Pensions Bill [Lords]

Debate between Malcolm Wicks and Steve Webb

Tuesday 18th October 2011 Commons Chamber

[Malcolm Wicks]

With respect, I think that what I have to say will be helpful to the hon. Gentleman, and I am sure that he will tell me where I get it wrong, if I do.

I want to analyse mortality by social class. I shall talk about men in particular, although there is a class difference among women too. People in social class 7 tend to be in routine occupations. For example, they might be labourers, van drivers, packers or cleaners; many women would be cleaners. We hear a lot about longevity and how we will all live to 100: the Minister keeps telling us—he issues a press notice every few months—that one fifth or one sixth of us will live to 100. It might surprise the House, therefore, that 19%—almost one fifth—of men from social class 7 die before the age of 65. Almost one fifth of these hard-working working-class people in tough jobs—no doubt they have had tough lives too—die before 65.

I put that point to the Minister and the House because, before glibly raising the pension age to 66 or 67, we need to recognise that many of our fellow citizens do not live to 65. Furthermore, 10% of women in social class 7 die before the age of 60, while among the professional classes, that figure is only 4%. I should have said earlier that, in contrast to the 19% figure, the proportion of men in the professional classes who die before the age of 65 is 7%. So there is a huge social class differential, and if we are not careful—we need to do the arithmetic very carefully—and if we glibly increase the pension age, we might rule out more and more people from ever getting their old age pension.

[Steve Webb]

The right hon. Gentleman raises some important issues. I do not think that he was Pensions Minister at the time, but he will be aware that it was the Pensions Act 2007 that ultimately raised the state pension age to 68. Why did he support that, given the points that he is making now?

[Malcolm Wicks]

I recognised the logic of demography and longevity and the need to raise pension ages, but since ceasing to be a Minister of any kind, I have had more opportunity to think about this and to study it—[Laughter.] The Minister might try thinking independently. It is not a bad idea. I would not giggle at the idea that we rethink our positions from time to time. I have rethought my position on this, not least because the Government are going helter-skelter towards raising the pension age in ways that the Labour Government never foresaw.

--- Later in debate ---

[Malcolm Wicks]

I am interested in the arithmetic that the Minister has just presented on how his savings have been adjusted, because some people will not be in work. Given that many people in the year or two before retirement are not in work, will he publish the detailed figures so that the House can scrutinise them?

[Steve Webb]

As a former Minister, the right hon. Gentleman will know that the figures were published with the Bill in May: they are from the impact assessment.

We have had a number of contributions, and in the short time available to me I shall refer to some of the points that have been made. As I have said, the hon. Member for Cumbernauld stated that his £11 billion should be spent and regarded it as a small sum, because he took the annual equivalent, divided that by the national debt and came up with a small fraction, as though somehow one can make £11 billion disappear. Well, the Labour party did make £11 billion disappear regularly, so he is keeping up that tradition, I suppose.

My hon. Friend the Member for Cardiff Central (Jenny Willott) asked where state pension reform fits into the measures before us, and I am pleased to tell her that we remain entirely committed to such reform, but one irony of all this is that the very group of women whom we are most concerned about, and whom we have heard most about in this debate, are probably the single group who will most benefit from our ideas on state pension reform.

In particular, many women who spent time bringing up children, before either home responsibilities protection came in or the state second pension introduced crediting, would benefit substantially from such reform. So, yes, their pension age will rise, but as our reforms take hold such women will benefit substantially, and my long-term commitment to pensions justice for women will be delivered. That is certainly my goal.

The right hon. Member for Croydon North (Malcolm Wicks) made the point that he has made before about differences in life expectancy and about people who leave school earlier, but his proposal for starting the national insurance clock running at different ages would create different anomalies. He says that somebody who leaves school and goes into a manual job could get their pension earlier, but someone who leaves school and goes to a desk job would also get their pension earlier, and people would then say, “Is that fair?” There are anomalies whichever way we do it.

The right hon. Gentleman did, however, raise the issue of people in the lowest socio-economic groups, but I remind him that over a 20-year period to 2002 men in the routine class, the lowest—as it were—socio-economic group, saw life expectancy at 65 years old increase by 2.5 years, and, given that the Bill increases the state pension age for men by only one year, the improvement in life expectancy for men, even in the group whom he is most concerned about, is running ahead of our proposed increase in the state pension age.

I repeat to the right hon. Gentleman that his points about the differences between groups are an argument for doing nothing. He supported the Pensions Act 2007, which will raise the state pension age to 68 years old, and we need to address health and occupational inequalities, rather than do nothing while we wait. That is the Opposition’s counsel—let us wait another decade—but the trouble is that we have already waited a century to move the state pensions ages, so how long is long enough?

My hon. Friend the Member for Gloucester (Richard Graham) quite properly raised the important issue of notifying people of any changes, so I shall share with the House our plans. I very much welcome the fact that, subject to the House approving the Bill tonight and their lordships approving it in due course, we will be able to write directly to those affected to tell them exactly how they stand, thereby ending a period of uncertainty.

