Pensions Bill [Lords]

Lord Watts Excerpts

Monday 20th June 2011 Commons Chamber

[Mr Duncan Smith]

Let me make a little more progress and then I will give way.

We have protected other key areas of support for pensioners, including free eye tests, free prescription charges and free TV licences for those aged over 75. Having quickly put incomes on a firmer footing, we have moved to secure older people’s right to work by taking decisive action to phase out the default retirement age, thereby sending a message that age discrimination has no place in modern British society and that older workers have a huge contribution to make.

Those were absolutely the right steps to take as a backdrop to the Bill, but they are just the beginning as we set about reforming our broken retirement system. At its heart, the Bill is about dealing with the challenge that faces the next generation, who will have to pay for their parents’ retirement while footing the bill for a crippling national debt, even before they start thinking about their own pension arrangements. I remind the House that 7 million people currently are not saving enough to have the income they want or expect in retirement. We need to look at the steps we can take to secure their future.

[Mr Dave Watts (St Helens North) (Lab)]

Is it not clear to the Secretary of State and the Government that although everyone accepts that there have to be changes, some of the proposals in the Bill are, for 500,000 women, unfair and unjustified? He should do a U-turn on those proposals as soon as he can.

[Mr Duncan Smith]

As I said at the outset, I will happily take an intervention on that part of the Bill when I come to it. Of course, that requires the hon. Gentleman’s staying for the whole debate, but that is up to him.

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[Mr Duncan Smith]

With respect, I recognise the right hon. Gentleman’s point, and I will take an intervention from his right hon. Friend the Member for Croydon North, but this is a complicated and fraught area that we should not necessarily deal with in the Bill. Beyond it, I am willing to hear more.

[Mr Watts]

Will the right hon. Gentleman give way?

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[Mr Duncan Smith]

As I said to the right hon. Member for Birkenhead (Mr Field) and repeat to the right hon. Member for Croydon North, I am always willing to look and to think carefully about what proposals there are—not for the purposes of this Bill, obviously, but in the future. I know that he has written—

[Mr Watts]

Will the right hon. Gentleman give way?

[Mr Duncan Smith]

May I just finish my answer to the right hon. Gentleman?

I am always happy to discuss the matter. There are complications, and there may be some issues about women, too, because contributions are an issue for many women at the moment, so we cannot take these things lightly. I recognise the work that the right hon. Gentleman has done, however, and I am very happy to discuss the issue beyond this Bill, as is the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb). For the purposes of the Bill, however, the right hon. Gentleman will forgive me if I stay to the point that we are going to equalise the retirement ages for men and women. The only question is, at what point?

[Mr Duncan Smith]

I am going to make some progress, but I give way to the hon. Member for St Helens North (Mr Watts).

[Mr Watts]

The Secretary of State seems to indicate that there is a potential practical problem. Is it not the case that when someone nears retirement age the Department looks at how many stamps they have paid and how many contributions they have made, which must mean that it keeps track of how long people have been working? That would resolve the problem mentioned by my right hon. Friend the Member for Croydon North (Malcolm Wicks).

[Mr Duncan Smith]

As I understand it, the pre-1975 data are very patchy and messy. I do not want to get sucked into this debate now, tempting as it is, and never to get on to the rest of the Bill; I do not think the hon. Gentleman’s colleagues would thank me for that. I recognise the issue and I am happy to discuss it post the Bill, but he will forgive me if I do not go down the road that Labour Members want by adding that in all of a sudden. I am not going to do that; we are going to stay with what we have. I am happy to listen to their concerns and to see whether we can make changes in future, but I do not give any guarantees.

