Pensions Bill [Lords]
The Committee consisted of the following Members:
Annette Toft, Committee Clerk
† attended the Committee
‘(3) In sub-paragraph (4) leave out “6 April 1959” and insert “6 April 1955”.
‘6 In section 126 of the Pensions Act 1995 (equalisation of and increase in pensionable age etc.) in paragraph (a) delete “2024” and replace with “April 2020”.’.
Malcolm Wicks (Croydon North) (Lab): I welcome you, Miss Clark, to our proceedings. You will find that generally we are a well-behaved bunch, despite the best efforts of one or two of us to break from that norm.
Just before we broke for lunch, I was on my feet for just a minute, probably not without hesitation and certainly not without deviation, as I acknowledged that it was the birthday of the national health service. I will now focus rather more smartly, I hope, on the amendment moved by my hon. Friend the Member for Leeds West, which I rise to support. By way of context, I shall reflect on the policy implications of increasing life expectancy. I will also argue that generalisations about demography and longevity might create new injustices unless pensions policy becomes more sophisticated and is supported by wider measures.
The Government’s proposals have an obvious context, but perhaps it is not so obvious. It is demographic—several colleagues have spelled out the demographic trends, and I will note one or two statistics myself. We also need to view the issues, albeit briefly, as we are in Committee, in a wider context of trends that have affected life cycles in the 20th century and are now affecting them in the 21st century. Today and in future, typical life cycles are and will be characterised by later entry into the labour market, as well as lives that are lived longer. Therefore, many years are spent in retirement.
Today, many of our children and grandchildren will not enter the labour market properly—there will be holiday jobs, I know—until the age of 21, or, with postgraduate qualifications and training, perhaps closer to the age of 25. In other words, in a modern society and economy, people may take 25 years to get started, at enormous expense to different people, such as families and the state. I will not talk about education, but although arguments about tuition fees may seem distant from a discussion on pensions, in terms of how we understand life cycles, those two subjects seem closer intellectually than might be thought.
We have seen statistics on longevity. I thank the Minister and the Department for their useful background statistical documents. One page tells us that in 1926, women who survived to 65—many did not, of course, and I will talk about that in the modern era—lived a further 13 years. Recent evidence suggests that that average has increased to 24 years in the recent past. The Department, presenting new data from the Office for National Statistics, issued projections that revised that still further upwards to 28.7 years; that is for women. I hope that I have got the figures roughly right; the Minister will correct them if I am wrong, although they are his figures.
One of the interesting figures in the documents shows that longevity now means that women could spend 42% of their adult life at state pension age, many of them, but perhaps not all, retired. That is an extraordinary thought and in many respects, one could argue, a slightly scary one. It would certainly require us to be a little more robust about what we mean by the strange and old-fashioned word, “retirement”, but that goes a bit further.
Previous Conservative and Labour Governments accepted the demographic logic, the implications of longevity and life expectancy, and have legislated accordingly. In other words, the judgment was made that people will have to take their state pension at a later
Both previous Governments planned for the long term, as many thoughtful individuals do. However, the nub of our critique is that the Bill is more about an interpretation and a response to deficit. I am not encouraging the hon. Member for Reading West to get to his feet; he made a good intervention, and I enjoyed it the first time. [Interruption.] Members of the Committee were not meant to laugh. In my judgment, the Bill is more a response to deficit and the crisis that we are undoubtedly in than sound, social policy planning and, as a consequence, it heaps a spectacular burden on the shoulders of the relatively few women—albeit up to half a million—who will be adversely affected.
After changes to other social policy measures such as child tax credits and child benefits, many people are entitled to ask whether the coalition has a problem with women because many of the severest cuts will fall on the necks and shoulders of women. I noted earlier that past reforms have met with little resistance or controversy. That is true, and if we compare the gradual planning of both Conservative and Labour Governments with the huge disturbances in Paris, for example, when pension changes were mooted, it is a tribute to those previous Governments that the long-term planning seemed fair to the public. There might have been the odd grumble here or there, but it did not create huge controversy. It was not about conflict. Indeed, it was more about consensus.
The Bill is undoubtedly different. It has brought conflict into the pension policy process because of new forms of injustice. There is a now a serious danger that that risks shaking and undermining public acceptance of the demographic challenge, and I would regret it if that turned out to be the case. I would also regret it if the Bill further undermined our support for the contributory principle in national insurance. It did not always work out well in practice because people paid in when they could because it was their duty, but they drew out as of right when they needed to, because that was their right, but if we start to undermine the principle in different ways, we will be in trouble.
I want to ask two questions, although I shall be careful not to say too much about such matters because both more than touch on the amendment that I shall discuss either today or Thursday, when I shall probably be talking more about men. However, I shall focus on women now and the danger of overgeneralising about longevity and life expectancy.
I have known for some years about the logic of longevity and life expectancy. There is no quarrel, but we get into difficulty when we assume that everyone, regardless of background, will live 20 or 30 years in retirement so they must all understand the nature of the challenge. I wanted to e-mail all members of the Committee a paper, but I do not know whether I did. With support from the Library, which had support from the Office for National Statistics, I looked at the likelihood of women dying before they reached the current state pension age of 60.
It is interesting to examine such results by social class. I must say that the social class of the husband was used methodologically in the process. The Library advised me that that was the best measure to go by, although distinguished social scientists might disagree. When we look at the figures, we see that 4% of women from the higher managerial and professional class—so-called “social class I”—die before the age of 60; for the next group, the lower managerial and professional class, the figure is 5%; and for intermediates, it is 5%. Women doing routine occupations—women in the poorest social class, if you like—tend to be manual workers. Many of them do the grottiest jobs in care homes, or are cleaners, and so on. When we look at those women from the routine social class, we see that fully 10% of them die before the age of 60. We can argue about the implications of that; I am bound to say that they are not obvious, although I will have a proposition on Thursday to put about them. Nevertheless, I hope that that figure will make us stop and think that this demographic trend is not so clear-cut and general as might be thought.
Of course, the other interesting thing is that when we look at people who reach state pension age—most people from all social classes do reach it—we again see, because of differentials in mortality through social class, that women and men from the poorest social class enjoy or experience fewer pension years than those in the professional class. I am focusing today on women, but the difference for both men and women is about four years.
My thesis would be, “Look, let’s be a bit careful about this”. Quite a few of those women in the poorest social class—we are talking about women today—die before they get their pension at 60, putting aside any consideration of wanting to push the pension age up still further. Of course, when women in the poorest social class get their pension, they generally get it for four fewer years than people in very different circumstances, who did not leave school at 14 or 15 and who did not do cleaning or manual work. Despite the stresses and strains of a Committee on a Tuesday afternoon, many people in the professions, such as ourselves, do not suffer the physical hardships that many manual jobs involve.
Harriett Baldwin (West Worcestershire) (Con): The right hon. Gentleman is making an absolutely truthful statement that since we have had a state pension there have been differences in longevity between different socio-economic groups. Does he accept that longevity for all socio-economic groups is increasing?
Malcolm Wicks: Yes, I do. The Minister very helpfully—to truth, let alone his own case—presented some evidence on that. Of course, I recognise that that statement is true. Indeed, someone else could make a further point that surely health inequalities fall outside the range of pensions and we need to tackle those inequalities, and the Marmot review has just been published, which reminded me of the Black report of many years ago. I understand all that.
Nevertheless, I am trying to say to the Minister—although he has heard this argument from me once or twice in recent months—“Let’s just pause for thought about whether we have absolutely got this right as we move the state pension age up rather quickly for this group of women.” I do not know whether the Minister,
This morning, the hon. Member for Arfon raised issues about location, which we discussed. It is worth putting some of this on the record further. I will read from my own paper, if that is allowed; one can plagiarise oneself, I think. This general social class difference is reflected in geographical differences. Considering drastic local variations in longevity, if we compare Kensington and Chelsea with Glasgow—the hon. Gentleman used this example himself—there is a difference of almost 10 years. That is for men, but there is of course a difference for women too. Across Sheffield, there is a difference of more than 14 years if we look at longevity. Even in Kensington and Chelsea—I alluded to this without the reference in front of me—which is, as he said, the borough with the highest life expectancy, there is a difference of eight years between the most and least deprived wards. As we represent different constituencies, and different social groups within our constituencies, my plea is to move away from generalisations and think whether a future policy which simply says that everyone has to reach a certain age before they get their state pension, might be insensitive to the way in which life cycles are being acted out.
The other point I wanted to raise, which has been touched upon by colleagues, is about employment. Various people have referred to the very good documentation we have had from the Department. Again, my plea would be: let us not generalise. Let us not assume that as we raise the state pension age—in this case for women—everyone will somehow be able to maintain their place in the labour market, keep their job, or, if they are not in a job already, readily be able to acquire a new job at the age of 60 or 61, 64 or 65. Common sense suggests that that is quite a proposition for the coalition Government to put forward. The figures I have—I may be repeating one given this morning—is that, looking at economic inactivity rates by age, by the age of 59 almost 40% of women are so-called economically inactive, for different reasons. In fact, it increases quite rapidly in the late 50s. You only have to go back to the age of 57 where the economic activity rate is only—and I say “only”, in inverted commas—26.7%. It suddenly shoots up in those last few years before the current state pension age.
As we proceed to raise the state pension age, quite rapidly for women, which is our main point, how confident is the Committee that, in our different constituencies, faced with these different occupational groups, jobs will be available for those women who want to work? Others have caring responsibilities, and I understand that, although many people, of course, combine work and care. Are we confident about the employment implications of this?
Stephen Lloyd (Eastbourne) (LD): I concur with many of the points the right hon. Gentleman makes; they are very valid and serious points. My question is that we are talking about, relatively speaking, a minimal difference. Exactly the same issues that the right hon. Gentleman is discussing would have applied to his Government when they were in power, where women who, as the right hon. Gentleman said, started work at 15 or 16, would be worn out, to coin a phrase. I am unsure what alternatives the previous Government brought forward, because they were following the same narrative.
Malcolm Wicks: I certainly understand that, to be fair, the ugly spectre of social class variations by mortality has not suddenly appeared under this coalition Government. I am being fair-minded. All sorts of other evils have appeared, which we can discuss on another occasion. Of course, it has always been an issue, but it goes back to the point that I raised earlier—my hon. Friend the Member for Leeds West put it better than I did—that past Governments have approached the problem rather cautiously and over a long term, so that individuals could plan and think through their future. The rush to judgment on increasing the state pension age for women is different from what preceded it, which is one difference. If and when I introduce my amendment later in the week—I am not 100% confident about it, because this is not easy stuff—I have some ideas about possible solutions to put to the Minister.
The Minister of State, Department for Work and Pensions (Steve Webb): Good afternoon, Miss Clark. This morning, you missed a ripsnorter—as it is known in the trade—of a discussion on the important issue of the state pension age. That has been the focus of much attention, and it is proper that it is the first clause of the Bill. I want to respond to the points made by every Opposition Member, except by the hon. Member for Erith and Thamesmead, who I think will speak on the next group of amendments.
It is interesting to follow the right hon. Member for Croydon North. I have indeed read his paper, which I commend to Committee members—if they do not have a copy, I will sell them one. In the paragraph headed “Policy implications”, he condemns
I am sure that he does not mean the Secretary of State or me—I might take some pride in it—but it is not an entirely accurate description of the Government’s approach. However, from the speech that the right hon. Member for Croydon North has just given and most others, one could be forgiven for thinking that amendment 16 and the others in the group would not raise the state pension age to 66; of course, they would. In response to an intervention, the hon. Member for Leeds West went further and said that the current legislative timetable for moving to 67 and 68 is too pedestrian. [ Interruption. ] I think she did. She also said that that move should probably be faster to pay for the effect of the amendments.
