Intergenerational Fairness

Lord Jackson of Peterborough Excerpts

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

[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.

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[Justin Tomlinson]

I am very grateful for the fact that we have a fantastic Pensions Minister who will be responding to the debate and who will no doubt comment in detail on that point.

The broader point, as I turn to the opportunities for younger people, is that we all collectively—the Government and the Opposition—have a responsibility to recognise that we have a habit of spending more money than we get in as tax revenue. Since the second world war, I think there have been only six years where the Government of the day have spent less money than they have collected. What that really means in plain English is that we, as the generations from most of those years, wish to have more than we can afford and we would like our children, or maybe our children’s children, to pay for it. This applies to all Governments, except in those six years where, for whatever reason, the Government of the day were able to collect in more tax revenue than they spent. We have a moral duty and responsibility to future generations not always to take that easy decision.

I was doing a radio interview yesterday on a relatively contentious issue involving possible additional Government spending, and another MP said, “Well, if I was the Minister, I’d have taken the hit.” The key point was that it was not they who would have taken the hit; it was everybody. Given that we already spend more money than we collect, what they were saying was, “I’d pass that one on to the next generation as well.” We all know that. We would all like to balance the books immediately, but we also all have a long list of personal priorities we would like to spend money on—our inboxes are full of helpful requests from residents for where we could spend more money. Many of those are very important—a balance always needs to be struck—but I gently remind the House not to lose sight of the fact that if we wish to give the best opportunities to future generations, we must not saddle them with too much of our own overspending.

I am inherently a very positive person—I believe that if we equip people and give them the opportunity, they will seize it with both hands and make a huge success of it—so I am greatly encouraged that our Government have delivered 1.8 million more good or outstanding school places. As someone who went to a school at the bottom of the league tables, I understand the importance of equipping people with the right skills. In my constituency and across Swindon, we have had a difficult Ofsted report recently. We have fantastic teachers, headteachers and governors all trying their best in Swindon and we have secured extra funding for our schools, but we are not quite there yet.

We all—the Government, MPs, the council, the schools collectively, the parents—have to look at what more can be done. I am encouraged that the schools Minister recently visited two of my local schools, Nova and Swindon Academy, both of which are transforming the opportunities for their children, having come from what not so long ago were very poor ratings. Frankly, they were failing the children who were relying on them to equip them for the future, but both have transformed their ratings through strong leadership, and I am delighted that yesterday Ofsted confirmed that Nova had moved to “good” in all categories. I pay tribute to Mr Barton, the headteacher, and all his staff who have worked incredibly hard to achieve that. Schools are the fundamental building block for equipping young people in life.

I am also a huge fan of the National Citizen Service, a new initiative giving young adults real, tangible life skills, and every summer, without fail, I visit every stage of the three to four-week programme. It takes a random collection of young people—the activities cost about £1,500—and sends them away for a week to learn teambuilding skills. They then come back, form teams and choose a charity. They learn about that charity, organise entrepreneurial and fundraising activities, volunteer for the charity to see it at first hand, learn presentation skills, haggling, engaging and so on, and at the end, they graduate as NCS students. There is an incredible transformation in all those young adults, who arrive well educated by their schools but perhaps not quite ready for the workplace. I ran my own business for 10 years and employed a lot of young people and I am encouraged to see the huge difference in those young adults. They take the time in their summer holiday, when it is tempting to do other less-constructive things, to go and engage. In doing so, they give themselves the best opportunity when entering the workplace.

University numbers continue to increase, but the Government have rightly put a huge emphasis on apprenticeships. For generations, Governments and Opposition parties got into an arms race on students going to university. Every general election, we would hear, “We sent 25%.”, “Well, we’d send 30%.”, “We’d do a third.”, “We’d do 45%.”, “We’ll break 50%.”. Everybody has a talent. David Beckham is not renowned for being academically gifted, but he has a gift that has earned him more money in a week than the majority of people in society will ever earn, and that was because somebody recognised his skill and allowed him to develop it.

