Cost of Living Increases: Pensioners

Guy Opperman Excerpts

Monday 21st March 2022 Commons Chamber

[Alan Brown]

Yes!

Returning to fossil fuel, obviously petrol and diesel prices have increased massively at the pump. They have gone up by between 35p and 40p a litre compared with a year ago—a 30% increase. That also means that while people struggle to run their cars, VAT returns to the Treasury have increased massively. The current rates compared with last year mean that the Treasury is getting something like £3 billion a year extra in VAT returns, but that should be recirculated to support hard-pressed people, especially pensioners. It seems that the Chancellor may respond to calls to cut fuel duty, but if he does, he will be demonstrating the folly of a 12-year duty freeze. When we had lower prices, that was the time when bolder action could have been taken to raise fuel duty, so that when fuel prices increased in the way they have, fuel duty could have been decreased. That would have created a much smoother curve, instead of peaks and troughs, and the Treasury would have had a far more stable income as well.

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

I am just trying to understand the hon. Gentleman’s policy. Is it genuinely his policy to raise fuel duty? That is the impression he has just given.

[Alan Brown]

I repeat that the time to be bold and increase fuel duty would have been when fuel prices were at a record low. That would not have had the same impact on people’s pockets. The current rise is unsustainable—[Interruption.] The Minister did not listen to what I said. This here-and-now policy from the Government is unsuitable; it should involve bolder long-term planning. Had they raised fuel duty earlier when prices were lower, they could have reinvested the revenue in public transport and in creating money for a rainy day, like right now.

[Alan Brown]

Absolutely. My hon. Friend has made my point much better than I was making it myself, and I appreciate that. A fuel duty regulator is exactly what would have given better stability for the Treasury and for people’s pockets.

Looking at other windfalls the Treasury receives, we see a VAT windfall from the £800 increase in average household bills. That is well over another £1 billion coming into the Treasury coffers. The Treasury is also benefiting from increased oil and gas revenues. The last Budget predicted an extra £6 billion in oil and gas revenues in this Parliament compared with the March 2021 Budget, but given the sustained period of increased prices, that £6 billion will prove to be an underestimate. That is more money that should have been reinvested.

I know that Labour has targeted a windfall tax on the oil and gas companies, but that sounds a wee bit like raiding the one traditional cash cow. Why do we not, as the SNP motion suggested last week, look at this in the round? Why do we not target all sectors or companies that have benefited disproportionately from the pandemic, and in particular the new-start companies and the Tory crony companies that were awarded PPE contracts and that have realised record profits since? That is a real obscenity that should be targeted. Anyone who has read Private Eye and seen the eye-watering sums that those companies have made should be truly horrified.

I want to highlight some additional measures in Scotland where the SNP Government are providing mitigation for pensioners, but even the powers the Scottish Government have are nowhere near enough to make the transformational changes that we want. Older people in Scotland get their bus passes at the age of 60, instead of having to wait until the state pension age. They also have universal free prescriptions and are more likely to have had targeted energy efficiency measures for their homes. All charitable organisations in this sector, as well as the energy companies themselves, want the UK Government to follow the lead of the Scottish Government in making energy efficiency a national infrastructure programme. The low-income winter heating assistance will give around 400,000 low-income households a guaranteed £50 payment every winter instead of the complicated UK cold weather payment of just £25.

[Guy Opperman]

I am just trying to understand the hon. Gentleman’s speech. Is it still SNP policy that, post-independence, the rest of the UK would have to pay for Scottish pensions? He seems to be unclear on that, and I just want to be utterly clear.

--- Later in debate ---

[Ian Byrne (Liverpool, West Derby) (Lab)]

Thank you, Mr Deputy Speaker.

The fear being felt across this nation is palpable. Millions, including pensioners, are worried about whether they will freeze or starve in their homes. In the fifth richest country in the world, how has this injustice been allowed to happen? That is the position so many face, due to political choices taken in this House. Shamefully, the figures show that one in five pensioners in the UK is living in poverty, 1.3 million retirees are undernourished and 25,000 die each year due to cold weather.

Food and energy bills are rising at the highest rates in 30 years. It is immoral that the Government have chosen this moment to force through a real-terms cut to the state pension of £388 this year—a state pension, let us remember, that is already one of the least supportive by international comparison. In November, I asked the Minister:

“What impact assessment has the Department for Work and Pensions made of scrapping the triple lock, and how many more pensioners in Liverpool, West Derby will be living in poverty and unable to afford food as a result?”—[Official Report, 8 November 2021; Vol. 703, c. 16.]

