I beg to move,
That this House notes the detrimental effect that the Social Security Benefits Up-rating Regulations 2017 will have on the lives of many expatriate UK citizens living overseas with frozen pensions; and insists that the Government take the necessary steps to withdraw those Regulations.
As chairman of the all-party parliamentary group on frozen British pensions, and with cross-party support, I move this motion on behalf of some 550,000 UK citizens living in countries overseas whose pensions have been frozen at the point at which they left the United Kingdom, in some cases many years ago.
Those people paid taxes and national insurance contributions in Britain throughout their working lives, and elected to move abroad in retirement to be close to family and friends, or simply through personal choice. On the basis that—as my hon. Friend the Minister said in November—entitlement to state pension is based on a person’s national insurance contribution record, they paid their way and are entitled to receive their state retirement pension uprated and in full.
Let me make it clear from the start that this is a matter not of cost but of moral responsibility. It is a duty that has been disgracefully shirked by successive Governments of differing political persuasions since the mid-1960s. It is past high time to recognise that an injustice has taken place and to take a modest step, which I shall detail shortly, to redress a wrong that has been a running sore for too long. The motion calls on the Government to withdraw the social security benefits uprating regulations that effectively exclude overseas pensioners from pension uprating in all countries but those with which the UK has an historic, arbitrary and illogical reciprocal agreement.
My hon. Friend the Minister knows of the illustrious precedent for the motion. In 1998, a similar prayer against the Social Security Benefits Up-rating Regulations 1998 was tabled. It was signed by the then Opposition Chief Whip, now Lord Arbuthnot; my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith), a former leader of the Conservative party and distinguished Secretary of State for Work and Pensions; the then leader of the Conservative party, now Lord Hague; my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley), another former Secretary of State; and the then shadow Leader of the House, now Baroness Shephard.
All those years ago, the party of which I am proud to be a member recognised the need to right a wrong inflicted on those who, in many cases, have served their country in the armed forces, the foreign service and many other walks of life, and who have, collectively and severally, paid their way. We are now—and I trust will remain—in government, so we have the opportunity finally to address and put to rest a debt of honour that must be paid.
I quote a UK pensioner living in Rayong, Thailand:
“I am resident in Thailand, where I retired nearly 8 years ago, and my State Retirement Pension remains at the same level as when I left, because Thailand, unlike the Philippines, for example, is not a country where pension increases are paid…there are some points which I feel should be brought to the fore.
Successive governments have always argued that pension increases can only be paid in countries with which the UK has ‘reciprocal agreements’, and that to extend increases outside these arrangements would negate their ability to conclude other such agreements in the future. However, that argument is utterly threadbare, given that the government announced more than 20 years ago its intention not to make any further reciprocal agreements.
There is a common misconception that expats pay no UK income tax. In the case of pensioners this is totally untrue, because all pensions paid from the UK are subject to tax, and I pay as much as I would if I were still living in—”
his former home in the United Kingdom; I will not identify him at this stage. He continues:
“While pensioners such as myself are paying into the UK economy, we take nothing out, so we make no demands on the NHS or social care. Now, even if we fall ill on a visit to the UK we have to pay for hospital in-patient NHS treatment. If over the years a significant number of us decide that because of reduced circumstances we have to return to the UK, the extra costs in health and social care would outweigh a good proportion of the ‘saving’ of not paying us the increases.
There is uncertainty at the moment on the status after Brexit of expat pensioners living in the EU, and their future right to pension increases…I can’t speak for anyone else, but personally I would not ask for any back payment of the increases I have ‘lost’ in the last 7+ years. I would just be happy to feel that in the future I will have that little extra security of a few extra pounds to sustain me in the last years of my life.”
I will return to his points that refer to Brexit and a possible solution in a moment, but first let us take a look at some hard facts. There are 13 million recipients of the United Kingdom state retirement pension. A fraction over 1 million of them live overseas. Of that number, some 650,000 have their pensions uprated as they would in the United Kingdom because of the reciprocal arrangements already referred to. Baroness Altman said in 2016 that
“UK state pensions are payable worldwide and uprated…only where we have a legal requirement to do so.”—[Official Report, House of Lords, 24 February 2016; Vol. 769, c. 251.]
That means that many people are denied that uprating. In fact, some 551,000 are excluded from uprating and find their pensions frozen from the point at which they moved abroad, in spite of paying their taxes and national insurance contributions in the United Kingdom throughout their working lives. As my hon. Friend the Minister made plain in November 2016, pensions are based on national insurance contributions.
Those 551,000 people have made those contributions. However, we still have the ludicrous situation that a British pensioner living on one side of Niagara Falls, in Canada, receives a frozen pension while another living just a mile across the falls, in the United States, has their pension uprated every year. Additionally, some Caribbean islands enjoy uprated pensions, while other small countries and overseas territories do not, with unintended and perverse consequences.
The UK representative of the Government of Montserrat, Janice Panton, wrote to me to say:
“A number of Montserratians now living in the UK wish to return to take up residence on the island but are hindered from doing so due to the fact that should they emigrate to Montserrat—”
go back home, effectively—
“their pensions would be frozen. Many of these individuals have lived, worked tirelessly and paid their national insurance contributions over the course of many years. It now seems they are being victimised simply because they desire to return to Montserrat or another Overseas Territory.”
The representative of the Falkland Islands in the United Kingdom, Sukey Cameron, also wrote to me, saying:
“The Overseas Territories have a different constitutional relationship with the UK and are not independent Commonwealth countries; therefore they should not be treated as such. To quote from the 2012 White Paper on the Overseas Territories ‘…the underlying constitutional structure between the UK and the Territories, which form an undivided realm, is common to all.’”
Of course, it is common to all, except in the case of pension uprating, where it is not.
The human consequences of this injustice can be devastating and are illustrated by scores of communications that the International Consortium of British Pensioners and the all-party parliamentary group on frozen British pensions have received from expatriate UK citizens. A spokesman for the Parity or Poverty Group, which has members in Canada, Thailand, Turkey and South Africa, says:
“We are trying desperately hard to undo the predicament that’s driving us into poverty. I can see it on the horizon for myself as once affordable items are now out of reach. I dread the future for myself and my wife.”
We shall await the Minister’s response with great interest. I am grateful to my hon. Friend.
A former constituent of mine, and a friend, now living in South Africa, wrote to me to say, “I have been looking after my wife since her stroke and increased dementia, plus incontinence now, for over a year. Reviewing the situation with our daughter, my wife is slowly going downhill. I am heading that way, too. I am worn out. To help with catering and finance, we are now on to Meals-on-Wheels for four days a week and are shortly to arrange five day or even five and a half day care support. Right now, our medical aid—insurance—takes half our combined basic OAP pension and the new care plan will certainly take the other half. Our daughter looks after our finances and generously helps and tops up when needed.” That is what my former constituent, a friend, is now reduced to. Sadly, I learned only this morning that his wife died last week, leaving him not only in penury but, apart from the care and affection of his daughter, alone.
Bernard Jackson, 91 years old, has returned to the United Kingdom from Canada and says:
“I was brought up to believe that Britain was a fair country. It’s a disgrace, it has to end, it’s terrible to meet pensioners over here who say they have to come back to Britain because they can’t manage.”
Joe Lewis, 90 years old, who lives in Canada and has recently lost his wife, will be moving back to the United Kingdom as he can no longer cope with his frozen pension. After suffering a severe fall, Joe is increasingly struggling to afford living and medical costs. The only way he can make ends meet is to use up all his savings. Joe Lewis, a nonagenarian, says:
“All I want is my full state pension which I have paid into my entire life”.
Here is another anomaly: any returnee, including those visiting the UK for a couple of weeks to see family on holiday, is entitled to claim their full uprated pension for that period.
