My Lords, I take this opportunity to thank all noble Lords for the positive engagement and feedback they have provided thus far. From the conversations I have had with many noble Lords, I believe there is a genuine desire across the House to tackle the matters addressed by the Bill. It is my sincere hope that we can continue to engage in this way as the Bill progresses through the House. Should any noble Lord wish to discuss any part of the Bill between its stages, our doors are always open.
It is unlikely to have escaped noble Lords’ attention that this is a short Bill. While short and technical, it is an important piece of legislation that will avoid a state pension freeze and benefit millions of pensioners by granting the Secretary of State powers to implement an increase in state pension rates in the 2021-22 financial year. It will also allow for increases for the poorest pensioners who are in receipt of pension credit, as well as uprating widows’ and widowers’ benefit under the industrial death benefit scheme.
Each year, the Secretary of State is required by law to conduct a review of most state pension rates and certain other benefit rates to determine whether they have retained their value in relation to the general level of earnings. If there has been an increase in earnings, there is a requirement to uprate these rates at least in line with that increase. However, if there has been no increase in earnings, there are no legal powers to bring forward an uprating order to increase these rates.
Since 2011, the Government have used average weekly earnings growth for the year from May to July as the basis for the review. The figures published by the Office for National Statistics earlier today confirmed that for the year from May to July 2020, earnings fell by 1%. Given this decline in the general level of earnings due to the coronavirus pandemic, the Bill temporarily amends the Social Security Administration Act 1992 to grant discretionary powers to the Secretary of State to increase pension and benefit rates linked to earnings even if there has been no growth in earnings. The provision lasts for one year only.
The Bill must receive Royal Assent by mid-November if it is to have any practical effect. If the Bill does not receive Royal Assent by the time the Secretary of State conducts her review of benefit rates, the existing provisions will apply and state pensions will be frozen. The Secretary of State must complete her review before 27 November, which is a hard deadline for the IT systems across the DWP that implement the increases, to allow them to take effect in April 2021.
The Bill covers the basic state pension, the new state pension, the standard minimum guarantee in pension credit, and widows’ and widowers’ benefits under the industrial death benefit scheme. These are the benefits that are linked in primary legislation to earnings. The Bill does not extend to benefits that are linked to prices. The Secretary of State will review those under the existing powers in the 1992 Act.
My Lords, first, I welcome the two newly ennobled Peers to our proceedings in this Room and congratulate them in advance on their maiden speeches. This is a unique occasion for newly ennobled Members of the House to make their maiden speeches in these newly formed proceedings, but it will be something to tell their grandchildren or others who fit into that category.
I am walking on very thin ice, and indeed not just on eggshells but on broken glass in terms of the short contribution I wish to make. Twenty years ago, I was in some conflict with the then Chancellor because I backed the stalwart but ageing battleship that was Barbara Castle and my good friend, the late Rodney Bickerstaffe, then the general secretary of Unison, in publicly advocating the double lock on the state pension, at a time when I know noble Lords will remember the Government were stumbling into a 75 pence a week increase and all the controversy around that. Here we are, some 20 years later, with a triple lock but in very different circumstances. Twenty years ago, pensioner poverty was rife, which is why we are talking about pension credit. It was a really big challenge to ensure that those who had given their lives during the war were not disadvantaged, and major steps were taken to put that right.
However, here we are, on the back of numerous research projects, including by the Resolution Foundation, and the work of the noble Lord, Lord Willetts, who has done so much on this, facing a very different situation. I realise that while we must pass this legislation as quickly as possible—as we would expect to do, because we are only putting right an expectation and implementing what was in fact in the Government’s manifesto—we will have to reassess how we deal with this in the future.
I deferred my retirement pension, but I now take it. For Members who have other ways of supplementing their pensions and are in a comfortable position, if not rich, it is very difficult to address these issues without being accused of hypocrisy. But the situation in relation to the young versus the old in terms of the balance between the generations has changed dramatically. It is difficult to talk about this. I was on the BBC “Politics Live” programme with Professor Karol Sikora at the beginning of September. He made remarks along the lines I have just touched on in respect of what is happening to young people. An avalanche of abuse was poured on his head, but because, thank God, I do not do social media, it took a bit of time for it to reach me. However, people did, some of them not realising that I am in the same age bracket as those who were writing to me.
