Women’s Pensions

Gregg McClymont Excerpts

Tuesday 8th October 2013 Westminster Hall

[Steve Webb]

The hon. Gentleman is putting words into my mouth. I am saying that older workers, on average, are very productive. Clearly there comes a point when our productivity declines, as we get much older. We should bear in mind that the 700,000 women who are the subject of the debate are in their early 60s. I think that many of the hon. Gentleman’s constituents would be offended at the suggestion that they are not productive, valuable members of the work force. We do not say that employers should be forced to go on employing them if they want to stop working, but the evidence from the IFS has debunked what has been called the lump of labour fallacy—the idea that there is a lump of labour to be done, and so it is possible to knock out an older worker and slot in a younger one. That neglects the valuable contribution of older workers.

Clearly there is a limit. The hon. Gentleman mentioned the age of 72 or 73, although the statute book takes us only to 68 at the moment, so I am not sure where he got that from.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

I am pleased to serve under your chairmanship, Mrs Main. I was going to ask the Minister about the lump of labour, which comes down to the argument that there is a fixed amount of labour in the economy. My view is that it is probably much more complicated; will the Minister expand on that a wee bit? Is there a demand issue as well? I take the point made by the hon. Member for Strangford (Jim Shannon) about people moving up a rung, but if we assume it is more complicated and stickier than that, there is a demand issue to do with the goods and services that older, wealthier workers are likely to buy.

[Steve Webb]

The very complexity of the issue is the reason for the IFS examining what happens across the developed world. It looked at different sorts of labour markets and different labour supply and demand conditions. Systematically, it found no evidence for the hypothesis that getting rid of older, more experienced, productive workers benefits the young unemployed.

Oral Answers to Questions

Gregg McClymont Excerpts

Monday 1st July 2013 Commons Chamber

[Steve Webb]

My hon. Friend is right. The danger with the current system is that people who save find that the Government come along and say, “You’ve saved some money—we’ll take some money off you.” Our intention is to encourage, not penalise, saving. Paying a single, simple, decent pension just above the level of the basic means test will greatly enhance those incentives.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

The Government’s case for the new state pension is that it will increase the incentive to save in private pensions, but does the Minister agree with his hon. Friend the Member for Warrington South (David Mowat), a Treasury Parliamentary Private Secretary? He told the House during Second Reading of the Pensions Bill:

“One reason that people are not saving is that there is massive distrust of the industry. I have many colleagues in the private sector who would almost cut their arms off than invest in the pensions market.—[Official Report, 17 June 2013; Vol. 564, c. 712.]

What will the Minister to encourage people to make those savings in private pensions?

[Steve Webb]

I agree with the hon. Gentleman to the extent that there is mistrust of private pensions, which is why we have taken strong action,: for example, we have banned consultancy charges, which were a source of concern. On savings incentives, if he looks at our analysis, he will find that low earners in particular will have much smaller withdrawal rates when they save. Therefore, the return on savings, particularly for low earners, about whom I am sure he is most concerned, will be enhanced by the proposals.

Pensions Bill

Gregg McClymont Excerpts

Monday 17th June 2013 Commons Chamber

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

The hon. Gentleman has enticed me from my sedentary position. Can he confirm what his colleague the pensions Minister, the hon. Member for Thornbury and Yate (Steve Webb), said in the Financial Times this morning—that the triple lock is guaranteed only for the lifetime of this Parliament and that neither the Conservative party nor the Liberal Democrat party is committed to it beyond 2015?

[Richard Graham]

Alas, I was not at the pensions Minister’s meeting with the Financial Times. However, the hon. Gentleman has raised a rather different question from the one I asked; I had mentioned his description of the current triple lock as a triumph of rhetoric over reality. Most of my pensioner constituents would describe it as a triumph of financial reality for their pensions.

[Richard Graham]

I read modern history, not ancient history, at university. My clear recollection of recent and modern history is that the hon. Lady’s party contributed three things to the evolution of pensions. First, there was the abolition of the advance corporation tax on dividends, which has been estimated to have cost occupational pension schemes about £100 billion. Secondly, although the hon. Lady’s Government made great play of criticising the breaking of the link between pensions and earnings by an earlier Conservative Government, over 13 years her Governments failed to do anything at all about it.

Thirdly, the contrast between the 75p increase and the £234 that I have just described represents, by any standards, a pretty compellingly disappointing story for the Labour party. I will not dwell on the Labour party’s shame on the matter of pensions, because it is well known to the House. However, the shadow Minister, the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East, recently described his Government’s approach over 13 years as “evolutionary”. Evolving an approach towards a single state pension over 13 years is different from putting forward a Bill and implementing a single state pension, which is what this coalition Government are doing today.

[Gregg McClymont]

rose—

[Richard Graham]

The shadow Minister rises again from his place. I welcome him.

--- Later in debate ---

[Gregg McClymont]

I thank the hon. Gentleman. I note that he did not clarify whether the pensions Minister had indeed said in the Financial Times this morning that neither party is committed to the triple lock beyond 2015.

Let me take the hon. Gentleman up on a specific point. He is a reasonable man, so does he not accept that the breaking of the link with earnings meant that by 1997, when Labour came into office, there was a genuine crisis of pensioner poverty for a significant section of the pensioner population? Pension credit was a significant and substantial response targeted on those most in need. Given the hon. Gentleman’s comments today, that would seem to fit his own approach to pensions more generally.

[Richard Graham]

The hon. Gentleman is correct. The break between pensions and earnings caused considerable upset across the country and was the reason why the Gloucestershire Pensioners Forum was founded some 30 years ago during that earlier Conservative Government. However, let us imagine the forum’s disappointment that nothing at all was done about the matter in 13 years of Labour Governments. The Gloucestershire Pensioners Forum had to continue into a coalition Government to see the wrong righted. The hon. Gentleman’s party had a great opportunity to resolve that disappointment from ancient history, but, as with so much, it has been left to us.