Of course, cometh Brexit, cometh another issue that will have to be addressed. The 492,000 British pensioners living in the 27 European Union member states and EFTA countries are protected by the social security provisions of the EU single market, but what will happen to their pensions when we leave the EU? A resident in France wrote to me to say:
“I have been a ‘victim’ of a frozen pension for the past 15 years having lived in Zimbabwe for 45 years and being forced to move to a EU country in order to get my pension... During my working life, I continued to pay Class 3 NI contributions to safeguard my UK pension and it was only when I reached age 65 that I found out that my pension would no longer be indexed, and this has cost me many thousands of lost pounds over a period of 15 years. Now the same issue is rearing its head because of Brexit.”
Will there be 27 different reciprocal agreements or one blanket agreement? Will former EU pensioners find their pensions frozen like those in Canada, Australia, New Zealand, the Indian subcontinent, Montserrat and other countries? Surely now, in the light of Brexit, is the time at least to start to put all expat UK pensioners who have paid their dues on an equal footing.
I return to the resident in Thailand who said that he
“would not ask for any back payment… I would just be happy to feel that in the future I will have that little extra security of a few extra pounds to sustain me in the last years of my life.”
Successive Governments, plucking figures out of the sky, have suggested that uprating overseas pensions would cost billions. In fact, the proposal that the all-party group supports, which goes nowhere near as far as the proposal that some would like and that justice probably dictates, is to uprate payments at the 2.5% from which UK-based recipients will benefit this year. That will cost not billions, but just £33 million. After five years, the budgetary impact will be £158 million. To set that in context, the triple lock costs the Government an extra £2 billion each year.
In the great scheme of Government expenditure, £158 million is small change—small change to settle a debt of honour, with no threat of legal challenge in respect of potential retrospective claims. That, surely, is a bill that, in the interests of a society that is fair for all, the Government cannot afford not to pay.
I pay tribute to the hon. Member for North Thanet (Sir Roger Gale), chair of the all-party parliamentary group on frozen British pensions, for his tireless and forceful campaigning on this issue over many years. I am proud to be a member of that group, but it is very much about his determination to see an end to this injustice. I hope that his campaigning, both personally and collectively, will soon start to bear the fruit that it deserves.
We are having this debate in an unexpected context. It was announced before the Easter recess, when none of us—even those on the Government Benches—had any idea that we would see Parliament dissolved and a general election. I think that is partly why fewer hon. and right hon. Members are here than there would otherwise have been, which is a shame. However, I was going to make the point anyway that there is a simple reason why this issue has never been resolved and Governments have been able to ignore it again and again. I say “Governments” because, as the hon. Gentleman said, it has been ignored by successive Governments. This is not a party political issue. All parties have failed to deal with it during their times in government.
I love and am hugely proud of being my constituency’s representative. Representing Leeds North West is the part of my job that I love most. However, the reality is that these 550,000 British citizens, who are the same as every one of us here and as all our constituents who are UK citizens, do not have an MP. They do not have a single person who directly represents them and fights their cause in the way that we all do when we receive constituents in our surgeries who tell us about injustices that they face. One MP, or groups of us, can take up those issues and campaign until we finally get Ministers, of whatever colour or Government, to make a change. This group of people do not have an MP. They are disenfranchised and are not represented. Constitutionally, the length of time that this injustice has endured means that it may now be time to look at what France and other countries do and somehow have representation for our UK citizens who live abroad.
I congratulate the hon. Member for North Thanet (Sir Roger Gale) on securing this debate. I supported his bid.
Does the hon. Member for Leeds North West (Greg Mulholland) recall our meeting in the House of Commons two or three months ago with a number of people who had come from overseas to make representations? Surely it is bad when people have to come from overseas, at great expense, to lobby Members of the Westminster Parliament. This issue goes back to the 1960s, so he is right to refer to successive Governments. This has gone on for far, far too long.
I entirely agree with the hon. Gentleman. I pay tribute to the dogged campaigners who have worked with the all-party parliamentary group. Their campaigning is remarkable, particularly given the distances involved. The situation he highlights makes my point even more clear. This group of campaigners, these British citizens, came to Parliament, but who could they directly contact? We meet our constituents when they come to lobby us, and we point people who come from another part of the country to their own MP, but we do not represent people who contact us from Canada, Africa or wherever it is because they are not our constituents. I pay tribute to the members of the APPG, and particularly to the very active members and the chair, for being prepared to represent such people through friendship.
Many of us have come to this issue because we have been told about a constituent’s relative or friend, or perhaps because we know someone in this situation. I do not know such a person, incidentally, but I have come to the conclusion, simply by engaging with, listening to and reading the arguments, that this disgraceful injustice cannot continue. It is morally wrong and legally deeply questionable. Ultimately, the position taken by successive Governments in ignoring the issue and using the same standard excuse for many years, despite this Government recently saying that they will look into the matter, will be shown to be legally unsustainable in an increasingly globalised world.
Let us remind ourselves that this is happening in the context of post-Brexit turmoil, which will have all sorts of effects. In the future there will be a very real threat to UK citizens who live in the European Union, and I know the APPG will lobby strongly to ensure that the situation is resolved as part of the Brexit negotiations. We discuss freedom of movement and immigration, but we forget to talk about emigration and the fact that many British citizens, for very good reasons, use their right to go to live and work, or retire, in another country.
This topic is important to many people, and not only those living abroad who left the UK for very good reasons, including people who migrated here in the 1950s and have since gone back to live in India, Pakistan, Australia and other places. Those people have contributed to this country’s economic and social life. I congratulate the APPG and its chair on raising these issues and on meeting and listening to the Australian campaigners who came here. I hope that the next Government will take this on board and ensure that these people are not disadvantaged.
The hon. Gentleman is right that this is not only unjust but clearly discriminatory, particularly to those in certain diaspora groups. As he knows, Leeds and West Yorkshire have a proud and strong Asian community. I am proud to have a mosque and a Hindu temple in my constituency, and the next constituency has a wonderful Sikh temple, and those wonderful communities are very much part of the life of the community and economy in Leeds. Members of any of those communities are discriminated against, in exactly the same way as anyone else, if they choose to go back to their country of origin, perhaps to live with family or to support family members. That is another reason why this is legally questionable as well as clearly unsustainable.
We are proud to live in a globalised world, whatever side we took in the EU debate. I did not hear anyone say, certainly not in this House, that we should stop wanting to play our full part in the world. I did not hear anyone say that we should stop wanting people from other countries to work in our economy and our health service. Equally, I did not hear anyone say that we want to stop our own citizens having the right to emigrate. In a globalised world we have people who choose to marry a foreign citizen and live in their spouse’s country to find work. This injustice is effectively denying the right of real freedom of movement to all the citizens of this country, which is extraordinary in a globalised world and in a nation that purports to want to play its full part. We are proud to have citizens living in and contributing to America, Canada, Europe, Asia and Africa. If their family have decided to live, work and make their lives in another country, it is understandable that some old people would wish to retire to be with them.
Indeed, as the hon. Member for North Thanet said, there is a huge saving to this nation when someone chooses to emigrate—the estimated annual saving is £3,800—yet we are not prepared to uprate their state pension, which they have paid into, even though the figure would clearly be significantly lower.
We cannot have a situation, as we have now, in which some UK citizens who choose to retire abroad have their pensions uprated and some do not. There is also now uncertainty for people who intend to retire to the European Union, and of course more people who are married to an EU citizen are now deciding that they would rather live in the European Union.
