Oral Answers to Questions

Malcolm Wicks Excerpts

Monday 19th July 2010 Commons Chamber

[Steve Webb]

My hon. Friend makes an important point, and we are seeking to move as quickly as possible to reach a conclusion on the change to the age of 66, to give people the maximum notice so that they can make appropriate plans.

[Malcolm Wicks (Croydon North) (Lab)]

Notwithstanding the need to increase the age at which people draw the state pension, will the Minister and his Department look into the social class dimension? According to the latest statistics, 19% of men from the poorest social backgrounds do not survive to get their pension. Those from poorer backgrounds, who often do heavy manual work throughout their lives, die much earlier in their pension careers than those from better-off backgrounds. Will he look into the social class dimension?

[Steve Webb]

The right hon. Gentleman is very knowledgeable about pensions and social issues, and he has highlighted an important matter. We specifically referred to this in the call for evidence for the change to 66. The good news is that life expectancy is increasing across all social groups, but the factor that he mentioned is an important one, and we will consider it when we examine state pension ages.

Capital Gains Tax (Rates)

Malcolm Wicks Excerpts

Monday 28th June 2010 Commons Chamber

[Malcolm Wicks (Croydon North) (Lab)]

I want to make a specific contribution about the assumptions that underlie Government policy on raising the pension age. Those assumptions relate to our increasing life expectancy, and therefore the number of years that we will spend receiving the state pension and the affordability of that. There is also a related assumption about our ability to work longer in the future.

Life expectancy is undoubtedly increasing in general, but I wish to give a social-class perspective on the matter. I sometimes think that we get so carried away with an analysis that we are all going to live into our 80s and 90s that we fail to examine how life expectancy varies between socio-economic groups. First, it is a clear fact that fewer individuals from lower social classes survive even to reach state pension age. It is estimated that almost one fifth—some 19%—of men from lower social classes who are currently 25 are likely to die before they are 65 years old, so they will never get a state pension. That contrasts with 7% of men from the highest social class. For women, the comparable figures for those dying before the age of 60 are 10% and 4%.

Secondly, the great majority of poorer people who do reach retirement age enjoy shorter pension lives, if I may call them that, than the better-off. At 65, professional men have a life expectancy of 18 years as a pensioner, while unskilled men have one of only 14 years. For women, taking the starting point as age 65, the respective contrasting figures are 22 years and 17 years. There are significant social-class differences, and the Government need to think through their implications.

What about the employment assumptions? Raising pension ages assumes that in future years, men and women will be able to work for an extra period. How reasonable is that assumption? Let us look at current employment trends. Some people, of course, continue to work past state pension age—I believe the figure is about 13%—but a far higher proportion are effectively out of the labour market before the formal state retirement age. We rather pretend that the state retirement age is 60 and 65, but the statistics show the myth behind that. The labour force survey data show that for the period of February to April this year, 24% of men aged 50 to 64 and 26% of women aged 50 to 59, in the period leading up to retirement, were classed as economically inactive. In other words, they were not in work.

When we look more specifically at those coming up to the state pension age, we see that very large numbers of them have effectively been retired long before the age of 65 for men and 60 for women. Some 43% of men aged 62, for example, are not working; by age 64, it is 53%. To take another example, 35% of women aged 58 are not working.

I am not making a particularly partisan point, but what conclusions do we need to draw? In general, it is not unreasonable to increase the age at which people become eligible for the state pension. I say that as a general proposition, but we need to be sensitive to social class. To be blunt, as many of us know from the people we meet in our constituencies, many people working in heavy industry or who have had tough lives in physically demanding jobs, such as in the mines, in steelworks, as cleaners or as care workers, cannot go on working for ever. There comes a point when they need a rest and need to retire.

Significant changes will be needed to employment practice and attitudes to work if more jobs are to be available for those in their late 50s and 60s. The statistics that I have cited show that it is currently difficult for many people of that age to get work. I suggest that we need to build on policies that are already in place to promote flexibility in state pensions. At the moment there are choices to be made at state pension age. People can take their pension at that point, as most need to and do. However, they can defer it and receive a higher pension later, or they can take the deferred element of their pension as a lump sum. We need to ask whether we can do more to promote that type of choice for those able to work, so that we bring more flexibility. The number of people deferring is relatively low. I am bound to say, as a former Pensions Minister who had some responsibility for legislating in that area, that I am disappointed at how low it is. We need to consider whether we could do more to encourage choice. Could we consider, for example, making the lump sum tax-free?

Finally, what about the people whose case I have cited, those who are already out of work in their late 50s and early 60s? We know those people from our advice surgeries and constituency offices. They are in a difficult situation. Are we really saying that someone of 60 who is not in work will have to wait another year to get their state pension? Are they simply destined to be classed as unemployed or disabled, and somehow trapped in a no-man’s land between grand assumptions about future retirement patterns and the grim reality of their lives? We need to think the matter through. I do not have the answers, but we have time to consider some of the issues.

Oral Answers to Questions

Malcolm Wicks Excerpts

Monday 14th June 2010 Commons Chamber

[Maria Miller]

I thank my hon. Friend for bringing the important work of Save the Family to the attention of the House. I am familiar with the project in north Wales, and my right hon. Friend the Secretary of State has visited it. Keeping families together is important, and I will do all I can to encourage colleagues who are considering child poverty across Government to consider the work being carried out by Save the Family. Family stability is vital and I am sure it will form part of the strategy that we work on to end child poverty.

[Malcolm Wicks (Croydon North) (Lab)]

One of the root causes of child poverty is teenage pregnancy. Before he assumed office, the Secretary of State—I congratulate the team on their new positions—did important work on the links between poverty and teenage pregnancy. What talks were held last week with the Secretary of State for Education before he announced cuts to local authority education and children’s budgets, which will, among other things, undermine the future of teenage pregnancy projects?

[Maria Miller]

I thank the right hon. Gentleman for his question. Teenage pregnancy is a critical part of the poverty strategy and one of the issues that will be considered in the cross-departmental Cabinet Committee on social justice which we will establish. It is important for the House to remember that, under the previous Government, not enough progress was made on that matter, but we will put that record right.