Social Security Benefits Up-rating Regulations 2005
Baroness Greengross rose to move to resolve, That this House regrets
that the Government have not considered uprating the state pension
rights of all United Kingdom citizens living abroad in the Social
Security Benefits Up-rating Regulations 2005, laid before the House
on 18 March (S.I. 2005/632).
The noble Baroness said: My Lords, I am delighted that the noble
Lord, Lord Jones of Cheltenham, has chosen to make his maiden speech
this evening in support of this issue. When in the other place, his
commitment to those who were vulnerable through no
25 Oct 2005 : Column 1140
fault of their own was manifest, as was his belief in social justice.
I hope that he will speak immediately after my introduction, because
this Motion is about social justice.
It is a Motion of Regret, and it is with great regret, disappointment
and some anger that I move it. Those feelings are shared by many in
the House and many in the other place—66 MPs, the same as the
Government's majority in the recent election, have signed Early Day
Motion No. 366 in support—as well as among the general public, the
media and especially those who are affected by the freezing of the
state pension—about half a million of our citizens. We all know that
if the Select Committee on Social Security's recommendation in their
1996 report that there be a free vote had actually happened, the
policy would have changed. I sometimes feel that it is only the DWP
that is wedded to it now.
We all know what the issue is: the refusal of Her Majesty's
Government to change their policy to uprate the state pension earned
by all our citizens, wherever they live, on an equal basis. The so-
called state pension freezing affects an arbitrary group of British
citizens, and it is the arbitrariness that is really the trouble.
They are people who happen to live largely in Commonwealth countries
such as Australia, New Zealand, South Africa and Canada, as well as a
host of other, smaller nations including, perhaps most poignantly of
all at the moment, Zimbabwe.
Imagine two brothers living in this country who fought in the Second
World War and who decided to emigrate when their wives died because
the children, one set living in Canada and the other in the USA,
asked them to go and live with them and the grandchildren. The
brother who went to Seattle, near the US border, has had his pension
uprated every year. The one who lives just over the border in Canada
has never had his pension uprated. Just imagine what he feels.
Think of the woman about whom I received a letter—Molly in Australia.
She drove ambulances during the war, worked in France and then in
Germany during the war, is a double amputee now living in Australia
and surviving on the 1986 level of state pension. That is grossly
unfair. I know that the Minister will say the Government won the
Carson case before the Law Lords, so the current policy is legal. It
is legal, but that case was about human rights, not whether the
policy was right, logical or relevant today. One of the judges, the
noble and learned Lord, Lord Carswell, delivered a devastating
indictment of the policy, which I am sure other speakers will
mention. He said:
"Once it is accepted that pensions should be paid to
contributing pensioners resident abroad, then no justification
remains for paying some less than others and less than UK residents".
However, the Minister should not take too much comfort from the Law
Lords' judgment either. In effect, the other four judges were not
saying that the Government's policy was fine and dandy, but that it
was not a matter for them—it is a matter of government policy.
25 Oct 2005 : Column 1141
One of the Law Lords said that the people who went abroad when they
retired should have known that their pensions were going to be
frozen. We all know that hardly anyone in this country understands
our pension system. If you have been bereaved and made a decision to
join your family in another country, with all the upheaval and
difficulty involved, will you really be thinking, "I must bear in
mind that my pension will be frozen"?
The Government should change their policy because it is the right
thing to do. It also affects our friendly relationship with certain
other countries such as Australia, where an Australian minister,
Senator Patterson, recently said that,
"the UK Government's policy is . . . unfair and it should
recognise the compelling moral arguments for paying UK pensioners
their proper entitlements".
The Minister may say that that has been the policy since 1948, but,
if the policy is right, why are almost half the pensioners who went
abroad uprated? I know it is about agreements, but this is about
fairness. The Government need to consider it seriously. I know that
it will be expensive, but it does not mean that it is not the right
thing to do. The end of the Carson case means that the Government
will probably never have to backdate uprating claims now, so why not
review the policy and target only those people in greatest need?
Perhaps that could include the oldest; those who worked in the UK and
then retired after a full working life and went abroad to be with
their children; people who were misled into making voluntary
additional contributions, not realising that their pension would be
frozen; and people who were not given the whole picture by the
Department for Work and Pensions. It is still not clear in the
literature that pension freezing applies in some countries. That
would be a lot cheaper than the overall enormous figure that the
Minister will no doubt quote to me.
I know that the Government's priority is UK-based pensions—I know
that they come first—but there is the huge amount of spending that
the Government have already committed to pensioners, and the pension
credit is an example of that. I understand that it is a regulation
that protects retiring civil servants and Ministers from state
pension freezing, but that is really even more grossly unfair,
especially at the moment when the pensions of civil servants are so
much in the news. The Minister may say that British pensioners do not
contribute to our economy, but they do; they save a lot of money for
the UK economy and contribute as much as the 462,000 UK pensioners
who receive uprated state pensions. Perhaps the Minister could say
what the difference is between all those people.
I want to end by paying tribute to the people who campaign on the
issue. They do it at their own expense and at a great distance and
are really the David to the Government's Goliath. Many are very
elderly themselves, but they are fighting about principle. They
contributed to a British state pension, and successive governments
made a great thing about that contributory principle. They see their
state pensions as deferred earnings, and as something to which they are
25 Oct 2005 : Column 1142
entitled, and it is high time that the Government looked again at
their inflexible stance, especially as we are 60 years from the end
of World War II. It would be great if the Minister would resolve the
issue, and I hope that he will tell your Lordships that he will take
personal charge to do that and discuss with his ministerial colleagues
—including the Prime Minister and the Chancellor—how he will do
something to remove this terrible unfairness and injustice. I beg to
move to resolve.
