Inflation rises to 4.2 per cent days after ministers limit rise to 3.1 percent
The House of Lords accepted the Commons defeat over their plan to meet the broken Tory manifesto pledge to keep the “triple lock” on pension rises next April.
The proposal from former Tory pensions minister, Ros Altmann, would have increased pensions by less than 8.3 per cent – the rise in earnings – but more than 3.1 per cent rise in inflation.
Yesterday when the measure came back to the Lords not a single Conservative peer – not even Ros Altmann who had proposed the compromise – spoke in the debate. Instead it was left to Labour peers, a Liberal Democrat and a crossbencher peer to criticise the Commons decision.
Labour peer Lord (Bryn) Davies of Brixton – noting that inflation will be high next year – warned that having broken the ” triple lock” because a 8.3 per cent earnings rise was not regarded as atypical – had created a precedent that could apply the following year to inflation.
He said: “We know the Government believe that highly atypical trends in earnings growth are sufficient justification for breaking the earnings link. We do not know how atypical earnings growth needs to be in future before they decide again to break the link. Can the Minister tell us more about what counts as atypical earnings growth? How atypical does it need to be to justify breaking the promise?
“However, it is not just earnings growth that might be considered atypical. What counts as atypical growth in prices? This is not a hypothetical issue. Most of us here have become familiar with what many in this House might regard as consistently low rates of inflation, but who knows what is to come, with the unwinding of quantitative easing and other pressures on the economy? How do we know that the Government, when faced with a significantly higher rate of inflation than we have experienced in the last 25 years, will not decide that this too is atypical?”
Labour peer Lord (Prem) Sikka warned “At around 25% of average earnings, the UK state pension is already the worst in the industrialised world. It is the main or only source of income for the majority of retirees, and their lives will be even harder, especially those of women.
“Women never got pension equality: the retirement age was increased but their pension was never equalised with that of men. Thousands will die this winter because people will have to make the harsh choice between eating and heating, and the first statistics will be emerging fairly soon. Our retirees are being hammered from every corner, whether it is on pensions or winter fuel payments, which are unchanged since 2011, or the Christmas bonus, which is unchanged since 1972, or the loss of the free TV licence for the over-75s.”
Liberal Democrat peer Lord Stoneham of Oxford, also expressed concern about the future:
“We are concerned that pensioners will not be protected from the effects of the economic pressures now coming from inflation. The Governor of the Bank of England is very uneasy about the situation and we want to know whether the Government are prepared to keep an open mind and look particularly at the case of the poorest pensioners as time goes on in the next few months, when these pressures will come to a head.”
Lord Desai, a crossbench peer, insisted that government having broken the triple lock could now always use the lowest amount to put pensions up every year.
Lord (Jeff) Rooker defended the Lords raising the issue;” With ignorant journalists in the media calling for the abolition of your Lordships’ House, this issue shows, above all, that we will always be an irritant to the Government, whatever party is in power. ”
Labour Baroness Sherlock warned: Tthis short Bill is a mistake. It steps away from the earnings link and, in walking away from their manifesto commitment for the third time, the Government are breaking trust with the electorate. Why are they so determined to do it? Ministers tell us that it is for one year only. Great, but I worry that their refusal to be creative in finding a way to deal with the fallout from the pandemic raises fears that they really are planning to walk away from this longer term.
“My noble friend Lord Rooker is, as always, right. We have done what we can. We have asked the elected House to think again. The Government whipped their people to say that they did not want to do so. I think they are wrong. Pensioners will pay the price for this and they will not likely forget this breach of trust. I hope the Government think it was worth it.”
Conservative DWP minister Baroness Stedman- Scott insisted the change was for one year only and criticised Lord Sikka for saying the UK had the worst level of state pension in the industrialised West.
Pensioners are going to get very angry if they do not have enough money to heat and eat this winter and not be able to keep up with inflation next year. Could this be the issue that ends the Conservative’s long period of popularity? By being silent and not even considering that pensioners are worthy of an explanation could be the issue that kills support for the party among the elderly.