My Lords, this is a short Bill: I count 29 lines in it. I have looked through all the other literature provided to brief on it, all of which is considerably longer than the Bill. It is undoubtedly an important piece of legislation and, as a temporary measure, it probably is acceptable to everybody, because we are dealing with unusual circumstances. However, what happens if the temporary measures continue? It is quite possible, if we look in a glass-half-empty way, that the economy could be severely interrupted for a long time. It would be nice to know the Government’s thinking on this. Will we be dependent on something going well in the future or will we have to do this again if something goes badly? It is a technical point. I appreciate that nobody wants that to happen, but it is something that we should hear about at this time.
We could have put into this Bill something that suggested that the norm would come back. It has been tried in the Commons and it might be interesting to look at that again. The 2.5% increase means that many pensioners have an easier time. Pensioners with good incomes are not so vulnerable in other aspects of life, which removes some other costs, usually to the health service and other interventions. I hope that we can have some commitment, not only in this debate but during the passage of the Bill, on how this is going to be raised. There is no long-term benefit in having pensioners reduced to levels of poverty and needing other forms of intervention to maintain their status.
I now come to one of the more pleasant bits and welcome the maiden speakers. I do not envy the noble Baroness, Lady Meacher, having to follow the noble Lord, Lord Field, on this subject. I am sure that the noble Baroness, Lady Stuart, will be able to shake us up a bit as well, but the noble Lord, Lord Field, has something of a reputation here and we wait with bated breath for what he is going to say. However, I am sure that, if anybody can match him, it is the noble Baroness.
My Lords, I totally support the intention of this Bill, which ensures that the triple lock is maintained for pensioners. It is extremely important that older people who rely on their pensions do not fall into poverty, especially during this crisis, which is hitting them so hard. However, older people who continue to work are not really pensioners; they are older workers. According to the May 2018 Office for National Statistics figures for December 2017 to February 2018, just under 1.2 million people over the age of 65 were in work. That is 10.2% of the entire age group.
The Equality Act 2010 includes provisions that ban age discrimination against adults in the provision of services and public functions. The ban came into force on 1 October 2012 and it is now unlawful to discriminate based on age. When someone receives a pension, they pay tax on any income above their tax-free personal allowance. They cease to pay national insurance on reaching the state pension age, regardless of whether they remain in employment.
The triple lock ensures that the state pension increases each year, using three different components—price inflation, earnings growth and 2.5%. The highest of the three, measured the previous September, is used to increase the pension each April. For the current financial year, UK Government borrowing could be anywhere from £263 billion to £391 billion, according to the Office for Budget Responsibility. People who continue to work over the age of eligibility for a state pension do not need their pensions triple-locked. In today’s attitudes and legislation, these people are older workers not pensioners and, in my view, they should be taxed like other workers in our society.
My Lords, it is a pleasure to follow the noble Baroness, Lady Greengross, who has done so much in our House on issues of longevity. I always listen to her with great pleasure. I thank my noble friend the Minister for setting out the Bill with characteristic grace and good humour. It is indeed a very short Bill.
Like others, I look forward immensely to the maiden speeches of the noble Lord, Lord Field of Birkenhead, and the noble Baroness, Lady Stuart of Edgbaston. They are two very distinguished parliamentarians, who I know will add massively to the strength of our House. I have known the noble Baroness for a long time. I taught her company law and I recall that on one occasion, before either of us got very involved in politics, she said to me that I was a far better lawyer than a politician. I think that my riposte was that she was a far better student than she was a politician. We both find ourselves in the House of Lords and I look forward to her contribution to our House immensely.
I believe that this Bill is necessary. It ensures that state pensions can potentially be uprated, despite the likely fall in earnings. It is matter of pride to me that our country and our Government believe in the pension triple lock—it is something that we should welcome, as indeed I do. I recognise that there is a great issue of intergenerational unfairness at present and I would like to say something about that, too. The Bill is necessary to amend legislation because of earnings falling, albeit by a relatively small amount, and it is necessary that the Bill gets Royal Assent, I understand, by mid-November, which I am sure will happen.
It is right to say, as others have, that many pensioners are well off now—the noble Baroness addressed this point. However, there are still some 2 million pensioners living in poverty—that is according to the Joseph Rowntree Foundation, and the Government’s own figures are only just under that. Despite the financial security that many pensioners enjoy in retirement, there is still a real issue for many others. We should rejoice that pensioners are living longer, but we need to recognise that there are ongoing issues of poverty in retirement for many people.
My Lords, I add my words of welcome to the noble Lord, Lord Field of Birkenhead, and the noble Baroness, Lady Stuart of Edgbaston, and look forward to their maiden speeches.
