Intergenerational Fairness

Lord Field of Birkenhead Excerpts

1st reading: House of Commons
Tuesday 28th February 2017 Commons Chamber

[Frank Field (Birkenhead) (Lab)]

In some ways, it could not be better that this debate is following the previous one, because, as was rather graciously referred to by the leader of the previous debate, the Chair of the Business, Energy and Industrial Strategy Committee, my hon. Friend the Member for Hartlepool (Mr Wright), we have had an announcement today from Sir Philip Green about part of a settlement to bring justice to BHS workers and pensioners. The inquiry on BHS showed how two Select Committees working together can be more powerful than the sum parts of each Committee. I continue to emphasise, as my hon. Friend did, that the announcement represents the first piece of the puzzle on pensions being put in place. We have not had a chance to read the small print, but one hopes it is good as the headline.

A number of reports are still outstanding, including from the Inland Revenue, which has arrested Dominic Chappell—the person who, wisely or foolishly, bought BHS for £1. There are outstanding reports from the liquidators, the Serious Fraud Office and the Insolvency Service. The Prime Minister has made it plain that she will make no move on making a recommendation to the Honours Forfeiture Committee that it should begin work on considering whether Sir Philip should keep his knighthood until she has access to all those reports. That is immensely sensible, as one would expect from somebody who is as careful as she is before taking such decisions. All I would add is that although we know that seeing justice as a result of the reports from the Revenue, the Serious Fraud Office, the liquidators and the Insolvency Service is much more important in the longer run than any knighthood, some in the country will look for sacramental changes that show that the Government have really taken on board how horrendous the BHS chaos was.

I am obviously not going to talk any more about that subject, Madam Deputy Speaker, because you have been kind in letting me make a follow-up statement on this of all days, when we are following a debate on a Business, Energy and Industrial Strategy Committee report with one on a Work and Pensions Committee report. Those Committees joined forces to look carefully at the beginnings of a longer-term solution for the pensioners and workers, and what these things mean for public companies, as well as a whole host of other issues. The two Committees began that work together, and I am pleased that our two debates have, with providential luck, somehow been joined together.

We are using the privilege of occupying the Chamber of the House of Commons to debate the Work and Pensions Committee report on intergenerational fairness. I am pleased that a number of members of the Committee and others are here to make a contribution. If I keep disappearing, Madam Deputy Speaker, to make some comments on Sir Philip Green, I hope I will be allowed some leniency; normally I would stay in the Chamber for the whole three hours.

By way of introduction, I would stress two points. First, intergenerational fairness is a huge, huge topic. The problem for any Select Committee—or for Select Committees that have joined together—is where to begin in order to make sense of a topic. The Committee has looked at, and made recommendations to the House on, the triple lock, and that will be the main subject of my speech. I agree that we could have started with other topics and looked at other aspects of intergenerational fairness, but the triple lock was where we began our inquiry. As my speech unfolds, I hope that Members will see that while there were immediate pressures that pushed us to look at that area rather than other aspects of intergenerational fairness, those other aspects need to be considered.

[Peter Kyle (Hove) (Lab)]

Does not my right hon. Friend agree that the fundamental core of this issue is that there are people in our society who will succeed because they have assets? However, someone who is talent-rich but asset-poor is unlikely to succeed in life, in terms of getting into the school they need to go to, educational attainment, and health and economic outcomes. The core challenge for our generation is to make sure that everybody has access to the best our economy can deliver, whether they are born into a family with assets or otherwise.

[Frank Field]

I could not agree more, but I hope that my hon. Friend will forgive me if I do not follow that up, because one of our colleagues wants to talk about how aspects of education affect intergenerational fairness.

The Committee decided democratically that it would look at the triple lock. However, I was also struck by the difference between my life chances and those of people who are the age that I was when I set out to earn a living after university. When I graduated, I was one of 3%. People might say, “Well, we can see which cohort you belonged to,” and it was a very privileged cohort. I went to university, but I did not pay fees—we expected county scholarships to see us through university, and we did not come away with debt. When we graduated, we interviewed big firms to see whether we wished to work for them, and now graduates are scrambling for jobs, so it is a very different world. I expected to get a job, I expected at least to own a house—if not more than one house—I expected to have savings and I expected to have a pension. One need only look at how privileged my life has been compared with that of people in their 20s who are graduating today to realise, as my hon. Friend the Member for Hove (Peter Kyle) said, that the wheel of fortune has turned. Whatever one wants to say about the golden oldies, we are in a very privileged position, and that has been reinforced by the Government. I shall return to that in a moment.

