Construction Workers: Pension Age

Ronnie Cowan Excerpts

Wednesday 12th July 2023 Westminster Hall

[Ronnie Cowan (Inverclyde) (SNP)]

As my hon. Friend the Member for Midlothian (Owen Thompson) mentioned, 2.2 million people work in construction, without whom there would be no offices, factories, roads, schools or homes. Although we place great value on having a roof our heads, we undervalue the people who build them.

[Margaret Ferrier]

Following on from that, a concerning skills gap is growing in the UK construction sector, which means that existing employees have to work longer hours on site to compensate for that gap. Does the hon. Member agree that if the skills shortage is not addressed, many construction workers will experience fatigue and might be burdened with poor health and retirement outcomes?

[Ronnie Cowan]

I could not agree more. When I left school in the late 1970s, it was no longer fashionable to take on trades. Everybody had to go to college, no matter what the course was, and we lost the skillsets in my local shipyards and in construction for plumbers, joiners, platers, fitters and all those skills. If we look at the average age now—they are getting into their 50s—there has been a gap of sometimes 20 or 30 years before we have taken on new apprentices. We are taking on new apprentices now, but the experience that we lose when these older guys leave is immeasurable. So they are staying on later and later and working longer into what should be their retirement life, sometimes in very physical jobs in very difficult circumstances.

As we approach a general election, a lot of MPs will be asking themselves, “Should I stand again?” For many who, like me, are over 60, age will be a factor in making the decision. Nights like last night, when we were here until 8.30 in the evening walking round and round—I think it was 20 times—would make anyone reconsider their working life.

As for the physical aspect of construction work, I spent the weekend gardening. When I say gardening, I do not mean bedding plants and potting sheds; I mean using industrial petrol-driven machinery. Trees, bushes and grass all got the treatment. My green credentials might have taken a battering, but I can assure Members that the replanting of more appropriate species will take place in the near future. My point is that at 63, hard labour for me was a few hours interrupted by cups of tea, chocolate biscuits, a natter with the neighbours and much stroking of my beard as I perused the damage that, obviously, I was doing. My effort was minuscule compared with the contribution made day in, day out, year in, year out by construction workers and the effect that that has on their joints, muscles and tendons. Mine was minor compared with the toll that years of construction work results in.

When I was 17, I worked on building sites and spent the day carrying bricks, mixing cement and moving raw materials around for the skilled workforce to utilise. I cannot imagine what state my body would be in if I had done that job all my working life. And yet we ask those workers to work in freezing conditions during the winter and increasingly hot conditions in the summer. The job we do must have a bearing on the age we retire at.

On the answer given to my hon. Friend the Member for Midlothian by the UK Government, the UK Government believe that

“the principle of having a State Pension age that is the same for everybody is fundamental in the UK”

but I disagree. They say that it

“has the merit of simplicity and clarity including giving a clear signal to those planning for retirement”,

but what is that clear signal? Is it “Frankly, we don’t care”? Is it “Just be grateful you are not dead already”? Or is it “We don’t appreciate your hard work over all these years”? I suggest it is a combination of all three.

Finally, we have acknowledged that people in many professions can and do retire earlier already—that happens. It is time we extended that to the unsung heroes that are our construction workers.

--- Later in debate ---

[Guy Opperman]

As the person who pioneered Pension Awareness Day, which I can strongly recommend, and many other pension policies during my five years as the Pensions Minister, I strongly endorse the hon. Lady’s point and encourage the sector unions to get involved in that. To be blunt, some were better than others. I had the honour and privilege of speaking twice at the Trades Union Congress annual conference; I think the first time was a legitimate invitation, but the second time I believe the invitation was probably just repeated by mistake. Making the case to union and sector colleagues for what we are trying to do is very important. I take the point.

The hon. Lady brings me nicely to the issue of which pensions are available. There are three types. There is the state pension, which obviously depends on the extent to which the individual pays national insurance contributions. Pretty much every employee in the construction sector will be paying national insurance contributions as part of their employment, and there is no question but that the self-employed should also be a part of that. The state pension should kick in in the usual way, so that will arrive at a particular time.

On top of that are the reforms brought in originally by the Labour Government, through the Turner commission, in 2003 and subsequently legislated for by the coalition in 2011-12 and expanded on by the coalition. I am referring to automatic enrolment. I accept that not everybody in the construction sector is in an employed job, but I will come to that point in a second. Automatic enrolment is an undoubted cross-party UK success story— I knew it was going well when the Pensions Minister from China requested a meeting to discuss how we were trying to get a workforce motivated and saving in a way that they could not necessarily do previously.

It was clear that the pensions system in the 1980s, the ’90s and the noughties was declining in terms of the private contributions that we wished to see. The defined benefit system was declining and the defined contribution system needed to grow. Putting it to the individual was difficult—I will come in a second to the point that the hon. Member for Rutherglen and Hamilton West made about the self-employed—but automatic enrolment has transformed private pension saving in this country. Saving 8% on an ongoing basis, as we are now doing, with a contribution from the employer within that and some support from the taxman, is massively helpful.