We all have a talent. Every time I failed to make it on to a sports team, I wondered whether I did—perhaps that is why I am here—but everyone has a talent, and apprenticeships rightly recognise that. Workplace learning provides people with real, tangible skills and a fantastic opportunity to secure a long-term career with good career prospects. That is also vital for our growing economy, particularly where we have skills gaps.

In the last Parliament, we had a commitment to 2 million apprentices, which we have met, and in this Parliament we have rightly identified an even more ambitious target. It will be tough to get there, but it is right to have such challenging targets. I have spent, as I am sure have all hon. Members, a lot of time meeting the young apprentices who are doing things that I have absolutely no idea about—advanced engineering, all sorts of complex things with computers. They are on the first rung on the ladder towards their brilliant careers. They will all go on to huge success.

Across the economy, this Government have now delivered record employment—2.7 million more people are in work than when we came to office in 2010. That is not just in London or the south-east, as has sometimes been seen in previous strong economic performances; it is in every single region of the country. In my town of Swindon, 8,400 more people are in work, which is greater than the number who currently go on a weekly basis to see Swindon Town bravely fighting the relegation battle. Thankfully, with the victory at the weekend, we have got a bit closer to achieving the objective.

There are now 865,000 fewer workless households, and youth unemployment is at its lowest since 2005. In Swindon—I know that people are keen to know how well we are doing—youth unemployment is down by 69.2% since 2010, which is a fantastic achievement. The Government have rightly introduced the national living wage so that we are looking at a wage of about £9-plus by 2020. That will help 6 million of the lowest earners to have a pay rise and to share in the proceeds of the strong economic growth that we have delivered. The increases in the personal tax threshold have taken the 3.2 million lowest earners out of paying any income tax at all, and we are continuing to raise that threshold to £12,500, after which it will be index linked, making sure that the lowest earners will never return to the point of having to pay income tax again.

[Mr Jackson]

My hon. Friend is making an excellent speech, based on his expertise as a former Minister. We share something in common, in that our towns and cities of Swindon and Peterborough are, unfortunately, the two largest conurbations in the UK without a university that was created from the beginning. Does he agree that, in that respect, it is important to build on apprenticeships, with university technical colleges, for instance, so that young people who are not of an academic bent can be persuaded to pursue a technical and vocational education, which is so important for our future economy?

[Justin Tomlinson]

I thank my hon. Friend for that powerful intervention. He is a real champion for his constituency. On his point about universities, my Swindon constituency benefits from having a huge influx of graduates, so we benefit from the network of local universities within striking distance of Swindon, which is why our area has seen such strong economic growth.

My hon. Friend is absolutely right to highlight the importance of university technical colleges. My constituency had one of the first UTCs—a £10 million facility in Swindon. It has had its teething problems, but the principle is fantastic, because it is identifying the people who would ultimately be doing advanced engineering and technical work, giving them a real focus on that. They are working with local businesses, which can help to shape the curriculum to fill the skills gaps that can be identified in the local economy. This means that young people will have the best chance of having a career at the end of their education.

The challenge with university technical colleges is how to attract the best and most able students for that type of education at the age of 14. Not unsurprisingly, schools, which are all judged by league tables, are not always brilliantly keen to encourage their most able students to transfer, because it will have a detrimental effect on their place in the league tables. I would urge the schools Minister to consider having a dual score in the league tables, whereby the student remains attributed to the original school, but the results can be shared with the UTC. That would get around the disincentive facing schools if they lose some of their best students. It will give them the opportunity to say, “Look, they are doing great; but they can do even greater with that type of specialist education”. Undoubtedly, apprenticeships and UTCs are making a huge difference.

Not everybody has the opportunity to walk straight into work. As a society, we therefore have a duty to make sure that our jobcentre network is at its most able to support people. I was not the Minister responsible for jobcentres during my time in the Department for Work and Pensions but we had a lot of joint meetings and I got very excited about the need to refresh our jobcentre network. I had been on a number of visits and I was fundamentally depressed when I saw the 1960s and 1970s concrete structures and the security guards who are, understandably, needed. Let me imagine, though, that I am going to a jobcentre. I am almost certainly nervous, and I am then greeted by a security guard in bleak surroundings. There is no celebration of the successes, and no highlighting of those who have faced the same challenges that I fear but know that I must overcome.