We need to get a grip on the issue and stop the disparity between people in countries that happen to have a bilateral agreement and people in countries that still do not. The Minister has an opportunity to put that right in this Government, unless he has something wonderful to announce today. He, like all of us on both sides of the House, needs to ensure that the issue is addressed. Let us make a firm commitment that whoever is here in the next Parliament from 9 June will ensure that this injustice is at least partially resolved by the next general election in 2022.
After the election it is clear that the Government, of whatever colour—people do not particularly question what colour the next Government will be—must do something, because they can act unilaterally in this case. There does not have to be bilateral agreement. A Government could act on the basis of justice and of wanting to resolve the matter by making a unilateral decision to make a change for all cases.
We need to do this properly and ensure that people living all around the world all get the proper state pension; that is the only real form of justice on this. We need to decide that from now on people should get the state pension that they paid into and that they deserve, regardless of whether they live abroad, particularly as they are not costing the NHS money and are not part of the ongoing crisis in social care, which, again, successive Government have failed to deal with in this country.
Clearly, the Government will not commit to doing this at the moment, although they should. I still challenge the idea that introducing a proper state pension for all citizens abroad would necessarily lead to backdating. That view is overcautious, and legislation could be brought forward carefully to avoid that situation.
A commitment has to be made to the partial uprating that has been pushed by the all-party group and mentioned today by the hon. Member for North Thanet. The estimated cost is very modest, even in the context of wider spending demands. It is a modest change, and it clearly could and should be made early in the next Parliament to help those who have suffered, and the many people whose standard of living has been affected. Remember that many of these people are not well off; they are not rich. Many of them are ordinary people who have chosen to live abroad for very good reasons, such as those I have described. As was movingly set out by the hon. Gentleman, this injustice, which has gone on for many years, has meant that older pensioners are facing penury. They are living in poverty because of this injustice perpetrated by the British state, so we need a commitment to partial uprating. It would be wonderful to get it today, but that is unlikely in the context of the general election.
I am committed to campaigning on this in future, if I am returned to this place after the 8 June election. I will carry on making this case, even though I am not doing it for constituents, because this is about justice. I pay tribute to my colleague in the other place, Baroness Benjamin, who is also a member of our group and who has been very vocal on this issue in the Lords; I am sure that she and others will continue being so. I do not write the Liberal Democrat manifesto—they would not let me, although it would be very good if they did—but partial uprating should be in all the manifestos; the election has provided an opportunity for that. We should all commit to that, to ensure that uprating happens in the next Parliament. I will certainly put that to my party leader, and I hope others will do the same, because this is not a party political issue. It never has been. There is no direct criticism of any one party; there has simply been a failure on this, for the reasons I laid out.
Representative democracy has failed people who choose to move away from constituencies and no longer have one. Perhaps we could examine that. In the meantime, I hope that all parties, all members of the group and the Minister will consider whether it is finally time to commit to bringing in at least partial uprating, so that this clearly unjustifiable injustice is at last dealt with, and Governments of all colours stop ignoring it and looking away.
The House should thank my hon. Friend the Member for North Thanet (Sir Roger Gale) and the hon. Member for Leeds North West (Greg Mulholland) for the way in which they have spoken, and we look forward to the contribution from the Scottish National party. If my friend the Minister does not mind, I will talk through him, because he will not be authorised to make the kind of commitment that this House is asking for. The questions we have to address are: is what is going on fair? Is it logical? Is it right? The answer to each of those is no, and I thank John Markham and the International Consortium of British Pensioners for the briefing they sent, which points out that the situation is grossly unfair, completely illogical and morally wrong.
To illustrate the point, were I to have retired overseas in the “wrong” place, in the seven years since I could have taken the state pension, I would have lost £5,000. I plan to be re-elected; in five years’ time—we may have an election then—the loss would be £13,000. Clearly, I can afford it, as when I retire I shall have a second pension. It will come from the state, but any increases in it will not be determined by whether I live in one part of the West Indies or another. Just to make sure that the Minister is paying attention, perhaps he would like to tell us in which of the areas represented by the West Indies cricket team people would get increases. If I were to retire to the United States part of the West Indies, would I get an increase? Yes. If I were to retire to the Dutch part of the West Indies, would I get an increase in my state pension? Yes. If we went through some of the independent countries, we would hear the Minister tell us about the difference between Guyana and Barbados.
The point has been made about the lack of a parallel between Canada and the United States. As my hon. Friend the Member for North Thanet asked, what is the reason for the difference in position in Thailand and the Philippines, except total chance? The point about this House is not to leave things to total chance. Old age pensions were introduced in 1906, or thereabouts, by a combination of Lloyd George and Winston Churchill to make sure that people were not left struggling in their old age.
Ministers may have been briefed to say that there is social security in some countries, but not in many others—Zimbabwe, which has been mentioned, perhaps being one of the worst examples. People who were asked by this country to stay on during Ian Smith’s illegal declaration of independence now find themselves in penury. That is made far worse by the freezing of their state pension.
The number of overseas pensioners who are registered to vote has doubled since the last election, and it could double again and again. If instead of there being 400 of these people for each constituency, there were 800 or 1,600, people might start paying more attention more widely, but the arguments for unfreezing to deal with this injustice should not be about numbers of votes; they should be about whether unfreezing is right or wrong. Let us suppose that at the moment four pensioners in every 100 are affected, and the issue affects a third of their state pension. We can clearly cope with the sum involved. We will in any case be coping with a growing number of pensioners—give or take, depending on the lifting of the state pension age. When we were considering decimalisation in the early 1970s, somebody said, “This will confuse the elderly. Let’s wait until they are all dead.” The fact is that the situation for overseas pensioners will get worse until we can establish a fair principle right across the board.
I do not want to repeat all the speeches I have made in the past, but briefly and clearly, we have to ask Ministers: when will the time come when a Minister of a Conservative, Labour or coalition Government of any kind can stand up and say that they will put before Parliament, or accept from Parliament, proposals that are fair, logical and right?
It is a pleasure to follow the hon. Member for Worthing West (Sir Peter Bottomley), who made a gracious and fine speech about why this House, working cross-party, must deal with this issue. I commend all the other Members who have spoken in this debate, too. Let me say to the Minister that I suspect this is the last time in this Parliament that we will be discussing pensions matters. I have always enjoyed our spats across the Dispatch Box. I know he is an honourable and decent man, and I ask him to reflect carefully on all the speeches made this afternoon and to give us an indication that the Government are prepared, on the basis of affordability, to deal with this very real injustice that too many people are facing.
I am grateful to the Backbench Business Committee for granting this important debate on a motion standing in my name and that of the hon. Member for North Thanet (Sir Roger Gale). I am also grateful but saddened by the fact that we have to be here today debating this issue, which is fundamentally about fairness and which should, as has been said, have been resolved many decades ago.
The motion addresses the rights of just over 1 million UK pensioners who live overseas. We are talking about those who have paid national insurance on the basis that the payments made to the UK Exchequer entitle an individual to a UK state pension. When someone makes national insurance contributions, building up their entitlement, there is nothing that suggests that their right to a full pension will be determined by where they choose to live in future. Each individual has earned that entitlement, and it should be honoured. It is a simple matter of entitlement in what ought to be a contractual arrangement.
The Government repeatedly call the state pension a benefit, but that argument is undermined by the basic principle that entitlement is earned by making contributions. To achieve a full UK state pension, a person needs to have accrued 35 years of payments. In such a regime, why should someone’s place of domicile affect their rights? The UK is the only member state of the OECD that does not confer full pension rights, including the annual uprating of pensions, to those who have made contributions. It is simply not right that we discriminate against pensioners because of where they live; and let us make no mistake: that is what it is—discrimination. It is a failure of the United Kingdom to accept its responsibility to give full pension entitlement to those who have earned that right.
