Pensions Bill [Lords]

Richard Graham Excerpts

Monday 20th June 2011 Commons Chamber

[Mr Byrne]

The Minister gave an interesting answer, because those costings say that if, for example, we increased the retirement age to 67 by 2035—that is, if we accelerated the reform by one year—that would save £6.9 billion. However, if the retirement age was increased to 67 by 2034, by accelerating the increase by two years, that would save £13.7 billion. Therefore, the question for us this afternoon is: how much will be saved by accelerating the reform for those women who are now having to retire later, and who therefore confront trying to find all that money magically, in the space of just four or five years? Has that been traded off against other options, such as introducing advances in the retirement age later on? That is the question that we have to get to the bottom of in this Second Reading debate.

[Richard Graham (Gloucester) (Con)]

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[Ben Gummer]

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[Mr Byrne]

In a moment.

We are talking about women in the age group that was asked by a Conservative Government in 1995 to set in train the equalisation of the state pension, a reform that we accepted, because it came with time to plan. However, that cannot be said of today’s proposal. This morning, Age UK warned that

“a sizeable minority are not even aware of the 1995 changes with nearly a fifth expecting to receive their State Pension at the age of 60.”

The Secretary of State’s proposals will now make that worse.

[Richard Graham]

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[Harriett Baldwin]

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[Mr Byrne]

My hon. Friend makes an extremely good point, because I think that that was news to the House. We would certainly expect that legal guidance to be published before we get to the Minister’s winding-up speech. That guidance is a material point in a debate that is important to many people, as well as many right hon. and hon. Members, because this Bill has such a poor effect on women in this country—the people we represent.

[Richard Graham]

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[Harriett Baldwin]

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[Mr Byrne]

Of course. The hon. Lady makes an extremely fair point, and that is why, after the Turner commission met and the Pensions Act 2007 went through this House, a clear timetable was set for how the state pension age should increase. [Interruption.] The Secretary of State is muttering from a sedentary position about how the longevity assumptions have now been increased. That is perfectly fair, and we should have a national debate about how the state pension age should be brought forward; indeed, the Pensions Minister has issued a consultation. It is just a shame that it closes on Friday, after this debate is concluded.

[Richard Graham]

The right hon. Gentleman made two comments about how the Bill treats women. He estimated that the cost of the changes to some women would be £10,000. Does he not recognise, however, that the change in the value of the basic state pension as a result of this Government’s commitment to linking it back to earnings will be worth more than £15,000? Will he also acknowledge that, as a result of the new flat-rate basic state pension being applied, a lot of women who would previously have lost out because of their caring responsibilities will now benefit hugely? Does he not agree that women will benefit from the changes in the basic state pension in those two ways?

[Mr Byrne]

Let us take the hon. Gentleman’s second point first. I understand that the proposal for a flat-rate pension is included in a Green Paper. It is therefore an early statement of the direction of Government policy. Given what the Government have managed to do to commitments in their coalition agreement, I am not sure how much water that proposal holds. The hon. Gentleman’s first point was more interesting, because he was comparing the benefit for someone on a pension under the lock introduced by the Government with a pension that is linked to prices. Going into the election, no party proposed to keep the pension linked to prices, so his calculation is purely fanciful. Indeed, the Pensions Commission said that we should re-link pensions to earnings in 2012. That was in our manifesto, and that is what we would have done if and when we were returned to office. I am afraid that the hon. Gentleman cannot make up fantasy numbers comparing the reality—

[Richard Graham]

The right hon. Gentleman is generous to give way again but, with all due respect to him, I am comparing the fact of what was delivered by one Government over 13 years with the fact of what has been delivered by this new Government within one year. The Gloucestershire Pensioners Forum, which was created by members of his own party precisely to campaign against the de-linkage made by the late Mrs Thatcher when she was Prime Minister—[Hon. Members: “She is still alive.”] Indeed she is. I meant to say “the former Prime Minister”. The Gloucestershire Pensioners Forum has now fully recognised the value of re-linkage, which this Government will introduce. It is a shame that the right hon. Gentleman does not recognise these facts.

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[Richard Graham (Gloucester) (Con)]

Today’s debate takes place more than 100 years after the Old Age Pensions Act 1908 was introduced by a slightly different coalition Government, led by Lloyd George, but including Churchill in his Liberal phase. The most important change since then is clearly in life expectancy. My hon. Friend the Member for Ipswich (Ben Gummer) and other speakers this evening have already tackled that in forensic detail.