All the points made by the right hon. Member for Croydon North and other Members about people feeling worn out in their late 50s and struggling to find jobs in their 60s will be true whenever we move to a pension age of 66, 67 and 68. Nothing in the group of amendments would address the points that have been raised; they would still be true, but true just a few years later. I will come on to the question of notice, but I thought it was important to make the point that the general trend to longer life expectancy and later state pension ages will raise precisely the issues referred to by Opposition Members, which are not remotely dealt with in the amendments. It is important to put on the record that the amendments would raise precisely the same issues.
I was struck during the debate by the fact that Opposition Members are asking the single figure of the state pension age to do a huge number of different jobs. It is meant to tackle local labour market difficulties in Wales and the fact that some working-class men—and women, for that matter—leave school at 16 and have amassed 49 years of contributions by the pension age. It is being asked to address differences in healthy life expectancy and differences between regions. One number cannot do all that work. The issues raised are perfectly proper, but the idea that we should respond to them through the state pension age is where the logic goes wrong.
Teresa Pearce (Erith and Thamesmead) (Lab): I am a little confused by what the Minister is saying. I did not hear what he heard. My colleagues argued that, although we may be living longer—that, too, is not a single fact, because there are mitigating circumstances for different types of people—it is not only that the pension age is moving, but that people are different and need different ways of planning for future changes. They have already planned for one set of changes, and they need more time to plan for the next. What I heard was that we cannot just say that people are living longer, which is a fact or statement that is being made to fit all circumstances. I think the Minister perhaps misunderstood what was said.
Steve Webb: I know that the hon. Lady missed the first half hour of the sitting this morning for the entirely proper reason that she had a debate in Westminster Hall, but it does mean that she missed the exchanges I was talking about. Perhaps, before accusing me of misunderstanding something she did not hear, she will think again.
The amendments deal with two issues that the Bill does not. First, those women have already had their state pension age moved once, under the changes in 1995; the goalposts are now being moved for a second time. Also, both Barbara and Linda, as well as other women, say that it is impossible. Linda made it particularly clear in her testimony: she earns only £270 a week, and it would be impossible for her to save anything like what is necessary for her to be able to make the adjustments that she wanted to given the impact that her job is having on her health. In two important ways, therefore, the amendments deal with the concerns of the women.
Steve Webb: I am slightly confused. The hon. Lady seems to be critical of us for moving the state pension age “for a second time”, but any woman who reaches state pension age after 2022 has already had her state pension age raised to 65 and would now find it raised to 66 by the hon. Lady’s amendments. The amendments would raise the state pension age twice.
There is clearly an issue to do with people having time to save. The hon. Lady is fond of quoting the fact that many women in their late 50s, after 13 years of a Labour Government, have not got much in savings. How will that change dramatically because of her proposed delay of a couple of years? If they got to their late 50s with minimal savings, putting the date back by a couple of years might help a little, but will not make a radical difference to their ability to put right a system that has worked against them over their whole lives, as we have heard from many hon. Members. That is why we are proud to press ahead next year with auto-enrolment into workplace pensions, which we will come on to later in the Bill.
The second reason for dealing with the problem, which no Opposition Member has mentioned at all, is not only the pension age but what people get at the pension age. I hope to be present in future, perhaps with the same cast, to address the question of what sort of pension that specific group of women who perhaps retire in a decade or so should expect. My firm conviction is that the state pension system presided over by the previous Government is not adequate for those women; we have time to change it, although we need to move quickly, to a system that is far fairer precisely for those women who spent time out of the labour market bringing up children. We have heard a lot about their needs, and we have a Green Paper that proposes solutions very
One of the key contexts for the amendments is the fiscal climate. The position of the Opposition party seems to be that its amendments would leave us £10 billion down on the Bill. When asked by my hon. Friend the Member for Reading West where that £10 billion would come from, the answer as far as I understood it was from the taxpayers and firms of 2035—that is when the money would come in from moving to 67 earlier. I think that even 68 was mentioned, so it would be the taxpayers of 2045 as well. As one of my hon. Friends said, that is the children and grandchildren of the very women we are talking about. The silent voices in the room are the next generation of taxpayers. The hon. Member for Arfon said that he had only had a small number of letters, and perhaps some women affected did not write in, but the other people who did not write in were those who do not know about the £10 billion that they are about to be asked to pay in decades to come, because the Labour party leaflet possibly did not mention that bit. That is the flip side: if we are going to spend £10 billion on this group of amendments, someone has to pay for it.
It has been pointed out that the change is not in the current comprehensive spending review. Pensions reform has a knack of not being in the current CSR, but it is still essential to think about the fiscal context. My hon. Friend for Grantham and Stamford put it very well when he said, if we are taking about such vast sums of money, we have to look at what bang for our buck we are getting, and not just at an aggregate level. We know how many people are affected, but how many people are so adversely affected that we need to spend £10 billion putting it right? I thought that was absolutely pertinent to our discussions.
Rachel Reeves: Does the hon. Gentleman really believe that it is fair that 500,000 women are so disproportionately affected by the changes? Even if the Government want to save the full £30 billion, does the Minister think it right that one group of women should have to pay the highest price for it?
Steve Webb: The question of why more women than men are affected is important, and the answer is that we are treating men and women equally sooner. An inevitable consequence of treating men and women the same more quickly is that it will be women who lose in the process when we level-up state pension ages. As we may go on to discuss, moving men first would breach our duties under equality legislation, because it increases the gap between men and women. If the hon. Lady had another hat on, she would be urging us to close the gap between men and women. That is what we are doing, and that is why more women than men are affected.
I have to say to the Committee that I have been uncharacteristically generous to Labour Members on their amendment; I suggested that it would cost the Exchequer only £10 billion, but I am guilty of understating the case. As is the way of Departments, we have a slight tendency to think only about our bit. The Department for Work and Pensions would indeed have to find
Steve Webb: They are predicated on realistic assumptions of the proportion of those women who will be working. The right hon. Member for Croydon North, my predecessor but six, would agree with me that the well-established macro-economic evidence is that if we can get people working longer—raising the state pension age is part of that, although it is not quite the same thing—we benefit the macro-economy as a whole, and get enhanced income tax and national insurance revenues. That is what we risk losing if we delay. It is a case of “Make me chaste, but not yet”; we all agree that we are living longer, but we do not want to do anything about it for another decade. If we stick to the timetable in amendment 16, men’s state pension age in 2020 will be roughly what it was a century earlier. That does not feel to me like undue haste.
Steve Webb: We published the figures in the impact assessment, and published two sorts of impacts: first, the annually managed expenditure impacts, which are the £30 billion and £20 billion numbers, and then the income tax and national insurance impacts, which go from about £8 billion to £5 billion and a bit, if I remember rightly. That is all published in the impact assessment; if the hon. Lady leafs through it a bit further, she will find those numbers.
Malcolm Wicks: To be fair, the hon. Gentleman has always had a reputation in social policy for concern about greater equality and social justice. When he looks at these very large figures of billions of pounds of revenue, the causes of the deficit, and the different groups in our society—including the top 2% who are now doing terribly well, in terms of increases in their income and wealth—is he satisfied, as a man concerned with fairness, that this is the place to put billions of pounds-worth of burden? He must have a conscience about this.
Steve Webb: My hon. Friend the Member for Grantham and Stamford said, “Let’s take this group and examine who they are and what their characteristics are.” The first thing we established is that roughly seven out of
Rachel Reeves: There are two key points here. One of the points that Age UK makes in its analysis is that a lot of women start to draw on their savings, whether that is because they are taking on caring responsibilities, going part-time for another reason, or find the physical stress of work too difficult for them to carry on. They make those decisions based on their savings, so they are able to maintain a decent standard of living. However, carrying on for another two years, which is what the Bill asks 33,000 women to do, would be beyond their financial means. Many women who will be affected have said to me that they have never claimed benefits in their life and will continue to work as long as they have to, even if the physical demand takes an enormous toll. They might not claim sickness benefits, but carry on under extreme physical strain, and the Government are asking them to do that for another two years.
Regarding national insurance, pages 35 and 37 of the impact assessment state that the figure is £12.7 million under option one and £8.8 million under option two. I am surprised that the Minister says that that was not included.
Steve Webb: The hon. Lady is referring to the White Paper. With the Bill, we have published a revised impact assessment, which she will find on page 11 of the Bill’s impact assessment. The Treasury revised its estimates of the income tax and national insurance impact, which is why the numbers are different.
The hon. Lady is right that a set of people, particularly women, might have no choice and might, perhaps because of family circumstances, find themselves with a caring responsibility in their late 50s. If that is a difficult situation for them, which I am sure it is, that will still happen regardless of amendment 16 and related amendments. There will still be, in a few years’ time, women in their late 50s who find that they have caring responsibilities and that they run down their modest savings in the run-up to a pension age of 66, which she supports. Indeed, she has tabled amendments to introduce the age of 66.
There is an inconsistency here. I accept that there is an issue about notice, but she is not talking about notice. People in their late 50s who have been forced into caring responsibilities unexpectedly do not make carefully calculated choices and nuanced decisions about it; it just happens to them. That will go on happening generation after generation, and that problem has to be dealt with by giving proper support to carers, not by
Returning to the fiscal context, we have heard the comment that the issue is a long way off, and that it does not matter from the point of view of the deficit. I think we even heard that the days of tackling the deficit will be over, and that the deficit will be some sort of history. What will not be history is the interest burden of the nearly £1.4 trillion of national debt that we will face at the end of this Parliament, despite the difficult decisions that we have had to make. The children and grandchildren of those women will be paying that interest for generations to come. A person who glibly says, “We need another £10 billion, but we will find it in the 2030s” or something like that does not seem to be living in the real world. There is always a case for looking at the impact on particular groups, which we will do, but simply to say, “Tomorrow, and tomorrow, and tomorrow” was the hallmark of the previous Administration, who got us into the situation in the first place.
The hon. Member for Edinburgh East asked about the role of employment and support allowance in supporting people in their late 50s and beyond who are no longer able to work because of sickness. She referred to the 12-month limit under the Welfare Reform Bill. As my hon. Friend the Member for Grantham and Stamford said, it is worth breaking that group down. Nearly a quarter of ESA recipients over 55 are in the support group, so they are not affected by the issue raised by the hon. Member for Edinburgh East. Nearly half of those who start claiming ESA over the age of 55 come off it within a year, so that is pretty typical for people. The majority of ESA claimants over 55 are men, in any case. When we start to narrow it down, the number of women who would otherwise have been on contributory ESA, who would not be in the support group or receiving income-related benefits, and would be on ESA for more than a year would be small. I am not saying that no one would be affected, but we should consider the matter relative to a £10 billion amendment; it is important to keep a certain sense of perspective.
The hon. Member for Arfon asked about the impact on Wales. I assure him that we took close cognisance of that. When we published our call for evidence, we highlighted in the document the improvement of life expectancy in Wales from 84.8 years under the 2004 projections to 86 years in the 2008 projections. One of the questions that we asked was what evidence concerning changes in life expectancy should be taken into account. In the impact assessment that we published with the Bill, which I am sure he will have seen, we gave on page 16 separate figures for life expectancy at state pension age in England, Wales and Scotland, under the different scenarios.
We have been very much aware that the policies will have a different impact on different nations of the United Kingdom, and as the hon. Gentleman rightly says, from community to community. I was interested in the example that he gave of the Welsh Assembly Government looking at ward-by-ward measures, and it
The hon. Member for Kilmarnock and Loudoun referred to the availability of jobs. One of the interesting things about the recent recession is that the market for older workers has held up the best. In fact, the market for workers over the age of 60 has had a positive growth, relative to negative growth for younger workers. That is not glibly dismissing the issues facing older workers, but the evidence shows that it is the growth area in the jobs market. Jobs are often part-time, and a part-time job could well pay the equivalent of the basic state pension, for example, so those jobs are relevant to that group. She raised an important point.
The hon. Member for Nottingham South talked about her constituents who faced 15-month increases, and was worried about the impact on women who do the right thing. She cited women who leave school, work a full working life and then face a pension age of 66. In four years’ time, when her policy would come in of bringing the age of 66 forward by four years to 2022, there will also be women who do the right thing. Why would the issue of women who do the right thing not be equally applicable under the amendment that she is asking the Committee to support? I think that it would.
