Oral Answers to Questions
Torsten Bell Excerpts(8 months, 1 week ago)
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Christine Jardine (Edinburgh West) (LD)
The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
The Government are committed to ensuring that all pensioners receive the support to which they are entitled. That is why we have been running the biggest ever pension credit take-up campaign. We plan to continue promotional activity from September through to the end of this financial year, with the focus not just on eligible pensioners but on their friends and family too.
Christine Jardine
Earlier this year, a constituent of mine in Edinburgh West contacted me about the delay she had faced in getting the pension credit she was entitled to. She applied in September last year and was told that she would receive it in November, but it was March before she got her pension credit awarded. The delay meant that she went without extra support just when she lost her winter fuel allowance, so what steps will the Minister take to cut those delays and stop more vulnerable pensioners from being left cold this winter?
Torsten Bell
I hope the hon. Member will write to me with the details of the case she raised. On the more general picture, I can reassure her that we now have a lower backlog of pension credit cases to be processed than we inherited from the last Government, despite the record number of claims that have come through.
Juliet Campbell (Broxtowe) (Lab)
Boots has been a significant employer in my constituency since 1927, and many of my constituents have been proud to work for it. However, those close to claiming their pensions have been advised that they will be unable to withdraw their pension at an unreduced rate at the age of 60, contrary to what they were led to believe. Does the Minister recognise the frustration that many of the Boots pensioners feel, and does he agree that the Pensions Ombudsman should progress swiftly with its process?
Torsten Bell
My hon. Friend has raised this matter with me before, and the one thing I can confirm is that she is a powerful advocate for her constituents on this very important issue for them. As she knows, I cannot comment on individual cases—particularly as the matter is now with the Pensions Ombudsman—but more generally, it is important that promises made to pensioners about their pensions are lived up to. Making sure that happens is exactly why the Pensions Ombudsman exists.
Mark Garnier (Wyre Forest) (Con)
Thanks to our Conservative winter fuel payments campaign, thousands of pensioners have signed up to pension credit, and millions more pensioners will receive winter fuel allowance, now that the Labour party has admitted that its policy on winter fuel payments was wrong. However, the Social Security Advisory Committee recently concluded that the Government’s winter fuel plans fall short of delivering their objectives of fairness, administrative simplicity and targeted support. It seems that the Government have prioritised civil service bureaucracy over helping frozen pensioners. Does the Minister agree with the Social Security Advisory Committee’s conclusion about their policies?
Torsten Bell
I thank the hon. Member for his question, and I congratulate Members on all sides of this House who have run campaigns to drive up pension credit uptake. That is very important, and it is why we have seen 60,000 extra awards over the course of the year to July 2025 compared with the previous year. That work, which is very welcome, has been done by not just Members but civil society organisations and local authorities.
On the points that the hon. Member raised about the process for winter fuel payments this winter and going forward, I do not agree with the characterisation he chose to present. Particularly on the tax side, the process will be automatic. Nobody will be brought into tax or self-assessment purely because of that change; the vast majority of people will have their winter fuel payments automatically recouped through the pay-as-you-earn system; and anyone who wants to can opt out. I remind Members that the deadline for that is 15 September.
Steve Darling (Torbay) (LD)
Around a year ago, the Labour Government inherited from the previous Conservative Government around 3 million pensioners in poverty. Sadly, last winter’s cuts to the winter fuel payment saw many pensioners pushed into hardship. In the light of winter fuel price hikes, will the Minister reconsider the Government’s proposals and ensure that moneys are paid to pensioners who missed out on the winter fuel payment last winter?
Torsten Bell
I thank the hon. Member for his question, but would gently say that every time he opposes every single tax rise or any difficult choice in this House, he is saying that the Liberal Democrats are not a party that could deliver on commitments, for example, to the triple lock, which will increase in cost, as my right hon. Friend the Secretary of State mentioned earlier, by £31 billion by the end of this Parliament. There are things called “choices”, which are necessary if we are to provide for our top priorities—and for Labour Members, the top priorities, when it comes to pensioners, are making sure that we can increase the state pension, the bedrock of most pensioners’ living standards, and saving the NHS, and that is exactly what we will continue to do.
Edward Morello (West Dorset) (LD)
Sarah Bool (South Northamptonshire) (Con)
The Parliamentary Secretary to the Treasury (Torsten Bell)
The hon. Lady only had to wait till next week’s Treasury questions, when she could have asked her question, but she has the same answer. What we should do is look at the record of parties and what they have done. When I look back over the last 14 years of Tory Budgets, I see a party—[Interruption.] And the Lib Dems; thank you for pointing that out. I have seen parties chopping and changing pension tax relief left, right and centre, because they had no plan. Those were the same Budgets that drove child poverty up and wages down.
Mr Luke Charters (York Outer) (Lab)
John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)
Torsten Bell
I thank the hon. Member for his question. We discussed this issue at some length in the statement before the recess. He knows that the priority for the Labour party has been to raise the state pension by committing to the triple lock throughout this Parliament at a cost of £31 billion a year. For the new state pension, that will mean an increase of £1,900 a year by the end of this Parliament.
On winter fuel payments specifically—and I thought this was the Conservative party’s position—most people think that we should not be paying hundreds of pounds to the very richest pensioners. We have listened to concerns and raised the threshold, but it is important to maintain that principle. If the Conservatives’ position is now that they want a return to universal winter fuel payments, they need to have a word with the Leader of the Opposition, who has not supported universal winter fuel payments or, indeed, a universal state pension.
John Slinger (Rugby) (Lab)
Peter Swallow (Bracknell) (Lab)
Torsten Bell
I thank my hon. Friend for his crucial question. That is exactly why we have revived the landmark pensions commission. We have to confront the reality that we are on track for tomorrow’s pensioners to be poorer than today’s. Auto-enrolment has been a huge success, with 88% of eligible employees now saving, but 45% of working-age adults, including 3 million self-employed and one in four low earners, are currently saving nothing. The commission will ensure that we build a pension system that is strong, fair and sustainable.
Alison Bennett (Mid Sussex) (LD)
The carer’s allowance overpayments review was due to report in early summer. It is now 1 September. In recent weeks, I have become aware of a case where the DWP has informed somebody that they now owe it £18,000. That is a scandal. When will the review report back?
Sir Julian Lewis (New Forest East) (Con)
Despite his new role in riding to the rescue of the Treasury, is the Pensions Minister still available to fulfil in principle the undertaking he gave me before the recess to have a meeting about the plight of ExxonMobil pensioners and the difficulties in them getting the discretionary surplus benefits to which I think they should be entitled?
Credit Unions
Torsten Bell Excerpts(9 months, 3 weeks ago)
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The Parliamentary Secretary to the Treasury (Torsten Bell)
It is always a pleasure to serve under your chairmanship, Mr Twigg. I start obviously by congratulating my hon. Friend the Member for Cumbernauld and Kirkintilloch (Katrina Murray) on securing this important debate and speaking so powerfully about the role of credit unions. The interest in this topic, particularly on this side of the House and for some parts of the country, shows how important credit unions are in supporting individuals and communities. The same commitment and motivations underpin the Government’s strong support for credit unions and the mutuals sector more widely, as the Opposition spokesperson just mentioned.
As a country, we have a rich history of mutuality. In 1775, Richard Ketley founded the world’s first ever building society in Birmingham, and that continues in the west midlands today, as we heard from my hon. Friend the Member for Wolverhampton North East (Mrs Brackenridge). The modern co-operative movement was also British-born, albeit slightly further north, in Rochdale.
Today we are here to discuss credit unions, which are deeply embedded in our local communities. Everyone in this Chamber passes on our thanks to Beth, who the hon. Member for Wokingham (Clive Jones) talked about so powerfully in his remarks. Before I turn to the important points that colleagues have raised specifically about credit unions, let me say a few words about the Government’s strong support for the mutual sector, as the Opposition spokesperson has raised it.
Mutuals have a footprint in high streets around the country and they provide jobs. They strengthen their communities, and they support people to build savings habits and access affordable credit and mortgages. Growth in the mutual sector means growth that touches all levels of society, aiding economic participation in the broadest possible sense, as my hon. Friend the Member for Glasgow North East (Maureen Burke) set out. That is why the Government have committed to doubling the size of the sector.
I am glad that the Opposition spokesperson has been paying attention to all the Government’s commitments and the change that we were elected to bring. In south Wales, building society branches are expanding in some areas, even as banks are stepping back. We have already begun to make our commitment a reality, not least when it comes to credit unions, whose lending is growing, even though, as several hon. Members have mentioned, the number of credit unions has fallen in recent years.
In her November Mansion House speech, the Chancellor announced new measures to support the growth of credit unions and mutuals. The shadow Minister would be keen to have the Chancellor give an even longer speech at every Mansion House, but she cannot reiterate all her greatest hits at every single one. We did not let people away till after 10 o’clock last night as it was, and there is such a thing as decent human behaviour. The measures included publishing a call for evidence on the potential to reform common bonds for credit unions in Great Britain, asking the Financial Conduct Authority and the Prudential Regulation Authority to produce a report on the mutuals landscape by the end of this year, which is now well under way, and welcoming the establishment of an industry-led mutual and co-operative business council, which has a live workstream specifically exploring the role of the credit union sector.
The common bond is a unique feature of a credit union. It fosters trust and accountability among members. However, there has been a long-standing request from the sector that the Government review the common bond, and that was reiterated by my hon. Friend the Member for Wolverhampton North East this morning. That is why we put out the call for evidence. I thank everyone who fed into that process, including individual credit unions, trade associations and some Members here today. We are now engaging with the sector and the regulators on those responses and are considering next steps. The Government and the Economic Secretary to the Treasury will provide an update on that work in due course.
More widely, all Members who have spoken today, including my hon. Friend the Member for Airdrie and Shotts (Kenneth Stevenson), recognise the role that credit unions play in achieving financial inclusion, more broadly considered. They provide access to financial services and products and allow people to participate in the economy.
The hon. Member for Wokingham asked about the long-standing calls for a fair banking Act. I gently note that there was little progress on that in the five years in which the Liberal Democrats were part of the UK Government. That tends to get slightly forgotten. When I spend time here in Westminster Hall—as was pointed out earlier, I do spend a lot of time here—I am told about long-standing Liberal Democrat policy in a whole range of areas.
The answer to the hon. Gentleman’s question is that our focus is on taking forward a financial inclusion strategy under the Economic Secretary to the Treasury. I know she will want to work with my hon. Friend the Member for North Ayrshire and Arran (Irene Campbell) in her new role—I congratulate her on it. That work is being supported by a committee of consumer groups and industry representatives, including Fair4All Finance, which has a key role in supporting the sector. That strategy will be published later this year and will seek to tackle a range of barriers facing individuals in accessing financial services, including banking and affordable credit. More importantly, it will consider what more the industry and the Government can do to address these issues.
The financial inclusion committee has recommended that the financial inclusion strategy focus on helping people build an emergency savings buffer—a pot of money that could help them replace a household appliance or repair a car. One area we are exploring is payroll saving schemes, which several Members have called for, which are offered by employers to staff. In my day job of dealing with the pensions landscape, people are talking about learning from the experience of automatic enrolment, and a number of credit unions already deliver such schemes. We talked about the role of a particular credit union earlier.
The Government are directly encouraging those on lower incomes to save via help to save, introduced under the previous Government. Although the scheme has been effective for those who use it, I think we would all say that take-up has been low. In April, eligibility was extended to all universal credit claimants in work, meaning that about 3 million people will be able to benefit from the scheme.
More widely, we are continuing to monitor the availability of affordable credit as part of that financial inclusion strategy work. The Treasury engages regularly to understand the current barriers faced by the mutual sector and credit unions specifically, and to identify opportunities for growth. There have been several discussions about credit union service organisations. That is an important development. The PRA is consulting on how we can facilitate that, given its role in the growth of the sector.
The hon. Member for Strangford (Jim Shannon) asked about growth. He is obviously well aware that the policy area is devolved to Northern Ireland, but he can see the legislation that is being progressed here. We are always happy to engage with our opposite numbers in the Northern Ireland Executive, and we do indeed do so. I join him in celebrating the growth in Northern Ireland. He might not like the progress on the legislative side, but on actual lending and members’ engagement, those of us in other parts of the United Kingdom have a lot to learn.
My hon. Friend the Member for Glasgow North (Martin Rhodes) asked wider questions about bank finance regulation—not least about buy now, pay later. I hope he is happy that the legislation that has long been promised was introduced just a few weeks ago. A few Members who are taking part in this morning’s debate were present in that Committee.
More widely, hon. Members rightly said that credit unions have a different regime from mainstream providers when it comes to regulation. I assure my hon. Friend the Member for Cumbernauld and Kirkintilloch that we are really clear about the differential requirements, including capital requirements and exemptions from consumer credit regulations. We maintain those different regimes for good reasons: we want a proportionate system for different parts of our financial sector.
My hon. Friend has consistently raised concerns about the Financial Ombudsman Service’s approach to handling certain complaints against credit unions, and about the volume of complaints more generally. Although they are a very small part of the Financial Ombudsman Service’s work, I appreciate that is not how it feels for the credit unions wrestling with them. We have heard those complaints, and we recognise the risk of a chilling effect on credit union lending. That is why we have acted. In the March regulation action plan, the Government announced that the Economic Secretary would lead a review of the FOS to examine whether it is delivering on its role.
Today’s debate is well timed. Yesterday the Chancellor launched a consultation on a significant package of policy proposals. That will run until October and I encourage all Members to engage with it. As the Chancellor set out at the Mansion House, the Financial Ombudsman Service will be returned to its original role as a simple, impartial dispute-resolution service, which quickly and effectively deals with complaints. Directly addressing the central point made by my hon. Friend the Member for Cumbernauld and Kirkintilloch, the Government propose to reform the legislative framework that the FOS operates in to stop it acting as a quasi-regulator. We will take steps to provide greater regulatory coherence with the FCA. Consumers and industry will benefit from a more consistent and predictable regulatory environment, and I encourage my hon. Friend and credit unions with recent exposure to and experience of the ombudsman to feed into the consultation over the summer.
In conclusion, the Government recognise the important role that credit unions play in our economy: helping individuals, strengthening communities, and as a major player in any attempt to make our society and economy genuinely financially inclusive. I see that in Swansea, not least in the work of the Celtic credit union. We remain absolutely committed to supporting the growth of the credit union sector now and into the future. I thank all hon. Members who have spoken in today’s important debate.
Beer Duty
Torsten Bell Excerpts(9 months, 3 weeks ago)
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The Parliamentary Secretary to the Treasury (Torsten Bell)
I always look forward to seeing you in the Chair, Dr Murrison—nearly as much as I am looking forward to that pint. I am grateful to the hon. Member for Woking (Mr Forster) for securing and opening the debate. I thank all the colleagues who have spoken—perhaps unsurprisingly, given the subject—with great enthusiasm. I am shocked that there is in fact cross-party support for beer; that is the kind of bold politics that has got everybody in this room where they are today.
Nobody in this place needs persuading of the cultural, social and economic value of the Great British pint, nor of the pubs that serve pints and the breweries that produce them. Pubs are places of consumption but, more importantly, they are places of friendship, community and employment. I have learned a lot in a year as a new MP, but not as much as I learned about life when I started my first job in a pub at 16. I learned a lot about the price of beer, even if not about the ins and outs of alcohol duty, or indeed, drinking alcohol—obviously.
Last autumn, the Chancellor cut alcohol duty on qualifying draught products, affecting 60% of the alcoholic drinks sold in pubs. The cut reduced bills by over £85 million a year. People now pay 13.9% less in tax for draught beer and cider than their packaged equivalents—a discount up by more than 50% since the previous Government’s introduction of the policy, as mentioned in the debate. The cut recognised the roles of pubs and other hospitality venues in supporting responsible drinking in social settings.
The Chancellor also recognised the UK’s 1,600 or so small breweries by making more generous small producer relief, which, as the hon. Member for Kingswinford and South Staffordshire (Mike Wood) was kind enough to mention, was introduced by Gordon Brown under the last Labour Government, and continued by the previous Conservative Government.
To respond directly to the question put by the hon. Member for Strangford (Jim Shannon), small producer relief is available in Northern Ireland, even though licensing is a devolved policy matter. I am happy to exchange letters with him on the wider points he made.
The Budget also committed to a review of small brewers’ access to UK pubs, including through the provision of guest beers, as mentioned by my hon. Friend the Member for Hartlepool (Mr Brash). I know that Members with breweries in their constituencies will contact the Under-Secretary of State for Business and Trade, my hon. Friend the Member for Ellesmere Port and Bromborough (Justin Madders), given his responsibility for that review.
Of course, alcohol duty does not exist in a vacuum. It relates to the real challenges that we face as a country on public health and the public finances. I understand the wish to call for lower duties, as the hon. Member for Woking did, but the implications for the Exchequer are real. I will dwell on a few related points, given that that call was the basis of the hon. Gentleman’s speech. I am not sure that the 50p call has been entirely thought through: the duty on a typical draught pint of 4.5% beer is currently 48p, so the hon. Gentleman has called for the whole duty to be abolished. He might want to reflect on that.
Questions were asked about the relationship of what is technically called the elasticity of beer consumption to the changes in duties. The Office for Budget Responsibility publishes its own view on the elasticity, which hon. Members can go and find. Suffice it to say that the implications of any large change in alcohol duty for the Exchequer are real. Obviously, the context is that alcohol duty on beer is down by 10% in real terms since 2019.
Questions were also asked about the international comparisons. The proportion of the price of beer that is made up of tax here is similar to that in Ireland. As Finland was raised, I should point out that the proportion there is less than that in Sweden, where members of my family are consuming beer today at higher prices.
At the autumn Budget, the Chancellor increased the main duty rate in line with the retail price index, but she kept the tax burden on packaged products flat overall in real terms, as has been the long-established policy under all three main parties. Along with the increase to draft relief, that balanced the need to fund public services, reduce harmful alcohol consumption, and support moderate responsible drinkers with the cost of living. We have to weigh all those factors together.