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Commons vote to throw out Lords case for a revised triple lock rise
The House of Commons last night voted down the Lords case for a higher pension rise next April with Guy Opperman, the pension minister, describing such a move as ” reckless” as there could be no robust figure to work out a compromise figure suggested by former Tory pensions minister Baroness Altmann. He boasted that the government were spending huge sums on pensions ” amounting to £129 billion this year”.
Full list of MPs who didn’t want pensioners to get a bigger rise below -all Tories
Baroness Altmann had argued for a higher figure than the government’s 3.1 per cent but below the 8.3 per cent rise in earnings if the government had kept the triple lock. This follows the latest estimates for inflation rising as high as 5 per cent by next April. The government won by 300 votes to 229 and by 299 to 53 to disagree with the Lords.
Full vote on pension uprating here. Those who were against any more money for pensioners included Sir Geoffrey Cox, who has made a £1m advising a tax haven, Alok Sharma, the president of Cop 26, Red Wall Tory, Ben Bradley for Mansfield and Lee Anderson, MP for Ashfield Bob Seely, Isle of Wight with a large pensioner population; millionaire Grant Shapps, the transport secretary; Scottish Tory leader, Douglas Ross; Peter Aldous, joint chair of the APPG on 50s women’s pensions and a clutch of Tories who won seats from Labour in the last general election. Two Tories rebelled and voted for the Lords uprating, Esther McVey, MP for Tatton and Derek Thomas, MP for St Ives. Derek Thomas it turns out voted against the government by mistake and then went into the government lobby. So he voted twice. Independents voting for the rise included former Labour leader, Jeremy Corbyn.
There were a lot of MPs who didn’t vote including Rishi Sunak, Boris Johnson and among Labour, Andrew Gwynne, joint chair of the APPG on 50s women’s pensions, Jack Dromey and Margaret Beckett.
The government was opposed by Labour, the Scottish National Party, the Liberal Democrats, the Green Party, the Alliance Party, the SDLP, and the Democratic Unionist Party. Only one Tory backbencher spoke to defend the government, Duncan Baker, the MP for Norfolk, North. Most Tory MPs stayed away from the debate.
He argued that his large number of elderly pensioner constituents understood the need not to increase pensions by 8.3 per cent because of the current financial situation. Jonathan Reynolds, Labour’s social security spokesman, supported the Lords move and rejected the government’s case -saying it was reasonable for the government to find a figure.
The strongest support came from John McDonnell, who argued the full triple lock of 8.3 per cent should be paid because of pensioner poverty, women being especially hit. ” Under the Lords amendment we are talking about giving pensioners an extra £2.75 a week – it is ridiculous that we are arguing against this. I would give them the full 8.3 per cent – worth £7 a week.”
Three Scottish MPs – two from the Scottish National Party David Linden and Patricia Linden – and Liberal Democrat Wendy Chamberlain argued against the government. Wendy Chamberlain said she had not received a single letter supporting the government abandoning the triple lock and many letters opposing the move.
Stephen Timms, Labour chair of the Commons works and pensions committee, challenged the government to make up the shortfall and was sceptical whether the government would abandon the triple lock next year ( Guy Opperman denied this) but even if not, it meant pensions would continue to fall behind wages.
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But deputy speaker stops Lord Sikka’s” full restitution” amendment going to a vote
The government were roundly defeated in the Lords – by 220 votes to 178 – yesterday over its plans to abolish the triple lock for next year’s pension rise – reducing the up rating for pensioners from 8.1 per cent to 3.1 per cent.
The loss of cash for pensioners in the next five years is enormous. They lose a share of £5.4 billon next year, £5.78 billion in 2023-24, £6.1 billion in 2024-25, £6.5 billion in 2025-26 and £6.7 billion in 2026-27. That amounts as Lord Sikka told peers to £30.5 billion removed from pensioners’ pockets over the next five years.
What happened yesterday in the Lords were two separate approaches to challenging the government’s decision to end for next year the link between pensions and earnings.
The first which was successful was put forward by Baroness Ros Altmann, a former Tory pensions minister, in a series of amendments. She had the support of Labour’s Baroness Sherlock, a former special adviser to Gordon Brown and an ordained priest at Durham Cathedral; Baroness Janke, a Liberal Democrat peer and former leader of Bristol council; and Baroness Boycott, a crossbench peer, feminist and former editor of the Independent newspaper.
