Construction Workers: Pension Age

Owen Thompson Excerpts

Wednesday 12th July 2023 Westminster Hall

[Owen Thompson (Midlothian) (SNP)]

I beg to move,

That this House has considered the pension retirement age for construction workers.

It is pleasure to take part today, Mr Davies, and to see Members in attendance. I will open with a question: why does it always have to be the working class who suffer? The Work and Pensions Secretary says that Ministers will soon have to “grasp the nettle” to raise the state pension age to 68. It is working people who will bear the brunt of that, none more so than construction workers.

Last year, around 2.2 million people were working in construction across the UK, with 670,000—31%—aged between 50 and 64. In Scotland, around 160,000 people were working in construction, with 54,000 of that group aged between 50 and 64. It is estimated that around 100,000 people aged 65 and above are working in construction across the UK, with 4,000 of that age group working in Scotland.

Undoubtedly, those workers bring a huge wealth of experience and skills that they can pass on to future generations, but they face a pension black hole in many situations. Research by Unite has found that the majority of construction workers were not saving towards retirement. Estimates show that only 797,000 employees in the construction sector are paying into a pension.

[Margaret Ferrier (Rutherglen and Hamilton West) (Ind)]

I congratulate the hon. Member on securing today’s debate. The Pensions and Lifetime Savings Association has stated that there should be a single state pension age for all, but that flexibility should be introduced to allow people to receive their pensions earlier. Does he agree that the Government should support construction workers perhaps receiving their pension earlier, considering the physical toll that their occupation can have?

[Owen Thompson]

I agree entirely, and I will develop that point. Those 797,000 employees paying into a pension make up only 36% of the construction workforce. We are creating a destitute generation. Unite said:

“These figures are deeply troubling…Even if workers are saving towards a pension, there is no guarantee that they are saving sufficient amounts to prevent poverty in retirement. The way that construction is organised, with short-term engagements, rampant bogus self-employment and nefarious schemes such as umbrella companies, it is incredibly difficult for construction workers to have confidence in their continued employment so as to allow them to consistently pay into a pension scheme. The government needs to take urgent action to begin plugging this black hole in construction pension saving, the consequences of not doing so do not bare thinking about.”

The issue is clear. There is already a mental health crisis in the construction industry, and the pension black hole adds to the worries of workers. It is very much a male-dominated industry, and we know that men are three times more likely to die by suicide than the national average. Construction work has a variety of pressures, from tight contracts to long hours, time away from loved ones and managing budgets, not to mention the added stresses of the pandemic and now the rising costs of supplies.

The sector still has a macho culture that prevents many workers from seeking the help and support they might need, putting further stress on their mental health and wellbeing.

[Margaret Ferrier]

On the point about health, construction workers face certain occupational hazards such as exposure to asbestos, which can cause cancer and detrimentally affect their health later in life. Does the hon. Member agree that, due to the health risks to which construction workers are exposed, the Government should evaluate reducing their pension retirement age?

[Owen Thompson]

The hon. Lady makes an excellent point. The key part of this is evaluation. Let us make sure that we have all the evidence to back up the calls that we are making. The issue has been looked at, so let us take on board the assessments and do something with them. We know that an early retirement age is possible in other industries. I thank and pay tribute to the Library for the excellent briefing that it has prepared to support this debate, which lists a number of other occupations in which early retirement is possible. Footballers are one example; I think their retirement age is something like 35.

Scotland has the lowest life expectancy of all the countries in the UK. In Midlothian, life expectancy at birth was 81 for women and 77 for men in the years 2019 to 2021. Meanwhile, men in Knightsbridge, London, have an average life expectancy of 94, the highest in the country—nearly 15 years longer than the average male.

Unlike other countries, the UK has no provision for early access to the state pension under any circumstances. That is a critical point. We must consider why we need to be so prescriptive when it comes to this particular topic. Proposals for early access to the state pension have been discussed previously, in the 2016-to-2017 and 2021-to-2023 state pension age reviews. The situation is unfortunate. The issue will not go away. The pressures around it will become significantly more challenging and eventually we will have to grasp the thistle and actually take action on it, so why not now?

