State Pension Age: Women

Debate between Lord Harrington of Watford and Lady Hermon

Tuesday 15th November 2016 Westminster Hall

[Richard Harrington]

I really cannot take any more interventions, simply because of the time. It is not in my nature, because I like interventions, but I really cannot.

The hon. Member for Paisley and Renfrewshire South (Mhairi Black) and others mentioned a notional national insurance surplus fund. The fact is that, in order to maintain the minimum work balance of the national insurance fund, a Treasury grant of £9.6 billion was made in 2015-16. Public sector finance is complicated. It is easy just to pick out one bit.

I wish to spend a little time discussing the Scottish National party’s proposals. Its independent report suggests rolling back the 2011 Act and returning to the timetable in the Pensions Acts of 1995 and 2007, but that is simply too expensive for the Government to consider. The report puts the cost at £7.9 billion, but my Department’s direct comparison for the same period is £14 billion. We can discuss it however many times, but our modelling is comprehensive and no one is trying to take advantage of anybody else. I really believe that the SNP report has underestimated the impact by somewhere in the region of 50%. It has done so by ignoring most of the costs and applying costs only to the five-year window from 2016-17. Costs beyond that horizon have simply been ignored.

The Pensions Act 2011 not only increased the female state pension age to 65 sooner, but brought forward the increase to 66 for both men and women. The increase to 66 generates significant savings of more than £25 billion, yet such an important element of the Act is omitted from the paper, along with the associated costings.

John Ralfe Consulting, which is independent, reviewed the SNP option. Mr Ralfe concluded that:

“Sadly, the SNP has not managed to pull a Rabbit out of its Hat. The real cost of Option 2”—

the SNP’s preferred option—

“is almost £30bn…The SNP can claim the cost is much lower simply because it has chosen to ignore most of the costs.”

I hope that demonstrates that that option is simply not deliverable.

In the limited time remaining, I shall address the notification issue. In answer to the hon. Member for Fermanagh and South Tyrone (Tom Elliott), between 2003 and 2006, the DWP issued 16 million unprompted products called automatic pension forecasts. People contacted the Department and it gave out all those forecasts. In 2004, the Department ran a pensions campaign that included informing people of the future equalisation of the state pension age. The Government made sure that the information was there, but I accept that it was not communicated by individual letter, as it was later when, as I am sure Members will be aware, millions of letters were sent out.

To say that nothing happened is not true. I have seen a leaflet on equality in the state pension age that was widely circulated, with many, many copies printed. A summary of the changes was issued and the general public were advised, although I accept that they were not informed by specific direct mailing in the way mentioned by some Members.

[Lady Hermon]

It is very kind of the Minister to give way. He will recall that in an earlier intervention I quoted the Prime Minister, whom he serves. Does he appreciate that his words make the Prime Minister’s words sound extremely hollow? This is not a nation in which the Prime Minister appears to care about all the people of the United Kingdom. Will the Minister please take that message back to the Prime Minister?

[Richard Harrington]

I certainly will not take that message back to the Prime Minister, because I do not accept that anything I have said today is incompatible with what the Prime Minister said on the steps of 10 Downing Street. Governments have to make difficult decisions, and the allocation of public spending is one of the most difficult.

It is not fair to say that the acceleration of the women’s state pension age has not been fully considered. It went through Parliament, there was a public call for evidence and there was extensive debate in both Houses. The Government listened during the process and made a substantial concession worth more than £1 billion. Finally, Parliament came to a clear decision. As it stands now, it would cost more than £30 billion to reverse the 2011 Act.