Transcript from Hansard of the
Lords Debate

25th October 2005

Social Security Benefits Up-rating Regulations 2005

7.33 pm

Baroness Greengross rose to move to resolve, That this House regrets 
that the Government have not considered uprating the state pension 
rights of all United Kingdom citizens living abroad in the Social 
Security Benefits Up-rating Regulations 2005, laid before the House 
on 18 March (S.I. 2005/632).

The noble Baroness said: My Lords, I am delighted that the noble 
Lord, Lord Jones of Cheltenham, has chosen to make his maiden speech 
this evening in support of this issue. When in the other place, his 
commitment to those who were vulnerable through no

25 Oct 2005 : Column 1140

fault of their own was manifest, as was his belief in social justice. 
I hope that he will speak immediately after my introduction, because 
this Motion is about social justice.

It is a Motion of Regret, and it is with great regret, disappointment 
and some anger that I move it. Those feelings are shared by many in 
the House and many in the other place—66 MPs, the same as the 
Government's majority in the recent election, have signed Early Day 
Motion No. 366 in support—as well as among the general public, the 
media and especially those who are affected by the freezing of the 
state pension—about half a million of our citizens. We all know that 
if the Select Committee on Social Security's recommendation in their 
1996 report that there be a free vote had actually happened, the 
policy would have changed. I sometimes feel that it is only the DWP 
that is wedded to it now.

We all know what the issue is: the refusal of Her Majesty's 
Government to change their policy to uprate the state pension earned 
by all our citizens, wherever they live, on an equal basis. The so-
called state pension freezing affects an arbitrary group of British 
citizens, and it is the arbitrariness that is really the trouble. 
They are people who happen to live largely in Commonwealth countries 
such as Australia, New Zealand, South Africa and Canada, as well as a 
host of other, smaller nations including, perhaps most poignantly of 
all at the moment, Zimbabwe.

Imagine two brothers living in this country who fought in the Second 
World War and who decided to emigrate when their wives died because 
the children, one set living in Canada and the other in the USA, 
asked them to go and live with them and the grandchildren. The 
brother who went to Seattle, near the US border, has had his pension 
uprated every year. The one who lives just over the border in Canada 
has never had his pension uprated. Just imagine what he feels.

Think of the woman about whom I received a letter—Molly in Australia. 
She drove ambulances during the war, worked in France and then in 
Germany during the war, is a double amputee now living in Australia 
and surviving on the 1986 level of state pension. That is grossly 
unfair. I know that the Minister will say the Government won the 
Carson case before the Law Lords, so the current policy is legal. It 
is legal, but that case was about human rights, not whether the 
policy was right, logical or relevant today. One of the judges, the 
noble and learned Lord, Lord Carswell, delivered a devastating 
indictment of the policy, which I am sure other speakers will 
mention. He said:

       "Once it is accepted that pensions should be paid to 
contributing pensioners resident abroad, then no justification 
remains for paying some less than others and less than UK residents".

However, the Minister should not take too much comfort from the Law 
Lords' judgment either. In effect, the other four judges were not 
saying that the Government's policy was fine and dandy, but that it 
was not a matter for them—it is a matter of government policy.

25 Oct 2005 : Column 1141


One of the Law Lords said that the people who went abroad when they 
retired should have known that their pensions were going to be 
frozen. We all know that hardly anyone in this country understands 
our pension system. If you have been bereaved and made a decision to 
join your family in another country, with all the upheaval and 
difficulty involved, will you really be thinking, "I must bear in 
mind that my pension will be frozen"?

The Government should change their policy because it is the right 
thing to do. It also affects our friendly relationship with certain 
other countries such as Australia, where an Australian minister, 
Senator Patterson, recently said that,

       "the UK Government's policy is . . . unfair and it should 
recognise the compelling moral arguments for paying UK pensioners 
their proper entitlements".

The Minister may say that that has been the policy since 1948, but, 
if the policy is right, why are almost half the pensioners who went 
abroad uprated? I know it is about agreements, but this is about 
fairness. The Government need to consider it seriously. I know that 
it will be expensive, but it does not mean that it is not the right 
thing to do. The end of the Carson case means that the Government 
will probably never have to backdate uprating claims now, so why not 
review the policy and target only those people in greatest need? 
Perhaps that could include the oldest; those who worked in the UK and 
then retired after a full working life and went abroad to be with 
their children; people who were misled into making voluntary 
additional contributions, not realising that their pension would be 
frozen; and people who were not given the whole picture by the 
Department for Work and Pensions. It is still not clear in the 
literature that pension freezing applies in some countries. That 
would be a lot cheaper than the overall enormous figure that the 
Minister will no doubt quote to me.

I know that the Government's priority is UK-based pensions—I know 
that they come first—but there is the huge amount of spending that 
the Government have already committed to pensioners, and the pension 
credit is an example of that. I understand that it is a regulation 
that protects retiring civil servants and Ministers from state 
pension freezing, but that is really even more grossly unfair, 
especially at the moment when the pensions of civil servants are so 
much in the news. The Minister may say that British pensioners do not 
contribute to our economy, but they do; they save a lot of money for 
the UK economy and contribute as much as the 462,000 UK pensioners 
who receive uprated state pensions. Perhaps the Minister could say 
what the difference is between all those people.

I want to end by paying tribute to the people who campaign on the 
issue. They do it at their own expense and at a great distance and 
are really the David to the Government's Goliath. Many are very 
elderly themselves, but they are fighting about principle. They 
contributed to a British state pension, and successive governments 
made a great thing about that contributory principle. They see their 
state pensions as deferred earnings, and as something to which they are

25 Oct 2005 : Column 1142

entitled, and it is high time that the Government looked again at 
their inflexible stance, especially as we are 60 years from the end 
of World War II. It would be great if the Minister would resolve the 
issue, and I hope that he will tell your Lordships that he will take 
personal charge to do that and discuss with his ministerial colleagues
—including the Prime Minister and the Chancellor—how he will do 
something to remove this terrible unfairness and injustice. I beg to 
move to resolve.

