The
Committee consisted of the following
Members:Chairman:
Mrs.
Joan Humble †
Alexander,
Danny (Inverness, Nairn, Badenoch and Strathspey)
(LD) †
Boswell,
Mr. Tim (Daventry)
(Con) †
Bottomley,
Peter (Worthing, West)
(Con) †
Buck,
Ms Karen (Regent's Park and Kensington, North)
(Lab) Burrowes,
Mr. David (Enfield, Southgate)
(Con) †
Clark,
Greg (Tunbridge Wells)
(Con) †
Cousins,
Jim (Newcastle upon Tyne, Central)
(Lab) †
Curtis-Thomas,
Mrs. Claire (Crosby)
(Lab) †
Devine,
Mr. Jim (Livingston)
(Lab) †
Dobson,
Frank (Holborn and St. Pancras)
(Lab) †
Flello,
Mr. Robert (Stoke-on-Trent, South)
(Lab) †
Hepburn,
Mr. Stephen (Jarrow)
(Lab) †
Heppell,
Mr. John (Vice-Chamberlain of Her Majesty's
Household)†
Laws,
Mr. David (Yeovil)
(LD) †
Mactaggart,
Fiona (Slough) (Lab) †
Plaskitt,
Mr. James (Parliamentary Under-Secretary of State for Work and
Pensions)Watkinson,
Angela (Upminster) (Con) Mark
Egan, Committee Clerk †
attended the Committee The following also
attended, pursuant to Standing Order No.
118(2): Keeble,
Ms Sally (Northampton, North)
(Lab) First
Standing Committee on Delegated
LegislationMonday 15
May
2006[Mrs.
Joan Humble in the
Chair]Social Security Benefits Up-Rating Regulations 2006
The
Chairman: Before we begin, I shall suspend the Committee
for 15 minutes if there is a Division in the House and for 25 minutes
if there is a second Division immediately afterwards. I add that hon.
Members may remove their jackets, if they wish to do
so. 4.30
pm Mr.
David Laws (Yeovil) (LD): I beg to
move, That the
Committee has considered the Social Security Benefits Up-rating
Regulations 2006 (S.I. 2006, No.
712). I welcome you to
the Chair, Mrs. Humble. I also welcome other hon. Members, including
the Under-Secretary of State for Work and Pensions, the hon. Member for
Warwick and Leamington (Mr. Plaskitt), and the Conservative spokesman,
the hon. Member for Daventry (Mr. Boswell). I expected to see the
Minister for Pensions Reform, and I had intended to start by welcoming
the opportunity to deal with a new Minister who has a relatively open
mind about this long-running issue. Nevertheless, the Under-Secretary
has been in his post for a relatively limited time, and this is perhaps
the first time that he has had to debate the issue, so I hope that I
can encourage him to put aside his civil service briefing, which has
probably been dusted off having been in the Department in a relatively
unchanged form since the 1950s or 1960s.
We want to give hon. Members an
opportunity to debate the long-running issue of the uprating of
pensions for British pensioners living abroad. [Interruption.]
The hon. Member for Worthing, West (Peter Bottomley) has added from a
sedentary position that we are also debating the non-uprating of many
of those pensions, because half of the individuals involved have the
uprating and half do not.
Peter
Bottomley (Worthing, West) (Con): May I take this
opportunity to congratulate the hon. Gentleman and his party on tabling
the prayer that led to this important
debate?
Mr.
Laws: I am grateful to the hon. Gentleman for making that
comment early in the debate. I should acknowledge, however, that many
hon. Members from all parties have raised the issue over the years.
Unfortunately, they have usually done so from the Back Benches and have
been unsuccessful in persuading the Government of the day of the
strength of their case or of the fact that this is an issue of natural
justice. I sincerely hope, therefore, that the Minister will
demonstrate the fair-mindedness thatI saw when we were
colleagues in Select Committee—I
am not sure whether he is shocked or whether he approves, but he was
fair-minded. The
context for our debate is the current discussion about reforming the
state pension system. If the briefings are accurate—I am sure
that they are—the Government will have delivered their White
Paper to the House by this time next week. The Minister must
acknowledge that the White Paper, and the debate that is bound to take
place, provide an opportunity to look afresh at this issue, which has
been bubbling in UK pensions policy for the best part of 40 years.
Indeed, when I was preparing for the debate, I came upon a report by
the Social Security Committee from 1996, paragraph 8 of which
stated: “In the
early 1960s, criticism of the policy began to build up. By 1963, the
Ministry of Pensions and National Insurance was regularly receiving
correspondence from MPs and from pensioners living abroad protesting at
the unfairness of not paying increases to those living
abroad.” As the hon.
Member for Worthing, West knows, hon. Members have been raising this
issue, rather unsuccessfully, for the past 43 years. Indeed, the matter
is quite unusual, because the case is extremely strong on social
justice and fairness grounds, but for a long time we have been
unsuccessful in persuading any Government of its merit, and I shall go
on to examine the reasons
why. The White Paper,
which will be produced in a week or so, is an obvious occasion on which
to review policy. According to newspaper briefings, the Government are
considering changing the uprating system for pensions and examining a
link with earnings, rather than with prices. The question how pensions
for British citizens living abroad will be dealt with in future must be
addressed seriously when the White Paper is produced. I have already
received letters from individuals asking whether the earnings link,
which the Government may introduce from 2012 or thereabouts, will
extend to pensioners living overseas who are or are not in receipt of
an uprated pension, so we will not be able to avoid the issue, whether
we like it or
not. There is a
long-standing anomaly in how we treat British citizens who have gone to
live abroad, and the Library has provided some interesting information
about the anomalous way in which we treat pensioners in different
countries. As this is a relatively rare opportunity to put the issues
on the record, it is worth going into
detail.