Moved to resolve, That this House regrets that the Government have
not considered uprating the state pension rights of all United
Kingdom citizens living abroad in the Social Security Benefits Up-
rating Regulations 2005, laid before the House on 18 March (S.I.
Lord Jones of Cheltenham: My Lords, it is with some trepidation
that I speak for the first time in this House after spending the past
13 years in another place, and I hope that noble Lords will be
tolerant as I learn the ropes. I particularly want to thank all those
who have been so kind and helped me during the first few tentative
weeks that I have spent here. In the short time that I have been
here, I have admired the extraordinary array of talent and experience
on these Benches—per head, probably one of the finest gatherings of
brain power in the world.
I do not believe that I was regarded as something of a rebel in the
other place, but I regard it as suspicious that two of my former
Chief Whips joined the House at the same time as I did, no doubt to
keep an eye on my activities. The noble Lords, Lord Kirkwood of
Kirkhope and Lord Tyler, dealt cautiously with me in the other place,
and I hope to receive the same sort of treatment from my new Chief
Whip, the noble Lord, Lord Shutt of Greetland, and his assistants—
although I am deeply suspicious of the noble Lord, Lord Roberts of
Llandudno, who shares an office with me.
A couple of years ago, my cardiologist, who was Welsh, told me that
if I carried on with what he called, "This 80-hour week lark", I
would be taken out in a box. He suggested, "Something more gentle". I
do not know whether he had this House in mind or whether he used his
influence with the powers that be, who decide who enters this House;
but I must say that things seem to be more gentle at this end of the
corridor so far.
I congratulate the noble Baroness, Lady Greengross, on securing the
debate, and I particularly wanted to contribute because, over the
years, I have come across a number of cases showing the effects of
this injustice. Surely, it cannot be right that people who have made
the same pension contributions should be treated differently because
of where they choose to live during their retirement.
I want to use the example of a lady called June, who used to be one
of my constituents in Cheltenham. June's son went to Canada and made
his life there; when she retired from work, latterly in the probation
service, she had intended to move to Canada to be near
25 Oct 2005 : Column 1143
to, but not to live with or to be dependent on, her son and his
family. Then she found out about the frozen pensions rule. She
imagined that it was an administrative glitch and that Parliament
would soon sort it out—so she waited. The rule did not change, so
after almost a decade of frustration she went to Canada anyway
because, as she told me, "I shall be dead if I do not go". She is now
nearly 80 and tells me that she rarely eats meat. She does not want
to be a burden on her son and his family and, like many other British
citizens in Canada, Australia, New Zealand and other countries, she
is angry about being cheated out of what she sees as her proper
pension. As she points out, if her son had made his life in the USA
or the Costa Brava, she would not be penalised by such improper
treatment. Instead of being good ambassadors for Britain, those
people are bitter at being let down by financial discrimination that
they find hard to understand.
I shall make two further points. First, with regard to pensioners
living in overseas British territories it seems bizarre that, except
for those living in Bermuda, Gibraltar and the sovereign base areas
on Cyprus, pensioners entitled to a British state pension who live in
British overseas territories fall foul of the frozen pension rule.
When I was in the other place, I tabled a Parliamentary Question
asking how many pensioners living in British Overseas Territories
were victims of that regulation. The answers, given in a Written
Answer on 23 February 2004 were:
"Anguilla 148 . . . British Virgin Islands 42 . . . Cayman
Islands 95 . . . Falkland Islands (including South Georgia and South
Sandwich Islands) 37 . . . Montserrat 154 . . . St. Helena and
that is, including Ascension and Tristan da Cunha, and,
"Turks and Caicos Islands 15".—[Official Report, Commons,
23/2/04; col. 322W.]
There are currently none in the British Antarctic Territory, British
Indian Ocean Territory or Pitcairn Island, although last week I met
the commissioner from Pitcairn Island, who tells me that he will be
caught by the regulations. That makes a total of 562 people. In the
two other British Overseas Territories where the pension is not
frozen, in Bermuda and Gibraltar, a total of 1,454 received the
annual uprating of their pensions. So almost three-quarters of those
who qualify living in overseas territories are treated properly.
I also asked what it would cost to unfreeze those pensions without
paying arrears; the estimate for the year 2003–04 was less than
£500,000. So I suggest that the Government consider unfreezing
pensions for all those living in British Overseas Territories as soon
as possible. They are British, they live on British soil, and the
cost in Treasury terms would be the equivalent of loose change.
Finally, I want to make a suggestion to the Government that, I
believe, will help with their proper desire to make poverty history,
and in particular to help the people of Africa. There are pensioners
in this country who have skills that would be valuable to countries
in Africa and to all developing countries, if
25 Oct 2005 : Column 1144
only they could be persuaded to spend their active retirement in
those developing countries. Unfortunately, the prospect of their
state pension being frozen will deter many people who might otherwise
choose to do that. Importantly, there are some countries that are
facing population loss, mainly because of the HIV/AIDS pandemic.