The hon. Lady raised a particular issue about local government workers, many of whom will, as she says, have a decent occupational pension, which will assist with later state pension ages. However, again, if there is an issue about how the local government pension scheme and re-grading in local government affects people’s pension choices, that is something to fix within the context of the local government pension scheme and local government, rather than by delaying state pension age changes. That would be using a sledgehammer to crack a nut.
I now come to a couple of other issues; I want to make sure that I have responded in full to the debate. I was asked about transition, which is obviously a key issue. I was pleased that my right hon. Friend the Secretary of State said on Second Reading that he stood by the principles of the Bill, such as faster equalisation and a faster move to 66, but that he heard the specific worry expressed by several Opposition Members, as well as some Government Members, who have been commendably restrained, but have properly raised their constituents’ worries with me in writing, for which I am grateful.
There was a specific concern about a relatively small number of women; my right hon. Friend the Secretary of State confirmed that we are willing to get the transition right. I have been asked, “Well, where’s the amendment?” This is a classic case of “Damned if you do, damned if you don’t.” The Bill had its Second Reading a fortnight ago, at which time we voiced our willingness to consider transition. If we then scuttled away and presented our transitional amendments to the Committee, the Committee would have said, “Where was the consultation? Where
Rachel Reeves: The Minister knows that I wrote to him on 22 June asking whether we could discuss this and work together on it. He did not even have the courtesy to reply to that letter. We wanted to build on the Turner consensus, which built consensus across business, unions and all parts of the House. The Government can decide to unravel that consensus, that is their choice, but I offered that opportunity, and I want the Minister to acknowledge that.
Steve Webb: I have indeed received the hon. Lady’s letter and she will receive a reply. She wrote a couple of weeks ago, saying that she wanted to help us with transition. I look forward to the ideas and fresh thinking that I assumed she would bring to the Committee. That is what the Committee is for. This part of the process is for the Opposition to say what they think should be done, to table amendments and to bring forward fresh thinking. We have had some fresh thinking from her right hon. Friend the Member for Croydon North, which we will debate later. We have had some helpful probing amendments from her hon. Friend the Member for Erith and Thamesmead, who suggested some other alternatives that have not been done to death. I hoped that the Labour Front Bench would come to the Committee with some fresh thinking of that sort. We have had the same old arguments, the same debate and the same amendments. I am happy to talk to anyone who will give us fresh thinking on transition. We have plenty of ideas and we want to get this right.
Sheila Gilmore: The Minister will have to concede that our position has been clear from the outset, as it was on Second Reading, on where we stood on accelerating this. It was the Government’s proposal that the problems might be alleviated through transitional proposals. Is it not therefore up to the Government to come forward with some proposal that we could discuss, rather than throwing it back and suggesting that we should be doing the Government’s job?
Steve Webb: I am not sure if the hon. Lady speaks for her Front-Bench spokespeople when she says that, because they are saying that they have lots of ideas that they want to share with us. Either they have not got any ideas, or they have got ideas and just have not told us what they are yet. This is the forum for telling us.
Alok Sharma (Reading West) (Con): I thank the Minister for indicating that the Government are thinking about transitional arrangements. I look forward, with all hon. Members, to finding out exactly what they are. I want to come back to this point: when the hon. Member for Leeds West wrote to the Minister, one would have expected her to put forward some proposals of her own and to bring some to the Committee today. That has not happened. She cannot have it both ways. I am delighted that the Government are thinking along these lines.
Steve Webb: I am grateful to my hon. Friend. I remain open to constructive suggestions on transition. The hon. Member for Leeds West told the Daily Mirror that she was disappointed when she saw when the amendment paper, but she was not half as disappointed as I was, when I saw the lack of fresh thinking from her.
Rachel Reeves: The Opposition Front Bench team has proposed two amendments. One is around the pension credit to help the poorest people affected by these changes. As the Minister knows, the gap between the Government’s proposals and our proposals is a lot less than £10 billion. There are also two amendments tabled by Labour Back Benchers, with nothing from Government Members.
Following up on the Secretary of State, who said he would happily discuss transitional arrangements with anyone who wanted to do so, I set out in my letter to the Minister on 22 June that I would like to do so, but I was not given a meeting with the Minister. In the final paragraph of my letter I said:
“It is important that we resolve this confusion during the Committee Stage of the Bill. We are willing to work with you. I would be grateful, therefore, if you could share with me the proposals that you are working on.”
Steve Webb: The hon. Lady says that she referred, in her letter, to confusion—as indeed she did—and I was confused about what she was confused about. We had made it clear that we stood by the principles of the Bill, but that we recognised that, particularly for the most affected group, we would need to look at the transitional situation. We look forward to anyone, frankly, who wants to feed into that process, and who has specific propositions on that transition. The hon. Lady mentioned the pension credit amendment which, if I recall correctly, was also tabled by her hon. Friends in the Lords and was rejected. We are very happy to hear from anyone who has any fresh thinking on these ideas.
Rachel Reeves: On Second Reading, the Pensions Minister said that he was willing to work to get the transition right, which I presumed meant that he thought that at the moment they had not got the transition right, and in fact had it wrong. If that was the case, I presumed that they would be willing to talk to us, and when I asked to have a meeting, that that offer would be taken up.
Steve Webb: I get the feeling of dancing on pin heads, here. I repeat what I said, and what my right hon. Friend said at Second Reading: we hear the specific concern about a particular, relatively small number of women, and we will consider it, and are willing to work to get the transition right. That remains our position. What I will not do is start off a whole range of speculation. As soon as I say, “We could look at this, we could do that,” then all sorts of hares get set running. A set of people hear a newspaper story that says, “Government set to do X,” and their hopes are raised, and then we do not do that, and they are disappointed. Given the uncertainty that is inevitable when something is going
Malcolm Wicks: The Minister says he does not want to start hares running, so in a way he has answered the question I was going to raise. When I think of the Liberal Democrats—in my better moments, over recent years—it has been a party, and not least the hon. Gentleman, which has been committed to freedom of information, a more open politics, with the Executive of which he is now a distinguished member treating the legislature with greater respect than, perhaps, under previous Governments. Given all of that, would it not have been sensible if the work going on in the Department, which I suspect preceded Second Reading debate on transitional arrangements, could be published as a kind of Green Paper so we could have a more well-informed debate? He would have supported this a little while ago.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): To press a point that my hon. Friend the Member for Leeds West has made, if there has been no opportunity for the Opposition Front-Bench spokespersons to meet to discuss this, and nothing has been brought forward by the Government into Committee, how are we to get any sense, or any flavour, of the types of amendments that the Government propose? I find myself quite bemused to know how we are going to scrutinise something in the absence of any information.
Steve Webb: My right hon. Friend the Secretary of State could not have been clearer on Second Reading when he said that he was aware of the issues facing a specific group, and wanted to ease the transition. Obviously, there are a variety of ways in which that could be tackled. As I say, I am keen that we get it right, and anything that involves primary legislation will have to be brought before the House. I think hon. Members have been here long enough to know that there are further stages that this Bill has to go through, so anything that requires primary legislation will go before the House and be properly scrutinised in the normal way.
Amber Rudd (Hastings and Rye) (Con): Does my hon. Friend agree that the Opposition do not have a monopoly on proposals for transitional agreements? I know that several Government Members here have made proposals, despite comments from an hon. Member here about school prefects. I hope that he will give careful consideration to those, so that the best proposals can come forward.
Steve Webb: My hon. Friend is quite right, and a number of hon. Members who have written in, including herself, have not simply said, “There is a problem here,” which is a slight shade of what we heard this morning,
Mr Marcus Jones (Nuneaton) (Con): The Minister may be aware that I have written to him on the very subject of transitional arrangements, advocating that the Government consider putting transitional arrangements in place for women who are in this particular cohort and may be disadvantaged by the changes. Regardless of that, would the Minister not agree that Government must look at this very carefully and take their time to make sure that they get the proposals right in the interests of both the cohort of women who may be disadvantaged and the wider interests of the taxpayer?
Steve Webb: I am grateful to my hon. Friend for inserting the interests of the taxpayer into the debate. Women in their 50s are taxpayers too, but we have to think of the taxpayers of today and tomorrow and the trade-offs involved. It is important that he highlights that context. I remind the House that we had Second Reading on 22 June and amendments had to be tabled for today. As Mr Brady reminded us at the start, they were tabled last Thursday, so within about 10 days of Second Reading, we suddenly have to produce finely honed legislation. Doing those things in a rush is not right, but clearly, there will be proper parliamentary scrutiny of anything that requires primary legislation.
Sheila Gilmore: I simply suggest that the timetable for Committee is within the Government’s powers. If more time was required, perhaps it would have been appropriate to have a pause before we moved to Committee Stage.
Steve Webb: The hon. Lady will know that we have five whole days in Committee and all the time that is needed to consider all the Opposition amendments has been allocated. I do not think that any Opposition amendment that has been tabled will not get a proper chance to be discussed—there are just not very many and we have had most of them before.
Rachel Reeves: The Minister said previously that he was willing to talk to people who had other suggestions. Is he having conversations with other groups? If so, who are they? Also, does he agree that it is usually sensible to take time to get it right before a Bill is published rather than scrabbling around afterwards to try to find the right answers?
Steve Webb: Once again we are in “damned if you do, damned if you don’t” territory. If you publish a Bill and regard it as holy writ, immutable, unamendable and perfect from birth, you are regarded as arrogant and
I meet organisations to which tribute has quite properly been paid—Age UK, Ros Altmann at Saga, and many others—regularly. It will not surprise the Committee to know that those issues have come up from time to time and we have benefited from their insight. The invitation remains open for the Opposition to make specific, costed proposals for transition that they believe would address the issues. I would be very happy to look at them.
Let me try to draw the threads together because I am aware that a whole range of other debates is closely linked to this one. The fundamental point is that, since the 2007 Act was published, based on 2004 projections, life expectancy has improved not just a bit, but like an express train. In four years, between 2004 and 2008, roughly a year and a half was added to life expectancy at pension age. The bill attached to that is tens of billions of pounds. The question is, who pays it? Does it all fall on the next generation of national insurance payers, taxpayers, and interest on debt payers or does some of it fall upon those who will benefit from the increased longevity?
The hon. Member for Leeds, West said that we are moving up pension ages faster than the improvement in life expectancy. I remind her that in 1990 when the pension age was 60, the average woman reaching pension age—I forget the exact figure—could expect to get a pension for a certain number of years and by 2020, that figure was exactly the same even with a six-year increase in state pension age. In other words, precisely over that period, the number of years for which a woman could expect to receive a state pension in 30 years, despite a six-year increase in the state pension age, has not changed. Again, this does not suggest breakneck speed, disproportionate impact.
Clearly there are trade-offs and we have aired them quite extensively in Committee. I simply say that we are mindful of the very specific group and the very specific issues that my hon. Friends and Opposition Members have raised. We will work to get that transition right, but I resolutely stand by the principle of grasping those difficult issues today rather than putting them off till tomorrow for someone else to tackle. Therefore, I urge the Committee to reject the amendments.
Rachel Reeves: It is good to serve under you in the Chair this afternoon, Miss Clark. I thank hon. Members for their speeches, their questions about the amendment, and for the debate this morning and this afternoon. The purpose of the group of amendments should be clear: collectively, they seek to amend the Bill’s acceleration of the equalisation of the state pension age for men and women and ensure that there is no rise to 66 before 2020, as in the coalition agreement, but allow for a faster increase to 66 between 2020 and 2022.