Alcohol harm costs this country an estimated £27.4 billion a year. Regrettably, deaths from alcohol are at record highs—admittedly, that is mainly among a concentrated part of the population, but that is still something we all need to wrestle with. That is why the Government will introduce new standards for alcohol labelling.
But we want to address the health challenges while supporting valued producers and communal settings. That is the grounds for the balanced approach we have taken on duty, valuing the pubs that are at the centre of all our communities, as we have heard this afternoon. There is also good reason to be optimistic about the future of the brewing industry, although I recognise the wider challenges that brewers face. I thank hon. Members for their clear representations on those challenges.
Some Members, including the hon. Member for Woking in particular, raised the issue of the extended producer responsibility for packaging and the forthcoming deposit return scheme. I gently point out that the Liberal Democrats regularly call for a fast move to a circular economy, but when anything actually turns up, they oppose it in practice. I gently note that that is not a politics that will get any of us very far in the long term.
The reforms are designed to increase recycling and reduce litter and landfill. Critically, local authorities will receive every penny of the EPR fees, thereby bringing much-needed investment into our recycling infrastructure. The EPR scheme administrator has already published the 2025 base fees, with those for most materials, including glass, down on earlier illustrations. In the case of glass, the base fee is down by 20%.
DEFRA continues to work with the industry on the dual-use packaging that several hon. Members mentioned. The Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Coventry East (Mary Creagh) recently held a roundtable on the issue, and I think she intends to hold more.
I acknowledge, as many Members have, that alcohol duty is but one small part of the business equation for pubs and hospitality venues, which is why the Government have made concrete interventions to support the sector, including a £1.5 million hospitality support scheme. I also recognise the points raised, not least by the hon. Member for Wokingham (Clive Jones), about business rates. We have frozen the small business multiplier for the current tax year and are providing 40% relief to retail, hospitality and leisure properties. As I say, I recognise the points made, but the package is worth more than £1.6 billion this year, and the previous Government left us with the relief due to end entirely in April 2025.
We are introducing high street rental auctions to bring vacant properties back into productive use, thereby offering smaller brewers and taprooms more affordable sites. Although there is bad news about pubs shutting across the country, and we are all sad when we see it in our constituencies, we also see some opening up on some high streets, and that is to be welcomed.
On 4 April 2025, we announced the licensing policy taskforce, co-chaired by Nick Mackenzie, the chief executive of Greene King. It is working intensively with the industry to ensure that the licensing conditions for businesses such as pubs, restaurants and music venues are proportional.
I began by acknowledging the unique place that beer and pubs hold in our national life. They deserve and have the steadfast attention of this Government and, it is clear, every hon. Member in this room. My local pubs in Swansea, from the Brunswick to the Deer’s Leap, certainly have my attention, and—I promise—my consumption. Through draught relief, small producer relief and tailored interventions for high streets, we are helping the sector to thrive.
I close with two brief invitations. First, I urge Members to please continue to bring to the Treasury their stories, spreadsheets, and suggestions from pubs and brewers, as they have done this afternoon. Secondly, I invite the industry to continue talking to us and demonstrating, year in and year out, that the British brewing scene is second to none.
Pension Schemes Bill
Torsten Bell ExcerptsMonday 7th July 2025
(10 months ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
I beg to move, That the Bill be now read a Second time.
This Bill aims to deliver fundamental reforms to our pensions landscape, and it is good to see that the prospect of discussing a long, slightly technical pensions Bill has seen so many Members flooding into the Chamber. These are reforms on which there is a broad consensus across the pensions industry. They also build on at least something of a consensus across the House. In its principal focus on higher returns for pension savers, the Bill also responds to specific responsibilities that we hold in the House.
It is because of decisions of Parliament that something significant has happened over the past decade: British workers have got back into the habit of saving for a pension. Today, more than 22 million workers are building up a pension pot. That represents a 10 million increase since 2012, when Parliament introduced the policy of automatically enrolling workers. The rise is largest for women and lower earners. So there is lots to celebrate as more save, but there are no grounds at all for complacency about what they are getting in return.
The private sector final salary pensions that many of today’s pensioners rely on guarantee a particular income in retirement. If those pension schemes do not deliver good investment returns, that is a problem for the employer and not directly for the saver. But most of tomorrow’s retirees with a defined-contribution pension bear all the risk; there is nothing guaranteed. How well the pension scheme that they save into performs matters hugely, and because pensions are a very long game, even small differences in how fast a pension pot grows can make a massive difference over time.
That is the system that the House has chosen, so the onus is on us to ensure that it delivers. But the pension system that we have today is too fragmented, too rarely does it ensure that people’s savings are working hard enough to support them in retirement, and it is too disconnected from the UK economy. That is the case for change and the context for the Bill.
The UK has the second-largest pension system in the world, worth £2 trillion. It is our largest source of domestic capital, underpinning not just the retirement we all look forward—or at least most of us look forward to—but the investment on which our future prosperity depends. But our big pension system has far too few big pension schemes. There are approaching 1,000 defined-contribution schemes and less than 10 providers who currently have £25 billion or more in assets.
A consolidation process is already under way, with the number of DC schemes reducing by about 10% a year. What the Bill does is add wind to the sails of that consolidation. It implements the conclusions of the pensions investment review, creating so-called megafunds. For the DC market, we intend to use the powers provided for in clause 38 to require multi-employer schemes to have at least £25 billion in assets by 2030, or a credible pathway to be there by 2035. Bigger and better pension funds can deliver lower costs, diversified investments and better returns for savers. That supports the work that the industry is already doing to better deliver for savers.
As the House has discussed before, in May, 17 major pension providers managing about 90% of active defined-contribution pensions signed the Mansion House accord. This industry-led initiative saw signatories pledge to invest 10% of their main default funds in private assets such as infrastructure by 2030, with at least 5% in UK assets. That investment could support a better outcome for pension savers and back clean energy developments or fast-growing businesses. To support this industry-led change, the Bill includes a reserve power that would allow the Government to require larger auto-enrolment schemes to invest a set percentage into those wider asset classes. That reflects the reality that the industry has been calling for the shift for some time, but words have been slow to translate into actions.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I draw the House’s attention to the fact that I am a trustee of the parliamentary contributory pension fund. Consolidation is absolutely the right direction of travel so that pension funds have better experts who are better able to advise. I still have a slight concern, though, about mandation. There will have to be schemes to invest in, and they will need to ensure that they are getting returns. How will the Minister ensure that the Bill actively delivers on both sides of the equation?
Torsten Bell
I thank my hon. Friend for her question and for her oversight of all our pensions, which I think is reassuring. [Laughter.] Sorry; it is reassuring! I will come directly to her point, because I know that is one question that hon. Members on both sides of the House will want to raise. Let me just say that the Bill explicitly recognises the fiduciary duty of trustees towards their members.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
In the last Parliament, a number of us raised concerns about the administration of defined-benefit schemes by, among others, BP, Shell and Hewlett-Packard. It was obvious at that stage—I think this view was held by his right hon. Friend the Minister for Social Security and Disability, who was then the Chair of the Work and Pensions Committee—that one of the root causes of the problem was insufficient independence and oversight by defined-benefit pension trustees. What is there in this Bill that will protect the position of pensioners in their retirement under those schemes?
Torsten Bell
The right hon. Member invites me to skip quite a long way forward in my speech, and it is a long speech.
Torsten Bell
That was not the support I was hoping for from the Chair—understandable, but harsh. I will come to some of the points that the right hon. Member raises. I think he is referring particularly to pre-1997 indexation, which I shall come to.
As I said, the Bill includes a reserved power that will allow the Government to require larger auto-enrolment schemes to invest a set percentage into wider assets. That reflects the wider calls that have been made for this change but have not led to its taking place. What pension providers are saying is that they face a collective action problem, where employers focus too narrowly on the lowest charges, not what matters most to savers: the highest returns. I do not currently intend to use the power in the Bill, but its existence gives clarity to the industry that, this time, change will actually come.
Some argue—I will come to some of the points made by my hon. Friend the Member for Hackney South and Shoreditch (Dame Meg Hillier)—that this somehow undermines the duty that pension providers have to savers. That is simply wrong. First, the Bill includes clear safeguards to prioritise savers’ interests and is entirely consistent with the core principle of trustees’ fiduciary duties. Clause 38 includes an explicit mechanism, which I have discussed with Members from the main three parties in this House, to allow providers to opt out if complying risks material detriment to savers. Secondly—this is the key point that motivates a lot of the Bill—savers are being let down by the status quo. There is a reason major pension schemes across the rest of the world are already investing in this more diverse range of assets.
Fragmentation within the pensions industry happens within providers, not just between them. Some insurers have thousands of legacy funds, so clause 41 extends to contract schemes the ability that trust-based schemes already have to address that. Providers will be able to transfer savers to another arrangement without proactive individual consent if, and only if, it is independently certified as being in the member’s best interest.
Another point that I hope is of common ground across the House is that we need to do more to realise the untapped potential of the local government pension scheme in England and Wales. We need scale to get the most out of the LGPS’s £400 billion-worth of assets. Again, the Bill will turn that consensus into concrete action. It provides for LGPS assets spread across 86 administering authorities to be fully consolidated into six pools. That will ensure that the assets used to provide pensions to its more than 6 million members—predominantly low-paid women—are managed effectively and at scale. Each authority will continue to set its investment strategy, including how much local investment it expects to see. In fact, these reforms will build on the LGPS’s strong track record of investing in local economic growth, requiring pension pools to work with the likes of mayoral combined authorities. In time, bigger and more visible LGPS pools will help to crowd private pension funds and other institutional investors into growth assets across the country.
Our measures will build scale, support investment and deliver for savers, but the Bill does more to ensure that working people get the maximum bang for every buck saved. To reinforce the shift away from an excessively narrow focus on costs, clause 5 provides for a new value-for-money framework. For the first time, we will require pension schemes to prove that they provide value for money, with standardised metrics. That will help savers to compare schemes more easily, and drive schemes themselves to focus on the value that they deliver. For persistently poor performers, regulators will have the power to enforce consolidation. That will protect savers from getting stuck in poorly performing schemes—something that can knock thousands of pounds off their pension pots.
We are also at last addressing the small pension pots issue. I was out door-knocking in Swansea earlier this spring, and a woman in her mid-30s told me that something was really winding her up—and it was not me knocking on the door. [Laughter.] This is a very unsupportive audience. It was trying to keep track of small amounts of pension savings that she had from old jobs; the only thing that was worse was that her husband kept going on about it. There are now 13 million small pension pots that hold £1,000 or less floating around. Another million are being added each year. That increases hassle, which is what she was complaining about, with over £31 billion-worth of pension pots estimated to currently be lost. It costs the pensions industry around £240 million each year to administer. Clause 20 provides powers for those pots to be automatically brought together into one pension scheme that has been certified as delivering good value. Anyone who wants to can of course opt out, but this change alone could boost the pension pot of an average earner by around £1,000.
Of course, once you have a pension pot, the question is: what do you do with it? We often talk about pension freedoms, but there is nothing liberating about the complexity currently involved in turning a pension pot into a retirement income. You have to consolidate those pots, choose between annuities, lump sums, drawdowns or cashing out. You have to analyse different providers and countless products. Choice can be a good thing, but this overwhelming complexity is not—77% of DC savers yet to access their pension have no clear plan about how to do so.
John Glen (Salisbury) (Con)
I agree with a lot of what the Minister is saying. Given what was said last week by the Financial Conduct Authority on targeted support, would he look again at what is being resisted by the Money and Pensions Service? It is not prepared to work with the pension schemes to allow automatic appointments so that pension savers can be guided to better outcomes. I realise that MaPS will say that it is too busy, but this is a key moment. If we could get people to engage at age 50, say, we would see vastly different outcomes for them if they invested properly, and in better ways, with their pensions.
Torsten Bell
I thank the right hon. Member for his question, and for the discussions that we have had on this important topic. He spent years working on this. The priority for MaPS right now is to ensure that we have the system set up to deal with the additional calls that are likely to come when pension dashboards are rolled out, but I will keep in mind the point that he raises. I think he and a number of hon. Members wrote to me about exactly that point. As I promised in my letter, I will keep it under review, but we must not overburden the system, because we need it to be able to deliver when pension dashboards come onstream.
Nick Smith (Blaenau Gwent and Rhymney) (Lab)
Will the Minister update us on when consumers will see the introduction of the pensions dashboard? [Laughter.]
Torsten Bell
I think recent progress on the pensions dashboard means that that deserves a little less laughter. What we are seeing at the moment is success, driving the first connections to the dashboards. Obviously, all schemes and providers are due to be connected by the autumn of 2026, but I will provide good notice of when we can give a firm date for that. My hon. Friend and near neighbour has secured himself early warning of exactly that happening.
We need to make the choices clearer for people as they move from building retirement savings to using them. The Bill gives pension schemes a duty to provide default solutions for savers’ retirement income—yes, with clear opt-outs. As well as reducing complexity and risk for savers, that will support higher returns because providers will be able to invest in assets for longer if they do not need to secure the possibility of having to provide full drawdown at retirement.
Each of these measures to drive up returns will have an impact on their own, but it is their cumulative impact that matters most, especially when it is compounded over the decades that we save for a pension. To give the House a sense of scale, someone on average earnings saving over their career could see their retirement pot boosted by £29,000 thanks to the higher returns that the Bill supports. That is a significant increase for something that should matter to us all.
The reforms that I have set out will transform the DC pensions landscape, but with £1.2 trillion-worth of assets supporting around 9 million people, defined-benefit schemes remain vital—they have already been raised by the right hon. Member for Orkney and Shetland (Mr Carmichael). Their improved funding position is hugely welcome. Around 75% are now in surplus, which has enabled far more schemes to reach buy-out with an insurer. Many more intend to do so, welcoming the security that buy-out can offer. Others may not be able to reach buy-out or may value running on their scheme for at least a time. The Bill provides those trustees with a wider range of options. Clauses 8 and 9 give more trustees the option to safely share surplus funds, which is something that many can already do.
Alan Gemmell (Central Ayrshire) (Lab)
I thank the Minister for giving way and the right hon. Member for Orkney and Shetland (Mr Carmichael) for raising this issue. What will the Bill do for my constituent Patricia Kennedy and the members of the Hewlett Packard Pension Association who are asking for more action on their pre-1997 non-index-linked contributions.
Torsten Bell
My hon. Friend has raised this issue with me on a number of occasions, and he is a powerful advocate for his constituents who have lost out through the discretionary increases that they were hoping to see on their pensions not being delivered. This is the same issue that the right hon. Member for Orkney and Shetland raised. One of the things that surplus release will allow is that trustees may at that point consider how members can benefit from any release that takes place. One thing I would encourage them to prioritise if they are considering a surplus release is the indexation of those that have not received it on their pre-1997 accrual. I hope that provides some clarity to the right hon. Gentleman and my hon. Friend.
Sir Julian Lewis (New Forest East) (Con)
I am extremely grateful to the Minister for taking my intervention and for the very helpful letter he sent me on 30 June about schemes of this sort, and in particular the ExxonMobil pension scheme. His letter encouragingly states:
“Following our reforms, trustees will continue to consider the correct balance of interest between members and the sponsoring employer when making decisions about the release of surplus funds. Trustees will be responsible for determining how members may benefit from any release of surplus…and have a suite of options to choose from—for example, through discretionary benefit increases.”
The trouble is that these pensioners have received a letter from the trustees of the ExxonMobil pension fund stating:
“The power to award discretionary increases is held by Esso Petroleum Company Limited (the “Company”). Whether or not any discretionary increase is provided is for the Company to determine: the Trustee has no power to award discretionary increases itself.”
This may be a loophole that the Minister needs to address. If the trustees cannot award the surplus as benefits and the company says no, that is not going to benefit my constituents.
Torsten Bell
I thank the right hon. Member for raising that specific case. I will look at it in more detail for him as he has kindly raised it here, but he has raised a point that will have more general application, which is that lots of different schemes, particularly DB schemes, will have a wide range of scheme rules. He has raised one of those, which is about discretionary increases. One thing that is consistent across all the schemes, with the legislation we are bringing in today, is that trustees must agree for any surplus to be released. It may be the case that the employer, in the details of those scheme rules, is required to agree to a discretionary increase, but the trustees are perfectly within their rights to request that that is part of an agreement that leads to a surplus release.
Torsten Bell
In any circumstances, the trustees would need to agree to a surplus release, so they are welcome to say to their employer: we are only going to agree to it on the basis of a change to something that the employer holds the cards over. I am happy to discuss that with the right hon. Member further, and there may be other schemes that are in a similar situation.
Lincoln Jopp (Spelthorne) (Con)
The way in which the Minister is talking about insurance buy-out suggests that, in the Government’s mind, insurance buy-out is still in some way a gold standard. Can he reassure the House that he is seeking to flatten the playing field, such that the increased choice available to defined-benefit pension schemes will mean that for perpetuals who run on—such as OMERS, which started off as the Ontario municipal employees retirement system and is now worth 140 billion Canadian dollars—there is as much safety in superfunds as there is in insurance buy-out?
Torsten Bell
I shall come on directly to the question of superfunds, which I know the hon. Member has a long-standing interest in. There is obviously a distinction between closed and open defined-benefit schemes, which I think is relevant to the point he is raising. It is also important for trustees to have a range of options.
Kirsty Blackman (Aberdeen North) (SNP)
Obviously that can happen only where there are surplus funds, and there may not be surplus funds in all circumstances. I just want to give the Minister a heads-up in relation to the questions about employee benefits. It would be useful in Committee to have more information about the Government’s analysis of how many of these surplus releases will directly benefit the employees rather than the employers. I understand that the Government, with their mission for growth, want investment in growing the company as well, but what kind of split does he expect to see? I do not expect an answer to that today.