It was one of these amendments that led to the defeat of the government in the Lords. This particular amendment had the support of former Labour Cabinet minister, Baron Hain, Liberal Democrat baroness Janke and crossbencher (and ex Conservative) Baroness Wheatcroft former editor of the Sunday Telegraph.
Basically the amendment challenged the government’s calculation of the rise in earnings at 8.1 or 8.3 per cent and wanted a new calculation stripping out the effect of the pandemic. Lady Altmann initially had put this at 3.8 per cent but yesterday suggested it could be as high as five per cent and then suggested she was had no firm figure. This particular approach had the support of Labour.
The official wording maintained the link with “earnings obtaining in Great Britain, as adjusted to take account of the exceptional impact of the COVID-19 pandemic on the level of earnings”.
She told peers: ” after seeing alcohol and fuel duty cut in the Budget and the bank surcharge allowance raised, and adding up the amount of Exchequer savings that those measures entail, half the cost of not honouring the triple lock will cover the costs of just those three measures. I appeal to noble Lords across the House: is this really the country that we believe that we should be living in? Is that the priority for public spending?”
The key point about this amendment is that it does not restore the full 8.1 per cent to pensioners and it leaves the government to decide – if it wants to – the new earnings rate.
Baroness Stedman Scott, the DWP Lords minister, did not sound convinced. Referring to a blog on the Office for National Statistics site she said “Using a range of possible estimates based on a method that cannot be agreed on does not provide a sufficiently robust basis for making critical decisions about billions of pounds-worth of expenditure.”
The second more radical approach came from Prem Sikka, Lord Sikka. He was backed by Baroness Bennett, Natalie Bennett the former Green leader; Baron Davies of Brixton – Bryn Davies- a former Labour union leader; Baroness Blower, Labour and former general secretary of the National Union of Teachers and Lord Hendy, Labour, a barrister and labour law expert. Lord Sikka told them the government’s measure “is also contrary to the Government’s levelling-up agenda. Rather than levelling up, it impoverishes citizens and condemns millions of current and future retirees to a life of poverty and misery. There is no moral or economic rationale for this; indeed, none has been offered by any Minister so far.
“The Government’s own statistics, published on 3 September 2021, say that the average weekly pre-2016 state pension is £169.21 for males, £141.98 for females, and the overall mean is £155.08. The average weekly post-2016 pension is £166.34 for males, £160.11 for females, and the overall average is £164.23. As we can see from these figures, women are especially impoverished by the way that pensions are calculated and paid. They will be hit even harder by the abandonment or, as the Minister might say, the temporary suspension of the triple lock.”
….”Low pensions condemn our citizens to a life of misery. Some 1.3 million retirees are affected by malnutrition or undernutrition. Around 25,000 older people die each year due to cold weather, and we will no doubt hear the grim statistics for this year, possibly on 26 November when the next numbers are out. Despite the triple lock, the proportion of elderly people living in severe poverty in the UK is five times what it was in 1986, which is the largest increase among major western countries. Some 2.1 million pensioners live in poverty, and the poverty rate has actually increased since 2012-13.”
Then extraordinarily Baroness Fookes, a Tory peer who was a deputy speaker, blocked a vote on Lord Sikka’s amendment leading Lord Sikka to say he was cheated. She argued that his opponents had made more noise than his supporters to justify the decision.
If this amendment had been passed it would have allowed pensioners to get the full uprating of 8.1 per cent but would have wrecked the bill. Labour did not support this and would have abstained. A spokesman for the Labour Whip’s office explained:”Prem’s amendment was not in line with the Lords’ constitutional position, in that it would wreck the core purpose of a bill that the Commons had already voted to support.
There was all party support however for a full impact study into pensioner poverty after peers from all sides had expressed concern about the plight of pensioners this winter and the DWP minister promised this when faced with possibility of yet another Lords revolt.. There was also a promise from the minister for a detailed explanation of the national insurance fund – which appears to have a £37 billion surplus which the government says cannot be used to pay for keeping the triple lock.
