Pensions and Social Security

Caroline Nokes Excerpts

Tuesday 10th February 2026 Commons Chamber

[The Minister for Social Security and Disability (Sir Stephen Timms)]

I beg to move,

That the draft Guaranteed Minimum Pensions Increase Order 2026, which was laid before this House on 12 January, be approved.

[Madam Deputy Speaker (Caroline Nokes)]

With this it will be convenient to discuss the following motion:

That the draft Social Security Benefits Up-rating Order 2026, which was laid before this House on 12 January, be approved.

[Sir Stephen Timms]

In my view, the provisions in the instruments are compatible with the European convention on human rights. The draft Social Security Benefits Up-rating Order will increase relevant state pension rates by 4.8%, in line with the growth in average earnings in the year to May to July 2025. It will increase most other benefit rates by 3.8%, in line with the rise in the consumer prices index in the year to September 2025, so the regular formula has been used.

The order commits the Government to increased expenditure of £9 billion in 2026-27, of which £6 billion will be from state pensions and pensioner benefits, £2 billion from disability and carers benefits, and £1 billion from other working-age benefits. A further £2 billion of expenditure on working-age benefits will be incurred in 2026 as a result of uprating decisions made under separate legal powers in the Universal Credit Act 2025, which will set new rates for universal credit and income-related employment and support allowance.

Let me say a little more about each of the benefits being uprated in turn. First, on pensions, the Government’s commitment to the triple lock means that the basic and full rate of the new state pension will be uprated by the highest of the growth in earnings or prices or 2.5%. That means that the uprating will be by 4.8% for 2026-27. As a result, from April the basic state pension will increase from £176.45 per week to £184.90, and the full rate of the new state pension will increase from £230.25 at the moment to £241.30 per week.

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[Sir Stephen Timms]

I think perhaps the point that the hon. Gentleman is making is that it does not fulfil the aspirations of the essentials guarantee campaign, with which he and I are familiar, and that is true. However, April’s above-inflation uprating will be the first of four such upratings, so there will be a similar over-inflation uprating in each of the following three Aprils. It will not end up at the level on which the essentials guarantee campaign has focused, but let us see what happens beyond the period for which we have made these announcements. As he said, it is an historic change of direction for public policy.

Benefits for people in England and Wales who have additional costs as a result of disability or ill health will also increase by 3.8%. These include disability living allowance, attendance allowance and personal independence payment. The increase will also apply to carer’s allowance.

The draft Guaranteed Minimum Pensions Increase Order 2026 sets out the yearly amount by which the guaranteed minimum pension part of an individual’s contracted-out occupational pension, earned between 1988 and April 1997, must be increased when it is being paid. The increase is paid by occupational pension schemes, and helps to provide a measure of inflation protection for people in receipt of contracted-out occupational pensions earned between 1988 and 1997. The law requires that GMPs earned between those two dates must be increased by the percentage increase in the general level of prices measured the previous September, capped at 3%. The September 2025 inflation figure— or CPI—was 3.8%, so the increase for the financial year 2026-27 will be 3%.

The 3% cap provides pension schemes with more certainty, allowing them to forecast their future liabilities more reliably. That is important when they are considering their funding commitments. The measure strikes a balance between, on one hand, protecting members against the effects of inflation, and on the other, not increasing scheme costs beyond what schemes and sponsoring employers can reasonably afford.

The draft Social Security Benefits Uprating Order 2026 will, if Parliament approves it, commit the Government to increased expenditure of £9 billion in the next financial year. Changes will mainly come into effect from 6 April this year and apply for the tax year 2026-27. The order maintains the triple lock—which benefits pensioners in receipt of both the basic and new state pensions—raises the level of the safety net in pension credit beyond the increase in prices, increases the rates of benefit for those in the labour market, and increases the rates of carers benefits and benefits to help with additional costs arising from disability or health impairment.

The draft Guaranteed Minimum Pensions Increase Order requires formally contracted-out occupational pension schemes to pay an increase of 3% on GMPs in pensions earned between April 1988 and April 1997, giving a measure of protection against inflation, paid for by the scheme. I commend the orders to the House.