A petition has been signed by more than 12,000 people, and an early-day motion, calling for precisely the same changes, has been signed by 180 Members, including the hon. Members for Colchester (Bob Russell), for Portsmouth South (Mr Hancock), for Mid Dorset and North Poole (Annette Brooke), for Ceredigion (Mr Williams), for Edinburgh West (Mike Crockart),
“That this House welcomes the equalisation of the state pension age for men and women, but notes with concern the Government’s proposals to accelerate the timetable for doing so; recognises that 300,000 women born between December 1953 and October 1954 will have to work an additional 18 months or more of which 33,000 will have to work an extra two years; further recognises that these women have less than the 15 years of preparation time recommended by the Turner Commission before the changes take place; and calls on the Government to take these issues into account and revise the timetable in order to maintain the commitment given in the Coalition Agreement.”
Stephen Lloyd: I thank the hon. Lady for reminding me of that, which I really appreciate. I return to what I asked several Opposition Members this morning: does she agree that the Secretary of State made a commitment to transition arrangements, or is she saying that he is not telling the truth?
Rachel Reeves: I thank the hon. Gentleman for his question. We are discussing transition arrangements. The early-day motion that he signed and the plans we are discussing today relate to the transition to 66, but at a slower rate to give people more preparation time. He supported that when he signed the early-day motion, and I expect that he told his constituents that he supported it, so for consistency he should support the amendment this afternoon.
Rachel Reeves: The hon. Gentleman may well have been told that, but it is the first I have heard of their coming out in the very near future. I hope that he is right, and that they will appear before the end of
On Second Reading, just two weeks ago, hon. Members of all parties spoke passionately about the need to address exactly that issue—it is a shame that more of them are not here today—and the need to find a better and fairer way that does not fall so disproportionately on one group of women. I remind the Committee of what was said on Second Reading. My hon. Friend the Member for St Helens North (Mr Watts) asked:
“Is it not clear to the Secretary of State and the Government that although everyone accepts that there have to be changes, some of the proposals in the Bill are, for 500,000 women, unfair and unjustified?”
“we need to know very early in the debate whether that group of women will be fairly treated and whether the Government will think again, because those of us who feel positive about many of the reforms would find that a sticking point.”—[Official Report, 20 June 2011; Vol. 530, c. 42.]
“Which of the facts that the Secretary of State has cited was he unaware of 12 and a half months ago, when in the coalition agreement the Government signed up to not introducing these changes before 2020?”—[Official Report, 20 June 2011; Vol. 530, c. 48.]
“recognise that for a particular group of some 300,000 women born in 1954 the transition arrangements are rather more difficult than for any other group in society? Although he should not change his policy, will he look at other ways to help that particular group of women?”—[Official Report, 20 June 2011; Vol. 530, c. 49.]
“Will he give particular consideration to the small group of 33,000 women born in March 1954, on whom the change will bear down disproportionately harshly? Surely there is a way of finding a transition method that takes account of that small group of women.”
“My constituents, the class that left Foxhills comprehensive school in 1970, who were all born in 1953-54, have written to me to ask why the pensions goalposts should be moved twice so close to their retirement. What would he say to those women?”
“I think there is general acceptance that with increased longevity, the pension age needs to be considered, including the current unfair differentiation between men and women. However, there is a particular group of women who will be badly affected. I welcome the Secretary of State’s saying that he will consider transitional arrangements. Is he willing to consider with an open mind amendments in Committee and on Report, or other solutions that might be brought forward, to help that particular group of women?” —[Official Report, 20 June 2011; Vol. 530, c. 51-52.]
The Chair: Order. The hon. Lady has cited a number of Members who have made the points that she is referring to. The purpose of the Committee is not to regurgitate the Second Reading debate but to focus on the clause that is before us. Perhaps she could do that—I think that she has made her point.
Rachel Reeves: The point that I am trying to make is that on Second Reading Members asked time and time again if the Government would consider the impact on this group of women. The Secretary of State said that they would and I think that many Members, including the hon. Member for Cardiff North (Jonathan Evans) who made the case very forcefully on Second Reading, expected that these transition arrangements that the Government said they were looking at and were willing to discuss would be introduced in Committee. The disappointment felt by the Opposition and, I believe, across the House, reflects the fact that despite giving a commitment on Second Reading that transition arrangements would be considered, we are not being given the chance to scrutinise them. Those transition arrangements relate to the part of the Bill that was probably debated most on Second Reading. The hon. Member for Eastbourne says that he thinks they are forthcoming and the Minister says that the Government are looking at them. Yet in the very forum in which they should be debated—this Committee—we do not have any such amendments to consider, even though we are being asked to scrutinise a Bill that may or may not impact this group of 500,000 women in the way that it currently does. If transition arrangements are made for those 500,000 women, or those 33,000 women, perhaps we will be in a different place. Frankly, we do not know that, because the Government are not sharing the information about what those transition arrangements will look like.
“This is unfair as women have too little time to plan for these changes. MPs from all side of the house have expressed their concerns on this issue. The NAPF urges the Government to re-consider the situation for this group of women during the Committee Stages of the Bill and come forward with detailed proposals on transitional arrangements to the State Pension Age.”
The NAPF goes on to make a series of recommendations: no changes until 2020; the increase to 66 should occur for both men and women from 2020 to 2022; and the Government need to do more to help people to work for longer.
and that it would expect the Government to introduce those proposals. That is what many Members in the House expected when they urged the Secretary of State to think about the impact on the 33,000 women whom we have mentioned and the 500,000 women who will have to wait for more than a year longer than they had thought for their pension.
An awful lot of pressure from inside the House—indeed, from all parts of the House—and from outside the House has been brought to bear. So I was pleased that the Secretary of State acknowledged this issue and repeatedly informed the House that he would be happy to discuss the transitional arrangements.
As with the Turner report, I still believe that the best way to go about these things is by achieving consensus. As I said to the Minister during his contribution, I wrote to him, asking him to share with me the proposal that he was working on, in order that we could scrutinise the arrangements. That is what the previous Government did when they put forward proposals for increasing the state pension age. We managed to build cross-party consensus for those changes, both inside and outside the House. It is a shame that the Government have deviated from that approach to pensions policy and it is one that will negatively affect those people, both in retirement and approaching retirement.
It is disappointing that no proposals were forthcoming and a further blow that we have heard nothing of their plans today. Will the Minister explain the confusion? Why did he and the Secretary of State say that transitional arrangements would be looked at, yet nothing is on the table before us today? As the postbags and e-mail accounts of the Members of this Committee and Members from across the House will no doubt attest, this is an issue that has real impact in all of our constituencies.
In my constituency, almost 1,000 women will be affected by these changes by more than a year. How will Government Members, such as the hon. Member for West Worcestershire, who has 1,300 women affected in her constituency, explain that she has not put forward transitional arrangements or supported the ones that are on the table. The hon. Member for High Peak has 1,200 women aged 56 and 57 in his constituency. The hon. Member for Grantham and Stamford has 1,300 women aged 56 and 57. In Nuneaton, there are 1,100 women; Eastbourne 1,200; South Basildon and East Thurrock 1,300; Hastings and Rye 1,400; South West Bedfordshire 1,200; Reading West 1,000; Norwich North 1,000; Thornbury and Yate 1,100; and Arfon 600—the Member with the fewest women in his constituency aged 56 and 57 seems to care more about them than those with perhaps twice as many women of those ages in their constituencies.
All of those women would have been reassured and comforted by what the Secretary of State and the Pensions Minister said during Second Reading, which acknowledged the unfairness of their situation and spoke of the possibility of transitional arrangements that would seek to address that. I know from letters and e-mails to me, that people have said that it looked like the Government were
This Committee could have had a fruitful discussion of the transitional arrangements, yet the Government have failed to come forward with options, as women in all our constituencies and the National Association of Pension Funds, Saga and Age UK would have liked them to have done. Instead we have had no actions and empty words. It is only the Opposition and Opposition Back Benchers who have tabled amendments with regard to the state pension age. We have set out—as I did on Second Reading—that any proposals must give women and men time to plan. They should impact on men and women equally and no one should have to wait more than a year before they get their state pension.
We recognise that the state pension age needs to increase and I believe that the amendments grouped together here would ease the transition, but still get to 66 earlier than under the previous timetable, to reflect increasing longevity. Ministers say they wanted to investigate: we could have an investigation and discussion in this Committee. Instead, we have only Opposition amendments, but I hope today that the hon. Member for Eastbourne and all hon. Members will support this group of amendments.
‘(3) In sub-paragraph (4) leave out “6 April 1959” and insert “6 April 1955”.—(Rachel Reeves.)
Teresa Pearce: During the debate on Second Reading, Members in all parts of the House expressed concern about how their constituents will be affected by the accelerated timetable and the equalisation of the state pension age between men and women. The Secretary of State for Work and Pensions, in his closing remarks, said that he would consider introducing transitional arrangements. Since no amendments have been tabled by the Government, I have introduced my amendment in an attempt to make the Bill fairer. We have heard from Government Members that they have submitted ideas to the Minister, so if they wish to intervene and share those ideas, I will be grateful to hear them.
It is interesting that my aim is to mitigate the detrimental effect; on 9 March, the Minister gave evidence to the Select Committee on Work and Pensions, of which three other members are present. This matter formed the early part of the evidence and there was quite a debate about it, as you will remember. At one point, it
However, the Government now seem to be considering mitigation and I would be interested to know how that could be achieved without moving the line to another place. Were some of the suggestions that have been made to the Minister, which we are not party to, about means-testing certain groups of people? I would be really interested to hear what those solutions are, because there is much in this Bill that we all agree upon, but this is a particular sticking point that most people in this room want to find a solution to. Surely the more voices and ideas we hear, the more likely we are to find a way to help this group of women. It is my aim to try to mitigate the detrimental effect that the accelerated timetable will have on this small group of women who are hardest hit. I am part of the larger group of women and I would like to hear the ideas that Government Members have.
If the compromise that I have put forward is accepted, it would mean that no woman born between 6 October 1953 and 5 April 1955 will have longer than one year to reach state pension age from the present position. On Second Reading, I made it clear that I am not opposed to the principle of equalisation, nor am I opposed to the idea of increasing the state pension age to reflect growing life expectancy. We live in an ageing society and the pension age needs to rise to ensure that people’s retirements remain financially secure and enjoyable. I do not want to see a time when people are too old to enjoy their retirement; it is something people have earned.
However, I cannot support the changes that the Government propose. Speeding up the timetable for equalising the state pension age in this manner is unfair to a large group of women. There is a feeling of injustice. People have said to me they feel conned. They thought they were contributing to one thing, but now they are getting something else. A common theme runs through the letters that I have received from constituents. They do not disagree about the state pension age rising and they did not complain when it rose earlier. They recognise that increasing life expectancy makes that logical. The issue is that moving the goalposts at short notice is creating serious financial harm and causing worries. As a result, some are considering working beyond their state pension age but that should be a choice; it should not be forced upon them. Retirement, and especially the age at which people decide to retire, should be about choice.
Some of these women have made a choice. There is a woman in my constituency who over a year ago decided that she would take a voluntary pay-off from local government. People were being encouraged to do that. At that time, she looked on the DWP website and at her pension forecast and she made the decision based on that. This is a point that I have raised with the Minister before. At that time he said the website could only reflect the law as it was at the time. Without any other information or flag on the website that things might
Teresa Pearce: My constituent worked in local government and they were looking to reduce numbers. She thought, “I am fairly near retirement age. If I take voluntary redundancy, I will be able to last until my pension age”. She looked around and saw younger people who perhaps needed that job more. She made the decision that she would be able to manage. She was nearing the end of her working life, and decided that she could take the pay-off because she would be able to manage until her state retirement kicked in. It was a calculated decision based on her finances.
Rachel Reeves: If my hon. Friend’s constituent had known that she would have had to wait an extra two years, would that lady have continued in her job? Would she have made different financial plans if she had had the correct information?
Teresa Pearce: The lady might well have done, because she had calculated that the amount she had been offered to take voluntary redundancy would last that length of time. Clearly, it will not last another two years so she might well have made a different decision.