Botswana, for example, according to a population projection in the
latest update to the Encyclopaedia Britannica, may lose a quarter of
its population in the next 15 years. President Mogae of Botswana is
actively encouraging experienced citizens from the UK and elsewhere
to go and help his country and, incidentally, to live in a civilised
environment with lovely people. Abolishing the frozen pensions rule
would give British citizens the choice of spending their retirement
making a real difference.
I believe that the Government should produce up-to-date estimates of
how much it would cost to put right the injustice of all frozen
pensions. There is a prize awaiting the government who sort out the
problem. As British citizens, those who suffer from frozen pensions
have votes in British parliamentary elections. Those votes could
swing the result of tight elections. The great civil rights
campaigner Martin Luther King once said:
"Injustice anywhere is a threat to justice everywhere".
I urge the Government to look carefully at this injustice and take
steps to eradicate it.
Baroness Fookes: My Lords, this is a first for me. Never before have
I risen to speak immediately after the delivery of a maiden speech.
It is a real pleasure and privilege to congratulate the noble Lord,
Lord Jones of Cheltenham, despite his misgivings, on a speech most
fluently delivered, which showed a real knowledge, sympathy and
understanding of the plight of expatriates, coupled with some
constructive suggestions about how these things may be put right. We
shall look forward to his further contributions in this House. I
offer him, on behalf of us all, a very warm welcome.
Like the noble Baroness, Lady Greengross, who introduced this debate—
we are deeply grateful to her for this opportunity—I have deep
regrets. I am not sure that "regrets" really covers how I feel. For
many years, both in the other place and here, I have felt strongly
and keenly the sheer injustice that is done to those expatriate
citizens who happen to live in the wrong country. That is what it
amounts to. It is, as the noble Baroness, Lady Greengross, said, the
arbitrariness of it which is so infuriating. I do not believe that
there is any justification, and I hope that no government Minister
will seek to take refuge in the judgment against Annette Carson. As
was so rightly said, this was on whether human rights had been
infringed, and nothing whatever to do with government policy. It is
high time that, after many years, the Government put right this
injustice. I do not pretend that the Government whom I supported when
they were in office were any better on this matter. They can share
equal opprobrium on the subject as far as I am concerned.
25 Oct 2005 : Column 1145
It seems to me extraordinary that if some people who go abroad are
not to enjoy these rights, others should do so simply because they
are members of the European Union, or where there is a reciprocal
arrangement. There is no logic in that whatever. It would be harsh,
but at least logical, if anyone living abroad was not entitled to an
uprating of the pension—not that I am advocating that for one moment.
To have some who are and some who are not, however, is quite
unjustifiable. The illustration of the Canadian/USA border is
extremely apt, and shows to the full the sheer folly of this
Of course, it falls far more heavily on those who retired many years
ago, when the pension was much less than it is now. Indeed, there was
a case—recently, I think—of somebody who died in their 90s, who was
receiving a pension of some miserable £6.95 a week. Almost
unbelievable. Therefore, those who are very elderly are in a far
worse plight than anyone else.
It is my understanding that this arrangement was intended to be
temporary when the government of the day dealt with the uprating of
the pensions. I am emboldened in this because, back in 2000 when I
had a Question on the subject, there was an intervention by the late
Lord Shore of Stepney. It is worth while quoting what he said:
"My Lords, will my noble friend"—
this was addressed to the noble Baroness, Lady Hollis of Heigham, who
then had responsibility for these matters—
"at least think very hard about this issue? I remember dealing
with this matter in Cabinet some years ago. There was never any
question but that, morally, our fellow citizens who worked for us
here in Britain and who then migrated overseas were entitled to a
pension by virtue of their paid-in contributions. We did not update
the pension because of the chronic shortage of foreign exchange, but
morally the case was clear. When we were controlling capital
movement, when tourists could spend only £50 a year abroad, and when
all kinds of restrictions faced us, we could not do it, but morally
these people have a right to a pension. Will the Government fulfil
that obligation at the earliest moment?".—[Official Report, 3/4/00;
The reference to the £50 travel restriction takes us back many years.
This is a long-standing grievance which needs to be put right.
I am aware, of course, of the cost. Let us make no mistake about it—
it is a matter of cost. This is what has influenced every
administration from that time to the present day. I make an
alternative suggestion to that of the noble Lord, Lord Jones of
Cheltenham. Would it not at least be possible to uprate—not backdate—
the pensions from whatever point in time the decision was made, for
those aged 80 or over? They are the ones most at risk. I would
seriously ask the Government at least to think about this, if they
cannot go, as I would wish them to, for total uprating. Then, at
least, we would know that those who get frailer and older, who may
well be of the war generation, would have some comfort in the last
years of their life. I urge at least this compromise upon the
Lord Mackie of Benshie: My Lords, I, too, congratulate the noble
Baroness, Lady Greengross, on
25 Oct 2005 : Column 1146
bringing this up. It has been a source of annoyance and grief to a
whole lot of people. Many people in political life have been trying
to make the Government see sense. It is extremely difficult to do that.
Fortunately, we have some hope on the legal side, in that a very
distinguished lawyer, the noble and learned Lord, Lord Carswell,
disagreed with the last verdict. The Government have won the last
legal case, but it is not a legal case that we are talking about. The
noble Baroness, Lady Fookes, put it in a nutshell: it a case of human
rights. The human rights issue may well provide some solution. The
Government should, however, think of doing something to put this evil
right. They would do some good to themselves in so doing.
