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Baroness Castle of Blackburn moved Amendment No. 184BG:

Page 69, line 42, leave out ("65") and insert ("63").

The noble Baroness said: I hope that in replying the Minister will not give me a whole list of technicalities but deal with the principle that I am trying to establish in my amendment. I am well aware that the drafting is far from perfect, and indeed that the amendment might prove to be in the wrong part of the Bill, because I have not attempted to enter into the cat's cradle of cross-references which besmirches the Bill. Indeed I would be incapable. I am too stupid to be able to enter into the competition of opacity with the Government. It takes great skill to hide the truth and it takes a lot of

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words, and this Government have always preferred verbosity to lucidity. It is part of their technique of government. I suspect that I am not alone in the Committee in having to try to put a wet towel around my head and follow the complexities of the Bill through to some kind of identifiable meaning.

I know that the issue of pensions is complex because I had to deal with it. As the Committee will be aware, I introduced my better pensions Bill in 1978. It gave birth to SERPS and so I well know what is involved. Even at its best and simplest it is sometimes difficult for the layman to understand what it is proposed should happen to him.

However, we can avoid making the matter more complex. I know because I turned up my Act and I was struck by the contrast in its clarity and simplicity. I will tell you why. When we had a complicated Bill I used to say to my draftsman, "Look, I know that you have to get in all the legal points but, for heaven's sake, try to make the Bill clear to those whom it will affect". I suspect that this Government have deliberately set out to make it obscure.

Therefore, my amendment concentrates on two straightforward, simple principles. In the amendment I am testing the political will of this Government and the purposes of their whole pensions policy. All the principles of the state earnings related pensions scheme, which I introduced, were based on the belief that there was what Dick Crossman, who also drafted an earnings-related pensions Bill, once called "apartheid in old age". In other words, we wanted to prevent the gross inequalities which afflicted our society in the retirement pensions field. So the earnings-related concept was not only introduced but it was inspired by certain political aims and not merely actuarial calculations, although they were sound enough, as the government actuary certified.

What were those principles?—that we could only adjust some of these gross inequalities if we recognised what they sprang from and whom they affected the most. Clearly, they sprang from great inequalities and variations in income, great uncertainties in earning power and great changes in the ability of people to earn as they approached retirement age.

I shared the same view as my brilliant Minister of State, the late Brian O'Malley. His death in the middle of our discussions was a very great blow, and was recognised by all sides of the House. We said that the group of people whose unjust treatment in the pensions field stood out a mile was, obviously, women. They were not even allowed to join occupational schemes when we started the demand for equal treatment in those schemes. Of course, my Bill abolished the married women's option to be dependent on her husband's pension. We had to phase that in gradually and some women are still suffering from the remnants of that dependency. We asked, "What is the earnings pattern of these women?". As the Equal Opportunities Commission has pointed out in more than one brilliant report, it is a pattern of earnings fluctuation, changing labour, casual labour, part-time labour and interrupted work due to family responsibilities. We all know it and

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I shall not bore the Committee by repeating it. However, I ask the Government to bear in mind the way in which they hope to correct it.

One of my civil servants—I do not claim the credit—had the inspired concept of the 20 best earning years. We knew as he said it that that would also help those blue-collar workers who often reach their earnings peak in middle life when they are physically strong and whose earnings may then decline somewhat. An obvious example is the miner who in the heyday of his physical strength will be at the coalface earning good money. When he can no longer bear the strain of that he will move to the surface and his earnings will drop. Of course, final salary schemes are no use to them. What is more, it would be unfair to average things out over the whole of their earning life. However, if you say to a manual workman or to a woman, "Look, pick the 20 best earning years of your life and we will base your pension entitlement on that", that is fairer.

I frankly admit that I introduced a piece of sex discrimination. The men did not like it; they had not suffered from it before. I said, "I am not going to raise the women's retirement age from 60", even though we as a government admitted that we could not at that time afford to bring the men's retirement age down from 65 to 60. I said to the men, "I am sorry. You will have to wait a bit; it will come. We have had to wait thousands of years for a bit of sex equality. It will not do you any harm to feel what it is like". So I kept it. The woman received the full benefit that she had contributed despite the fact that she retired five years earlier.

Since then we have seen this Government beat the most miserable retreat from that piece of inspired legislation, which I point out to the Committee was fully backed by the pensions industry. We knew that, by imposing these standards as a condition for contracting out of the state earnings related pension scheme, we had to help them a bit with the costs of, for instance, indexation which the conditions included. We did not mind. Good heavens, is not that what this society of ours is crying out for—a little more generous-spirited partnership—and not, "Let's have the competitive system. We are the bosses so we have to have our funds protected. You are the workers so you have to take less pay."? We have seen the recent indecent examples, which are spreading still further, of those inequalities as the man at the top takes millions. He boasts that his business is profitable so he deserves it. But that profitability has been based on keeping down already low wages.

I would like to think that this Chamber could recapture some of that spirit that we tried to infuse into our society. If we do not, the rich will suffer as much as anybody, even if it is only in poverty of spirit. But they could suffer from great social insecurity as well. Surely history has taught us that. My long life has taught me it. Therefore, I want to seize this opportunity to try to reiterate those principles and to make the Government face up to the fact that they have deliberately slaughtered them, because not only have they reduced the value of the state pension on which low-paid women depend—and very often a large majority of women receive nothing but a state pension—but they have also

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broken the earnings link. Everyone will tell you that they know how much better off those at the bottom in retirement would be if only this Government had not broken that earnings link; or at least their genetic predecessor did that—the Thatcher Government.