I move on to other aspects of the Opposition’s response today. Many of us will recall that the shadow Secretary of State has promised us a laser-like approach to public expenditure, but it was not clear today whether he was advocating that the 700,000 women born between April ’51 and ’53 should be given the additional £4.5 billion that it would cost to put them on precisely the same footing as those born later. Perhaps in his winding-up speech the shadow Minister will confirm whether the laser-like approach to public expenditure will revert to the “Sorry, there’s no money left” approach for which the shadow Secretary of State is so renowned.

What we have heard from Members across the House today is an extraordinary amount of unanimity and consensus on the fact that, although means-tested pension credit was well intentioned, it is not the solution and should be replaced. Many Members, including the distinguished Chair of the Work and Pensions Committee, have welcomed the approach of a single state pension and the doing away with the means-tested pension. For many of us, the means-tested pension has caused sad arguments between neighbours, some of whom have small amounts of savings. Someone needs only more than £10,000 not to qualify for the means-tested pension credit; the income generated from £10,000 is tiny in a low-interest-rate environment. The consensus has been encouraging, but some things have clearly not been covered in the Bill today. It is worth touching on those; perhaps the Minister will address some of them in his summing up.

I start in no particular order. In the creation of a new single-tier state pension, it is clear, as always, that there will be losers as well as winners. Some members with private sector pension funds will be affected and it would be interesting to hear more from the Minister on who those losers will be. Then there is the question of the defined ambition pension, which the pensions Minister has advocated. We are promised a Government paper on that soon. Will the Minister confirm when it will come? Sometimes “summer” is taken to extend all the way through to November; it would be helpful to have an idea of what stage of the summer is meant.

I understand from some of the professional associations that the business of contracting out requires a statutory override, so there is a question of when that will come in secondary legislation. Will the Minister say something on that? One or two Opposition Members rightly raised the National Employment Savings Trust, the restrictions on it and its competitiveness against other products in the marketplace. None of us would wish NEST to be penalised as the Post Office was inadvertently by the previous Government in respect of private sector competition. NEST must not be prevented from succeeding as we all wish it will.

On the small pots, there is an issue about a cost assessment of bundling them all together. What sort of safeguards might there be in moving from a strong scheme into a weaker one?

On the issue of bereavement, I would like to read a small part of a letter I have received from a constituent. She raises the question of whether the regular income available to widows from the widowed parents allowance, which will be replaced by a bigger but shorter-term amount, could

“leave future widows and widowers worse off than most other single parents who can claim child maintenance from the other parent in the case of a relationship breakdown.”

She goes on:

“It seems so unfair that in future someone like my husband who has worked for 20 years will never claim a state pension but the government would not support his children either.”

Perhaps that issue can be raised in Committee and a discussion had on the potential unintended consequences of the changes for those affected by bereavement.

Lastly, there is the new objective laid down for the pensions regulator

“to minimise any adverse impact on the sustainable growth of an employer”.

That raises the question of the definition of an employer. Charities and non-governmental organisations with pension schemes, for example, do not necessarily focus on growth. Perhaps some clarity on precisely what changes are implied by the new objective for the pensions regulator could be discussed in more detail.

The Chair of the Select Committee and the right hon. Member for Birkenhead—both of whom have huge experience of this sector and the world of pensions—welcome the Bill and I welcome it, too. I think that there should be consensus on pensions and that this is a great opportunity for the Opposition to say, as my hon. Friend the Member for Rochester and Strood (Mark Reckless) has said, that the glass is not half empty, as I mistakenly suggested, but half full. They should be enthusiastically supportive of the fact that there is a lot in the glass and we want more: we want a single state pension and we want it to succeed.

I am delighted that Opposition Front Benchers are wriggling—some more comfortably than others—towards a recognition that this coalition Government are taking the right steps to simplify and clarify pensions and, above all, to enable all our constituents to believe that it will always pay to save. The value of that is enormous and it is this Government’s duty to return us to that principle and remind the whole House of why we should endorse this Bill and its objectives.

--- Later in debate ---

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

I endorse almost everything that the hon. Member for Warrington South (David Mowat) has just said. In fact, I do not think it would be unfair to suggest that he has thrown a grenade into this debate, because for all the Bill’s positive aspects, he has hit the nail on the head. In order for a single flat-rate state pension and auto-enrolment to work, we must have a private pensions industry that delivers value for money for every saver.

This speaks directly to the general thrust of the contributions of other Government Members. The hon. Members for Gloucester (Richard Graham), for Aberconwy (Guto Bebb), for Thurrock (Jackie Doyle-Price) and for Rochester and Strood (Mark Reckless) were right to focus on the Bill’s importance in encouraging incentives to save, but the question that went unasked until the powerful contribution of the hon. Member for Warrington South was: save into what? That is why we have been telling the pensions Minister for 18 months, as we will continue to tell him in Committee and further stages, that although there are very good things in the Bill, the danger is that it will represent only half a reform unless the Government take on the series of reforms referred to by the hon. Member for Warrington South. Let us be clear: this is not just a state pension Bill; it is also a Bill for auto-enrolment and private pensions.

Pensions are an issue where the devil is in the detail, and the detail in this Bill demands analysis. In principle, the introduction of a flat-rate state pension is a positive move that, as my hon. Friend the Member for Edinburgh East (Sheila Gilmore) has made clear, builds on a Labour platform. In order for auto-enrolment and the new workplace pensions—as the Secretary of State has generously stated, these build on Labour’s work—to work, we must have a private pensions industry that delivers value for money for every saver.

Much of the debate centred on the pensions legacy with which we all grapple, in opposition and in government. I do not think that it is possible to understand this Bill unless we consider two consequences of the Thatcher revolution for pensions. The first is the breaking of the link with earnings, which led to enormous growth in pensioner poverty, to which pension credit was the Labour answer. [Interruption.] The pensions Minister speaks from a sedentary position. I am sure he would agree that pension credit attacked a significant and real problem with pensioner poverty in 1997. He is now building the flat-rate state pension a pound above pension credit, which is why this is a Labour platform.