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[Nick Boles]

The hon. Lady is eloquent, as so many people have been, on behalf of a particular group, and I would accept and understand that were they not equally eloquent on behalf of every single other group that is being affected by the process of getting our public finances on to a stable footing. I would have some respect if an Opposition Member said to me, “I voted for EMA, I voted for tuition fees and I am voting for the benefits cap, but this one I cannot bear because it is egregious, outrageous and singles out this group in a way that no other group is being treated.” But we do not hear that. All we hear is the same cry—“It isn’t fair”—applied every day, every week, to a different group of people. Opposition Members need to understand that it is not fair to pretend to people that we can do this without pain or loss. It is not fair to perpetrate on the British people the deceit that we can somehow grow our way out of this deficit without cutting off some things that everybody appreciates.

[Mr Watts]

I thank the hon. Gentleman for giving way. No one is saying that. People are saying that the reductions in public expenditure can be done slower to cause less pain. No one denies that the deficit has to be dealt with; the issue is how we go about doing that. It is about the difference between tax increases and cuts in public expenditure. Perhaps he will address those issues.

[Nick Boles]

The hon. Gentleman would have more credibility if we had heard, at any point in the past 13 months, a single specific proposal for a painful cut with unpopular consequences for a defined group of constituents who would write to all of us, but we have heard none, although we might be about to hear from the hon. Member for Leeds West (Rachel Reeves), who gesticulates at me.

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[Alex Cunningham (Stockton North) (Lab)]

I am very keen to speak about this issue because it has resulted in my heaviest postbag for some time, with most of the correspondence coming from women. Some time ago, I was declared an honorary woman, which I took as a great compliment. I was in a discussion with half a dozen women who were talking about things of a feminine nature. One woman looked at another and said, “There’s a man here”, only to be told, “No, it’s okay—Alex is an honorary woman.”

I am very pleased that I am not a woman, because at my age I would be one of those losing out under the formula that the Government have put together. Only this afternoon, I received a phone call from one of my constituents, Fiona, who is a 56-year-old nurse. I wish that the Minister could have heard her voice and learned a little about the anguish and despair that was in it. She told me that she started work at the age of 17 and has worked in the health service for several decades, and that she now feels that the Government are slapping her in the face. She said that she had been aware for some time that her pension age would be going up from 60 to 65, and that she understood that and did not mind—she even thought it was fair—but that raising the age even further to 66 was going too far, too fast, and with very limited warning. In her own words—we have heard this cliché all day—“They keep moving the goalposts.”

Fiona pointed out that older nurses and other health professionals, particularly those in their sixties, would struggle to lift and assist the most frail and elderly patients. Similar issues exist for manual workers, many of them women, who simply cannot do the job that they were originally employed to do. Surely we should value people such as Fiona, not force them to replan their future with such limited notice. It was on behalf of Fiona and many other women in my constituency that I wanted to speak.

It is great that most people are living longer—of course, many others are not—but it brings challenges. It is important that as politicians we confront the difficult issues raised by the ageing population, not just for pensions, but in health care, the quality of life we provide for older people and how society treats the retired population. Those are all important issues.

My hon. Friend the Member for Sunderland Central (Julie Elliott) and my right hon. Friend the Member for Croydon North (Malcolm Wicks) outlined inequality in a different way today, with regard to manual workers who will be lucky to reach retirement age and even luckier if they get to 70, let alone the grand old age of 100 that some Government Members think they and their relatives will reach. Those manual workers are the people who have created wealth in our country, and yet they have never had the advantages of that wealth and they get very limited benefit from their pensions.

[Mr Watts]

Does my hon. Friend agree that it is also unfair that many of the women we are talking about started work at the age of 15 and so will have worked for 10 years longer than many other people by the time they retire?

[Alex Cunningham]

Indeed, that is the case. Some of the women in these difficult jobs may not have their health in later years, so they will lose in all ways.

All too often, the elderly are ignored and not treated with the respect that they deserve. The Government should play a big role in ensuring that society takes care of people when they have retired and are not as independent as they once were. Family, friends and community all play a big role, but the Government can and should lead by example. Pensions, among other things, are a big part of that.