The figure quoted by my noble friend Lord Jones of Cheltenham—I think
he said £500,000—would upgrade the pensions without paying the money
they are due for back pensions, which must cost more. If the Minister
would explain this, and agree or disagree, I would be grateful.
I am a pensioner. I took my pension when I was 70. That, I am afraid,
was 16 years ago, but my pension then was £74. It is now over £140.
The difference that that would make to someone who has gone abroad,
simply to live with his family—which is a right and proper instinct—
might be very big indeed.
The people who are profiting from being paid the rise are mostly
people who are quite well off. One can go and live on the beaches of
Spain or the French Riviera; one can mingle with the toffs in
Tuscany; or one can go and live in Las Vegas, if anyone would desire
to do that. Then you get the increase. It is totally illogical. If
you live in the Caribbean, as I understand it—and I should like the
Minister to confirm this—you get the winter fuel increase of £200.
That seems a bit illogical in view of all the good people who get
nothing out of it.
To talk of money is right and proper, and we have to think of it. But
to save money for the Treasury from one section, totally unjustly, is
quite wrong. If the Treasury has to save that money it should come
off all of us from taxation or elsewhere. To save it at the expense
of people who go to live with their families in the Commonwealth—
people who have supported us in two wars—is quite wrong. The
Government must consider not paying a little more but paying the full
rate to pensioners who have lived abroad for family reasons as well
as giving it to all the people who are rich enough to live in the
Lord Goodhart: My Lords, I am very pleased indeed that the noble
Baroness, Lady Greengross, has chosen to raise once again for debate
in your Lordships' House the subject of this longstanding injustice
to a substantial number of people who have contributed much to the
United Kingdom. I am also very pleased that my noble friend Lord
Jones of Cheltenham has chosen this debate in which, a little
unusually, to make his maiden speech. But it shows that his 13 years of
25 Oct 2005 : Column 1147
distinguished service to his former constituents in Cheltenham is
continuing despite the fact that he is no longer their representative
in the lower House of Parliament.
I believe that any reasonable person would agree that the treatment
of pensioners who have gone to live abroad in countries where there
is no mutual agreement on pensions is grossly unfair. I think that
that belief will only have been reinforced by the specific examples
that have been raised this evening by the noble Baroness and by my
noble friend. This unfairness dates back to 1975 when the Wilson
government were in a terrible mess, had to find spending cuts and had
to restrict the outflow of sterling. The uprating of pensions of non-
residents was selected as one target for these cuts and restrictions.
It had the great attraction, and continues to have the great
attraction, that those who suffered from these changes did not have
the vote. So they were denied the uprating and they have never had it
since despite the great improvements in this country's fiscal
situation and the transformation of sterling into one of the
strongest currencies in the world.
Back in 1975 there was no Human Rights Act which gave the victims of
this decision an opportunity to challenge it on grounds of
discrimination. Following the enactment of the Human Rights Act, a
number of overseas pensioners claimed that their treatment was
discrimination which was rendered unlawful by the Act. Mrs Carson,
who took her case to your Lordships' House, was one of them. I
believe profoundly that in rejecting her claim the Appellate
Committee of your Lordships' House got it wrong—except, of course,
for the noble and learned Lord, Lord Carswell. I do not know whether
there is any possibility that this case might be taken from your
Lordships' House to Strasbourg. If there is any possibility, I
certainly believe that there would be a real chance of victory for
I was my party's spokesman on pensions for some years and became very
concerned with this issue. Pensions are a contributory benefit;
indeed, they are by far the largest contributory benefit. Not only
that; they are by far the largest benefit of any kind in money terms,
whether contributory or non-contributory. Contributions are paid into
the national insurance fund. The national insurance funds is not a
fund like a private pension fund; it is, as I say sometimes, a
pipeline and not a reservoir because the year's contributions go to
pay the current year's pensioners, not to provide capital for future
pensions. But that does not alter the principle, which I believe is
that there is an implicit contract between the contributors and the
state—not a legal contract, but an understanding that the
contributors will make payments, and in return for that the state
will pay them a pension. Contributions are payable only if and while
the contributor is employed in the United Kingdom, apart from the now
fairly numerous occasions when people receive contribution credits
without actually paying contributions.
25 Oct 2005 : Column 1148
During the period when they are employed in the United Kingdom, those
people will not have been making contributions to foreign state
pensions and building up foreign pension rights. The contributors
will have been contributing to the United Kingdom economy when they
are working here. When they go abroad, they relieve this country of
the burden on the National Health Service and the social services,
which are very much more expensive for those who have retired than
for those who have not yet reached retirement age. This relief far
outweighs the fact that pensioners, when they go abroad, do not pay
income tax on their pensions.
The Government have singled them out for the denial of uprating. That
means that the value of their pensions goes down in real terms from
year to year. There is no possible justification for that. It means
that some elderly pensioners who got pensions 20 or 30 years ago in
periods of high inflation are now receiving only a tiny fraction of
the pension that they would receive if they were still resident in
The lead speech in the Carson case was given by the noble and learned
Lord, Lord Hoffmann. I disagree strongly with the noble and learned
Lord's statement in his speech that:
"There is nothing unfair or irrational about according
different treatment to people who live abroad".
Against that background it is not surprising that he decided against
Mrs Carson. He went on to say:
"The primary function of social security benefits, including
state retirement pensions, is to provide a basic standard of living
for the inhabitants of the United Kingdom".
That is only partly true of retirement pensions because, by working
in this country and by contributing to the economy, people deprive
themselves of the chance of acquiring benefits in other countries.