More or just as importantly, we continue to grapple with the legacy of the Thatcher Government’s policy on occupational pensions. Simply put, in order to promote a brave new world of personal private pensions the Thatcher Government did things—not deliberately; I am sure they were unintended consequences—that undermined the UK occupational pension system, which was at that time the envy of the world. The result was the mis-selling scandals of the 1980s and 1990s, the collapse of confidence in all non-state pensions and the flight from high-quality workplace pension schemes. That is the context in which we proceed.

[Mark Reckless]

Will the hon. Gentleman give way?

[Gregg McClymont]

I am sorry, but much time has been taken up by the important contributions of other Members and I know that the pensions Minister wants, rightly, a reasonable amount of time to wind up this debate on a Bill of which he is the architect.

I have described the Bill’s context, but what is the detail? Even on its own terms, the Government’s case demands testing. First, the Government claim that the Bill will simplify pensions, thus encouraging individuals to save privately on top of their flat-rate state pension. My hon. Friend the Member for Aberdeen South (Dame Anne Begg) and the hon. Member for Banff and Buchan (Dr Whiteford) have noted the complexity of pension reforms generally and of the transition process in particular. Put simply, we will have two systems running in parallel for the next 30 years. That is not a case against the reform, but it is worth considering when we are thinking about the simplicity of this pension proposal.

Secondly, the Government claim that the Bill will substantially reduce means-testing, but the DWP’s own impact assessment reveals that means-testing will be reduced by just 4%. Any reduction in means-testing is welcome. There is no debate about that. Government Members must recognise that pension credit was a necessary and significant reform to reduce pensioner poverty and Opposition Members must accept that reducing means-testing is a good thing. The question is by how much means-testing is being reduced.

Thirdly, the Government claim that the Bill is cost-neutral, but we know that billions of pounds will fall into the Treasury coffers every year because of the increased national insurance contributions in both public and private sector defined contribution schemes. That point was made eloquently by my hon. Friend the Member for Glasgow North East (Mr Bain).

Most importantly, the Government claim that the Bill will encourage saving. I can only refer Government Members to the analysis of the hon. Member for Warrington South on the failings of the private pensions industry. The incentive to save is important, but I say again that we must look at what people are saving into. [Interruption.] There is no point in Government Members laughing at me. They should speak to their colleague, who set out clearly the problems with the private pensions industry.

More widely, the Government claim that the Bill is fair. However, we have to be aware that the fast-tracking of the single-tier state pension has created steep cliff edges and inequities, to which a number of my hon. Friends and other hon. Members have referred. The Government’s pension changes have consistently hit working women. They have denied more than 1 million women the ability to build retirement savings via auto-enrolment. Now, their flat-rate pension will short-change 700,000 women. My hon. Friend the Member for Inverclyde (Mr McKenzie), who is not in his place, referred to 600 women in his constituency who will not get the new state pension, while a man of precisely the same age will.

I will give the Minister a case study. Catherine Kirby is nearly 61 and was born on 1 October 1952. She has worked for 41 years that qualify for national insurance contributions. At today’s rate, her basic state pension is £110 per week. She receives £20 in SERPS and S2P, so the total amount that she gets each week is £130. That is £15 less than the single-tier amount will be. Catherine had to leave school at 16 because her parents could not support her any longer. She had caring responsibilities and in later years, due to health constraints, had to reduce her hours of work and her already low income. She is unable to afford a private or other pension arrangement and is unable to defer taking her state pension as she has no other income. She has chronic, deteriorating health conditions. Every pound is important to her, as it is to many women close to retirement.

That is the personal story behind the rather abstract 700,000 women to whom Ministers refer. Catherine simply asks to receive the improved pension that a man of the same age will receive. We accept that there are many significant advances in the Bill, so in that spirit of co-operation, I ask the Minister to look again at the issue of women such as Catherine.

The Work and Pensions Committee raised the issue of those who are close to retirement and who had planned to retire based on their partners’ contributions. Those people face a difficult transitional situation. We believe that the Government should consider offering those individuals something along the lines of the 15 years’ transitional protection that the Select Committee suggested.

Another issue is the rise in the national insurance contributions required to get the full state pension from 30 years’ contributions to 35 years’ contributions. One of the many excellent things that the previous Labour Government did was bring down the years of contribution to ensure that there was greater eligibility for the full state pension. We ask the Government to make up the difference, especially for those who are close to retirement and who have had letters saying that they need only 30 years’ contributions. From the look on the Minister’s face, he is not keen on that idea, but I ask him in a spirit of constructive engagement to look at that matter.

Another critical aspect of the Bill that has not received enough attention this evening concerns what the abolition of the second state pension will mean. The hon. Member for Rochester and Strood explained that he is now convinced of the merits of the Bill because it is not redistributive, but it would be worth his looking at who are the losers from the abolition of the second state pension. For many people in private sector employment, on both low and higher earnings, the abolition of the second state pension means losses. More generally, Government Members might consider that one way of looking at the new pension scheme is that it puts a cap on state pension savings because no one can get more than £144 a week. Previously, under the second state pension one could get significantly more than that.

[Mark Reckless]

rose—

[Gregg McClymont]

As I said earlier to the hon. Gentleman, it is important to give the Minister enough time to wind up on his Bill. I am happy to oblige on that, so it is important that I proceed. If the hon. Gentleman wants to try again in a couple of minutes I may be more amenable.

Let me return to the heart of the Bill and the laser focus placed on that issue by the hon. Member for Warrington South. The Bill is predicated on the Government’s assumption that it increases the incentive to save. It is about what people will be saving into under the new workplace pensions and private pensions more widely. Public confidence could be finally restored if the Minister grasped the nettle with the Bill, and did not what I am telling him to do, but what his Back Benchers are saying. Auto-enrolment is under way. We give credit to the Government for continuing with Labour’s auto-enrolment policy, but the success of the revolution is not ensured. [Interruption.] The hon. Member for Bedford (Richard Fuller) laughs, but the Secretary of State generously put that matter on the record in his earlier contribution. Getting auto-enrolment right is crucial.

[Mark Reckless]

rose—

[Gregg McClymont]

Given the hon. Gentleman’s persistence, I will happily give way.