Torsten Bell
It is nice to sometimes be able to surprise on the upside. I would expect employees to benefit in most cases, because trustees are in the driving seat and I am sure they will want to consider how employers and employees will benefit from any surplus release. Obviously, the exact split between the two will be a matter for the individual cases, but I am sure we will discuss that further in Committee.
I want to reassure the House that this is not about a return to the 1990s free-for-all. DB regulation has been transformed since then, and schemes will have to remain well funded and trustees will remain in the driving seat. They will agree to a release only where it is in members’ interests and, as I said, not all schemes are able to afford to buy out members’ pensions with insurers.
The Bill also introduces the long-awaited permanent legislative regime for DB superfunds, which is an alternative means to consolidate legacy DB liabilities. This supports employers who want to focus on their core business, and, as the superfunds grow, they will have the potential to use their scale to invest in more productive ways. Crucially, trustees will be able to agree to a transfer into a superfund only where buy-out is not available and where it increases savers’ security.
The Pension Protection Fund is, of course, the security backstop for DB members. It celebrates its 20th anniversary this year, and it now secures the pensions of over 290,000 people. The Bill updates its work in three important ways: first, by lifting restrictions on the PPF board so that it can reduce its levy where appropriate, freeing schemes and employers to invest; secondly, by ensuring that PPF and financial assistance scheme information will be displayed on the pensions dashboard as it comes onstream, which my hon. Friend the Member for Blaenau Gwent and Rhymney (Nick Smith), who is now not in his place, is keen to see; and thirdly and most importantly, by making a change to support people going through the toughest of times. As several hon. Members have called for, we are extending the definition of terminal illness from a 6-month to a 12-month prognosis, providing earlier access to compensation for those who need it most.
Pensions are complex beasts, and so are the laws that surround them. That complexity is inevitable, but not to the extent that some recent court cases risk creating. The Bill also legislates to provide clarity that decisions of the Pensions Ombudsman in overpayment cases may be enforced without going to a further court. I have been clear that the Government will also look to introduce legislation to give affected pension schemes the ability to retrospectively obtain written actuarial confirmation that historical benefit changes met the necessary standards at the time.
Governments are like people in one important respect: they can easily put off thinking about pensions until it is too late. I am determined not to do that. We are ramping up the pace of pension reform. The past two decades have delivered a big win, with more people saving for their retirement, but that was only ever half the job. Today, too many are on course for an income in retirement that is less than they deserve and less than they expect. The Bill focuses on securing higher returns for savers and supporting higher income in retirement without asking any more than is necessary of workers’ living standards in the here and now.
The Bill sits within wider pension reforms as we seek to build not just savings pots but a pensions system that delivers comfortable retirements and underpins the country’s future prosperity. Legislation for multi-employer collective defined-contribution schemes will be introduced as soon as possible after the summer recess, and we will shortly launch the next phase of our pensions review to complete the job of building a pensions system that is strong, fair and sustainable. It is time to make sure that pension savings work as hard for all our constituents as our constituents worked to earn them. I commend the Bill to the House.
Kit Malthouse
That may well be true, but that is a different question. There is a question about financial education and the ability of large numbers of our fellow citizens to understand these financial complexities. We have a large and professional independent financial adviser community, and all pension funds are required to have pension advisers who can speak to members, tell them what is going on and explain the decisions before them. I do think that over the years, such steps have disenfranchised the British people from their financial decisions, yet we hold them responsible for their debts, their mortgages and their future. There is a larger question for us in this House about how much we have subtracted from the autonomy of the British people, and therefore how much blame attaches to us as politicians when their financial circumstances are not what they expect.
Torsten Bell
The right hon. Member is giving a lucid speech, as he always does—he speaks very well—but I am failing to understand exactly the point he is making. He is talking about a local government pension scheme, which is guaranteeing him an income in retirement, as if it is a defined-contribution scheme where he is the one at risk from changes in the investment performance. It is local taxpayers with their employer contribution who ultimately bear the risk in the scheme he is talking about. It is our job to make sure that those taxpayers have the best possible chance of not having bad returns, leading to bad outcomes for them. He is not at risk in the way he is talking about.
Kit Malthouse
Yes, I have. I paid contributions through my employment at City Hall, as did my employer. Admittedly, it was a scheme based on a defined benefit, rather than a defined contribution, but that was the deal done with me on a settled contract, saying that this was what I would be provided for from my contribution. Every year, I review my pension benefit forecast. I am consulted by the fund about how it should conduct its affairs. I am asked to turn up to my pensioners’ conference to discuss with trustees how they are looking after my future. The point is that the Government are steaming in with absolutely no consultation with me as a pensioner and I have no right to be represented, although I am uniquely affected, beyond other pension schemes. I consider that to be high-handed and, as the hon. Member for Oldham East and Saddleworth said, to be solving a problem that does not exist.
My third point was also raised by my hon. Friend the Member for Wyre Forest (Mark Garnier): who carries the can? What happens when the Minister tells my private pension scheme or the parliamentary pension scheme that it must invest in, for instance, HS2 and it turns out to be a disaster? What happens when whichever ministerial pet project rises to the top of the priority list for pension allocation—what rough beast, its hour come round at last, slouches towards Whitehall to get its finance—and it all goes horribly wrong? I am sorry to quote Yeats to the Minister, but who will pay when that happens? When there is a deficit in defined-contribution pension funds that have been so directed by the Minister, who will pay for that deficit?
Women’s State Pension Age: Financial Redress
Torsten Bell Excerpts(10 months ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
I thank all hon. Members who have spoken powerfully today, and in particular my hon. Friend the Member for Salford (Rebecca Long Bailey) for leading today’s debate on behalf of the Backbench Business Committee. This is an important topic that she and I have discussed several times, both in public and in private. I look forward to her closing remarks.
When we retire, the question of how comfortable we will be in retirement and in the years leading up to it— ot least given the growth in pre-retirement poverty, partly due to ill health, as the hon. Member for Mid Dunbarton-shire (Susan Murray) set out—is crucial to all of us. We ask that question of ourselves, and of those we care about. As the debate has shown, many hon. Members rightly ask that about the country as a whole. We should expect people to have strong views on the state pension age. We all know women affected by the changes made, since 2010 in particular, that affect that age group—constituents, friends and family. I have declared a family interest on this front before, alongside my professional one.
Dawn Butler (Brent East) (Lab)
I, too, have many constituents who are affected, and I have held up the banner saying, “I stand with WASPI women.” My hon. Friend the Member for Salford (Rebecca Long Bailey) laid out where we can find the money. Surely we can promise to revisit this when the public purse allows, rather than letting down these women who have been let down over and over again. Justice delayed is justice denied.
Torsten Bell
I always thank my hon. Friend for her contributions. She makes a powerful case. I will come on to the reasons why we do not agree with that case, but I understand her point.
This is a cohort of women who have too often faced discrimination in the world of work, with lasting effects on the value of their workplace pensions. They have borne the brunt of unequal caring responsibilities, and as my hon. Friend the Member for Salford set out, historically the genders have had very unequal state pensions. That, at least, has been addressed, but the workplace pension divide remains as big as ever.
Lee Pitcher (Doncaster East and the Isle of Axholme) (Lab)
I should declare that my mum is a WASPI woman. She would be disappointed if I was not here today, and there is nothing worse than your mum being disappointed in you. I also represent 6,030 other WASPI women in my constituency. I just wonder if the Minister really understands the discrimination faced by 1950s women, including sexism and a lot of discrimination in the workplace. They just feel let down. Does the Minister realise that, and that they absolutely deserve justice?
Torsten Bell
I thank my hon. Friend for his question. I know, without having met her, that his mum will not be disappointed in him. Obviously, the point he makes is absolutely right; it is the point that I was just making. I think we are all aware of the experiences that this generation of women have had to face, not just in the labour market but much more broadly. He makes a powerful case, as always.
Now, there is broad political consensus that it is right to equalise the state pension age for men and women, but the acceleration of the state pension age increases by the Conservative and Liberal Democrat coalition was more politically controversial. I was not going to mention it, but I will gently remind Liberal Democrat Members who have spoken today—the hon. Members for Eastleigh (Liz Jarvis) and for Lewes (James MacCleary) used particularly strong language on this point—that it was the choice made by their party. Not to mention that acceleration at all—[Interruption.] If Members are going to use strong language about difficult choices, then they need to reflect on the choices that led to that point. My party opposed those choices at the time.
However, neither the acceleration nor the longer planned increases to the SPA legislated for since 1995 were matters the ombudsman investigated. This matters, given that it is the desirability of the original policy decisions made by previous Governments that is most frequently referred to by campaigners and by hon. Members, including the hon. Member for Strangford (Jim Shannon) today, who focus on the increases to the state pension age. In contrast, the ombudsman’s focus was on how those changes were communicated by the Department for Work and Pensions, as the hon. Member for Mid Dunbartonshire very clearly pointed out.
As all hon. Members know, we carefully considered the ombudsman’s findings. We always will, given its important role, which was set out by the right hon. Member for South Holland and The Deepings (Sir John Hayes) today and in several debates that I have taken part in with him in recent months.
Sir John Hayes
The Minister is right to say that no party—indeed, no previous Government—can be excused in this respect, because this matter covers the time in office of several Governments. The difference is that members of his party, in opposition, said,
“This injustice can’t go on. I have been a longstanding supporter of the WASPI campaign”,
and that Labour “will compensate” the WASPI women, as it is “their money”. That was said by the current Work and Pensions Secretary and the current Deputy Prime Minister.
Torsten Bell
The right hon. Gentleman has been a Member of this House for much longer than me, so he knows how this works. Parties set out their manifestos, and I am sure that if he looks at the Labour party’s 2024 manifesto, he will find there different words from the ones he has just shared with the House.
The Government agree that letters should have been sent sooner. We have apologised, and we will learn the lessons from that. However, as hon. Members and campaigners on this issue are well aware, we do not agree with the ombudsman’s approach to injustice or to remedy—and neither, reading carefully between the lines of the speech from the hon. Member for East Wiltshire (Danny Kruger), do the Opposition. The hon. Gentleman spoke very eloquently, as always.
Let us look at what the ombudsman said when it made its decision to lay the report before Parliament. It was not looking ahead to what a future Government might do; it knew that the then Conservative Government would have come to a similar conclusion. Hon. Members should remember that the long debate over those years between the Government and the ombudsman was held in private, so the ombudsman was aware of the approach of the Government, to whom it was talking in a way that those of us outside Government at the time could not have known.
The hon. Member for Harrogate and Knaresborough (Tom Gordon) and the right hon. Member for New Forest East (Sir Julian Lewis) asked about the decision not to accept an ombudsman’s findings. They are right to say that it is unusual, but it is definitely not unprecedented. I should spell out that the Government have accepted other ombudsman findings since, so it is not right to say that this is some kind of fundamental break in the approach by Government.
Seamus Logan
Earlier, the right hon. Member for Hayes and Harlington (John McDonnell) warned us that we might simply see the Government Front Bencher regurgitation the Government’s views today. Can the Minister clarify whether he has been sent here to defend the indefensible, or will he give us something new today?
Torsten Bell
The hon. Gentleman is welcome to choose his tone; I will continue to the end of my comments. My job is to come and explain the Government’s decision, and to be held accountable for it. That is what I am doing today, and what I will continue to do over the course of my remarks. It is right that the Government are then asked questions about their decision; that is the nature of this democracy, as the hon. Member for East Wiltshire said.
An important consideration in the Government making this decision was that evidence showed that sending people unsolicited letters is unlikely to affect what they know. That is why letters are sent only as part of wider communication campaigns. This evidence was not properly considered by the ombudsman. Another consideration was that the great majority of 1950s-born women were aware of the state pension age changing, if not of a change in their specific state pension age, as several hon. Members have pointed out. My hon. Friend the Member for Salford mentioned the statistic of 43%, referring to the 2024 rather than 2023 survey. However, as she will know, that refers to all women, including some women as young as 16; if we look at the cohort of women born in the 1950s, the figure is far, far higher. On those and other grounds, we rejected the ombudsman’s approach to injustice and remedy.
Members will be aware that litigation is live, so I will not go into lots more detail on the research evidence, which is the core of that litigation. I will just say two things: first, our decision was based on published research reports, which were robust and met professional standards; secondly, the same awareness research, which the right hon. Member for New Forest East disparaged, was used by the ombudsman.
Sir Julian Lewis
Will the Minister explain to the House why not one single speech in this debate until his has taken the line that he is taking? Everyone who has spoken in this debate believes that some compensation, at least symbolically, should be paid.
Torsten Bell
I thank the right hon. Member for his intervention. I am a liberal man. People will come to different views on the evidence. There are many Members in the House who have campaigned powerfully on this issue over many years, and I respect the work they have done on that. I am setting out a different view from the one that the right hon. Member has taken. That is the nature of policy choice, the nature of accountability, and the nature of this debate.
The ombudsman is clear that redress and compensation should normally reflect individual impact, as it did in the case of the Equitable Life compensation scheme that an hon. Member mentioned. And they spell out the challenges of assessing the individual circumstances of 3.5 million women, not least given that it took the ombudsman nearly six years to look at just six cases. The reality is that assessing them would take thousands of staff very many years. We gave detailed thought to whether we could design a fair and feasible compensation scheme. However, most of the schemes that were suggested would not focus on women who lost opportunities as a result of the delay in sending letters. Rule-based schemes, such as that suggested by the Work and Pensions Committee, would make payments on the basis of the likes of age rather than injustice. Simply playing a flat rate to all 3.5 million women born in the 1950s, irrespective of any injustice, is also hard to justify.
Fundamentally, though, our decision was not only driven by cost—to answer directly the question of the hon. Member for Falkirk (Euan Stainbank)—but by the fact that we do not agree with the ombudsman’s approach to injustice or remedy for the reasons that I have set out. Indeed, our commitment to pensioners can be seen in the significant fiscal investments that we are making in our priorities for pensioners, including raising the state pension and rescuing the NHS.
John McDonnell
I have an awful lot of affection for the hon. Member. Is there any difference between this speech and the one that was made in Westminster Hall? As it does not look as though there is, he might as well just send us the tape of the last one.
Torsten Bell
Well, the right hon. Member has demonstrated more affection on previous occasions is what I would gently say to that. If he is asking me whether the Government’s position has changed, I am afraid that the answer, from his perspective, is no.
Daisy Cooper
A few moments ago, the Minister said that the Government had concluded that it would not be appropriate to apply a flat rate to all 3.8 million women. Have the Government done any modelling on paying a flat rate to any other smaller cohorts within that 3.8 million women—for example, women on pension credit, or under a certain level of income or savings?
Torsten Bell
I thank the hon. Lady for her question. I think we have discussed versions of this question before. Yes, there have been models that may have focused on a subset of women—for example, those on pension credit—but that still comes up against the fundamental challenge of payments based on some other qualifying condition, which in this case is income, and not the injustice that has been suffered. The ombudsman set out that compensation was due for the injustice, not just the virtue of being a woman born in the 1950s.
Torsten Bell
I will give way, but then I will wrap up before Madam Deputy Speaker loses her patience.
Daisy Cooper
I am grateful to the Minister for giving way again. He will be aware that in other compensation schemes, there are often waves of compensation. The first wave of compensation can be on one indicator, with a second wave looking at other complicating factors. Have the Government looked at that model?
Torsten Bell
I refer the hon. Lady to our very detailed response, which was published in December. It runs over a number of pages, so I will send her the relevant extracts on the conclusions that we have considered. [Interruption.] I will have to conclude now because I am testing the patience of Madam Deputy Speaker.
I recognise that none of what I have said today is likely to change the minds of many Members here, as the right hon. Member for New Forest East (Sir Julian Lewis) has kindly pointed out to me. I know that, not least because I see many familiar faces from similar debates in Westminster Hall, as the even more friendly right hon. Member for Hayes and Harlington (John McDonnell) has told me. The campaigners, too, are unlikely to be satisfied. Their tenacity has been clear for all to see and has been attested to sufficiently today. They are right to continue to point to the wider context, which is that society has been far from universally kind to women born in the 1950s, as they have wrestled with discrimination in the labour market and beyond, which is what the hon. Member for Ceredigion Preseli (Ben Lake) set out earlier. Nothing regarding the case I have set out today diminishes any of that. However, the Government have made their decision and we owe it to everybody to be clear about it. It is right that hon. Members hold us to account for it, as the hon. Member for East Wiltshire (Danny Kruger) has set out.
That has happened today and in other debates in the House, including Westminster Hall. As I have said before, there are lessons for the Department to learn, and learn them we will. We will also continue to support women born in the 1950s and pensioners generally, not least by raising the state pension and turning around our NHS. I know that they and hon. Members will expect nothing less.
Work and Pensions
Torsten Bell Excerpts(10 months, 1 week ago)
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Shaun Davies
Away from the knockabout of Westminster politics, I and people in Telford welcome this change. The principle of means-testing was right, but the level was too low. Does my hon. Friend agree that millionaires, MPs who happen to be of pensionable age and those who are living abroad should not receive this payment?
Torsten Bell
I almost always agree with my hon. Friend, so the answer is yes. He also provides me with an opportunity to clarify a point that has not been covered in the last hour or so: the payment will continue not to be exportable for those not resident in the UK.
[Official Report, 9 June 2025; Vol. 768, c. 636.]
Written correction submitted by the Under-Secretary of State for Work and Pensions, the hon. Member for Swansea West (Torsten Bell):
Torsten Bell
I almost always agree with my hon. Friend, so the answer is yes. He also provides me with an opportunity to clarify a point that has not been covered in the last hour or so: the payment will not be exportable for those not resident in the UK.
Draft Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) Order 2025
Torsten Bell Excerpts(10 months, 2 weeks ago)
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The Parliamentary Secretary to the Treasury (Torsten Bell)
I beg to move,
That the Committee has considered the draft Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) Order 2025.
It is a pleasure to serve under your chairmanship, Mr Stuart.