What is clear is that Rishi Sunak, the Chancellor, has been silent about this surplus in all the documents he produced to accompany the Budget. If it turns out that it has been used secretly to repay government debt I suspect there will be an all mighty row as 12 million pensioners will feel they have been cheated yet again by successive governments. Watch this space for more developments.
Read here who supported revising the triple lock and those who were against pensioners getting a penny more. Those in favour included 3 Tories, 99 Labour, 41 cross benchers,64 Liberal Democrats,13 non affiliated, including one Green Party and 2 Democratic Unionist Party.
Those against included 165 Tories, 11 crossbenchers and 2 non affiliated peers. Hereditary peers also voted against. You can see all their names on the link.
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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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The Department for Works and Pensions has compounded the big scandal over millions of people who are entitled to compensation for the ministry’s hidden decision to scrap an annual increase worth anything up to £27,000 over the lifetime of a pension for those, particularly women, who were contracted out of Serps by private companies.
Previous blogs highlighted this scandal after the Parliamentary Ombudsman ruled that there was maladministration in not telling millions of people that they would lose out when the new state pension was introduced in 2016. Only two people were compensated with sums of £500 and £750.
But the Ombudsman wimped out in enforcing the compensation for millions by allowing the DWP two years to take action to compensate people and then allowing them to create a factsheet which didn’t tell the full story.
Suspicious that the DWP was still avoiding to do anything a campaigner on this issue, Chris Thompson, put in a freedom of information request to the DWP to find out how many people have asked to be compensated,
The answer has now come back. The DWP said:
“We can confirm that we hold information falling within the description specified in your request. However, we estimate that the cost of locating, retrieving and extracting the information for these requests, when aggregated, would exceed the appropriate limit of £600. The appropriate limit has been specified in regulations and for central Government it is set at £600. This represents the estimated cost of one person spending 3½ working days in determining whether the Department holds the information, and locating, retrieving and extracting the information.”
This was only asking about emails and letters the ministry had received since August 12 this year – a matter of a few weeks- it is rather suspicious if not laughable that this would take more than 3.5 days to find out. Surely the department would have a simple database to do a computer search.
Suspicion that nobody or few people have contacted the DWP
Mr Thompson suspects there is another reason.
” I think the reason the DWP don’t want to give me the information is that no one has contacted them or only a few which would show up by putting it on GOV.UK so that people only find out by happenchance which is not very satisfactory. For GOV UK to be a suitable way for people to find out about loss of GMP indexation then a majority of the 11 million people should see it. I wonder if they did any sort of assessment to find out how many people they thought would find the fact sheet on the GOV.UK website.”
Again this bodes badly should the women born in the 1950s and 1960s achieve compensation for maladministration over the up to six year delay in receiving their pensions when the age was increased from 60 to 66. It sounds like the government won’t be very helpful in telling people how many were compensated.
However they may be another way to get hold of what is happening or rather what is not happening.
Following some lobbying by Mr Thompson and myself Stephen Timms, the Labour chair of the Commons works and pensions committee, plans to tackle the government over this omission.
He has been promised a six month review by the ministry on how the use of the factsheet is working.
He told us that he intends to write to the ministry in December demanding that as part of the review they disclose how many people have applied for compensation.
This means whether they like it or not the DWP will have to spend some money and time finding out – unless they are going to tell Mr Timms that it is too expensive to do the exercise. We shall wait and see but for some of the people who don’t know they are entitled to this money – it could be a matter of life and death – as they may already be in bad health and could die before they realise.
Previous blogs on this:
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Today is the United Nations International Day of Older Persons. As the number of older people grows in developed countries they are becoming a much bigger force.
Yet as we see in the UK the government pays mere lip service to them – trying to present the general public with the idea that they are all well off and preferring to focus on the young.
Indeed the present Tory government thinks it can get away with targeting them – along with the poor- for the mainstay of their new post pandemic austerity polices.
In the last few years they have taken away free TV licences for the over 75s, abolished the ” triple lock ” for pension rises for one of the lowest state pensions in developed countries, continually raise the pension age and targeted women born in the 1950s and 1960s -taking away around £50,000 in pension payments by raising their pension age.