I think it would be helpful if I detailed a couple of salient facts as an introduction to my views about Second Reading. A hundred years ago, life expectancy was slightly less than the pension age of 65. That would imply a pension age of about 87 today. To put it another way, 10 million people who are alive today will live to be 100. Clearly, something must be done, and I am afraid that it falls to this coalition Government to do it. The Labour party had its chance. In 2002, the Labour Green Paper fudged the issue and, two years later, the then Secretary of State for Work and Pensions clearly told the TUC that raising the pension age would not happen. The message today from the shadow Secretary of State and the shadow Minister, the hon. Member for Leeds West (Rachel Reeves), who is in her place, blithely recommending as an alternative to some aspects of the Bill a speeded-up increase in the pension age beyond 2020, can therefore be treated with a huge bucket of salt. Their paymasters, the trade unions, simply would not let it happen. As is so often the case, it falls to this Government to tackle the difficult questions and decide how to balance the interests of future pensioners with those who are earning, paying taxes and paying for those pensions.

The most critical issue of fairness that the Bill must tackle is intergenerational fairness. When my right hon. Friend the Secretary of State introduced the Bill, he highlighted several aspects that are worth mentioning. He referred to life expectancy, and I hope that I have covered that point. He also mentioned fairness between generations, which is the basis for the main provisions of the measure. He talked about the importance of savings and their not being frittered away through a means-tested system. I echo that strongly. Correspondence from my constituents in Gloucester constantly reflects the unfairness between people living next door to one another, some on means-tested pensions and others not, owing to their small amounts of hard-earned savings.

The other key aspect is auto-enrolment. I pay tribute to the Labour party for the previous Government’s work on auto-enrolment, but once again this Government will have to implement the scheme. We have examined the details of simplifying the administrative aspects, ensuring an opt-out, not an opt-in, getting the self-certification from defined contribution schemes and so on. I welcome those aspects of the Bill as well as the changes to occupational schemes, in which I should declare an interest as chairman of the all-party parliamentary group on occupational pensions.

It is notable that no Labour Members referred to judges’ pensions. An extraordinary silence has come upon my friends on the Opposition Benches. Several Government Members have pointed out that having zero contributions to the judges’ pension scheme is surely a massively unfair anomaly, which Work and Pensions Ministers are quite correct to change. That should have been done years ago.

That brings us to the one aspect of the Bill that causes hon. Members of all parties some concern: the effect on women born between December 1953 and October 1954. I have written to the Secretary of State and the Chancellor, inquiring whether it would be possible to introduce some flexibility to tackle the specific problems of women in that age group. I received a letter from the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), which tackles the question in some detail. He said that

“implementation of the increase to 66 between December 2018 and April 2020 is the option that best balances sustainability with fairness in the face of demographic change.”

I recognise that Ministers have a difficult task in trying to balance often conflicting aspects of dealing with pensions. I wondered—the Minister has agreed to consider the matter—whether the same argument could be made even more convincingly for stretching the period from December 2018 to the autumn of 2020 so that the increased period of waiting for their pension for those women would effectively be reduced from 24 to 18 months. I am confident, given everything that has been said today, that Ministers will consider that during the Bill’s later stages. I await what happens on Report.

It is important that our constituents understand that today we are considering and debating the principles of the Bill. The detail will be examined in Committee and again in the Chamber. I believe that the principles for tackling critical issues such as savings, auto-enrolment, occupational pensions, judges’ pensions and changes in life expectancy should occupy our time here today.

I was genuinely disappointed by the contribution of the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), who gave a speech that contained a series of stories, rumours and quotes from newspaper articles—admirable soundbites in the absence of any policy. One must conclude that the shadow Secretary of State has no more policy on pensions than he had money left in the Treasury coffers a year ago. Although he said that he was proud of Labour’s pensions record, and the right hon. Member for Croydon North (Malcolm Wicks) gave one or two examples, such as the creation of the PPF, which are to be commended, I wonder whether Labour Front Benchers’ pride extends to the 75p increase in the state pension that was offered to my constituents so very recently. It is difficult to be proud of policy, but if Government Members are to be allowed some pride, it is in restoring the earnings link to the basic state pension, added to the triple guarantee that ensures that the basic state pension will always rise by at least 2.5% every year. That is a huge contrast to 75p.

I therefore believe that the Bill has a lot in it to commend to Members on both sides of the House. This issue should be non-partisan and non-tribal. We all want a good, affordable, sustainable pension for our constituents. I shall therefore support the Bill, which will make a significant difference to the 7 million people of both sexes who are currently under-saving, resolve the scandal of judiciary pensions, and allow for sensible reflections on aspects for women born within a particular year.