[Mark Reckless]

I am grateful. Could the shadow Minister not perhaps recognise some fault in Labour’s past, particularly with the £5 billion-a-year tax rate through the removal of the dividend tax credit, and will he listen to himself building up into a great rhetoric of peroration? Does he support the Bill, or is he about to lead his troops into the Opposition Lobby against us?

[Gregg McClymont]

I do not think the hon. Gentleman has been listening to what I said. To recap: the flat-rate state pension is a good idea in principle, and I refer him to his hon. Friend the Member for Warrington South, who is sitting behind him and who explained—even more clearly than I managed—that for the Bill to work, the private pensions industry must deliver value for money for every saver. As the hon. Gentleman and Opposition Members have said, that must be the other half of this Bill. I cannot be any clearer than that.

Let me return to what the Minister should do, bearing in mind that I want to give him time to wind up —[Interruption.] He is telling me how long I have now, but I will be the judge of that while also being fair to him. The opportunity is there for the Minister. The stated aim of the Bill is to ensure that people have confidence in saving for their future and in putting money aside for their retirement. Members have made the point repeatedly, but simply reducing state pension provision—that is what the Bill does in the long term—and hoping that will act as an incentive for people to save into private pensions is not enough. The Opposition have set a direction of travel, which the Government have finally begun to follow, to ensure that saving pays into private pensions. We set out the way to ensure value for money for every saver in the UK occupational system, and we called for the Office of Fair Trading investigation into costs and charges that is now taking place. We called for the Government to deal with consultancy charges and auto-enrolment practices, and we welcome moves in the Bill to give the Secretary of State the power to do that. He could go yet further in the Bill and clarify precisely what he will do.

Why is the Minister asking the House to agree to the abolition of the second state pension before imposing quality requirements of the kind outlined by the hon. Member for Warrington South on auto-enrolment pensions? Why does the Bill contain a clause—clause 34 —drafted so widely that it would allow the Secretary of State to exempt employers from auto-enrolment on the Beecroft model, which no one else would applaud? Why, unlike the proposals on savers, do regulations to exempt employers from auto-enrolment not have to be passed by a resolution of both Houses? I could go on.

Pot follows member, which the hon. Member for Gloucester mentioned, will be discussed in great detail in Committee. Most of the industry takes a different view to the Minister, so I look forward to discussing it with him. He can do no better than listen to the hon. Member for Warrington South on a swathe of policy issues on private pensions.

The Opposition believe that the principle of the flat-rate state pension is a good one. We will not stand in the way of the Bill today, but unless the Minister grasps the nettle on the private pensions industry, the Bill will remain half a reform.

--- Later in debate ---

[Steve Webb]

I have given way to the right hon. Gentleman twice already, so I will make some progress.

A number of hon. Members raised matters of detail. I thank my hon. Friend the Member for Rochester and Strood (Mark Reckless), who said that he had approached the Bill in a spirit of scepticism. He is right to have done so. We should approach all new pension reforms in a spirit of scepticism, because there have been so many of them. One of the nicest things anyone has ever said to me is that the more he found out about the Bill the more he liked it. I am grateful to him for that.

My hon. Friend the Member for Rochester and Strood asked a specific question on whether someone who defers under the current system past 2016 will continue to receive the current generous terms after 2016. He also paid tribute to the staff in the House of Commons Library—he mentioned Djuna Thurley specifically—who have to wrestle with complex legislation. I echo that tribute. A lot of legislation is complex and difficult, and I think all of us accept that the Library provides us with great support.

My hon. Friend the Member for Thurrock (Jackie Doyle-Price) asked about another group and the whole issue of derived rights. The single-tier pension is designed for the future, whereas the current state pension system is rooted in the 1940s when men had jobs and women had husbands. We cannot go on like that. We have introduced a lot of transitional protection. For example, there was an option for women to pay something quaintly called the married woman’s stamp. If they did that at any point in the 35 years up to their pension age, we would protect them and pay them the pension they would have got. There is extensive transitional protection.

My hon. Friend raised the question of what she described as homemakers. People who are not in the paid labour force can still receive protection for their pension rights in a number of circumstances. If they are at home with children, caring for an elderly or disabled relative, or are unemployed and looking for a job, they receive credits. If they are too sick to work, they receive national insurance benefits credits. So a whole raft of circumstances are covered.

My hon. Friend mentioned a specific and narrow group of people—childless homemakers. Interestingly, at the start of her speech, she said how important the contributory principle was—I agree with that—and she was right that in many ways the Bill reasserts that principle. To reassert it, however, and then say that someone who has paid no national insurance, not been a carer, not been looking for work and not been too sick to work should none the less get a significant pension creates a tension. I can reveal to the House that she and I discussed this issue in the Tea Room before we got here, and she said, “But aren’t you changing the rules late in the day?”, as she also said in her speech. We have to strike a balance between moving to a new system and protecting people as we move, and not setting in aspic every single corner of the old system.

The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) said, “You can’t go on running two separate systems”, and then demanded that we keep various bits of the old system going for another 15 years while running two separate systems. I would say to my hon. Friend the Member for Thurrock, then, that there is extensive protection. If the lady in question were widowed, for example, there would be pension credit of £145, so if she had nothing else she would be brought up more or less to the same level. Extensive protections are in place. I cannot promise that every single person will be protected in every single respect, and nor should I, but there is extensive protection.

[Gregg McClymont]

I want to correct the Minister. I did not suggest that we could not run two systems in parallel; I was merely pointing out that when we talk about the simplicity of this new pension, we have to take it into account that two systems will be running in parallel. I did not say it was an argument against the Bill in toto, but it is a point that we must all bear in mind when considering a simple pension system.

[Steve Webb]

The hon. Gentleman raised a lot of questions, which it is his job to do obviously, but did not offer any solutions. He gave a case study of someone born between 1951 and 1953 and said how unfair the system was. I want to stress that the person he gave an example of will get exactly the pension she was expecting on exactly the day she was going to get it, so we have not changed anything about that person’s pension. We have, however, triple locked her pension, which is better than she might have expected under the last Government, so I think we have done the right thing.

