The government came under fire from all parties last night in a late sitting in the House of Lords for deciding to scrap the “triple lock” for pensioners- reducing next April’s rise from over £14 to £5.55 a week.
There also was a constitutional row when the Conservative Leader of the House of Lords, Baroness Evans, on advice from the clerks, wanted to rule out of order an amendment from Tory peer Baroness Stroud, on the £20 a week cut in Universal Credit. It was quite clear from her proposal – she worked with Iain Duncan Smith at the Centre for Social Justice – that she wanted MPs to to have a vote on the cut and was not happy with the policy.
The debate which ran on until midnight united rebellious Tories, Labour, Liberal Democrats, Greens and crossbenchers in opposition to the plans to break the earnings link.
Baroness Altmann, a former Conservative pensions minister, proposed three amendments – all aimed at restoring in some way an earnings link – though offering the government a compromise by either linking to a lower earnings level or giving the highest rise to those pension credit – who are the poorest pensioners.
By far the strongest criticism of the move came from the Labour peer, Prem Sikka, who wanted to scrap the clause altogether. He was backed by Baroness Bennett, the former Green Party leader and Lord Davies of Brixton, a former trade unionist and leader of the Inner London education authority.
He called for the full 8.3 per cent up rating to be paid:” In the 1980s, the Thatcher Administration broke the link between earnings and the state pension, and we never recovered from it. This is another example of where, once that link is broken, we will never really recover from it; the Minister so far has not said that in future the backlog will somehow be made up. Nothing has been said about that.”
“The current full state pension at the moment is £9,350 a year, and only four out of 10 retirees receive it. The average state pension is about £8,000 a year and, as has already been pointed out, is around 24% or 25% of the earnings. It is the lowest among industrialised nations, and by not increasing the state pension in line with average earnings we are going to condemn it to remain low.”
He said that state pensions were lowest in Europe – just 4.6 per cent od gross national product – compared to 10 per cent in Germany.
1.25 million women pensioners living in poverty
He asked: “Why is it that the Government are content for such low allocation to the state pension? What happened to the billions that the Government took from 3.8 million women by raising their state pension age from 60 to 66? What happened to the billions that the Government said would be saved by coming out of the European Union? Why have those resources not been used to lift our senior citizens out of poverty?”
He added: “Despite the triple lock, 2.1 million pensioners live in poverty, 1.25 million of whom are women. The poverty rate is higher now that it was in 2012-13. Many simply struggle to survive. Those retirees who try to top up their meagre state pension with part-time work will soon be hit by the Johnson tax: a 1.25% hike in national insurance. At the same time, what do we actually observe? For those rich people who make vast fortunes from capital gains and dividends, or speculation on second homes, commodities markets and securities markets, no national insurance contributions are payable on unearned income. That money could definitely be used to alleviate poverty, but the Government have not indicated any inclination to do that.”
“£8.50 a week is probably less than what many ministers pay for a glass of wine”
He said it would cost £4.7 billion to do so and could easily be raised by raising the national insurance levy on unearned income, such as shares or capital gains, which are exempt from the new levy.
“A triple lock based upon the existing formula could have given an increase of around 8% to 8.3%, adding up to about £14 a week in the full new state pension, instead of £5.55 a week. That is a difference of about £8.50 a week. Is that really a king’s ransom? It is probably less than what many Ministers pay for a glass of wine with their lunch.”
Baroness Bennett said she wanted a even more radical overhaul of the pensions system – saying no pensioner should live in povery and the con tributory system which is unfair to women should be abolished.
Baroness Stedman-Scott, junior minister at the Department for Work and Pensions, said if Lord Sikka’s proposal was passed the bill would collapse as it has only two clauses and asked for him to withdraw it. He did but promised to come back next Wednesday when the bill is debated again when he plans to raise the issue of the National Insurance Fund whose latest accounts show it has a £37 billion surplus. Curiously I learnt that Sir Keir Starmer, the Labour leader, did not want Labour peers highlighting the issue of the pensions ” triple lock” implying Labour was prepared to go along with the Tories over this issue but it seems pretty clear from the debate that this was ignored. Rather extraordinary that Labour don’t want to highlight the issue.
For those who want to see the debate go to https://parliamentlive.tv/Event/Index/3af431d5-923d-46d3-a9ec-3bf5a3ad7d2f and scroll down to 20:12:26 Legislation: Social Security (Uprating of Benefits) Bill – committee stage .It is a long debate lasting nearly four hours.
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