that inflation in September was 3.1% but is likely to rise further. The OBR said:

“We expect CPI inflation to reach 4.4 per cent next year”


warned that it could peak at close to 5% and added that

“it could hit the highest rate seen in the UK for three decades.”

That is around 7.5%. Last month, gas and electricity bills rose by 12%. Food prices are rising, and the OBR warns of a further rise in the energy price cap next April. Yes, this is for one year only, but what a year to choose to do this, while older people are facing a cost-of-living crisis and the protection that they were relying on is being removed.

The third basis was that not doing this would cost £5 billion per year and that earnings fell last year, but pensioners received a 2.5% rise, so they will have money taken from them next year as some kind of payback. Using an adjusted figure would still save several billion pounds relative to the £5 billion cost. But after seeing alcohol and fuel duty cut in the Budget and the bank surcharge allowance raised, and adding up the amount of Exchequer savings that those measures entail, half the cost of not honouring the triple lock will cover the costs of just those three measures. I appeal to noble Lords across the House: is this really the country that we believe that we should be living in? Is that the priority for public spending?

This is also a perfect example of our role. If we are scrutinising legislation that has come over to our House and which we believe that it is flawed, that it was perhaps passed through on a false premise, or if circumstances require us to send it back for reconsideration, is that not precisely what we should be doing? Twelve million citizens depended on that commitment. We have a chance to ask the other place to reconsider, perhaps in the light of updated information. I hope that noble Lords across the House can support this.

[Baroness Lister of Burtersett (Lab)]

My Lords, as no one else is getting up, I will. I support Amendments 3 and 4 and congratulate the noble Baroness, Lady Altmann, on her tenacity in pressing this issue.

I have made it clear at each stage of the Bill that, while questioning the rationale for the triple lock, I strongly support the double lock that links pensions to earnings or prices as crucial to maintaining or hopefully even improving pensioners’ living standards. If under the triple lock it is possible to raise pensions by the arbitrary figure of 2.5% in some years, I do not understand why what is proposed in the amendments is deemed to be not sufficiently robust by the Government. I have yet to hear a convincing response to the very strong case made by the noble Baroness, Lady Altmann, nor have I received any letter from the Minister today. I have just checked my phone, and nothing has come through.

If, despite assurances to the contrary, and when an alternative that did not use the 8% figure was clearly available, there was a jettisoning of any earnings link, it is not surprising that this has given rise to fears that the link could be scrapped at some future point, just as it was in 1980. As has already been pointed out, the case for maintaining some form of earnings link, in line with the amendment, is all the stronger given the anticipated increase in inflation. Many people on low incomes—pensioners and others—face a bleak winter, especially if inflation rises as high as 5%, as predicted by the Bank of England’s chief economist recently—and that is before taking account of the differential impact of inflation on those on low incomes, for whom fuel and food represent a disproportionate proportion of their budget, as noted already. They will struggle during the winter months without any additional help with fuel, as called for by National Energy Action, and when they finally get their uprating next April, it will not be enough to compensate. While it is very welcome that the Government have finally agreed to produce an impact assessment of the Bill, it is a shame that we have not got it to inform our debate today.

Echoing what I said in the first group of amendments, I hope that, despite what she said earlier, when responding to these amendments, the Minister will not once again trot out the statistics based on the so-called absolute measure of poverty, when she knows full well that pensioner poverty, on the relative measure, is on the rise over a longish time period. Rather than avoid the issue of pensioner poverty, as it is experienced relative to the rest of society, the Government should be working to prevent a further increase. This amendment provides them with a means of doing so.