Consumers have waited too long for the change before us. More than 10 million people now use buy now, pay later products. When used responsibly, such products can help people manage their finances. Many especially value the fact that the products are interest-free, often making them an affordable alternative to credit cards and personal loans. Yet, unlike those traditional forms of credit, buy now, pay later products sit outside the UK’s consumer credit regulatory framework. That is because buy now, pay later products fall under an exemption originally designed to help small businesses offer instalment plans to their customers. In recent years, however, innovative fintechs have used the exemption to roll out buy now, pay later products offering to customers, usually at an online checkout, new ways to pay via the likes of Klarna, PayPal and Clearpay.
Small firms do not need authorisation from the Financial Conduct Authority, nor are buy now, pay later agreements required to adhere to the Consumer Credit Act. That approach makes sense for small businesses offering simple instalment plans for goods and services, but it is not right for the large-scale consumer credit lenders now in this market.
Back in February 2021, under the previous Government, the Woolard review set out the risks of that unregulated market. First, there are no rules on what information buy now, pay later firms must give their customers. Too many people are left unclear about what they owe, and some do not even realise that they have taken out credit. Secondly, the firms are not required to check whether people can afford these products. Finally, that lack of checks brings real danger.
Chris Vince (Harlow) (Lab/Co-op)
Does the Minister agree that this draft legislation is particularly important to protect those facing hardship? Potentially, people—certainly residents in my constituency—may feel the need to turn to buy now, pay later products, but given that they are not regulated, that could lead them into further debt.
Torsten Bell
My hon. Friend makes an important point that is generally relevant to financial services regulation: we want the availability of credit for people, but we want it done safely. That is exactly what the changes are about. As I was saying, debt can quickly mount up when people take out several buy now, pay later products at once, with no one checking what they already owe.
The previous Government rightly pledged to bring the products into regulation, although sadly did not get to the point of delivering on that promise. I am proud that, in May, this Government laid this draft order to bring unregulated buy now, pay later products offered by third-party lenders into regulation under the Financial Conduct Authority. That will bring proper oversight of such firms and strong protection for consumers.
In future, buy now, pay later firms will have to carry out robust affordability checks, ensuring that consumers are protected from taking on debt that they cannot afford. Firms will also be required to give consumers clear information. That will help people to decide whether buy now, pay later is right for them, and to know that support is available if they face financial difficulty. Buy now, pay later users will gain strong rights under the Consumer Credit Act, including section 75 protection. That will make it easier for consumers to get a refund if something goes wrong with a purchase. Crucially, consumers will have the right to take their complaint to the Financial Ombudsman Service. That will guarantee them access to a fair, independent resolution if problems arise. Those are the rights and protections that users of other regulated credit products already enjoy. It is only right that users of buy now, pay later products receive them, too.
There is also something new: the Financial Conduct Authority will be able to develop a modernised information disclosure regime for buy now, pay later products, set by FCA rules, not by the Consumer Credit Act. We have recognised, in line with feedback, including from consumer groups, that the existing provisions of the Consumer Credit Act on information requirements do not suit interest-free, short-term buy now, pay later products. However, this is not special treatment for these products. On the same day as we laid the draft order that we are debating today, we launched a consultation to reform the Consumer Credit Act more widely.
Lastly, let me stress that a new regulatory regime is not just a win for consumers. Buy now, pay later firms will benefit as well. For years, they have faced regulatory uncertainty. This order ends that uncertainty, and we have ensured that the order delivers a smooth transition to regulation for them. They will be able to continue lending under a temporary permissions regime while the FCA authorisation is under review. That guarantees business as usual, for them and for customers, throughout the transition.
Twelve months after this order is made, the new regulatory regime for these products will come into force. In that time, the FCA will consult on and finalise the rules that will govern buy now, pay later lending. We must not delay giving millions of consumers the vital protection that they deserve.
I thank the Committee for its attention to this issue and would welcome any questions from the shadow Economic Secretary to the Treasury or any other Members.
Mark Garnier (Wyre Forest) (Con)
It is an absolute joy to serve under your very professional and diligent leadership and chairmanship of this Committee, Mr Stuart. I also congratulate the Minister on his debut in a Delegated Legislation Committee. He does it masterfully.
These buy now, pay later measures, as colleagues will recall and as pointed out by the Minister, were consulted on extensively by the previous Government. As the Minister also pointed out, there was an unfortunate general election, which got in the way of us actually—
Mark Garnier
That rather depends on one’s point of view. I think it was fortunate for everyone in this room apart from Conservative Members.
Moving on, we are absolutely supportive of bringing these products within the scope of financial regulation. As we have heard, the sector has seen rapid growth. Because the products are now used by millions of people, the last Government rightly acted to protect consumers from harm—or wanted to act. The proposed regulations require FCA authorisation, affordability checks and clearer information for consumers, which are all measures that we absolutely support. An ability to access the Financial Ombudsman Service will also give consumers an avenue to escalate any issues.
However, as these regulations have been developed, several concerns have been raised by businesses operating in the BNPL market, and I hope that the Minister may be able to address those issues today. First, the exemption for merchants offering their own BNPL products could create inconsistencies and consumer risks. I appreciate the sentiment for keeping an exemption, and Conservative Members do not want to expose small businesses to burdensome regulation. For example, the local gym should not be required to undertake the FCA approval process to provide a 12-month membership; I am sure that many people would agree with that. However, a potential loophole still exists. A large e-commerce website, such as Amazon, could offer BNPL directly and not come under these regulations. That is because there is no way in the Consumer Credit Act to distinguish between a large e-commerce site and a small or medium-sized enterprise. Currently, no online retailer is operating its own version of BNPL, as opposed to using a third party provider. However, I am sure that the industry would welcome reassurance from the Minister today that the Government will be looking at any knock-on effects that these regulations might cause.
Opposition Members also welcome the Treasury’s saying that work is under way to review and reform the Consumer Credit Act, but I hope that the Minister will confirm that the review will specifically address the issue of definitions, ensuring that there is a way to distinguish between the largest retailers and small businesses. Will the Government also provide further details on how they will go about monitoring the prevalence of retailer-provided BNPL services, and at what point they will intervene once they see evidence of such activity taking place?
Secondly, short-term lenders have highlighted the fact that although interest-free agreements under 12 months will fall under a new regime, longer or interest-bearing agreements remain subject to older rules. A 10-month interest-free instalment agreement and a 14-month low-interest agreement may be economically and structurally similar, but one will benefit from modern disclosure rules while the other will not. I hope that the Minister can address whether that has the potential also to be reviewed as part of the review of the CCA.
Finally, the regulations do not address late fees, which can disproportionately impact vulnerable consumers, so again I would welcome the Minister’s setting out today whether the Government will also keep that under constant review.
The Opposition support the intent of these regulations, but call for the Government to address some of the outstanding points raised by the industry in order to ensure robust consumer protection and a level playing field for everybody participating in this market.
Torsten Bell
I thank Members for their comments. Let me try to do justice to their questions in turn.
The core question raised by my hon. Friend the Member for North East Hertfordshire and both Opposition spokespersons was about merchant-offered credit. First, we do not see huge evidence of that happening. As things stand, we cannot see large providers doing that, and there are good reasons why they would choose not to.
Secondly, where large providers look to do that kind of thing, they tend to do it through a separate finance arm. Where that is the case, it will be required to be FCA-authorised, and the wish to avoid that lending sitting on the balance sheet of the retailer is a strong disincentive to the kind of activity that is being discussed. There are risks on the other side, because if we accidentally bring instalment plans or gym memberships into regulation, that would be a significant loss to consumers. We do not see the evidence today, but as I said, the Government will keep this under active review.
I can confirm that the wider CCA reforms will look at the question of definitions. The big picture is that when the CCA was created, the FCA did not exist, so primary legislation was very prescriptive about the nature of regulation. However, markets, technology and products have changed significantly, so we do not need the primary legislation to be as specific as it has been in the past, and there is more role for FCA rules to carry out that purpose.
In terms of next steps, the first phase of the review is under way. There will be a second consultation covering rights and protections later this year, and then there will be one Bill, bringing together the conclusions of that, to introduce that reform. That is also the answer to the question that the hon. Member for Wyre Forest asked about the unfairness of a 12-month cut-off in terms of the level of regulation we are talking about on the disclosure of information requirements that will apply to buy now, pay later. The lessons from that consultation over the next year will also inform what the future FCA rules might look like for the wider market under CCA reform. I am sure we will keep debating that, and that he will debate it with the Economic Secretary to the Treasury in the months ahead.
The hon. Member for St Albans mentioned the consumer duty. I can confirm that, because these will be FCA-authorised firms, it will apply in the normal way. The question of fees was also raised. I should remind everyone that FCA-authorised firms are already not allowed to impose fees and charges on customers who are in arrears or default beyond the costs required to match their costs. They are not allowed to rack up arrears and fees for people who are already in that situation. That is progress that has been made in recent years.
Lastly, I can confirm that the Government will publish their financial inclusion strategy, covering many of the issues that have been raised. It is a chance to pick up the wider questions about financial inclusion that I know are important to all Members.
In conclusion, let me stress once again that millions of people are using buy now, pay later products every year. They value that in many cases, but they deserve vital consumer protections, and we must not keep them waiting any longer. That is what this order does, so I hope Members will join me in supporting it.
Question put and agreed to.
Oral Answers to Questions
Torsten Bell Excerpts(10 months, 2 weeks ago)
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Sir Ashley Fox (Bridgwater) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
We all know the importance of work, and since the election we have seen employment rise by 500,000, but Britain is a country that has too few young adults in work or education, and where the post-pandemic employment recovery has taken too long. That is why we will continue our reforms to support more people into work.
Julia Lopez
To cut spending and balance the books, Labour has to get people off welfare, but the Chancellor’s job tax and the Deputy Prime Minister’s unemployment Bill mean that there are fewer jobs for them to go to. Some 285 more of my constituents are out of work than last year, and since the Budget a quarter of a million jobs have vanished. A rise in public sector roles in the same period is probably masking a far deeper crisis going on in the private sector. There is no joined-up thinking. Has the Secretary of State warned her Cabinet colleagues that their policies are making her job impossible?
Torsten Bell
The Secretary of State inherited a labour market that was a mess under the Conservatives, with nearly 1 million young people not in education or training, and 2.8 million too sick to work. Employment is up by 500,000. Economic inactivity—[Interruption.] Conservative Members might not like to hear it, but economic inactivity is down by 300,000 under this Government. No one on the Government Benches will take lectures on a good labour market from the Conservatives.
Sir Ashley Fox
Unemployment is now 115,000 higher than when Labour took office. The Chancellor’s new jobs tax and the Employment Rights Bill make hiring a new person more expensive. The family farms and family business taxes are reducing investment. Can the Minister therefore explain how he will reduce unemployment while the Chancellor is pursuing policies that increase it?
Torsten Bell
I do not want to try the patience of the House but, as I have said, employment is up by 500,000 under this Government. [Interruption.] Conservative Members do not like to talk about that. The hon. Gentleman mentions what British business wants—what British business wants is a Government who are actually fixing the public finances and the public services that mean that when a member of staff gets sick, they do not sit on a waiting list for years, as they did under the previous Government. The Conservatives like to attack the Employment Rights Bill, but stopping good employers being undercut by bad is the pro-business thing to do.
Johanna Baxter (Paisley and Renfrewshire South) (Lab)
Paisley jobcentre runs a “Take a job to work” day, where work coaches look for local employment opportunities and take those suggestions into the jobcentre to match jobseekers with local jobs. Does my hon. Friend agree that that is a good example of local innovation in jobcentres, and would the Government consider sharing that good practice across the rest of the country?
Torsten Bell
I thank everyone in Paisley who has been working on those practices—it is exactly the kind of innovation we like to see. Under the Conservatives, only one in six employers said they bothered to engage with their local jobcentre, which is exactly what we need to change with our reforms to Jobcentre Plus. I thank everyone in Paisley, but there is much more to do right across the UK.
Deirdre Costigan (Ealing Southall) (Lab)
The previous Government left us with one in eight young people out of work, training or education, and with 2.8 million people out of work due to long-term sickness, not only costing the economy billions more but costing people opportunity, hope and dignity, and now the Conservatives cannot even agree a plan among themselves to address that. Does the Minister agree that the Conservative party is in chaos, while this Government are bringing forward sensible plans to give the country a way forward after the mess the Conservatives left it in?
Torsten Bell
That was a powerful and long question, and I am glad that Conservative Members listened to every word of it, because they left us 1 million young people not in education, employment or training—that is what a disgrace looks like. What is happening now? We have seen falling numbers of NEETs over the past quarter and the past year.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call the shadow Secretary of State.
Helen Whately (Faversham and Mid Kent) (Con)
Two weeks ago, the hon. Gentleman’s Government told people they were U-turning on winter fuel payments because the economy is on a “firmer footing”. The next day, the unemployment figures were released, showing that a quarter of a million jobs have been lost since the Chancellor’s job-taxing Budget. The country is now losing 100,000 jobs a month. These figures are worse than even the most pessimistic forecast. Is that what a firm footing looks like to the hon. Gentleman?
Torsten Bell
A firm footing for economic recovery looks like kicking the Conservative party out of office and growing the economy once again, and that is what we see if we look at the data. The hon. Lady likes to look at one month’s data—well, let us look at it. Data from the Office for National Statistics show that vacancies rose by 27% between April and May. I know the Conservatives want to pretend that everything was wonderful a year ago, but every business and every voter in this country knows that that was not the case.
Helen Whately
Honestly, who does the Minister think he is fooling with this spiel? Growth forecasts have been slashed and inflation has surged. What world is he living in? The Government have been in office for a year and people are losing their jobs because of the decisions that they have made. How does he think his “everything’s fine” mantra actually sounds to one of the people who have lost their jobs or to a business facing a tax bill that it cannot afford? Has the Secretary of State even told her Back Benchers, who will be strong-armed into voting for cuts next week, that the welfare cuts Bill that we will be debating will get a grand total of zero people into work, according to the Government’s own impact assessment?
Torsten Bell
The hon. Lady asks about what is going on with the economy. What is going on is that we have had four rate cuts over the past year. What is going on is that we have signed three trade deals over the past year. What is going on is that employment has gone up and inactivity has gone down. I know that the Opposition love to latch on to one month’s data, but let us look at the whole period of this Government: wages have increased by more under this party in the past 10 months than they did in the first 10 years of the Conservative Government.
Victoria Collins (Harpenden and Berkhamsted) (LD)
Anna Gelderd (South East Cornwall) (Lab)
The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
The short answer to that question is yes. The Department is contributing to two consultations that will shortly be published by the Business and Energy Departments. They will invite views on the new UK sustainability reporting standards and transition plans. This will help investors, including pension savers and their schemes, to understand the impact of climate and nature on investments.
Anna Gelderd
As a co-chair of the all-party parliamentary groups on sustainable finance and on global deforestation, I remain concerned that around £388 billion in UK pension savings is still invested in fossil fuels and deforestation-related activities. Will the Minister reassure me further that undermining the long-term financial security of savers in South East Cornwall is not the Government’s intention, and will he commit to reviewing this, including via the Pension Schemes Bill and the landmark pensions review?
Torsten Bell
My hon. Friend has been a powerful campaigner on this issue for some years, and she will know that larger pension schemes are now required to publish annual reports with climate-related disclosures. The evidence shows that around two thirds of pension funds have a net zero commitment in place, and we will be reviewing those regulations over the course of this year.
Jim Shannon (Strangford) (DUP)
It is very important that those who have pensions get a return, so that their pensions are beneficial. It is also important to ensure that net zero is delivered, because many people who have pensions want to see that happen. It is about getting a balance, so how will the Minister get that balance?
Torsten Bell
On the first part of the hon. Member’s question, I do not want to get the balance, because we want to make sure that savers get the absolute best value they can for every buck they save. I completely endorse his sentiment on that part; that is the very purpose of the Pension Schemes Bill that is coming through. On the second part of his question, I also endorse the point that he makes. When we look at those disclosures, we see that they set out a balance of judgments about the requirements on schemes, but they also provide greater transparency so that both individuals and the schemes themselves can take a view about the investments.
Winter Fuel Payment
Torsten Bell Excerpts(11 months ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
On 21 May, the Prime Minister told this House that the Government wanted to extend eligibility for winter fuel payments to a wider range of pensioners in England and Wales. Today we are setting out how this will happen for the coming winter and the years ahead. This will provide certainty for pensioners and ensure that payments can be made swiftly and automatically, which is our priority. I hope this statement will also answer many of the questions that hon. Members have raised with me and others in recent weeks.
Let me set out for the House how this system will work. All pensioners with incomes up to and including £35,000 will benefit from support, as will all those on pension credit and other income-related benefits. The payment of £200 per household, or £300 per household where there is someone aged over 80, will be made to all pensioner households in England and Wales. Individual pensioners with taxable income above £35,000 will have any winter fuel payment automatically recovered via His Majesty’s Revenue and Customs without the need for them to take any action. This will be via PAYE for the majority, or in their self-assessment tax return for those who already complete one. No one will be brought into tax or into self-assessment just to repay their winter fuel payment. Those that prefer not to receive a payment can opt out of receiving it. As was previously the case before July 2024, where the household is not getting an income-related benefit and there is more than one pensioner in the household, shared payments split across the recipients will be made.
This Government have had to make tough decisions. It is right to means-test the winter fuel payment—[Interruption.] I thought the Conservative party supported means-testing the winter fuel payment. We will find out in this debate shortly. We have had to make take tough decisions because of the disaster left by the Conservative party. It is right to means-test the winter fuel payment on grounds of fairness and fiscal sustainability. Most people accept that it makes no sense to pay hundreds of pounds to pensioners irrespective of their incomes. Those on the highest incomes do not need it, and there are many other calls on public spending.
The Government have, however, listened to concerns about the level of the means test. We are acting to ensure that all lower-income pensioners receive support. The new individual £35,000 threshold is significantly above the income of pensioners in poverty, and broadly in line with average earnings. It will mean that the vast majority—over three quarters, or 9 million pensioners—will benefit from a winter fuel payment. This change ensures that the means-testing of winter fuel payments has no effect on pensioner poverty.
