John McDonnell MP
May I say that we in the Opposition, and I think Members on both sides of the House, take pride in the expertise of my right hon. Friend the Member for East Ham (Stephen Timms)? Time and again, as Chair of the Work and Pensions Committee, he has warned the House —both sides of the House, at times—about the approach that needs to be taken if we are to have a stable social security and pensions regime. I pay tribute to the work he does.
I am an ardent advocate of the coalition Government’s policy on the triple lock. That seems somewhat ironic, given the history of this policy, but I am. The historical background is that I was a total opponent of Mrs Thatcher’s breaking of the link between pensions and earnings. To be frank, the state pension still has not recovered from breaking that link. I was elected in 1997, and at the end of Conservative rule in 1997 the basic state pension would have been 50% higher in value if Mrs Thatcher had not broken the earnings link in 1980.
From 1997, I prepared alternative Budgets to the new Labour Budgets. Gordon Brown had a sense of humour about that, and when I was on a platform with him recently—when I was the shadow Chancellor—he said, “Actually, he’s always been the shadow Chancellor,” because I was producing alternatives to his Budgets. In every alternative Budget, I put forward the restoration of the link between earnings and pensions. I did so because the breaking of that link had undermined the progress we had seen until then in improving the state pension and lifting pensioners out of poverty. That is why I was a strong supporter of the triple lock when the coalition Government introduced it. Despite a decade of the triple lock, however, the basic state pension would still be 37% higher if the earnings link had been maintained. That means that today a single pensioner on the basic state pension would be £2,662 a year better off, and a pensioner couple would be £4,277 a year better off, if the link had not been broken by Mrs Thatcher all those years ago.
According to figures on pensioner poverty from Age UK, there are 2.1 million pensioners living in poverty in our country at the moment, up from 1.6 million in 2014—a 30% increase. What is interesting about this, and not shocking to some in this House, is that the majority of pensioners living in poverty are women. In addition, pensioners from black and Asian communities are about twice as likely to be living in poverty.
What I find interesting are some of the individual examples we can bring to the House about what this means. I remember that, the last time energy prices rose, I had a constituent who used her bus pass to stay on the bus all day to keep warm. Such stories about the reasons why people were living in such fuel poverty were not uncommon. I remind the House that this year fuel bills are increasing on average by £139 and they are expected to rise again next year, so I predict that we will have more of our pensioner constituents going cold this winter and, if we are not careful, in future winters as well, especially as, as has been said, inflation is now likely to be 4% and some are even predicting 5%.
I just wonder what this row is all about, because I support the amendments. I would have given the 8%, because I do not believe that people should break the principle of a manifesto commitment in such circumstances and I believe the additional top-up would have worked. However, the Altmann amendment is moving towards a 5% increase and the Government will award a 3% increase, so the difference we are talking about—this is the argument—is about £2.75 a week. Even if we went to the full amount of the 8%, there would only be an additional £7 a week between the 3% and the 8%. Are we really having a row in this House about robbing pensioners of £2.75 a week? I just find it unbelievable that we can even contemplate that.
I have seen the range of costings, but I have examined the DWP estimates on the effect of the Altmann amendment. They said it would cost £1.3 billion in ’22-23; that was in comparison with the uprating with prices. I was in the House a few weeks ago. We are arguing about an additional £1.3 billion for pensioners. Actually, a £25 billion corporate tax break was given away by the Chancellor in the Budget. It will be £12.5 billion next year.
On the issue about calculations, the Office for National Statistics estimate of earnings growth in the period from May to July was, as the Minister said, anything between 3.6% to 5.1%. The argument now is that these figures are not robust enough. We have had example after example in this House of the Government plucking figures out of the air.
The Minister also said there is not sufficient consensus, but if the Conservative party agrees, we can build consensus. When I was in local government, we always looked for a rational decision. We always used the Wednesbury principles: take into account all relevant factors and dismiss all irrelevant ones. If we were to come to a decision tonight in terms of the Wednesbury principles of rational behaviour, it would be on the basis of a choice between arriving at a statistic that is completely agreed by everyone, and leaving pensioners in poverty next year and not being able to afford their energy bills.
It just does not cut the mustard. The hon. Member for Glasgow East (David Linden) referred to the calculation when the Government wanted to buy off the Unionists in Northern Ireland. Figures were just plucked out of the air. The level at which pay awards are being imposed at the moment across Departments has no rational basis in the work or productivity of the individual workers.
This is a question of whether we are in favour of pensioners living in dignity in this coming period; whether we can ensure they can turn on the heating and have some decent quality of life; and whether we can, not lift more pensioners out of poverty, but prevent more from falling into poverty. That is what this decision is all about and that is why I support these amendments. It cannot be right that we are cutting taxes to corporations and introducing tax breaks, yet at the same time we are preventing pensioners from having a basic decent pension.
I hear the Minister’s reassurances that this is for one year only. I have been in this House too long though. We have been promised something for one year only and then suddenly it has become permanent. That is the big fear out there—that actually there will be another special circumstance next year and the year after, and, as my right hon. Friend the Member for East Ham pointed out, we will lose the commitment given a number of years ago that there would be the continuous link with earnings so the pensioners of this country would share more equitably in the wealth within our country. That is why I support these amendments.