Opposition Members drew a comparison between women in that age group and men born on the same day. Let us try a thought experiment: if we were to impose a sex change on all 700,000 women in this group, 95% of them would not thank us—financially at least, although perhaps for other reasons as well. Getting on for 95% of them would say, “Why did you do this to me? Yes, I might get another six quid a week, but I’ll have to wait two or three years longer for it.” That is not a good deal. We have worked out that it would take many of these women 30 years of retirement to recover what they lost through waiting longer for their pension.

The hon. Member for Glasgow North East (Mr Bain) mentioned people with short life expectancies, as did the hon. Member for Inverclyde (Mr McKenzie). People who do not live long after pension age want to have their pension as early as possible, and again the last thing these women want is to get their pension when men do, because if they are not going to live long past the pension age, they will want their pension straight away, not later. The comparison with men born on the same day, therefore, is a false one. Overwhelmingly, these women will do better than a man born on the same day.

The hon. Member for Banff and Buchan (Dr Whiteford) made a thoughtful speech. I was impressed with almost all of it, expect the bit when she was pressed by Scottish colleagues about independence, at which point she became shifty and evasive. [Laughter.] I think that is just about parliamentary. It is clearly that independence would mess up pensions big time. The whole debate today has been about simplification and people knowing where they stand. How on earth would we splice together different countries’ national insurance records, cross-border deficits—

Oral Answers to Questions

Gregg McClymont Excerpts

Monday 20th May 2013 Commons Chamber

[Steve Webb]

I think that the hon. Gentleman might have written his question before he heard my earlier answer. Comparing those women in his constituency with men born on the same day, as he did, misses the point that those men will have to wait several years longer for their pension. They would far rather be in the position of the women who get their pension at 62 or 63.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

The Minister’s response to my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) is to say that these women are in a far better position than equivalent men. Let me push him a little on this. How did he come to a calculation suggesting that these women are better off? My understanding is that, under the Government’s plan, 700,000 women currently aged between 60 and 62 will on retirement receive a lower state pension every week than a man of the same age. Will he tell us specifically how much less a week on average these women will receive on retirement than a man of the same age?

[Steve Webb]

As the hon. Gentleman knows, two things matter: how much people get, and when they get it, and he ignores the second thing. A man born on the same day has to wait until he is 65, but the women he is talking about will get a pension at 61, 62 or 63. The fact that they get the pension for years longer more than offsets a lower average receipt.

Oral Answers to Questions

Gregg McClymont Excerpts

Monday 11th March 2013 Commons Chamber

[Steve Webb]

My hon. Friend is right to say that information will be crucial. One thing we have been doing with the changes to the state pension age, for example, is writing to the individuals affected so that they know exactly what position they are in. All too often in the past, laws have been passed, no one has been told and it has taken many years for people to find out about it. An information campaign will be central to taking forward these excellent proposals.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

The Minister has so far provided cold comfort for the 429,000 women who will not benefit from the new state pension when men of precisely the same age will. May I ask the Minister about a specific group of 80,000 women who are represented in Parliament today? Under the Pensions Act 2011, which this Government passed, their retirement age increased with little notice. Now they will miss out on the Government’s proposed new pension with an average loss to the tune of £9 per week. Is it fair to penalise these women twice in two years?

[Steve Webb]

To be clear about the particular group to which the hon. Gentleman refers, their pension ages increased by a maximum of six months under the 2011 Act. The vast majority of those 80,000 would be worse off if we treated them the same as men, which is what he seems to be calling for. I was not clear what else he was calling for, but treating them the same as men would leave them worse off than they are now.

Pensions and Social Security

Gregg McClymont Excerpts

Wednesday 13th February 2013 Commons Chamber

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

There are two major issues at hand in these orders. The second order is uncontroversial, as the Minister explained at the outset, but inside the controversial order on social security benefits uprating are two issues in particular. First, there is the nature and extent of the uprating of pensioner incomes; and, secondly, there is the Government’s decision to cut in-work and out-of-work benefits. It would be better if those two things had been separated to allow for a proper debate on both, but the Government have taken the decision to place one inside the other.

The debate began with the Minister taking the Floor, and he was followed by my right hon. Friend the Member for East Ham (Stephen Timms), who forensically dissected the impact of the Government’s policy on hard-working families, strivers and the most vulnerable. Further contributions came from only one side of the House—the Opposition side. We heard from my hon. Friends the Members for Hayes and Harlington (John McDonnell) and for Edinburgh East (Sheila Gilmore), the hon. Member for Banff and Buchan (Dr Whiteford), and my hon. Friend the Member for Dumfries and Galloway (Mr Brown). All their contributions were characterised by an emphasis on and an interest in how the Government’s decision to cut in-work and out-of-work benefits will affect families—not only families in what we might call the squeezed middle but families who are looking for work. I will return to the issue of what we might call the strivers tax, but let me first deal with the nature and extent of the uprating of pensioner incomes.

We have heard much from the Minister about the triple lock. I do not know if he is aware, but the original triple lock was a handgun produced by Smith & Wesson in 1908. Like the Minister, it had such high hopes for its triple lock. It claimed it was the best gun it had ever made and yet, just eight years later, the triple lock was redundant: it was a triumph of rhetoric over reality. The same might be said of the Government’s triple lock. This is the third year it has been in operation, and we know that the increase in the state pension is less than it would have been if the uprating method used by the previous Government was still in place. My right hon. Friend the Member for East Ham eloquently dissected that aspect of the case.

It is worse than that, however. The triple lock this year has produced a real-terms cut in the value of the basic state pension. The Minister shakes his head, but listening to his exchange with my right hon. Friend, one could only feel that the Minister wants to have his proverbial cake and eat it. Last year, the Minister trumpeted that he had delivered the highest real-terms increase in the state pension for about 10 years. Having in all seriousness claimed that credit, it is difficult for him now to avoid the blame for the very same mechanism that is producing a real-terms cut in the state pension.

I took a look at the Minister’s website this evening, just to see whether there was any further evidence of his liking to have his cake and eat it. What did I find? The Minister is calling and campaigning for his local citizens advice bureau to be protected from council cuts. Earlier in the debate, however, he defended strongly the council tax freeze as an important contribution to improving family income. I will let the House make its mind up on this second case of having cake and eating it.

