My Lords, the draft Social Security Benefits Up-rating Order 2021 and the Guaranteed Minimum Pensions Increase Order 2021 were laid before this House on 18 January. In my view, the provisions in these orders are compatible with the European Convention on Human Rights.
The Guaranteed Minimum Pensions Increase Order is an entirely technical matter that we attend to each year. It provides for formerly contracted-out defined benefit occupational pension schemes to increase their members’ guaranteed minimum pension which built up from April 1988 to April 1997 by 0.5%. This is in line with the increase in the general level of prices as at September 2020.
The Social Security Benefits Up-rating Order reflects the Government’s continuing commitment to support working families and pensioners across the nation, especially during a particularly challenging time for many. It will increase the basic state pension and the new state pension in line with the triple lock; increase the pension credit standard minimum guarantee in line with the cash increase to the basic state pension; increase working-age benefits in line with prices; and increase carer’s benefits and benefits intended to meet additional disability needs in line with prices.
In November, Parliament passed the Social Security (Up-rating of Benefits) Act. Without this legislation, state pensions would have remained at 2020-21 levels, because under the existing legislation there is no power to bring forward an uprating order to increase these rates in the absence of an increase in the level of earnings. The legislation allows for state pension, pension credit and widows’ and widowers’ benefit in industrial death benefit rates to be uprated for the 2021-22 financial year, benefiting millions of pensioners.
Under the Government’s triple lock commitment, the basic state pension will continue to be uprated by the highest out of earnings, prices or 2.5%. This year, the Government will draw on the power in the Social Security (Up-rating of Benefits) Act to maintain this commitment to the triple lock. The triple lock has been an invaluable tool in combating pensioner poverty and demonstrates this Government’s commitment to pensioners. This year, the basic state pension will increase by 2.5%, which is the highest of the triple lock figures. The basic state pension will rise to £137.60 a week for a single person. From April this year, the basic state pension will be over £2,050 a year higher in cash terms than in April 2010.
Five years ago, the Government introduced the new state pension, which provides a transparent and sustainable foundation for private saving and retirement planning for people reaching state pension age from 6 April 2016 onwards. We have also committed to increasing the new state pension by the triple lock. From April 2021 the full rate of the new state pension will increase to £179.60 per week.
Turning to the additional state pension, from April state earnings-related pension schemes and the other state second pensions, as well as protected payments in the new state pension, will rise by 0.5% in line with prices.
We are continuing to take steps to protect the poorest pensioners. This includes the pension credit standard minimum guarantee, the means-tested threshold below which pensioner income should not fall. The pension credit standard minimum guarantee will rise by 1.9% to match the cash increase in the basic state pension. Therefore, from April 2021, the single-person rate of this benefit will rise to £177.10, providing a valuable safety net to pensioners.
Working-age benefits will increase in line with prices—or 0.5%. This includes people receiving jobseeker’s allowance, employment and support allowance, income support, housing benefit and universal credit. Those benefits linked to child tax and working tax credits will also be uprated in line with those benefits. This increase to working-age benefits is in addition to the unprecedented support that this Government have provided to those affected by Covid-19. To support individuals through this challenging time, we have mobilised our welfare system with a wide-ranging package of measures worth more than £7 billion, benefiting millions.
The uprating review did not include a decision on the £20 per week uplift to universal credit and working tax credits, announced by the Chancellor as a temporary measure in March 2020. The uplift was enacted for one year under different legislation to support those facing the most financial disruption as a result of the
Covid-19 public health emergency, so it is not referenced in the order. This is still being kept under review in light of the ever changing situation we find ourselves in.
Universal credit work allowances will also rise in line with prices. This means that an individual is able to earn more before their universal credit payment is reduced and directs additional support to some of the most vulnerable low-paid working families.
Finally, I turn to disability benefits. Carers and those who face additional costs as a result of their disability will see their benefits increase in line with prices from April 2021 to ensure that they continue to get the support they need. These benefits are: disability living allowance, attendance allowance, carer’s allowance, incapacity benefit and personal independence payment. In addition, the carer and disability-related premiums paid with pension credit and working-age benefits, the employment and support allowance support group component, and the limited capability for work and work-related activity element of universal credit will also increase by 0.5%. The Government remain committed to protecting the most vulnerable.
To conclude, in this order the Government propose to spend an extra £2.7 billion in 2021-22 on increasing benefit and pension rates. With this spending, we are maintaining the triple lock, increasing spending on pensioner benefits by £2.2 billion and upholding our commitment to the country’s pensioners; helping the poorest pensioners who count on pension credit; and ensuring that working-age benefits maintain their value in relation to prices. This is in addition to the comprehensive support package already put in place to support those affected by the pandemic, providing essential support to disabled people and carers. On this basis, I beg to move.
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