HL Deb 26 June 2002 vol 636 cc1352-5

2.47 p.m.

Lord Mackie of Benshie

asked Her Majesty's Government:

Whether there is any reason other than economy for withholding pension increases from British citizens living in certain Commonwealth countries.

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham)

My Lords, annual upratings have never been generally paid abroad. Exceptions apply under the EC's social security regulations, which apply to pensioners who have a UK pension and live in the European Economic Area, and under reciprocal social security agreements with other countries that allow increases to be paid there. Pensions are not uprated in any other country.

Lord Mackie of Benshie

My Lords, I thank the noble Baroness for that Answer, but I do not consider it satisfactory. It is extraordinary that, although someone who goes to live in the south of France, enjoying themselves on the Riviera, can draw the full increases as they come along, as can someone on the United States side of the Niagara Falls, those on the Canadian side cannot. That is manifestly unjust. I know that it would cost money to change the situation, but is it right for one section of the community who do not live in privileged areas to pay for the poorest sections in this country? Should that not be paid for by all of us? Will the Government consider starting the process by at least paying the increases to pensioners living abroad—most of whom go there to be beside their children and grandchildren—when they reach 75, which is when they begin to need it?

Baroness Hollis of Heigham

My Lords, on the first point—the unfairness, as the noble Lord perceives it, between pensioners in the United States and those in Canada—the fact is that we have a reciprocal agreement with the United States whereas we do not have one with Canada. Canada was offered one but rejected it back in the early 1970s; in 1972,I think. On the second point, uprating, the fact is that the basic state retirement pension is uprated to compensate pensioners living in this country for the increases in the cost of living in this country. That is the reason. It therefore seems to me perfectly proper that it is not paid elsewhere, other than where there are reciprocal agreements or, as in the EU, reciprocal arrangements for pensioners.

Baroness Carnegy of Lour

My Lords, is the noble Baroness able to tell us whether, when people emigrate to one of these countries, they are informed that they will not receive their pension?

Baroness Hollis of Heigham

Yes, my Lords; I have a copy of the leaflet here. It makes clear in very strong terms that the retirement pension can normally be paid to people living anywhere and that annual increases may be payable to people living in the EEA or in a list of countries provided. However, it goes on to say that, otherwise, you will not get annual increases in benefit if you go to live outside the UK or one of the above-mentioned countries". It is very clear, in very large letters.

Lord Davies of Coity

My Lords, while appreciating that reciprocal arrangements are best, is it not true that these people have earned their pension while working in this country and that they are therefore entitled to full benefits? They are British citizens albeit they live abroad in one of those countries.

Baroness Hollis of Heigham

No, my Lords, I do not agree. The benefits have not been paid for by the individual pensioners. The first point is that the state retirement pension of current pensioners is funded by current taxpayers. It is not a funded scheme. It is contributory only in the sense that one's contributions entitle one to a pension; they do not necessarily en title one to an uprating. The second point is that the national insurance contributions paid by today's married pensioner who had been on average earnings for his entire working life fall far short of what he is currently receiving in retirement pension. He does not pay for it.

Earl Russell

My Lords, is the Minister aware that, in the 1970s, there was considerable resentment in the Commonwealth over the terms on which we entered the European Union? Is she aware—as she will be if she reads the Sun or the Daily Telegraph—that the effects of that resentment are still with us? Does she think that this is a sensible time to increase it?

Baroness Hollis of Heigham

My Lords, the reciprocal arrangements, apart from those associated with the EU, were made largely in the 1950s and 1960s. As far as I am aware, although some commitments took some time to deliver, no new commitment has been made in the past 20 to 25 years. We are in this case following the policy of successive governments of the past 20 to 25 years.

Lord Blaker

My Lords, with respect to the noble Baroness, is she aware that many Members of this House and of the other place have heard the answer she has just given, in exactly the same terms, from successive governments? We have long thought that those answers are not good enough, and that feeling is now stronger than ever.

Baroness Hollis of Heigham

My Lords, I am afraid that the noble Lord's views have not been shared in the past by this House or by the other place. There were votes on this issue in the passage of the Pensions Act 1995, the Welfare Reform and Pensions Act 1999 and the Child Support, Pensions and Social Security Act 2000. On all three votes, under different governments, this House and the other place voted by an overwhelming majority to continue the current policy.

Lord Watson of Richmond

My Lords, the Minister says that the proposal made to the Canadians in the 1970s was rejected. Does she agree, if it does not try her patience too much, that perhaps the time has come to try again?

Baroness Hollis of Heigham

No, my Lords. We believe that the pension uprating increases are to compensate for the cost of living increases in this country. Pensioners who are living in this country need them. We have no knowledge about the cost of living increases in the other 150 countries to which UK pensioners have retired. I therefore do not think it appropriate to single out Canada or any other country in that respect.

Baroness Noakes

My Lords, is the Minister aware of the case of Annette Carson, who took the issue to court on behalf of the one half million "frozen pensioners"? She lost the case and was ordered to pay costs. Will the Minister say whether the Government intend to pursue her for costs?

Baroness Hollis of Heigham

My Lords, it is not appropriate for me to comment on the Carson case except to say that the Government were obviously pleased to receive the favourable judgment of the High Court, which shows that our policy is consistent with the European Convention on Human Rights.

Lord Morris of Manchester

My Lords, can my noble friend offer any estimate of the cost of conceding parity?

Baroness Hollis of Heigham

Yes, my Lords; £400 million—nearly half a billion pounds.

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