[Mr Reid]

The pension increase is higher than both the rate of inflation and the increase in earnings. The hon. Gentleman seems to disagree with the 2.5% figure that the Government are putting forward. Will he tell us what the percentage increase in the pension would be if Labour were in power?

[Gregg McClymont]

Is the hon. Gentleman aware that inflation is now 2.7%, and that the pension is to be uprated by 2.5%? I do not have my abacus with me—maybe the hon. Gentleman should have one—but that seems like a real-terms cut to me.

[Mr Reid]

I am grateful to the hon. Gentleman for being generous in giving way. He knows perfectly well that under the previous Government and under this Government the rate of inflation in the previous September is used to calculate the pension increase for the following year. That has not changed, and this pension increase is higher than the rate of inflation at the standard time at which it is calculated.

[Gregg McClymont]

As far as I could take from that further intervention, the hon. Gentleman still maintains that inflation is less than 2.5%, when in fact it is 2.7%. [Interruption.] The Minister makes a comment from a sedentary position. If he wants to intervene I will be happy to let him, but before he does so let me deal with the hon. Member for Argyll and Bute (Mr Reid). It is clear that CPI inflation is currently 2.7%. The basic state pension is to be uprated by 2.5%. Is that, or is that not, a real-terms cut? It obviously is. Would the hon. Gentleman like to intervene again?

[Mr Reid]

I still have not got the answer to the question I asked the right hon. Member for East Ham (Stephen Timms), and I am now asking the hon. Gentleman. If Labour was in power, what would the pension increase be?

[Gregg McClymont]

I am still waiting for the hon. Gentleman to confess that he was absolutely wrong to suggest that this is an above-inflation increase. That leads to some questions about the ability of the Liberal Democrats to devise economic and financial policy when they do not know the current rate of inflation and how it relates to the basic state pension.

[Steve Webb]

Understandably, the hon. Gentleman would like to be sitting where I am sitting. If he was, by how much would he have put the pension up?

[Gregg McClymont]

The Minister is determined to tease out from the Opposition what will be in our next manifesto. Our position is clear, and he is obviously trying to deflect attention from this real-terms cut in the pension.

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

Come on, Greg, you can do it. Just tell us!

[Gregg McClymont]

The Secretary of State must be less exuberant from a sedentary position.

I shall move rapidly on to the strivers tax. It is clear that strivers have been hit by a tax to pay the cost of the Government’s economic failure, while at the same time millionaires have received a £107,000 tax cut.

[Ian Murray]

Does my hon. Friend share my deep concern that this does not really have anything to do with economic policy or the deficit, but is driven by ideology?

[Gregg McClymont]

My hon. Friend makes a good point. The Chancellor thought that he could play clever politics and draw dividing lines between different sections of society, but he did not take it into account that this would hit those in work above all else. I am afraid that he has been too clever by half.

Let us be clear. One of the groups that will be particularly hard hit will be women. House of Commons Library analysis is clear that two thirds of those hit overall by the real-terms cut in benefits and tax credits are women.

[Steve Webb]

indicated dissent.

[Gregg McClymont]

The Minister shakes his head, but that is House of Commons Library research.

There has built up a picture of a Government who, having failed miserably on the economy, want to make working people and those seeking work pay the price for their economic failure. Labour’s alternative is clear: get Britain back to work, introduce a compulsory jobs guarantee and bring down the unemployment bill—the price of failure that the country is paying.

To conclude, the proposals in the order for working-age benefits are an affront to hard-working people—although an increase is better than no increase, of course. If the Government want to plug the hole in their failing economic plan, they should cancel their tax cut for millionaires this April, not hit millions of working people on modest incomes. That is the reality of the situation. The pension proposals are, of course, worth having. Pensioners depend on these upratings every year to maintain their standard of living, so I will urge my hon. Friends to abstain on this order, but to campaign for a new set of economic policies as we move towards 2015.

Oral Answers to Questions

Gregg McClymont Excerpts

Monday 28th January 2013 Commons Chamber

[Steve Webb]

My hon. Friend is right. For those who retire under the new regime, years spent some decades ago bringing up children, which were not properly protected for state pension rights, will be so under the single-tier arrangements.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

It has been a busy few weeks in pensions world. The Minister will be aware that the Office of Fair Trading has recently announced that it is to undertake an inquiry into the private pensions market. This follows a Labour campaign for just such an inquiry. The Minister’s response to our campaign was to accuse the Labour party of scaremongering on pension charges. Now that the OFT has decided to undertake this inquiry, may I encourage the Minister to heed another Labour campaign call and lift the restrictions on NEST as soon as possible so that it can provide low-cost, high-quality pensions to everyone who wishes to save with it?

[Mr Speaker]

We look forward, I am sure, to hearing about NEST, whatever that may be.

State Pension Reform

Gregg McClymont Excerpts

Monday 14th January 2013 Commons Chamber

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

I thank the Minister for advance sight of the statement, although it was not as advanced as that of some newspapers over the weekend. However, he did have the decency to brief me as our paths crossed in a TV studio this morning.

Today was not supposed to be about pensions at all but about the unveiling of the Government’s flagship child care proposals, which took centre stage at the coalition relaunch last week. Unfortunately, the latest bout of coalition unity did not last even a week. The Government cannot agree on child care, but the Prime Minister was desperate to have something to talk about this morning other than Europe, so—voila—we have the pensions White Paper.

In all seriousness and in respect of the Minister’s commitment to this proposal, we will take the White Paper very seriously. However, I sound a cautionary note. The Government have form on pensions. We remember when the Government laid the 2011 Pensions Bill before the House. The Minister told the House that it was fair to all, but neglected to mention a huge unfairness. I talk, of course, of the targeting of women in their later-50s, who found that the goalposts for their retirement had been moved again at short notice. It took Labour’s digging to reveal that injustice and a Labour campaign to win Government concessions. There is therefore every reason to look closely at the detail.