They have rights to UK pensions, which they should be able to take
with them when they leave this country, whether they leave before or
after reaching retirement age.
The Government could, of course, say that no pensions should be
payable to anybody resident abroad. There are good reasons why the
Government do not say that. They would not get overseas workers to
come here if they did. It would be an intolerable restriction on the
rights of older people to move abroad. Instead they give the full
pension that has been earned by the contributors at pension age, and
then slice a little bit off year by year. It is death by a thousand
cuts. That is not just unfair; it is immoral.
Lord Oakeshott of Seagrove Bay: My Lords, this is not the easiest
debate to answer from this Front Bench. The noble Baroness, Lady
Greengross, has done us all a great service by raising with all her
customary persistence and passion the issue of uprating. We almost
always sing from the same hymn sheet in this House, so I thought long
and hard about how far I could follow her on this occasion.
My noble friend and predecessor as Front Bench spokesman, Lord
Goodhart, and I also stand shoulder to shoulder on almost every
issue. As usual he has put
25 Oct 2005 : Column 1149
his case with the logic and precision that we always expect. My noble
friend Lord Mackie has also spoken with great force.
My short answer is that I have considerable sympathy with the points
that they made, and I shall probe the Government's position as hard
as I can. The official position of our party, as set out in our
policy paper last year is,
"to look at whether further reciprocal arrangements could be
established with other countries to allow as many pensioners as
possible to benefit whilst recognising that a country's first duty is
to those who live within its borders".
It is a particular pleasure to pay tribute to my noble friend Lord
Jones of Cheltenham in his maiden speech, especially for his tireless
work for his former constituents. He was in the front line for
democracy in Britain on that dreadful day when he was attacked in his
advice centre. He has also done much valuable work for the cause of
democracy overseas in election monitoring. I pay particular tribute
to him for his moving and focused speech highlighting the problems of
the small group of state pension recipients in the British overseas
territories. As he pointed out, only Bermuda, Gibraltar and the
sovereign base area of Cyprus receive quarterly uprating. In 11 other
territories they do not. He quoted £500,000 a year as the estimated
cost of unfreezing pensions. Will the Minister either confirm that
that is a realistic estimate, or perhaps write to me and the noble
Lord, Lord Jones, if he needs to check the figure?
My noble friend made a particularly strong case for this group. We
urge the Government to try much harder to widen uprating by a series
of reciprocal arrangements with individual countries. But how
realistic is that when we are dealing with tiny islands for which
Britain is still largely responsible, such as British Virgin Islands
with 47 pensioners, the Falklands with 38 and Ascension Island with
just five? With whom would the British Government negotiate a
reciprocal agreement when there are only a handful of pensioners? In
practice the British Government would be negotiating with themselves.
The Minister must consider whether the doctrine of reciprocity would
stretch that far, or whether in all the circumstances, UK pensioners
in the British overseas territories should not be treated for
uprating purposes as if they were still resident in the UK. The cost,
as we have heard, would be negligible.
Cost is a relevant consideration if the Government's estimate of £400
million a year, increasing over time, is correct as the price to
public funds of fully unfreezing the pensions paid to about 520,000
people overseas, of whom the great majority—about 470,000—live in
Canada, Australia, New Zealand and South Africa.
I fully understand how badly let down many—or all—of those pensioners
feel. We have to recognise that they are competing for a limited
pension and social security budget with, for example, many women who
are shamefully treated by Britain's present pension system, or the
85,000 people in this country
25 Oct 2005 : Column 1150
who have been robbed of their pensions when their funds collapsed and
still have not received a penny from the financial assistance scheme.
We have heard powerful cases on behalf of overseas pensioners
tonight. When we on these Benches are arguing our spending priorities
with our Treasury team colleagues nearer the next election they will
certainly be in our mind. But from these Benches we cannot make firm
promises of backdated uprating now.
The Government must also tell us why progress on entering new
reciprocal arrangements with overseas countries is so slow. In the
past 20 years only with Barbados and the Philippines have they signed
new agreements that have not been overtaken by European-wide
regulation. Are they really trying? What is the strategy for reaching
agreement with the key four countries? Do the Government now accept
that reciprocity is not a realistic option with the overseas
In replying to the debate on the Pensions Bill last year, the then
Minister Chris Pond struck an encouraging note in discussing new
bilateral agreements. He stated that after around 1981 there were no
new bilateral agreements. He said:
"One way forward may be to argue for a bilateral agreement
between those countries and the United Kingdom that would allow us to
work out how to meet the reciprocal costs of such an arrangement".—
[Official Report, Commons Standing Committee B, 27/3/04; col. 259.]
In reply to our then pensions spokesman Steve Webb, he said:
"I hope that other hon. Members will reflect on whether
further pressure should be exerted to examine whether other bilateral
agreements would benefit the interests of the particular communities
mentioned today".—[Official Report, Commons Standing Committee B,
27/3/04; col. 259.]
That struck an encouraging note. Is that still the Government's
position or, if not, why has it changed.