Moved to resolve, That this House regrets that the Government have 
not considered uprating the state pension rights of all United 
Kingdom citizens living abroad in the Social Security Benefits Up-
rating Regulations 2005, laid before the House on 18 March (S.I. 
2005/632).—(Baroness Greengross.)


  Lord Jones of Cheltenham:  My Lords, it is with some trepidation 
that I speak for the first time in this House after spending the past 
13 years in another place, and I hope that noble Lords will be 
tolerant as I learn the ropes. I particularly want to thank all those 
who have been so kind and helped me during the first few tentative 
weeks that I have spent here. In the short time that I have been 
here, I have admired the extraordinary array of talent and experience 
on these Benches—per head, probably one of the finest gatherings of 
brain power in the world.

I do not believe that I was regarded as something of a rebel in the 
other place, but I regard it as suspicious that two of my former 
Chief Whips joined the House at the same time as I did, no doubt to 
keep an eye on my activities. The noble Lords, Lord Kirkwood of 
Kirkhope and Lord Tyler, dealt cautiously with me in the other place, 
and I hope to receive the same sort of treatment from my new Chief 
Whip, the noble Lord, Lord Shutt of Greetland, and his assistants—
although I am deeply suspicious of the noble Lord, Lord Roberts of 
Llandudno, who shares an office with me.

A couple of years ago, my cardiologist, who was Welsh, told me that 
if I carried on with what he called, "This 80-hour week lark", I 
would be taken out in a box. He suggested, "Something more gentle". I 
do not know whether he had this House in mind or whether he used his 
influence with the powers that be, who decide who enters this House; 
but I must say that things seem to be more gentle at this end of the 
corridor so far.

I congratulate the noble Baroness, Lady Greengross, on securing the 
debate, and I particularly wanted to contribute because, over the 
years, I have come across a number of cases showing the effects of 
this injustice. Surely, it cannot be right that people who have made 
the same pension contributions should be treated differently because 
of where they choose to live during their retirement.

I want to use the example of a lady called June, who used to be one 
of my constituents in Cheltenham. June's son went to Canada and made 
his life there; when she retired from work, latterly in the probation 
service, she had intended to move to Canada to be near

25 Oct 2005 : Column 1143

to, but not to live with or to be dependent on, her son and his 
family. Then she found out about the frozen pensions rule. She 
imagined that it was an administrative glitch and that Parliament 
would soon sort it out—so she waited. The rule did not change, so 
after almost a decade of frustration she went to Canada anyway 
because, as she told me, "I shall be dead if I do not go". She is now 
nearly 80 and tells me that she rarely eats meat. She does not want 
to be a burden on her son and his family and, like many other British 
citizens in Canada, Australia, New Zealand and other countries, she 
is angry about being cheated out of what she sees as her proper 
pension. As she points out, if her son had made his life in the USA 
or the Costa Brava, she would not be penalised by such improper 
treatment. Instead of being good ambassadors for Britain, those 
people are bitter at being let down by financial discrimination that 
they find hard to understand.

I shall make two further points. First, with regard to pensioners 
living in overseas British territories it seems bizarre that, except 
for those living in Bermuda, Gibraltar and the sovereign base areas 
on Cyprus, pensioners entitled to a British state pension who live in 
British overseas territories fall foul of the frozen pension rule. 
When I was in the other place, I tabled a Parliamentary Question 
asking how many pensioners living in British Overseas Territories 
were victims of that regulation. The answers, given in a Written 
Answer on 23 February 2004 were:

       "Anguilla 148 . . . British Virgin Islands 42 . . . Cayman 
Islands 95 . . . Falkland Islands (including South Georgia and South 
Sandwich Islands) 37 . . . Montserrat 154 . . . St. Helena and 
Dependencies 71"—

that is, including Ascension and Tristan da Cunha, and,

       "Turks and Caicos Islands 15".—[Official Report, Commons, 
23/2/04; col. 322W.]

There are currently none in the British Antarctic Territory, British 
Indian Ocean Territory or Pitcairn Island, although last week I met 
the commissioner from Pitcairn Island, who tells me that he will be 
caught by the regulations. That makes a total of 562 people. In the 
two other British Overseas Territories where the pension is not 
frozen, in Bermuda and Gibraltar, a total of 1,454 received the 
annual uprating of their pensions. So almost three-quarters of those 
who qualify living in overseas territories are treated properly.

I also asked what it would cost to unfreeze those pensions without 
paying arrears; the estimate for the year 2003–04 was less than 
£500,000. So I suggest that the Government consider unfreezing 
pensions for all those living in British Overseas Territories as soon 
as possible. They are British, they live on British soil, and the 
cost in Treasury terms would be the equivalent of loose change.

Finally, I want to make a suggestion to the Government that, I 
believe, will help with their proper desire to make poverty history, 
and in particular to help the people of Africa. There are pensioners 
in this country who have skills that would be valuable to countries 
in Africa and to all developing countries, if

25 Oct 2005 : Column 1144

only they could be persuaded to spend their active retirement in 
those developing countries. Unfortunately, the prospect of their 
state pension being frozen will deter many people who might otherwise 
choose to do that. Importantly, there are some countries that are 
facing population loss, mainly because of the HIV/AIDS pandemic. 
Botswana, for example, according to a population projection in the 
latest update to the Encyclopaedia Britannica, may lose a quarter of 
its population in the next 15 years. President Mogae of Botswana is 
actively encouraging experienced citizens from the UK and elsewhere 
to go and help his country and, incidentally, to live in a civilised 
environment with lovely people. Abolishing the frozen pensions rule 
would give British citizens the choice of spending their retirement 
making a real difference.

