State Pension

Matt Rodda Excerpts

Monday 12th December 2022 Westminster Hall

[Matt Rodda (Reading East) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Robert. I thank my hon. Friend the Member for Battersea (Marsha De Cordova) 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.

--- Later in debate ---

[Laura Trott]

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.

[Matt Rodda]

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.

[Laura Trott]

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 (Beth Winter), 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.