Pensions: Reciprocal Arrangements (Hansard, 1 March 1993)

§ The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley)
My Lords, the same principles, including cost, apply when negotiating reciprocal social security agreements between the United Kingdom and any other country. These principles are that both countries' social security schemes must be sufficiently similar in order to provide reciprocal benefits.

§ Lord Stallard
My Lords, I thank the Minister for that Answer, but he will not expect me to be too happy about it. It does not take me much further when we consider that there are 613,000 expatriate prisoners—

Noble Lords
Pensioners!

§ Lord Stallard
My Lords, there are 613,000 expatriate pensioners throughout the world, nearly half of whom—about 45 per cent.—receive pensions that are index-linked to the British retail prices index, but the rest do not. However, when they were living and working here all of them paid their national insurance contributions; all of them paid taxes; all of them helped this country's production; and all of them served this country during the war. They all have the same qualifications, but only half of them receive an index-linked pension. That seems manifestly unjust. That is where my point about principles comes in. 413 How does one sort out which half receives index-linked pensions and which half does not? Is the Minister aware that this problem came to light and was emphasised during the last general election when his own party and its workers scoured this country and abroad in an effort to get the votes of all these pensioners? They were worth giving a vote to. Is it not true that those pensioners were worth canvassing and everything else, but they are not worth paying? Is it not time that something was done about that? Even thinking about it would be useful.

§ Lord Henley
My Lords, I am surprised that the noble Lord wants to comment on the result of the last election. But I can only confirm what I have said on previous occasions. The noble Lord is quite correct in the figures that he gave to the House. Some 355,000 are not entitled to have their pensions uprated and some 260,000, or thereabouts, do have their pensions uprated. It is simply a question of cost. It would cost some £275 million to unfreeze those existing pensions and, quite frankly, as I have said on earlier occasions, my right honourable friend the Secretary of State has to make very difficult decisions in terms of allocating the finite resources available to social security.

§ Lord Dean of Beswick
My Lords, the Minister should not be surprised that my colleague, my noble friend Lord Stallard, referred to the expatriate vote. When the Minister derided my noble friend about that, he must have been aware that the Government retained a number of seats solely because of the expatriate vote. Surely it is time for the Government seriously to consider the issue that my noble friend repeatedly brings before the House, and to give those people a fair deal. By any standards of fair play it looks—I am not saying that it is deliberate—as if they are being treated shabbily by the Government. Where is the equal society about which the Prime Minister, Mr. John Major, talks? It is not equal for some people.

§ Lord Henley
My Lords, I cannot comment on the expatriate vote, because, as the noble Lord will appreciate, there is a secret ballot.

§ Lord Dean of Beswick
My Lords, why did the Minister mention it?

§ Lord Henley
My Lords, I sympathise with the case made by the noble Lord and the noble Lord, Lord Stallard, but there is little evidence that there is any real hardship. There is also little evidence that merely unfreezing those pensions would necessarily bring relief to any alleged hardship, bearing in mind other factors such as exchange controls or the cost of living in individual countries. I have to repeat that it would cost Her Majesty's Government some £275 million to unfreeze all the pensions worldwide, and, quite frankly, there are better uses for that money.

§ Baroness Elles
My Lords, will my noble friend confirm that all the pension schemes are arranged on a reciprocal basis and that if Canada, Australia and 414 South Africa were willing to negotiate the uprating of pensions on a reciprocal basis, the position might be different?

§ Lord Henley
My Lords, we have negotiated with Canada, but, even if it were on a reciprocal basis, the amount of money coming from Canada would not equal the amount we would have to pay there, and we would be net losers to a very large extent.

§ Lord Shepherd
My Lords, will the Minister undertake to look at the costs charged by the banks for the transfer of pensions to pensioners overseas? I have seen figures recently which reduce considerably the amount that pensioners receive. That is due mainly to bank charges.

§ Lord Henley
My Lords, that is a little wide of the Question, but I am prepared to give an undertaking to the noble Lord to look at that problem.

§ Lord Stoddart of Swindon
My Lords, is the Minister not making too light of the equity of the situation? Can it be right that one set of pensioners who have paid their contributions and taxes in the same way, in the same context and at the same rate as another set of pensioners should receive so much less pension, simply and solely because the Government wish to save £275 million? Is that going to be a precedent in this country—for one set of pensioners to receive their pensions at a given point as against another set of pensioners receiving theirs at another point? Are we eventually going to penalise people in this country as well?

§ Lord Henley
My Lords, no. The noble Lord should perhaps look at the history of the matter. In the early days of the state retirement pension it was payable only within the United Kingdom, with one or two minor exceptions. As from 1955 it became exportable, and thereafter a certain number of reciprocal agreements were made with individual countries which allowed pensions to be uprated in line with prices. However, I have to go back to my original Answer: there is a very important principle. It is one of cost. It would cost some £275 million to unfreeze those pensions.

§ Baroness Hollis of Heigham
My Lords, how many other countries have sought reciprocal arrangements and have been refused by Her Majesty's Government?

§ Lord Henley
My Lords, we have reciprocal arrangements with some 32 or 33 countries. I cannot remember the precise figure. Of those, not all have uprating of pensions in line with prices. In other words, in Canada, Australia and New Zealand they are not uprated, but all the others are uprated.

§ Baroness Hollis of Heigham
My Lords, forgive me, that was not the question I asked. I asked how many countries have sought reciprocal arrangements and been refused by Her Majesty's Government.

§ Lord Henley
My Lords, I cannot answer the precise question. We are always prepared to negotiate 415 with any country so long as the criteria I elucidated in my original Answer are met; so long as their arrangements are sufficiently similar to ours.

§ Lord Stallard
My Lords, perhaps I may take the Minister back to the question asked by his noble friend Lady Elles who mentioned Canada. Canada has been seeking a reciprocal arrangement. It has even offered to assist with the financial deficiencies that that would cause initially. It has offered some kind of transitional arrangement, but that has been refused. The fault is not on the Canadian side. It is willing to enter into a reciprocal arrangement.

§ Lord Henley
My Lords, yes. Unfortunately I was not able earlier to give an answer in terms of figures to my noble friend Lady Elles, but I can tell the noble Lord that the Canadians offered some 8.5 million Canadian dollars, which is about £4 million. That is negligible compared to the overall cost to the United Kingdom of some £70 million.