Cost of Living

Lord Evans of Rainow Excerpts

Tuesday 14th May 2013 Commons Chamber

[Graham Evans (Weaver Vale) (Con)]

It is a pleasure to follow the hon. Member for Wirral South (Alison McGovern). It was interesting to hear what she had to say about James Callaghan. Growing up on a south Manchester council estate during the Labour years is one reason why I am on the Government Benches and not on the Opposition Benches. Callaghan’s was a complacent Government who were totally out of touch; as we all know, he was replaced by a certain Margaret Thatcher.

I rise to support the Gracious Speech, and I am pleased to be able to make a short speech on the cost of living and people’s ability to save for their retirement. When we consider the nature of our roles in this place, it is extraordinary to look at our society now and in the future, as no real reform to pensions has been made in generations. The world around us has changed so much and our expectations of living standards and life expectancy exceed anything that could have been imagined when the first state pension of five shillings for those over 70 was introduced in 1909—in the famous “People’s Budget” introduced by the then Liberal Government. The pension age remained at 70 until 1928, when the Conservative Government under Stanley Baldwin reduced it to 65. Conservative Governments have always been reforming Governments, particularly when it comes to pensions. Back then, there were limits on what one’s private income could be and having too much furniture could prevent people from being eligible for the state pension.

This House has tried time and again to keep pace with changes to the average person’s working life, but instead of there being a clear, logical plan to make sure that every person in this country can look to a retirement where there is certainty and continuity, the issue has become complicated and confusing. As the relative worth of the basic state pension has dropped, additional payments have been tacked on, which have led to a generation heading to retirement age without knowing what to expect from their pensions, how they need to save or what the cost of living will be.

The increased dependence on means testing, with all the complications that result from it, has meant that a third of pensioners do not claim the pension credit to which they are entitled because they have not received the information they need. That is not to say that Governments have not tried to take steps to reach them, but the confusing nature of eligibility means that many people simply have no idea of what they are entitled to receive. Some of the criteria for eligibility may seem just as odd as the furniture requirement of the 1909 state pension. What is clear, however, is that when the safety net fails to support the most vulnerable, we know something must be done.

Equally, there is no such thing as a job for life. I remember growing up in a south Manchester council estate in the 1970s. My neighbourhood had three industries—the textile industry, the aerospace industry and the growing pharmaceutical industry—and most people worked within them. Forty years later, there is no textile industry, there is no aerospace industry and the pharmaceutical industry is consolidating by moving abroad. That means communities have to reinvent themselves, just as we as individuals have to reinvent ourselves and just as our country has to reinvent itself to compete in a highly competitive 21st century world.

With the rise of new technologies, we should be encouraging entrepreneurs to take their own initiative and build their own businesses. That is why I welcome the inclusion of the self-employed in these reforms, based on national insurance contributions. We can thus encourage business and growth, while guaranteeing a pension for those young entrepreneurs as well.

These reforms are not about our future, but are about our children’s future—and, indeed, our children’s children’s future. We are setting up a system whereby this country’s under-25s will have the security of knowing exactly what to expect from their state pension. They are safe in the knowledge that the new, single-tier pension will be uprated in accordance with higher earnings and will always be above the escalating cost of living. Government Members are safe in the knowledge that we acted in the national interest, took the long-term view and are making the big changes necessary to secure our children’s future. That is why I welcome the Queen’s Speech and the underpinning objective of this Government—that it always pays to work and it always pays to save.