State Pension Age: Women

Damian Green Excerpts

Wednesday 30th November 2016 Commons Chamber

[The Secretary of State for Work and Pensions (Damian Green)]

I beg to move an amendment, to leave out from “House” to the end of the Question and add:

“welcomes the planned average rise of £550 a year for 3 million women, including those born in the 1950s, who receive the new state pension; further welcomes the increase of over £1,100 per year of the basic state pension since 2010 as the result of the triple lock, which will also benefit such women; and recognises that the state pension must reflect the welcome rise in life expectancy in order to remain sustainable for generations to come.”

We have heard the case put fully by the hon. Member for Ross, Skye and Lochaber (Ian Blackford), and I want to start my response by putting this debate in full context. The pensions system, along with the whole welfare system, needs to change to reflect the reality of today. What has happened in recent decades is not only that we are all living longer, which is welcome, but that we are able to work for longer as we become healthier. Of course this does not apply to everyone, and I will come to those who need financial help. However, although this is often a divisive debate, I hope the whole House can accept these four principles: first, that men and women should receive their state pension at the same age, a principle first set out more than 20 years ago in the Pensions Act 1995; secondly, that the age at which all receive a state pension has to rise as life expectancy rises; thirdly, that all who need help because they cannot work should receive appropriate support; and fourthly, that for most people work is beneficial not only because it provides an income, but because it gives them greater control over their own lives.

State pension age increases cannot be looked at in isolation. They fit into a wider array of changes, including changes in life expectancy, the huge and very welcome progress made in opening up employment opportunities for women, and the wider package of reforms we have introduced to ensure a fairer deal for pensioners, particularly the new state pension.

The state pension system for people who reached their state pension age before 6 April this year was extremely complex. The new state pension brings greater clarity by helping people to understand their pension more easily, and it is much more generous for many women who have been historically worse off under the old system. On average, women reaching state pension age last year get a higher state pension over their lifetimes than women who reached state pension age at any point before them, even when the accelerated equalisation of state pension age is taken into account. By 2030, over 3 million women stand to gain an average of £550 extra per year as a result of these changes.

[Fiona Mactaggart]

I probably should declare an interest as a woman who was born on 12 September 1953. The Secretary of State’s remarks about women’s extra income throughout their lives does not pay the bills today for WASPI women, and that is their problem. They do not disagree with any of his four principles—they accepted the equal pension age—but they have planned their lives responsibly, and in return the Government have been irresponsible.

[Damian Green]

I will come to the specific point that the right hon. Lady raises later in my speech, as she would expect.

The new state pension works hand in hand with automatic enrolment, enabling many more people to save in a workplace pension. Together, the new state pension and automatic enrolment, along with reviews of the state pension age, are designed to form the main elements of a sustainable basis for retirement income in the decades to come. We want to ensure economic security for working people at every stage of their lives, including retirement, and that is why we are protecting the incomes of millions of pensioners through the triple lock. Living standards for pensioners have been rising steadily for many years. In 2014-15, the proportion of this group living in a low-income household was nearly the lowest on record, in terms of the proportion and of pensioner numbers. That is the general position, which it is important for the House to recognise.

[Neil Gray (Airdrie and Shotts) (SNP)]

How much notice would the Secretary of State expect his own private pension provider to give him of such significant changes? Would he be happy with as little as 15 months’ notice?

[Damian Green]

We are discussing the state pension, not private pensions—[Interruption.] My principal pension is that of a Member of this House, so all aspects of it are exactly the same as those of the hon. Gentleman’s pension.

Let me deal with the group that is principally affected by the changes. Of course I have met many of those women in my own constituency. There was clearly a problem, and that is why a substantial concession worth £1.1 billion was introduced in the Pensions Act 2011. As a result, no woman will experience an increase of more than 18 months, and for 81% of the women affected—more than four in five of them—the increase will not exceed 12 months compared with the previous timetable. This concession benefited almost 250,000 women who would otherwise have experienced delays of up to two years. The introduction of further concessions cannot be justified, given the imperative to focus public resources on helping those who are most in need.

