My Lords, as the Minister will have spotted, this is a device to continue the debate on the level of the STP and the associated costs and savings in the Bill. The Bill assumes that STP, but not any projected payments, will be uprated by not less than earnings but the impact assessment is predicated on the triple lock applying, with uprating by the higher of earnings, CPI or 2.5%. Looking long term, these two bases of uprating produce materially different results, as illustrated in annexe B to the impact assessment.
Overall, we know that these reforms will reduce the overall percentage of GDP going to pensioner benefits. As we discussed briefly on Monday, by 2060 the share of GDP, compared to the current position, would fall by 0.6% if uprated by the triple lock but by 1.3% if uprating was just by earnings. Over the long term, the cumulative effect of uprating by earnings rather than the triple lock would lead to STP being 10% lower than if uprated by earnings. This is not a small difference and although the long term— 2060—may seem a long way away, it is the scenario which those in the labour market today will face. Annexe C shows projected expenditure in total support for pensioners at various
points over the period to 2060. It shows, in 2013-14 prices, that state pensions in total will be £30 billion less than they would have been under current arrangements. This is why we need to keep an eye on how things are uprated.
One message we take from all this is that the Treasury has undoubtedly taken advantage of a progressive proposal—the STP—to claw back support from pensioners where it can. The figures just discussed do not, I think, include amounts being withdrawn from the systems because of the introduction of the minimum qualifying period, now confirmed at 10 years and saving some £650 million a year, nor the changes to the rules on deferrals, with savings rising to something like £300 million a year. We will obviously come on to debate those in due course. We do not have clarity on the savings that may be made from restrictions on passporting although, as we discussed earlier, these may be limited. None of these figures take account of the increases in national insurance which the Treasury will garner: some £5 billion in 2016, £4.6 billion in 2020 and £3.7 billion by 2030, which are very significant sums.
We heard much praise on Monday for the triple lock and we should acknowledge its significance. However, my noble friend Lady Sherlock explained previously why our priorities had to be elsewhere—to tackle the legacy of pensioner poverty. Given the manner in which the Treasury has clawed back money where it can, it is reasonable for us to at least ask about the Government’s aspirations for the triple lock without, of course, conceding the likelihood of them being in a position to implement those aspirations. I beg to move.
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