I was not given an answer, so I ask again on their behalf: what impact assessment has been made? I would like to touch on the impact of the cost of living crisis on the 5,360 women in Liverpool, West Derby who were affected by the changes made to the women’s state pension age by the Pensions Act 1995, 4,000 of whom were further affected by the Pensions Act 2011, which accelerated the increases to ages 65 and 66. It is clear from the correspondence I have received and from speaking to people in our area just how much hurt has been caused by the actions of the DWP, as women who were paying in with the expectation of a set retirement date had that taken away from them without proper notice.

[Guy Opperman]

I notice that the hon. Gentleman jumped through the 13 years of the Labour Government on state pension age increases when there was the same policy, including a pensions Act that raised the state pension. With great respect, this Government and the coalition Government have increased the state pension exactly in line with the policies of the Labour Government in the 13 years that they were in power. There is no difference.

[Ian Byrne]

I thank the Minister for that intervention. I will go on to the issue of full restitution shortly.

The harm caused by this situation goes beyond just financial matters. Many women who are facing this unjust situation have faced huge disruption to their lives, their wellbeing, their work and their plans for themselves and their families—and now the cost of living crisis has worsened this dire situation even further. I would like to read out some of the correspondence I have received from women affected. One said:

“As a single parent with a dependent child and caring for elderly parents, it was terrible to discover the huge financial loss caused by the Government removing my state pension for 6 years with no notice. Near destitution was the result, despite me and my employers paying National Insurance contributions for 45 years.”

Another email said:

“I like millions of other 50’s women never received an official letter from the state informing me that the pension age was changing and allowing me time to build up a private pension, which I never had. All my money went towards paying a mortgage as no council houses were ever available. Rightly or wrongly, I chose not work when my children were born so that I could spend as much time with them as possible while they were young. My plans for the future were to retire at 60 and finally spend time with my Mother, time that my siblings and I never had growing up as she was always working. The Government robbed me, not just financially but in so many other ways.”

It is unacceptable that the Government have so far refused to act to right this wrong. I urge Members in all parts of the House to support my early-day motion 906 on providing full financial restitution to women born in the 1950s.

Pensioner poverty is a political choice, fuel poverty is a political choice, and hunger is a political choice: all choices made by this Government that could be reversed if Conservative Members had the political will to do so. Let us hope they start this week with the Chancellor’s spring statement.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

With a mother who was a Llewelyn by birth, I am under tremendous pressure with this speech. I will attempt to address in some detail the points that the hon. Member for Cynon Valley (Beth Winter) made.

This year, we will spend more than £129 billion on the state pension and the benefits accrued for pensioners in Great Britain. We have never supported our pensioners with more in this country. That figure includes more than £105 billion on state pension, £5 billion on pension credit, £2 billion on winter fuel payments, £325,000 on cold weather payments so far this winter and £144 million on the warm home discount payments last year.

Before I get into the meat of the debate, may I address one key point? The spring booster campaign was announced today. It is utterly vital that Ministers send out the message from this Dispatch Box that we really want the 5 million people at whom the campaign is targeted to take up the vaccine, which is being offered to adults over the age of 75, care home residents and the most vulnerable over-12s—those who, like me and several other Members of this House, are immunocompromised. Approximately 600,000 people will be sent invitations over this coming week, as I understand it, and 5 million people will ultimately be contacted. I urge everyone, primarily the pensioners with whom we are all concerned today, to apply and to come forward when asked.

[Jonathan Ashworth]

In a cross-party spirit, may I endorse what the hon. Gentleman says? I shadowed the Department of Health and Social Care for many years, and I completely agree. I want the message to go out across the country that there is no division: everybody who needs the vaccine should get it. I encourage my constituents, his constituents and all hon. Members’ constituents to come forward for the vaccine.

[Guy Opperman]

The right hon. Gentleman does himself credit with what he says. Much as he did as shadow Secretary of State for Health and Social Care, he seeks cross-party ground where it is right and proper, which I support and really appreciate. We need to get that message across.

I thank all colleagues who have contributed today. As the Secretary of State set out, we are experiencing a period of increasing consumer demand that, together with disruptions to global supply chains and the impact of the war in Ukraine, is definitely placing a strain on household and other finances. The Government recognise that inflation is rising; together with the Bank of England, we are closely monitoring the situation.

I applaud the many Members across the House who have put in detailed recommendations to the Chancellor for the spring statement. I am sure that those on the Treasury Bench have been listening most carefully. In the intervening period, we have taken significant steps to ease the financial pressures by providing a support package worth billions of pounds during this fiscal year and the next.