[Andy Burnham (Leigh) (Lab)]

The Secretary of State talks about those in need as though the WASPI women are not in need, but of course many of them are. He has talked about resources, but what price justice? What price doing the right thing? These are the women who brought us up, who now care for older relatives and who are the mainstay of their communities. They are not some militant group. At a time when this House has a low standing, I believe that his dismissive attitude towards them will damage not only the Conservative party but politics as a whole in the eyes of the women who have made this country what it is today.

[Damian Green]

I am not being remotely dismissive, and if the right hon. Gentleman will be patient, I will come to the measures that the Government are taking to help women in that age bracket. I can absolutely assure him that I am not being dismissive.

[Mr Vara]

Does my right hon. Friend agree that one of the luxuries for the Opposition is proposing to spend money that they do not have? Does he also agree that the comments from the Opposition parties ring hollow, given that these matters were not mentioned in their manifestos? They were not mentioned in the Labour manifesto or the Scottish National party manifesto.

[Damian Green]

My hon. Friend makes a pertinent point.

I want to deal specifically with some of the issues raised by the hon. Member for Ross, Skye and Lochaber. He talked about communications. Since 2000—a long time before the 2011 Act—the Department for Work and Pensions has issued 14 million state pension estimates, which include mention of the state pension age. Between 2003 and 2006, the Department issued about 16 million automatic pension forecasts, which were accompanied by a leaflet about equalisation. There was also a media campaign in 2004. After the 2011 Act, as the hon. Gentleman admitted, the Department wrote to all those directly affected. There has been quite a significant communications campaign, going back more than 15 years.

[Melanie Onn (Great Grimsby) (Lab)]

Will the Secretary of State give way?

[Damian Green]

The hon. Lady certainly deserves to intervene on my speech.

[Melanie Onn]

I thank the right hon. Gentleman for giving way. He says that media and publications campaigns have been undertaken, but does he accept that some of the women did not receive any notification of the latest changes, which extended the period before which they would be entitled to access their state pension?

[Damian Green]

It is obviously impossible to talk about individual cases without talking to the individuals. All I can say is that the DWP tried hard after the 2011 Act and wrote more than 5 million letters to people’s most recent addresses.

[Ian Blackford]

rose—

[Damian Green]

I feel that the hon. Gentleman has had his fair share of the time, having used more than 35 minutes of a three-hour debate, and I want to turn to the specific option that he proposed. He mentioned the Landman Economics report that modelled the impact of several options. The SNP’s preferred option would roll back the 2011 Act entirely, returning to the timetable in the 1995 Act. He said that that option would cost £8 billion, but I disagree. Our analysis suggests that the cost has to go beyond 2020-21 and must include the effects on national insurance payments and tax collection, which his economic model entirely ignores, and that it would cost over £30 billion.

Even if we accept the hon. Gentleman’s figures, his other suggestion is that the costs could be met from the surplus in the national insurance fund that he conveniently discovered. In fact, there is no surplus in the fund because it is all used to pay contributory benefits. If we take from the national insurance fund £8 billion, £30 billion or whatever number one cares to mention, we take it from people who receive benefits. The surplus of £16 billion that he identified is two months’ expenditure—an advisory level recommended by the Government Actuary as a prudent working balance. The money has been put there by a Treasury grant to maintain the fund at the recommended long-term balance. The Government Actuary does not forecast a long-term surplus, so this convenient pot of money for the SNP does not actually exist.

[James Cartlidge]

May I add to that? Others have tried to alight on this fund as a source of expenditure, but the then Financial Secretary Ruth Kelly said in 2003:

“The national insurance fund provides security for those contributory benefits. It is ring-fenced and cannot be used for other Government expenditure.”—[Official Report, 21 October 2003; Vol. 411, c. 231WH.]