Canada and the USA have general provision for early access to pensions in exchange for lower pension amounts, and that could be considered as part of this. The normal minimum pension age, which is the earliest age from which someone can normally draw their workplace personal pension, has gone from 50 to 57 by April 2028. Some people in certain professions with a lower retirement age—such as sportspeople, as I mentioned—who had a right before April 2006 to draw their pension before age 50, may have a protected pension age, further widening the gap. However, construction workers do not have that provision.

Last month, I asked the Under-Secretary of State for Work and Pensions, the hon. Member for Sevenoaks (Laura Trott), about the potential merits of lowering the state pension age for construction workers. She argued against reforming the current system, saying:

“The Government believes that the principle of having a State Pension age that is the same for everybody is fundamental in the UK. It has the merit of simplicity and clarity including giving a clear signal to those planning for retirement.”

So we are sacrificing a generation of workers for the sake of “simplicity”.

A recent survey by the Chartered Institute of Building again showed the scale of the problem. Many employees cannot afford to retire because of inadequate pension plans and because they have no alternative financial investments to support themselves. The organisation called for construction employees to be encouraged to consider retirement plans and to set aside a sufficient amount to support themselves for possibly the next 20 to 30 years. However, in the face of a cost of living crisis, that has become even more challenging than it was. The CIOB said that clear information needed to be provided, with a focused campaign to help construction workers, and I support that call. However, I would go one step further and say that we need a full review into the issue of pensions and the construction industry.

In March, Baroness Neville-Rolfe said that builders, electricians, plumbers and manual labourers should be allowed to retire on a state pension earlier than office workers who had stayed on in further education. Her report said that the UK Government should look at changing the rules to allow manual workers to access their pension pot early. She recommended that those

“who have performed physically demanding roles over many years”

should be allowed to access their pension early, because they had a higher likelihood of developing health problems than other people, yet there has been nothing—no change and no impetus to help hard-working people. A full review would be the first step on the road to righting this wrong and the first step towards stopping an entire generation being flung on the financial scrapheap. After a lifetime of hard manual work, the ultimate ignominy for construction workers is to face poverty in their twilight years.

Construction workers literally built this country. We talk of levelling up and growing the economy, and, dare I say it, we have had a Government who talked about building hospitals—I do not know how many hospitals they eventually got to. None of that happens without construction workers. We need new homes, and that does not happen without construction workers. They deserve so much better, and this could be the starting point to achieving that.

--- Later in debate ---

[Owen Thompson]

I thank the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) and my hon. Friend the Member for Inverclyde (Ronnie Cowan), as well as the shadow Minister, the hon. Member for Reading East (Matt Rodda), and the Minister, for taking part in the debate, but I have to say that I am disappointed in the responses from the shadow Minister and the Minister.

I think perhaps we are coming to the issue with different perspectives. The Opposition and the Government’s point of view is “This is what it would cost,” whereas mine is “Let’s put the health and wellbeing of the individual first, and then we can work out the other bits.” I am not saying that one is better than the other, but they are different ways of looking at the issue. I agree with the Minister that there is a conversation that still needs to be had. Is the approach of simply asking the price tag enough to decide whether we should or should not do something? Just because something is difficult, that does not mean that we should not do it.

I hear the Minister’s point about auto-enrolment. However, I gently suggest that a high volume of people signed up with a private pension does not automatically mean that they are going to have enough to support them in retirement. There is more still to be done. I welcome the start of the conversation, but it needs to continue. We need to change the mindset on the issue and move away from simply saying, “This is what it costs, so we can’t do it.” Let us look at it in a more rounded way and make it about the wellbeing of the individual.

Question put and agreed to.

Resolved,

That this House has considered the pension retirement age for construction workers.