The Committee wanted to test whether the triple lock was viable for the next Parliament and beyond. If it was not, we wondered whether we could marshal a report on which all of us agreed, and behind which political parties could slowly move before deciding what policy they would stand on in the election, perhaps in 2020. We now see our role as a Select Committee as taking on controversial topics and letting the Government and Opposition judge for themselves what nuclear warfare should be employed against us. Then, if we are still standing to tell the tale, perhaps the Government can be a little more brave than they would otherwise have been.

I am not saying—the whole Committee was united on this—that there are not a number of very poor pensioners in all our constituencies, but the position of pensioner poverty has been transformed over the past 10 to 15 years through Gordon Brown’s pension credits and the coalition Government’s triple lock. If we were having this debate 10 years ago and talking about not making moves to benefit the vast majority of pensioners, we would be laughed out of court, but now the debate has significantly changed. Despite that, I do not want anybody to think that we do not have to rack our brains to think how we can sensitively, but equally effectively, ensure that we continue to deal with poor pensioners. One does not have to be a very bright Member of Parliament to know that we all have some very poor pensioners in our constituencies. However, we also now have a growing number of rich pensioners, thank God.

It was against that background that we considered the whole business of the triple lock. There are four ways in which the Government could deal with this issue. First, they could just ignore it and allow the public finances to let rip, depending on the international money markets to shovel us loans at very low rates of interest forever so that we can continue, right into the sunset, to live beyond our means. I do not think for a minute that the historically low interest rates that we have at the moment will last for very long, let alone that we would have a Government who would commit the next Parliament to the triple lock. I cannot see that our public finances will be secure unless the Government take a deep breath and think very carefully about our report.

I also make a plea to Labour Front Benchers. People are now saying that it is impossible to envisage another Labour Government in anybody’s lifetime, but funny things have happened this year—funnier things than the election of a Labour Government. I therefore would not bank on Labour being unelectable and our party therefore not having to consider how fiscally responsible we have to be as we approach an election.

The second approach to the triple lock would be to say, “We’re going to increase taxation.” If we were to go down that route, we would need to raise the same amount of money that we would otherwise have to borrow, so we would be talking about raising an additional £40 billion in today’s money. That is half the sum that we raise from income tax, so it would mean saying to the country, “We expect to be continuously elected on the basis of putting up your income tax by 50%.” I do not think we would be able to hold that position for very long. If we look at the marginal tax rates paid not by the rich, but by the working poor who draw benefit and then lose it as they work harder, we will see that the idea of putting 10p on the standard rate of tax seems so absurd that there is hardly any point in suggesting it, but that is the second way in which we could square the circle of keeping the triple lock.

The third approach is to continue the policy of not just this Government but previous Governments of favouring pensioners and reducing the living standards of the working population. I do not believe that that is tenable now, but it is what will happen until the end of this Parliament. It is certainly not tenable beyond that point, however, because we are taking resources from the working population and giving them to many pensioners who are well off. People sometimes hear what they want to hear rather than what is being said, so I want to emphasise again that I am not denying that there are not too many poor pensioners. However, the standard of living of the vast majority of pensioners is of a kind that the pensioner population has never experienced before. Thank God for that, but cuts in the living standards of the working poor are already starting to result in people of working age being reduced to destitution.

[Ruth Smeeth (Stoke-on-Trent North) (Lab)]

It is heart-breaking that 73% of working parents already go without a meal during the school holidays in order to feed their children. Is not that an indictment of exactly where we are going wrong as a country and society?

[Frank Field]

It is, and my hon. Friend’s intervention could not be better timed. Members who followed closely the Archbishop of Canterbury’s Christmas message will know of an example from Feeding Birkenhead. A family would lower their child into a supermarket waste bin to scavenge for food before rescuing them and seeing what food they had. The mother is suffering from cancer. She is now fed by Feeding Birkenhead with food that would otherwise go to the tip, but she says that she has never been better fed. Is this House prepared to continue policies that put so much pressure on working-age families that that example will no longer be exceptional? More and more of us will be troubled by examples of our constituents nobly not feeding themselves, as my hon. Friend says, and it will happen more regularly. Destitution is an issue.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

I agree with the argument that the right hon. Gentleman is developing, but what he is suggesting would be politically unpalatable. Given that the majority of healthcare costs that we generate in our lifetimes come at the extremes of life, does he agree that one way of selling this to the population, and especially those pensioners who are principally in the frame, would be to say that the £2.2 billion per annum that the 2.5% element of the triple lock will probably generate by the end of this decade might be hypothecated into the national health service? In that way, we might gain some level of acceptance from pensioners.