I welcome the Social Security (Up-rating of Benefits) Bill. Pension credits are vital for the welfare of low-income retirees and it is right that measures are taken to support them in this challenging time. However, there is certainly scope for going further. Accusations relating to intergenerational fairness are not entirely unfounded. While I am for uprating the basic state pension, providing a guaranteed rise of 2.5% at a time when millions have lost income due to the pandemic, I realise that it will raise questions over whether this Government represent the entire country or just those who are older.
As other noble Lords have mentioned, the situation is perilous for those on the breadline. The Government’s failure to guarantee the permanence of the April 2020 universal credit uplift will be devastating for those formerly employed and now relying on universal credit. Across the country, arrears are building up, and immediate action will be required to prevent low-income families being burdened with unrealistic debt.
While the pandemic has affected everybody, when it comes to income, it is not retirees but low working-age households that have been most affected, whether through cuts in income or redundancy and rising living costs. I hope that the Government make the right decisions and stay true to their levelling-up agenda by being a national Government who choose to represent all age demographics.
Faith groups have been working hard to raise awareness of the financial difficulties endured across the country. For example, the recent Reset the Debt report by a coalition of four national Christian denominations drew attention to the increasingly unstable position that those made redundant due to Covid-19 now find themselves in, with many through no fault of their own sliding into debt spirals and homelessness. Their call to reset the debt through a Jubilee fund is the sort of innovative policy required so as not to condemn generations to imposed poverty. I join my Church of England colleagues, the right reverend Prelates the Bishop of Durham and the Bishop of Portsmouth, and the Joseph Rowntree Foundation in its “keep the lifeline” campaign in urging the Government to make permanent the universal credit uplift that occurred in April this year.
My Lords, I want first to say a huge thank you. I was told before I came to this place that the welcome would be warm, and it most certainly has been, both from before taking the oath and in the lead-up to today’s debate. People said, “What’s on the tin you’ll find in the box”, and I certainly did—until the last part of taking the oath, when my eye caught the screen. It said, “Motion of Regret”. I hoped that that did not apply to me, but, if it does, I hope that the execution may be delayed a little so that I might make a contribution today.
I want briefly to touch on the three themes that most concern me at the moment and that I know very much affect your Lordships. I thought that I would be standing today, but, sitting here and thinking about my parents and the difference between my life and theirs, which was brought about largely by the great Attlee Government, I cannot but think what a springboard to freedom education was. I say to my noble Peers—I will get under my belt how I refer to everyone shortly; I hope that you are all my noble friends today—that it is really important that we think about education. My noble friend Lord Blunkett has made such a contribution here. We should think about both the foundation years or early years and the possibilities the Government create for apprenticeships. I cannot see the Government being able to fulfil their one-nation policy unless we are much more successful on apprenticeships than we have been up to now. I am looking to my noble friend at the other end of the Room. I know about his interest and I hope that, like me, he will express a particular concern on this issue.
The second issue in a sense relates to the Bill and has been touched on by the right reverend Prelate who spoke before me and others. One of the most important things that the Government did as this terrible plague descended on us was to give people on universal credit a £1,000-a-year uplift. We could argue that that was making good cuts that the scheme suffered in its implementation, but, as two speakers have already said, it has made such a difference to people totally dependent on universal credit. When I was an MP, I saw the effect on breaking the avenue to destitution that many of our fellow citizens faced with that particular cut. My pledge is to work with as many of you here who wish to to defeat any government plan, should that be their aim, not to continue to pay the £1,000-a-year extra in universal credit.
My Lords, it is indeed a special privilege to speak after the noble Lord, Lord Field of Birkenhead. It is very difficult to call him that; I have known him for 50 years and now I have to learn his new name. My noble friend is of course well known for his expertise and contribution in the area of poverty, in welfare benefits, food banks, education for under- privileged children, housing needs and so forth. He has also made an exceptional contribution to the welfare of the people of Birkenhead on all those issues and many others, as well as being an exceptionally effective parliamentarian over 40 years. The combination of those two contributions is remarkable.
Of course, the noble Lord, Lord Field, has also contributed on a considerable number of other issues over those years. I could probably keep your Lordships here all afternoon going through all the different issues that he has talked about and effected change on over the years, but noble Lords will be glad to know that I shall mention just three.