A person’s entitlement to the annual uprating of the state pension is determined by what country they live in. Some 679,000 UK pensioners who live in other countries do get the annual uprating, but there are 551,000 whose pensions are frozen at the level at which they first received their state pension when living abroad. Someone who is now aged 90 who had retired aged 65 in April 1991 would, had they qualified for pension uprating, now be receiving £119.31 per week; if their pension was frozen at the 1991 level, their weekly pension would be £52 per week. That is without justification. Such an individual would have lost out on £39,489 of pension income over a 25-year period as a consequence of their being in receipt of a frozen pension and denied their full rights. Think about what that means: by refusing to grant uprating, we are impoverishing our pensioners.
The average amount received by a pensioner with a frozen pension is just £2,258 per year, whereas the average for a pensioner living in the UK is £7,198 per year. We are denying pensioners income that rightfully ought to be theirs. Many will have to receive support from relatives, or perhaps they will have to return to the UK, where the cost of supporting such elderly residents is invariably higher when health and other social costs are taken into account. We also have to think about the fact that many people came to this country to work, often for many decades, and want to return to their country of origin in retirement. Such folk are put off by the reality of potentially being penalised through the receipt of a frozen pension. Where is the humanity in this? Where is the dignity in stopping people who have given long service to this country and paid their way retiring as they wish? They want to know that they will receive their full pension rights. This is a wrong that we must deal with. People who come to this country should not be penalised when they choose to go home.
Other countries see the current situation as a diplomatic grievance, and that will no doubt be a factor when the UK discusses trade deals. Other countries are going to turn around and say, “You want a decent relationship with us, but you are not prepared to treat your pensioners who live in our country fairly.” The fact that we are unique in the OECD in not accepting our obligations does not go down well with other Governments. We need to show leadership, and that we will stand by those who have earned a pension entitlement.
The International Consortium of British Pensioners has been mentioned by many speakers. I commend the consortium for the work it has been doing with the all-party group and the research it has conducted, which shows that because of the lower health and social care costs of somebody not living in this country, there is a saving of £1,575 for every pensioner who moves abroad. Such savings would partly offset the costs of annual uprating.
The House debated frozen pensions on 11 May last year. This debate follows other debates on this matter going back over the past few decades. The hon. Member for Worthing West mentioned Winston Churchill at the turn of the century; indeed, his grandson, also Winston Churchill, was involved in this matter, too. I have been sent a copy of a letter sent in 1993 by the younger Winston Churchill, the then Member for Davyhulme, to a retired pensioner living in Australia called Victor Humphries. Churchill stated in his letter that he hoped the
“Government may be shamed into taking steps to honour its commitment to expatriate pensioners”.
He went on:
“I have no doubt that if sufficient weight of Parliamentary support can be demonstrated for redressing this clear injustice, the Government will have no alternative but to back down.”
Winston Churchill was right in 1993, and all the Members who have spoken in this debate are right in 2017. It is shameful that, collectively, we have not yet dealt with this issue.
There is, of course, a topical aspect to the debate. Brexit hangs like a black cloud over this issue. Of the 679,000 UK pensioners who do receive an annual uprating, 492,000 are currently protected by the social security provisions of the EU single market. What is going to happen to the rights of those 492,000 UK pensioners post-Brexit? Will the Minister commit today to the continuation of the annual uprating for those living in EU member states? We often hear from the Government how they want to protect the rights of UK citizens living in Europe. Many of those citizens will be listening to or will hear about this debate. They will be concerned about their pension rights to the extent that, in the absence of any guarantees, many will consider whether they might not be able to afford to continue to live in an EU member state. The Minister can deal with that uncertainty today.
Does the hon. Gentleman agree that it is inconceivable that this Government, or the Government after the election, would not guarantee uprating to British pensioners who live in the EU 27? As my hon. Friend the Member for North Thanet (Sir Roger Gale) said, it is therefore inconceivable that justice would not come at the same time for the people who have been denied it for so long. That would be discrimination of the worst sort.
I concur 100% with the hon. Gentleman; he is absolutely right. We have the opportunity today to deal with this matter and with the uncertainty facing UK citizens who live in Europe. That would be the right thing to do. As has been demonstrated, the cost of doing this for other British citizens would not be all that great. We can actually deal with this matter today if the Minister will recognise that it is a matter of good faith. As we go into the election campaign, I implore us all to make the commitment, collectively, to deal with the injustices we are discussing. If he so chooses, the Minister can remove the uncertainty today, or he can at least give us an indication that the Government are prepared to do something about this issue.
A further 186,000 UK pensioners live in countries with which the UK has a historical bilateral agreement on social security, including the US. A total of 551,000 UK citizens live in countries in which their pensions are frozen, with the largest numbers being in Australia where there are 246,000, and Canada where there are 144,000. The all-party group has met members of the Canadian diplomatic community, and I can tell the House that they are less than impressed with the behaviour of the UK Government on this matter. We are offending our international friends with our failure to take action.
We often hear about a postcode lottery; this is a national lottery, but one in which 551,000 British pensioners are paying the price. I am glad that the motion has cross-party support, and hope that the Minister will recognise the nature of that support and that we are all appealing to the Government to signal that there is an obligation on them to see sense on this matter. I look forward to the Minister’s response, and I hope we will hear from him that the Government are prepared to take action. It is about doing the right thing, and standing up and recognising that all pensioners, irrespective of where they live, deserve to be treated equally.
When we consider that the Government are lifting the limit on the period that UK citizens may live abroad but vote here from 15 years to their entire lifetime, we have to ask why the Government would want to confer voting rights on UK pensioners but deny them full pension rights? Perhaps the Government should reflect on the fact that more than 1 million UK pensioners live overseas. Those pensioners may have a reason to want to register to vote in this coming election campaign, given the infringement of their pension rights. As the hon. Member for Worthing West mentioned, there are 264,000 registered overseas voters—400 per constituency. Can Members imagine the threat to MPs up and down this country if frozen pensioners and others decided that they were going to exercise their franchise? With an election coming, a rise in registrations may just help focus the mind of the Government. What drives the decision-making process of the Government? Is it cost saving, or is it about accepting our obligations to meet a commitment to paying pensions regardless of country of residence?
I appreciate that the Minister will have been told by the Treasury not to offer anything. I know that he is a loyal Government servant and I understand his position. Let me, if I may, try to help him by strengthening his arguments with the Treasury. The right hon. Member for Tatton (Mr Osborne), the previous Chancellor of the Exchequer, said during a debate on the Pensions Bill in the 2003-04 session, when acting as the shadow Chief Secretary to the Treasury:
“If the system worked in the way that most people think, it would not matter where a person lived.”––[Official Report, Pensions Public Bill Committee, 18 March 2004; c. 256.]
I have to say that, on this occasion, I agree with him; it should not matter where a person lives. I appeal to the Minister to reflect on the words of his friend, the former Chancellor of the Exchequer. Those words were spoken when the right hon. Gentleman was in opposition, but each and everyone one of us should be judged by our deeds in government. It is not good enough to say the right thing when in opposition and then, when in government, claim that it is all about cost. We should be judged by our deeds, and today we have that opportunity. I implore the Minister to do the right thing on this issue today.
I have faith that the Minister will listen to reasoned argument and recognise that this is an injustice that needs to be corrected. Let me deal with the issue of affordability. The Government like to claim that the cost of unfreezing pensions is unaffordable. Ministers have sometimes cited numbers in the billions, but any such claim is highly misleading. The motion for debate proposes the withdrawal of the Social Security Benefits Up-rating Regulations. That would include previously frozen pensions in this year’s 2.5% increase, which would cost £30 million. Assuming that this inclusion continued in subsequent years, the total cost would rise by around £30 million extra each year.