[Madam Deputy Speaker (Caroline Nokes)]

I call the shadow Minister.

[Rebecca Smith (South West Devon) (Con)]

I wish to reassure the Minister about something that I said in last week’s debate on the two-child benefit cap. I shared something of my story, and said that we had lost child benefit as a result of the Labour Government coming into office in 1997. I was convinced I had said “family credit”, which was what I was supposed to say. When I read back over Hansard, I realised that, in my haste to get my point across, I had said the wrong thing, which explains why I caught sight of the Minister’s perplexed face from across the Dispatch Box. I have also corrected the record through Hansard.

I can confirm that the Opposition support the usual increase in the guaranteed minimum pension, and the uprating of social security benefits. However, given that this debate is largely a formality and there will be no vote on the motions, it is a good opportunity to take a step back and reflect on the pensions and benefits system more broadly—in the context of the motions before us, of course.

First, let me highlight what I call the “benefits barbell”. At one end is the working-age welfare bill, which keeps getting heavier; at the other is the eye-watering cost of public sector defined-benefit pensions. In the middle of those two heavy weights is the hard-working taxpayer, straining under the load. Welfare and pensions both matter—they are pillars of a decent society—but it is Britain’s taxpayers who do the heavy lifting. They are the ones who get up before dawn, commute in all weathers and keep the economy moving. Without their efforts or even more Government borrowing, there would be no welfare state at all, and we cannot pile more weight on to their shoulders indefinitely.

The Secretary of State for Work and Pensions has already admitted that the long-awaited Timms review will not involve making welfare savings and is not likely to be published before 2027. It seems that this Government are shunning any attempts at reform over the coming year, and yet again, it is taxpayers who bear the cost of this delay. Right now, the UK is on the verge of becoming a welfare state with an economy attached. Over 40,000 people were signed off work every day by GPs over the last year, according to the Centre for Social Justice. Over 5 million people are claiming benefits with no work requirements, which is equivalent to over half of London’s population.

Concerningly, that number includes more than 300,000 people aged 16 to 24—young people with promising lives ahead of them whose ambitions are being stifled by a benefits system that would rather write them off. Labour is presiding over a youth unemployment crisis and seems unable to offer long-term solutions. There are already nearly 1 million young people in the UK who are not in education, employment or training. Over 700,000 university graduates are out of work and on benefits. One and a half years after taking office, this Government are still failing to tame the runaway benefits bill and rising unemployment rates. By contrast, the Conservative plan to get Britain working again will tackle youth unemployment by offering young people a first jobs bonus, which they can use to save for their first home.

Living within our means is one of those sensible, mundane things that gives the Conservative party its reputation as a safe pair of hands for the economy. Of course, making welfare savings is far less likely to grab headlines—scrapping the two-child benefit cap or rolling out more free school meals is a far easier win—but getting the deficit under control is crucial to a healthy economy. When the Conservatives took office in 2010, the Government were running a deficit of 9%. By the time covid struck, we had brought it down to under 1%. That, in turn, enabled us to provide generous support to individuals and businesses during lockdowns.

As I said in the debate on the two-child benefit cap last week, keeping the limit would have saved the taxpayer £2.4 billion in 2026-27, rising to £3.2 billion in 2030-31, yet our current Prime Minister would rather throw some red meat to his Back Benchers than exercise fiscal discipline. He has caved in to their demands, even though scrapping the two-child benefit limit was previously ruled out by the Chancellor and was conspicuously absent from Labour’s manifesto.

Conservatives believe in fairness for the working parents who make difficult choices about whether they can afford another child. Many working families do not have incomes much higher than the threshold for universal credit but are paying for others through their taxes. Why should we make those parents bear the double burden of supporting their own children and subsidising other people’s? A fair system should not simply exempt families on benefits from making tough choices.