We will write to those women born between April and December 1953, just over 250,000 of them, early in the new year; to those born between December 1953 and April 1954, another 250,000 people, in February; and to another 250,000, born between April 1954 and April 1955, in March. The last group covers all women who would have been affected by the original equalisation timetable.

Pensions Bill [Lords]

Debate between Malcolm Wicks and Steve Webb

Monday 20th June 2011 Commons Chamber

[Malcolm Wicks]

I imagine that that woman might have been categorised by the Office for National Statistics, rather inelegantly, as being part of the social class of “routine occupations”. That includes many women who are cleaners, and men who are manual labourers, van drivers or packers—heavily demanding work. Can they all look forward to living to 80 or, as the Minister likes to remind us periodically, to 100? Actually, they cannot.

The class differences are most pronounced for men, but they also exist for women. Here are the ONS statistics. Almost one fifth of men from the lowest social class—19%—die before reaching the existing pension age of 65. We talk about pension ages, but sadly a lot of these guys are already dead by that point. That 19% figure compares with just 7% from social class 1. For women, the respective figures are not so stark, but 10% in routine occupations die before the current pension age of 60—not like my right hon. Friend’s constituent, I hope, but with that type of job—while the figure is just 4% for those from the professional classes.

[Steve Webb]

Will the right hon. Gentleman give way?

[Malcolm Wicks]

I am pleased that the Minister wants to intervene, but may I add another statistic? I have given him a lot of notice of this point, and a wonderful briefing paper has been presented, so I hope there might be some solutions. An additional pension penalty is paid by the poorest groups. Whereas the great majority survive to get the state pension, they then draw it for fewer years than people from the top social classes, because of earlier mortality. Life expectancy at 65 is 18.3 years for men from social class 1, which is professionals, but it is only 14.1 years for those from social class 5. That four-year difference is the same for women. A double pension whammy affects people from the poorest social classes, and that should at least raise a question in the Minister’s mind about whether the general policy that he is pursuing—to be fair, it is the general policy that my party’s Government were pursuing—is on the right track.

[Steve Webb]

The right hon. Gentleman is making a characteristically fascinating contribution. He is citing different social groups, but does he accept that the sizes of those groups are changing? His idea would have been brilliant in 1975, but in designing a pensions system for the 21st century and beyond, is he not trying to solve a problem that is diminishing with every passing year?

[Malcolm Wicks]

I was solving many other problems in 1975—they were so numerous that I cannot think of an example. I believe that there are solutions to the problems. They might be complex, but if the Minister will bear with me I will come on to them.

I first wish to make my other contrarian point about the general assumption that it will be all right if we keep raising the state pension age—and indeed the occupational pension age. It is about employment patterns. At the moment it is not the case that 90%-odd of men and women are working until they are 65 and 60 respectively, and that if we keep increasing the pension age by a year or two there will be jobs available. That is not the situation at all. Labour force survey data show that almost a quarter of men aged 50 to 64, and more than a quarter of women aged 50 to 59, are classed as economically inactive. Many of them are not working at the moment. Why do we assume that there will be jobs for them if they have to work for a few more years? More specifically, 39% of men aged 62 are currently not working. By the age of 64, the figure is 52%. Among women aged 58, two years before their current state pension age, 36% are not working. The assumption that general life expectancy increases will benefit everyone and the at least implicit assumption that jobs are available are at least partly illusory.

I am not challenging the demographic logic, or the fact the state pension ages—and, may I say in a reasoned way, occupational pension ages—have to increase. Of course they do. That is the logic of demography, and it helps us safeguard our welfare state system. I ask, however, whether the situation is right for a man or woman who left school at 15 or 16. They may have had caring responsibilities or periods of unemployment, but they will have essentially worked for 49 or so years. They currently get their pension at 65, in the case of men. Is it right that they should be on the same playing field as the professional person who left university and did not do the type of job that my right hon. Friend the Member for Rotherham (Mr MacShane) described, as a packer, cleaner, steelworker or miner, but who is from the professional classes, rather like many of us who are currently in this room? Is it right that the same state pension age should apply to both groups? I do not think that that is a state pension system that is in line with, or goes with the grain of, people’s lives. It does not seem fair to many people.

I meet many people from professional classes—politicians, business people, think tankers and broadcasters—who dread retirement. They want to keep working. They are hale and hearty and often at the top of their game. They want to carry on working, and that is a good thing. [Interruption.] My right hon. Friend the Member for Rotherham gives an important example. In 10 years, he will constitute another important example.

That is right and proper, but people who have done physically demanding work are literally worn out in an old-fashioned sense. Some of the steelworkers I met when we set up the Pension Protection Fund were physically worn out. They do not want to keep working for another couple of years. They want to retire to have a well deserved rest.

What is the answer? I think that we should try to calculate the records of those who left school at 15 or 16. I know that it is a challenge for the civil service. I have not got the briefing paper—the Minister has it and I am sure that he has read it. Given national insurance records, employment records and perhaps income tax records, should not we be able to calculate that people who have worked for 49 years can retire at the age of 65—for men and women in due course—rather than assume that they can carry on working? It is a big issue for social administration and it needs a bright Minister to tackle it. The Minister should give it rather more attention than I think he has given it so far.