I end on as positive a note as I can. I can, at least, go further
than the suggestion made by the noble Baroness, Lady Fookes. We on
these Benches and my colleagues in the Commons believe that, as a
start, UK state pensions paid to people living in countries where
they are not currently uprated should be increased from now on in
line with UK inflation. That change would let people make an informed
choice about where they lived in future. It would not be
retrospective, but it would be affordable, costing an estimated £20
million this year, rising to some £100 million a year by 2008–09. It
may be cold comfort to those who retired and emigrated many years
ago, but we think that it would strike a fair balance between the
financial pressures of the pensions crisis in this country and the
injustice felt by people living abroad whose pensions are frozen. It
would be a useful start and it would at least stop the problem
How I wish we could say that about our collapsing pension system in
Baroness Noakes: My Lords, I add my thanks to those of other
noble Lords to the noble Baroness, Lady
25 Oct 2005 : Column 1151
Greengross, for bringing the issue of the pension entitlement of
overseas pensioners before the House. The noble Baroness works
tirelessly for older people and it is enormously to her credit that
she includes those who live beyond our shores. Of course, the noble
Baroness is eternally youthful, which is why she can bring these
issue before us with such energy and determination.
I congratulate the noble Lord, Lord Jones, on his maiden speech. I
welcome him to our House and would say to him that perhaps he will
not surprise noble Lords in future by his speeches if he advertised
his presence on the speakers' list and other noble Lords might have
the opportunity to hear what he has to say. I hope that we hear more
The noble Baroness, Lady Greengross, has given an excellent summary
of the position of overseas pensioners and uprating and there is
nothing I can add to that. The noble Baroness also conceded that the
Government have established through the Carson case that they are
entitled to decline to uprate the pensions of those who live abroad.
The current law is now clear as a result of that case,
notwithstanding the dissenting judgment of the noble and learned
Lord, Lord Carswell. But, as other noble Lords have said, the heart
of the issue is one of policy, regarding whether the Government
should now change their settled policy of not paying pensions uprating
—whatever the strength of the legal case that they have for choosing
In the last Session of the previous Parliament we had many debates on
pensions in the context of the Pensions Bill, which is now an Act.
Many of its provisions are aimed at reinforcing the pensions promises
made by private sector employers to employees. The Government chose
to use the Pensions Act to provide financial underpinning of
employers' pension promises where those employers might otherwise
have found reason to reduce the financial strength of the pension
promise. In effect, the Government have elevated that promise above
other potential claims on businesses.
That is how the Government have told employers to behave. When it
comes to public pensions, the Government take a different view. They
do not acknowledge any pension promise in the sense that it is
implied for employers. So for pensioners who live abroad , the
Government say that they are entitled to freeze their pensions at the
date that they leave the UK.
I do not think that I am alone in finding the position of the
Government somewhat illogical. On the one hand, employers have made
pensions promises that are to be protected by legislation that
borders on the draconian, but, on the other hand, the Government say
that they have made no promise to a pensioner about his pension and
it is for the Government to determine whether or not to pay uprated
benefits if the pensioner chooses to live abroad.
Of course, the legal position of the Government choosing to decline
to pay uprating has been amended in those instances where the
Government have chosen to enter into reciprocal social security
25 Oct 2005 : Column 1152
by way of the mutual obligations of the EU. It is that selective
approach to pensions that has created the sense of arbitrariness to
which the noble Baroness, Lady Greengross, and other noble Lords have
referred. That is seen to be particularly unfair. It seems unfair
that those who choose to live on the Costa Blanca, in California or
Las Vegas, as was mentioned, should receive their increases while
those in Australia or Canada do not. Since the lapse of the
reciprocal agreement with Australia, I understand that a majority of
overseas pensioners do not now receive uplifts although that does not
make it any less unfair for the pensioners involved.
Difficult issues are raised. I have a number of questions to put to
the Minister. The issue of costs has been touched on by other noble
Lords. How much will it now cost on an annual basis to upgrade the
pensions which are frozen? There are two ways of considering the
matter. One is to uprate as though uprating had already applied. The
other is to start from where we are at the beginning of the year and
to begin uprating from now on, as the noble Lord, Lord Oakeshott,
suggested. My noble friend Lady Fookes suggested uprating for those
over 80 years old. I hope that the Minister will be able to give us
costs for all those suggestions, if not now, perhaps later. The noble
Lord, Lord Oakeshott, referred to £20 million for his option of
uprating from the beginning of the year. It would be helpful to have
that and the other figures confirmed. It is important to have those
figures because the Government make a choice every year, implicitly
if not explicitly, whether to uprate pensions. It is important to put
that annual choice in context.
Will the Minister also tell the House the lowest figure of frozen
state pension? We have some anecdotal examples of low frozen
pensions. We have to remember that policy decisions made in the
aggregate have a precise human impact at the micro level. The noble
Lord, Lord Jones, the noble Baroness, Lady Greengross, and my noble
friend Lady Fookes referred to specific examples. Alongside the total
cost, it is important to know the impact on individuals.
What policy do the Government have towards reciprocal social security
arrangements? Are the Government prepared to negotiate any further
such agreements? Alternatively, is it the policy of the Government
actively to seek to withdraw from agreements, as they did in the case
of Australia? The Government's position should be made clear.
Finally, I raise the issue of the report expected next month by the
noble Lord, Lord Turner of Ecchinswell, who was in his place earlier
but has deserted us at present. Will that report cover overseas
pensioners? In today's increasingly global world we should not be
surprised if pensioners choose to spend all or part of their
retirement abroad. The question of savings for a future generation of
pensioners must take account of the possibility that some of them
will choose to live abroad and will need, therefore, to have an
adequate income to support that. That should be taken into account in
any pensions review because that is part of today's life choices. If
it is not clear that the noble
25 Oct 2005 : Column 1153
Lord, Lord Turner, will be including that in his report, my plea to
the Minister is to ensure that it is brought to his attention.