Speaking of fairness, the issue of passported benefits desperately needs investigating. Last week, I highlighted the shocking statistic that one in four full-time UK workers would be better off on benefits than in work, but something that often gets overlooked is that people on universal credit also gain access to a raft of discounts and additional benefits such as free prescriptions, discounted broadband, healthy food cards and special savings accounts. There are over 20 of these schemes sprinkled across multiple Government Departments. Taken together, passported benefits give some families who are already on universal credit over £10,000 a year in extra support, costing the taxpayer over £10 billion, according to a new report from the think-tank Onward. These benefits need rationalising and streamlining within universal credit. Otherwise, we will continue to face three serious problems.

First, passported benefits disincentivise people from entering employment. Any sensible person would think twice about starting a job if they faced a cliff-edge denial of additional benefits worth thousands of pounds once their universal credit tapers away. Secondly, we have a two-tier system. As a result of these linked benefits, individuals just outside the universal credit threshold often face greater financial hardship than benefit claimants. Thirdly, for those who really do need these extra schemes, there is a labyrinth of bureaucracy that slows down the process of getting help. These piecemeal entitlements distort the system. From a quantitative perspective, it is harder to see which poverty interventions are actually having a positive effect. It is also incredibly difficult for everyone to see whether this Government are succeeding at reducing poverty.

I welcome the Government’s new emphasis on deep material poverty as a headline poverty metric, which is a far more holistic measure that captures how poverty impacts people’s daily lives and whether they can afford necessities. Last week, we heard endlessly that the Government’s child poverty strategy and the scrapping of the two-child benefit cap will bring half a million children out of poverty, but it is worth noting that we are talking about relative poverty. That can never be eradicated, because it refers to a household income below 60% of the median household income. The only way to reduce relative poverty is to raise the incomes of the poorest faster than the middle or compress the income distribution. An overemphasis on relative poverty has underpinned a misleading left-wing argument that exaggerates the need for income redistribution. I worry that we will end up paying people to be so-called middle-class if we continue as we are.

At the heart of Conservative philosophy is a belief in personal responsibility—taking control of our future through hard work and aspiration. If we are serious about tackling child poverty in the long term, it is vital to deal with the effects of intergenerational worklessness and not just rely on social security. Children in long-term workless households are four times more likely to be materially deprived and 10% more likely to end up workless themselves. For every parent who does not go out to work, there is a child who misses seeing a positive example of work modelled to them—the early alarm clock, the daily routine, the reward for an honest day’s work and the ability to save up to buy important things. That is not to say that there are not those in dire circumstances for a vast number of reasons, but ultimately, when we are looking at people in general, that is the reality we need to deal with. Under our watch, the number of children in workless households fell consistently. Under Labour, the number has reached a nine-year high, with 1.2 million children now living in homes where no parent has worked for over a year.

Turning to the topic of personal independence payments, I would like to ask the Minister about a disabled constituent I caught up with at the weekend. She is a veteran who served in the Royal Navy for 19 years and is now an unpaid carer for her elderly father. She works full time, mainly from home, and commutes to London a few times a month. She had a Motability scooter, which enabled her to get to the office and around London when required, but after her last PIP review, which took place over the phone, she lost her higher rate of PIP and thus her scooter. She then received a puzzling letter from the Department for Work and Pensions, which wrongly claimed that full-time work indicated she had reasonable mobility, despite the fact that her entire home is adapted for her accessibility requirements.

My constituent is a highly capable woman who is skilled at advocating for herself as well as her father and, indeed, her fellow veterans, but she admitted that she felt too stressed to open the letter for a few weeks, meaning that the reconsideration window had timed out by the time she fully processed the DWP’s decision. For context, she has also been diagnosed with complex post-traumatic stress disorder following a traumatic experience in the military and is currently on a long waiting list for treatment. Statistically, she is unusual; fewer than one in six PIP claimants are in employment.