I believe that the Government should produce up-to-date estimates of 
how much it would cost to put right the injustice of all frozen 
pensions. There is a prize awaiting the government who sort out the 
problem. As British citizens, those who suffer from frozen pensions 
have votes in British parliamentary elections. Those votes could 
swing the result of tight elections. The great civil rights 
campaigner Martin Luther King once said:

       "Injustice anywhere is a threat to justice everywhere".

I urge the Government to look carefully at this injustice and take 
steps to eradicate it.

Baroness Fookes: My Lords, this is a first for me. Never before have 
I risen to speak immediately after the delivery of a maiden speech. 
It is a real pleasure and privilege to congratulate the noble Lord, 
Lord Jones of Cheltenham, despite his misgivings, on a speech most 
fluently delivered, which showed a real knowledge, sympathy and 
understanding of the plight of expatriates, coupled with some 
constructive suggestions about how these things may be put right. We 
shall look forward to his further contributions in this House. I 
offer him, on behalf of us all, a very warm welcome.

Like the noble Baroness, Lady Greengross, who introduced this debate—
we are deeply grateful to her for this opportunity—I have deep 
regrets. I am not sure that "regrets" really covers how I feel. For 
many years, both in the other place and here, I have felt strongly 
and keenly the sheer injustice that is done to those expatriate 
citizens who happen to live in the wrong country. That is what it 
amounts to. It is, as the noble Baroness, Lady Greengross, said, the 
arbitrariness of it which is so infuriating. I do not believe that 
there is any justification, and I hope that no government Minister 
will seek to take refuge in the judgment against Annette Carson. As 
was so rightly said, this was on whether human rights had been 
infringed, and nothing whatever to do with government policy. It is 
high time that, after many years, the Government put right this 
injustice. I do not pretend that the Government whom I supported when 
they were in office were any better on this matter. They can share 
equal opprobrium on the subject as far as I am concerned.

25 Oct 2005 : Column 1145


It seems to me extraordinary that if some people who go abroad are 
not to enjoy these rights, others should do so simply because they 
are members of the European Union, or where there is a reciprocal 
arrangement. There is no logic in that whatever. It would be harsh, 
but at least logical, if anyone living abroad was not entitled to an 
uprating of the pension—not that I am advocating that for one moment. 
To have some who are and some who are not, however, is quite 
unjustifiable. The illustration of the Canadian/USA border is 
extremely apt, and shows to the full the sheer folly of this 
particular arrangement.

Of course, it falls far more heavily on those who retired many years 
ago, when the pension was much less than it is now. Indeed, there was 
a case—recently, I think—of somebody who died in their 90s, who was 
receiving a pension of some miserable £6.95 a week. Almost 
unbelievable. Therefore, those who are very elderly are in a far 
worse plight than anyone else.

It is my understanding that this arrangement was intended to be 
temporary when the government of the day dealt with the uprating of 
the pensions. I am emboldened in this because, back in 2000 when I 
had a Question on the subject, there was an intervention by the late 
Lord Shore of Stepney. It is worth while quoting what he said:

       "My Lords, will my noble friend"—

this was addressed to the noble Baroness, Lady Hollis of Heigham, who 
then had responsibility for these matters—

       "at least think very hard about this issue? I remember dealing 
with this matter in Cabinet some years ago. There was never any 
question but that, morally, our fellow citizens who worked for us 
here in Britain and who then migrated overseas were entitled to a 
pension by virtue of their paid-in contributions. We did not update 
the pension because of the chronic shortage of foreign exchange, but 
morally the case was clear. When we were controlling capital 
movement, when tourists could spend only £50 a year abroad, and when 
all kinds of restrictions faced us, we could not do it, but morally 
these people have a right to a pension. Will the Government fulfil 
that obligation at the earliest moment?".—[Official Report, 3/4/00; 
col. 1082.]

The reference to the £50 travel restriction takes us back many years. 
This is a long-standing grievance which needs to be put right.

I am aware, of course, of the cost. Let us make no mistake about it—
it is a matter of cost. This is what has influenced every 
administration from that time to the present day. I make an 
alternative suggestion to that of the noble Lord, Lord Jones of 
Cheltenham. Would it not at least be possible to uprate—not backdate—
the pensions from whatever point in time the decision was made, for 
those aged 80 or over? They are the ones most at risk. I would 
seriously ask the Government at least to think about this, if they 
cannot go, as I would wish them to, for total uprating. Then, at 
least, we would know that those who get frailer and older, who may 
well be of the war generation, would have some comfort in the last 
years of their life. I urge at least this compromise upon the 
Minister tonight.
Next Section


  Lord Mackie of Benshie:   My Lords, I, too, congratulate the noble 
Baroness, Lady Greengross, on

25 Oct 2005 : Column 1146

bringing this up. It has been a source of annoyance and grief to a 
whole lot of people. Many people in political life have been trying 
to make the Government see sense. It is extremely difficult to do that.

Fortunately, we have some hope on the legal side, in that a very 
distinguished lawyer, the noble and learned Lord, Lord Carswell, 
disagreed with the last verdict. The Government have won the last 
legal case, but it is not a legal case that we are talking about. The 
noble Baroness, Lady Fookes, put it in a nutshell: it a case of human 
rights. The human rights issue may well provide some solution. The 
Government should, however, think of doing something to put this evil 
right. They would do some good to themselves in so doing.