The ICBP has historically campaigned for pension parity, bringing currently frozen pensions up to UK levels immediately, which would cost £580 million, but that is not what is being proposed today. Any higher number cited by the Government involves looking at the cumulative cost over a longer period, which is not how new policies are usually assessed and is therefore misleading. The additional cost of uprating at 2.5% over the next five years would have a cost in year one of £30 million, rising to £33 million by year five, by which time it would have a cumulative cost of £158 million. Let me put that in context: the bill for UK state pensions is currently £86.8 billion. Partial uprating is equivalent to 0.03% of current pension spending.
Let me assist the Minister again. We are all aware that there is a separate national insurance fund, and we know from the Government Actuary’s Department that it is anticipated that that fund will have a surplus of £30.7 billion this year. Clearly, the cost of doing this can be met from the surplus that currently sits in the national insurance fund. Of course this is affordable. This is about our obligation to our pensioners and the human cost of not meeting those obligations. We need to listen to the voices of those who are discriminated against by our failure to pay full pension entitlement.
I will close now with some quotes. I know that the hon. Member for North Thanet has eloquently presented us with some human experiences, but let me just add to them, because at the end of the day it is the cost for the individuals that should concern us. Abhik Bonnerjee is 72 years old and now lives in Kolkata, India. After contributing to the British economy for 38 years, he is now scared of losing his home as he is struggling to survive on his frozen pension. He is considering moving to an unfrozen country. He said:
“The Government should be doing more, especially for Commonwealth countries, and MPs can’t explain why they are not.”
Bernard Jackson, 91, moved to Canada, but was forced to return to the UK in order to obtain his full pension. He said:
“I was brought up to believe that Britain was a fair country. It’s a disgrace, it has to end. It’s terrible to meet pensioners over here who say they have to come back to Britain because they can’t manage.”
I am grateful for that intervention. I agree with the hon. Gentleman, and it is up to us to demonstrate that fairness. Why should people who have emigrated from the UK be put in this position? They have a pension entitlement, but they have to return here to get what is theirs. That cannot be right. That is not something that we should support.
Joe Lewis, 90, lives in Canada and has recently lost his wife. He will be moving back to the UK as he can no longer cope with his frozen pension. After suffering a severe fall, Joe is increasingly struggling to afford living and medical costs. The only way he can make ends meet is to use up all his savings. Joe says:
“All I want is my full state pension, which I have paid into my entire life.”
Why should Joe not get something for which he has paid? That is the salient point. Joe and everyone else we are talking about have paid national insurance. This is an entitlement.
George Gray, 77, now lives in South Africa. He paid national insurance for 48 years until reaching retirement at 65. He was completely unaware of frozen pensions until it came to applying for one. He states:
“I was even told that getting our state pension was not a right, but merely a benefit from the British Government that could be amended at any time - but I’ve paid for it all of my working life.”
Anne Puckridge, 90, now lives in Canada. She worked in the UK up to the age of 76, paying mandatory national insurance contributions, and now has a frozen pension. She says:
“The Government should be doing more, especially for Commonwealth countries, and MPs cannot explain why they are not.”
Jane Davies, 70, now lives in British Columbia, Canada. She worked in the NHS for more than 20 years, helping hundreds as she worked in rehabilitation and elderly care. She was unaware that pensions could be frozen. She has said:
“It’s outrageous when you think that it’s mainly Commonwealth countries that are affected, especially when Canadian pensioners living in the UK receive a full pension.”
That is why the Canadian Government are so exercised about this. They pay a full pension to their citizens living here, and yet we fail to reciprocate.
Wendy Moss now lives in Australia. She moved there in 2002 and was completely unaware that her pension would be frozen. She says:
“I am looking into a potential return to the United Kingdom, but need to ensure that my family can make the journey back with me.”
In conclusion, these stories are heartbreaking. Let this House show that we can deliver compassion and recognise injustice. Let the Government commit to fixing this issue before we go out and campaign. Let us show that we are prepared to do the right thing. When we are back, I will look forward to legislation being passed to fix this and to fix the injustices for the WASPI women as well.
It is nice to see you in the Chair, Madam Deputy Speaker. I am glad to have the opportunity to respond to the debate on behalf of the Scottish National party. I thank the hon. Member for North Thanet (Sir Roger Gale), who chairs the all-party parliamentary group on frozen British pensions, for securing the debate and congratulate him on an excellent speech; he is a strong advocate for pensioners and I am sure that they are lucky to have him. He stated that this is a matter of moral responsibility and that today gives us a chance finally to address it. He highlighted the plight of many ex-pat pensioners and concluded that the Government cannot afford not to pay.
The hon. Member for Leeds North West (Greg Mulholland) made an excellent contribution, noting that successive Governments of all colours have failed these pensioners and making the important point that those people do not have an MP of their own, and that when they come to us with their cases we cannot take them on.
The hon. Member for Worthing West (Sir Peter Bottomley) talked about a personal situation and the disparity between countries. He made the important point that the number of people living abroad and registered to vote will only increase, so perhaps we will then take more notice of them. He said that these proposals are fair, logical and right. I also thank all Members who contributed through interventions.
Today’s debate is yet another example of this Government’s atrocious handling of state pensions, which is a typical representation of the disdain and contempt with which the UK Government hold our older citizens, whether they are resident here or overseas. The Tories have ducked their responsibility to pensioners too many times, sticking their heads in the sand and ignoring the backlash, whether from the steadfast WASPI women—the Women Against State Pension Inequality Campaign—or the International Consortium of British Pensioners. It is time the UK Government faced up to reality: pensions are not a privilege; they are a contract, and the UK Government continue to break that contract.
It is clear from today’s debate that the SNP is standing up not just for Scotland’s pensioners, but for British pensioners around the world. Our track record in this Parliament speaks for itself: while the UK Government recklessly abandoned their obligations to the WASPI women, it was the SNP that rolled up its sleeves and did the work that the Government should have been doing, and it was the SNP that commissioned independent research proving that the Tories’ figures are completely wrong, and that the UK Government can afford to right the wrong they have done to the WASPI women. We therefore call for a great injustice to end for British pensioners living overseas.
Around 7.5% of British pensioners live abroad. As my hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford) explained, entitlement to receive the state pension relates only to the national insurance contributions made during a recipient’s working life, not to their place of residence. Despite that, the UK takes a wildly inconsistent approach to uprating state pensions. More than half a million pensioners—almost half of those living overseas—are excluded from uprating. My hon. Friend also made the point that their pensions are effectively frozen at the level at which they first received them abroad. Worse still, the vast majority of those with frozen pensions live in the Commonwealth—around a quarter of a million of those affected live in Australia, and almost 150,000 live in Canada.
Those people are not immune from the effects of inflation, yet they are forced to cope with their rising costs of living on a static income. As we can imagine, that has a major impact on their lives. A pensioner who made the required national insurance contributions in order to be eligible for a full state pension, but who has moved abroad and had their pension frozen, stands to lose out on a substantial amount of money. A 75-year-old who retired in 2006 will have lost out on over £10,000. An 81-year-old who retired in 2000 will have lost out on an eye-watering amount—over £22,000. Those are substantial figures, which no doubt put great strain on the lives of those affected, yet this Government seem not to care.
That is hardly surprising, because this Government do not overly concern themselves with pensioner poverty at home, so how could we expect them to give a monkeys about impoverished British ex-pats? I recall that during the 2014 Scottish independence campaign pensioners were fed no end of nonsense about the risk to their pensions in an effort to panic them into voting no. The reality is that this great, fantastic Union, with its mighty broad shoulders, offers one of the most shamelessly pitiful and paltry pensions in the world. Only two countries in the OECD pay poorer pensions than the UK. The OECD 2015 report “Pensions at a Glance” showed that countries such as Turkey, Russia and Greece pay significantly bigger retirement incomes than we do. We should be utterly ashamed of our state pension system and, by extension, of how we treat our pensioners.