Means-testing the winter fuel payment in England and Wales like this will save around £450 million a year, subject to certification by the Office for Budget Responsibility, compared with the system of universal payments. It will cost around £1.25 billion in England and Wales, compared with the position last winter. Decisions about the situation in Scotland and Northern Ireland remain for their devolved Administrations in the usual way. As the Prime Minister has previously set out, these are changes that will be fully funded at the next fiscal event, the autumn Budget. That will ensure that final costings and funding decisions come alongside the latest forecast from the OBR. We will ensure that the Government’s non-negotiable fiscal rules are met.
We are setting out these changes before the summer to ensure that more pensioners receive support this winter. Regulations will be laid in the coming months to ensure that the payments are made, and tax changes will be legislated for in the Finance Bill.
I want to spell out clearly today that pensioners do not need to do anything. Winter fuel payments will be paid automatically this winter to all pensioners who receive the state pension, pension credit or anyone who has previously received a winter fuel payment. Similarly, payments will be recovered automatically through the tax system for those with an income of over £35,000.
Pensioners will also continue to receive wider support. Our pension credit take-up campaign has seen almost 60,000 awards made. I thank hon. Members on both sides of this House, local authorities and charities for their work on that campaign. Over 12 million pensioners right across the UK are also benefiting from the triple lock. The full new state pension is set to increase by up to £1,900 a year over this Parliament as a result. I commend that support for pensioners, and this statement, to the House.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call the shadow Secretary of State.
Helen Whately (Faversham and Mid Kent) (Con)
I feel for the Minister, sent here by his bosses to complete what must be the most humiliating climbdown a Government have ever faced in their first year in office. For nearly a year, the Conservatives have campaigned against this cut, and for nearly a year, the Government have tried to hold out. Just four weeks ago, I stood here and asked the Minister how long this tone-deaf final stand could go on for. Loyally, he held the line. He defended the cut one final time. He said their plan for pensioners was right on track. Well, today he has been sent to end that “courageous” last stand, and—unless it is coming next—he has been sent without the one thing that pensioners up and down the country deserve: an apology.
Let us be clear: the Government made a choice to cut the winter fuel payment. It is outrageous to claim that the economy has somehow improved from the day they made the cut, and they know it. In fact, by almost every metric, the opposite is true. Inflation was at the 2% target—now it is 1.5 points higher; 150,000 more people are unemployed; and growth forecasts have been slashed in half by the Office for Budget Responsibility. In the meantime, the Government have gone to town with the country’s credit card. Borrowing is up. Debt is up. Who is the Chancellor trying to fool when she suddenly says she can afford this when before she could not? The fact is that last winter she gave pensioners’ fuel money to the unions. Now she realises how unpopular that was, so she is pretending that everything has changed. Perhaps the most surprising thing is that she thinks anyone is taken in.
According to the Government’s own analysis, 50,000 pensioners were plunged into poverty this year and 100,000 extra pensioners ended up in A&E this winter. Their mistake has hurt people, and it is cowardly not to own up to it. Just like their personal independence payment reforms, there were no consultations or proper assessments—just a self-righteous insistence that what they are doing should not be questioned. There is certainly no thought for those affected or concern for the anxiety that their government by press release is causing. This is what happens when a Government come into office with no plan, no principles, no idea what they want to achieve and no idea how to achieve it. They just bumble from one mistake to another, breaking promise after promise. Did they think they could try out new policies like trying a new mattress—unwrap it, see how it feels, sleep on it for a while, but if it causes a political backache, send it back?
This rushed reversal raises as many questions as it answers. It is clear that when the Prime Minister stood up and made his big U-turn announcement in PMQs, he had no plan and no idea how he was going to pay for it. It is a totally unfunded spending commitment. Where is the £1.25 billion needed to pay for this U-turn coming from? I note that the Minister has kicked that can down the road until the Budget. The Government claim that the change will not permanently add to borrowing, so does that mean it will permanently add to taxation?
On the plan itself, is this really the best system of means-testing that the Government could come up with? Is the Minister sure that they have thought it through, or will this unravel, too? What happens if a pensioner earns over £35,000 a year through non-taxable income? Will they have to register for self-assessment and start filling out a tax return in their 80s or 90s? [Interruption.] You didn’t cover that.
Why should someone earning taxed income be disadvantaged? Is it fair that a millionaire pensioner and their spouse might receive a payment, but two people earning £36,000 will not? What happens if someone dies in the period between receiving the payment and having to pay it back? Will the Government go after the deceased person’s relatives?
I have two final questions. After all this, the savings for the Treasury for this coming year may be as little as £50 million. Does the Minister think it is worth it, and will he apologise?
Torsten Bell
I will deal directly with two of the questions raised because it is important to provide reassurance. The right hon. Lady asks what will happen with the estate of someone who is deceased. I want to be clear that His Majesty’s Revenue and Customs will never pursue any estate for the winter fuel payment alone. She also asks about the level of savings. As I set out in my statement, the savings will be £450 million a year in England and Wales. That is very clear, and it is a significant saving.
More broadly, the hon. Lady talks about an apology. She comes here representing the party of Liz Truss and lectures anybody else about apologies; she comes here representing the party of flatlining wages, rising debt and a 200,000 increase in pensioners in poverty, and asks anybody else to apologise. I have never heard such nonsense. We have listened to pensioners. For all her sound and fury—she was at her most furious today—I still cannot tell what the Conservatives’ policy is, 11 months on. For all the rhetoric and shouting, it sounds like she might support the means-testing of winter fuel payments. After all, that was the policy of her party’s leader, who once also supported means-testing the entire state pension in one of her bolder moments.
Conservative Members say that the policy is not much comfort to pensioners, but Age UK says the exact opposite: charity director Caroline Abrahams said that this announcement is
“the right thing to do”.
Martin Lewis says that it is a “big improvement”. [Interruption.] There is a lot of chuntering from the Conservative Front Benchers. Maybe their Back Benchers can work out what the Front-Bench policy is by the time they get to their feet in a few minutes’ time. I have no idea whatsoever what the Conservative party’s policy is.
More widely, when it comes to pensioners, the Government’s priorities are to raise the state pension and rescue the NHS. The triple lock will see state pension spending rise by £31 billion annually over this Parliament. Some £26 billion is being invested into the NHS because we inherited in England a disgraceful situation in which more than one in five pensioners aged over 75 were on waiting lists. There is no excuse for that legacy from the Conservative party. Neither of those forms of progress—raising the state pension and investing in the NHS—would be possible without the difficult decisions that we have had to make on tax. Those are difficult decisions that every Opposition party has opposed. Only this Government can provide that crucial support for pensioners, because we will do what is necessary to turn that support from rhetoric into reality.
Navendu Mishra (Stockport) (Lab)
Members on both sides of the House will have had a large volume of correspondence on this matter, so I thank the Minister for his statement. This fair policy change saves our public services £450 million by ensuring that the wealthiest pensioners do not continue to receive the winter fuel payment. Does he agree?
Torsten Bell
My hon. Friend sets out the principle case for means-testing the winter fuel payment very well indeed. I do not think that anybody with common sense thinks it right that millionaires receive each year from the Exchequer hundreds of pounds towards their winter fuel payments—people have recognised that for years. The Government are making the tough choice of saying that that we will no longer pay the winter fuel payment in that way.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call the Liberal Democrat spokesperson.
Steve Darling (Torbay) (LD)
Our country needs stability. I fear that this policy is from the book on how to botch running the country. Although last year’s decision was wrong and this change is right—the Liberal Democrats had long campaigned against those proposals, and it is important to acknowledge Independent Age, Silver Voices and Age UK, which have all driven the change—a Government who wobble do not give us the stability we need for our economy.
Some 300,000 pensioners in Devon and Cornwall have been worried sick about the proposals, so why did the Government not implement this approach 12 months ago? The Government comms have not been clear on single pensioner households, about which there are grave concerns, so will the Minister provide clarity on that matter? What about households in which there are pensioners on higher and lower rates—how will they be treated? Finally, may I have assurances that the Government will continue to push hard on pension credit? For the poorest pensioners, it can offer a boost of £11,000 a year to their income, which is the real way to tackle pensioner poverty in the UK.
Torsten Bell
I thank the hon. Member for his comments and his welcome for this change; he called it the right change. He asked about different treatment of single and couple households; I can explain that in a bit more detail. Single households will receive the entire household’s winter fuel payment to the one individual, whether that is £200 or £300. If the individual’s income is below £35,000, they will keep that in full, and if the individual’s income is above £35,000, that will be recouped by HMRC unless they choose to opt out. With couples, the situation for those not receiving means-tested benefits will be as it was before July 2024, which is split payments, half to each member of the household, and then they will be individually tested against the tax system.
I thank the hon. Member for giving me the chance to clarify that point. I also entirely endorse his statement about pension credit. The reason we want to see higher rates of pension credit take-up is not because of winter fuel payment per se, because that is small relative to the financial gains that come from people who are entitled to a pension credit receiving it. We absolutely must maintain the progress on pension credit take-up in the months and years ahead. As I said in my statement, I welcome the work of MPs in their constituencies, and of local authorities and charities, in driving up those rates.
Rachael Maskell (York Central) (Lab/Co-op)
As chair of the all-party parliamentary group for ageing and older people, I really do welcome the reinstatement of the winter fuel payment for 9 million pensioners, but since the announcement to remove it, the energy price cap has gone up £281, so will the Minister take a look at the value of the winter fuel payment and perhaps turn to the industry, which over the last five years has profited by £207 billion? Perhaps it can make a greater contribution to help our poorest pensioners.
Torsten Bell
My hon. Friend is right to raise questions about energy prices—an issue for households of all ages that have been living through the cost of living crisis of recent years. The good news is that the energy price cap will be coming down in July, although I think everybody across the House would like to see it fall significantly further. This Government have been taking steps over the last 11 months to make sure that more households are getting support with their energy bills. Members will have seen the consultation on the doubling of eligibility for the warm home discount, the work to significantly increase the spending on warm home insulation—over £3 billion this year—and the extension of the household support fund. Right across the piece, for households of all ages, not just for pensioners, we do need to make sure that this is a country where more people can afford to heat their homes.
Dame Harriett Baldwin (West Worcestershire) (Con)
The truth is that the Chancellor made a chilling political choice last July and has now had to make a screeching U-turn following pressure from people across the House and outside this Chamber. Will the Minister take this opportunity to send an apology to all the low-income pensioners in West Worcestershire and elsewhere who had to shiver through last winter?
Torsten Bell
As I was saying, we do need to make sure that low-income families right across the board are receiving the support they need. That is why we set out changes to free school meals last week and it is why we will be coming forward with a child poverty strategy in the weeks ahead. I have already explained why the original decision was taken and set out that we have listened. The important thing is that it is right to maintain the principle of means-testing winter fuel payments but to do so with a higher threshold. As I have set out, the changes we are bringing forward today will mean that the vast majority of pensioners—over three quarters—will receive it in future.
Johanna Baxter (Paisley and Renfrewshire South) (Lab)
I welcome my hon. Friend’s announcement, because this news will not only bring more money to Scotland; it also demonstrates that this is a Government who listen. The winter fuel payment is devolved in Scotland, as it was at the time of the original announcement, and the Scottish National party’s current policy robs poorer pensioners to fund payments for millionaires. Does my hon. Friend agree that the SNP must now re-examine its own policy in the light of this game-changing announcement today?
Torsten Bell
My hon. Friend is always quite right. I spoke to Ministers in the devolved Administrations today to set out in advance the details of this policy and to spell out, for example, to Ministers in Edinburgh that if they want a fairer system that means-tests the winter fuel payment and the equivalent in Scotland for those on the highest incomes, HMRC is ready to support that, but so far they have chosen not to means-test the system—to have a system that is not fair to poorer pensioners.
Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)
The politics of U-turns are not always bad; this is a welcome U-turn by the Government as people will benefit. It would have been helpful for the Minister to have said, “We made a mistake, but we are going to put it right”, but that is by the by. However, I have had many letters and communications, as I am sure have many other hon. Members from across the House, about a group of people who are still suffering: something like 750,000 pensioners who are eligible for pension credit, and therefore theoretically for the winter fuel payment, applied for the winter fuel payment but have not received a single penny for last winter. Whatever other changes are made, will the Minister commit to putting that situation right, so that those pensioners will receive the money that they should have had during the winter?
Torsten Bell
The right hon. Gentleman is right to highlight the issue of low take-up of pension credit and he refers to the figure of more than 700,000 pensioners, which unfortunately was true under the last Government. We have seen unprecedented levels of pension credit applications over the past year because of the campaign by the Government and by hon. Members from all parties. Those applications are very welcome, but I agree that we need to keep up the momentum. In the short-term, we are writing to all new housing benefits claimants who we think could be eligible for pension credit and encouraging them to apply; we are engaging in new research about what has worked in the drive for pension credit take-up, which largely seems to be awareness of the benefit; and we are looking at better data sharing with local authorities and across central Government Departments, including between the Department for Work and Pensions and His Majesty’s Revenue and Customs.
Frank McNally (Coatbridge and Bellshill) (Lab)
I welcome today’s announcement. It is right that, despite the horrendous financial situation that this Government inherited from the Conservative party, they are reinstating the winter fuel payment for 75% of pensioners and specifically targeting those in the most need. Following the question from my hon. Friend the Member for Paisley and Renfrewshire South (Johanna Baxter), will the Minister outline what discussions he expects to have with Scottish Ministers about the Scottish Government’s universal approach to winter fuel payments in Scotland? At a time when public services in Scotland are facing significant peril, the SNP’s position is to continue to give winter fuel payments to millionaires at a time of deep hardship for people in Scotland.
Torsten Bell
My hon. Friend is right to highlight the targeting. Setting the means test threshold at £35,000 ensures that it is well above the income levels of pensioners in poverty and is around the average earnings level. On policy in Scotland, an important principle of devolution is that those are decisions for the Scottish Government, but they are also decisions for which they will be held accountable.
John Glen (Salisbury) (Con)
Over several fiscal events over seven years, the option of removing the winter fuel payment from the wealthiest was resisted by the previous Government because there was not seen to be an effective rationing mechanism and there were considerable presentational challenges. Will the Minister confirm that pensioners with no mortgage and with significant tax-wrapped savings in individual savings accounts or venture capital trusts, but with a monthly pension of £2,500, will still be fully entitled to receive the winter fuel payment?
Torsten Bell
I always enjoy discussing technical details with the right hon. Gentleman. I set the position out clearly in my initial statement: means-testing is based on taxable income of £35,000, which answers his question.
Imran Hussain (Bradford East) (Lab)
The original decision to cut the winter fuel payment was the wrong decision; today’s decision is the right decision and a much fairer decision. In my constituency, 2,000 more pensioners will, quite rightly, get the winter fuel payment again. It is clear that the Government have listened, so I ask them to listen again to the growing calls in the Chamber and to scrap their planned, devastating cuts to disability support.
Torsten Bell
I thank my hon. Friend for welcoming today’s policy announcement. We will continue to discuss with him all aspects of how his constituents are treated in the social security system. On the wider questions that he raises, I will say that the Government have obviously set out the position—I think the position of most people in the country—that we cannot continue with a position where one in eight young people are out of work or where we see 1,000 people a day flowing on to personal independence payments. We need a better system, focusing on supporting those who can work into work—the Minister for Social Security and Disability is setting out the case on that. I do not think anybody should support the position of leaving the status quo as it is.
Wendy Morton (Aldridge-Brownhills) (Con)
No matter how the Minister tries to dress it up, the Chancellor made a monumental political mistake last year. While I welcome the news that the payment is being reinstated, it is cold comfort to those pensioners who missed out last year and faced really difficult choices over the winter. Will the Minister look at this issue again and reinstate the winter fuel payment for all those who missed out?
Torsten Bell
This is why I am confused. What is the position of the Conservative party? Is it to support means-testing of the winter fuel payment—yes or no? Are you going to send out the shadow Chancellor to give a speech—
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. “Are you going to send?” I do not think the Minister is speaking to the Chair.
Torsten Bell
Is the Conservative party going to send out the shadow Chancellor to give a speech in which I cannot tell whether he is apologising for Liz Truss, then come to this House the very next week and call for universal winter fuel payments? If the Conservatives are calling for universal winter fuel payments, they need to set out how that will be funded. This is a Government who have made their choice. It is right to means-test the winter fuel payment, because millionaires should not receive it. If the Conservatives do not know what their policy is on that, they will not know their policy on anything else.
Blair McDougall (East Renfrewshire) (Lab)
I have not met anyone—other than John Swinney, perhaps—who thinks that millionaires should get the winter fuel payment. I have met a lot of constituents who felt that the threshold was too low, and the Government have recognised that today. However, the Minister knows better than most that while some pensioners still struggle, pensioner poverty has fallen in recent times, whereas child poverty has gone in the opposite direction. Will he use some of the nearly £500 million saved through this measure and direct it towards the grandchildren, rather than the grandparents, and to where poverty is most acute in our society?
Torsten Bell
As always, I thank my hon. Friend for his well-put thoughts. He is absolutely right that pensioner poverty fell significantly, halving under the last Labour Government, before unfortunately rising by 200,000 people under the Conservatives, but we must not be complacent about the headline of falling pensioner poverty, because there are wider problems. [Interruption.] I am glad that the right hon. Member for Beverley and Holderness (Graham Stuart) welcomes it. The point I am coming to is that the stagnating incomes of working-age households under the last Labour Government moved across to stagnant incomes for pensioners and no falls in absolute poverty for pensioners under the Conservatives. There are subsets of pensioners, such as single pensioners, private renters and others, where we see lasting problems. It is important to see this in the round, but my hon. Friend the Member for East Renfrewshire (Blair McDougall) is absolutely right to say that we must move further on child poverty. He will have seen last week’s announcement on free school meals in England, with consequentials for the devolved Administrations, and we will come forward further with a child poverty strategy soon.