The figure quoted by my noble friend Lord Jones of Cheltenham—I think 
he said £500,000—would upgrade the pensions without paying the money 
they are due for back pensions, which must cost more. If the Minister 
would explain this, and agree or disagree, I would be grateful.

I am a pensioner. I took my pension when I was 70. That, I am afraid, 
was 16 years ago, but my pension then was £74. It is now over £140. 
The difference that that would make to someone who has gone abroad, 
simply to live with his family—which is a right and proper instinct—
might be very big indeed.

The people who are profiting from being paid the rise are mostly 
people who are quite well off. One can go and live on the beaches of 
Spain or the French Riviera; one can mingle with the toffs in 
Tuscany; or one can go and live in Las Vegas, if anyone would desire 
to do that. Then you get the increase. It is totally illogical. If 
you live in the Caribbean, as I understand it—and I should like the 
Minister to confirm this—you get the winter fuel increase of £200. 
That seems a bit illogical in view of all the good people who get 
nothing out of it.
8 pm

To talk of money is right and proper, and we have to think of it. But 
to save money for the Treasury from one section, totally unjustly, is 
quite wrong. If the Treasury has to save that money it should come 
off all of us from taxation or elsewhere. To save it at the expense 
of people who go to live with their families in the Commonwealth—
people who have supported us in two wars—is quite wrong. The 
Government must consider not paying a little more but paying the full 
rate to pensioners who have lived abroad for family reasons as well 
as giving it to all the people who are rich enough to live in the 
Caribbean.

Lord Goodhart: My Lords, I am very pleased indeed that the noble 
Baroness, Lady Greengross, has chosen to raise once again for debate 
in your Lordships' House the subject of this longstanding injustice 
to a substantial number of people who have contributed much to the 
United Kingdom. I am also very pleased that my noble friend Lord 
Jones of Cheltenham has chosen this debate in which, a little 
unusually, to make his maiden speech. But it shows that his 13 years of

25 Oct 2005 : Column 1147

distinguished service to his former constituents in Cheltenham is 
continuing despite the fact that he is no longer their representative 
in the lower House of Parliament.

I believe that any reasonable person would agree that the treatment 
of pensioners who have gone to live abroad in countries where there 
is no mutual agreement on pensions is grossly unfair. I think that 
that belief will only have been reinforced by the specific examples 
that have been raised this evening by the noble Baroness and by my 
noble friend. This unfairness dates back to 1975 when the Wilson 
government were in a terrible mess, had to find spending cuts and had 
to restrict the outflow of sterling. The uprating of pensions of non-
residents was selected as one target for these cuts and restrictions. 
It had the great attraction, and continues to have the great 
attraction, that those who suffered from these changes did not have 
the vote. So they were denied the uprating and they have never had it 
since despite the great improvements in this country's fiscal 
situation and the transformation of sterling into one of the 
strongest currencies in the world.

Back in 1975 there was no Human Rights Act which gave the victims of 
this decision an opportunity to challenge it on grounds of 
discrimination. Following the enactment of the Human Rights Act, a 
number of overseas pensioners claimed that their treatment was 
discrimination which was rendered unlawful by the Act. Mrs Carson, 
who took her case to your Lordships' House, was one of them. I 
believe profoundly that in rejecting her claim the Appellate 
Committee of your Lordships' House got it wrong—except, of course, 
for the noble and learned Lord, Lord Carswell. I do not know whether 
there is any possibility that this case might be taken from your 
Lordships' House to Strasbourg. If there is any possibility, I 
certainly believe that there would be a real chance of victory for 
Mrs Carson.

I was my party's spokesman on pensions for some years and became very 
concerned with this issue. Pensions are a contributory benefit; 
indeed, they are by far the largest contributory benefit. Not only 
that; they are by far the largest benefit of any kind in money terms, 
whether contributory or non-contributory. Contributions are paid into 
the national insurance fund. The national insurance funds is not a 
fund like a private pension fund; it is, as I say sometimes, a 
pipeline and not a reservoir because the year's contributions go to 
pay the current year's pensioners, not to provide capital for future 
pensions. But that does not alter the principle, which I believe is 
that there is an implicit contract between the contributors and the 
state—not a legal contract, but an understanding that the 
contributors will make payments, and in return for that the state 
will pay them a pension. Contributions are payable only if and while 
the contributor is employed in the United Kingdom, apart from the now 
fairly numerous occasions when people receive contribution credits 
without actually paying contributions.

25 Oct 2005 : Column 1148


During the period when they are employed in the United Kingdom, those 
people will not have been making contributions to foreign state 
pensions and building up foreign pension rights. The contributors 
will have been contributing to the United Kingdom economy when they 
are working here. When they go abroad, they relieve this country of 
the burden on the National Health Service and the social services, 
which are very much more expensive for those who have retired than 
for those who have not yet reached retirement age. This relief far 
outweighs the fact that pensioners, when they go abroad, do not pay 
income tax on their pensions.

The Government have singled them out for the denial of uprating. That 
means that the value of their pensions goes down in real terms from 
year to year. There is no possible justification for that. It means 
that some elderly pensioners who got pensions 20 or 30 years ago in 
periods of high inflation are now receiving only a tiny fraction of 
the pension that they would receive if they were still resident in 
this country.

The lead speech in the Carson case was given by the noble and learned 
Lord, Lord Hoffmann. I disagree strongly with the noble and learned 
Lord's statement in his speech that:

       "There is nothing unfair or irrational about according 
different treatment to people who live abroad".

Against that background it is not surprising that he decided against 
Mrs Carson. He went on to say:

       "The primary function of social security benefits, including 
state retirement pensions, is to provide a basic standard of living 
for the inhabitants of the United Kingdom".