It is not just this Government who should shoulder the blame, because our pensioners have been seriously let down by successive Westminster Governments. When the OECD report was released, Tom McPhail, head of retirement policy at Hargreaves Lansdown, said:
“This analysis makes embarrassing reading for the politicians who have been responsible for the UK’s pensions over the past 25 years”.
I must admit that I cannot disagree with that assertion.
I am sure that current pensioners and those due to retire in the near future will have little faith in what is to come. I am sure also that they will be poring over party manifestos in the coming weeks, looking for a commitment to continue the pensions triple lock. The Cridland report will have worried many people, specifically because of its recommendation to drop the lock. Indeed, this Government have guaranteed it only until 2020. The upcoming general election provides an opportunity to guarantee it beyond that. However, that would be of little comfort to overseas pensioners suffering with frozen pensions.
Likewise, that guarantee will be of little comfort to British pensioners living in the EU, who simply do not know whether the same fate will befall them, with no guarantee that their pensions will be uprated following Brexit. When the UK leaves the EU and the single market, the Government will no longer have a legal requirement to uprate state pensions. Without a new and reciprocal social security agreement agreed as part of the Brexit negotiations, almost half a million EU-resident British state pensioners could face a frozen pension. Those pensioners deserve to know where they stand.
The pensioners living overseas with frozen pensions deserve justice. Contributing to the state pension is compulsory. The Government are effectively discriminating against retirees, based solely upon where they live, despite their having made the same national insurance contributions. That discrimination is leading to pensioner poverty and a loss of independence, and it is even forcing pensioners to return to the UK without their family.
The International Consortium of British Pensioners informs me that most of the pensioners affected did not know that their pension would be frozen if they retired in some countries abroad. Just as we have seen with the WASPI women, sharing of information with retirees is lacking. As the hon. Member for Leeds North West mentioned, the policy is also leading to discrimination against ethnic minorities. The frozen pension policy has a particularly significant impact on the life choices of those in British black, Asian and minority ethnic communities, who retain close cultural links to many Commonwealth countries where pensions are frozen.
The Government might claim that the cost of unfreezing pensioners is unaffordable. Ministers have sometimes cited numbers into billions of pounds. The motion proposes the withdrawal of the social security benefit uprating regulations, which would include previously frozen pensions in this year’s 2.5% increase, the cost of which is just £30 million. Assuming that that inclusion continued in subsequent years, the cost would rise by around £30 million extra each year. When this Government are renewing Trident, at a cost of hundreds of billions of pounds, it is indefensible to say that this uprating is unaffordable.
It is time the UK Government started getting it right for pensioners. It is time that priorities were put right. Let us stop pouring endless amounts of public cash into weapons of mass destruction and start treating people with the dignity and respect they deserve in their later years.
I thank the Backbench Business Committee for granting the debate and congratulate the hon. Members for North Thanet (Sir Roger Gale) and for Ross, Skye and Lochaber (Ian Blackford) on securing it, and I thank all Members who have contributed.
I have spoken many times in this Chamber and in Committee about the injustice within our pensions system. On numerous occasions, I have highlighted how the Government have let down the WASPI women and vulnerable pensioners more widely in society. Today it is overseas pensioners. The upcoming general election gives us an opportunity further to highlight such issues and the need for greater transparency in the pensions industry. I hope that those issues, and the issue of pensions uprating for overseas pensioners, get plenty of attention over the next seven weeks.
Today, all pensioners, at home and abroad, want to know whether the Government will ditch the triple lock on 3 May, in line with the Secretary of State’s answer to me on 9 January, when I confirmed that Labour’s commitment was for the longer term. Will the Minister confirm that the Tory triple lock is at an end, or is the commitment to 2020, as declared by the Secretary of State in November on “Peston on Sunday”, and as was suggested to be the case by the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier)?
The pensions of those living overseas are a hot topic for hundreds of thousands of people, many of whom have seen their British state pension frozen—in some cases, for decades. Like the hon. Member for Leeds North West (Greg Mulholland), I will not be writing a manifesto, but while he cannot guarantee that partial uplifting will be in the Lib Dem manifesto, it will certainly be in the Labour party’s.
As the law stands, there are 551,000 UK pensioners living abroad, in countries such as Australia and Canada, who have had their pensions frozen at well below the level paid to pensioners still living in the UK, according to the International Consortium of British Pensioners. While UK pensioners receive up to £155.65 a week, a person who retired in 2000 and moved to either Canada, India, Australia or one of hundreds of other countries receives just £67.50.That does not grow with inflation; in fact, it does not grow at all, leading to a continuous reduction in real-terms income, a loss of independence and, eventually, poverty for hundreds of thousands of pensioners across the globe. As we have heard from their champion, the hon. Member for North Thanet, all these people contributed tax and national insurance to the UK throughout their working life, and they are now penalised because they choose to live in a different country, perhaps to spend their retirement closer to their families.
Without uprating, recipients reliant on their state pension income could find themselves increasingly impoverished, leaving them unable to afford a basic standard of living and increasingly dependent on relatives, and they may be forced to return to the UK—we have heard many examples of that during the debate. Surely it is time that this country established a fair system to support our pensioners regardless of where they choose to live. Those who have spent their life working to contribute to the national economy should be supported in the manner they deserve.
Over recent decades, it has become increasingly clear that we live in a globalised world—a world that sometimes requires people of all ages to move across borders to Europe, the US or Canada, or sometimes further afield. As we look to our new future out of the European Community, but working in a more comprehensive partnership with the wider world, I ask the Pensions Minister to do what other Ministers, Labour and Tory alike, have failed to do, and start increasing overseas pensions now.
Why, in this globalised world, should the country in which a person retires—by choice or for other reasons—affect the pension they have worked hard to earn for 45 years or more? Why should the country a person collects their pension in affect their standard of living? Why should it affect their ability to enjoy their retirement and buy the essentials in life? That does not sound like a fair system; it sounds like a system that leaves hundreds of thousands of pensioners uncertain about their future, their financial position and, ultimately, their wellbeing.
There are those who argue that overseas pensioners spend their cash in economies other than ours, that they no longer pay tax here—if they have the income to do it—and that they make no contribution to our society. However, some may remind us that our overseas pensioners do not access our national health service, and nor do they require support from social care and other services. As has been said, for the relatively small cost of £30 million this year, the UK could begin a system of partial uprating for pensioners living overseas. For 2018, that would cost £30.75 million, and the figure would continue to increase at roughly the level of inflation.
This is about not a costly backdating of pensions uprating, but a way to begin to rectify the injustice of the overseas pensions system. We should prove that we care about the wellbeing of UK pensioners abroad and care about the vulnerable in society. Our message to the Government should be that that should translate into a fair pensions system.
As others have said, the issue of overseas pensions is of even more pressing concern due to the recent invoking of article 50, with a lack of clear Government policy around much of the Brexit process. Many expats who have retired within the EU face an uncertain future, and I have heard nothing about the protection of British people’s pensions in EU countries once we have left.
In addition to people being left uncertain about their immigration status, health benefits and many other issues, the Government’s inability to commit to policy in Brexit negotiations has left 472,000 retired UK nationals living in the EU uncertain of what the future holds for them. We do not know whether a deal will be made to ensure that UK pensioners living in the EU receive the full pension they are entitled to. The Government will not tell us whether that is even on the cards. Perhaps the Minister can update the House today. Will British pensioners living in EU countries have their pensions protected after we leave? The right decision—to uprate overseas pensions now—would send the right signal to pensioners in the EU that the Government have a plan and that they will be protected.