Many people aged 60 cannot now get free bus passes until they are 66 and ministers now have their plans to make them pay full prescription charges from the ages of 60 to 66 – knowing that far more of them are unhealthy and suffer chronic ailments than younger people. And they are going to reintroduce national insurance contributions for those over 66 who supplement their pension by working.
Older people facing redundancy
There are also problems for older people being targeted for redundancies -indeed the organisation Rest Less, (website here) which monitors job prospects for the over 50s, suggests that there were half a million people over the age of 50 on furlough according to the latest figures. They are reporting growing numbers of economically inactive people in their 50s and 60s. How are they going to get a full pension?
So it is rather good news that JustFair – a campaigning organisation – is calling for a new international convention on the rights of older people. You can read about them and their proposal here. Sufficient to say it highlights a lot of issues affecting older women – and it has the backing of CEDAWinLaw which held a tribunal examining women’s rights and the case for putting that UN convention on eliminating all forms of discrimination against women into UK law.
As it says: “Gender inequality in older age is the result of disadvantages accumulated over the life course and further exacerbated by ageism and age discrimination. As a result, many older women are denied their rights, a situation further aggravated by the COVID-19 pandemic with its disproportionate effect on both older persons and women. It is estimated that the impact of the pandemic increased the gender gap by a generation. This means that women will continue to reach older age in a disadvantaged position unless structural changes are made“.
Internationally the UN is highlighting a huge digital divide between developed nations and developing countries over the internet with older people the worst affected.
Yet, one-half of the global population is off-line, with the starkest contrast between the most developed countries (87%) and the least developed countries (19%) (ITU Facts and Figures 2020).
There are also lots of local events today highlighting the day. In my area in Hertfordshire Dacorum Age UK have a fund raising campaign called ” Slip into Slippers” celebrating the dignity of old age and the fact that many older people play a big role in the community.
Charlie Hussey, development officer for Age UK Dacorum said: “We are asking individuals businesses schools and clubs to get involved by Slipping into Slippers for some of the day, and encourage people to have some fun, make a small voluntary donation and take some photos / videos. All to raise funds and awareness of Age UK Dacorum and highlight the needs of older people and equally importantly the contributions they can still make to our community. “
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A highly critical National Audit Office report today exposes major shortcomings in the running of the country’s state pension system.
With some 12 million people relying on the Department for Work and Pensions to calculate their pension accurately the auditors reveal a sorry picture of outdated IT systems, civil servants reduced to making manual calculations and mistakes galore with no proper system to identify the errors in the first place.
The NAO investigation was triggered when former pensions minister Liberal Democrat Sir Steve Webb and Tanya Jefferies of ThisIsMoney.co.uk, last year started to refer a number of cases to the Department of women who had been underpaid. On 26 May 2020 Sir Steve published an estimate of the level of underpayments using the
information obtained from the Department combined with public information from the Family Resource Survey that at least 220,000 women had been underpaid including 131,000 married women, 56,000 widows and 35,000 divorcees.
90 per cent of the losers are women
Now the department has admitted that 134,000 people have indeed been given underpaid pensions and it will cost £1.053 billion to compensate them. This figures excludes those who have already died because the department wipes them from its records after four years
Once again 90 per cent of them are women, and only 10 per cent men.
What is particularly alarming is the summary in the report about the whole pensions system.
It says: ” The errors occurred because State Pension rules are complex, IT systems are outdated and unautomated, and the administration of claims requires a high degree of manual review and understanding by case workers. This makes some level of error in the processing of State Pension claims almost inevitable.
“The Department’s caseworkers often failed to set (and later action) manual IT system prompts on pensioners’ files to review the payments at a later date, such as their spouse reaching State Pension Age or their 80th birthday. Caseworkers also often made errors when they did process prompts because frontline staff found instructions difficult to use and lacked training on complex cases.“
Worse the department seem to have a top down approach to find out about errors – rather than a bottom up from the pensioners themselves who might challenge their pension awards. Therefore it never picks up a large volume of similar complaints.