I am proud of Labour’s record in this field. We lifted a million pensioners out of poverty, and free bus passes, free TV licences and the winter fuel allowance all play their part in helping pensioners. In common with other hon. Members, I want to home in on two things.

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[Priti Patel]

I thank the hon. Lady for her remark. It is a fact of life that we are living longer. At the end of the day, there are serious pressures on public finances and on funding for our state pensions. The Government are seeking to address that serious issue. Ultimately, this is about the future of a sustainable state pension. The Bill is not about today or tomorrow, but about future generations. It is right that the Government tackle this fundamental, serious issue in the way that they are. Furthermore, we have all seen from Department for Work and Pensions figures that more than 10 million people in the UK can expect to live to see their 100th birthday. This reform is therefore clearly long overdue.

People are living longer and healthier lives, but we simply cannot ignore the pressure that this puts on the state pension system. In my view, increasing the state pension age is the only fair and sustainable option. We have heard a range of quotes in the Chamber today from various organisations. There are experts in our society who understand how our pensions are funded, and it is worth noting that the chief executive of the National Association of Pension Funds said:

“Our ageing population means increases in the State Pension Age are unavoidable. This rise in the State Pension Age to 66 from 2018 to 2020, as implemented in the…Bill, is a sensible move.”

[Mr Watts]

We keep hearing the same arguments, as though Opposition Members have not taken on board the need for changes. Our issue is with the speed, and with the unfairness to a specific group. If the Government address this issue, we can have consensus, which surely is what we all want.

[Priti Patel]

The previous Labour Government had the perfect opportunity to address this issue. Opposition Members say that their issue is with the speed, but this is now about having a sustainable pensions system, as we simply cannot carry on as we are, so I do not think that the hon. Gentleman’s remarks are plausible. The status quo is not an option.

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[Steve Webb]

As there were 25 contributions to the debate, I want to try to respond to some of the points that were made, and then I will certainly give way some more.

My hon. Friend the Member for Cardiff North (Jonathan Evans)—indeed, Cardiff was well represented in the debate: by my hon. Friend the Member for Cardiff Central (Jenny Willott) and by the hon. Member for Arfon (Hywel Williams), who raised issues relating to Allied Steel and Wire—pointed out Labour’s track record on pensions. He was right to do so, because although one or two Opposition Members glossed over history, he reminded us of the 75p pension increase—something that can never happen again under our triple lock. He reminded us of the failure of the previous Government to get to grips with Equitable Life and of the tax grab by the previous Chancellor and Prime Minister on company pensions. That is not a proud record.

The hon. Member for Aberdeen South (Dame Anne Begg), the Chair of the Work and Pensions Committee, made a characteristically thoughtful contribution and I am grateful for her support for our abolition of the default retirement age. The link to that issue has not often been made in today’s debate. The previous Government were planning to raise the state pension age to 66, 67 or 68—but to leave it legal to sack people for turning 65. There is a logical flaw there, and I am sure the House is ahead of me on that. It is therefore right that we have taken away employers’ ability to sack people for the “sin” of turning 65.

I am also grateful for the hon. Lady’s support for our going ahead with the National Employment Savings Trust and the flexibility around auto-enrolment in 2012. She asked whether our £10 billion estimate of the cost of delay to 2020 was a gross or net figure. It is a net figure, taking account of benefit offsets. However, a lot of the points that she and a number of other Members made would apply whenever we raised state pension ages. For example, it was the hon. Member for Erith and Thamesmead (Teresa Pearce), I think, who asked, “What will happen to volunteers? What will happen to carers?” Those are important questions, but they would of course arise whenever state pension ages are raised—and she supports a party that legislated to raise the pension age to 68. She is right that these issues need to be addressed, but they exist not specifically because of this Bill but because of legislation that is already in place.

[Mr Watts]

Is it not a fact that, if the Minister accepted the Opposition’s proposals, they would deal with the short-term problem, the long-term problem and the unfairness, and he would probably get more support from his own party?