--- Later in debate ---

[Steve Webb]

If it had been self-evidently not possible, I think that the right hon. Gentleman would have pointed it out in the past 12 months, but I have not heard him do so.

The right hon. Member for Croydon North (Malcolm Wicks) made a characteristically thoughtful speech and I hope that he is on the Public Bill Committee. That would lengthen our proceedings, but in a very nice way. He raised the important issue of the entitlement of people with long years of national insurance payments to a national insurance pension. He generously referred to the fact that I taught his daughter at university; I hope that I contributed in some way to her social mobility as a result. He raised the serious issue of using long periods of national insurance records. As my right hon. Friend the Secretary of State pointed out, the records before 1975 are a mess, which the right hon. Gentleman will know as he is one of my many predecessors. Our ability to use those records is very limited and one of my concerns about his proposal, which I am happy to discuss with him in a genuinely open way, is the position of women, because they would have to be credited for times when they were not in paid work. Some of that paid work will have been before home responsibilities protection was introduced and so we simply would not know who to credit. That is only one of the issues, but as I have said, we are happy to engage with him in the spirit of openness.

[Malcolm Wicks]

I am grateful for that. My point was that those who have been working since the age of 15 or 16 in manual occupations are often physically worn out and need to retire earlier than Governments have proposed. If the objections or concerns are technical, that suggests that if there is a technical way forward, we could arrive at it—could we not?

[Steve Webb]

As I have said, I am happy to engage with the right hon. Gentleman in an open and constructive way. I suspect that wishing away the technical problems might be more difficult than he imagines, but I am happy to have that dialogue with him.

My hon. Friend the Member for Gloucester (Richard Graham) who chairs the all-party group on occupational pensions—

State Pension Reform

Debate between Malcolm Wicks and Steve Webb

Monday 4th April 2011 Commons Chamber

[Steve Webb]

My right hon. Friend puts me on the spot, but I am glad to respond positively. I have noted his comments down as being the first response to my consultation, making it 1-0 for the single-tier option—I will keep score as we go. He is right that the restoration of the earnings link after 30 years of breaking it is an historic event, although it has been rather overshadowed by other events in the world. We think someone retiring this year will, over the years, get an extra £15,000 in basic state pension through the restoration of the link. That is a real firm foundation for today’s pensioners as well as reform for tomorrow’s. I am grateful to my right hon. Friend in respect of the liberal heritage and to my right hon. Friends the Secretary of State and the Chancellor for their encouragement for the proposal to move forward.

[Malcolm Wicks (Croydon North) (Lab)]

It is humbling to follow a question from a “for ever” Member of Parliament.

May I ask about the mechanism for determining future changes to state pension age? Could this mechanism please allow for occupational and social class differences in terms of life expectancy? If we look at men who work in what are called routine occupations, such as van drivers, cleaners and labourers, we see that almost a fifth of them—19%, I believe—die before they receive the state pension at 65. If we keep raising the state pension age without allowing for those people who have been working since they were 15 or 16, we will certainly bring insensitivity into the system.

[Steve Webb]

I am grateful to the right hon. Gentleman, who brings great knowledge of these issues to the House. He raises a vital point. Although it is true that life expectancy across the social classes has been improving, which is entirely to be welcomed, there are still very significant differences. One suggested option in the Green Paper is that the review mechanism should take account of a wide range of factors of the very sort that he mentioned. It is possible to have a too formulaic or automatic approach, but the right hon. Gentleman will have noted that the Chancellor referred in the Budget to a “more automatic” approach, taking systematic account of increases in life expectancy, but potentially of other factors such as those that he mentioned.

Oral Answers to Questions

Debate between Malcolm Wicks and Steve Webb

Monday 10th January 2011 Commons Chamber

[Steve Webb]

I am happy to look into the individual situation to which my hon. Friend refers. In general there are statutory requirements for the uprating of pensions in respect of service post-1997, but occasionally, when schemes are wound up underfunded and fall under different regimes, different indexation rules can apply. I would be very happy to receive more details and to meet my hon. Friend.

[Malcolm Wicks (Croydon North) (Lab)]

Given the importance of tackling social security fraud, which depends in part on promoting a sense of responsibility and honesty across the whole of society, does the Secretary of State agree that that is undermined by the widespread tax evasion by rich individuals and companies? If honesty is good enough for the poor, surely it is good enough for the rich.

Oral Answers to Questions

Debate between Malcolm Wicks and Steve Webb

Monday 22nd November 2010 Commons Chamber

[Malcolm Wicks (Croydon North) (Lab)]

As the Secretary of State and his team develop their longer-term thinking on social security, including for state pensions, what emphasis and importance will they place on the contributory principle?

[Steve Webb]

I am grateful to the right hon. Gentleman for his question. We believe that a link between what people put into the system and what they get out of it is important, and we are looking at ways of modernising that principle. He will know that the contributory principle, as it currently exists, was invented in the 1940s when the assumption was that men worked and women stayed at home. We live in a modern world and need to modernise the contributory principle.

Oral Answers to Questions

Debate between Malcolm Wicks and Steve Webb

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.