Women are suffering. Not only are they told that the maturity period has been lengthened and that everything has been whittled down, but they are told also that they must carry on with their low-income lives into an old age of uncertainty and instability until they are 65. I know that we have to equalise the pension age. I had my bit of fun and I won the women a breathing space; and I am darned glad that I did. But I recognise that eventually the pension age must be equalised. But if it is still true that this country of economic miracles cannot afford to reduce the pension age for everybody to 60, the obvious fair compromise is to strike a figure of 63. That is the first thing for which I ask.

But women are also the greatest beneficiaries of the restoration of the principle of basing their pension on the 20 best earning years. Women are the most insecure earners in our society by definition. It is the woman who is likely to have an interrupted career. Sometimes that may be for the happiest of reasons—she has a family. But sometimes it is for the unhappiest of reasons. As we heard in our debates yesterday, it falls to her to look after her husband's elderly parents, and small thanks she gets for it. We are snatching away that raft of security and saying to a woman, "Well, you have to contribute as long as you are earning, unless you have your home responsibility credit, or whatever, but we will enable you to retire on your 20 best earning years level".

Please, Mr. Minister, do not tell me that the amendment may be out of order in some word here or some phrase there. The nomenclature of the amendment shows the sort of minefield of obscurity which we are in. What is it—Amendment BH or GA, or something? That is easy compared with some of the enumerations of some of the clauses, subsections and sub-subsections until all the letters of the alphabet are exhausted. Please can I have some inkling that even at this late stage the Government will think again about those two basic principles?

Baroness Turner of Camden: I proffer my sympathetic support for what my noble friend has been saying about her amendments. Of course, more than anybody, she has the right to tell the Government what they should be doing. As she has reminded us, she was responsible for the pensions legislation introduced in the mid-1970s, with all-party support—I emphasise that. It was then known as the "Castle Plan" and we all thought that the debate about pensions had finished for a very long time. We had not expected a Conservative Government quite so soon to attempt to demolish the structure which had been created.

The first amendment seeks to amend the clause so that it reads, "a normal pension age of 63" instead of "a normal pension age of 65", with regard to the Government's reference occupational scheme. As we know, nowadays many occupational schemes have a lower pension age. Indeed, 63 is not at all uncommon. When seeking to equalise pension ages some years ago

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many schemes chose the age of 63 as being cost-neutral. Indeed, had the Government decided to be cost-neutral in relation to the state scheme, they could have accepted the proposition for a flexible decade of retirement and taken 63 as the principal age at which state pensions would be paid.

Unfortunately, I was not able to be here later in the Committee's proceedings last night, but I understand that there was some discussion about a flexible decade of retirement. I was a member of your Lordships' committee back in 1989 which recommended a flexible decade of retirement—a decade of choice between the ages of 60 and 70. We recommended 63 as the pivotal age at which full state benefits became payable because we were advised then that that was cost-neutral.

Moreover, flexibility surely makes sense, particularly nowadays. In view of the Government's support for flexible employment and for various changes in employment patterns, I am surprised that they are apparently not in favour of the flexible decade of retirement because, as my noble friend pointed out, there are different types of employment. In some employments people are only too happy to retire early because they have had a long and arduous life; for example, in heavy industry. Mining is obviously a case in point where it is sensible to have an early retirement age. But there are other employments where people welcome the social environment brought about by participation in the activities of the workplace and would wish to retire much later. If the Government really believe in choice, the flexible decade is the option which they should choose. As we have already said, 63 is the cost-neutral pivotal point.

As I said earlier, I know there was some discussion about that last night. I have looked at Hansard. But, on the other hand, there were no votes and it is still open to the Government to consider that option. Perhaps I may press the Minister to do so between now and Report.

As regards my noble friend's second amendment, she is quite right to say that the best 20 years provision in SERPS was of very great benefit to large numbers of the lower paid, particularly women and those who have a chequered work pattern. As she rightly points out, many employees have their best earning years when they are younger. As they get older they are given lighter or less well paid employment. Moreover, women spend time in and out of employment and a broken work record often prevents them from getting onto the promotional ladder. Therefore, when they retire the final years of their working lives are not necessarily the best years upon which entitlement to pension should be based.

My noble friend has advanced important arguments. As she said, her amendment is possibly flawed. However, the issues raised are important. There is time within the framework of our discussions on the Bill for the Government to think about what has been said and perhaps to do something between now and Report stage to try to meet some of the considerations that have been raised.

3.30 p.m.

Baroness Seear: As the arguments about the flexible decade of retirement and also about the age of 63 being

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the pivotal age have been fully aired, I shall not repeat the support we gave yesterday from these Benches to those proposals. We must remember that one of the major purposes of the Bill is to move from the pay-as-you-go scheme, with all that that involves, to a funded scheme. That accounts for some of the differences we are finding. I believe that we should welcome the change. It shows more foresight than that displayed by our predecessors who legislated in the field and by those operating in other parts of the European Union.

However, having agreed with the Minister and supported him up to this point, I press him to think again about the proposed 20 best years. The last three years is liable to be a very poor deal for people who have had to go into part-time employment or, indeed, who have been in part-time employment for a good deal of the time. The last three years for people between the ages of 60 and 65, except in certain executive and administrative jobs where people are able to continue to contribute very satisfactorily in their early 60s, is not a time of good earning for many people. I cannot see that the proposal for the 20 best years would make that much difference. No doubt the Minister has figures at his disposal that are not available to me. I doubt that it would make a great deal of difference as regards the costing of the scheme, but it would make a great difference to many less well-paid people. That applies to women in particular, but also to men who are now retiring early and getting whatever job they can, often at a very much lower rate of pay. I urge the Minister most strongly to think again about changing the provision from the last three years to the best 20.

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