Lord Hunt of Kings Heath: My Lords, we have had a good debate. I
congratulate the noble Baroness, Lady Greengross, on her initiative
in opening up the debate and as someone who has been a sterling
champion of older people for so many years. It is a great privilege
for me to answer the debate although I doubt whether she will be
pleased with the response I shall give her.
I also welcome the noble Lord, Lord Jones of Cheltenham. It was a
marvellous maiden speech. He will be warmly welcomed when he takes
part in future discussions in your Lordships' House. Looking at his
CV, I note that although he is clearly a keen supporter of Cheltenham
Town for some reason he also watches Swindon Town. He needs to know
that I was brought up in Oxford and that I spent many happy hours
watching Oxford play Swindon—and mostly lose. So I look forward to
discussions on that most important matter.
I can also clear up the matter of the noble Lord's presence on a
speakers' list. Noble Lords have had an agonising wait for his maiden
speech. When this order was due to be debated in, I believe, the last
week of July, by mistake a speakers' list was put up in the Whips'
Office and most noble Lords who have spoken tonight put down their
names to speak. The noble Lord, Lord Jones, did so and was listed as
a maiden speaker. I think he is perfectly entitled to have attended
this debate and to have carried out his maiden speech with such
skill. However, if he is looking for a cosy time here, he will not
get it—we may be more gentle but, my goodness, we are hard-working.
I understand the points raised by noble Lords, and I do not seek to
pretend that it will be easy to respond in the way that I shall. Of
course, I understand the concerns that noble Lords and Members of
Parliament have had on this issue over many years. But I reiterate
that successive governments have taken the view that all those who
work in the UK and have built up an entitlement to state pension
should have the right to receive it. There were no plans to change
that arrangement. But the pension is increased or uprated in line
with UK price inflation only where the recipient is a resident in the
European economic area or in a country with which the UK has a
reciprocal agreement. I know that noble Lords are well versed but,
for the record, I should state that the uprating of pensions paid to
people residing in the EEA is a requirement of EC law. As members of
the EU, we are required to comply with that. Over the years, we have
entered into a number of reciprocal agreements. They are not
primarily concerned with the uprating of pensions; essentially they
are about providing for the protection and rights of workers who move
between the UK and the other country concerned. I shall return to the
question of future reciprocal agreements as a number of noble Lords
raised that point.
25 Oct 2005 : Column 1154
We have heard a very interesting summary of the Carson case, and it
is good to hear the noble Lord, Lord Goodhart, disagree with the
noble and learned Lords who made that decision. It is worth quoting
from the noble and learned Lord, Lord Hoffmann—it is a slightly
different quotation from the one given by the noble Lord. In fact,
this is a difficult debate to sum up because noble Lords have tended
to anticipate my answers. However, in the Carson case, the noble and
learned Lord said that the difference in payments to non-residents
was rationally justifiable as pension benefits were part of an
intricate and interlocking system of domestic social welfare, making
the position of a person living abroad relevantly different from that
of a UK resident so as to preclude a claim for equality of treatment.
I understand that the noble Lord disagrees with that but it was the
view of the majority of the Law Lords. Of course, we wait to see
whether Mrs Carson takes her case to Strasbourg, and clearly we shall
watch with interest if that happens.
I turn to the question of money because it is at the heart of this
issue. Governments have to make hard decisions, and there is no
question that, taking each of the options being presented to us, a
considerable amount of public money is involved. I understand that if
we fully uprated and back-paid, there would be an enormous amount to
pay—in the region of £3 billion.
Lord Goodhart: My Lords, I thank the noble Lord for giving way. I
do not think that anyone would suggest that the benefit should be
back-paid. The question is: if it is to be paid, from now on will it
be paid on the basis of what the current pension is or what it would
have been if it had been uprated in past years?
Lord Hunt of Kings Heath: My Lords, I fully understand that, and I
was about to give an order of the payments because I was asked to do
so. We calculate that it would cost an extra £400 million per year,
increasing over time, to bring pensions paid in countries where
uprating is not available up to the rate paid to pensioners resident
in the UK. That would be if we did it now as opposed to backdating.
For example, increasing the rate of basic pension paid to a person
who left the UK in 1988 from £41.15 to the current rate of £82.05.
If further upratings were applied to the current frozen rates, which
is the point that was raised by the noble Lord, Lord Goodhart, and
other noble Lords, the estimate that I have is that the cost in the
first year would be £20 million and that it would increase to £130
million by the fifth year and would further increase over time. Those
are the different orders of cost. The principle still remains the
same: that each of those options would cost government money—money
from taxpayers. The judgment is where to spend that money most
wisely. I have to say that the Government are not persuaded that they
should change their existing policy. They follow the policy of
previous governments: I have wonderful quotes here from the right
honourable William Hague and the right honourable James Arbuthnot
defending that principle. I will not bore the House with those quotes
because I recognise that this has been a constructive debate with the
best of intent, but I do have them up my sleeve.
25 Oct 2005 : Column 1155
We heard from the noble Lord, Lord Oakeshott, too, in the sense of
the Liberal Democrats' Front Bench indecision on resource priorities.
When it comes down to it, that is the nub of the problem. We are not
alone in applying restrictions on payments of state pensions abroad.
