17:20 - The House divided: - Ayes: 288 / Noes: 0 - Question accordingly agreed to.
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
Since world war two, we have seen a dramatic change in life expectancy. We are living longer, staying healthier, fighting diseases that previously would have killed us and leading a more active lifestyle, regardless of age. Faced with demographic pressures and increased life expectancy and costs, successive Governments have acted. We must be realistic about the demographic and fiscal challenge that these changes create for us as a society.
Taking forward-looking action is critical to protecting the long-term sustainability of the state pension not only for today’s taxpayers, but for future generations. In July, the Government published their first review of the state pension age, which sets out a coherent strategy targeted at strengthening and sustaining the UK state pension system for many decades to come. It accepts the key recommendations of John Cridland’s independent review, which consulted a variety of people and organisations, including the Scottish National party—the bringing forward to 2037 to 2039 of the increase in state pension age from 67 to 68.
Julian Knight (Solihull) (Con)
Will the Minister explain to the House the potential debt impact on future generations of spending up to £39 billion reverting to the 1995 timetable, as well as of Labour’s plan to freeze any increases in the state pension age, which would cost hundreds of billions?
Guy Opperman
I am grateful to my hon. Friend for his intervention. I recognise that he has more than 25 years’ experience of working in the pensions industry through his previous journalistic work. The reality is that if the Pensions Acts 1995 and 2011 were to be revoked, it would cost well in excess of £70 billion. If we were to follow the path set out in the Labour party manifesto, which would keep the state pension age at 66, it would cost approximately £250 billion compared with the itinerary set out by the independent review commissioned by the Government and produced by John Cridland.
The Cridland review is very clear on that point. It says:
“In 1917 King George V sent the first telegrams to those celebrating their 100th birthday. 24 were sent that year. In 2016 around 6,000 people will have received a card from Her Majesty the Queen. In 2050, we expect over 56,000 people to reach this milestone.
Three factors are at play here: a growing population; an ageing population as the Baby Boomers retire; and an unprecedented increase in life expectancy. A baby girl born in 2017 can expect to live to be 94 years and a boy to be 91. By 2047 it could well be 98 and 95 respectively…The world of the Third Age is now a very different one, in which those lucky enough to get the State Pension will on average spend almost a third of their adult life in retirement, a proportion never before reached.”
It was clear that the Government had to act.
Andrew Selous (South West Bedfordshire) (Con)
Can the Minister tell us what specific help Jobcentre Plus is able to give older women to help them to retrain or to reskill to find age-appropriate work? That is a question that a number of older women often ask. What specific help is out there for them?
Guy Opperman
Having visited his local jobcentre, my hon. Friend will be aware that a great deal of assistance is provided by the job coaches. However, help comes not just from job coaches and jobcentres but from local job clubs, which I am sure exist in his constituency, as they do in mine; from individual flexible working arrangements; and from jobs fairs, which a number of colleagues have mentioned. I have done three myself, culminating in the last one in September, which was highly successful. There is also all manner of private sector support on an ongoing basis.
Guy Opperman
I will give way in a moment, but first let me address the issue in relation to Scotland. I was surprised that the right hon. Member for Ross, Skye and Lochaber (Ian Blackford) refused 10 times to give way. If I were him, I would say that he was frit, but I will not go down that route.
In addition to the substantial support that the UK Government are providing, which is worth £50 billion across the country and 6% of GDP, the Scottish Government now have significant new powers available to them to tailor welfare provision to people in Scotland. Although pensions remain a reserved matter, the Scotland Act 2016 has given the Scottish Government the ability to use a wide range of new welfare provisions.
My hon. Friend the Member for Aberdeen South (Ross Thomson) correctly set out the provisions of section 28 of the Scotland Act. There are of course section 24 powers as well. I refer all colleagues, on both sides of the House, to a letter written to my predecessor by Jeane Freeman, my opposite number in the Scottish Government. She says that the power under section 26
“is limited to providing help with ‘short term needs’, and those needs must require to be met to avoid a risk to a person’s wellbeing. That would not readily allow assistance to the majority of women most affected by the acceleration of increase in their State Pension Age. Their needs and the risks to their well-being would have to be assessed individually.”