The ambitions of the nearly 700 overseas pensioners who have emailed me directly go well beyond the proposal to start uprating pensions now. I recognise that restoring pensions to the levels of today would be a huge stretch for any Government, never mind one that has such a recent record of slashing everything from bereavement income to in-work benefits and of denying mentally ill people, among others, the personal independence payments they need, but we need to start somewhere.
We have always prided ourselves on being a caring country. We are one of the largest net providers of foreign aid in the world, and rightly so. We must, however, ask why we do not feel the need adequately support our pensioners who have retired abroad. An increasing number of modern countries uprate pensions to those living overseas in line with inflation, regardless of where those pensioners reside. Today, we must consider why the UK is not doing the same.
As a modern, compassionate nation, we must look to provide all our pensioners with enough financial support to allow them to enjoy their retirement, as they deserve. Labour has laid out its pledges to pensioners in the last few weeks—maintain the triple lock, compensate the WASPI women and preserve the universal winter fuel allowance and free bus passes. Will the Minster join us in our other pledge—to protect the pensions of people living overseas? It is just the right thing to do.
I hope we would all agree—I know you have been in the Chair for only some of the debate, Madam Deputy Speaker—that we have had an interesting debate. Before I attempt to address the points that have been raised, I would like to thank those who have spoken. In particular, I thank my hon. Friend the Member for North Thanet (Sir Roger Gale) and the hon. Member for—I have been practising this for quite a long time—Ross, Skye and Lochaber (Ian Blackford) for securing the debate, which has been wide and varied. It concerns an important subject, which I do not take lightly.
The hon. Gentleman was very kind in the comments he made about me, and I would like to say something about the way he has conducted himself while I have been Pensions Minister. I have disagreed with him and the Labour party spokesman, the hon. Member for Stockton North (Alex Cunningham), on a lot of things, but we have also agreed on a lot of things. However, when we have disagreed, we have discussed things properly in this Chamber, in Committee and personally, and I wish all Government and Opposition relationships were like that.
On this particular subject, however, I have to say that I disagree with a lot of things that the hon. Member for Ross, Skye and Lochaber and my hon. Friend the Member for Worthing West (Sir Peter Bottomley) have said.
I know that that remark may have been addressed to just some of the things we said, but one of the things we said was that what is happening at the moment is not fair, not logical and not right. Is the Minister trying to say that it is fair, logical and right?
Well, it is about the subjectivity of those words, if I may say so. I will try to address some of the points he made, but I cannot successfully answer his cricket team question. However, given that our civil servants will probably have less to do over the next few weeks than they have had to do over the last few weeks, I will formally write to him. As a child, with “Wisden” and everything else, I would probably have been able to answer his question myself, but I am afraid I cannot do that now.
As I was about to say before I was hit for six by that intervention, the United Kingdom state pension is payable worldwide, regardless of the recipient’s country of residence or their nationality. I say that formally on the record because were I a member of the public watching the broadcast of this debate or reading it in Hansard, I could quite easily get the impression, when we talk about scandals and things like that, that people were leaving the country and not getting their pension at all. The state pension is paid to people who are entitled to it when they leave the country, but increased—“uprated” is the expression in this context—abroad every year only when the recipient is in certain areas: in the European economic area, Switzerland, or a country with which the UK has a specific reciprocal agreement that allows for uprating. This is a long-standing policy that has remained consistent for about 70 years, and, as has been said, it has been the policy of consecutive Governments of all persuasions.
I recognise that this subject arouses strong opinions, and some of the language used is very concerning. Please do not think, Madam Deputy Speaker, that I think that the language used has been improper in any way, but it is very strong language about people suffering hardship and so on.
Does the Minister appreciate that there is clear evidence that people who have gone to live abroad have come back because they do not feel they can manage on a frozen pension? There is clear evidence that people feel that they have been affected quite significantly by that situation.
I do not disagree with that, but people also return for many other reasons. When people decide to emigrate and live abroad, they do it for a number of reasons. They take into consideration the cost of living generally and the cost of property, or food, drink and entertainment—whatever it may be—and the pension is part of that. Similarly, when they decide to return, part of the reason might be whether their pension increases by the rate of inflation, but I suspect that there are many other reasons as well—for example, ill health, getting older, and family issues. I could not dispute what the hon. Gentleman said—in fact, I would never try to dispute what he says—but it is part of the picture and it is not right just to pick out that particular point.
I felt it my duty when taking on this portfolio to speak to as many people as possible. In November last year, I attended a meeting at Lancaster House—a very grand venue—where there were leaders from the overseas territories. It was a big Joint Ministerial Council. I met many of the people mentioned by my hon. Friend the Member for North Thanet, from Montserrat, the Falkland Islands and elsewhere. They were very impassioned people who gave a series of speeches that were basically saying the same thing. That has been reflected in what has been said today. Several hon. Members, including my hon. Friend, referred to people not having parliamentary representation. That point was made strongly by the hon. Member for Leeds North West (Greg Mulholland). I was born and brought up in that constituency, so I accept what he said about its minority communities; I was a descendant of one of them. I could only say to the people at the conference that I was there to listen. It seemed from what they told me that Ministers of all persuasions have politely declined such an invitation before. I know that this is a very impassioned debate. People do feel very strongly about it, and it is not something that I take lightly.
Several contributors, including my hon. Friend, said that because all workers pay their national insurance contributions towards their state pension there is a moral right that they should receive an uprated state pension wherever they live. Moral rights are very subjective, but I know exactly what was meant. However, the rate of contribution paid has never earned entitlement to the indexation of pensions payable abroad. That reflects the fact that the scheme overall is primarily designed for those living in the UK, and it operates on a pay-as-you-go basis. Contributions paid into the fund in any one year contribute to the expenditure in that year. That is the way that public finance works. The contributions provide a foundation for calculating the benefits, but they do not pay for those benefits.
The hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) mentioned the national insurance fund. It is convenient to bring this up in debates, but in reality there is no surplus in the national insurance fund because it is all used to pay contributory benefits. It is basically a system of public accounting. The £16 billion that was mentioned is two months’ expenditure. It is just an advisory level for the fund suggested by the Government Actuary because it is a prudent working balance. It is not like having a bank account where we can say, “Oh, we’ve got a surplus—let’s use it.”
We all understand and accept that it is a pay-as-you-go system, but that does not detract from the fact that when someone pays national insurance, it is on that basis that they are earning entitlement from that mechanism. As for the national insurance fund, the surplus is actually £30 billion, and it needs to have—the Minister is right—two months’ cashflow within it, which is £16 billion. So the point remains the same—the money is there to do this.
I think, as we do on many things, the hon. Gentleman and I will have to agree to disagree on that, but we both fully understand each other’s arguments, I am sure.
The point about cost has been made very coherently. The Government generally take the view, of course, that the first priority is to ensure that older people in this country have an adequate income in retirement. Uprating all state pension payments in full to the rate currently paid in the UK, regardless of the recipient’s country of residence, would cost about an extra £500 million a year, increasing significantly over time. While that may not have been specifically argued for in this debate, people in favour of the motion are talking about a moral argument, not a legal argument. Many of us are here because we believe in moral arguments generally in our political lives, and I hope in our personal lives as well. That is why many of us do the job, so please do not think that I am pooh-poohing the idea of a moral argument. However, both systems of calculating this could be seen as being based on a moral argument.
