First, I thank Age Scotland and Engender for their helpful briefings. When I lodged the motion back in January, I held on to some hope that the United Kingdom Tory Government would reconsider its callous decision to force newly retired people whose partners are younger than the state retirement age of 65 to claim universal credit rather than pension credit. Unfortunately, as the change is to come into force next Wednesday—15 May—the Tories seem to have chosen to ignore the calls from Age Scotland, Citizens Advice Scotland, Engender, MSPs, MPs and campaigners who have expressed concerns about the impact that the change will have on some of Scotland’s poorest pensioners.
This is no minor change—the switch to universal credit could cost affected households £140.44 a week or £7,320 a year. The pension credit guarantee tops up a couple’s income to a minimum of £12,940 a year. Under universal credit, the standard allowance entitles couples to less than half that. Such a cut could devastate a couple’s finances and ultimately their overall health and wellbeing. As Age Scotland said when the announcement was sneaked out on the day of the first meaningful vote on Brexit,
“Such an outrageous new policy will do nothing but penalise older couples of mixed age, making them poorer for living together.”
As if forcing people on to universal credit—the problems of which are well documented—was not bad enough, the loss of pension credit will have a profound impact on other aspects of social security delivery, as it is a passporting benefit. People who are eligible for pension credit receive free national health service dental treatment, cold weather payments and help with housing benefit and council tax.
The loss of such support can only impoverish our poorest pensioners. To illustrate that, I offer the example of a mixed-age couple who rent a one-bedroom property in North Ayrshire that is in council tax band C and has a monthly rent of £373. If they receive a state pension of £160 a week and pension credit, their total loss after being moved to universal credit will be £9,223.80 a year, which is an enormous sum. The Scottish Government estimates that, by 2020-21, 3,800 mixed-age households in Scotland will collectively lose about £20.8 million.
It is shocking that the UK Tory Government has not considered that the change might force couples who find themselves financially pressured to split up. It argues that pension credit was not designed for working-age claimants, but universal credit was never designed for pensioners, as it includes no additional support for a couple in which one member is not expected to work because they are over the state pension age. The justification for the policy is therefore deeply flawed.
Even more gallingly, as I touched on, the changes were sneaked out in a written statement by the Parliamentary Under-Secretary of State for Pensions and Financial Inclusion, Guy Opperman MP, on the evening of 14 January 2019, when the Prime Minister suffered a crushing defeat at Westminster as MPs rejected her Brexit deal. That drama allowed the pension credit changes to be buried deep in the news agenda, even though they will drive many older people and their partners in Scotland—and across the UK—into poverty.
Age Scotland responded quickly to the statement and is working hard to help as many eligible people as possible to claim pension credit before the 15 May changeover.
Tories might try to cover their backs by stating that this change was legislated for in 2012 and it is too late to turn the tide. However, I note that Age Scotland told the Social Security Committee that the Welfare Reform Act 2012 was 182 pages long, with provisions on mixed-age couples buried among provisions on the introduction of universal credit and personal independence payments. Further, I point out that the changes can still be stopped.
The UK Government presented the reforms as gender neutral because universal credit treats women and men in the same circumstances equally. However, Engender understood that pension credit changes will compound the situation that is already faced by women who are affected by the increase in the state pension qualifying age. Changes to pension credit entitlement, which might otherwise have offered a lifeline to women against state pension inequality, will hit that group of WASPI women especially hard. In addition, women are more likely to be the younger person in a couple and have to work or claim working-age benefits despite the likelihood that they already have unpaid caring duties.
It seems that the UK Tory Government cares little about the impact that the policy will have. When it announced the change, the UK Government must have known how many people would be affected in each UK nation. Such information is crucial to devolved Governments and the third sector, as it enables them to adequately prepare their services. In spite of that, the UK Government has still not provided a comprehensive geographic breakdown.
Of course, with Michelle Ballantyne as their welfare spokesperson, it is little surprise that Tory MSPs have not challenged their Westminster counterparts to reverse or delay the change. When asked at the Social Security Committee two weeks ago today whether she would sign a letter from the committee asking for a six-month extension to the 15 May and 13 August deadlines, to allow both the Scottish and UK Governments to do all that they can to maximise benefit uptake, she replied:
“do I care one way or the other? I probably do not, actually, if I am honest”.—[Official Report, Social Security Committee, 25 April 2019; c 52.]
That perfectly encapsulates the indifference that Tories have towards the real suffering that their policies inflict. Those same Tories propose to take free television licences away from over 75s and to deny women born in the 1950s their full right to state pensions, and they are pushing thousands of pensioners into poverty when the UK already has one of the lowest earnings-to-pensions ratios in Europe.
It is imperative that fairness be at the heart of our pension system and that older people be treated with dignity. The risks are not just financial. People on lower incomes are also susceptible to poorer health. Reducing the incomes of some older people will force them to choose between heating and eating. It is undeniable that those who cannot afford to heat their homes are more likely suffer from poor health, which places more stress on our national health service. The Scottish Government and our local authorities will be left to pick up the pieces of this disastrous, short-sighted policy.
It is unrealistic to expect the Scottish Government to mitigate the impact of the cut. To do so for each Tory welfare reform would be impossible. By 2020-21, it is estimated that mitigating UK welfare cuts would cost £3.7 billion, which is three times the Police Scotland budget. Meanwhile 100 per cent of national insurance contributions that are raised in Scotland flow to the Treasury.
I encourage any older person who is listening today and is concerned about their income to call Age Scotland’s excellent helpline. It is free and available from Monday to Friday from 9 am to 5 pm on 0800 12 44 222. It offers free benefit checks and can support older people with pension credit claims. It is vital that older people claim the support to which they are entitled.
Any situation in which an older person would be financially better off living alone claiming pension credit than living as a couple claiming universal credit is unacceptable. The UK Tory Government must act to prevent that, and must act now.
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