[Damian Green]

I am grateful to my hon. Friend, who is knowledgeable about such matters.

The hon. Member for Ross, Skye and Lochaber used to work in the financial services industry and has been a fund manager, so he knows what he is talking about. However, he must know that his characterisation of the national insurance fund as involving some kind of individual contract that relates what someone gets out of it to what they pay in is not true. The state pension is a social security benefit, funded through national insurance contributions.

[Ian Blackford]

Will the Secretary of State give way?

[Damian Green]

All right, I will finish this point in a minute.

[Ian Blackford]

I am grateful. I actually talked about a cost of £8 billion for this Parliament, which is affordable given the current surplus in the national insurance fund. Please do not twist what I said.

[Damian Green]

I did not twist what the hon. Gentleman said at all. Is he prepared to take £8 billion from people who receive contributory benefits? That is the only way that he could pay for it.

Returning to the hon. Gentleman’s characterisation of the national insurance fund, he gave the impression that it involved an individual contract. As he knows perfectly well, the national insurance scheme operates on a pay-as-you-go basis, meaning that today’s contributors are paying for today’s social security entitlements and pensions. Those who previously paid contributions were paying for the pensioners of that time. In other words, contributors do not accumulate an individual pension fund. It is not like any individual’s pension fund of moneys paid, which is personal to them. Instead, payment of contributions allows them, or their spouses, to access a range of social security entitlements. It is not an individual contract or fund. I gently suggest that the hon. Gentleman knows that perfectly well.

Moving on to the issues that affect the WASPI women, I absolutely accept that getting into work will be difficult for some older women, so I want to say what we are doing to help them and also what we are doing for those who simply cannot work.

[Maggie Throup]

Does my right hon. Friend agree that, however well intentioned, the message of the WASPI campaigners has been severely damaged by the hate campaign on social media and in constituency offices against MPs, such as me, whose viewpoint is different from the campaigners’? Will he condemn that and say that it must stop?

[Damian Green]

I deprecate any form of personal abuse. I think that one of the problems of modern politics is that everything becomes personalised. I have not been aware of such abuse, as every WASPI woman I have met has been entirely polite and entirely reasonable, and I would wish that to continue.

[Steve Rotheram (Liverpool, Walton) (Lab)]

Does the Minister accept that the fundamental issue here is not equalisation, because that has been agreed, but fairness? He can give comfort to the 63,000 WASPI women in Merseyside who, through a quirk of their birthdate, will be hit hard and penalised. He can announce transitional arrangements that would give them some comfort that that is not going to happen.

[Damian Green]

I was coming on to discuss what we are doing and what we will do for this group. Supporting older claimants to remain in the labour market, and tackling the barriers to their doing so, is a key priority for the Government. To support that aim, we have abolished the default retirement age, so most people can now retire when the time is right for them, and we have extended the right to request flexible working for all. Flexible working is particularly important for this group of people, who may well have caring responsibilities.

[Fiona Mactaggart]

The Secretary of State will be aware that many of these older women are putting together two or three jobs, all of which are paid at less than £108 a week, as a result of which they do not get any national insurance contributions and that will affect their future pension. What is he doing about that? They can have their tax claimed, but they cannot get credits for a future pension.

[Damian Green]

What we are trying to do is what I am talking about, which is remove barriers to work, so that it is easier for these people to work. The arrival of universal credit makes it easier for people to extend the hours they work, so that they do not hit the old cliff edges under the other benefits. Paid employment maximises people’s opportunities to build up savings—the point the right hon. Lady was just making—and helps to maintain social networks, and it is beneficial to health, provided the employment takes into account the person’s broader circumstances.

[Robert Neill (Bromley and Chislehurst) (Con)]

I appreciate that the SNP’s proposal is not economically viable, but does the Minister accept that some women, including in my constituency, had to give up work for health reasons and were therefore not able to pay in, and they are not able to return to the workplace either? It does not seem that we have yet put in place adequate measures to be fair to those people, who cannot change their situation.