That is only partly true of retirement pensions because, by working 
in this country and by contributing to the economy, people deprive 
themselves of the chance of acquiring benefits in other countries. 
They have rights to UK pensions, which they should be able to take 
with them when they leave this country, whether they leave before or 
after reaching retirement age.

The Government could, of course, say that no pensions should be 
payable to anybody resident abroad. There are good reasons why the 
Government do not say that. They would not get overseas workers to 
come here if they did. It would be an intolerable restriction on the 
rights of older people to move abroad. Instead they give the full 
pension that has been earned by the contributors at pension age, and 
then slice a little bit off year by year. It is death by a thousand 
cuts. That is not just unfair; it is immoral.
8.10 pm

Lord Oakeshott of Seagrove Bay: My Lords, this is not the easiest 
debate to answer from this Front Bench. The noble Baroness, Lady 
Greengross, has done us all a great service by raising with all her 
customary persistence and passion the issue of uprating. We almost 
always sing from the same hymn sheet in this House, so I thought long 
and hard about how far I could follow her on this occasion.

My noble friend and predecessor as Front Bench spokesman, Lord 
Goodhart, and I also stand shoulder to shoulder on almost every 
issue. As usual he has put

25 Oct 2005 : Column 1149

his case with the logic and precision that we always expect. My noble 
friend Lord Mackie has also spoken with great force.

My short answer is that I have considerable sympathy with the points 
that they made, and I shall probe the Government's position as hard 
as I can. The official position of our party, as set out in our 
policy paper last year is,

       "to look at whether further reciprocal arrangements could be 
established with other countries to allow as many pensioners as 
possible to benefit whilst recognising that a country's first duty is 
to those who live within its borders".

It is a particular pleasure to pay tribute to my noble friend Lord 
Jones of Cheltenham in his maiden speech, especially for his tireless 
work for his former constituents. He was in the front line for 
democracy in Britain on that dreadful day when he was attacked in his 
advice centre. He has also done much valuable work for the cause of 
democracy overseas in election monitoring. I pay particular tribute 
to him for his moving and focused speech highlighting the problems of 
the small group of state pension recipients in the British overseas 
territories. As he pointed out, only Bermuda, Gibraltar and the 
sovereign base area of Cyprus receive quarterly uprating. In 11 other 
territories they do not. He quoted £500,000 a year as the estimated 
cost of unfreezing pensions. Will the Minister either confirm that 
that is a realistic estimate, or perhaps write to me and the noble 
Lord, Lord Jones, if he needs to check the figure?

My noble friend made a particularly strong case for this group. We 
urge the Government to try much harder to widen uprating by a series 
of reciprocal arrangements with individual countries. But how 
realistic is that when we are dealing with tiny islands for which 
Britain is still largely responsible, such as British Virgin Islands 
with 47 pensioners, the Falklands with 38 and Ascension Island with 
just five? With whom would the British Government negotiate a 
reciprocal agreement when there are only a handful of pensioners? In 
practice the British Government would be negotiating with themselves. 
The Minister must consider whether the doctrine of reciprocity would 
stretch that far, or whether in all the circumstances, UK pensioners 
in the British overseas territories should not be treated for 
uprating purposes as if they were still resident in the UK. The cost, 
as we have heard, would be negligible.

Cost is a relevant consideration if the Government's estimate of £400 
million a year, increasing over time, is correct as the price to 
public funds of fully unfreezing the pensions paid to about 520,000 
people overseas, of whom the great majority—about 470,000—live in 
Canada, Australia, New Zealand and South Africa.

I fully understand how badly let down many—or all—of those pensioners 
feel. We have to recognise that they are competing for a limited 
pension and social security budget with, for example, many women who 
are shamefully treated by Britain's present pension system, or the 
85,000 people in this country

25 Oct 2005 : Column 1150

who have been robbed of their pensions when their funds collapsed and 
still have not received a penny from the financial assistance scheme.

We have heard powerful cases on behalf of overseas pensioners 
tonight. When we on these Benches are arguing our spending priorities 
with our Treasury team colleagues nearer the next election they will 
certainly be in our mind. But from these Benches we cannot make firm 
promises of backdated uprating now.

The Government must also tell us why progress on entering new 
reciprocal arrangements with overseas countries is so slow. In the 
past 20 years only with Barbados and the Philippines have they signed 
new agreements that have not been overtaken by European-wide 
regulation. Are they really trying? What is the strategy for reaching 
agreement with the key four countries? Do the Government now accept 
that reciprocity is not a realistic option with the overseas 
territories?

In replying to the debate on the Pensions Bill last year, the then 
Minister Chris Pond struck an encouraging note in discussing new 
bilateral agreements. He stated that after around 1981 there were no 
new bilateral agreements. He said:

       "One way forward may be to argue for a bilateral agreement 
between those countries and the United Kingdom that would allow us to 
work out how to meet the reciprocal costs of such an arrangement".—
[Official Report, Commons Standing Committee B, 27/3/04; col. 259.]

In reply to our then pensions spokesman Steve Webb, he said:

       "I hope that other hon. Members will reflect on whether 
further pressure should be exerted to examine whether other bilateral 
agreements would benefit the interests of the particular communities 
mentioned today".—[Official Report, Commons Standing Committee B, 
27/3/04; col. 259.]

That struck an encouraging note. Is that still the Government's 
position or, if not, why has it changed.

I end on as positive a note as I can. I can, at least, go further 
than the suggestion made by the noble Baroness, Lady Fookes. We on 
these Benches and my colleagues in the Commons believe that, as a 
start, UK state pensions paid to people living in countries where 
they are not currently uprated should be increased from now on in 
line with UK inflation. That change would let people make an informed 
choice about where they lived in future. It would not be 
retrospective, but it would be affordable, costing an estimated £20 
million this year, rising to some £100 million a year by 2008–09. It 
may be cold comfort to those who retired and emigrated many years 
ago, but we think that it would strike a fair balance between the 
financial pressures of the pensions crisis in this country and the 
injustice felt by people living abroad whose pensions are frozen. It 
would be a useful start and it would at least stop the problem 
getting worse.