With one or two other people, it was the noble Lord, Lord Field—Frank Field, as he then was—who persuaded Mrs Thatcher, as she then was, to enable council tenants to buy their own houses or flats and become homeowners. For these deeply underprivileged people, to own a home was an incredibly important change in their lives and we should never forget it. If people remember, the issue at the time was that the noble Lord wanted these houses sold to the tenants but for the money to be used to invest in new social housing. The sad thing about that whole policy was that Mrs Thatcher agreed to sell the properties to their tenants but not to use the money to invest in social housing. Half the policy was wonderful but had the noble Lord, Lord Field, had his way, there would have been investment in social housing and then it would have been the perfect policy.
On a very different issue, the noble Lord, Lord Field, was one of the masterminds of the Modern Slavery Act. He chaired the committee that developed that policy and then led the charge in driving the Bill through the other place. We know that my noble and learned friend Lady Butler-Sloss and the noble Lord, Lord Randall, were also key players in that reform. It is a radical, major issue, which will last for many decades to come—that is important.
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This is a technical Bill and, provided that it receives Royal Assent by mid-November, it will ensure that the state pension is not frozen in 2021-22. It will allow the Government to increase the level of the safety net for the poorest pensioners in pension credit and the rates of widows’ and widowers’ benefits under the industrial death benefit scheme. I beg to move.
I understand this because there are people who are still extremely badly off in retirement, but there are real challenges. Today we learn that out of the half a million people who have, we have been notified, lost their jobs through to August, three out of five were between the ages of 16 and 24. Older people have at least been protected to some extent from 10 years of austerity by other benefits, but not younger people. While we must go ahead with this legislation, all major parties—difficult as it is—will have to reassess their policies in relation to fairness between and within the generations. That will have to be done sooner or later, not least because of the enormity of the increase in debt and the investment that have been needed because of Covid.
I know what the politics are; I am not foolish. Older people vote in substantial numbers compared to the young. The answer is that young people need to learn the bitter lesson that, if they do not vote, they pass power to others who do.
I hope that we will be able to get ideas about the ongoing thinking behind this. We also need to bear in mind, if a long-term strategy is agreed, all those who have not been able to put money into pensions during this interruption. This is the backstop. This is the thing that says that you will have some benefit. Most of those who have had the biggest interruption to their savings plans and patterns will be at the lower end of economic reward.
It will be interesting to get the Government’s long-term thinking on this. Are we dealing with this as a one-off blip or could it happen again and again? That possibly is there, even if none of us wants it to be. Having said that, I have no other objections and I hope that the Minister will be able to give us assurances that will make us feel a bit more comfortable about the passage of this unusual Bill.
I want to say a little about intergenerational fairness, which was addressed briefly also by the noble Lord, Lord Blunkett. Many people at the young end of the age spectrum—16 to 24—will be massively disadvantaged through this crisis. They have seen their education missed, disrupted apprenticeships and lost jobs, and they will continue to do so. According to a report this year by the Social Metrics Commission, chaired by my noble friend Lady Stroud, an estimated 8.5 million people of working age are living in families in poverty. Can the Minister say something about that? I know that it is something that the Secretary of State will come to, but can my noble friend say something about the timing and the likely thinking, because there is a much greater issue here than the important points about pensions that we are addressing. Yes, this Bill is important and it is right that we focus on it today, but, for the next 10 years, the issue will be the fairness that we need to apply to the younger generation, who are likely to have to pay the bills of this crisis and who have seen their education and jobs disrupted. I shall certainly support the Bill, but I hope that my noble friend will be able to say something about the broader picture of benefits for those at the other end of the age spectrum.
I understand that difficult economic decisions will need to be made. However, given the uncertainty that we face, cutting back on economic support before the crisis is over will only exacerbate the situation and do so quickly. The Treasury has been taking bold decisions and will need to take more that will entail spending additional revenue in the short term to give those chances on the line a chance in the long run.
Noble Lords have already commented on the different roles of social security. One is when we are dealing with a class of people who are poor, where one very much needs universal provision. As other speakers have said, a number of us, as pensioners, are now moderately well off, so should any increase above inflation-proofing not go to those groups who have suffered most from social security changes? That means people below retirement age and, strangely, those who do not have children. They are the group who have suffered most.
The third theme, on which a number of noble Lords have been very active, is modern slavery. Hobbes talked about life being “nasty, brutish, and short”. It is certainly nasty and brutal for people sold into slavery, though not always short. Noble Lords will know that your period of slavery comes to an end only when you cannot earn enough and you are thrown out. I hope that, as this House develops its programme over the coming months, we can look very carefully at how we need to strengthen the pioneering Act that the previous Prime Minister, Mrs May, put on to the statute book, to her eternal credit.