[Steve Webb]

I am grateful to the hon. Gentleman for recognising that there is a long-term problem, which not all his colleagues have done.

My hon. Friend the Member for Grantham and Stamford (Nick Boles) made the point that this is not about the deficit. That is quite true—these measures do not save us money in the current comprehensive spending review period. However, I have a figure to present to the House: £1.3 trillion. That is the national debt at the end of this Parliament, even after our austerity measures. That is the legacy; that is the reason we need to get a grip on these matters.

As well as the 25 Members who spoke today, there were two almost silent voices—especially silent in the Opposition’s contributions. The first silent voice was tomorrow’s taxpayer. Labour wants to put the Bill into the 2030s. If we delay the changes, all these things will have to be paid for by someone else. As long as it is not the people who write to us—somebody else will pay, and they do not write to us, so that is fine. That voice needs to be heard.

The second voice that was not really heard much in the debate—although a few coalition Members did raise it—was that of employers. Of course, many of the Bill’s measures on auto-enrolment are about easing the burden it imposes, particularly on smaller firms, which are crucial to our recovery and the fundamental improvement of the economy. These measures strike a balance. The waiting period gives employers time to get people on the payroll. The threshold enables employers to take on people on a lower wage, with less bureaucratic burden. The voice of the employer and the costs and burdens on business were issues that the Opposition almost did not raise at all.

My hon. Friend the Member for Cardiff Central (Jenny Willott) was very generous in her remarks, supporting the measures on judges and on auto-enrolment. She quite properly raised concerns about the state pension age, but she made an important point about our state pension reform agenda generally. There are two sides to the state pension deal—when people get it and what they get. One Opposition Member this evening described the state pension as a pittance, but who oversaw it at that level for 13 years? We have brought forward, in our Green Paper, proposals for a single tier of state pensions set above the level of the means test. That is one of our reform options and that is the pension, if those proposals go ahead, that every one of the women we have been talking about today would get, so there is an issue about when they get the pension, but there is also, crucially, an issue about what they get. We are actively looking into that and I am grateful to my hon. Friend for raising it.

The hon. Member for Arfon asked about Allied Steel and Wire workers and the financial assistance scheme. I can confirm that I met them along with the Secretary of State for Wales and Dr Ros Altmann, who has done a huge amount of good work in this area, back in November and that I wrote to update the Secretary of State last week. We are aiming to provide forecasts for financial assistance scheme members once the wind-up process for schemes is completed. In the case of ASW, the scheme is still winding up, so the financial assistance scheme is not yet in a position to provide forecasts, but we hope to make progress later this year. The hon. Gentleman also asked about Dr Altmann’s ideas for getting money into the scheme and we have looked at trying to release value from annuities. That is not looking as hopeful as we had hoped but we are working hard to see if that can be done and I am grateful to the hon. Gentleman for making the point.

My hon. Friend the Member for Ipswich (Ben Gummer) gets the prize for making the sharpest intervention. He pointed out to the shadow Secretary of State the legal advice and comments made by my noble Friend Lord Freud in the House of Lords on 30 March. I know that my hon. Friend reads little else and I am grateful to him for drawing those comments to our attention. [Interruption.] As the right hon. Member for Birmingham, Hodge Hill has asked the question, let me tell him the answer before he asks again. My noble Friend was responding to an amendment that would have slowed the process at which we equalise the men’s and women’s state pension age. The right hon. Gentleman will know that we are on a process of equalisation, and the legal issue is that we deviate from equalisation if at any point we widen the gap. The coalition reference to moving men in 2016 and women in 2020 would widen that gap. The issue is directive 79/7, which

“deals with the progressive implementation of the principle of equal treatment for men and women in matters of social security…Any change we now wish to make needs to be considered in relation to the position left by the 1995 Act.”—[Official Report, House of Lords, 30 March 2011; Vol. 726, c. 1279.]

That is on the record and has been for several months.