How I wish we could say that about our collapsing pension system in 
this country.
8.15 pm


  Baroness Noakes:   My Lords, I add my thanks to those of other 
noble Lords to the noble Baroness, Lady

25 Oct 2005 : Column 1151

Greengross, for bringing the issue of the pension entitlement of 
overseas pensioners before the House. The noble Baroness works 
tirelessly for older people and it is enormously to her credit that 
she includes those who live beyond our shores. Of course, the noble 
Baroness is eternally youthful, which is why she can bring these 
issue before us with such energy and determination.

I congratulate the noble Lord, Lord Jones, on his maiden speech. I 
welcome him to our House and would say to him that perhaps he will 
not surprise noble Lords in future by his speeches if he advertised 
his presence on the speakers' list and other noble Lords might have 
the opportunity to hear what he has to say. I hope that we hear more 
from him.

The noble Baroness, Lady Greengross, has given an excellent summary 
of the position of overseas pensioners and uprating and there is 
nothing I can add to that. The noble Baroness also conceded that the 
Government have established through the Carson case that they are 
entitled to decline to uprate the pensions of those who live abroad. 
The current law is now clear as a result of that case, 
notwithstanding the dissenting judgment of the noble and learned 
Lord, Lord Carswell. But, as other noble Lords have said, the heart 
of the issue is one of policy, regarding whether the Government 
should now change their settled policy of not paying pensions uprating
—whatever the strength of the legal case that they have for choosing 
not to.

In the last Session of the previous Parliament we had many debates on 
pensions in the context of the Pensions Bill, which is now an Act. 
Many of its provisions are aimed at reinforcing the pensions promises 
made by private sector employers to employees. The Government chose 
to use the Pensions Act to provide financial underpinning of 
employers' pension promises where those employers might otherwise 
have found reason to reduce the financial strength of the pension 
promise. In effect, the Government have elevated that promise above 
other potential claims on businesses.

That is how the Government have told employers to behave. When it 
comes to public pensions, the Government take a different view. They 
do not acknowledge any pension promise in the sense that it is 
implied for employers. So for pensioners who live abroad , the 
Government say that they are entitled to freeze their pensions at the 
date that they leave the UK.

I do not think that I am alone in finding the position of the 
Government somewhat illogical. On the one hand, employers have made 
pensions promises that are to be protected by legislation that 
borders on the draconian, but, on the other hand, the Government say 
that they have made no promise to a pensioner about his pension and 
it is for the Government to determine whether or not to pay uprated 
benefits if the pensioner chooses to live abroad.

Of course, the legal position of the Government choosing to decline 
to pay uprating has been amended in those instances where the 
Government have chosen to enter into reciprocal social security 
agreements or

25 Oct 2005 : Column 1152

by way of the mutual obligations of the EU. It is that selective 
approach to pensions that has created the sense of arbitrariness to 
which the noble Baroness, Lady Greengross, and other noble Lords have 
referred. That is seen to be particularly unfair. It seems unfair 
that those who choose to live on the Costa Blanca, in California or 
Las Vegas, as was mentioned, should receive their increases while 
those in Australia or Canada do not. Since the lapse of the 
reciprocal agreement with Australia, I understand that a majority of 
overseas pensioners do not now receive uplifts although that does not 
make it any less unfair for the pensioners involved.

Difficult issues are raised. I have a number of questions to put to 
the Minister. The issue of costs has been touched on by other noble 
Lords. How much will it now cost on an annual basis to upgrade the 
pensions which are frozen? There are two ways of considering the 
matter. One is to uprate as though uprating had already applied. The 
other is to start from where we are at the beginning of the year and 
to begin uprating from now on, as the noble Lord, Lord Oakeshott, 
suggested. My noble friend Lady Fookes suggested uprating for those 
over 80 years old. I hope that the Minister will be able to give us 
costs for all those suggestions, if not now, perhaps later. The noble 
Lord, Lord Oakeshott, referred to £20 million for his option of 
uprating from the beginning of the year. It would be helpful to have 
that and the other figures confirmed. It is important to have those 
figures because the Government make a choice every year, implicitly 
if not explicitly, whether to uprate pensions. It is important to put 
that annual choice in context.

Will the Minister also tell the House the lowest figure of frozen 
state pension? We have some anecdotal examples of low frozen 
pensions. We have to remember that policy decisions made in the 
aggregate have a precise human impact at the micro level. The noble 
Lord, Lord Jones, the noble Baroness, Lady Greengross, and my noble 
friend Lady Fookes referred to specific examples. Alongside the total 
cost, it is important to know the impact on individuals.

What policy do the Government have towards reciprocal social security 
arrangements? Are the Government prepared to negotiate any further 
such agreements? Alternatively, is it the policy of the Government 
actively to seek to withdraw from agreements, as they did in the case 
of Australia? The Government's position should be made clear.

Finally, I raise the issue of the report expected next month by the 
noble Lord, Lord Turner of Ecchinswell, who was in his place earlier 
but has deserted us at present. Will that report cover overseas 
pensioners? In today's increasingly global world we should not be 
surprised if pensioners choose to spend all or part of their 
retirement abroad. The question of savings for a future generation of 
pensioners must take account of the possibility that some of them 
will choose to live abroad and will need, therefore, to have an 
adequate income to support that. That should be taken into account in 
any pensions review because that is part of today's life choices. If 
it is not clear that the noble

25 Oct 2005 : Column 1153

Lord, Lord Turner, will be including that in his report, my plea to 
the Minister is to ensure that it is brought to his attention.
8.24 pm

Lord Hunt of Kings Heath: My Lords, we have had a good debate. I 
congratulate the noble Baroness, Lady Greengross, on her initiative 
in opening up the debate and as someone who has been a sterling 
champion of older people for so many years. It is a great privilege 
for me to answer the debate although I doubt whether she will be 
pleased with the response I shall give her.