There is an acceptance in that letter that, as Scottish Conservative colleagues have said, the powers are there. Those powers commenced on 5 September 2016. It is up to the Scottish Government to determine how they will use those powers, but—
Ian Blackford
On a point of order, Madam Deputy Speaker. I am asking for your guidance about what we can do, because the Minister, perhaps inadvertently, is seeking to mislead the House. It is absolutely crystal clear in the Scotland Act 2016 that the Scottish Parliament is not in a position to introduce benefits by reason of old age. That is quite clear, and the Minister should be truthful with the people of this country. He should stop blaming the Scottish National party and the Scottish Government for a responsibility that solely lies here with Westminster.
Madam Deputy Speaker
I thank the right hon. Gentleman for that helpful advice. I suggest that we move on, because time is very limited and we do not want to delay the debate further with continuous points of order.
Guy Opperman
I fully understand, and I will move on, but I will make one single point in reply to the right hon. Member for Ross, Skye and Lochaber. I specifically read the letter of 22 June from Jeane Freeman, quoting what she said. When the right hon. Gentleman criticises me, he should be aware and conscious that he is criticising someone from his own party.
Ross Thomson
Regarding the point of order, does the Minister agree that the argument can be made that people under the retirement age of 66 are not in old age? The Scottish Government have already been in correspondence with the Department for Work and Pensions, and the DWP has accepted that very argument. The Scottish Government have the powers, they just do not use them.
Guy Opperman
The reality of the situation, given the motion facing us today, is that one has to ask what the Scottish Government are doing. My hon. Friend is entirely right.
The issue dates back to 1995, when the Government legislated after two years of debate and consultation to equalise the state pension age in order to eliminate gender inequalities in state pensions. There had been welcome increases in life expectancy, and there was an anticipated increase in the number of pensioners in the years to come.
Guy Opperman
I will give way for the last time. I am conscious that 20 Members wish to speak.
David Linden
I have come through an apprenticeship on how this works. The Minister made a point about jobcentres, but he is actually closing half of Glasgow’s jobcentres. I have a question for him about life expectancy—I asked him this 10 days ago in Westminster Hall, so he has had 10 days to find out the answer. Can he tell me the life expectancy in Glasgow East?
Guy Opperman
The hon. Gentleman will be aware that, without a shadow of a doubt, life expectancy has increased in all parts of the country and in all socioeconomic groups over the past 30 years. I refer him to the Cridland report, which accepts the situation that has existed for the past 30 years, and the change that has been made.
Developments in policy have included the Pensions Act 1995, as well as the Pensions Act 2007, passed when the Labour party was in power. It is a shame that the Labour party is now scrapping the fiscal prudence that it seemed to demonstrate with the 2007 Act by now revoking its desire to increase the pension age beyond 66. Under the coalition, action was taken in the Pensions Act 2011 to increase the pension age as a result of enhanced life expectancy.
Guy Opperman
I will not give way any more, because I am conscious that 20 Members wish to speak.
Automatic enrolment was introduced in 2012 on a cross-party basis after a considerable amount of time. The important point is that the overall participation in workplace pensions of eligible female employees in 2012 was 58% but, following the introduction of automatic enrolment, the figure increased to 80% in 2016. For males, the figure increased from 52% to 76% in the same period. The private sector has seen the largest increase in participation in workplace pensions, and there was no gender gap in participation rates in 2016.
In the circumstances, I would respectfully point out that the key choice a Government face when seeking to control state pension spend is whether to increase the state pension age or to pay lower pensions, with an inevitable impact on pensioner poverty. The only alternative is to ask the working generation to pay an even larger share of their income to support pensions.
Guy Opperman
I am not going to give way again—I am so sorry.
While increasing longevity is something to be celebrated, we must also be realistic about the demographic and fiscal challenges it creates for us as a society. Since the early 2000s, it has been widely recognised that we face big questions as a society about how we ensure economic security for people in retirement, while maintaining fairness between generations.