The state pension is clearly the foundation of support for older people. Over the last two years, the basic and new state pension will have increased by more than 5.6%, taking into account the 2.5% rise this year and the 3.1% rise from this April. There has been much discussion of pension credit, which continues to provide invaluable financial support to approximately 1.4 million vulnerable pensioners. We want all pensioners to claim it.

[Peter Gibson]

My hon. Friend has had the opportunity to raise the matter of pension credit at the Dispatch Box on several occasions today. What advice can he give Members across the House on engagement with our constituents to raise the profile of that valuable benefit, which opens up the gateway to other benefits and help for pensioners? What help is available from the Department to Members across the House?

[Guy Opperman]

My hon. Friend is right to raise the issue. A bit like with the jab, we are all responsible for making the case to our constituents that there is huge benefit in what is in reality a passport to several hundred pounds a month—potentially £3,000-plus a year. The stats are extraordinarily good. When we took office in 2010, the take-up was 70%; it is now up to 77%. Obviously we want it to go higher. The take-up figure for guarantee credit is up to 73%, and internal management information suggests that in the 12 months to December 2021, the number of new claims for pension credit was about 30% higher than the figure for the 12 months to December 2019.

My hon. Friend specifically asked what the Government could do. There are a number of things that we have been doing for some time. We set up the pension credit taskforce to work with key stakeholders such as charities—including Age UK, which many Members rightly mentioned and whose representatives we have met several times—the Local Government Association, Virgin Money, and several of the banks. The energy company Centrica is involved, and ITV and the BBC have a key role to play in raising awareness, ensuring that we have greater knowledge of pension credit and that our constituents are aware that the opportunity is out there.

As the Secretary of State said, 11 million letters about the state pension uprating were sent out—that has never been done before—along with copies of the pension credit information factsheet containing information for pensioners so that they could apply. That, too, seems to be making a difference. There was a pension credit awareness day last June, when we worked with the BBC throughout the country. We also worked with the other stakeholders, including Age UK, with which we formed a specific partnership. We have been making the case to local papers: we wrote to all of them on three occasions last year, we did it again this year, and we will continue to do it. Individual Members of Parliament can do a fantastic amount in making the case to their local communities, working with their citizens advice bureaux and Christians Against Poverty groups. Mention has been made today of the older persons fairs, which have been very successful in individual constituencies and have made a big difference to pension credit take-up.

[Alan Brown]

Will the hon. Gentleman give way?

[Guy Opperman]

I will give way to the hon. Gentleman, because he allowed me to intervene on his speech.

[Alan Brown]

How much extra money do the Government set aside each year on the assumption that there will be a greater uptake of pension credit, and what happens if that sum is not used? Does the Minister agree that any money that is not used for pension credit should be recirculated to support elderly people?

[Guy Opperman]

I can answer that question easily. There is no limit whatsoever. This is a means-tested benefit which was set up by Gordon Brown. If there were a 100% take-up, the Government would pay. If the take-up is 70%, the Government pay.

I was going to address some of the comments made by the hon. Gentleman in his interesting speech. I genuinely felt that it was the policy of his party to raise fuel duty, which is certainly an interesting approach to cost of living difficulties. He made no mention of the powers conferred by sections 24, 26 and 28 of the Scotland Act 2016 and the capability of his Government to intervene if they should choose to do so—which, to be fair, they have done. The hon. Gentleman shrugs his shoulders and heaves a sigh, but he probably does that when he tries to analyse and understand the policy of that humble merchant banker-crofter the right hon. Member for Ross, Skye and Lochaber (Ian Blackford), whose approach to the state pension is something that we all struggle to comprehend.

I did test the hon. Gentleman by asking him what genuinely was the Scottish National party policy on the state pension in the unlikely event that the Scottish people were unwise enough to choose independence. Is it the old policy that was agreed previously, or is it the new policy of his leader in Westminster that the rest of the UK should pay for this? I genuinely do not understand, and I think one of the reasons why the popularity of independence is falling in Scotland is the fact that the leadership that the hon. Gentleman so strongly supports are not making the case in any way whatsoever.

The arguments of the hon. Members for Cynon Valley, for Liverpool, West Derby (Ian Byrne) and for Leicester East (Claudia Webbe) centred on the issue of the state pension age. Let me say, with respect, that that is a matter that has been determined by successive Governments. As I pointed out earlier, this Government continued, as did the coalition Government, the policy of the Labour Government under Tony Blair and Gordon Brown. I realise that no one is a Blairite any more, but those 13 years saw exactly the same policy. The arguments put forward on that issue were comprehensively rejected by the Court of Appeal.

