My Lords, I take this opportunity to thank all noble Lords for the positive engagement and feedback they have provided thus far. From the conversations I have had with many noble Lords, I believe there is a genuine desire across the House to tackle the matters addressed by the Bill. It is my sincere hope that we can continue to engage in this way as the Bill progresses through the House. Should any noble Lord wish to discuss any part of the Bill between its stages, our doors are always open.
It is unlikely to have escaped noble Lords’ attention that this is a short Bill. While short and technical, it is an important piece of legislation that will avoid a state pension freeze and benefit millions of pensioners by granting the Secretary of State powers to implement an increase in state pension rates in the 2021-22 financial year. It will also allow for increases for the poorest pensioners who are in receipt of pension credit, as well as uprating widows’ and widowers’ benefit under the industrial death benefit scheme.
Each year, the Secretary of State is required by law to conduct a review of most state pension rates and certain other benefit rates to determine whether they have retained their value in relation to the general level of earnings. If there has been an increase in earnings, there is a requirement to uprate these rates at least in line with that increase. However, if there has been no increase in earnings, there are no legal powers to bring forward an uprating order to increase these rates.
Since 2011, the Government have used average weekly earnings growth for the year from May to July as the basis for the review. The figures published by the Office for National Statistics earlier today confirmed that for the year from May to July 2020, earnings fell by 1%. Given this decline in the general level of earnings due to the coronavirus pandemic, the Bill temporarily amends the Social Security Administration Act 1992 to grant discretionary powers to the Secretary of State to increase pension and benefit rates linked to earnings even if there has been no growth in earnings. The provision lasts for one year only.
The Bill must receive Royal Assent by mid-November if it is to have any practical effect. If the Bill does not receive Royal Assent by the time the Secretary of State conducts her review of benefit rates, the existing provisions will apply and state pensions will be frozen. The Secretary of State must complete her review before 27 November, which is a hard deadline for the IT systems across the DWP that implement the increases, to allow them to take effect in April 2021.
The Bill covers the basic state pension, the new state pension, the standard minimum guarantee in pension credit, and widows’ and widowers’ benefits under the industrial death benefit scheme. These are the benefits that are linked in primary legislation to earnings. The Bill does not extend to benefits that are linked to prices. The Secretary of State will review those under the existing powers in the 1992 Act.
This is a technical Bill and, provided that it receives Royal Assent by mid-November, it will ensure that the state pension is not frozen in 2021-22. It will allow the Government to increase the level of the safety net for the poorest pensioners in pension credit and the rates of widows’ and widowers’ benefits under the industrial death benefit scheme. I beg to move.
2.36 pm