The Pensions Commission found in 2005 that a state pension age fixed at 65 was no longer sustainable or affordable. Between 2007 and 2014, three separate Acts of Parliament were introduced, each responding to changes in life expectancy by changing the state pension age. At the same time, the state pension has been increased, between 2010 and 2017, by £1,250 a year for an individual who is on a full state pension.
So with increasing financial pressures, as I have described, we cannot change a policy that has been implemented for over 22 years and supported by all three major political parties. The Government have to ensure that the costs of an ageing population are shared out fairly, without placing an unfair financial burden on future generations.
Alex Cunningham
I am nearly finished. Before I conclude, I would like to ask the Minister what the Department is doing in relation to the legal challenge from the WASPI campaigners, which was mentioned by my hon. Friend the Member for Easington (Grahame Morris). Has the Minister made contingencies for the day when the courts rule against the Government, as they may well do, and order that ’50s-born women be compensated? What is happening in relation to that?
Although we support the motion, I think that the House needs to be able to vote on a motion that will be binding on the Government.
Guy Opperman
I will answer two of the hon. Gentleman’s points. First, the Government do not believe that there has been maladministration by the Department for Work and Pensions in relation to the legal claim by Bindmans, and that includes in the 13 years when the Labour party was in power. Secondly, with regard to his assertions about the Scottish Government, the situation is as I said when I cited the letter of 22 June from Jeane Freeman, my opposite number in the Scottish Government.
Alex Cunningham
I am grateful to the Minister for that intervention, but he knows as well as I do that the decisions of successive Governments are overturned in the courts time and time again, and the then Government end up having to pay for it.
I want to see before the House a motion that actually means something, and that is binding on the Government to deliver some of the relief that these women desperately need. We will continue to look for that opportunity, and then we will call on the supporters of ’50s-born women, from both sides of the House, to vote for that relief and make something happen.
The Parliamentary Under-Secretary of State for Work and Pensions (Caroline Dinenage)
I start by thanking everyone who has contributed to today’s debate on this important issue. Members on both sides of the House have made passionate and heartfelt speeches and interventions.
A welfare and pensions system is successful only as long as it is sustainable, and as the population balance shifts from working-age pension contributors to those aged over 65, an increase in the state pension age is necessary for the welfare of all. As the hon. Member for Eastbourne (Stephen Lloyd) pointed out, virtually every party in the House has either taken the opportunity to raise it, or not taken the opportunity to do something about it.
Jamie Stone
To support my hon. Friend the Member for Eastbourne (Stephen Lloyd), does the Minister agree that the failure to address the issue—for whatever reason, and by whatever party—reflects badly on this Parliament in general at a time when we could do with a much higher standing in public esteem?
Caroline Dinenage
We have taken forward transitional arrangements. It is insulting for Members from parties that have played their part in getting us to where we are today somehow to wash their hands of the matter. I will go on to make a few points, if the hon. Gentleman will forgive me.
Those who are able to work should support those who are not, confident in the expectation of similar support when they reach retirement. Today’s workers provide the support for today’s pensioners, and that is why it is so important that we have the right balance of the contributions that are paid in at present with the pensions that are being withdrawn, and that we adjust pension ages to maintain that balance. Women who retire today can still expect to receive the state pension for 24 and a half years, on average—almost three years longer than men.
As was outlined by the Pensions Minister, my hon. Friend the Member for Hexham (Guy Opperman), the Department for Work and Pensions has communicated the timetable for changes to the state pension age since they were first set in train 22 years ago. As my hon. Friend the Member for Redditch (Rachel Maclean) pointed out, in response to concerns raised during debates on the Pensions Act 2011 in both Houses, we introduced the £1.1 billion concession that has been mentioned, which staggered the changes and ensured that no one would wait more than 18 months for their pensions, compared with under the previous timetable.
Any further concession would cost significantly more. It would involve asking people of working age—more specifically, today’s younger people, as my hon. Friend the Member for Chelmsford (Vicky Ford) mentioned—to pay even more for it. Those outcomes simply cannot be justified.
