State Pension Age

Guy Opperman Excerpts

Tuesday 21st November 2017 Westminster Hall

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Coatbridge, Chryston and Bellshill (Hugh Gaffney) on securing today’s debate on the state pension age and welcome him to what I think is his first debate here.

Since world war 2, we have seen dramatic changes in life expectancy. We are living longer and staying healthier for longer, and we are leading far more active lifestyles, regardless of our age. Although increasing longevity is to be celebrated, we must also be realistic about the demographic and fiscal challenges that that creates for us as a society. Faced with significant increases in life expectancy and compelling evidence of demographic pressures, it is right that successive Governments took action to secure the affordability and sustainability of the state pension system for current and future generations.

To answer the point raised by the hon. Member for East Londonderry (Mr Campbell), who wanted us to think long term, in July the Government published their first review of the state pension age, setting out a coherent strategy targeted at strengthening and sustaining the UK’s state pension system for many decades to come. It accepts the key recommendations of John Cridland’s independent review, which consulted a wide range of people and organisations, proposing that the state pension age be increased from 67 to 68 in the years 2037 to 2039.

The Cridland review was independent and is very clear. It stated:

“In 1917 the first telegrams to those celebrating their 100th birthday”

were sent. There were 24 that year. The review continued:

“In 2016 around 6,000 people will have received a card from Her Majesty the Queen. In 2050, we expect over 56,000 people to reach this milestone. Three factors are at play here: a growing population; an ageing population as the Baby Boomers retire; and an unprecedented increase in life expectancy. A baby girl born in 2017 can expect to live to be 94 years and a boy to be 91. By 2047 it could well be 98 and 95 respectively.”

The reality, therefore, is that the

“world of the Third Age is now a very different one”

and that those who receive the state pension

“will on average spend…a third of their adult life in retirement, a proportion never before reached.”

[David Linden (Glasgow East) (SNP)]

Given that the Minister has spent so long talking about life expectancy, will he do me the honour of telling the House what the life expectancy in Glasgow East is?

[Guy Opperman]

The reality is that life expectancy has increased repeatedly across the country—[Interruption.] It most definitely has increased across the country in all socioeconomic groups over the past 30 years, and for all constituent countries of the UK. Mr Cridland, who was independent, did extensive work on that point, concluding that a universal state pension age remained the best system, and the Government agree with that point.

[James Cartlidge]

The Opposition spokesman said that Labour supports a variable state pension age. Does my hon. Friend think that that would survive legal challenge?

[Guy Opperman]

I will make two points about that. The first is that anybody who proposes a situation involving framing new legislation that lacks equality between men and women will have to deal with the Equality Act 2010, because any new transitional provision runs the risk of creating a new inequality between men and women and being subject to challenge.

Further to the proposal made by the hon. Member for Coatbridge, Chryston and Bellshill, the Labour party’s position in its manifesto, as agreed with by the hon. Member for Paisley and Renfrewshire South (Mhairi Black) and presumably the Scottish National party, is to reject any increase in the state pension age above 66. That would involve scrapping the Pensions Act 2007, the work of the Labour Government in the Blair-Brown years. Costs have been mentioned; let me be clear that the costs of capping the rise in state pension age at 66 in 2020 would be £250 billion higher than proceeding according to the timetable set out by John Cridland.

[Alex Cunningham]

The Minister referred to Labour policy, but he edited it to a few words. We actually said that we wanted to freeze the pension age at 66 and set up our own commission to consider longevity and pensions issues and how we could help the more vulnerable in our society.

[Guy Opperman]

I will quote the hon. Gentleman’s party manifesto to him, just so we are utterly clear.

[Mhairi Black]

Will the Minister give way?

[Guy Opperman]

No, I will not. The manifesto says:

“The pension age is due to rise to 66 by the end of 2020. Labour rejects the Conservatives’ proposal to increase the state pension age even further.”

The hon. Gentleman will be aware that the shadow Secretary of State made it clear in July, as the hon. Member for Coatbridge, Chryston and Bellshill said, that 66 was the proposed utter limit for an increase.

[Several hon. Members rose—]

[Guy Opperman]

I want to make a little bit of progress.

I turn to the legislation passed over the last 22 years, during which time Labour, the coalition and the Conservatives have all been in government. Back in 1995, after two years of debate and consultation, the Government legislated to equalise the state pension age to eliminate gender inequalities in state pensions. That was a result of welcome increases in life expectancy, combined with the anticipated increase in the number of pensioners in the years to come.

[Patricia Gibson]

The Minister has talked about the number of people who are living longer, getting telegrams from the Queen on their 100th birthday and so on. That is fantastic, and I am sure that we are all happy about it, but can he not see that it does not help the women who have been told, with very little notice, that they will not get the pension they thought they would get at age 60? Telling them that they will live longer does not ease their hardship now.

[Guy Opperman]

Over the past 22 years, the Government have gone to significant lengths to both communicate and mitigate the nature of the state pension age changes, and that included a campaign in 2004 to educate people about their state pensions and extensive debates in the House of Commons on a multitude of occasions under a number of different Governments.

[Mhairi Black]

Will the Minister give way?

[Guy Opperman]

No; I am answering the question. Beyond that, over the last 17 years, the Department has provided more than 19 million personalised state pension estimates. In addition, the Department wrote to women born between 6 April 1950 and 5 April 1953, informing them of changes to their state pension age.

[Mhairi Black]

Will the Minister give way?

[Guy Opperman]

I am still finishing this point. Following the Pensions Act 2011, the Department wrote 5.77 million letters to the people directly affected, to inform them of changes to their state pension age. The reality of the situation is that during the passage of the 2011 Act, the two-year acceleration originally proposed was revised to 18 months. It was a concession worth more than £1 billion, which reduced the delay that anyone would experience in claiming their state pension to no more than 18 months, compared with the previous timetable from 1995.

[Mhairi Black]

The Minister seems to have a distorted view of history. The reality is that most women did not receive a letter, most letters that were received had incorrect information and many were sent to completely the wrong address. It is important to put that on record in the first instance.

Secondly, I have been listening to the Minister intently. He talked about birthdays and people living longer, and that is fine. He brought up Labour Governments, and I understand why he did so: it is important to remember that both Conservative and Labour Governments let this group of women down. That is why we must rise above the politics of the issue and come up with a reason. Please do not give platitudes about letters.

[Guy Opperman]

I feel that I have already answered the point about notice.

The proposal made by many is to revoke the Pensions Act 1995 and all subsequent Acts, which would cost the public purse more than £70 billion, to be paid for by younger people, as today’s pensions are paid for by today’s worker. It would represent a cost of more than £38 billion to the public purse in the next year alone.

[Angela Crawley]

On that point, will the Minister give way?

[Guy Opperman]

No; I have a minute and a half in which to finish. If we consider that in combination with the ever-increasing demographic pressure—the number of people over state pension age is set to rise by almost one third in the next 25 years—it quickly becomes clear that we cannot afford to back away from the responsible choices that successive Governments have made. Although the state pension has risen significantly since 2010 under the coalition and this Conservative Government, and although auto-enrolment has succeeded in increasing eligible female employees’ participation in a workplace pension to 80% in 2016, the reality is that the Government face a key choice when seeking to control state pension spend: increase state pension age or pay lower pensions, with an inevitable impact on pensioner poverty.

The only alternative is to ask the working generation to pay an ever-larger share of their income to support pensioners. Although increasing longevity is to be celebrated, we must also be realistic about the demographic and fiscal challenges that it creates for us as a society. Given the increasing fiscal pressures described, we cannot and do not intend to change a policy implemented over the last 22 years and supported by all three major political parties.