I also visited a Shaw Trust community hub that helped a number of people who were a long way away from entering the workplace. There were bright colours and great furniture. This security guard had a different uniform to show that he was a welcomer: as soon as people arrived they were made to feel special, were congratulated on taking this step, and were made aware that he was there to be their anchor throughout the process. It was a real hub of activity. I could see nervous people coming into the building, but as soon as they met the guard they were at their ease, keen to engage in the process and fulfil their potential.

I am delighted that the Government have rolled out this system. When I visited the Swindon jobcentre a few weeks ago, I was not sure what to expect. I was greeted by senior members of staff, who told me excitedly that although the jobcentre had a budget of only about £3,000, they had painted the walls, changed the furniture around, changed the way the entrance worked, and provided work stations so that people could use computers to look for jobs independently after receiving support from the staff. Those staff members were excited because those improvements had transformed their morale and engagement among those with whom they sought to work.

The staff were then keen to talk to me about the difference that universal credit was making by simplifying what had been an incredibly complex benefits system. Under the old system, involving about 167 benefits, it was necessary to be a nuclear physicist to work out what people were or were not entitled to. All too often, through our casework, we would discover that, because of the complexity of that system, our constituents were missing out on support to which they should have been entitled.

Everyone supports the idea of a simplified single benefit that enshrines the principle that the more people work, the better off they will always be, and removes the ridiculous 16-hour cliff edge that prevented people from progressing from part-time to full-time work, to the frustration both of employers and of those whose circumstances were changing and who wished to build up their hours. Crucially, real-time technology now allows people with fluctuating health conditions to have a minimum income. As the condition goes up or down, the system automatically kicks in, so that people no longer constantly have to reapply and experience complicated bureaucracy when they want to focus on dealing with their health challenges and with remaining, or progressing, in work.

Often it is the simplest things that make the biggest difference. Another exciting development is that, for the first time, there are named work coaches. When people arrive at the jobcentre, they do not just need direct help with their search for work; there are a number of other challenges that they may need to navigate, such as securing childcare or additional training. The named coach will help them through that process, giving them significantly more time to concentrate on looking for the work that they would like. The coach will stay with people when they start work, which will also make a huge difference.

Many of us, looking back on our careers, will realise that we were probably driven mostly by our parents encouraging us to make progress—encouraging us not to be complacent; encouraging us to push ourselves—but that is not a given in life. When I was at school, it was a given that many people had no interest in going to work. That was a shame, because they were brilliant people, and with the right encouragement they could have made huge successes of themselves.

Often, people—especially those who have been out of work for a long time—will enter work, but on the lowest wage. Sometimes they will then stagnate, and will not have the confidence to kick on to higher levels. Let us suppose, for example, that I have been out of work for a long period, and have secured work in a supermarket. I am determined to make it a success, so I turn up every day, work my hours diligently, and stay there. Now, however, the named work coach would contact me and ask, “How is it going?” I would say, “For the last three months I have turned up every day and worked as hard as I possibly can.” The named work coach might say, “Have you thought about asking to become the supervisor?” The reply would be, “I’m too shy to do that.” The named coach would say, “No problem,” and then ask the supervisors and managers in the store, “Is he ready to take that step up?” Therefore, the coaches help people to progress in the workplace.

It is great that we have 2.7 million more people in work and that we have introduced the national living wage, which has helped the 6 million lowest earners to get a pay rise, but the next challenge, as we move close to full structural employment, is to ensure that there is support for in-work progression, so that everyone can not just get a job but fulfil their potential. By working hard, they can then progress through those organisations.

[Justin Tomlinson]

I thank my hon. Friend for his intervention. I am always at a loss to understand why he is not a Minister. He is one of our most able MPs. In the debates that I have attended, time and again, he is so thoughtful. I had a brilliant time visiting his constituency as a Minister to see the great work that he had done to help to promote apprentices, before it became fashionable and all of us started to campaign for more apprenticeships. He is always ahead of the curve. Rightly, his intervention highlights that we have to look at people of all ages and at the opportunities. I was an employer myself, so I understand the responsibilities to staff in respect of pensions and other benefits and career progression. As ever, he makes a powerful point.