[Damian Green]

Absolutely, I quite take the point that my hon. Friend makes. Clearly, specific issues need to be dealt with for this group, and I am going through several of them now. Some of these people will not be able to work, as I made clear at the start; this touches on one of the four principles I set out at the start of my speech. Working-age benefits are specifically designed to help such people, and I wish to make it clear that this group of women will be entitled to working-age benefits. If there are barriers to their claiming them, we need to remove those barriers.

[Mrs Anne Main (St Albans) (Con)]

I, too, accept that the SNP proposal is totally ludicrous because it is totally unaffordable, but can the Secretary of State give me assurances on what can be done for WASPI women who say that they are finding it difficult to get back into work, with the jobcentres not geared up to help them, and who may have been out of the workforce for considerable time and do not have the skillset needed to get a good job?

[Damian Green]

Absolutely, and if my hon. Friend will bear with me for 30 seconds while I make one further point, I will then deal with precisely the point she raises, as I absolutely recognise it as an issue for many of these women. I should point out that the current average age of exit from the labour market for women is 63.1, which is well above the state pension age of 60 that the SNP proposal would take us back to. The number of older women aged 50 to 64 in work in 2016 stands at more than 4 million, which is a record high. That is one reason why the Government have extended the right to request flexible working and why job search requirements for those who are not in employment are adjusted to take account of individual circumstances. One purpose of the Green Paper on work and health that we have just produced is precisely to look at much better ways to join up the health, welfare and employment systems, so that we can deal with health conditions or disabilities that may be particularly prevalent in older women who want to work. We need to make the system much better than it has been in the past at removing those barriers, so that people can work.

[Victoria Borwick (Kensington) (Con)]

Will the Secretary of State, or a member of his team, personally examine some of the individual cases so that the women affected can prove that they are suffering hardship?

[Damian Green]

Absolutely. We are always willing to look at individual cases. My hon. Friend the Under-Secretary of State for Pensions has already done so. More widely, we introduced older claimant champions last year specifically to support older claimants. They work in jobcentres with work coaches and employers to raise the profile of this group and highlight the benefits of employing older jobseekers.

[Tim Loughton (East Worthing and Shoreham) (Con)]

My right hon. Friend is being very generous, and I very much respect the interest that he has taken in this matter. On the older people’s champions and in answer to my parliamentary question, since April 2015 his Department has appointed seven such champions to cover every jobcentre in the country, which sounds good, but, in practice, it will really not make a lot of difference, will it?

[Damian Green]

So far, we have appointed older people’s champions at a regional level. This is the first step to a system that needs to improve. My hon. Friend and I will be at one on that, because this is an increasingly important part of what we need to do. One thing that I hope these older claimant champions will be able to achieve is to spread best practice. I am conscious that there will be different standards of practice in different jobcentres—I am talking about the capacity to deal sympathetically with older workers, particularly those who may not have been in a jobcentre before. We must get better at that.

[Andy Burnham]

I am grateful to the right hon. Gentleman for giving way again. I hear what he is saying about people working, but it is difficult for many older women in this position to run a car. It is something that they often cannot afford, yet free bus passes are not available in all parts of the country. They are available to women at 60 in London, Scotland and Merseyside. People’s ability to access work is different in different parts of the country. In Greater Manchester, they do not have that help. Will the Government do a very practical thing today and commit to helping all women into work by extending that free bus pass on the same basis all over the country?

[Damian Green]

The right hon. Gentleman, who has other fish to fry in the Manchester area, will know perfectly well that bus passes are the responsibility of the local authority, rather than national Government. I will of course urge everyone in the Manchester mayoral election to vote Conservative, but it may be that he has the chance to do something about that matter at some stage in the near future, as successive Mayors of London have done.