Wrong assumption that there are no errors
As a result there always been the assumption – and it was taken until now by the National Audit Office- that there was virtually no fraud or error in the payment of the £100 billion plus to pensioners every year. This has now been proved wrong.
The ministry is recruiting 544 people – at a cost of £24.3 million – to chase up and pay out the money to people who have lost out. But it is going to take some two years to do this with priority being given to the over 80s and widows. It has no plan on how to compensate relatives of dead pensioners owed money- and the NAO think it should create one.
Meg Hillier MP, Chair of the Committee of Public Accounts, said
“Many pensioners – most of whom are likely to be women – have been short-changed by thousands of pounds which they are still yet to receive many years later.
“DWP must provide urgent redress to those affected and take real action to prevent similar errors in future.”
A DWP spokesperson said:
“We are fully committed to ensuring the historical errors that have been made by successive Governments are corrected, and as this report acknowledges, we’re dedicating significant resource to doing so. Anyone impacted will be contacted by us to ensure they receive all that they are owed.
“Since we became aware of this issue, we have introduced new quality control processes and improved training to help ensure this does not happen again.”
Fourth pensions scandal to hit DWP
However one must comment that this is the fourth scandal to hit the DWP over the payment of pensions and women are by far the worst treated. First we had the 3.8 million 50swomen not being properly informed about the raising the pension age which the Ombudsman has found there was maladministration. Then we had the complicated story of people losing their guaranteed minimum pension uprating which could affect 11 million people, mainly women. Again the Ombudsman found maladministration but only two people have been compensated. And now we are also having delays for people claiming their pension for the first time in getting paid.
Cynics might conclude the ministry is almost misogynist in its approach – and also all these delays is ensuring more people -particularly in the age of Covid- will be dead before they get the money that is owed to them.
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You may remember I wrote a long article on a decision taken by the Government to no longer provide an index linked guaranteed minimum pension to millions of pensioners when they new pension came into force. The blog is here.
This decision never debated in Parliament meant the government has got away with not paying out anything from a £1000 to tens of thousands of pounds over the lifetime of their pension, depending on how long they were contracted out by their employer from the old SERPS scheme. The numbers could be as high as 11 million.
The Parliamentary Ombudsman, Robert Behrens, was asked to investigate and came to the conclusion that there had been maladministration and two people shared £1250 compensation. Unlike the row over the 50s and 60s born women who lost out by not being informed by the government over the rise in their pension age, no record exists, as far as I can find out, of the ministry repealing this provision in the 2014 Pensions Act.
And the man responsible for piloting that legislation, Liberal Democrat minister Sir Steve Webb, while publicly championing millions of women pensioners who have been underpaid by the ministry, is strangely silent about this issue which is he must be responsible.
What has happened since has taken morality and standards in Whitehall to new depths and exposed a level of deviousness and dishonesty among civil servants and cowardice in the Parliamentary Ombudsman’s Office that fittingly goes with a government headed by a serial liar.
In September 2019 the Ombudsman gave the ministry three months to sort out this issue. His proposals were quite clear. He asked the ministry to “review and report back on to us on the learning from this investigation, including action being taken to ensure that affected individuals receive appropriate communication from the DWP about their state pensions.
“ln particular, the DWP should ensure that their literature clearly and appropriately references that some individuals, who have large GMPs and reach State Pension Age in the early years of the new State Pension, may be negativity affected by the changes. The DWP should advise individuals to check their circumstances, and should provide instructions for how to do this;”
Sweet nothing happened
So what happened? Sweet nothing. The DWP ignored the deadline and then produced a factsheet which I know from correspondence the Ombudsman clearly felt did not fit the bill. But after one attempt to get this changed the Ombudsman dumped the issue and wimped out of getting the ministry to implement their recommendations.
Their press office told me: “
“We closed this case in November 2020 after working with the Department for Work and Pensions on compliance. At this point we referred the case to the Work and Pensions Select Committee, to oversee DWP’s ongoing work in this area. They will hold the Department to account on the actions it has agreed to take.“
Actually the communication got lost and the committee knew nothing of this to the following April.