The situation in respect of energy prices has been addressed in detail by the Secretary of State, but it is right to make the point that the key intervention was announced by the Chancellor on 3 February with a £9.1 billion energy bill rebate, and there is in excess of £12 billion of support over this financial year and the next to ease cost of living pressures. We have set out in sufficient detail the £200 rebate for households, the £150 non-repayable council tax rebate for all households in bands A to D, and the fact that local authorities will in addition have access to £144 million of discretionary funding to support households in need, regardless of their council tax band.

[Alex Sobel]

I spoke to my constituent Maggie Stead today. Maggie has been diagnosed with chronic lymphocytic leukaemia. She told me that she cannot afford her rising bills on her state pension, and that she sits at home in her hat, scarf and gloves and eats only one meal a day. I am doing everything I can to help Maggie. What can the Minister tell me to tell her about how we can support her, given the ever-increasing energy bills that she cannot afford?

[Guy Opperman]

Quite clearly she should be contacting her local authority, because several million pounds has been set aside for individual councils up and down the country so that they have the capability to intervene for such constituents. Obviously I would hope the hon. Gentleman has advised her to apply for pension credit, which could unleash £3,000-plus for her, and although I cannot comment on individual circumstances, I presume she will qualify for the winter fuel payment, which runs to £2 billion, the cold weather support payment and the various other supports that exist, including the warm home discount scheme, where payments will increase from £150 in 2022-23, with spending rising from £354 million to £475 million. Pensioner households are able to access the £144 million of discretionary funding from local authorities to support households who need support but are ineligible for council tax rebates.

My hon. Friend the Member for Amber Valley (Nigel Mills) rightly defended the record of the coalition and of this Conservative Government. I will just briefly remind the House that the change to the state pension that has been taking place under the coalition—to be fair to our Liberal Democratic colleagues—and the Conservative Government has been absolutely transformational. There has been a 35% increase in the state pension, with massively enhanced figures going forward. Without a shadow of a doubt the triple lock, which the right hon. Member for Leicester South (Jonathan Ashworth) never mentioned, has had an impact. Not once in any of the 13 years of the Labour Government did they have a triple lock—not once. Gordon Brown famously raised the state pension by 75p in 1999, so I will take no lessons on that from Labour.

My hon. Friend the Member for Darlington (Peter Gibson) is a brilliant champion for his local area, and he was right to say that pensioner poverty has decreased under this Government—

[Jonathan Ashworth]

No, it has not.

[Guy Opperman]

Yes, it has. I am terribly sorry to have to point out that on this particular point the hon. Gentleman is utterly wrong. The number of pensioners living in absolute poverty has fallen. There are now 200,000 fewer pensioners in absolute poverty, both before and after housing costs, than there were in 2009-10.

My hon. Friend the Member for Broadland (Jerome Mayhew) made a very good speech and was right to mention the impact of the Ukraine conflict. He was also right to talk about automatic enrolment, which has transformed private pensions in his constituency, with 2,150 employers supporting 9,000 employees who are saving 8%. That is a cross-party, cross-Government implementation of real impact to address pensioner poverty on a long-term basis. It is a 20-year policy that is transforming this particular situation.

This Government are committed to ensuring that people have security and dignity in retirement. We have recognised and acted on the concerns of pensioners struggling with the cost of living, and we will continue to spend £129 billion on pensioner benefits this year, which includes the £105 billion on the state pension. Obviously there is also the £9.1 billion energy rebate pack and the £2 billion on winter fuel payments and the warm homes discount scheme. I strongly urge the House not to accept this Labour motion.

Question put and agreed to.

Resolved.

That this House is concerned that older people and pensioners risk being at the sharp end of the cost of living crisis as a result of spiralling inflation, a lack of Government action on household energy bills, a poorly thought-through tax rise on older people in work and a real-terms reduction to the state pension; notes that the state pension is being cut in real-terms by hundreds of pounds a year and that working pensioners will begin paying the Health and Social Care Levy from next year; regrets that levels of pensioner poverty and pensioner debt have risen over the last decade even before the current cost of living crisis with almost one in five pensioners now living in poverty; and calls upon the Government to cut home energy bills, halt the planned tax rise on working pensioners and ensure older people are protected from the cost of living crisis.

[Mr Deputy Speaker (Mr Nigel Evans)]

Minister, your pronunciation of “Cynon Valley” was very good as well.