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Lord Higgins: My Lords, not so. In that case, I am puzzled by the e-mail which I received. It suggested that, following a meeting with Alistair Darling, the Australian Social Security Minister, Jocelyn Newman, gave notice to the UK that Australia intended to end the social security agreement with the UK because of the UK's intransigence on the frozen pension issue. In that case, I am puzzled by the e-mail and do not understand exactly what the position is. It would be helpful if the Minister could throw some light on that.
At all events, after the Select Committee in the other place had looked at the matter in considerable depth, the conclusion was that it is a question of priorities. There is some cost--of the order mentioned by the noble Lord, Lord Goodhart. It is a question of whether that is something that is appropriate to give priority to rather than some alternative use of the equivalent amount of money. The report suggests that there should be a free vote on the issue. If the House is to assess priorities, it seems to me that there could be some case for that argument.
As to the second amendment moved by my noble friend, there may be some case for those consultations, although it seems to me that the real problem is that there is clearly an anomalous situation when some countries have a reciprocal arrangement and others do not. It is right that we should reconsider the issue. I am glad that my noble
The amendments have one purpose: to attempt to redress the situation where more than half of UK pensioners living overseas do not receive annual cost of living increases in their retirement pension. The House is well aware that the issue has been discussed for many years and has been considered in previous debates, including the Committee stage of this Bill. I am aware of the importance which some Members of the House attach to the issue and of the strength of feeling among many UK pensioners overseas. In return, noble Lords know the Government's position well and I do not believe--as the noble Lord, Lord Higgins, suggested--that they will be particularly surprised at my response to the amendments proposed.
UK pensions are paid anywhere in the world. We pay some 870,000 pensioners in more than 150 countries. In 1998 the UK paid over £1 billion in retirement pensions to pensioners living abroad. Some 470,000 of those pensioners have what is commonly referred to as a frozen pension--in other words, it is fixed at the point at which they left the UK permanently or at the rate initially awarded on retirement if the person is already resident abroad. The pension remains frozen at the rate payable when a person ceases to live permanently in the UK.
Upratings are only paid within the EEA, in the Channel Islands, the Isle of Man and in about a dozen other countries where certain long-standing social security arrangements, going back to the 1950s for the most part and certainly before the 1970s, exist.
Noble Lords must also recognise that pensioners who live abroad have chosen to do so, and they knew that their pension would be frozen when they made that decision. That position does not represent a change in government policy--it has not changed since 1955. It is not solely a priority for this Government to reconsider and it is not just the Government's view. The Social Security Select Committee came to the same conclusion in 1996 when they considered the matter. If it wants a free vote on this, I wonder whether it would like a free vote on all areas of government expenditure so that on the basis of free votes we can all decide what our priorities are.
We already know the scale of the total cost of uprating all frozen UK state pensions paid abroad to the rate of pensions in the UK. It would be some £300 million per year for all countries affected. The amendment as drafted also seems to suggest that any pensioner could be entitled to attendance allowance as well. If that happened it would add many millions to the bill.
The noble Lord, Lord Higgins, read from the e-mail about the Australian Government. The Australian Government recently announced that they will be ending their social security agreement with the UK because we have rejected their proposal for a limited unfreezing. Over 45 per cent of frozen rate pensioners live in Australia and total unfreezing would cost £129 million. The Australian proposal would apply only to the 3,000 people who already receive the means-tested Australian old age pension and those who start to get a UK pension in Australia in the future. It would not benefit the great majority of the 200,000 UK pensioners resident in Australia. In other words, the Australian Government asked not for a total unfreezing but for a certain response from us for the 3,000 who already receive the means-tested Australian age pension. That would not affect the majority of those living there.
It may be helpful if I repeat the figures I gave to noble Lords when we discussed this issue. My noble friend Lord Monkswell seemed to suggest that all we needed was a reciprocal arrangement; that we should then have symmetry and all would be well. That is simply not the case. At the moment, for example, there are 17,000 Australian citizens living in this country while there are 210,000 UK citizens living in Australia. From New Zealand, 7,600 live here; 34,000 of our citizens live there. From Canada, 9,500 live here; 138,000 British citizens live there. Therefore, though it might be reciprocal, any unfreezing would not be at all symmetrical. The costs would very heavily fall on the UK Government.
I can only repeat what I have said before: those UK pensioners living abroad have chosen to do so in full knowledge of how it would affect their pension. As is very clear from these figures, we are not talking about equality of spending between two countries. Our overall position is clear. We do not consider unfreezing to be a priority call on resources. Those who have chosen to live abroad cannot have first call on resources in the light of some of the issues about social exclusion and so on which we have been talking about tonight. We have much to do to improve the position of pensioners and indeed the very poor who are in the greatest need in the UK. I regret, therefore, that I shall not be able to accept the amendment proposed tonight.
Baroness Fookes: My Lords, as I was not expecting any concessions, I have not been disappointed. However, that does not mean that I do not remain annoyed nor that I shall not continue to work on what I believe to be an injustice. Clearly, for the time being, I shall make an orderly retreat but only so that
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