This debate has been predominantly about so-called partial uprating. I understand this to mean not to uprate fully but to uprate the current level of state pension that the person is receiving through the triple lock or equivalent from a future date, and only pay uprating going forward with no arrears. I had to look at that very carefully when I saw that we were having this debate, because partial uprating can mean different things in different contexts. It is superficially a very attractive argument to say, “We could do this because it’s a few million pounds a year—tens of millions, not hundreds or billions.” It is not like the cost involved in the case of the WASPI women; the hon. Member for Ross, Skye and Lochaber correctly mentioned that some independent research has been done on that, which I have read very carefully. That would cost billions of pounds, but this is about tens of millions of pounds, which, on the face of it, sounds like small change within the full scale of Government expenditure.
It is only a matter of time.
Maybe not in this life.
To return to the serious point, on the face of it, tens of millions of pounds does not seem a lot, but the annual costs of the policy would converge with those of full uprating in the medium to long term. That compounds the situation, because if we changed the policy now to either full or partial uprating, in 25 or 30 years, the vast majority of pensioners—they would be new pensioners—would receive pension payments as if they had been uprated for the whole time. Everyone knows that, whichever Government are in power after the election—I think the hon. Member for Leeds North West suggested that they would be of a certain colour, although I may have misunderstood him—resources are scarce, and Governments have to make judgments about how best to use them. That is what government is about.
Although the proposed spend each year might appear to be small, it would soon add up to a much more significant £500 million extra each year on about 500,000 pensioners. That might look to others as though the Government were disproportionately favouring those who have gone abroad. Much of that spending would not in fact increase the money that a poorer pensioner living abroad would receive. In Australia, for example, the age pension is means-tested, with the Australian Exchequer in some cases keeping up to 50%. New Zealand, too, requires people with overseas pensions to claim them; they are then taken into account, and the New Zealand benefit or pension is reduced by the amount of UK pension. In addition, since most people who move abroad to those countries do so before they have reached pensionable age, most would have been able to build up decent pension provision in the country to which they emigrated, if they went when they are younger.
For most people, the decision to move abroad is voluntary; it remains a personal choice dependent on the individual’s circumstances. The Scottish National party spokesperson, the hon. Member for Rutherglen and Hamilton West, said in her summing up that people may not have been aware that they were moving to a country with different pension arrangements. Others have mentioned the line and short distance between Canada and America. However, people who move abroad find out about so many things, including visas; they have to.
I apologise to you, Madam Deputy Speaker, and to the Minister for not having attended this debate. I had intended to do so, but I had other commitments. As I shall shortly be leaving the House, perhaps I could put on the record my support for our overseas pensioners, who have been badly treated. Many of them have almost been obliged to move abroad for family reasons, so it is not the case that they all made a voluntary choice. In many cases they felt obliged to move to support their families and they feel trapped. They also feel a sense of betrayal.
I perfectly accept that in some cases people have no practical choice, but many who emigrate decide to do so for a number of reasons, including personal ones. When people move away, pensions are, by and large, part of their calculations, as is the cost of living.
The hon. Member for Ross, Skye and Lochaber was eloquent, as usual, in making his point about uprating the state pensions of people residing in the European economic area and Switzerland. It is a requirement of UK law that those payments be the same as those made in the UK. However, as everyone is aware, the article 50 process is under way, and in accordance with what happened in the referendum and everything that has been discussed in this House, the UK is leaving the European Union. The Prime Minister has made clear that securing reciprocal rights is one of the top priorities. The rights and entitlements that will apply following the UK’s exit, such as those relating to the UK state pension paid to individuals living in member states, are subject to the wider negotiation on our future relationship with the EU. The Government have made it clear that we plan to strike an early agreement on the rights of EU citizens living in the UK and, obviously, vice versa. As the Prime Minister has said, it is in no one’s interests for there to be a cliff edge when we leave the EU, so the current laws and rules will, wherever practicable, continue to apply, to give certainty to individuals and businesses.
We understand the limitations on the Minister, and I hope that anything we think will not be taken personally by him or anyone else. I remind him of the Old Age Pensions Bill debate on 10 May 1907, when the Member moving the Bill’s Second Reading said that Chancellors always want to stop people getting “Money! money! money!” My hon. Friend has said that we are now likely to make decisions that will affect hundreds of millions of people, so surely now is the time make a small change for fewer than 500,000 people. I ask him to commit to revisiting the issue after the election and to looking at it properly.
I thank my hon. Friend for his intervention. Perhaps he was present during that debate in 1907; I was not, but I look forward to reading about it.
Those who are eligible for a UK state pension can have their pension paid wherever they choose to live. The rules governing the uprating of pensions are straightforward, widely publicised and have been the same for many years. The Government’s position remains consistent with that of every Government for the past 70 years. The annual costs of changing the long-standing policy will soon be an extra £500 million, which the Government believe cannot be justified.
I am grateful to all hon. Members on both sides of the House who have contributed to this debate, which will have been watched by many people around the world. We are proud to live in a country that has a reputation for fairness and non-discrimination. There is an injustice, and my hon. Friend the Minister knows that. To say that the situation has been widely publicised and that it has been the same for many years does not make it right. It has been wrong for many years, under successive Administrations. It will go on being wrong, and people like me and my colleagues will carry on until we get a resolution.
I understand that the Minister is not in a position to make a concession this afternoon, and I did not expect him to do so. I will ask him just one thing. When this debate was called, none of us had any idea that there was going to be a general election. To some extent, inevitably that has coloured some of the remarks made this afternoon. I have deliberately not pulled my punches, because that is not what I do. I just say this, in friendship, to the Minister. Will he please have a serious discussion with the Secretary of State for Work and Pensions—one of my Kent colleagues—about how we can put the matter into the Conservative party manifesto as an election pledge, so that we can resolve this issue on the very modest terms that we have proposed, into which great thought has been put? That would enable us, when we come back in June—I hope that we, at least, will be coming back—to put this issue to bed and allow half a million people living in retirement around the world to sleep more soundly.
Question put and agreed to.
That this House notes the detrimental effect that the Social Security Benefits Up-rating Regulations 2017 will have on the lives of many expatriate UK citizens living overseas with frozen pensions; and insists that the Government take the necessary steps to withdraw those Regulations.
On a point of order, Madam Deputy Speaker. It would be helpful if the Pensions Minister remained in the Chamber. I am grateful to him for his kind words about our working relationship, and I agree that it has been constructive, even when we have disagreed. I hope that you or he can assist with the news given to my office today that the Department for Work and Pensions MP hotline is closing down at midnight tomorrow; staff claim that that is because of purdah coming into effect. That would have a hugely detrimental effect on MPs’ ability to do their job effectively. I am sure that the wheels have moved since I raised the matter with a Government Whip earlier this afternoon, but can you or the Minister confirm the date for purdah and whether hotlines for MPs should close tomorrow evening?
I will have a go at responding to the hon. Gentleman’s question. I do not know the answer to it, but I will find out straight away and communicate it to him. I suspect that this is a matter that is decided by the civil service based on previous protocols about purdah and so on, but I do not feel experienced enough to give him the answer that he wants and deserves.
Further to that point of order, Madam Deputy Speaker. The Minister has been very clear and helpful. If the practice is for such helplines, which are for our constituents rather than for us, to be closed down before Parliament has stopped sitting—before we stop being Members of Parliament—may I suggest, through you, that those who are listening should change the practice and make sure that that happens when Parliament is dissolved, and not simply because an election has been called?
Further to that point of order, Madam Deputy Speaker. The Minister has made it clear that he will communicate with the shadow Minister, but can we ensure that there is communication with all Members of the House if this closure happens? We hope that it will not, because it will impact all our constituents in a very big way.
I thank all hon. Members for their points of order, and I thank the hon. Member for Stockton North (Alex Cunningham) for raising this point. It is important, and I am grateful to the Minister for having responded so positively to it. We will leave it there for now.