The DWP to cover its back claimed when challenged said:
“Working with the Ombudsman, we have now published information on gov.uk about this complex policy area and welcome anyone who wants to know how they have been affected by the policy change to contact us.
“Publishing this factsheet is the final step in the DWP meeting the requirements of the PHSO findings in relation to the way the GMP indexation policy change was communicated.”
It turns out that the Ombudsman agreed to this tardy response.
23 month delay
What finally happened was on August 12 in the middle of the Parliamentary recess, the department 23 months after being asked put out a publication notice amending its guidelines. The link is here.
I can’t imagine a more devious method about informing people and Parliament about this – in the middle of the August holiday. It is designed not to be seen.
Furthermore it does not comply with the recommendations which is why I say it is dishonest. There is no reference as you will see to the Ombudsman’s report, and the fact that people could be entitled to compensation. There is no mechanism for people to apply for the compensation and the notice was not even accompanied by a press release.
The losses are considerable for some people – about £27,000 for some women over the lifetime of their pension – but the information does not spell that out properly. Indeed all the DWP had to do was copy and paste as I have – a table from the Government’s Actuary Department ( at the bottom of this blog) which provided an ” oven ready ” guide to the losses.
Pathetic consultation using ignoramuses
A pathetic consultation process was held by the DWP – where they sought out the most ignorant people about pensions to comment- and only found seven out of 40 who agreed.. We only know this because the Commons Works and Pensions Committee published the details – the ministry itself has not published it.
There are probably millions of people who should at least get £500 in compensation but Therese Coffey, the secretary of state, is determined that nobody should know about it. It does not bode well for the 50s and 60s born women over their pensions compensation. She has already said the Labour Party should compensate the women not the taxpayer.
The headline in this story is a paraphrase of an extraordinary letter to be sent out to 15,000 people randomly chosen by the Department for Work and Pensions. Some 180 pensioners are being contacted this month.
The ministry has mounted an exercise to check fraud and error in payments for the state pension alongside universal credit, attendance allowance, PIPs, carer’s allowance, pension credit, housing benefit, and the employment and support allowance. It is run by the Performance Measurement Team. The ministry are asking people on other benefits to send them original documents showing their savings, pay slips, rent books and tenancy agreements.
It comes as the ministry faces a potentially damning report from a National Audit Office inquiry into the underpayment of state pensions to tens of thousands of women under the old state pension system replaced in 2016.
The NAO want to know how these mistakes occurred , what is being done to put them right and what lessons have been learnt. The NAO made it clear yesterday it had nothing to do with this exercise mounted by the DWP.
This also comes on top of a finding of “maladministration” by the Parliamentary Ombudsman over the ministry’s failure to inform 3.8 million 50swomen adequately about the rise in the pension age from 60 to 66.
The letter reproduced above is pretty insensitive to say the least – since it will be going to elderly people aged anywhere from 66 to their 80s and 90s.
Onus put on pensioners not the DWP
As you can see it puts the onus on pensioners to answer questions correctly-with the threat of prosecution or fines if they don’t.
” You have a personal responsibility to make sure all the information you give during the call is correct and complete.
If it isn’t and we pay you too much money you may have to pay the money back. You also risk being prosecuted or having to pay a financial penalty.”
But it gets worse. Under the heading What will happen if I do not hear from you it says:
“If you fail to be available for this review and do not contact me, your entitlement to State Pension may be in doubt and your payments may be stopped. ( Bold type my emphasis).
This is “coercive and threatening language”- Rosie Brocklehurst
Rosie Brocklehurst from St Leonards, is one who got the letter and contacted me.
She saId: “There could be 15000 terrified pensioners receiving this letter all of whom are being threatened with having their state pension. stopped if they do not “make themselves available.” This is abusive coercive and threatening language in my lexicon.”
She is 71. She said: “The letter they send out is couched in language that is designed to frighten and certainly frightened me. I am not well and have had a chronic condition for 18 months. I have no other income but state pension and pension is not means tested. I am married and claim nothing else but my pension..”
Two points First you have to claim your pension but the calculations are done by the DWP. So if the figure is wrong it is not your responsibility, it is theirs and there is a history of the ministry getting things wrong.