Peter
Bottomley: We are talking about the basic state pension,
not the pension that the Prime Minister might have if he decided to
live in part of north America, or the pension that I might get, as a
Member of Parliament, if I chose to live in an old Dominion or a fully
foreign country; we are talking about people who have an entitlement,
through their contributions or their former responsibilities, to a
basic state
pension.
Mr.
Laws: I am grateful to the hon. Gentleman for that helpful
intervention. He has put on record early in our debate what we are
talking about—the basic state pension, which is set at what many
hon. Members would consider an extremely modest level which is not
sufficient in itself to take pensioners in this country out of poverty.
We are discussing a very modest minimum rate and pensioners who moved
out of the United
Kingdom many years ago and who may have received no upratings at all
since then. Such people may be living on very low incomes, or they may
be dependent on means-tested benefits from the state in which they
live, which is something that many of the countries that end up picking
up a bill that the UK Government and UK taxpayers have not been willing
to pay so far deeply resent.
A helpful note for this debate
from the Library sets out the situation on which countries will get an
uprating and which will not. At the end of September 2004, 990,000 UK
state pension recipients were living overseas, so we are talking about
a very large number of people, and we are also talking about a figure
that is likely to increase considerably in future. I tabled a
parliamentary question the year before last about the number of people
in receipt of the basic state pension abroad, and the figures have gone
up quite dramatically from 576,000 as recently as 1990 to 952,000 in
2003. In other words, since 1990, the number of people who have moved
overseas has pretty much doubled. That underlines the fact that 30, 40,
50 or 60 years ago it was comparatively unusual for people to decide to
retire abroad. Nowadays, however, communications are much easier, costs
of travel are much lower, and the extent of integration across the
world is much greater, which means that people have friends and family
in other countries and may be willing or keen to move abroad when they
reach retirement
age. The issue is
already important. Nearly 1 million people are affected, half of whom
have lost out seriously, and the number is likely to be greater in
future. Of those 990,000 people, some 520,000 or 52.5 per
cent. live in countries where their pension is not uprated by prices,
so they receive the basic state pension to which they are entitled when
they move overseas, but it is not uprated as a consequence of price
inflation. Somewhat counter-intuitively from the UK citizen’s
perspective, the vast majority of those individuals live in
Commonwealth countries—237,000 of them in Australia, 151,000 in
Canada, 45,000 in New Zealand and 37,000 in South Africa. Although most
of the people whom we are considering live in those four countries, UK
citizens who are affected live in a large number of other countries,
too. The countries with
which we have reciprocal agreements under which the annual increases
are paid were listed in a parliamentary answer last July. It is worth
mentioning which they are to highlight the bizarre and anomalous
division between the countries in which we do and do not pay the
uprating and to set out how that situation has arisen. The written
answer stated
that “The UK
currently has reciprocal agreements which provide for the uprating of
state pension with the following countries: Barbados; Bermuda;
Bosnia-Herzegovina; Croatia; Isle of Man; Israel; Jamaica; Jersey and
Guernsey; Mauritius; Philippines; State Union of Serbia and Montenegro;
Turkey; USA and the former Yugoslav Republic of
Macedonia.” There does not
seem to be any logic that determines that the United States of America,
Jamaica and the state union of Serbia and Montenegro should all be in
one category. The written answer
continued: “Although they
have generally been superseded by EC Social Security Regulations which
provide for uprating of state pensions for European Economic Area (EEA)
and Swiss nationals moving between the UK and other member countries,
the UK also has reciprocal agreements which provide for uprating of
state pensions with the following countries: Austria; Belgium; Cyprus;
Finland; France; Germany; Gibraltar; Iceland; Ireland; Italy;
Luxembourg; Malta; the Netherlands; Norway; Portugal; Slovenia; Spain;
Sweden and Switzerland.”—[ Official Report, House of
Lords, 19 July 2005; Vol. 673, c.
WA232.] In other words,
there is uprating in a group of European countries and in a complete
and utter hotch-potch of other countries, and there is no logic that
determines which are included and which are not. Indeed, there is not
even any logic in relation to geographic areas, because among the
island nations of the Caribbean, Barbados, Bermuda and Jamaica all
experience uprating, whereas Trinidad, Antigua and Bahamas do
not. Mr.
Tim Boswell (Daventry) (Con): Does the hon. Gentleman
agree that the plot thickens further in that Guadeloupe and Martinique
are both French overseas territories and are therefore members of the
European Union, and so, as I understand it, the social security
arrangements extend to them? The Minister is
nodding.
Mr.
Laws: The hon. Member for Daventry is right. Martinique is
affected in the way that he describes. As my noble Friend Lord Jones of
Cheltenham set out recently in the House of Lords, the situation is
bizarre in that even pensioners in British overseas territories are not
covered by the uprating regulations. Indeed, those living in Bermuda,
Gibraltar and the sovereign-based area on Cyprus have their UK state
pensions uprated, but those living on the British Virgin Islands, the
Cayman Islands, the Falkland Islands, Montserrat, Pitcairn Island, St.
Helena and the dependencies, the Turks and Caicos Islands and Anguilla
do not have the uprating. Were there any pensioners on the British
Antarctic Territory and the British Indian Ocean Territory, their
pensions would be frozen
too.
Peter
Bottomley: I am not surprised, if they are on the British
Antarctic
Territory.
|