Caroline Dinenage
I am not going to give way to the right hon. Gentleman. He made criticisms in relation to the Budget and the Chancellor, but he went on to speak for a considerable time today, taking more than 40 minutes for himself and depriving Back Benchers of the chance to have their say. I will make some progress—[Interruption.] I want to address some of the issues that have been raised by SNP Members, so if the right hon. Gentleman would like to listen, I will do so.
As has previously been stated—my hon. Friend the Member for Aberdeen South (Ross Thomson) pointed this out—if the Scottish National party disagrees with any of the UK Government’s welfare reforms, it has the power to do something about it in Scotland.
The right hon. Member for Ross, Skye and Lochaber (Ian Blackford) has mentioned on several occasions that the Scottish National party’s Westminster parliamentary group published a report by Landman Economics, which modelled—[Interruption.] I thought he would be keen to listen to this. The report modelled the impact of a number of options for compensating women affected by the 2011 Act. Of these, the Scottish National party’s preferred option was to abandon that Act entirely, returning us to the timetable under the Pensions Act 1995.
The SNP-commissioned report put the cost of this option at £7.9 billion for the period between 2016-17 to 2020-21. As it stands, that is simply unaffordable, but it has the double misfortune of also being wrong. The Landman report significantly underestimates the full costs of returning to the 1995 Act’s timetable. The Government estimate that the cost over that period would be about £14 billion—nearly double—and that figure includes the impact of lost revenue from tax and national insurance, which the Landman report does not fully take into account.
What is worse is that the SNP’s position applies the costs only to the five-year window between 2016-17 and 2020-21. The costs beyond this horizon are simply not included in the option put forward. If the changes we are implementing did not happen, the actual costs to working-age people would be more than £30 billion over an extended period, which is equivalent to over £1,100 per household. I am sure the right hon. Gentleman would like to justify that to his constituents.
The Scottish National party has also suggested using the national insurance fund to pay for the cost of scrapping the Pensions Act 2011. However, that is not the intended use of the fund, and it is worth reiterating that today’s national insurance contributions fund today’s pensions, with an excess of only two months’ outgoing payments at any given time.
The new state pension is actually much more generous for many women, who were historically worse off under the old system. By 2030, over 3 million women stand to gain an average of £550 extra per year as a result of these changes. The acceleration of the increase in the state pension age for both women and men is necessary to ensure the state pension system’s sustainability in the light of increasing life expectancy and more pressure on public resources. In fact, by 2035, there will be more than twice as many people aged 100 and over as there are now.
Failure to act in the light of such compelling evidence would be reckless. Given the increasing financial pressure that I have described, we cannot and should not unpick a policy that has been in place for 22 years. It is simply not affordable, especially when we take into account the fact that the average woman reaching state pension age will get a higher state pension income over her lifetime than an average woman reaching state pension age at any earlier point.
It is important to appreciate the modern lived experience of later life in the 21st century, which has altered significantly since the inception of the state pension in the 1940s. Longer life, better health and continued activity in later decades are reshaping the profile and participation of older people in our society. This includes sustaining work and other economic activity as those over 60 continue to learn, earn, contribute and participate.
Rachel Maclean
Contrary to the assertion by SNP Members that it is an insult to offer an apprenticeship, does my hon. Friend agree that saying that is actually an insult to women who would like to take up—
Madam Deputy Speaker (Dame Rosie Winterton)
Order. I am sorry, but I think the Minister had finished her speech.
Caroline Dinenage
In fact, I do not think that I had quite finished, Madam Deputy Speaker.
I do not think that anybody is suggesting that older women should be forced to take an apprenticeship. No one is even suggesting that they should be cajoled or encouraged to do so, but I find it insulting that SNP and Labour Members seem to be suggesting that women over the age of 60 should be put on the scrapheap and should not be allowed to do what they want. If they want to take an apprenticeship, they should be allowed to do so.
Patrick Grady (Glasgow North) (SNP)
claimed to move the closure (Standing Order No. 36).
Question put forthwith, That the Question be now put.
Question agreed to.
Main Question accordingly put.