[Frank Field]

Again, I could not agree more. I did not want to fan out the debate—I wanted to keep it as tight as possible so that we might get some agreement—but these are proper options that have to be considered. There is no way, sadly, that we as pensioners can get all the goodies and expect other people to pay for them. The issue of how we integrate care into the NHS will grow in importance as each month of this Parliament passes.

The fourth and last way in which we could keep the triple lock would be to raise the retirement age continually. Again, I make a plea to Front-Bench and Back-Bench colleagues, because such a policy would adversely affect our constituents almost more than any other. The Select Committee has published the names of the constituencies where the average life expectancy for males is such that they simply will not reach retirement age if we say that we will square the books by increasing the retirement age from 68, which is the figure that it is expected to rise to, to 70 or 71.

There is a commonality between the constituents of my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams), who leads for the Opposition on these matters, and my constituents. We do not say that no male in our constituencies will on average receive a pension if we raise the retirement age to 70 or 71, thank God, but we know that swathes of our poorer, older and frailer constituents will not actually reach the retirement line—the point at which they pick up the state retirement pension—at the age of 70 or 71, because they will simply have died.

[Mr Stewart Jackson (Peterborough) (Con)]

As usual, the right hon. Gentleman is making an excellent and well considered speech. Notwithstanding what he says, given that average life expectancy has increased from 71 in 1960 to 81.5 now, and that 9.9 million people over 50 are working, people surely want to work longer—I know that the situation is different for those who work in heavy industry, which has killed a lot of people shortly after their retirement—and to be able to exercise their choice to do so.

[Frank Field]

I would not for a moment—look at me—say that people over the state retirement age should not be allowed to work; far from it. However, there is a difference when people have had jobs such as those in factories—I have not had such a job—and are simply worn out by the cost of such jobs, meaning that they will not make it to the finishing line if we keep extending that line. I am therefore making a plea that we do not go down the route of keeping the triple lock by just continuing to raise the retirement age, saying, “With fewer of you drawing the state retirement pension, we will balance the books.”

That approach was one of the alternatives, and I will go through the others again. One was just to continue putting all the cost on people of working age, and I have made a plea about why we should not do so. Another is to think we can just tax and tax again, but I simply do not think that Governments can get elected on that basis. They cannot put up income tax by 50% over a number of Parliaments and expect to be elected—and thanked in the process. Finally, I do not think that any party that wishes to be elected can let borrowing rip to the extent that would be needed to balance the books while keeping the triple lock.

I therefore make a plea to both the Government and the Opposition that they look carefully at the Select Committee’s proposal for a double lock-plus. Pension credit and the coalition Government’s triple lock have already—this will continue—raised the value of the state retirement pension compared with average earnings to a historical high. The Select Committee report says that by 2020, we should peg the state pension against earnings at the level at that time. The double lock-plus would ensure that the state pension would never from that day forward fall relative to average earnings. As there will be—perhaps in the very short term—periods during which price inflation exceeds earnings, we should honour the prices link at those times, albeit coming back to the earnings link as soon as possible. In that way, we would not actually have to face many of the terrible scenarios I have painted.

As my hon. Friend the Member for Stoke-on-Trent North (Ruth Smeeth) said, the cost of the existing policy has been borne by people of working age. We should not pursue a policy of continuing to take money from that group, especially those who already find it difficult to put food on the table for their children for every meal in the way that our parents fed us when we were growing up.

This is not about begging both sides. If people came here with a script saying that they were going to reject the Select Committee’s report, I ask them not to read that passage, but perhaps instead to enter into discussions more widely with the House of Commons about how we can guarantee standards of living against pensioners’ earnings in 2020. We must ensure that they are never eroded, but we must also ensure that this policy of making increases at the expense of the working population ceases. We should all put such a programme to the electorate when the general election comes.

--- Later in debate ---

[Mr Speaker]

As far as I can see, there are four more would-be Back-Bench contributors. I should have thought that we will need to start the Front-Bench wind-ups no later than 6.30 pm. The right hon. Member for Birkenhead (Frank Field) might want to make a two-minute wind-up.

[Frank Field]

indicated dissent.

[Mr Speaker]

No—well, the wind-ups should certainly start no later than 6.30 pm.