[Mr Jackson]

Before my hon. Friend finishes his speech, on a positive note, does he agree that it is important that we have done everything we can to remove the badge of shame in the way we treat disabled people who want to work, and that the Disability Confident scheme, with which he was very much involved at the Department for Work and Pensions, is going from strength to strength, so that more disabled people, who should not be put in the shadows but allowed to fulfil their potential are able to do so in the employment market?

[Justin Tomlinson]

I thank my hon. Friend for his intervention. I know that he personally supported the Disability Confident campaign. I am coming to that, if he can hold on for a few more seconds.

Another thing that the staff at the jobcentre highlighted was the great initiative of the school advisers from the jobcentre going into schools, starting to identify those who would need help at an earlier stage and working with them to prepare them for their final day in education and to have a smooth transition. Staff are very excited about the early stages of that initiative. I am delighted that the small employment offer, a pilot that I introduced, is making a difference in getting more businesses to engage directly with the jobcentres, which are now a hub of activity, creating more potential vacancies for those who are still looking for work.

As a former disability Minister, it would be remiss of me not to talk about the additional opportunities that have been created for disabled people. On all the visits I ever did, the most passion I saw from people was when I played my favourite game, which was to ask anyone I ever met, “You are the Minister—what would you do?” I was always looking for good ideas. Without a shadow of a doubt, the most passionate, enthusiastic and engaged cohort of people I talked to were young disabled people who wanted to have exactly the same chances and opportunities as their friends. These were highly talented, often highly educated, brilliant young people, but not all employers had the confidence to consider offering them an opportunity. Nearly always, the employer just needed to make a relatively small change and they would benefit. As an employer, by accident—I am not looking for a halo—I employed people with a disability and it made a huge difference. Therefore, I welcome the fact that over the past three years 600,000 more disabled people have gone into work and that the Government are committed to delivering the disability apprenticeships. Those are real opportunities, predominantly for that younger generation.

I welcome this report, but I urge everyone to remember: it is not them versus us. We have a duty to do our best by people of all ages. I very much hope the Government continue their good work in this area.

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[Mr Stewart Jackson (Peterborough) (Con)]

This has been an excellent debate, which was brilliantly introduced by the right hon. Member for Birkenhead (Frank Field) and has included thoughtful and intelligent contributions from all hon. Members.

This debate is about poverty, wealth, the accretion of assets and life chances. My grandmother, Kathleen Woodman, was one of 13 children born in County Wexford in Ireland. Eleven of those children died of tuberculosis before Kathleen was taken to England in the late ’40s to live out the rest of her life. I mention that because it is impossible not to remember that the reality of life for so many of our fellow citizens for so many hundreds of years was brutal, grinding poverty. We have come an enormous distance. I say to the right hon. Member for Birkenhead that, yes, there is much to be done, but we have done a great deal to right the wrong of the grinding poverty that afflicted so many people over so many years.

It is important to remember that the modern welfare state was debated after Lloyd George’s 1909 people’s Budget, which brought in social insurance, pensions and the pre-Beveridge foundations of the welfare state. For that reason, we ought to recognise that we have gone in the right direction over the years. To use another statistic, it is impossible to believe that 44% of the world lived in absolute poverty as recently as 1980. In 2015, that figure was 9.6%. We have done an enormous amount—through technology, science, innovation and advances in healthcare—to lift the burden of destitution, misery and poverty from our fellow man, and we should accept the importance of that.

I will confine my remarks to the specific issues raised in the report. The debate between the so-called millennials and the baby boomers does not have to be acrimonious and adversarial. None of us can do anything about the societal change inherent in it, which is essentially demographic. The number of over-85s will double in the next 25 years, and that is a fantastic piece of news. As recently as 30 years ago, people worked incredibly hard—often in manual work. They reached 70 and had a few years tending their plants or their budgie, and then they fell off their perch. That was the reality of our life then. People now are richer, happier and healthier, generally speaking, than they have ever been, and that is a good thing.