The second is you are entitled to your pension. There is no way the DWP or anybody else can take it away from you. Whoever drafted that letter should have changed it for pensioners. I suspect that it may be illegal for the government to stop pension payments which they have already calculated. Certainly if the grounds are not agreeing to be interviewed.
I have contacted the DWP press office but they took over two days to reply. This is their reply;
“We urge people not to worry. We would only suspend payments in very specific circumstances such as where a pensioner has died and we are continuing payments.
“These reviews, introduced in 1997, take a sample of claims from across several benefits to help us identify cases where the department has paid the wrong amount.”
“The wording of our letters is kept under constant review.”
However what does it not say is that the state pension was exempt from all reviews since 1997. A decision to include it was taken in February this year. No explanation was given why the ministry suddenly decided to include it.
On the day Chancellor Rishi Sunak cuts the support to companies using the furlough scheme to 60 per cent of the wages paid to the 1.9 million people still on furlough, some very disturbing figures are beginning to emerge on the make up of the numbers left.
Both the think tank Resolution Foundation and Rest Less report that it is the older generation rather than the young that are not getting called back to work.
While headlines have concentrated on the serious issue of the mental health of the young who cannot find work, official figures reveal a growing problem for the old.
HMRC data shows that younger workers have been leaving furlough most quickly, with the share of under 18 staff furloughed falling from 13 per cent in May to 7 per cent in June, and from 10 to 6 per cent for those aged 18-24. One-in-ten workers aged 65 and over were on furlough – the highest share of any age group. The Foundation has warned of older workers being ‘parked’ on furlough as younger workers return to work as hospitality reopens.
London remains the furlough capital of Britain, with nine of the ten local authorities with the highest furlough rates in the capital, including Newham and Hounslow where around one-in-eight workers are still on the Job Retention Scheme.
Rest Less, a digital community and advocate for the over 50s, analysed Coronavirus Job Retention Scheme (CJRS) Statistics issued by the government on 29 July and found that the total number of furloughed jobs fell from 2.4 million to 1.9 million between May and June* – a fall of 590,000.
Proportion of over 50s furloughed is rising
Whilst the number of furloughed roles fell across all age groups, the proportion of over 50s on furlough has been steadily increasing this year, rising from 27% in January to 34% in June. In contrast, the proportion of under 30s on furlough fell from 29% to 21% in the same time period.
Both sets of figures show that those over 50 are going to find it harder to get a job and build up enough years to claim a full state pension between the age of 50 and 666 or 67 when they can claim the state pension. Being out of work also means that they won’t qualify for a second work based pension either – possibly forcing them to have to claim pension credit if they can.
Charlie McCurdy, Economist at the Resolution Foundation, said:
“The number of furloughed employees has fallen below two million for the first time as the economy continues to reopen. But that is higher than many expected, and a cause for concern as the scheme is wound down.”
Fresh wave of redundancies
Stuart Lewis, Founder of Rest Less, commented: “The country is reopening, and the total number of people on furlough is falling quickly – by three million since the beginning of the year. However, the recovery is clearly not working for everyone, with more than 630,000 people aged over 50 still on furlough and waiting to find out if they have a job to go back to. This is in addition to the 568,000 over 50s claiming job seeking or out of work benefits.
‘When the furlough scheme draws to a close next month, we’re expecting it to be accompanied by a fresh wave of redundancies and another spike in unemployment levels – delivering another blow to workers in their 50s and 60s.
‘Faced with significant age discrimination in the recruitment process, and no Government equivalent to the Kickstart scheme for older workers – the implications of redundancy for workers in their late 50s or early 60s can be significant.
‘Once made redundant, workers over the age of 50 are two and a half times as likely to be in long term unemployment than their younger counterparts. Rather than being able to top up their pensions in those crucial years before retirement, many will find themselves having to dip into what pension savings they do have – leading to a significant drop in long term retirement income for decades to come.”
Yet the government seems obsessed with continuing to raise the pension age when it is becoming clear that the old generation are facing the greatest difficulty in getting jobs. A new generation will be living in poverty with failing health and that poverty will not end when they eventually get their pension.