As I said earlier, it is important to note that those women have already accepted changes to their state pension age. Originally—as I was—they were expecting to retire at the age of 60. Depending on the electorate, I might still do that. They were disappointed when it was announced that retirement age would increase from 60 to 65 years, but they accepted it and planned accordingly. Now those women find that they are nearing the end of their time in the labour market. The goalposts have been moved yet again, and it is not surprising that they are angry and losing faith in the pensions system. That is important, because there are aspects of the Bill that we will discuss later on auto-enrolment, which are welcome. It is about getting people to engage in the pensions market—a market in which people have lost faith over recent years.
To now be saying to a group of people who have perhaps worked for 40 years that, although a promise was made to them and they have kept their side of the promise, the goalposts will now be moved, further weakens people’s faith in pensions. That is not what anyone in this room wants to do. The women are facing a large gap, which must be filled. Their main complaint is the insufficient notice that they have received. My amendment hopes to minimise that to a certain extent. The women are about seven years away from their pension date, which is well below the 15 years that the Turner commission recommends. I should be interested to know why the Minister disregarded that, and opted for fewer years.
I have heard the hon. Gentleman refer to the rapidity of the increase in the living age. I heard him say that on Second Reading, as I did when he spoke to the Select Committee. However, the particular group of women who were targeted before, and are now targeted again, feel so angry and unhappy about such matters. I understand what the Minister said about our arguments about caring responsibilities and volunteering, but that will just happen later on. I am not referring to a group of complaining women. They form the same group whose pension age was moved before. They did not complain about that, but said, “Okay, fair enough. We will be able to deal with that, although it is a disappointment.” But, as I said before, it is the rapidity and the lack of time in which to plan for such a change that is the problem.
I wish to cite some examples of how my constituents will be affected by the Bill. Susan Harris from Belvedere was a teacher for 30 years. In 2005, she took early retirement and a reduced pension. She had made calculations based on when she thought she would receive her state pension. She thought she was making an informed decision. Sadly, now she is one of the unfortunate women facing a two-year wait and a loss in pension income. I know plenty examples of women in the same position, but I do not intend to go into each one because we would be here for a long time. Women with manual jobs have also contacted me, one of whom is a forklift truck driver. She said that she will not be able to do such work when she is in her later 60s, and asks what she will do.
Stephen Metcalfe (South Basildon and East Thurrock) (Con): The hon. Lady makes some good points, but she is straying into territory that is about the raising of the state pension age, not necessarily the transition. I can understand why people are worried that they cannot work into later life, but that is a very separate issue from the transitional arrangements. We should focus on those and talk about them rather than the emotive subject of whether people will be able to work later into life.
Teresa Pearce: I understand the hon. Gentleman’s point, but what will happen to such people matters. If they are meant to work to a later age, will they be able to work? That is relevant. Another woman who came to me, who has also done the calculations, had an illness in the family, which could not have been expected. She had some savings and a couple of private pensions. She was lucky, because a lot of women of that age do not have private pensions, because they worked at a time when they were not eligible to join the schemes or they were part-time workers who were not eligible. She decided that she could manage with her deferred pension being paid at 60 and her state pension not being paid until she was 63, so she left work to look after her elderly relatives. Now she has to wait for an extra two years, that money will not last.
What will the Minister do to mitigate the circumstances of people like that, who made the right decisions at the right time and took responsibility? What will happen to them? A large number of people have to wait, but only a small number are badly affected. Does not that woman deserve any transitional arrangements? I think she does.
What are the options for the women in these situations? The accelerated timetable means that women who have taken up caring for relatives or providing child care on their retirement, so that the next generation can join the work force, will not be able to do so. As we heard earlier, many women will not have enough savings to fall back on if they cannot hang on in the labour market. Women who have been employed in low-paid work or who have taken time out to have children or act as carers will have few savings to cover them between the time when they expected to retire and the proposed state pension date. They may be able to cover a smaller period of time, but two years is too much.
We must remember that it is not only women that will be affected; their families and their partners will be too. Extended family members may have to contribute financially to help women cover the costs of the period between when they expected to get a pension and when they receive it. The change will also affect many men of pensionable age, because they cannot claim pension credit until their wife or partner reaches pension age. The change will therefore affect the whole household. The 12-month limit outlined in the timetable in my amendment is the maximum that women should have to wait or make alternative plans for. Any longer is unfair and disproportionate.
I disagree with him. No man will have to wait longer than a year, but thousands of women will. If that is not disproportionate, what is? When it comes to the state pension, women are already at a disadvantage. The median pension savings of a 56-year-old women are almost six times lower than a man of the same age. Women will have decided to have children, work part-time and raise families. That is a valid decision and one for which they should not be penalised. It is the very type of responsible behaviour that we should encourage.
Retirement is an opportunity for those who have contributed all they can to society to rest with peace of mind, knowing that their contributions will be recognised and that they will be adequately provided for. I worry, however, about the long-term cost for these women. I suspect that there will be significant hardship, anxiety and stress about financial matters. I also worry that ill health will result from working to an older age.
During my Adjournment debate on this topic, my hon. Friend the Member for Makerfield (Yvonne Fovargue) quoted a constituent who felt that she was discriminated against when she started work 30 years ago, because she was barred from joining a personal pension scheme. She feels discriminated against once again because of her date of birth and because her pension will be delayed. Does the Minister think that is fair?
I have also raised with the Minister the issue of how the women affected who are not in work are meant to balance their finances. I raised that issue in the Chamber and in the Select Committee. The Minister said that it was an important question to ask. What will these women live on in this two-year period? Take the women we are talking about. They are roughly 57 years old currently. What will they be doing when they are 63,
The Minister then went on to talk about what such women would live on if they were not working. If they were not working because they were out of a job but trying to find one, jobseeker’s allowance is there. I know people say that they do not want to go on the dole, and I understand that, but working-age benefits will take the place of pension benefits. In that two-year period, those women will be able to claim jobseeker’s allowance if they are unemployed. However, the issue I raised in the Chamber with the Minister was that, if they were out of work and had a small savings pot, perhaps from a redundancy, or had a small pension, it is my understanding that they could only claim jobseeker’s allowance for six months. What would they do for the remaining 18 months?
I do not know whether the Minister has any ideas about mitigating factors or that cohort of women, but if he does they would be very welcome. It does not seem fair that because they have a small widow’s pension or a small amount put away which they have saved towards their retirement, they would not be supported in any way even though they were out of work through no fault of their own. In my constituency, for instance, more than 3,000 people are registered as unemployed and there are 107 vacancies. For women of that age, competing in such a labour market would be hard.
The Government’s aim is to eliminate the deficit by 2015. The provision we are discussing will not help them achieve that goal, because it does not come into effect until well after. Therefore, the argument that the proposal will help eliminate the deficit, as has been agreed, is not valid. However, the Minister says that there will still be debt after that. My understanding is that the pensions paid to pensioners today are paid by the people who work today—that has always been the case—and the pensions paid in future will be paid by the people who work at that time. It appears that Government policy, with the Work programme and all the changes to welfare benefits, is to get everyone back into work, so surely that would be achievable.
Another point that I wanted to make about the wider Bill is that there is much in it that we agree on. Let us look at this particular issue and at what the Government are trying to achieve. People are living longer, we agree—perhaps people in every region are not living as long as in other regions, but we agree—and male and female pensions should be brought into line, we agree. The Minister was a pensions expert, and spent 10 years working for women’s pensions and talking about pensions—never stopping talking about pensions—so he knows that pension planning needs three things: due notice, time to prepare and proportionality of impact. But that is where this part of the Bill fails—on those three issues, the Bill fails.
During this morning’s debate, the focus of Government Members was very much on the amendment moved by my hon. Friend the Member for Leeds West. They said that her amendment would reduce projected savings
By accepting the amendments, the Government would demonstrate that they want to help the women most affected by the change to the state pension age. Mitigation is what we are looking for; it is what I asked about in March and it has been asked about in the Chamber. On Second Reading, it was clear that people were looking for a solution. As I said earlier, I am happy to take interventions from anyone on the Government Benches who has written to the Minister with different suggestions of mitigation for those women. Sadly, no one has intervened.
Teresa Pearce: By accepting the amendments, the Government would demonstrate that they wanted to help those women. I very much hope that the Minister will accept them or, if he cannot, that he will lay out what he believes would be mitigating circumstances that were costed, affordable and acceptable to the whole Committee.
Sheila Gilmore: I want to speak briefly to address some of the issues that I know will be raised by the Minister, and which were raised in response to the earlier group of amendments. I want to look again at whether it is unfair and unaffordable to make some of the suggested changes. It is very easy to say that one is concerned about the future. This is, as we know, not about deficit reduction. It now appears to be an issue about not burdening our daughters, our grand-daughters, our great-grand-daughters, and so forth.
However, in Government, over such a long period, there will be many changes that take place, which have to be put into the scales when one is looking at what is fair and proportionate. The amendment would not mean such a great deal of savings forgone as the previous group of amendments, but I suspect, though I might be pleasantly surprised, that we will have a similar response to them. At all times, there will be changes and money spent in different ways. I understand that just today the Chancellor has been able to find some £50 million as a concession to the oil and gas industry. Not in 10, 20 or 35 years’ time, but in this financial year. Now, £50 million is not £2 billion, but it is getting on towards £2 billion. I would suggest that in the future there will be other things that we will choose, if we want to, to spend money on. We have to ask ourselves, what is important here? What is important in terms of fairness? And are we really in such a difficult position that this relatively small concession could not be made?
I listened with some interest to what the Minister said about transitional proposals, which may or may not come forward in the near future or the not quite so near future. This is not a new issue. It did not suddenly come to light on Second Reading in this House. Indeed, the matter was debated at some considerable length in the other place. The issue has been at the forefront of a
Rachel Reeves: I congratulate my hon. Friend the Member for Erith and Thamesmead on tabling this amendment, which addresses a large number of concerns that were raised on Second Reading. It smoothes the position, so that nobody, man or woman, has to endure a delay of more than 12 months to their state pension. I welcome the principle that underpins this amendment. The amendment also demonstrates that there are many options open to the Government, of which this is one. We have debated our preferred amendment, and many of the issues are the same. We have to get this right, now, which is why it is imperative that Members do not shy away from doing the right thing by their constituents today. I welcome this contribution to the debate.
As we have already discussed today, the state pension age needs to rise in order to pay for a more generous basic state pension linked to earnings, and also as longevity increases. This was a principle established by the Labour Government in the Pensions Acts of 2007 and 200, and it is one that we continue to support.
As my right hon. Friend the Member for Croydon North said, we do not challenge the life expectancy projections used by the Government to underpin their policy changes, and we understand that life expectancy has increased since the Turner report.
The amendment addresses the underlying unfairness at the heart of today’s debate and throughout the passage of the Bill. It accepts the rise in the state pension age as a necessity, as do I, but it recognises that it is unfair to hit certain women disproportionately—a point that my hon. Friend the Member for Erith and Thamesmead made forcefully in her speech. The amendment would ensure that the accelerated timetable proposed by the Government is smoothed out, so that no man or woman will need to wait for their pension for more than an extra 12 months.
“Having retired early because of health issues I am living off a combination of capital and a small pension. Pushing back my retirement age by another 10 months will impact hugely on my savings. The changes are too…fast and do not provide the opportunity to make extra savings. The job market is pretty desolate, so part-time jobs are non-existent.”
The amendment would mean that that woman will have to wait only an extra five months before she receives her state pension. It would make the transition easier, and mean that she is less likely to fall into debt during the intervening period. Such debt is a blight on the start of many pensioners’ retirements, which we all believe should be a happy time.
The amendment would mean that women born between 6 June 1953 and 6 March 1955 will have to wait for a shorter period before they receive their state pension. There will still be a delay before they receive that pension, but it will be of up to 12 months, rather than 24 months. For women born between 6 April 1954 and 5 December—those most impacted by the current Bill—the amendment would mean a delay of up to 11 months before reaching state pension age, not 23 months as in the Bill. Women born between 6 March 1954 and 5 April 1954—the 33,000 so adversely affected by the Bill because they have to wait an extra two years—would receive their state pension on 6 March 2019. That would mean a delay of 12 months rather than the 24 months set out in the Bill.