Mr Will Forster (Woking) (LD)
I welcome this Government’s U-turn. Countless pensioners in Woking suffered last winter, so I am pleased that that will not continue. The Minister stated that £36,000 is the threshold that he and the Government have chosen because it is the average earnings. Will the Government commit to increasing that threshold going forward when average earnings rise?
Torsten Bell
That is an important question. There is always a judgment in choosing a threshold for any means-tested benefit, and I want to be completely straight with the House about that. We have chosen a threshold that is well above the income level of pensioners in poverty, and it will ensure that more than three-quarters of pensioners receive the benefit of the winter fuel payment in England and Wales. The hon. Gentleman is right that it is currently in line with average earnings. It is important to have clarity for pensioners—a point that the Liberal Democrat spokesperson, the hon. Member for Torbay (Steve Darling), just made. We will leave the £35,000 at the current level, as all thresholds in the income tax system are frozen for the coming year, so that pensioners know that that is the threshold and there are no surprises. Decisions about future uprating will be for future Budgets.
Rebecca Long Bailey (Salford) (Lab)
I very much welcome the Minister’s statement today—it is the right thing to do to lift pensioners out of poverty. I am sure that both he and the Chancellor also agree that it is right to lift children out of poverty, so can he reassure this House that he and the Chancellor are doing all they can to outline plans to lift the two-child cap on universal credit as soon as possible?
Torsten Bell
As my hon. Friend knows, we have said clearly that all levers to reduce child poverty are on the table. The child poverty strategy will be published in the autumn, but we are not waiting for that—as I said earlier, we have already seen action on free school meals. It is another reason why we need to see more support for energy bills, and for insulating homes in particular, because it is younger families with children who are struggling most and having to turn off their heating. My hon. Friend is absolutely right to raise this issue, which is one of the core purposes of this Government. We cannot carry on with a situation in which huge percentages of large families are in poverty.
Simon Hoare (North Dorset) (Con)
I assume that because the Minister cannot find the word “sorry” in his vocabulary this afternoon, he expects pensioners in North Dorset and elsewhere to be saying thank you to him for this screeching U-turn. However, just a few weeks ago, what he has announced today was predicted to cause financial Armageddon. When should the City of London, mortgage payers and everybody else now expect the run on the pound that was predicted by the Leader of the House of Commons?
Torsten Bell
What this Government are doing is sorting out the mess in the public finances left by the Conservative party, and not repeating its irresponsibility. All Opposition parties oppose all of the tax rises set out in the autumn Budget, yet claim that they support the spending on the NHS and on pensioners—they cannot have it both ways. The party of Liz Truss has not learned its lesson.
Catherine Atkinson (Derby North) (Lab)
No one I have spoken to in Derby thinks that millionaires should be receiving the winter fuel allowance, but many will welcome the lifting of the threshold so that more people receive it. Does the Minister agree that this shows the Government listening; it shows money being targeted at where it is needed; and it shows what can be done with a stable economy?
Torsten Bell
My hon. Friend is completely right. As I say, we have set the threshold at a level that means that the vast majority of pensioners—not just in her constituency, but right across England and Wales—will receive support in the coming winter. Importantly, we are announcing the threshold now, to make sure those payments can be made in time for this winter.
Brendan O’Hara (Argyll, Bute and South Lochaber) (SNP)
When the Chancellor slashed the winter fuel allowance last year, she told us that it was necessary, urgent and the responsible thing to do. It turns out that it was not necessary, urgent or the responsible thing to do after all, so is the Minister going to apologise to the millions of pensioners who were put through the wringer so cruelly and unnecessarily? I think he knows that they deserve an apology from this Government. Having performed one U-turn, will the Government now do the same for the country’s poorest families and abolish the two-child cap?
Torsten Bell
I thank the hon. Member for his question. I have just referred to the progress that needs to be made on reducing child poverty, not just in England and Wales but in Scotland. We will set out that strategy in the coming months, and he is absolutely right to say that we should all want to see very significant progress on that issue in the years ahead. When it comes to the winter fuel payment in England and Wales, the equivalent benefit is obviously devolved in Scotland, so that is a question for Ministers in Edinburgh.
Pamela Nash (Motherwell, Wishaw and Carluke) (Lab)
I welcome the decision today, and I am delighted to hear the announcement from the Minister. Let us be crystal clear: this is a direct result of the progress that this Labour Government are making in turning around our economy. For my constituents, however, the future of the winter fuel payment—or its equivalent—lies in the hands of the Scottish Government. Can the Minister confirm that the Barnett consequentials to Scotland resulting from today’s announcement will exceed what the Scottish Government are already planning to spend on their equivalent of the winter fuel allowance? [Hon. Members: “Will the hon. Lady give way?”] Will he join me in urging the Scottish Government to follow suit and ensure that the additional funds that are provided due to today’s decision will restore the full winter fuel payment to all those who need it in—
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. Please be seated. I do not need any help with managing the Chamber, but questions need to be short. Minister, let us have a short, sharp answer.
Torsten Bell
My short, sharp answer is that wages have grown in the first 10 months of this Government faster than in the first 10 years of the last Conservative Government. Interest rates have been cut four times. My hon. Friend is right to say that progress is being made, and that needs to continue. We need to ensure that more people feel the benefits of that growth in their pockets. The changes we are making to winter fuel payments today are one of those benefits. I can confirm that there will be a block grant adjustment exactly as she sets out.
Esther McVey (Tatton) (Con)
I appreciate that this has been a humiliation for the Chancellor and that her credibility is in tatters—no wonder she is not here today to announce her own U-turn—but now that she and the Government have got a taste for climbdowns, may I urge them through the Minister, who unfortunately drew the short straw today, to reverse the equally ridiculous national insurance contribution rises, which are destroying jobs, and the inheritance tax changes, which are destroying farms and family businesses?
Torsten Bell
It is usual for a Minister to thank the Member for their question, but I actually mean it in this case, because the right hon. Lady has completely proved my point that the Conservatives have learned no lessons whatever. They think they can come to this Chamber and call for more spending and oppose every tax rise—and they expect to be taken seriously ever again? They will not be.
Richard Burgon (Leeds East) (Lab)
As a Labour MP who voted against the winter fuel payment cuts, I welcome this change in position, but I urge the Minister and the Government to learn the lessons. One of them is to listen to Back Benchers. If the Minister and the Government listen to Back Benchers, we can help the Government get it right and help them avoid getting it wrong. We do not want to be here in a year or two’s time with a Minister sent to the Dispatch Box to make another U-turn after not listening to Back Benchers on disability benefit cuts. If they listen now we can help the Government get it right.
Torsten Bell
It is important to listen to Back Benchers and to Front Benchers. It is even important to listen to Opposition Members on occasion, particularly when they are digging their own grave with their party’s policies. More seriously, the point that my hon. Friend raises is important: everybody on the Government Benches wants to make sure that this is a fairer country that is growing again—that wages are growing, that poverty is falling, that inequality is coming down. That is what we need to deliver. Sometimes that will involve tough choices, including all the ones that the right hon. Member for Tatton (Esther McVey) opposes. Those choices will need to be made, because we are a party of government not a party of protest, but they are made in the interests of our values and of a fairer country and a fairer Britain.
Saqib Bhatti (Meriden and Solihull East) (Con)
The Minister comes to this House almost triumphant, having voted to take away winter fuel payments a minimum number of months before winter, and now says that we should be thanking him for this reinstatement. Anguish, anxiety, uncertainty—that is what my pensioners suffered. Will he apologise?
Torsten Bell
The hon. Gentleman is trying to put words in my mouth and he will not succeed. We have been clear. What I said in my statement is that we have come to the House today, before the summer recess, particularly to deal with the issue that he is raising, which is to provide absolute certainty for pensioners in England and Wales that they will be receiving the winter fuel payment this winter if their income is below £35,000. I agree with him that that is an important level of certainty to provide, and that is why I am here today.
Several hon. Members rose—
Mohammad Yasin (Bedford) (Lab)
I share the deep concerns of my constituents about the loss of the winter fuel payment, which the Minister will know I relayed to the Department. I am glad that the Government have acted on those concerns and reviewed the threshold so that the majority of pensioners will receive the payment this winter. Does the Minister agree that in stabilising the economy we are now in a better position to do what Labour Governments have always done best: protecting the vulnerable in our society?
Torsten Bell
That is exactly the point I have just made: what are Labour Governments here for? Building a fairer Britain. What did the last Labour Government do? They brought down child poverty, halved pensioner poverty and raised wages year after year. That is what this Government will do again.
Alison Bennett (Mid Sussex) (LD)
I have listened to the Minister’s statement and read the words, too, and nowhere can I see an explanation for why this decision has come now, 11 months after it was first announced. Why has this decision come now? Will we have to wait another 11 months for the Government to rethink their cuts to disability benefits?
Torsten Bell
I have just explained why we are making this announcement now: we want to ensure that the payments can be made in time for the winter. I have not hidden from the fact that last year we made the difficult decision to means-test the winter fuel payment, and that was the right choice to make, but we have listened, which is why we have announced a higher means test. I have directly answered the hon. Member’s question.
This is important, but we do need to make some tough decisions. I know that the Liberal Democrats want a universal winter fuel payment, because they think it right to pay hundreds of pounds to millionaires, but I take a different view. I think it is that kind of wishful thinking that created, in 2010, a Liberal Democrat Government who promised to scrap tuition fees and ended up trebling them.
Kirsteen Sullivan (Bathgate and Linlithgow) (Lab/Co-op)
I thank the Minister for his statement, which I know will be greatly welcomed by my constituents. Over 14 years, we became used to a Government who did not listen and did not change course when circumstances changed, so I for one am grateful for a Labour Government who do so.
While there was an uptick in pension credit—
Kirsteen Sullivan
Will the Minister commit himself again to working with local government and devolved Administrations to increase the number of people receiving pension credit, so that pensioners on the lowest incomes do not lose out but receive the support that they need?
Torsten Bell
That is a very important point. Whatever the views expressed in the House today, I say to all Members that if any of them want to suggest ways in which we can continue to drive up pension credit and ensure that the poorest pensioners receive the support to which they are entitled, I will always be happy to talk to them.
Julia Lopez (Hornchurch and Upminster) (Con)
As my hon. Friend the Member for North Dorset (Simon Hoare) ably recalled, the Minister’s superiors told us that there would be a run on the pound unless pensioners took a hit on winter fuel. Given that every economic indicator was worse last year, can the Minister tell us whether the pound is safe with this U-turn, or whether this is just another example of his seniors’ talking utter bilge to justify their terrible decisions?
Torsten Bell
It is the hon. Member who is talking bilge. Growth was the highest in the G7 in the first quarter of this year, interest rates have fallen four times, and wages have risen faster in 10 months than they did in 10 years under the Conservatives. What is happening is that we are sorting out their mess and putting Britain on a better track.
Warinder Juss (Wolverhampton West) (Lab)
Does the Minister agree that, given that ours is now the fastest growing economy in the G7 and interest rates have been cut four times, now is the time to ensure that our public services will be protected and that pensioners who do not need the winter fuel payment to heat their homes will not receive it, while those who do need it to heat their homes will receive it?
Torsten Bell
I should have got out of the way, because my hon. Friend has given a direct rebuttal to what was said by the hon. Member for Hornchurch and Upminster (Julia Lopez). He is entirely correct in every detail of the important points that he has raised. A Labour Government investing in public services and ending austerity: that is what we will be hearing about in the House on Wednesday, and I look forward to hearing Conservative Members explain how they tried to support that spending while opposing every tax rise that was necessary to make it happen.
Ben Lake (Ceredigion Preseli) (PC)
I welcome the Minister’s statement, not least because it will offer much support and reassurance to so many of my constituents. As he knows, no system is perfect and mistakes will be made, so may I ask whether there will be an appeals mechanism for those who are entitled to the winter fuel payment but, for whatever reason, do not receive it?
Torsten Bell
I thank the hon. Member, my near neighbour, for that question. No bureaucracy is perfect, but in such cases we do not need an appeals mechanism; we just need to ensure that those people receive the payment as soon as possible. As I have said, we have made this decision to ensure that we can automatically make winter fuel payments to people who are receiving all the benefits that I mentioned, and who also received the payments previously. The success rate of that payment mechanism is strong, which is why I have made this announcement today. However, if any Members have any constituents in that position, I ask them to get in touch with me immediately.
Jacob Collier (Burton and Uttoxeter) (Lab)
I welcome the Government’s decision, and thank them for listening to Members on both sides of the House. Many of my older constituents live in houses that are not energy-efficient, which results in higher bills, so can the Minister say more about what the Government are doing to increase energy efficiency in homes to keep them warmer and bring down bills?
Torsten Bell
That is such an important point! One of the biggest mistakes that we made in previous decades was saying, “We will not see the benefits of work to improve the quality of the housing stock for years, so let us slash it.” That is exactly what happened in 2013, when there was a 90% cut in the level of insulations under the energy company obligation scheme, and we have paid the price for that ever since. This Government are not going to make the same mistake. My right hon. Friend the Secretary of State for Energy Security and Net Zero has been ramping up the warm homes programme, and we need to be out there insulating homes and improving lofts every day until Britain has a housing stock of which it can be proud.
Dr Andrew Murrison (South West Wiltshire) (Con)
Many of my elderly constituents had an unnecessarily cold and miserable winter, and the uncertainty to which the Minister constantly refers was of his Government’s own making. Will he take this opportunity to apologise to my constituents?
Torsten Bell
The right hon. Member is right to highlight that we need to provide support for older people, and for all households, with their energy bills right through the year, which is what this Government have been doing. We have not been waiting. As I said, the warm homes discount is being extended to almost 3 million extra households, we are rolling out the improvements to the insulation programmes that I have just mentioned, and the household support fund has been extended for future years. That is exactly what we need to do, while at the same time improving our energy security and our energy generation to make sure that, in future, we do not see the disaster of the last five years, when global wholesale gas prices sent electricity and gas prices here in the UK through the roof.
Rachel Taylor (North Warwickshire and Bedworth) (Lab)
I thank the Minister for his statement, which will be warmly welcomed by constituents, particularly pensioners who were just above the threshold and who lost out last winter. Does he agree that measures such as rolling out free breakfast clubs—I visited one this morning at Goodyers End primary school—are making a real difference by tackling poverty and that that is what this Government are doing across the board in all age groups?
Torsten Bell
I could not agree more with my hon. Friend. We need to make sure that we are seeing child poverty fall and seeing extra help for families through free school meals, as well as through the breakfast clubs that she mentions. We also need to see more progress on pensioner poverty. That is why today we are saying that the threshold will be well above the incomes of pensioners who are in poverty. We do not want to see that poverty in the years ahead, which is exactly why we have made this change today.
Claire Young (Thornbury and Yate) (LD)
While the Government buried their heads in the sand, countless pensioners suffered, such as my constituent who, despite having a terminal disease, had to cut back on heating and food, and spent the winter “freezing cold”. Can the Minister explain why no impact assessments were conducted last year before winter fuel payments were stripped from millions of pensioners?
Torsten Bell
I thank the hon. Lady for her question, but the equalities analysis was done. Unusually, the poverty impact analysis was also published over the last year. I do not agree with the statement that she has just made, but she is right to say that we need to make sure that we are improving things for pensioners. As I said before, this Government’s priority is to keep raising the state pension and to rescue the NHS. As I said, one in five over-75s are currently on an NHS waiting list, and the funding to make that happen is possible only because of the tax rises that I hear the Liberal Democrats oppose week in, week out.
Chris Webb (Blackpool South) (Lab)
I welcome the Minister’s announcement and the change in course from the Government. Many of us were uneasy about the low threshold for the winter fuel payment, especially in deprived communities such as mine—I have the most deprived borough in the country. Will the Minister assure my constituents that all pensioners under the threshold will automatically receive the new winter fuel allowance and will not have to do a single thing in the winter to come?
Torsten Bell
That is an absolutely crucial point and has been central to the work that we have done to decide on the policy. We want a system of automatic payment, so that pensioners do not need to do anything to claim the payments, and one that is automatic for those who have incomes above £35,000, so that they do not have to take action if they need to have the funding recouped, unless they choose to opt out. My hon. Friend is absolutely right: we need a simple system that supports pensioners.
Dr Caroline Johnson (Sleaford and North Hykeham) (Con)
The Minister talks about the NHS, and I wonder whether he recognises the number of elderly people who had to use the NHS as a result of having been cold because of his policies. I want to ask him a very specific question. He said:
“All pensioners with incomes up to and including £35,000 will benefit from support”.
He also said:
“Individual pensioners with taxable income above £35,000 will have any winter fuel payment automatically recovered”
through the tax system. Where a household has two individuals over the eligible age, what happens when one earns more than £35,000 and the other earns less? Will they get some, all or half of the winter fuel payment?
Torsten Bell
I think I have answered that question, but I am happy to lay it out again, if that is helpful. There is a long-standing principle of individual taxation, which I think is supported by all parties in this House. Where a couple are not receiving a means-tested benefit, they will each receive half of their household’s winter fuel payment. Whether they continue to keep that or it is recouped through the tax system will be based on their individual taxable income. For example, if one has an income above £35,000, their payment will be recouped by HMRC automatically, but if the other has an income level below £35,000, they will retain the winter fuel payment. I hope that clarifies things.
Ms Polly Billington (East Thanet) (Lab)
Would my hon. Friend help clear something up? The opposition parties seem to be claiming that they urged us to make this decision, but that is not true, is it? They actually urged us to give winter fuel payments to millionaires at the expense of our public services.
Torsten Bell
I can clear that up, in the case of the Liberal Democrats and Reform. They have the same policy—not for the first time, I might add—which is definitely to give winter fuel payments to millionaires. I have no idea what the position of the Conservative party is, and I have been here for an hour and a quarter. Actually, I have been in the House for the last 11 months, and I have still not been able to fathom what the Conservative party’s policy is, but I think it is to not learn any lesson from Liz Truss.