It is also true to say, though, that we have not always done the right thing in response to that significant demographic change. To go back to the points made by my hon. Friend the Member for North Swindon (Justin Tomlinson), we have made some policy mistakes. We had a fetish in the 1980s and 1990s for university education—academic education. We did not consider the importance of technical and vocational education to young people who were not necessarily academically gifted. We drove the target of 50% of 18-year-olds going to university, which is great if someone goes to Harvard, Oxford or Cambridge, but not if they go to a less prestigious university and end up earning £7.50 an hour in a call centre, with £40,000 of student debt. We have to really consider whether we made the right decision. For instance, we turned polytechnics, which did a great job in providing technical education for young people, into universities. Was that the right thing? We are doing our best now to ameliorate those issues by, for instance, creating university technical colleges and a brilliant apprenticeship programme across the country, but I am not sure that is enough.

Housing is an important issue, and it was raised by the hon. Member for Hornsey and Wood Green (Catherine West)—I think she got her figures the wrong way round, unless Muswell Hill has gone downhill a lot since I last visited it, compared with Wood Green. It is absolutely right to point up the issue of older people, who are, in any case, better off, hoarding capital assets and, particularly in the planning system, preventing younger people from having what they themselves had. When someone who wants to buy a home has to be 37 years of age and to have something like £25,000 for a deposit, that cannot be right, and it distorts the system. We must build more homes, release more land and liberalise the planning system to address the specific issue of housing and intergenerational fairness.

We have to look at the triple lock, and we need a national debate about it. I am indebted to the Resolution Foundation for the paper it produced last year—“Stagnation Generation: the case for renewing the intergenerational contract”—and for the work of Lord Willetts, among a number of people. It is scarcely believable that the Resolution Foundation could say:

“Millennials are at risk of becoming the first ever generation to record lower lifetime earnings than their predecessors”.

That is the political inheritance we are potentially giving to people who are under 30 at the moment.

[Julian Knight (Solihull) (Con)]

Does my hon. Friend therefore agree that we should reform pensions tax relief to enable younger people to save more? Three quarters of pensions tax relief goes to higher earners, who are often older. If we reformed it—moving to, say, 28p or 30p in the pound—lower-income people would have more bang for their buck.

[Mr Jackson]

I absolutely agree. In terms of fairness and social equity, that is an excellent fiscal policy, which we should look at.

As the Select Committee report said, we also need to look at the information gap. We need qualitative and quantitative data on what goes in and comes out across both generations. We need to publish that analysis and study it independently.

We need to look at universal pension benefits, such as the winter fuel allowance. With demographic change, it is inevitable that we need to make sure we marshal our public resources in the best way we can. We need to look at a smoothed earnings link—a nuance in terms of prices-related indexing of benefits to pensioners. Life expectancy is increasing and health outcomes are getting better.

It is not that we have not done a good job, with automatic enrolment, changes in tax allowances, the national living wage, record employment of 74.6%, apprenticeships, and real incomes now rising by 2.6%. As we have heard, the number of those not in education, employment or training is reducing. Youth unemployment in my constituency has seen one of the biggest falls in any constituency in England—about 70%. Work means wealth. Work is the biggest determinant of getting out of poverty. Albeit that it might be low-paid and low-skilled work at the beginning, it is the No. 1 determinant of breaking the cycle of intergenerational welfare dependency. It is hugely impressive that the Government have taken 865,000 people out of workless households since 2010, although obviously they need to do more.

Before I conclude, may I be a little disobliging to the Scottish National party? The hon. Member for Motherwell and Wishaw (Marion Fellows), who is an excellent representative of her constituency, was rather churlish in the partisan point that she made. If we are talking about ideology, perhaps she can explain the £2,000 gap per head in public expenditure as a result of the Barnett formula, as between my constituents and hers. I will leave that in the air for her to think about.

My hon. Friend the Member for Weston-super-Mare (John Penrose) made a superb speech. In fact, we do not have an approach where we just put money in a biscuit tin and take it out when we are 68 or 70—we have a pay-as-you-go system. We must have a national consensus and a proper debate on this issue, because we cannot kick it into the long grass any longer. As I said at the beginning, grinding poverty, destitution, ill health and hidden mental illness are all things that we never want to go back to. The system we have is a price we are paying for a civilised society.