As hon. Members will recognise, the amendment goes a long way to support women and give people time to prepare. Crucially, it would mean that the delay in receiving the state pension is no longer than a year, which would make it much easier financially for that group of women to cope. The amendment would provide some of that help with transition that hon. Members sought on Second Reading.
Lilian Greenwood (Nottingham South) (Lab): Will my hon. Friend confirm that the amendment is different from that tabled in the Lords, which may have been rejected on the grounds that it was not consistent with equality legislation, and provides an excellent opportunity to smooth the transition, and is a new suggestion for the Government to consider?
Rachel Reeves: I agree with my hon. Friend and I will come on to the points discussed in the House of Lords. As hon. Members will know, the amendment bears some resemblance to those tabled in the other place by Lord Boswell and Baroness Greengross. The advantage of my hon. Friend’s amendment, however, is that it at no point widens the gap in the state pension age for men and women, which was the objection of the Minister in the other place, but I will come on to that matter in a moment.
We have dealt at length with the effects of the changes in the Bill, and the fact that women who face a two-year delay in reaching state pension age stand to lose up to £10,000, or £15,000 if they receive pension credit. There has also been some discussion about passported benefits such as bus passes, dental and medical prescriptions, sight tests, Warm Front grants, the winter fuel allowance and cold weather payments. For someone receiving pension credit, there is also help with housing benefit, council tax benefit and crisis loans. Delaying the state pension age by up to 12 months rather than 24 months will make a huge financial difference to those women who are bearing the brunt of the changes. A compromise such as the one we are debating will minimise the burden for the group of 500,000 women who will have to wait for more than a year, and in particular, alleviate the impact on the 33,000 women by changing the delay from 24 months to 12 months so that no woman has to wait longer than any of the men affected by these changes.
Many of the women who are helped by these changes, as my hon. Friend for Erith and Thamesmead mentioned, have already left the labour market for reasons discussed by members on both sides of the Committee today,
Steve Webb: The hon. Lady is trying to draw some sort of inference about the likelihood of women working into their early 60s on the basis of current figures, when the state pension age is just above 60. Is that not meaningless?
Rachel Reeves: I am sorry. From a sedentary position, the Minister said he wanted me to produce the figures. The figures are available in the impact assessment published by the Government. The point is that, for all the reasons discussed earlier, which I do not think anyone will dispute, women drop out of the labour market earlier for a variety of reasons, particularly caring responsibilities. We know from the interventions and the speech earlier by the hon. Member for Arfon that many of these women take up caring responsibilities. The point that my hon. Friend the Member for Erith and Thamesmead mentioned earlier was that a lot of these women are making informed decisions. They are not just taking early retirement or taking on caring responsibilities hoping that somehow they will make ends meet. They have done the financial calculations, based on the information that was available to them. Many of these women feel that, very late in the day, the goalposts are being moved without them having the time to prepare.
At age 56, 27.3% of women are economically inactive compared with 20% of men—to make the point about the difference between labour market participation rates for men and women, given their different caring responsibilities.
Harriett Baldwin: The hon. Lady is making the case that retirement age drives behaviour; that when you are approaching retirement, you are more likely to take the early retirement package. If she looks at the table in the Library research paper, based on the ONS labour force survey statistics, she will see that men and women
Rachel Reeves: I do not think it is, because these women thought that their state pension age was at 63 or 64 and have made decisions based on that state pension age. It may well be the case that if you adjust the state pension age, people’s behaviours will change. We know from the constituents who have written to us and the evidence from Age UK that if you give people just five years’ notice of these changes—because of course they kick in 2016—or just seven years notice for the 33,000 most affected women, many of these people have already based their decisions on that information. It is not necessarily that women and men make different choices because of their state pension age, but that people have made decisions based on the information available. They have done what, I guess, we hope everybody does, which is take on board all the information available about our occupational pensions, about the state pensions and when we will receive those. We do our calculations based on those and what we can afford. Many of the women, including the women whom my hon. Friend met, did exactly that. They checked the Department for Work and Pensions website and made their decisions based on that and then they had the goalposts moved.
Harriett Baldwin: Does the hon. Lady accept that there may be just as many women who see that their state pension age is changing and therefore change their expectations as to when they might retire, and change their behaviour?
Rachel Reeves: Yes. We have already seen that, because of the changes that the Government made in 1995 to the state pension age, many women are working longer. Earlier, I gave the example of Barbara Bates, who said that since 1995 she had known what her state pension age was going to be and she had accepted that that was fair and that her pension age would increase to 64. What she finds very difficult—given her circumstances, the nature of job she does and her level of savings—is to carry on for another two years with such little notice. This is the heart of the issue. I have had so many letters from constituents and people across the country who say, “I recognise that my state pension age needs to increase. I accept that and I accept that people need to work longer, but I had done my calculations.” As the lady mentioned by my hon. Friend said, they have done their calculations based on the information available. That is why the Pensions Policy Institute says that people need 10 years’ notice. It actually says that women need more notice because women adjust their plans, for example, going part-time at an earlier age compared with their state pension age than men. Turner said people needed 15 years’ notice and Age UK says people need 10 years’ notice. These changes obviously give only five years’ notice.
Harriett Baldwin: The hon. Lady raises the question of part-time working. Women working part-time in the 25 to 54 age group, according to the ONS statistics, are broadly similar to women working part-time in the year group 55 to 59. Yes, more women work part-time than men, but there does not seem to be a meaningful statistical difference in terms of their age.
Rachel Reeves: One thing the hon. Lady will not see from those numbers is what hours they do part-time. A woman might have been working four days a week and have gone down to two days a week to take on a caring role, so those numbers need to be combined with average hours of work. What the Pensions Policy Institute, which is much respected in its area of expertise, say is that women change their plans further away from their retirement than men, and that largely reflects their caring responsibilities.
The hon. Member for Arfon mentioned earlier the higher proportion of women who take up caring responsibilities. I am not totally disputing what the hon. Lady says, but I am saying that there is still a pertinent point here, for two reasons. First, women were making plans based on a retirement age that they thought they were going to have. Secondly, the Pensions Policy Institute and others say that women adjust their plans earlier than men.
To elaborate on the issue of carers, which my hon. Friend the Member for Erith and Thamesmead also mentioned, Age UK’s statistics reveal that nearly three out of 10 of the women affected have caring responsibilities. This builds on the point that the hon. Member for Grantham and Stamford mentioned earlier. The Age UK report said about the women who were part of their focus group:
“Some women had already left work or had reduced their hours due to caring responsibilities. One of the reasons given for being concerned about further rises in their state pension age was that some wanted or needed to do more caring in a situation where the cared-for person’s health was deteriorating or where they would have liked to have offered to care for their grandchildren”.
“I am desperate to get the government to listen. I work part time with a net salary of just over £7,000 per annum to enable me to look after my grandchildren. My daughter needs to work to pay her mortgage and child care is too expensive. My parents are in their 80s and in need of more care as age and infirmity catch up with them. Looking after my family is my greatest privilege and pleasure but it is demanding and knowing that I will now have to work for almost two more years has left me completely dismayed.”
Steve Webb: One of the consequences of this group of amendments is that the state pension age will still rise to 66. Will there not be absolutely identical stories to the ones that the hon. Lady cites of women who, for all sorts of reasons, are being forced to become carers and who have a long wait to reach pension age—to 66—that will result from amendments that she supports? Why is that any different?
Rachel Reeves: As I said earlier, the reason that there is a difference is twofold. The first is about giving people adequate notice. The other is the time difference. A 12-month delay in the state pension will cost those on the basic rate £5,000; a delay of two years will cost £10,000. Those on pension credit who have to wait one year will lose £7,500, and for two years it will be £15,000. Those women will have done the financial calculations based on the state pension age that they were told would apply to them.
Rachel Reeves: The Minister shakes his head, but that is the reality. These women have been making decisions based on their occupational pensions, the state pension and the age at which they will receive those pensions. Women such as the one who was mentioned earlier, women who spoke to Age UK and women who have written to me have all made decisions about caring. For example, the woman that I mentioned made the decision to care for her grandchildren. However, if she had known that she would have to wait an extra two years before receiving her state pension, she might not have made that decision. That is exactly the point made by my hon. Friend the Member for Erith and Thamesmead, who spoke about a woman who had accepted redundancy payment on the basis that she would receive her state pension at a particular age, but who now finds that her redundancy money has to last an extra two years.
Steve Webb: It is slightly invidious to discuss constituents not knowing the full details, but a woman in that situation—I presume that she is 57 or thereabouts—has taken voluntary redundancy. Is it Labour policy that able-bodied 57-year-old women should not be expected to do any more paid work and that we should shape our pension policy around that assumption?
Rachel Reeves: As I said earlier, the circumstances of these 500,000 women are all different, but they all made decisions based on what they thought was a contract with the Government—that they had paid into the system for a certain number of years and would get their state pension at a certain age.
As others have said, particularly my right hon. Friend the Member for Croydon North, there were no riots or huge objections when the state pension age was increased from 60 to 65, because that group of women recognised that it was fair, and they were given 15 years’ notice, as Turner had recommended. For these changes, however, they are not being given adequate notice. In 1995, few of those women had envisaged their retirement plans but now, with only six or seven years to go, many of them are well on their way to planning for retirement. They have done the right thing. They have carefully planned their finances and taken on caring responsibilities that they could afford, but they now find that those caring responsibilities are unaffordable because they will lose up to £15,000 of pension income. That is the key point.
“My proposed State Pension age will now be 66. I had accepted that the age had been pushed back from 60 but will now have to work extra years. I have 2 children, 1 still at university, and 2 grandchildren under school age who I look after 2 days a week to help my daughter with childcare costs. I had worked all my life with just breaks for maternity, until 2009 when I took early retirement to become full-time carer for a parent with Alzheimer’s. Since their death I have returned to work 3 afternoons a week to supplement the household income. I feel that I and hundreds of other women with similar stories are being penalised for trying to do the best for our families without asking for State help.”
That may be only one example, but it is similar to many others up and down the country. Again, that woman did the right thing. She has cared for her family. She has worked all her life. She has made what she thought were robust financial plans, based on information that she was given, but her plans have been blown out of the water by the rapid changes that the Government are pushing through.
Under the amendment, the state pension age would still go up, but the impact on those 500,000 women would be greatly reduced. Instead of having to wait for more than a year, they would have to wait for less than a year. The 33,000 who would have had to wait exactly two years would have to wait just one year. The 300,000 who would have had to wait 18 months would wait for 11 months or less. There is a difference. It is a balance between the finances and supporting the women on whom the changes would have the greatest impact, which is why I support the amendment.
I want to come to the point mentioned by my hon. Friend the Member for Nottingham South. As Members who have followed the Bill’s progress will know, a similar amendment to the one tabled by my hon. Friend the Member for Erith and Thamesmead was debated in the other place. The Minister for Welfare Reform said in the other place that any alterations to the Pensions Bill must be measured against the 1995 timetable—that is correct—and that they must not contravene the requirements of the equal treatment directive. In response to an amendment tabled by Baroness Greengross, the Minister for Welfare Reform said:
“Directive 79/7 deals with the progressive implementation of the principle of equal treatment for men and women in matters of social security. It provides that there shall be no discrimination on grounds of sex in relation to the benefits to which it applies. When the Pensions Act 1995 was passed, the UK legislated to end gender discrimination in the state pension age by April 2020.”
“Any change we now wish to make needs to be considered in relation to the position left by the 1995 Act. In particular, we need to consider whether any alteration would hinder progress towards equal treatment by either increasing the present gender gap in pension age or prolonging the period of unequal pension ages.”—[Official Report, House of Lords, 30 March 2011; Vol. 726, c. 1279.]
