The Social Security (Uprating of Benefits) Bill 2021-22: Progress of the Bill

The Social Security (Uprating of Benefits) Bill 2021-22 was published on 8 September. The Bill as it was introduced, would suspend the earnings element of the State Pensions ‘triple lock’ normally used for the annual uprating of State Pensions and some other benefits. This would apply for the tax year 2022/23 only.

This would mean that from April 2022, the basic State Pension, the full rate of the new State Pension, the Standard Minimum Guarantee in Pension Credit, and survivors’ benefits in Industrial Death Benefit, increase by no less than 3.1% (the increase in the Consumer Price Index (CPI) over the twelve months to September 2021).

What is the triple lock?

The triple lock is a Government commitment to increase State Pensions each year in line with earnings, prices, or 2.5%; whichever is highest.

The economic disruption caused by the coronavirus outbreak led to the fall in average earnings in mid-2020, but in 2021 there has been a rebound in earnings as the economy has opened up. The earnings growth figure that would have been used for the triple lock this year was 8.3%. This is measured by the year-on-year increase in the Average Weekly Earnings (AWE) index for May to July 2021. The Government states, however, that this year’s earnings measure is “skewed and distorted” because of the effects of the coronavirus pandemic on the labour market and is “not a real-life basis” for uprating State Pensions this year.

Timetable for the Bill

The Bill is being fast-tracked through Parliament. It completed all its Commons stages – without being amended – on 20 September 2021. Second Reading in the Lords was on 13 October, and the Lords Committee and Lords Report stages were on 26 October and 2 November respectively. The Lords Third Reading was on 8 November.

The Government states that the Bill must receive Royal Assent by mid-November to meet departmental deadlines to implement increases from April 2022.

Responding to criticisms that no impact assessment was published with the Bill, on 5 November the Department for Work and Pensions (DWP) published an Impact Analysis for the Social Security (Uprating of Benefits) Bill.

Amendments to the Bill

No Government amendments were tabled during the Commons or Lords stages.

At Report Stage in the Lords, an amendment was moved by the Conservative Member and former Pensions Minister, Baroness Altmann, to maintain the earnings element of the triple lock for the 2022 uprating, but instead using an adjusted earnings measure taking into account distortions caused by the pandemic. The amendment was agreed by 220 votes to 178.

The Government opposed the amendment on the grounds that no estimate of “underlying” earnings growth is robust enough to form the basis for an uprating decision.

Analysis by the Office for National Statistics (ONS) suggests that underlying earnings growth, adjusting for distortions caused by economic effects of the coronavirus pandemic, in the 12-month period to May-July 2021 may have been between 3.6% to 5.1%. However, the ONS emphasises uncertainty around this range.

In the Bill’s explanatory notes (PDF 226 KB), the DWP estimates that uprating State Pensions and the related benefits from April 2022 by the mid-point of the ONS’s range (4.4%) would cost an additional £1.3 billion in 2022/23, compared with uprating in line with prices. This would rise to £1.7 billion per annum in 2026/27.

The Commons is due to consider the Lords amendment to the Bill on Monday 15 November. The Government is seeking to overturn the amendment.

Further information on the Bill can be found on the Bill page on Parliament.uk, and in the following briefings published ahead of the Commons and Lords Second Reading debates:

• Social Security (Uprating of Benefits) Bill 2021-22, Commons Library briefing CBP 9311
• Social Security (Up-rating of Benefits) Bill, Lords Library briefing LLN-2021-0025