It seems bizarre that the DWP assessors are happy to downgrade someone in this situation, who is in work and genuinely needs the higher rate of PIP to help her carry out that work, yet the Department seems reluctant to stem the tide of benefits claims from people with less severe mental health issues. That is why a Conservative Government will end sickness benefits for low-level mental health problems, to ensure that support is targeted at people who need it most. I welcome the Government’s commitment to increase the number of face-to-face PIP assessments to 30%, up from the very low rate of 5% in 2024, but I urge them to be even more ambitious with their target, to ensure that constituents like mine are accurately assessed and receive the help they need.

In conclusion, as I return to the image I began with, the barbell is getting heavier by the year, with welfare on one side and pensions on the other, and still the hard-working taxpayer stands in the middle doing all the heavy lifting. The Government are doing far too little to ease that pressure. Working families are paying the price for a system that grows ever more expensive, while true reform moves at a crawl. It is time for a welfare system that is fair to those who need support and fair to those who pay for it.

[Madam Deputy Speaker (Caroline Nokes)]

I call the Chair of the Work and Pensions Committee.

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[Debbie Abrahams]

I am familiar with the child payment, but I need to understand it in the context of what else is happening in Scotland. I am aware of it, and I think it is an interesting way for Scotland to try to address the issue. We had a meeting with the Children and Young People’s Commissioner Scotland and were impressed with what she was doing, but I will reserve judgment until I understand it a little more in the round.

Only last week, the Joseph Rowntree Foundation published new analysis:

“In 2021-24, the average person in poverty had an income 29% below the poverty line, with the gap up from 23% in 1994-97”.

If we use equivalised figures, that means that couples without children are living on less than £12,500 a year, and couples with two children under 14 get about £17,500 a year. Social security is complex, but looking at deep poverty, as my right hon. Friend the Minister is doing, is important. If we are to avoid the appalling situation with NEETs that we have inherited, that is what we need to do.

Of the 14.2 million people living in poverty identified in JRF’s most recent poverty analysis, 6 million are in severe and persistent poverty, and more than half are disabled or live in a disabled household. Although I recognise the significant moves that this Government have made to address the inadequacy of working-age social security support to tackle the poverty and cost of living crisis that people are experiencing, I personally think we need to be a bit bolder.

As I said last week, I want to see us be clearer about our vision and values, which define what our social security system is for. It is 80 years since the National Insurance Act 1946, which was introduced in response to the Beveridge report and the outcomes and appalling circumstances after the second world war. I believe we need a new social contract that the British people can buy into and that spells out how all the elements of a comprehensive 21st century welfare state work together to deliver for them.

Our social security system, like our NHS, should be there for all of us in our time of need. It should protect us from poverty if we lose our jobs, are born with or acquire health conditions or disabilities, and when we grow old. It should also be there for us if and when we need extra support, become carers and, sadly, lose a loved one, but it cannot work in isolation; it needs to be considered in conjunction with our health and social care, education and skills, and business and employment systems in particular, but there are more.

Without a fit and healthy working-age population, a skilled workforce and a fair employment system providing quality, well-remunerated jobs, our economic productivity is known to fall, and our welfare system as a whole then comes under threat. As an example, Health Equity North’s “Health for Wealth” report shows that improving the health of the north to the same level as the rest of the country would add an extra £18.4 billion to the economy through enhanced productivity while reducing demand on the NHS.

Last year, the Work and Pensions Committee commissioned Health Equity North to report on what income could be generated through increasing returns to work for people in receipt of universal credit by just 5%. Its estimates show that that would yield an extra £20 billion over the life of this Parliament, with a return on investment of between £5.21 and £6.63 for every £1 of employment support invested. That is the way that we will reduce DWP spending and increase growth.

I look forward to seeing how the “Get Britain Working” and “Keep Britain Working” programmes, such as Connect to Work and the vanguards, are expanded. They are fantastic examples of how we can proceed. I was so impressed when I met organisations delivering Connect to Work. The Work and Pensions Committee had a session last week with Sir Charlie Mayfield and small businesses to see how they could be involved in that, and I hope that we can expand and build on this work.

[Madam Deputy Speaker (Caroline Nokes)]

I call the Liberal Democrat spokesperson.