I have one last comment to make about modern slavery. People were kind enough to say that they expected some sort of fireworks from me today. Indeed, if this was not my maiden speech, I could have given a speech saying this, that or the other. But I have one last comment to make, if I may, about modern slavery and the brutality and horror of seeing people and knowing of people destroyed in this manner. One amendment that we might make, to give power to justices, is to think about statues for modern slave users in our society. My plea to Black Lives Matter, an incredibly important movement, is that it is very important to bring its campaign up to date, given the slavery that exists in this country here and now.
Maybe this is one way of concentrating the minds of employers who know so much about taking dividends but so little, it appears, about the conditions in which their workers earn their fortunes for them. We might put these individuals on a plinth to remind ourselves that, sadly, this evil of modern slavery exists in our society and that one purpose of this place is to put a lot of salt on the tails of those slave owners.
The third, totally different, example, which illustrates the versatility of the noble Lord’s mind, was the adoption by the Queen, for her jubilee year, of the Queen’s Commonwealth Canopy—it was his idea and rather a wonderful one. We can expect the noble Lord to contribute on all sorts of issues to do with climate change and the planet—you name it and he will be up there. I think he will be an extremely active Member of your Lordships’ House and a formidable challenge to anyone who chooses to disagree with him. I have to confess that that might often—sometimes, anyway—include me.
I turn now to the Social Security (Up-rating of Benefits) Bill, which is what I am supposed to be talking about today. I thank the Minister and her officials for their very helpful briefing the other day. I understand that if wages fall this year, as they are expected to do, without this Bill, the Secretary of State cannot uprate a range of benefits, but I have a few questions for the Minister.
First, I believe that this year and next year should really be taken together. These two years are going to be ravaged by Covid-19, in very different ways. We know that this year average wages are likely to fall by about 1%. Indeed, we know that people on the Government’s employment support scheme will lose some 17% of their wages. I applaud the scheme—I am not being critical of it—but we have to be aware that a lot of working people, including many young people, will lose substantial percentages of their income. Millions of others will lose their incomes altogether. This year is not like any other that we have experienced in our lifetimes.
Next year, however, average wages are likely to increase by about 4%. These shifts in pay make a nonsense of the triple lock. Over the two years, we can expect average wages to increase by, let us say, 3%—a purely illustrative figure. However, if the triple lock is applied, my understanding is that with that sort of wage change this year and next, pensions would increase by 6.5%—more than double the wage increases, if I am right. No doubt the Minister is looking around for some information to prove me wrong. Maybe she will succeed but I stand by my figures for the next while.
Seriously, there is an important issue here, which a number of other Peers have mentioned: the difference between the old—like me; I claim my state pension—and the young. It is crucial that we do not lose sight of that; others have made the point far better than I could.
I understand that there is a dispute between the Prime Minister and the Chancellor. The Prime Minister wants to stand by his manifesto commitment to hold on to the triple lock, which I can understand. But nobody knew about Covid at the time of the election, although we probably should have done. The Chancellor, rightly, wants to ditch the triple lock for the moment and I have to say that I think he is right. I just want to put that on record. We have a Chancellor who really knows about figures and I think he has got it right.
I agree with the flexibility introduced by this Bill but hope that it will be repeated next year. Unfortunately, it is not just one Bill covering the two years. I also hope that it will be used to increase the basic pension in line with average earnings, at most. The basic pension should not increase any more than wages; in the light of the fact that so many pensioners have done rather well in the last decade or so, even to increase pensions in line with wages at least needs thinking about. Also, I very strongly think that pension rates and other benefits for the poor should be increased even more than the increase in average wages. I hope that the Chancellor will treat the basic pension differently from the pension and other benefits for the most deprived, because we have to deal with the most incredible inequalities in our society and that is one way in which to do it.
I turn to a slightly different issue. I hope that we will consider in Committee the problem of the 4% of UK pensioners who currently do not receive the pensions to which they contributed over their entire working lives. This is the 4% who do not live in the EEA or in a country covered by an agreement that requires us to update their pensions. If they are in other countries, their pension is frozen at the level it was when they moved from the UK or first claimed their pension. You could say that that is nothing to do with this Bill, or that this is an opportunity to do something about this rather tragic little group. These are people who may have moved to Canada, or somewhere, to be near their daughter because they are frail and have stayed there. They may still alive 15 years later but have had no increase in their pensions. In conclusion, I welcome the Bill but with one or two provisos, and I look forward to the Minister’s response.