Greg Smith (Mid Buckinghamshire) (Con)
During the general election campaign, that well-known political giant, “a Labour spokesman”, said that Labour had no plans to change the winter fuel payment, but within weeks, the Government had cruelly cut it, withdrawing it from millions of pensioners, and 13 months later, the Minister is performing this screeching U-turn. Given the hokey-cokey nature of this policy, can he give an assurance from the Dispatch Box that what he is announcing will apply not just this winter, but every winter in this Parliament?
Torsten Bell
The point about certainty for pensioners is important—I think that is the point the hon. Gentleman is making. As I said earlier, we are setting the £35,000 threshold so that people become aware of it in the coming months. It is a round number, and we do not intend to change it in the years ahead, although further in the future, yes, there will be questions about uprating, which will be considered in the normal way.
Nadia Whittome (Nottingham East) (Lab)
I welcome the fact that the Government are responding to the huge public pressure and are expanding eligibility for winter fuel payments. I am concerned that we are about to make a similar mistake, which, once again, we will come to regret, in cutting disability benefits. Will the Treasury drop those cuts before they cause harm to our constituents, instead of reversing them after the fact? I have listened carefully to what my hon. Friend has said. To be clear, I am not asking him to keep the status quo, or to not support people into work; I am simply asking him not to cut disabled people’s benefits.
Torsten Bell
I thank my hon. Friend for her question, and we always have interesting conversations. The Minister for Social Security and Disability will have heard the point she made. I gently say that the number of people receiving personal independence payments is forecast to continue to grow in every single one of the years ahead. That is after changes were set out by this Government. That important point sometimes gets lost in this debate.
Ellie Chowns (North Herefordshire) (Green)
I welcome the fact that the Government are finally listening to the public and doing a U-turn on winter fuel payments, which is long overdue. However, in a truly strategic approach to tackling fuel poverty, we would make sure that every home could be heated affordably and was well insulated. Will the Government commit to investing in the national asset that is our housing stock, and to properly funding the warm homes programme, so that no pensioner, no child—nobody—is condemned to fuel poverty in a cold home?
Torsten Bell
Yes, that is exactly what we are doing, and we are funding that, because this Government know that we need to make difficult decisions, and will make them, so that we can deliver priorities such as investment in better housing stock.
Peter Swallow (Bracknell) (Lab)
I welcome this news, which will mean that more pensioners in Bracknell Forest receive this important benefit, and the Government’s recommitment to the triple lock. Does the Minister agree that a Conservative party that cannot decide whether it supports giving winter fuel payments to millionaires, whether it backs the triple lock, or even whether Liz Truss is a member is in no position to govern this country every again?
Torsten Bell
Obviously, I agree with my hon. Friend in lots of ways, but it is really important to dwell on the point that he made at the beginning of his question. Through these changes, the vast majority of pensioners— over three quarters—will receive winter fuel payments this winter. We can give them the necessary reassurance that they do not need to do anything for that to happen, even if they are on a higher income.
Dr Kieran Mullan (Bexhill and Battle) (Con)
The Minister is at pains to say that pensioners do not have to do anything to get this payment, but of course they had to do something—they had to write to, email and call Labour MPs, and tell them that this cut was wrong. At the time, the justification Labour MPs gave for the cut was the economic circumstances. Given that inflation and unemployment are higher, and growth is lower than it was going to be, was not the time for Labour MPs to listen before the cut, not after it?
Torsten Bell
No, because this Government were formed on the back of disastrous public finances. The Conservative party had announced public spending commitments without having a penny to pay for them. We will not apologise for doing the right thing to put this country back on an even keel.
Sam Rushworth (Bishop Auckland) (Lab)
On 3 September, I said in this House that I represent England’s coldest and snowiest constituency, where even people on a living wage can be in fuel poverty, as can children and pensioners. That is why, as the Minister knows, I pressed the Government not only for the changes that he has announced today, but to widen the eligibility criteria for the warm home discount scheme, which is the smartest mechanism we have for tackling genuine fuel poverty. He has only gone and done both those things, so can I thank him for listening not to me, but to the people I represent? What assessment has been made of the impact of these changes on lifting children out of fuel poverty?
Torsten Bell
I obviously thank my hon. Friend for his question, but I have to disagree. I do not deserve any credit for doubling eligibility for the warm home discount; the Under-Secretary of State for Energy Security and Net Zero, my hon. Friend the Member for Peckham (Miatta Fahnbulleh), who is here on the Government Front Bench, deserves it. On fuel poverty estimates, over 5 million households should benefit from the warm home discount next year. That will make a real difference to households right across the country.
Jim Allister (North Antrim) (TUV)
I greatly welcome this overdue U-turn, but if £35,000 is the correct cap, why did the Government impose misery on millions of pensioners last winter? Is not a basic part of getting something wrong saying sorry? It is not enough to say, “Look at all the things the Conservative party did.” That is not the point. The point is that this Government think they are better than everyone else. Why will they not say sorry?
Torsten Bell
Over the past year, this Government have been getting on with providing more support for pensioners, raising the state pension, ensuring the triple lock, extending the household support fund and investing in the NHS, the state of which is the single biggest betrayal of pensioners in England. We believe in and support the principle of means-testing the winter fuel payment, but have listened, and have looked again at the threshold. That is what I have set out today.
Lizzi Collinge (Morecambe and Lunesdale) (Lab)
I very much welcome raising the threshold for the winter fuel allowance. As I am sure the Minister knows, the threshold was at the heart of my concern about means testing, although the principle of means-testing is absolutely correct. Morecambe and Lunesdale has an older than average population. Can the Minister assure me that my pensioners will not have to do anything special—make any application—to get their winter fuel allowance?
Torsten Bell
I can absolutely give my hon. Friend that assurance. We want to make sure that the vast majority of pensioners can receive winter fuel payments. We want to make that as easy as possible, which means making receipt automatic.
Graham Stuart (Beverley and Holderness) (Con)
The Minister seems unable to say sorry, but does he at least regret that more than 90,000 more elderly people went to A&E last winter than did the year before, in the last winter under the Conservative Government?
Torsten Bell
Over the last few years, since 2020, energy bills have risen for all households, and far too many people have been struggling. That is absolutely right, and the Government are focusing on addressing it through the warm home discount and the warm homes scheme, which provides the insulation that the hon. Member for North Herefordshire (Ellie Chowns) mentioned. We need to do that right across the board, including, in the long run, by fixing our broken energy system.
Louise Jones (North East Derbyshire) (Lab)
I have spoken to many people in North East Derbyshire who, although they acknowledged that we should not give this payment to millionaires, were deeply concerned that the threshold was too low. Can the Minister reassure my constituents that those who are eligible for the payment will not have to apply for it?
Torsten Bell
I absolutely can. As I said, we need to provide the reassurance that the vast majority of pensioners will receive this support, and will not have to do anything to get the payment in their bank account.
Mike Martin (Tunbridge Wells) (LD)
The cut to winter fuel allowance and the subsequent U-turn have caused much anguish, distress and misery to the parliamentary Labour party. Judging by the questions from the Minister’s Back Benchers, it seems that we will have two further U-turns, on PIP and on the two-child benefit cap. To save his colleagues the anguish, will he let us know now when those U-turns are coming?
Torsten Bell
What Labour MPs want is a Labour Government who bring down child poverty, and that is what we will do. They want a Government who take responsible decisions, including difficult ones on tax and on means-testing the winter fuel payment, so that we can invest in public services and turn around the disgrace that there has been in Britain’s public realm for far too long.
Alison Hume (Scarborough and Whitby) (Lab)
I welcome this announcement, as will the 26,000 pensioners in my constituency, where we have particularly cold and harsh winters. Will the Minister reassure my constituents that automatic payments will be reinstated, and will there be any change to the date on which payments will be made?
Torsten Bell
I will not adjudicate on which Member has the coldest constituency in England, as my hon. Friend invites me to. She raises an important point that has not yet been made, so I should spell this out: we will bring forward the regulations on the payment of the winter fuel allowance over the summer, and they will set the qualifying week as that of 15 September, as it has been in past years. That means that payments will be made in November and December, as in past years.
John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)
A shocking 75% of Scottish pensioners said that they were left cold in their home last winter. Does the Minister agree that the Scottish Government must use the additional funding from today’s announcement to ensure that pensioners in Scotland receive the same amount of winter fuel payment as they did under the previous UK Conservative Government?
Torsten Bell
As I am sure the hon. Gentleman is aware, those are decisions for the Scottish Government. However, as I said, I have spoken to the relevant Ministers in the Scottish Government today. There will be a block grant adjustment to reflect this higher spending in England and Wales.
Gill German (Clwyd North) (Lab)
I thank the Minister for his statement, and for the extensive time he spent with the Work and Pensions Committee last week. Our inquiry on pensioner poverty has found that this issue is multifaceted and complex. Can the Minister assure me that he will work cross-Government on a policy that will ensure that pensioner poverty is a thing of the past?
Torsten Bell
My hon. Friend raises the important issue of the complexity of pensioner poverty. I will just give one example, which does not get mentioned in these discussions often enough. The growth rate—the value people are getting; the returns on every pound saved into a private pension—absolutely needs to be as strong as possible. Private pensions support the living standards of our pensioners. We need a pension industry that is focused on driving the best possible value for savers.
Dr Neil Shastri-Hurst (Solihull West and Shirley) (Con)
There appears to be universal support for this damascene conversion by the Government. Last year, they told pensioners that the right course of action was to scrap the winter fuel payment for millions, but they are now telling them that a means-tested system is right, so how can pensioners possibly believe anything that the Government say?
Torsten Bell
Did we actually get a Conservative party policy there? Is the hon. Member saying that the Conservatives support today’s announcement? [Interruption.] That is a no. We do not have an answer yet, after an hour and 10 minutes, on what the Conservative party’s policy is. I can give him the answer that he would like: yes, we will provide certainty that this is the policy of this Government.
Jessica Toale (Bournemouth West) (Lab)
I have worked hard with Citizens Advice Bournemouth, Christchurch and Poole in my constituency to get pensioners on to pension credit. However, on the doorstep, I have met far too many people, especially single women, who are £10—or even £1—over the threshold for pension credit. I welcome the statement, and thank the Minister for listening to my constituents’ concerns about the threshold. Does he agree that this policy shows the difference between this Government and the previous one? This Government are doing what is necessary to get stability in our economy, what is fair to get money back into our public services, and what is right to protect the vulnerable in our society.
Torsten Bell
I thank my hon. Friend for her question and, in particular, for her hard work to drive take-up of pension credit. Forget winter fuel payments—pension credit is a really important lifeline for low-income pensioners. It is worth an average of £4,000 to those receiving it, and far too many are missing out. I thank my hon. Friend for her work, and I hope that it continues.
Robbie Moore (Keighley and Ilkley) (Con)
Today’s U-turn is an astonishing victory against the Government, whose support has dried up after less than a year in office. When the Government announced their cruel cut to the winter fuel payment, costing 64,000 Bradford district pensioners vital support, experts across the country warned that up to 4,000 lives could be at risk as people were forced to choose between heating and eating. Now that the majority of the winter fuel payment has been restored, do the Government dare to produce a figure for how many pensioners may have lost their life as a result of the Government’s choice to remove the winter fuel allowance?
Torsten Bell
That is a serious matter. There are poorer households, with people of all ages, that have been struggling with energy bills in recent years. I am sure that all of us across this House want to see those problems addressed. We have also seen increases in food prices over the last few years that are higher than we would like, and it is lower-income households that spend a higher proportion of their budget on essentials such as food, energy and housing. It is the policy of this Government to ensure that we are dealing with all those issues.
Paul Waugh (Rochdale) (Lab/Co-op)
The median average income of a pensioner in Rochdale is £15,000, which is way below the amount we expect people to live on with the national living wage, so I thank the Minister for today’s announcement. Does he agree that it proves that the Government have listened not only to Opposition MPs, but to MPs in the Labour party who have pushed for this for so long and, more importantly, to the pensioners we represent?
Torsten Bell
My hon. Friend is right that we had to make difficult decisions last year, and I understand that Labour Members have raised those with the Government. It is why we looked again at the threshold and are sticking to the principle of means-testing while setting a higher threshold so that the vast majority of pensioners—over three quarters—will now receive winter fuel payments.
Richard Foord (Honiton and Sidmouth) (LD)
I welcome the partial reinstatement of the winter fuel payment. When we met, the Minister and I discussed the cliff edge that existed last winter, which meant that people in receipt of pension credit could in some cases leapfrog the income of people in receipt of a small private pension. Can the Minister indicate whether the new means test will remove that eligibility cliff edge?
Torsten Bell
I remember discussing exactly that with the hon. Member. All means tests have pros and cons, but by having a much higher threshold—in particular a higher threshold relative to the level of payment, with £100 or £200 being received by individuals—the large unfairness he talks about, where small differences in income led to large differences in outcome, is far reduced.
Richard Baker (Glenrothes and Mid Fife) (Lab)
I used to work for Age Scotland, so may I say how welcome it is that the Government have listened to older people’s charities and made today’s announcement? I understand it will mean some £100 million additional funding for the payments in Scotland. Does my hon. Friend agree that SNP Ministers should now rethink their plans and instead endorse Scottish Labour’s plans, which were first proposed last November and would mean more generous payments for the pensioners who need them most?
Torsten Bell
I am glad to hear about my hon. Friend’s previous role, and it is encouraging to see what charities representing older people have put out over the last few hours. As I said earlier, Age UK has said that this is the right thing to do and that it will bring much-needed reassurance for older people and their families.
Lincoln Jopp (Spelthorne) (Con)
I appreciate that the Minister did not get a chance to spend long on the Back Benches—such has been his accelerated rise up the ministerial pole—but would he like to spare a thought for his former Back-Bench colleagues and join me in thanking and congratulating the small band of Labour Back Benchers who went public, broke cover and opposed this dreadful policy?
Torsten Bell
I agree that we should welcome all Labour Back Benchers, because they are the people going through the Lobbies every day to keep in place a Labour Government who are saving public services, taking tough but fair decisions on tax—decisions that are opposed by all the Opposition parties—rescuing our public services and driving down poverty. That is what a Labour Government is about, and that is what everyone on the Labour Benches agrees on.
Neil Duncan-Jordan (Poole) (Lab)
I welcome today’s statement. As one of the MPs who spoke against the decision to means-test the winter fuel payment last year, I pay tribute to all the campaigners who have lobbied hard for a change in policy. Does the Minister agree that means-testing has once again failed and that effectively what we are seeing today is the return of Labour’s commitment to universalism and to using the taxation system to get money back from those who are better-off?
Torsten Bell
I think I agree with my hon. Friend, in the sense that the tax system is a progressive tax system. That is the purpose for which it is being used in this case—to drive fairer outcomes for pensioners, and so that millionaires do not receive the benefit of a winter fuel payment but all lower and middle-income pensioners do.
Robin Swann (South Antrim) (UUP)
The Northern Ireland Executive is to receive a consequential budget adjustment. May I ask the Minister when it will receive that adjustment, so that we can ensure that our Northern Ireland pensioners get a winter fuel payment in the coming winter?
Torsten Bell
I absolutely recognise the hon. Member’s question, and I spoke to the Northern Ireland Executive earlier today. We will ensure that the Executive receive the budget adjustments in year in order to provide the same support, in line with the principle of parity under which the social security system in Northern Ireland operates. The answer is yes, that support and funding will be there.
Shaun Davies (Telford) (Lab)
Away from the knockabout of Westminster politics, I and people in Telford welcome this change. The principle of means-testing was right, but the level was too low. Does my hon. Friend agree that millionaires, MPs who happen to be of pensionable age and those who are living abroad should not receive this payment?
Torsten Bell
I almost always agree with my hon. Friend, so the answer is yes. He also provides me with an opportunity to clarify a point that has not been covered in the last hour or so: the payment will continue not to be exportable for those not resident in the UK.
Mr Peter Bedford (Mid Leicestershire) (Con)
Does the Minister agree that those pensioners who missed out on their payment in the winter of 2024 and will qualify under these rules should be reimbursed for the money they lost?
Torsten Bell
My view is that all pensioners are being supported by our higher level of the basic state pension and the new state pension, supported by the difficult decisions that the Government have been able to take. All pensioners will be supported by a functioning NHS, which is what we are putting in place after the disgrace of the last 14 years. To answer the hon. Member’s question directly, we are setting out the system for future years and not for the past.
Douglas McAllister (West Dunbartonshire) (Lab)
This is welcome news that will bring even more money to Scotland on top of the record funding settlement that our Chancellor delivered in the Budget. Does the Minister agree that my constituents fear the Scottish Government and John Swinney’s plans to pay out just £100 in Scotland? Those who need it most will now get more in England and Wales than the SNP will pay out to pensioners in Scotland—double, in fact—because the Scottish Government seem determined to pay out to the very wealthiest millionaires in Scotland. Should they rethink that?
Torsten Bell
I cannot compete with my hon. Friend in making a powerful case that the SNP Government in Edinburgh do need to think again.
Monica Harding (Esher and Walton) (LD)
In my constituency, over 15,500 pensioners lost the winter fuel allowance, of whom 5,000 were over 80. Would the Minister like to apologise to the gentleman who wrote to me who had cancer and could not keep his heating on for the winter of worry he was put through?
Torsten Bell
I thank the hon. Member for raising that point. It is important that those in need of healthcare, in particular, receive support. It is not that we see higher levels of challenge in keeping the heating on among older generations; it is about the consequences of that, particularly in cases such as the one she raises. That is exactly why we need to ensure that we are turning around the NHS, which all the constituents of hon. Members in England are relying on. We are seeing improvements to waiting times in Wales as well.
Dr Scott Arthur (Edinburgh South West) (Lab)
I thank the Minister for his leadership on this issue. If he is looking for examples of how to increase the uptake of pension credit, he is welcome to visit my constituency to see the work that the Community Help and Advice Initiative is doing with Gate55 to maximise benefits. If he comes along to one of those sessions with the Dove Centre, he can also get a warm meal and a game of bingo. But the £35,000 threshold is much more generous than I, as a tight-fisted Scotsman, would have expected, so will he explain how he reached that value?