The principle of a simplified state pension was laid down by the Turner commission and was supported by all parties. The Leader of the Opposition has reiterated our support for that principle. However, it is fair to note that Turner rejected an abrupt shift to a single-tier state pension, which is why the previous Labour Government adopted an evolutionary approach.

Even on my speed-reading of today’s White Paper, there will be heavy losers, steep cliff edges and significant costs if the proposal goes ahead as planned. For example, the briefing from the Government over the weekend was at pains to emphasise the women-friendly aspects of the measures. However, I want to ask the Minister directly about the 429,000 women born between 6 April 1952 and 6 July 1953. Is it the case that those 429,000 women will not qualify for the single-tier state pension, and yet men who were born between the same dates will?

Let me dig a little deeper. The Minister referred to existing pensioners. Is it the case that this proposal excludes all existing pensioners and all those who intend to retire before 2017? If so, what is his message to the 15 million or 16 million people, by my calculation, who will not be eligible for the new pension? How many pensioners does he estimate will remain on £107 a week rather than £144?

May I ask the Minister about the 1.4% national insurance tax rise on 6 million workers? As I understand it, the money raised by that tax hike will not be reinvested in the new state pension but will flow straight into Treasury coffers. If that is indeed the case, how much money will that tax grab raise, and why is the money not being reinvested in the new state pension?

More narrowly, will the de minimis 10 years of contributions be part of the process by which public sector workers and private sector defined-benefit contracted out workers will participate in the new pension? Specifically, will they need at least 10 years of contributions to the new state pension to get any pension whatever?

[Steve Webb]

indicated dissent.

[Gregg McClymont]

The Minister shakes his head, which is important. I would appreciate it if he referred to the matter in his response.

We also seek clarification on what the abolition of the state second pension means for savers. Will the state second pension part of people’s accrued rights be uprated by CPI, not under the triple lock that will apply to the single state pension? That is an important question. Furthermore, how many savers currently pay into the state second pension, and how many of them will receive a lower state pension than they would have done without this reform? In other words, how many losers will there be among those who currently save in the state second pension?

The Government claim to have learned from the 2011 Pensions Bill. They say, and have briefed widely over the weekend and this morning, that the big winners in the new system will be stay-at-home mums. Some context is needed here. The Labour Government put female pensioners at the heart of their pensions policy. Most importantly, they massively reduced the number of years of contributions that both men and women needed to get a full state pension. It was reduced enormously to 30 years from 44 for men and 39 for women. The Government propose to put it back up to 35 years. What will be the impact of that five-year rise in contributions? Specifically, will it reduce the number of pensioners eligible for a full state pension, on Department for Work and Pensions estimates? That is an important question.

May I ask the Minister about the rising state pension age, which he mentioned towards the end of his statement? The Government seem to propose a new mechanism for increasing the state pension age. I have two questions about that. First, the difference in life expectancy between a manual worker and someone doing a non-manual job will play itself out both in the amounts saved in the new state pension and in the fact that non-manual workers will get it, on average, for much longer than manual workers. How will the system be made fair, given the difference in life expectancy, with a rising state pension age?

The second question is related to that. What if manual workers in particular cannot work for as long as any new mechanism sets out that they should when the state pension age is raised? If they cannot do hard, physical labour, how will that affect the Government’s claim that there will be a massive reduction in means-testing in the new system?

Those are only some of the questions that face us as we consider the detail of the White Paper. I suspect that the argument will not disappear overnight, because there is much detail to be considered. I hope that the Minister will give us some provisional answers on important matters that are affecting our constituents and his own.

[Steve Webb]

I thank the hon. Gentleman for what I would characterise as his broadly constructive response to my remarks. I welcomed his comment on the television this morning that

“the Labour party supports the principle of a flat-rate state pension”.

I welcome that because pensions are for the long term, and with two coalition parties united in support for this reform and support in principle from the official Opposition, we have a chance of stability in pensions policy, which would be good for all.

The hon. Gentleman says that the Government have form on pensions, and that is a fair cop: we restored the earnings link after 30 years, we ruled out 75p increases, and last year we introduced the biggest ever cash rise in pensions. He asked about women in their late 50s, many of whom are the very women who were penalised for time spent at home with their children. Although they got some protection on the basic pension, they did not get it on SERPS and the state second pension. The Government are putting that right for the very group of women about whom he asks.

The hon. Gentleman asked about women born in certain months, and the equivalent men. The changes are based on state pension age, and as he knows, that is different for men and women so the implications are also different. The April 2017 change is based on when people’s state pension age falls. He asked about people who “retire” but that is not really the right word—it is all to do with someone’s state pension age and whether it is before or after the change.

The hon. Gentleman asked how many pensioners are on £107. To be clear, someone who has worked in the public sector throughout their life—a teacher, for instance—would be on £107 because they contracted out of the other bit. In our system, from day one they would also be on £107 because we will take account of past periods of contracting out. Future service in the public sector at the full NI rate will add years to that £107. It is not a cliff edge; the exact day before or day after for those people is the same, but they can then work off that contracted-out deduction.

The hon. Gentleman asked about the national insurance rebate and—interestingly—suggested that we spend it on pensions. That is obviously a matter for a future Chancellor, but given that the public sector, the NHS and schools will pay significantly more national insurance, it would be interesting to know whether the hon. Gentleman’s position is that that money should go from the NHS and schools into higher state pensions. He asked about the 10-year de minimis. Let us be clear that we are not saying 10 years in the new system—the requirement is 10 qualifying years in someone’s lifetime. That is because there are backpackers who do a couple of years of bar work and 40 years later we are paying them a state pension for another 20 years. The sorts of people who would be excluded are those who come for a few years, do not really have any skin in the game and pay just a few years of national insurance. They will not get a pension—that is how we save money to spend on pensions.

On state second pension uprating, as I mentioned in my statement, for someone on £160, the first £144—at least earnings—will be triple locked in our White Paper and the balance will be linked to the CPI as SERPS is currently. The hon. Gentleman asked about people who pay into the state second pension, and except for about 5 million public sector workers and a couple of million private sector workers, everybody else pays into the state second pension. He said they were all losers—obviously they will not accrue S2P, but they will accrue a bigger flat-rate state pension.