Many countries apply restrictions; in some cases the UK arrangements
are far less restrictive than those of other countries. Under the
Australian system, for instance, unless there is a reciprocal
agreement a pension cannot be claimed by a person residing outside
Australia. So if a person leaves Australia before reaching the age at
which he or she becomes eligible for a pension, all rights are forfeit.
New Zealand also applies a residents' condition at the point of
claim. Close to home, the Netherlands is proposing to introduce
similar restrictions on payments of pensions outside the EEA area, in
countries where the Netherlands does not have a reciprocal agreement.
So we are not alone in the kind of arrangement that we have had in
A number of specific points were raised. The noble Lord, Lord Jones
of Cheltenham, has a clear interest in the British Overseas
Territories and I suspect that we will hear more of that in the years
to come. I am advised that the figure of £500,000 is described as
reasonably accurate, but I will find out whether we can obtain some
harder figures—it is a ball-park figure. He is also right about
defining the different countries within the category of British
Overseas Territories as to which are subject to uprating and which
I turn to agreements and the future policy. I think that it is fair
to say that most of the existing agreements are consolidations of
earlier longstanding ones. They were entered with a view to
administration improvements and efficiencies and to take account of
developments and changes to both countries' schemes over time, rather
than to extend the scope for payment of increased amounts of benefits
abroad. It would be fair to say that the previous government in 1996
decided to adopt a policy of limiting the scope of future agreements
to exclude benefits and to cover only the avoidance of double payment
of national insurance or other countries' equivalent social security
I am not aware of any current specific plans for extending reciprocal
agreements. There is also the question of countries that do not have
similar policies to uprate. Some may not have a social security
system that we would recognise as such, where a reciprocal agreement
would not be able to be brought in. I am afraid that I cannot give
the noble Lord the comfort that he seeks on that point.
Lord Oakeshott of Seagrove Bay: My Lords, will the Minister accept
that that is rather a different tone from that struck by his right
honourable friend in the other place and I wonder why that is?
Lord Hunt of Kings Heath: My Lords, I am prepared to write to the
noble Lord, but tonight I am giving him my understanding of the
position. I do not want to hold out hopes that cannot be delivered
on. I will be happy to write to the noble Lord with fuller details,
but he should not take that a reason for optimism.
25 Oct 2005 : Column 1156
The position on winter fuel payments, which were raised by the noble
Lord, Lord Mackie of Benshie, is that a person entitled to a winter
fuel payment in the UK may continue to receive it if he moves to
another EEA country or, from winter 2002–03, to Switzerland. It is
only in those countries that winter fuel payments can be applied for.
We do not pay to people living in the Caribbean, other than those
living in French Martinique because of its annexation to France.
Australia unilaterally ended the social security agreement with the
UK from 1 March 2001. UK pensioners living in Australia never got UK
pensions uprated while living in Australia. The reciprocal agreement
never provided for the uprating of pensions.
I was fascinated when the noble Lord, Lord Turner, came into the
Chamber because I wondered whether he was going to contribute to our
debate. The noble Baroness, Lady Noakes, continually asked me to
anticipate what would be in the Pensions Commission report. She knows
that I cannot do that. I have no doubt that when the report comes out
we will have an interesting debate in your Lordships' House, and I
must express some disappointment at the negative tone that has again
come from both Front Benches about the Government's record on
A number of noble Lords asked whether we could identify the people
who were suffering most hardship and make a special case for them.
There is still the principle of resource and the great difficulty of
targeting specific groups within that cluster of people. Such action
would be as likely to be discriminatory as any other possible policy
that we could adopt in that area.
The noble Baroness, Lady Greengross, asked whether the DWP literature
was clear. I am informed that the leaflets say very clearly that
pensions are frozen if you go abroad, unless you go to an EEA country
or to certain other countries. That brings us to the crux of the
issue: in the end it is down to individual choice. That principle has
been in practice for a considerable number of years. It is known to
people and therefore the consequences of going to live in certain
countries ought to be known by them. The position of the Government,
notwithstanding my sympathy with the excellent speeches that have
been made tonight, is that we do not think that we can move away from
the principle that has been accepted by this Government and the
previous government. None the less, it has been an extremely useful
debate, and I am most grateful to noble Lords for taking part.
Baroness Greengross: My Lords, I rise with some sadness, but I
expected the Minister to respond more or less in the way that he has.
I was heartened by his tone because I know that he is a humanitarian
person, as are all noble Lords who have taken part in the debate, and
appreciates the difficult situation that many people overseas now face.
25 Oct 2005 : Column 1157
I was particularly struck by the comment of the noble Baroness, Lady
Fookes, about those who retired a long time ago and whose pensions
are frozen at a really paltry level, which they try to survive on.
They have my greatest sympathy out of all those about whom noble
Lords have spoken with such clarity. I am grateful to have such
support for what I have said.
I still hope that maybe, one day, the Government—who have done a
great deal to lift pensioners in this country out of the sort of
poverty that many lived in before—could do something to alleviate the
25 Oct 2005 : Column 1158
People find it so unfair that some are doing so well, and others are
not. Could the Government not look with a humanitarian glance at the
sort of people we have talked about tonight?
I am obviously not pleased, but I understand what the Minister has
said. I withdraw the Motion—with regret, as it was such a Motion—and
hope that one day the position might change for those with whom
everybody here has expressed much sympathy. I beg leave to withdraw
Motion, by leave, withdrawn.
House adjourned at twenty minutes to nine o'clock.