Torsten Bell
It is a fair question. All means-test thresholds do involve judgments—I have been completely honest with the House about that—and the judgment we have come to is that we want to see the vast majority of pensioners receiving the winter fuel payment. We want to be absolutely sure that no lower-income pensioners will miss out. That is what brought us to a £35,000 threshold. It also means that those on higher incomes—the richest 20% or 25% of pensioners—will not receive it.
James Wild (North West Norfolk) (Con)
The Minister may be in denial, but this U-turn is a humiliation for the Chancellor, who claimed that economic stability demanded taking money from vulnerable pensioners, and for all the Labour MPs who voted for it. Why did the Government not listen sooner to those who campaigned against these cruel cuts? Will he now apologise to my constituents and those across the country who were cold last winter?
Torsten Bell
This is a Chancellor who has brought stability and growth back to the economy and got wages growing once again; one who is driving investment in our public services, which will rescue them; one who has driven up public investment, which is crucial to showing that, once again, we are a country that can do the basics like building houses, filling potholes and the rest.
Mr Jonathan Brash (Hartlepool) (Lab)
When the policy was originally announced, I, hon. Members across the House and constituents of mine all shared the same basic view that means-testing is fair but the threshold was far too low. I therefore welcome the Government’s decision today and the fact that they are listening. Over the last winter, working with the citizens advice bureau in Hartlepool, we secured nearly £1 million of additional annual income for Hartlepool pensioners. Does that not show the work that needs to be done on all those unclaimed benefits not going to the pensioners who need them?
Torsten Bell
I congratulate my hon. Friend on the work that he and others have been involved in in Hartlepool. Driving up the take-up of all benefits so that people get the support to which they are entitled is important for ensuring that more poor households are able to eat, to heat their homes and to live a decent life.
Pete Wishart (Perth and Kinross-shire) (SNP)
I do not know where Scottish Labour MPs have been for the past six months, but the Scottish Government have already made it abundantly clear that we will reintroduce a winter fuel payment—and we would have done that with or without this embarrassing, screeching U-turn. Here is another place where the Minister can follow the Scottish Government: the two-child benefit cap. We vowed to ensure that it will disappear in Scotland. Will he now make the same pledge across the UK?
Torsten Bell
The hon. Gentleman asks where Scottish Labour MPs have been, so I will tell him: campaigning in Hamilton, making sure there is a Labour MSP and that in a year’s time there will be a Labour Government in Edinburgh once again.
Noah Law (St Austell and Newquay) (Lab)
Away from some of the consternation of this place, a glance at His Majesty’s Treasury distributional analysis will reveal that the original decision to protect the most vulnerable, the Budget that followed, the spring statement and—I hope—the spending review have been some of the most progressive fiscal decisions we have seen in recent years. Will the Minister join me and the many wealthier pensioners in my constituency who agree that means testing is the right decision, the progressive decision and the Labour decision?
Torsten Bell
That is absolutely right. I think every Member of this House will have heard from people on higher incomes who think it makes no sense at all that they receive hundreds of pounds from the Government each year. With the sensible decision to means-test—yes, to the higher threshold—we have brought that to an end.
Liz Jarvis (Eastleigh) (LD)
The Government’s cuts to the winter fuel payment was estimated to have impacted 16,766 pensioners in my constituency, so I welcome today’s U-turn. Those affected include my constituent Chrissy, who was just above the threshold and now has the added fear that she will lose her personal independence payments. Does the Minister understand why Chrissy is so angry and afraid?
Torsten Bell
I have already discussed with the hon. Member for Honiton and Sidmouth (Richard Foord) the question of people just over the pension credit threshold. I recognise that issue and I have spoken to pensioners in that situation. As I say, we have listened, and that is why we have put in place a much higher threshold, which means that Chrissy, if she is near to the pension credit threshold, will be receiving winter fuel payments this year.
Chris Vince (Harlow) (Lab/Co-op)
I thank the Minister for his statement, which pensioners in Harlow will welcome. The fastest growth in the G7, three trade deals and four interest rate cuts—is that the context in which the Minister feels we are able to provide more pensioners in Harlow with the winter fuel allowance?
Torsten Bell
My hon. Friend always does a good job of not only representing Harlow, but remembering the economic progress that is being made. If anyone did not hear what he just said, he talked about rising growth, rising wages, interest rates falling and a country back on the path to success.
Vikki Slade (Mid Dorset and North Poole) (LD)
Almost £85,000 was paid out by Dorset Community Foundation through its “Surviving Winter” campaign, including to many in my constituency. The foundation has noticed that many more people are relying on oil and liquefied gas, especially those in park homes and rural areas. What is the Minister doing with Cabinet colleagues to push down the price of power for those who do not have a choice?
Torsten Bell
The hon. Lady’s question gives me the opportunity to praise the work done by all kinds of charities—in some cases through supporting pension credit uptake and, in the case of better funded foundations, providing direct support to pensioners. That is all very welcome. She is right to raise the wider question about sources of energy, but of course the winter fuel payment is a cash benefit that can be used for all kinds of energy.
Chris McDonald (Stockton North) (Lab)
The decision to restore the winter fuel payment to those earning under £35,000 a year is the right decision. I thank the Minister and his predecessor for their constructive engagement with representations from my constituents in Stockton, Billingham and Norton on the threshold issue, but does he agree with my constituent who wrote to me to say that, although welcome, the winter fuel payment is not a silver bullet, and this Government’s commitment to the triple lock stands in stark contrast to the previous Conservative Government’s breaking of that triple lock in 2022, which is still costing my constituents hundreds of pounds a year?
Torsten Bell
I absolutely agree with my hon. Friend, and he is right to say that we should focus on the big changes we are making to support pensioners, which in England are rescuing the NHS and raising the basic and the new state pension.
Jim Shannon (Strangford) (DUP)
I thank the Minister for his statement. I very much welcome the decision to give the winter fuel payment back to pensioners. Raising the threshold to £35,000 means that many will now qualify, and I thank him for that. On behalf of all of those pensioners who have struggled for the last 10 months, will they receive back pay from the Government to pay off the credit cards or the loans they have had to take out in order to make it through the last winter, bearing in mind that the cold weather over the last few weeks has meant people are still having to turn their heating on and racking up even more costs?
Torsten Bell
We have been making sure that there has been support over the course of the last winter, and the hon. Gentleman will have seen the increase in the state pension at the beginning of April, including for many of his constituents. The question for the Northern Ireland Executive is how they wish to handle this, but on the principle of parity, we would say that the same change should take place in Northern Ireland so that his constituents receive the winter fuel payment this winter.
Fred Thomas (Plymouth Moor View) (Lab)
I represent over 20,000 pensioners in Plymouth—more than a quarter of my constituents. I have had hundreds of conversations over the past year, and I know that people understand that the winter fuel payment should not be given out to everyone in society. The richest in society do not need it, and I warmly welcome the policy announced by the Minister today. What economic measures have this Government taken to allow us to make this change now?
Torsten Bell
I thank my hon. Friend for his question. We have gone from competing over temperatures to competing over volume of pensioners, but both are important. The point he makes will echo with lots of Members around the House who have had similar conversations with pensioner constituents who are on a higher income and who do not think it makes sense for them to be receiving hundreds of pounds from the Government every year. In future, they will not be, but the vast majority of pensioners—over three quarters—will be receiving support this winter because of today’s decision.
John Slinger (Rugby) (Lab)
Does the Minister agree that it is the strong economic foundations that this Government have been building that have enabled us to provide this extra support to pensioners and working people, and that as the economy continues to grow, we must focus ever more political attention and resources on the younger generation, particularly people starting their careers, so that perhaps one day they may have a triple lock?
Torsten Bell
My hon. Friend raises an important point, which is that as economic growth returns, as it has over recent months, what matters is that it feeds through to rising living standards, particularly for poorer middle-income households. We need to be honest about this: the reason why wages did not grow under the last Government was that growth was not there. That is exactly what we need to make sure never happens again.
Linsey Farnsworth (Amber Valley) (Lab)
My constituents are people of common sense, and they tell me that they do not think millionaires should get the winter fuel allowance, but they did feel that the threshold was too low, so they will no doubt welcome today’s announcement. However, after 14 years of being let down by the Conservatives, they are wary of Government announcements, so can the Minister reassure my constituents that support for pensioners by way of the triple lock, pension credit and NHS investment will remain?
Torsten Bell
My hon. Friend is absolutely right to say that faith in the system has been strained by the failure of the last 14 years—economic failure, public service failure and a failure of basic behaviour in politics—and that is what we need to turn around. She can tell her constituents that wages are growing, pensions are rising, waiting lists are falling and Britain is back.
Pensions: Expatriates
Torsten Bell Excerpts(11 months, 2 weeks ago)
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The Parliamentary Secretary to the Treasury (Torsten Bell)
It is a pleasure to serve under your chairmanship, Mr Dowd. I thank the hon. Member for Farnham and Bordon (Gregory Stafford) for opening today’s debate, which was granted by Backbench Business Committee, and for setting the scene so well, in a way that others then followed.
I thank all hon. Members who made the time to speak and set out their cases. They covered issues that are important to many state pension recipients living abroad. I recognise that those who are affected, who obviously cannot speak today, feel strongly about this issue; many of us, in their shoes, would feel the same. On that basis alone, it is right to debate this subject and to hear from hon. Members about their constituents, including my hon. Friend the Member for West Dunbartonshire (Douglas McAllister), the hon. Member for Aberdeen North (Kirsty Blackman) and others who are not in Scotland.
Late last year, my predecessor, now the Economic Secretary to the Treasury, met Anne Puckridge and others from the End Frozen Pensions campaign to discuss the policy’s impact. We have listened, and I read case studies every week, either from hon. Members who have written in about them or in letters directly from pensioners themselves. We are all aware that there are many countries where high inflation has posed particular challenges in recent years, so I recognise the salience of today’s subject matter.
We all recognise the importance of the state pension, as the UK’s foundation of support for older people. In 2025-26, the Government will spend over £174 billion on benefits for pensioners. That represents 5.8% of the UK’s GDP and includes £145 billion spent on the UK state pension, including for those living abroad. I raise those facts because they are important; they sit behind the debates that we often have here or in the main Chamber about the size of the state and the level of taxation.
As hon. Members are very aware, the state pension is uprated abroad only when there is a legal basis for doing so, which is why we are here today.
Kirsty Blackman
On that, the state pension is uprated abroad only when there is a legal requirement to do so. There is no legal bar to the UK uprating those pensions in countries where there is not a reciprocal agreement in place.
Torsten Bell
There must be a legal basis for making payments. However, the hon. Member is right to say that under the specific policy I am setting out, payments are made only when there is a legal requirement to do so. As the hon. Member for Farnham and Bordon set out right at the beginning, that is a long-standing policy that has lasted for 70 years. For many years, the priority for successive Governments of all parties has been to prioritise those living in the UK when making difficult spending decisions on pensioner benefits. That was true of the coalition Government, when a Lib Dem Pensions Minister chose for five years not to make any progress on this issue. He did that under a Conservative Government and a Conservative Prime Minister all the way through.
The hon. Member for Brecon, Radnor and Cwm Tawe (David Chadwick)—my constituency neighbour—mentioned Lloyd George, who introduced a state pension with no uprating whatever. The first uprating of the contributory state pension in 1946, under the Attlee Government—again, I am making a point about the cross-party basis of some of these decisions—was not paid to pensioners living abroad. So since the beginning, policy on pension uprating has been consistent.
As we have discussed, people move abroad for many reasons—to be with their family, as the hon. Member for Strangford (Jim Shannon) set out, enjoy a particular climate or return to their country of birth. It is for individuals, not the Government, to make those decisions, but when they make them, they will of course consider the impact on their finances, alongside a wide range of other factors. As the hon. Member for South West Devon (Rebecca Smith) set out, our duty is to ensure that information regarding the effect of living abroad on the state pension entitlement is available. These days, that is on gov.uk, and includes information on where the uprating does and does not occur.
Pensioners who have retired to other countries will obviously take into account the UK state pension position, but they will also look at the wider provision for pensioners in those countries. Many countries will have a means-tested provision that is similar to the UK pension credit. It is true that the real-terms value of some people’s state pension will fall over time, but in most cases, particularly in the countries that have been mentioned today, that will be compensated for by higher means-tested payments when they are living abroad.
It is also important that further advice can be obtained from the International Pension Centre or the Pension Service. The hon. Member for South West Devon asked whether there is more we can do, and I want to be clear that I am always open to new ideas about what more we can do to communicate what happens to the state pension if people choose to retire abroad. More generally, I am happy to meet with any hon. Members who have suggestions in that area.
Jim Shannon
I gave the example—others will have similar examples—of a constituent who had moved to Canada. She phoned the DWP to ascertain her pension obligations and responsibilities, and was assured that her pension would follow her, but quite clearly it did not. The Minister outlined a system whereby it should be able to follow her, but that lady went a stage further—she actually phoned the Department, which told her that it would not matter and she would still receive her pension—and quite clearly it did not.
Torsten Bell
I thank the hon. Member for sharing that story. I have not heard of specific cases like that, and he might like to write to me about it. The position with respect to Canada is clear: somebody can take their state pension with them, but the uprating will not be paid once they are living in Canada. That is what the gov.uk website spells out. However, I am open to talking about individual cases and to hearing suggestions about what more we can do to communicate clearly, because this is an important issue.
Of the 1.1 million state pension recipients overseas, 652,000 live in countries where pensions are uprated. However, I do not want to hide from what that means, because that is why we are here today; as my hon. Friend the Member for Poole (Neil Duncan-Jordan) said, it means there are more than 400,000 pensioners living in countries where uprating is not paid. By volume, those are in the countries that have been mentioned most today: Australia, Canada and New Zealand. Many hon. Members have spoken eloquently of the impact of living in a country where that uprating is not paid, and I have heard about it myself in correspondence from those affected, as I have said.
That does not mean that we can wish away the real trade-offs that are involved. There would be significant additional costs to be borne by current taxpayers if uprating were extended to everybody living overseas, as the hon. Member for Aberdeen North calls for. The cost of increasing all state pensions in payment to current UK levels would be approximately £0.9 billion a year, as has been mentioned. If there were any above-inflation uprating, it would then increase gradually over time.
Torsten Bell
Let me get through the discussion of the costs, and then I will take any interventions on that issue.
I recognise that many campaigners are asking for indexation in future, not for retrospective indexation, although there are obviously disagreements among campaigners about the exact ask to prioritise. However, arguing that we can simply put in place indexation going forward does not escape the need to recognise the real trade-offs involved. The long-term impact would be the same, as the right hon. Member for Herne Bay and Sandwich (Sir Roger Gale) explained. In the end, moving to forward-looking indexation would take us to the same increase in spending levels as would immediately lifting people up to the current level of the basic and new state pension. It is the same effect in the long-run, and we owe it to everyone to make financial decisions based on the long-run effects of the policies that we call for.
There are wider considerations about the net financial effects of these decisions. The hon. Member for Strangford and others raised the issue of health expenditure. To get to a wider understanding of the net effects, we have also to take into account where income is taxed and where it is spent. That does not get us away from the underlying point, which is that, focusing narrowly on the question of uprating, the costs are as I have set out.
Sarah Olney
Does the Minister not agree that under a reciprocal arrangement, not only would we uprate the pensions of our citizens who are living in a partner country, but that partner country will then be required to uprate the pensions of their citizens living here, and that would obviously be a benefit to this country, because they will have a greater income that they can spend here? Can the Minister assure me that that particular effect is included in the estimates?
Torsten Bell
I recognise the point that the hon. Member is making. I offer a few reflections on that. Some countries already do provide uprating for their pensioners based in the UK, so some of that is already in place, although it does vary across countries. It is, obviously, always for countries to set in place their own social security system. That is why the Australian system, for example, provides means-testing of the state pension, or elements of means-testing of their state pension. I suspect most people—with the possible exception of the Leader of the Opposition on occasion—do not support means-testing of the state pension.
I come on to the other point made by the hon. Member in the debate, which was to call for new reciprocal arrangements to put in place more widespread uprating. As I have explained, that would require significant tax rises. There is no way around that. The issue she raised would not negate that effect.
It is worth putting ourselves in other’s shoes. Why did the Liberal Democrat Pensions Minister for five years not change the policy on this issue? It was because he recognised the costs involved, and that it would involve tax rises. It is worth us reflecting on why the situation is not as some people would like.
Sir Roger Gale
Does the Minister consider that it is morally acceptable for Canada to uprate the pensions of its citizens in this country and to also bear the cost of this country not uprating its pensions for UK expats in Canada when Canada has formally offered to enter into a reciprocal arrangement? Why is that offer not being accepted?
Torsten Bell
Canada is a close ally of this country. We talk about that a lot in the current climate, for a whole host of reasons, and that is not going to change.
The right hon. Member is correct that Canada has made requests for a formal reciprocal arrangement, but the UK Government’s position—and that, again, of all parties—is that we are not in the business of new reciprocal arrangements with any countries. The only recent agreements have been the roll-over agreements with the EU and the EEA by the previous Conservative Government, but that was to maintain the existing social security arrangements, not to put in place any new reciprocal arrangements over that time.
I fully recognise the case that many hon. and right hon. Members have made today. I see the ongoing campaigning that those Members have put in place and that of many pensioners who are affected, but as I have said, the policy on uprating pensions is a long-standing one. More importantly, changing it involves real costs and trade-offs.
I gently note—very gently, so that I get out of this room safely—that many of the people calling for pensions to be uprated are also calling for reverses to the winter fuel payment policy and compensation for WASPI women, but are not calling for less investment in the NHS or higher taxes. In the current financial climate, there are real choices, and there have been no suggestions in this debate about how any of these policies would be funded.
I fully recognise the issues raised by Members today. I hope that I have explained why that recognition sits alongside the long-standing policy in this area, and I look forward to hearing the closing remarks from the hon. Member for Farnham and Bordon.