I also welcome the noble Lord, Lord Jones of Cheltenham. It was a 
marvellous maiden speech. He will be warmly welcomed when he takes 
part in future discussions in your Lordships' House. Looking at his 
CV, I note that although he is clearly a keen supporter of Cheltenham 
Town for some reason he also watches Swindon Town. He needs to know 
that I was brought up in Oxford and that I spent many happy hours 
watching Oxford play Swindon—and mostly lose. So I look forward to 
discussions on that most important matter.

I can also clear up the matter of the noble Lord's presence on a 
speakers' list. Noble Lords have had an agonising wait for his maiden 
speech. When this order was due to be debated in, I believe, the last 
week of July, by mistake a speakers' list was put up in the Whips' 
Office and most noble Lords who have spoken tonight put down their 
names to speak. The noble Lord, Lord Jones, did so and was listed as 
a maiden speaker. I think he is perfectly entitled to have attended 
this debate and to have carried out his maiden speech with such 
skill. However, if he is looking for a cosy time here, he will not 
get it—we may be more gentle but, my goodness, we are hard-working.

I understand the points raised by noble Lords, and I do not seek to 
pretend that it will be easy to respond in the way that I shall. Of 
course, I understand the concerns that noble Lords and Members of 
Parliament have had on this issue over many years. But I reiterate 
that successive governments have taken the view that all those who 
work in the UK and have built up an entitlement to state pension 
should have the right to receive it. There were no plans to change 
that arrangement. But the pension is increased or uprated in line 
with UK price inflation only where the recipient is a resident in the 
European economic area or in a country with which the UK has a 
reciprocal agreement. I know that noble Lords are well versed but, 
for the record, I should state that the uprating of pensions paid to 
people residing in the EEA is a requirement of EC law. As members of 
the EU, we are required to comply with that. Over the years, we have 
entered into a number of reciprocal agreements. They are not 
primarily concerned with the uprating of pensions; essentially they 
are about providing for the protection and rights of workers who move 
between the UK and the other country concerned. I shall return to the 
question of future reciprocal agreements as a number of noble Lords 
raised that point.

25 Oct 2005 : Column 1154


We have heard a very interesting summary of the Carson case, and it 
is good to hear the noble Lord, Lord Goodhart, disagree with the 
noble and learned Lords who made that decision. It is worth quoting 
from the noble and learned Lord, Lord Hoffmann—it is a slightly 
different quotation from the one given by the noble Lord. In fact, 
this is a difficult debate to sum up because noble Lords have tended 
to anticipate my answers. However, in the Carson case, the noble and 
learned Lord said that the difference in payments to non-residents 
was rationally justifiable as pension benefits were part of an 
intricate and interlocking system of domestic social welfare, making 
the position of a person living abroad relevantly different from that 
of a UK resident so as to preclude a claim for equality of treatment. 
I understand that the noble Lord disagrees with that but it was the 
view of the majority of the Law Lords. Of course, we wait to see 
whether Mrs Carson takes her case to Strasbourg, and clearly we shall 
watch with interest if that happens.

I turn to the question of money because it is at the heart of this 
issue. Governments have to make hard decisions, and there is no 
question that, taking each of the options being presented to us, a 
considerable amount of public money is involved. I understand that if 
we fully uprated and back-paid, there would be an enormous amount to 
pay—in the region of £3 billion.

  Lord Goodhart:   My Lords, I thank the noble Lord for giving way. I 
do not think that anyone would suggest that the benefit should be 
back-paid. The question is: if it is to be paid, from now on will it 
be paid on the basis of what the current pension is or what it would 
have been if it had been uprated in past years?

Lord Hunt of Kings Heath: My Lords, I fully understand that, and I 
was about to give an order of the payments because I was asked to do 
so. We calculate that it would cost an extra £400 million per year, 
increasing over time, to bring pensions paid in countries where 
uprating is not available up to the rate paid to pensioners resident 
in the UK. That would be if we did it now as opposed to backdating. 
For example, increasing the rate of basic pension paid to a person 
who left the UK in 1988 from £41.15 to the current rate of £82.05.

If further upratings were applied to the current frozen rates, which 
is the point that was raised by the noble Lord, Lord Goodhart, and 
other noble Lords, the estimate that I have is that the cost in the 
first year would be £20 million and that it would increase to £130 
million by the fifth year and would further increase over time. Those 
are the different orders of cost. The principle still remains the 
same: that each of those options would cost government money—money 
from taxpayers. The judgment is where to spend that money most 
wisely. I have to say that the Government are not persuaded that they 
should change their existing policy. They follow the policy of 
previous governments: I have wonderful quotes here from the right 
honourable William Hague and the right honourable James Arbuthnot 
defending that principle. I will not bore the House with those quotes 
because I recognise that this has been a constructive debate with the 
best of intent, but I do have them up my sleeve.

25 Oct 2005 : Column 1155


We heard from the noble Lord, Lord Oakeshott, too, in the sense of 
the Liberal Democrats' Front Bench indecision on resource priorities. 
When it comes down to it, that is the nub of the problem. We are not 
alone in applying restrictions on payments of state pensions abroad. 
Many countries apply restrictions; in some cases the UK arrangements 
are far less restrictive than those of other countries. Under the 
Australian system, for instance, unless there is a reciprocal 
agreement a pension cannot be claimed by a person residing outside 
Australia. So if a person leaves Australia before reaching the age at 
which he or she becomes eligible for a pension, all rights are forfeit.