The hon. Gentleman mentioned the April 2010 changes to qualifying years which he described as an “enormous” reduction. That is, therefore, also an enormous cliff edge of the sort he accuses the Government of making, and there were virtually no transitional arrangements for that. Someone who retired a day before that enormous cliff edge got nothing, whereas someone who retired the day after got the benefit of 30 years’ contribution. There are precedents for such things. When the contribution years were set to 30, women’s state pension age was still 60. In our world, and in the future, it will be 65, 66 or 67, and it is hard to see why in a working life of 50-odd years someone should get a pension for 30 years of contributions. We are merging a pension with a 30-year rule with another pension with a 50-year rule, and we have 35 as a sort of weighted average.

Finally, the hon. Gentleman asked about differences in life expectancy. I gently point out, however, that when the previous Government legislated for a pension age of 66, 67 and 68, they did precisely nothing about differences in life expectancy. We are recommending an independent panel to look at the issue and advise the Secretary of State.

Oral Answers to Questions

Gregg McClymont Excerpts

Monday 10th December 2012 Commons Chamber

[Steve Webb]

My hon. Friend is right. That was one of several measures that took money out of final salary pension schemes, which, given they were the highest-quality schemes available, was no way to show commitment to quality pension provision.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

I would have thought that Conservatives had more respect for the office of Prime Minister, Mr Speaker.

Do the Government have plans to make the rising state pension age fairer for those who have worked in manual occupations their whole life and who will tend not to have the same life expectancy? How do the Government plan to make the state pension age fair across all occupations?

[Steve Webb]

I am interested in that point—it is one that the hon. Gentleman’s late right hon. Friend, Malcolm Wicks, used to raise regularly—and we are always interested in looking at ideas on it. Our proposal is that the state pension age would be more automatically linked to the general improvement in longevity that has applied across the social scale. He is right that there remain significant differences, but a rising tide—as it were—is lifting all boats.

Ford UK (Duty of Care to Visteon Pensioners)

Gregg McClymont Excerpts

Tuesday 4th December 2012 Westminster Hall

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

I pay tribute to the hon. Member for South Basildon and East Thurrock (Stephen Metcalfe), who has led the campaign for justice for the Visteon pensioners; my hon. Friend the Member for Swansea West (Geraint Davies), as the co-chair of the all-party group; the hon. Member for Finchley and Golders Green (Mike Freer), who secured the debate; and the other Members who have contributed to what, so far, has been a helpful debate in terms of keeping this injustice at the forefront of the public’s mind.

I am looking forward to hearing from the Minister about what the Government can do to help Visteon pensioners achieve justice. How will the Government put in place a system that ensures that such things never happen again? How will they ensure, if indeed they can, that there is justice for Visteon pensioners? Do they believe that Ford has a moral responsibility to staff who were spun off into Visteon, many of whom are here today? Does the Minister believe Ford has a duty of care to Visteon pensioners?

Hon. Members have clearly set out the case, which goes to the heart of corporate social responsibility, a term we often hear used in the limited sense of the things that companies do to show that they are good citizens. However, nothing is more fundamental to being a good citizen and a good employer than exercising a duty of care towards one’s employees.

What we have heard today is pretty shocking. Hon. Members on both sides have made it clear that Ford set out to spin out into Visteon the members of its work force involved with motor parts and that it really set the company up to fail—certainly not to succeed. My hon. Friend the Member for Llanelli (Nia Griffith) talked of a terrible betrayal and a complete rip-off, and, importantly, of the Ford actuarial calculation, which left the pension fund with a 17.5% deficit at the outset.

The hon. Member for Finchley and Golders Green referred repeatedly, as did other hon. Members, to the guarantee regarding pensions. “Lifetime protection” was one of the terms used—accrued pension rights were protected. How can it be, then, that several years later Visteon pensioners are getting much less than 100% of the pension they paid into their whole working lives? No wonder they feel cheated. In cases such as this, that feeling of injustice and betrayal is very strong, because a pension is a promise and a contract between employees, who pay into it, and employers, who also make their contribution. The feeling in this case—this is clear from the strength of feeling today—is that that contract has been broken, and that the Visteon pensioners have been betrayed.

What has come across clearly is that that is particularly shocking, given Ford’s stature. Ford is not some two-bit, small-scale employer; it is a recognised company and is considered a blue-chip, global brand. It has a strong reputation in the UK historically, and it has played a big role in UK manufacturing and the UK economy more widely. It has been a huge figure in the past 100 years of British economic history. For it to be involved in what appears to be such a clear case of injustice is deplorable. I say again, therefore, that I am keen to hear from the Minister what role the Government can play in bringing justice to the Visteon pensioners.

I pay tribute to the role the unions have played in keeping this issue at forefront of the public mind. At the heart of this issue is the question of whether there was a deliberate dumping exercise. My hon. Friend the Member for Llanelli and other Members have been pretty clear that Ford wanted to get rid of its pension scheme liabilities and that that was a major aspect of spinning Visteon out.

I am very proud that the previous Government put in place the Pension Protection Fund. I was not a Member of Parliament then, but it has become clear to me since taking up my shadow pensions role that the PPF is an important institution. However, there is a danger that the creation of the PPF leads employers to take the view that it will sort out their problems and pick up the bill; there is a danger of the socialisation of losses while profits remain privatised—in this case at the top of the Ford Motor Company. We must consider that issue more broadly.

Also, the issue is not just the burden that the taxpayer picks up for the PPF, potentially. The PPF charges a levy on other employers to cover payments that it must make to pensioners. Other employers will pick up the bill, in the form of a larger levy every year, if a company such as Ford is involved in what has been seen today in the House as a clear case of the dumping of liabilities. Alongside the sheer injustice of the treatment of Visteon pensioners is the broader public policy issue of the rights and responsibilities of employers with respect to their work force and wider society.

I again thank and pay tribute to hon. Members who have led the campaign and secured the debate, and I look forward to hearing from the Minister what the Government can do to ensure justice for Visteon pensioners.