Apart from the older claimant champions, we have appointed Andy Briggs as business champion for older workers. He is the chief executive of Aviva, which is one of the most enlightened companies in dealing with older workers, and I am delighted that he has accepted this job, as he will work with employers not just to retain older workers, but to retrain and recruit them. If women in this age group are finding it difficult to find work, there will be more employers out there who are actively looking for them. We have also established carers in employment. We are carrying out pilots in nine local authorities at the moment. I recognise that people in this group are quite likely to have caring responsibilities, and combining those with work is inevitably complex. Ensuring that businesses are suitably sympathetic and flexible in dealing with that is one of the very important steps forward that we need to take as a society in the next few years.

[David Rutley]

My right hon. Friend is making some important points. In the way that he is providing support for people who are born in the 1950s and ’60s to stay in employment for longer, does he not agree that that will also help the cultural change, which will enable future generations to stay in work longer? Obviously, that will be a requirement given the demographic changes.

[Damian Green]

My hon. Friend hits the nail on the head. We are in the early stages of this change, and it will be increasingly important for future generations, assuming that we continue to live longer and be healthier for longer.

[Peter Aldous (Waveney) (Con)]

My right hon. Friend is making some very good points. He touched on the issue of carers. Is he aware that many of the WASPI women have dual caring arrangements, looking after not only husbands who might be ill but parents who might be very elderly?

[Damian Green]

Indeed. Like my hon. Friend, who has considerable expertise in this area, I have read the reports that suggest that the gap between childcare responsibilities and elderly care responsibilities for many families will get narrower and narrower. We are now piloting people who will teach employers how to deal with workers who are also carers. As with the point made by my hon. Friend the Member for Macclesfield (David Rutley), we are in the early stages of a journey that will become hugely important for society and the whole workforce in future decades.

Let me make some progress, as I am conscious of the time. I said I wanted to deal with women who find it impossible to work, and of course the system needs to be designed to deal with problems such as disability that prevent them from working and mean that they are most in need as they approach state pension age. We are committed to supporting these vulnerable groups, spending around £50 billion a year on disability benefits, which equates to more than 6% of all Government spending. Carer’s allowance and related benefits provide financial support and safeguards for carers and their families, including those who are disabled or who are ill, and this week I was pleased to announce that the earnings limit for carers will be uprated by £6, which will help those with caring responsibilities.

Early in the new year, we will propose a new strategy specifically for elderly workers—the fuller working lives strategy—and I would be very happy to deal with colleagues on both sides of the House who have suggestions about how we can specifically help older workers in general and, specifically, older women. I do not believe that a monopoly of wisdom in this area lies in Whitehall. We will propose a new strategy that will involve many Departments, but we will also need to include ideas from employers, charities and Members and their constituents.

[Stephen Gethins (North East Fife) (SNP)]

The Secretary of State talks about reaching out to other Departments. This point has been made by my SNP colleagues, but we are about to spend £167 billion on weapons of mass destruction—the figure has gone up because of the collapse of the pound. Will he charge his colleagues in the Ministry of Defence to see whether they can find the £8 billion we are proposing from there?

[Damian Green]

The defence of this country is hugely important, but not, I think, a direct issue for this debate.

I hope that the House will see that I am extremely open to ideas to help this group of women but in ways that reflect the modern world of work and do not blur the lines between working age benefits and pensions.

[Several hon. Members rose—]

[Damian Green]

I think I have been very generous in giving way.

It should go without saying that any idea needs to be not only practical but affordable. None of the ideas proposed that concentrate purely on the pensions issue achieve this. The acceleration of the pension age for both women and men was necessary to ensure the state pension’s sustainability in the light of increasing life expectancy and increasing pressure on public resources. For those who face hardship, we continue to provide a strong and well-functioning welfare safety net. I am always looking for ways to improve that. Of course there has been a considerable concession of £1.1 billion to lessen the impact on those most affected. As I have set out, we not only continue to increase the employment prospects for women above the age of 60, but provide the new state pension, which gives people greater security, choice and dignity in retirement. This is a balanced and affordable package for older women—and men—and I commend the amendment to the House.

[Several hon. Members rose—]