Clause 5
Pensions Bill
9:30 am
David Laws (Shadow Secretary of State for Work and Pensions, Work & Pensions; Yeovil, Liberal Democrat)
I do not propose a probing manifesto; today I propose a probing amendment. I want to encourage a good debate by reassuring Members from all parties that I shall not press for a Division. I hope that we can have a constructive and intelligent debate, without people worrying about having to vote one way or the other. At the end of my speech I shall discuss the financial issues that relate not only to the amendment, but to the financial issues behind amendment No. 28 and some of the other proposals that we have tabled for discussion today.
I hope that at that stage, Mr. Taylor, you will feel that my comments have been in order, and I hope also that my strategy will have saved time in the later debate on amendments to the earnings link. I shall of course bow to your judgment about what is in order and try to keep strictly to the financial issues that relate to the amendment before us.
I promise the Minister—and other Members who want to discuss the financial issues that relate to the amendment and to the different proposals—that I shall spend time at the end of my speech discussing those issues. Following that would be the obvious time for the Minister to make the points that I know he will make.
I hope, however, that we can have a sensible and constructive debate. I am conscious that this is not a single-party issue. Members from all parties have spoken passionately in the Commons and in another place about the injustice that the amendment seeks to address. When I sat on a Delegated Legislation Committee recently, to which the Under-Secretary responded, the hon. Member for Worthing, West (Peter Bottomley) made an excellent speech about the injustices and consequences of the way in which UK pensions are uprated. I am also conscious that many Labour Members have spoken about the issue. The hon. Member for Tooting (Mr. Khan) secured an Adjournment debate not that long ago.
This is a serious issue about the way in which people who have lived in the United Kingdom and are entitled to the basic state pension have it uprated when they decide to move abroad. One group of pensioners receives the uprating in line with the retail prices index, which everybody in this country receives, but another group of pensioners in about 150 countries does not receive any uprating at all. Their pension is frozen at that level while they remain overseas. When they come back, it is returned to the level that it would have been at had the pensioners remained in the United Kingdom.
I welcome the fact that the Minister has met Mr. John Markham, who represents a group of pensioners from several different countries. The Minister will know how passionately they feel about that potential injustice. The reason why it is so important is that the Bill will change the uprating mechanism from prices to earnings. Unless I have got it wrong—if I have, I hope the Minister will stop me now before I make a fool of myself—it is proposed to uprate a number of countries by earnings rather than by prices. The other lot, in the other 150 countries, will be uprated at zero—they will not receive anything atall. In other words, the existing injustice will be considerably magnified. I shall discuss whether the current situation is unfair and then turn to the financial consequences of dealing with it, what the options might be, what is affordable or unaffordable, and what might be a reasonable way forward.
Since I have had this portfolio—it is about 18 months, but that is a long time in the world of work and pensions—I have raised this matter several times, but I always receive an unusual response. Even the Minister for Pensions Reform, for whom I have a great deal of admiration, and his predecessor, who did an excellent job, seemed mystified that I had raised the issue.
That is odd coming from a Labour Government, because uprating arrangements for the pensions of those who live abroad represent an enormous injustice. They are totally arbitrary and illogical. The Labour Government committed themselves in 1997 to deal with unfairness in society. Indeed, a junior spokesman had already made a commitment to address the issue if the party got into power. The Government should be concerned; they should not respond as if it was an oddity or the obsession of only a few Members.
I hope that those in the governing party do not think that those pensioners are rather affluent Tories who have gone abroad, and that they can be written off because they are not going to vote for the Government or are not sympathetic to their party, or because they do not have voting rights abroad. I do not think that that is so. However, we are certainly talking about people who may have different political views.
We should also remember—I hope we do, if our debates descends into a party-political knockabout—that many of those people can still exercise their vote in the United Kingdom. Indeed, I hope that they will make their voice heard in the debate on pensions. They also have families in the UK who will have strong views on the subject. Indeed, many in the UK who may think of moving abroad in future will want the Government to put in place arrangements that give them the real freedom to decide where to go.
Over recent years, a number of Ministers have defended the existing situation, saying that people have a free choice about where to go, and that they should go to countries where we have special uprating arrangements. In the modern world, our aspiration is for citizens to be free to make their own decisions; the idea that they should be influenced by arbitrary historic arrangements on whether the countries that they choose will allow their basic pension to be uprated is ludicrous. As a Liberal Democrat, I feel passionate about that, and I hope that other Members do too.
Although it seems a bit of an oddity—it sounds as if it affects a rather small number of people—it affects an increasingly large number. The number drawing state pensions and living abroad has risen rapidly. It was 575,800 in 1990; and in 2003 it was 952,000. I do not have a figure for 2005-06, but I suspect that it is more than 1 million. Only 11 million or 11.5 million people are drawing the basic state pension, so we will pretty soon get to the state when one in 10 of our pensioners live overseas.
At the moment, more than half of the pensioners who live overseas have their pensions frozen. It is not a minor issue that affects only a few people. It affects many, and because of the huge disparity in property prices between the UK and abroad there will be an increasing pull for people to move abroad.