Contribution
It is a pleasure to serve under your chairmanship, Mr Dowd. I thank the hon. Member for Farnham and Bordon (Gregory Stafford) for securing this debate.
Nearly 13 million UK citizens receive the state pension, and around 1.2 million of them live outside the UK. Most of those people are entitled to state pension increases because they live in the European economic area or in the 15 other countries with which the UK has signed an agreement. In return for uprating the state pension, those countries have promised to continue supporting their own citizens living in the UK.
It is right that UK citizens who have diligently paid into the UK national insurance system over many years are entitled to receive their UK state pension, whether or not they decide to move abroad. However, the issue at the forefront of today’s debate is whether pensioners who reside overseas receive annual increases to their pension.
As other hon. Members have set out, this depends on the specific country in which a person lives. My Liberal Democrat colleagues and I know it is unfair that some UK pensioners abroad receive state pension increases while others do not, simply because of the country in which they live, not because of the contributions they have made to the UK national insurance system. Addressing that is a matter of fairness and equality, especially for those who have paid into the UK system for their entire working lives.
There has been a long-standing campaign to rectify this discriminatory system. However, the last Conservative Government refused to take any positive steps to increase the number of reciprocal agreements, which would have had the effect of uprating pensions. In fact, it is disappointing—although unsurprising—that under the last Conservative Government, agreements lapsed and the best interests of both British nationals residing overseas and non-British pensioners residing in the UK were neither prioritised nor championed.
We saw catastrophic economic mismanagement under the last Administration, with spiralling inflation rates and a soaring cost of living. That hugely exacerbated the gap in the value of pensions paid to recipients in countries with reciprocal agreements and those paid to recipients in countries without, with a completely unacceptable impact on hundreds of thousands of pensioners.
The majority of pensioners who live overseas receive pension increases because they live in countries with reciprocal agreements. However, many fall through the gaps and are left struggling. Currently, half a million UK pensioners living overseas do not receive the annual state pension increases that those in the UK and in certain other countries are entitled to. This issue affects my constituents and the constituents of many hon. Members. Their pensions are effectively frozen at the rate when they first started claiming—sometimes decades ago. This frequently leaves long-term pensioners abroad significantly worse off over time.
The UK Government have stated that they uprate pensions only in those countries where there is a mutual agreement. Many of those agreements have not been updated or renegotiated for decades, and no new ones have been signed since 1981. Countries such as Australia and Canada have repeatedly requested new agreements, but the UK has declined. Frozen pensions are the norm in countries such as Australia, Canada, New Zealand, South Africa and parts of the Caribbean and Asia, despite significant British expatriate populations. It is critical that the Government tackle this injustice and take steps to ensure that all pensioners receive the support to which they are entitled. However, it is also critical that this comes alongside a fair deal for the UK taxpayer.
Rather than unilaterally increasing the state pension for UK citizens living abroad, I urge the Government to prioritise entering new arrangements with other countries that would manage costs and provide oversight. That would be more affordable and provide a better framework for monitoring payments. Colombia, Mongolia, Thailand, Uruguay, Brazil, Australia and Canada have all approached the Government in the past decade to ask for a reciprocal agreement, and each time the Government have refused.
We have seen the Government enter new bilateral and multilateral trade negotiations over the last few weeks. As they work to build new trade partnerships with countries across the globe, there is a real opportunity to speak out for thousands of British pensioners who currently face unfair financial hardship. I urge the Minister to ensure that existing agreements are not allowed to lapse. The Liberal Democrats also call for the inclusion of reciprocal pension agreements in future trade deals. More broadly, the Liberal Democrats believe that the Government should conduct an independent review of frozen pension policy, an issue that has been raised with me time and again by constituents.
The previous Conservative Government abandoned pensioners and totally failed to give them proper support. This Labour Government have also treated pensioners poorly by cruelly ripping away the winter fuel payment. The Liberal Democrats are proud to be the ones who introduced the triple lock, lifting thousands of vulnerable pensioners out of poverty.