The issue was brought up on Second Reading, referring to the coalition agreement and the amendments tabled by Baroness Greengross and Lord Boswell. The Secretary of State said, regarding the legality:
“There is a slight problem with that element of the coalition agreement. It was done in that way at the time, and that is fair enough, but we have since looked at it carefully and taken legal advice. The agreement talks about men’s pension age being accelerated to 66, which would breach our legal commitment to equalisation and then not to separating the ages again. There are reasons for needing to revisit that, and we have done so and made changes.”—[Official Report, 20 June 2011; Vol. 530, c. 48.]
“the legal issue is that we deviate from equalisation if at any point we widen the gap. The coalition reference to moving men in 2016 and women in 2020 would widen that gap. The issue is directive 79/7, which ‘deals with the progressive implementation of the principle of equal treatment for men and women in matters of social security…Any change we now wish to make needs to be considered in relation to the position left by the 1995 Act.’—[Official Report, House of Lords, 30 March 2011; Vol. 726, c. 1279.]”—[Official Report, 20 June 2011; Vol. 530, c. 126.]
The amendment would deal with the problems identified in amendments in the Lords, so those legal objections would not stand. The timetable proposed in this amendment can be measured against the 1995 timetable, and it is crafted in such a way that the gap would not be widened.
I urge the Minister to study the timetable and confirm that, measured against the 1995 timetable, the timetable laid down by the amendment would ensure that at no point would the gap in the pension age between men and women get wider. If the equal treatment directive was the objection—and it was—that the Government raised to a similar amendment in the House of Lords, we need to revisit their objections to the amendment that we are discussing, as the debate in the other place was about the legal obstacles to the Bill rather than anything else. What, if any, is the reason for the Government’s opposition, if the Government oppose the amendment?
The amendment represents a middle road between the Government’s proposals and the amendments debated earlier today. The Government’s timetable, which will disproportionately affect women and leave people approaching retirement with little time to plan for the change, is expected to save £30 billion by 2026. The amendment that we discussed earlier would save £20 billion over a similar timetable. However, it is clear that this is a middle way. As my hon. Friend the Member for Erith and Thamesmead said, the estimates for what this might save are roughly somewhere in between. The estimate for the amendment tabled by Lord Boswell was £7 billion. It will be interesting to know whether the Minister and his Department have costed the impact of this amendment and whether it fails for legal reasons or for other reasons.
“Bringing forward the increase to 66 is about helping to maintain fiscal sustainability beyond 2015…my noble friend’s compromise proposal—the third-way proposal—would still cost more than £7 billion.”—[Official Report, House of Lords, 1 March 2011; Vol. 725, c. GC123.]
Although we cannot be sure in the absence of an impact assessment, we think that this proposal, given its similarity to the proposal debated in the other place, will fall between the savings of the Government’s plans and the amendment that we discussed earlier today.
As well as transitional arrangements, the amendment shows that the Government have a number of options on the table, and this is just one of them. Would not this measure amount to a suitable alternative that deals with the fundamental unfairness at the heart of the Government’s timetable—an unfairness that was acknowledged on Second Reading? As my hon. Friend asked, what are the parameters of an acceptable set of transitional arrangements? If this measure does not meet them, what would the parameters look like?
Would not this set of amendments deal with the concerns that we have heard from thousands of women, groups such as Saga and Age UK, unions and newspapers as diverse as the Daily Mail and The Guardian? Would it not cost the public purse less than any alternative arrangements? Will the Minister pay close attention to this amendment, to the benefits that it could bring to women in the affected group and to its status under the equal treatment directive?
Steve Webb: I congratulate the hon. Member for Erith and Thamesmead on doing what this Committee is here to do, which is to probe the legislation to come up with creative alternatives and to present them in a thoughtful and well-informed way. I appreciate the fact that she did all those things. It has given us a good
In the last 24 hours, I saw a performance of the musical “Fame”, the theme song of which is “I’m gonna live forever”—a song that is dreaded by all Pensions Ministers. Unfortunately, the consequence of this set of amendments for a number of women would be, “I’m gonna work forever.” The amendments are flawed and would provide for large numbers of women in a particular age group no pension age at all. Amendment 24 is defective in that it provides no pension age for women who were born between 7 May 1953 and 5 December 1953 except for those born on the 6th of the month.
I appreciate that we overdo our impact assessments a bit with ethnicity and gender and all the rest of it, but we have yet to conduct an impact assessment on the people who were born on the 6th of the month. This amendment would have a particular effect on them, which was clearly not the hon. Lady’s intention. If she were to pursue her amendment to a Division, I would encourage my hon. Friends to reject it on that basis, if no other.
The amendment has another slightly odd consequence, which is that it would reduce men’s state pension age. The proposed timetable would reduce the state pension age for men born between December 1953 and February 1954 from 65 to between 64 and six months and 64 and 10 months. I feel duty-bound to point that out, but I say it in no criticism of the hon. Lady because I know how difficult it is to get such things right. This perhaps provides further evidence for the point that I made in a previous debate, which is that doing these things in a hurry is not a terribly good idea. We as a Government should take our time to get these things right.
I will not dwell on the technical flaws in the amendment because that would be unfair and unhelpful to the Committee. None the less, the hon. Lady raises some important issues, which I want to try to address without duplicating the comments that I made earlier. She said that she does not want to see a time when people are too old to enjoy their retirement, and I absolutely agree with her.
A little while ago we had people standing outside the Department wearing T-shirts that said, “I don’t want to work till I drop.” I asked my private office where the departmental T-shirt saying the same thing was, because I do not want to work till I drop either. Raising the state pension age to 66 will leave most people with more than two decades in retirement, and is a recognition that, compared with the previous generation and the one before that, our life expectancy, including healthy life expectancy, is improving dramatically. There is nothing in the Bill that means that people will be too old to enjoy their retirement.
Malcolm Wicks: A lot of people drop—to use a horrible term—before they get to state pension age, so has the Department calculated how many extra people will die before they get to the increased state pension age that the Minister advocates?
Steve Webb: Yes. I was trying to keep my powder dry for the right hon. Gentleman’s next group of amendments. I wish to put him on notice that we will get to them today, if possible. He raises an important point, but my point to the hon. Member for Erith and Thamesmead is not so much about whether people will make it to pension age—the vast majority of people who reach 57 will—but about whether they will be too old to enjoy their retirement. I take the right hon. Gentleman’s point about averages, but we have to deal with the most common outcomes as well as the extreme ones, and what he suggests is not a feature of our proposals.
The hon. Member for Erith and Thamesmead quite properly mentioned the information that we put on our websites. I saw a figure the other day of something like 500,000, or perhaps 1 million, hits on one of our state pension age calculator websites—I think most of them were by me. I can assure the Committee that on the pension age websites we are clear about the current legal position, which is the only thing we can definitively state because the Committee is, I think, urging us to change what is in the Bill. I ask the hon. Lady to imagine a situation in which we put the current legal position and a calculator based on what is in the Bill on the website and people print that off and go away without looking at it again, but we then amend the Bill and come up with another timetable. I hope she appreciates that information on websites has to be based on the current state of the law. The website clearly flags up, on both the entry page and the forecast page that estimates when someone can get a pension, the sorts of things that are being considered. I accept that the site has been improved to make things clearer, and I agree that we need clear information for people to act upon.
Notice periods have been mentioned—the issue often comes up. The hon. Member for Leeds West told us what Age UK, Saga and the NAPF have said, but not what the women themselves say. She quoted a lot of research by Age UK but missed out a table. Women aged 50 to 57 were asked how much notice they thought they needed of changes in the state pension age, and their replies were rather surprising. Some 31% of the sample thought that they needed a notice period of five years or less and 25% thought they needed six to 10 years, so more women said that getting on for five years rather than six to 10 was about right. In addition, 9% said they needed 20 years, 3% said 25 years, and 4% said they would like to have known when they left school. It is important to say that it is tempting for us to speak for others, but in this case when people were spoken to directly they said something rather surprising.
Steve Webb: The hon. Lady is right. The table I have here shows the mode as 10 years, but various bands have been aggregated so I am not absolutely sure about the calculation. The point remains, however, that more women said five years or less than said six to 10.
The hon. Lady was absolutely right to make the point that today’s pensions are paid for by today’s workers and tomorrow’s will be paid for by tomorrow’s workers. She seemed to suggest that if we nudge up the pension age a bit, and have the Work programme and so on, that would fix it. To give a perspective over the long run, in 2008 there were four people of working age—16 to 64—to every one over 65. In 2058 it will be 2¼. That is the kind of dramatic shift that we are beginning to try to grasp. The marginal changes we are talking about here do not begin to reverse those massive trends, which is why we need to act.
With regard to the hon. Member for Erith and Thamesmead’s amendment as a whole, we estimate it would cost around £5 billion. In a sense, the hon. Member for Leeds West is right to say that it is a halfway house between her amendments with the figure of £10—or £12.5—billion, and zero, the effect of not changing the Bill. It again represents a constructive contribution to the debate and would cap increases at 12 months. With regard to the overall experience of these women, the hon. Member for Leeds West said that many—her favourite phrase of the day—have left the labour market, when 70% are still in work, and that many take up caring responsibilities, when 3% are on carer’s allowance.
Lilian Greenwood: The Minister said earlier that only 3% were in receipt of carer’s allowance. Does he not accept that many of the women undertaking caring responsibilities do not qualify for carer’s allowance? He should acknowledge that.
Steve Webb: Indeed. The threshold for carer’s allowance is in the order of 35 hours a week. These will be people with full-time essentially caring responsibilities. The hon. Lady is right that there will be many women in that group who are combining paid work with caring responsibilities. That is the way that they are making ends meet now. A change in pension age does not change that; that is part of their lives. It is an important role that they fulfil; I am not belittling that at all. My point is that they are combining those demanding caring roles with paid work now, and that will not change because the state pension age changes.
Rachel Reeves: Will the hon. Gentleman accept that many of these women are drawing on their savings during the time they have gone on to reduced hours to make ends meet? They have done that on the basis of when their state pension age will kick in. When the Minister says that I use words such as “many”, he will remember that I said earlier that of women aged between 55 and 59, 31.5% are inactive; 43.5% are sick, injured or disabled; and 24.2% are looking after family and home. I do not accept that I am using huge generalisations; I am relying on facts and figures.
The hon. Lady asked about the compliance of this amendment with directive 79/7. I am happy to confirm that because the amendment would not cause the pension age between men and women to diverge—whereas the amendment in another place did have that property—there is no objection on that basis.
We welcome the fact that Labour Back Benchers are coming up with constructive ideas about transition, and we welcome the chance to discuss the amendment. However, I hope that the hon. Member for Erith and Thamesmead will accept that it is fatally flawed in a number of respects that I am sure she did not intend, and so will seek to withdraw the amendment. If she does not, I encourage my hon. Friends not to support it.
Teresa Pearce: I thank the Minister for his comments. I have been trying to probe to discover his thinking. He clearly has plenty of ideas and I would like to hear them; perhaps at some point during the debate we will. I also understand his point that some people’s financial circumstances would be the same whatever the retirement age. I asked a specific question about jobseeker’s allowance and those women who would not be eligible for more than six months.
Steve Webb: I apologise for not responding to that point. The way that it works is that contributory jobseeker’s allowance, as the hon. Lady knows, is time-limited to six months. After that period, the person might still be eligible for income-based JSA, subject to the two points that she made. If they have significant occupational pension income to live off instead of JSA, they will live off that. If they have savings, their savings will decrease, but as soon as they go below the savings threshold, they will immediately be entitled again. They will not have to spend all their savings, merely to go below the threshold. Then they will become entitled again.
Teresa Pearce: My concern about the pension income for that group of women is that, in my understanding, if they have any occupational pension they are not eligible for jobseeker’s allowance. Is the Minister saying that it must be above a certain level?
Steve Webb: The point that I was making is that what is time-limited for six months is contributory JSA, which has a threshold for an occupational pension. After the six months, when contributory JSA stops—I think that is what the hon. Lady is mainly worried about—there is income-based JSA, in which case the occupational pension is simply one item of income counted against the threshold for entitlement. Having an occupational pension per se does not prevent a person from getting income-based JSA.