New Zealand also applies a residents' condition at the point of 
claim. Close to home, the Netherlands is proposing to introduce 
similar restrictions on payments of pensions outside the EEA area, in 
countries where the Netherlands does not have a reciprocal agreement. 
So we are not alone in the kind of arrangement that we have had in 
place.

A number of specific points were raised. The noble Lord, Lord Jones 
of Cheltenham, has a clear interest in the British Overseas 
Territories and I suspect that we will hear more of that in the years 
to come. I am advised that the figure of £500,000 is described as 
reasonably accurate, but I will find out whether we can obtain some 
harder figures—it is a ball-park figure. He is also right about 
defining the different countries within the category of British 
Overseas Territories as to which are subject to uprating and which 
are not.

I turn to agreements and the future policy. I think that it is fair 
to say that most of the existing agreements are consolidations of 
earlier longstanding ones. They were entered with a view to 
administration improvements and efficiencies and to take account of 
developments and changes to both countries' schemes over time, rather 
than to extend the scope for payment of increased amounts of benefits 
abroad. It would be fair to say that the previous government in 1996 
decided to adopt a policy of limiting the scope of future agreements 
to exclude benefits and to cover only the avoidance of double payment 
of national insurance or other countries' equivalent social security 
contributions.

I am not aware of any current specific plans for extending reciprocal 
agreements. There is also the question of countries that do not have 
similar policies to uprate. Some may not have a social security 
system that we would recognise as such, where a reciprocal agreement 
would not be able to be brought in. I am afraid that I cannot give 
the noble Lord the comfort that he seeks on that point.

Lord Oakeshott of Seagrove Bay: My Lords, will the Minister accept 
that that is rather a different tone from that struck by his right 
honourable friend in the other place and I wonder why that is?

Lord Hunt of Kings Heath: My Lords, I am prepared to write to the 
noble Lord, but tonight I am giving him my understanding of the 
position. I do not want to hold out hopes that cannot be delivered 
on. I will be happy to write to the noble Lord with fuller details, 
but he should not take that a reason for optimism.

25 Oct 2005 : Column 1156


The position on winter fuel payments, which were raised by the noble 
Lord, Lord Mackie of Benshie, is that a person entitled to a winter 
fuel payment in the UK may continue to receive it if he moves to 
another EEA country or, from winter 2002–03, to Switzerland. It is 
only in those countries that winter fuel payments can be applied for. 
We do not pay to people living in the Caribbean, other than those 
living in French Martinique because of its annexation to France.

Australia unilaterally ended the social security agreement with the 
UK from 1 March 2001. UK pensioners living in Australia never got UK 
pensions uprated while living in Australia. The reciprocal agreement 
never provided for the uprating of pensions.

I was fascinated when the noble Lord, Lord Turner, came into the 
Chamber because I wondered whether he was going to contribute to our 
debate. The noble Baroness, Lady Noakes, continually asked me to 
anticipate what would be in the Pensions Commission report. She knows 
that I cannot do that. I have no doubt that when the report comes out 
we will have an interesting debate in your Lordships' House, and I 
must express some disappointment at the negative tone that has again 
come from both Front Benches about the Government's record on 
pensions overall.

A number of noble Lords asked whether we could identify the people 
who were suffering most hardship and make a special case for them. 
There is still the principle of resource and the great difficulty of 
targeting specific groups within that cluster of people. Such action 
would be as likely to be discriminatory as any other possible policy 
that we could adopt in that area.

The noble Baroness, Lady Greengross, asked whether the DWP literature 
was clear. I am informed that the leaflets say very clearly that 
pensions are frozen if you go abroad, unless you go to an EEA country 
or to certain other countries. That brings us to the crux of the 
issue: in the end it is down to individual choice. That principle has 
been in practice for a considerable number of years. It is known to 
people and therefore the consequences of going to live in certain 
countries ought to be known by them. The position of the Government, 
notwithstanding my sympathy with the excellent speeches that have 
been made tonight, is that we do not think that we can move away from 
the principle that has been accepted by this Government and the 
previous government. None the less, it has been an extremely useful 
debate, and I am most grateful to noble Lords for taking part.

Baroness Greengross: My Lords, I rise with some sadness, but I 
expected the Minister to respond more or less in the way that he has. 
I was heartened by his tone because I know that he is a humanitarian 
person, as are all noble Lords who have taken part in the debate, and 
appreciates the difficult situation that many people overseas now face.

25 Oct 2005 : Column 1157


I was particularly struck by the comment of the noble Baroness, Lady 
Fookes, about those who retired a long time ago and whose pensions 
are frozen at a really paltry level, which they try to survive on. 
They have my greatest sympathy out of all those about whom noble 
Lords have spoken with such clarity. I am grateful to have such 
support for what I have said.

I still hope that maybe, one day, the Government—who have done a 
great deal to lift pensioners in this country out of the sort of 
poverty that many lived in before—could do something to alleviate the 
situation.

25 Oct 2005 : Column 1158

People find it so unfair that some are doing so well, and others are 
not. Could the Government not look with a humanitarian glance at the 
sort of people we have talked about tonight?

I am obviously not pleased, but I understand what the Minister has 
said. I withdraw the Motion—with regret, as it was such a Motion—and 
hope that one day the position might change for those with whom 
everybody here has expressed much sympathy. I beg leave to withdraw 
the Motion.

Motion, by leave, withdrawn.

                   House adjourned at twenty minutes to nine o'clock.