Let me give the stats. As of May 2023, we were almost at 11 million employees, having started in 2012. In 2012, the number of people who had a private pension was 42%; that has now gone up to 86%. Young people were at below 30%; they are now at 85%. Women were at just about 40%; they are now at 87%. The stat that I have for construction workers, which I am assured was provided by my predecessor but one, is that construction workers with private pensions have gone from 30% to 79%. Obviously, that is those who are in an employed situation, but it clearly shows a dramatic improvement on the situation that would have applied if we had been having this conversation 11 years ago, prior to the introduction of automatic enrolment.

That does not mean that one should not address the points that have fairly been raised about the self-employed. Having done 20 years as a self-employed individual, let me make the point that if one is self-employed, one has the perfect right to sign up to one’s own pension. One has the perfect right to join NEST, the National Employment Savings Trust, which is the easiest automatic enrolment provider. There are many different sectors that are relevant. I started out as a—much thinner—jockey and then became a lawyer. Construction workers can set up their own self-employed pension, which is of course tax-deductible as to earnings on an ongoing basis, and many in the construction industry take advantage of that.

However, I accept that there is a cohort that is not saving as it would like to, notwithstanding the three potential ways in which that happens. Along with a state pension that has increased, one has to be aware of the 2016 reforms, which were introduced by a previous Government and set out the new state pension, which was introduced to be simpler and better for a whole cohort of society. To be fair to the hon. Member for Midlothian, he set out the Pensions Minister’s approach previously. This is in a context where there is the universality of the state pension, but more importantly, we have had this for 75 years, and the modern state pension has very clear rules—the hon. Gentleman set them out—about the time at which one can get entitlement. Those rules help to make it both affordable, because it is paid for by the working taxpayer, and sustainable, so that it can continue to be the foundation of income in retirement for future generations.

There is some evidence from some countries—I accept the hon. Gentleman’s point—that one can have an earlier acceptance of part of one’s pension in some cases, but there is a lesser sum. There is genuinely an issue with being careful what you wish for, though. The reason why the Cridland review and the Neville-Rolfe review are sceptical about this, as the hon. Gentleman set out, is that the state pension is there to provide a basic form of support in our old age, such that the state can then say, “We assess that this contribution of taxpayer funding—of GDP—is the amount that we will set aside to try to support those in difficulties by reason of their age, such that they are now pensioners.”

On top of that, there is £30 billion-worth of housing support, there is pension credit support worth many thousands of pounds, and there are a huge number of other additional benefits, such as the winter fuel payment, which is going up by £300. The hon. Gentleman alluded to the fact that things like the cost of living are more complicated; he will be aware that we have spent £94 billion over the past couple of years to support the most vulnerable, including those on benefits, those in receipt of the state pension and particularly those in receipt of pension credit. That support is ongoing. The rises in winter fuel payments are a good example, with the extra £300 coming in plus the ongoing energy support grant.

It is clear that special arrangements for certain groups would rapidly lead to calls for similar arrangements for other groups. How can I put it delicately? I was not a very good jockey—I broke 26 bones in my body in my limited and short career, and my life expectancy and longevity as a jockey were highly limited—but I was able to transfer those skills, some would say interestingly, into being a lawyer and a Member of Parliament. But there are plenty of other professions that would then come forward, and that is a very significant issue for the state. It is worth having a proper conversation about this, because ultimately the state has to decide how much of a tax contribution should be taken from the working population to address these problems. There are inherent problems that would undermine a universal state pension age and its clarity.

Having worked in the Department for Work and Pensions for the past eight years, for my sins, I can strongly assure the hon. Member for Midlothian that the administration of the state pension is a marvel, but it is also incredibly complex. The moment that there were an introduction of a differential assessment, it would create a logistical conundrum, to say the least, and would require administration on an epic level. Getting such a thing correct—I suspect that as the hon. Gentleman proposes, all these things would have to be assessed, including with a prior medical assessment—is extraordinarily difficult. With respect, that approach was comprehensively rejected by the Cridland report. I accept that one paragraph of the Neville-Rolfe report seems to suggest that certain people do so; I think it talks about people who are 65 with 45 years of national insurance contributions. It is something that can be legislated for, because this Government or any future Government will have to legislate for the state pension situation in the next two years. There is no doubt that we will have to return to the issue and produce legislation setting out on how these things can be done, and Parliament can make decisions on that.

I will make a couple of brief points that I think are relevant to how we approach people who have done one job but are struggling to continue in it. First, they would obviously rather be working than on welfare, but we have never paid more welfare support: this country has never given more to the disabled and to those on welfare support. There is a copious amount of support out there. On reskilling, the hon. Gentleman will be aware of the Augar review, the lifelong learning pledge and the efforts that are being made to create further education not just for people aged 18 to 24, but for older workers, in a whole host of ways.

I will slightly push back on the hon. Member for Inverclyde, who was slightly disparaging on the skills situation. I believe that there have been about 5,454,000 apprenticeships since 2010. That is a pretty impressive record on apprenticeships, which have massively increased.

[Ronnie Cowan]

Will the Minister give way?

[Guy Opperman]

I will happily give way, but surely the hon. Gentleman must accept that that is a massive figure.

[Ronnie Cowan]

But the point I was making was that we picked that up after two or three decades of neglect. What we have been missing in between is the experience that people have gathered during that time.