As I said, my amendment is a halfway house, but any amendment that we pass will have a cost. I asked what cost would be acceptable. Is any cost acceptable, or will whatever amendment we propose be unacceptable because this is about money and not fairness? That is my concern. As has been said, the retirement age for the women that we are discussing has already been adjusted, with hardly a murmur at the time due to the length of time that they had to plan. Because the age is now quite soon—they can see it and touch it—that cohort of women feel that it is an injustice against them in particular. In view of what has been said, I will not press the amendment to a vote, but—
Lilian Greenwood: Does my hon. Friend share my concern? I am not clear whether the Minister is rejecting the amendment on technical grounds or in principle. It would be helpful if he clarified that, so that we can better discuss transitional arrangements and how to deal with the problems and concerns raised by Members across the House.
Teresa Pearce: I agree. The Minister made it clear at the beginning that there was a flaw in my amendment and that he would be asking Government Members to vote against it for that reason. Is that the only reason? Does he disagree with the whole amendment, or just the fact that it is defective? I would be interested to hear his reply. In view of the fact that it is defective, we will not press it to a vote, but I would like to know whether it would have been an acceptable halfway house for the Minister and those on the Government Benches.
Cathy Jamieson: Does my hon. Friend share my concerns that in the absence of any response from the Minister, we will have to assume that he does not support the principle of the amendment, and that we are therefore no further forward in agreeing transitional arrangements?
Teresa Pearce: That is exactly my point. As I said earlier, the Minister is very knowledgeable on pensions. I am not as knowledgeable, which is why I made an error in the amendment. He said that he would ask his hon. Friends to vote against it for that reason. I ask again: is that the only reason why, or does he reject the proposal altogether?
Rachel Reeves: I do not know whether my hon. Friend knew before she came to this debate whether the amendment that she tabled would save £25 billion, compared with £13 billion. If it had been a difference of £1 billion or £2 billion, does she think that the Government would have supported it? She is proposing new ideas that the Government say they are willing to consider. I wonder whether the Minister has given her the chance that he has not given me to discuss transitional arrangements with him, given that she has been so helpful in proposing them.
Teresa Pearce: I thank my hon. Friend for allowing my intervention and for what she just said. My understanding was that the reduction in saving would be about £7 billion, so the fact that it is £5 billion is even more of a bargain.
Rachel Reeves: I think this point is particularly pertinent, because further down the amendment paper we will be debating new clause 3, which looks at pension credit for the poorest women and whether they can keep pension credit at the old timetable for women. It is an instructive amendment, which helps with the transition process. It does not change the timetable for the state pension age, but it does look at how we can help the poorest women. Going back to the point made earlier by the hon. Member for Grantham and Stamford, it is perhaps a more official way of helping the people who most need the support. When we come on to that, we will need some indication of what sort of costings are appropriate for the transitional arrangements.
As my hon. Friend the Member for Erith and Thamesmead said, any transition support will have a cost attached. We expect the Government to introduce proposals, because only the Government can know what transition proposals and what sort of cost is acceptable to them. Opposition Members are second-guessing, so clarification from the Minister would be useful as we look at transition amendments and try to find something that we can all support.
Teresa Pearce: I thank my hon. Friend for her intervention. I want to draw the Minister’s attention to a reply that he gave to the Work and Pensions Committee when asked about the extra £10 billion to be found. He said:
“I know in the world of pensions that it is easy to say, ‘It is only £10 billion,’ but that really is very serious money, and so it really was a trade-off or a judgement call between reflecting rising life expectancies and the Exchequer position.”
‘(8) The Secretary of State shall review the options for linking pensionable age to the number of years in employment so as to ensure that pensionable age is reached no later than 49 years after entry into employment. The Secretary of State shall report the findings of his review to both Houses of Parliament within six months of the passing of this Act.’.
It is good news that the Pensions Minister has now seen “Fame”, not least because the equivalent of the Fame Academy, the BRIT school, is based in my constituency. I am responsible for very many stars, including Adele. I suspect that in a few weeks’ time, or even now, many of us must be feeling that we have been in this Committee for ever. It has been a long day and a very tough-minded Government Whip is keeping us at it.
My amendment basically asks the Secretary of State, although it could be his talented Pensions Minister—I am not fussy—to review the option for linking pension
As I said on Second Reading, it seems that pension policy at its best—I am talking over 100 years now—is policy that has some understanding of the way in which lives, society and economies are changing, which seeks to adjust pension arrangements to them. In saying that I am not suggesting some great golden age, because there have been many problems with our state pension system, not least in relation to women and carers until recently. But we introduced old-age pensions back in 1909 at the time of Lloyd George because working men, in particular, were beginning to outlive their working lives. The state had to do something—hence the birth of state pensions. Liberals were as generous as they are being today. The pension was 5 shillings and people had to be at least 70 years old and there were all sorts of other catches. At least it started the thing off.
In between the wars there was the birth of national insurance and the Beveridge report by another great Liberal, William Beveridge, and then there was the National Insurance Act under the Clem Attlee Government. They recognised how society was changing and the need for national insurance and in particular for pensions. Later on, there was certainly the beginning of an understanding that all this looked more like a man’s world than a woman’s world, and what about mothers who had to leave the employment market to care for children and later the carers and so on? We began to adjust it, although not always adequately. We do not need to make party points on this, but we began to adjust all of that. Yes, in our discussion today we recognise that there was a gender inequality in favour of women and we needed to standardise the pension age. Yes, indeed, as we are discussing now, we need to increase the state pension age for both men and women.
Malcolm Wicks: I seem to recall making some fascinating point, and then the bells starting ringing in my head. I was rather relieved to find out during the break that other colleagues had heard the bells as well. That is always a good sign.
I was presenting an analysis and stating that, while pension history has hardly been perfect, at crucial points pension policy has tried to reflect the changing nature
It is in the spirit of trying to understand where we are with such issues because of demography and so on that I want to re-present my proposal. However, before I do so, I wish to quote a constituent who wrote to me. I will call her Jill Brown, although that is not her real name. What she has written illustrates the sort of citizen who is having quite a tough life and of whom we need to take account. She writes:
“I am almost 57 years old, a single mum and earn a feeble £7,000 a year, propped up by working tax credit as I work 24 hours cleaning courtesy of three part-time jobs. I get up at 6 am, work two jobs before noon and then walk another mile to my third job from 4 pm to 6.15 pm. I am exhausted when I finish for the day, and I have little quality of life. I know other women who are in a similar situation to myself, ie working both ends of the day to make up their hours to a poverty wage because one full-time job is hard to come by these days. Also, many manual workers did not receive higher education that qualified them for any other type of work. We always believed that we could hang up our heavy equipment when we reached 60 years old.”
That letter reminds us of the fact that many of our constituents, both men and women, work tough lives and—this is my argument—have probably been working tough lives since they left school at 15 or 16. I cited earlier some data on mortality rates, and I focused on women. Let me now focus on men, and consider the group of workers in what are called—according to the ONS—the routine occupations. For men, we are talking mainly about labourers, van drivers and packers, while for women it will probably be some of those occupations plus cleaning—people rather like my constituent whom I call Jill Brown.
Let us consider the proportion of those people who never see a pension because they die. I have sent my paper round, so the Minister will have seen the sources for my information. As ever, thanks to the Library. Of men in the higher managerial and professional class I, 7% die before the age of 65 while it is 10% for lower managerial and professional class people. However, when we examine the so-called routine occupations, it is estimated that 19% of those men die before the age of 65. Almost one fifth never see their state pension. Colleagues will reflect on that and accept that it is a significant proportion. For any Government—Labour, Conservative or Liberal—talking about raising state pension age, which I repeat we must do, provokes interesting issues, which is why I appeal to the Minister to reflect on the matter, as I am sure he has done. Even if he can find fault with my proposed piece of social engineering, which I can myself, I hope that he will respond to me.
In addition, there is a double whammy, because although most folk in poorer occupations live to claim their pension—of course they do—there is a differential. From the information that the Minister has presented, life expectancy may have increased. However, for argument’s sake, from the table, professional men at age 65 have a life expectancy of 18.3 years, but people in the social class V unskilled category have an expectancy of only 14 years. There is a class differential, from top to bottom, in how many pension years both men and women receive. Some people will die never having got their pension, which is based largely on social class; most people get it, but those in heavy occupations, from the tougher end of society, have fewer pension years than those from professional classes.
Harriett Baldwin: I thank the right hon. Gentleman for giving way. He makes an extremely valid point about what has been a feature of the state pension since it was introduced in 1926. Did he consider the proposal in his amendment when he was Pensions Minister?
Malcolm Wicks: No, I did not. I am not going to rehearse my record, good or bad. There are things of which I am proud, such as the Pension Protection Fund, which we will touch on later. One of the beauties of being on the Back Benches and having more time to reflect is that one can do a bit of research and think again. If that is a criticism of my stance as Pensions Minister it is a perfectly justifiable one. My concern now is for none of us to level the same criticism at the current Pensions Minister and I am trying to be helpful to him.
What are the policy implications of the measure? When I reflected on that I quickly concluded that they were not immediate or clear. It would be easy to say, “Well, this is mainly an issue about health and social class, and we should tackle it through nutrition and so on.” Of course we must do that, but I want to press the point that, nevertheless, there might be some implications for pensions.
I started off by saying that from time to time we reflect on how our pension arrangements relate and react to how people live their lives. One could say that it has probably always been the case, but it is glaring that many people now, including us in Committee, did not get our first proper jobs until we were 21, 22 or 23. I said on Second Reading that although my own three children had holiday jobs, on average they were probably 23 when they first got into the proper labour market with proper careers. That is very different from the world in which most of our grandparents or great-grandparents lived. They would have left school at 12, 13 or 14 and worked all their life. We now have a great differential, with increasing numbers of people not getting their first proper jobs until almost a quarter of a century has gone by. Yet many people are still leaving
I say at once that I can see some of the difficulties in the complexity of my policy proposals. The Minister will be primed to say that some people with holiday jobs will start paying their national insurance—let us tick that one off—when they are 16 or 17, or 18 if they are doing their holiday job, so we could simply link their pensionable age to when they start paying national insurance. I understand that—civil servants are brilliant; they will have picked that up, but the Minister will have picked it up sooner.
Are we relaxed? Are we content with pension arrangements? On the one hand, the privileged people, of whom there are growing numbers, start work at 21 or 22 and get their pensions at 65, 66 or whatever the age will be; but those from the least privileged backgrounds, who are working harder in terms of physical labour than most of us do, get their pension after having worked five or six years more than those from the most privileged backgrounds. Essentially, that is my thesis. Such people have a higher chance of death before reaching state pension age, and they receive their state pension for four fewer years than the most privileged, yet they have worked hard all their life.
I propose to the Committee, and particularly to the Minister, that it is surely possible to explore drawing on national insurance records. I think the Minister indicated once that those records are not complete, but we all get pension forecasts, so can we believe them? I had better not say that the Minister is shaking his head, because that would be unfair, so for Hansard, the Minister is not shaking his head, but he looks terribly interested at this point.
Surely, from a combination of income tax, employment and national insurance records, it would be possible to determine the group that I am talking about. Such people might have started work at 15 or 16, and have reached pensionable age after 49 years—or whatever the arithmetic is. They might have been in work, become mums or carers, or experienced periods of unemployment. Essentially, however, they will have been out of education since the age of 15 or 16. Should we not be able to devise some sort of trigger so that they can draw their state pension—I am still looking to the future—at, say, 65? They have worked damned hard; they are physically worn out; their joints are creaking; their backs are aching and they have served this country well. To simply treat them as we treat the postgraduate class seems an act of great folly and injustice. If previous Pensions Ministers failed to spot this one and act on it, that is a shame, but I look to future Pensions Ministers to find some way of remedying an injustice.