Transitional State Pension Arrangements for Women

Shailesh Vara Excerpts

Wednesday 24th February 2016 Commons Chamber

[The Parliamentary Under-Secretary of State for Work and Pensions (Mr Shailesh Vara)]

The hon. Member for Pontypridd (Owen Smith) has just made a speech more of politics than of substance. Given that he has declared himself a contender in the event of a Labour leadership contest, it is clear that his choice of audience was more about getting nominated as a contender than about dealing with the substance of the matter at hand. [Interruption.] Labour Front Benchers are chuntering, “What about the women?” Precisely—what about the women? What about focusing the debate on the women? What about some substance? I will move on to that.

[Several hon. Members rose—]

[Mr Vara]

I wish to make a little progress.

[Dr Roberta Blackman-Woods (City of Durham) (Lab)]

rose—

[Mr Vara]

I will give way, but I first wish to make a little progress.

Hon. Members will be aware that the women’s state pension age was changed in 1995 to equalise it with the state pension age for men. Equalisation was then accelerated in the Pensions Act 2011, following extensive debates in both Houses of Parliament. Those changes were about bringing gender equality to pensions for the first time, about reflecting rises in life expectancy—it continues to rise for both men and women—and about taking spending on pensions to more sustainable levels.

[Dr Blackman-Woods]

I am grateful to the Minister for giving way, because I wanted to point out to him that the audience today is the huge number of women across the country who are adversely affected by the changes. One of them wrote to me:

“When equalization for pensions was first introduced in 1995 I was informed I could collect my State Pension at 64…however this was changed again in 2011 to…66. This is very unfair to me and the many other women it affects bearing the brunt of the changes twice”.

Labour has recognised that, which is why we have tabled a motion calling for transitional arrangements. Why is the Minister not backing us and the WASPI women on this?

[Mr Vara]

As far as the hon. Lady’s question—or her speech, which had a question at the end of it—is concerned, I will address those issues later in my speech. However, she is absolutely right that the audience for this debate is the women concerned. In my speech, I intend to address the substance of the subject, rather than the politics of it, which we heard earlier.

[Mark Spencer (Sherwood) (Con)]

Was the Minister struck, as I was, by the fact that the shadow Secretary of State, during the 30 minutes he took to set out the challenges we face, did not actually tell us what the Labour party would do, which of the six changes he would commit to, or whether he would commit to all six of them?

[Mr Vara]

My hon. Friend is absolutely right. The shadow Secretary of State’s speech was full of bluster and specified no options. He failed to recognise or to speak about the cost, and to explain why the issue was not in the Labour party manifesto. The luxury for the Opposition is the ability to spend money for which they are not accountable and for which they have no responsibility. The difficulty for the Government is to deal with taxpayers’ money and to take the hard decisions that are necessary.

[Alison McGovern]

The Minister is speaking as though we did nothing to bring this issue to the Government’s attention during the last Parliament. That is straightforwardly not true. I participated in debate after debate with my hon. Friend the Member for Leeds West (Rachel Reeves), who brought it to the Government’s attention time and again. As we have had so many debates about it, can we not just get on with talking about what we are going to do about it?

[Mr Vara]

I will come on to the debate we had in 2011 later in my speech. If the hon. Lady wants to talk about previous Governments, may I gently remind her of the 13 years of Labour Government, with the 10 Pensions Ministers—one Minister had the job twice—and the nine Secretaries of State for Work and Pensions? In the interests of fairness, she, along with everyone else, might wish to acknowledge the limited work, if any, that was done during the 13 years of the Labour Government to put matters right, as they put it.

[Owen Smith]

The Minister says that the Labour Government did limited work. May I point out that, following a freedom of information request to the Government just a couple of weeks ago, it was conceded that Labour spent more than £5 million advertising the changes and sent out 800,000 letters? That was in stark contrast to the previous Tory Government, which, frankly, did damn all.

[Mr Vara]

If the hon. Gentleman is so proud of what the Labour Government did, why does he stand up to complain? They obviously did very little, and it must have had very little impact, because otherwise we would not be hearing the comments that Labour Members are making today.

[John Redwood (Wokingham) (Con)]

When it comes to equalisation, how much leeway do the UK Government have under EU law?

[Mr Vara]

EU law does require us to equalise pension ages. Later in my speech, I will mention countries that have already achieved what we are still endeavouring to achieve. Incidentally, the shadow Secretary of State was wrong in what he said about Germany. Germany has already achieved equalisation.

[Helen Jones]

The hon. Gentleman ought to recognise that although EU law requires the equalisation of pension ages, it also allows for transitional arrangements while reaching that stage. Frankly, it is disingenuous to suggest otherwise.

[Mr Vara]

I will come to transitional arrangements a little later on.

[Mrs Anne-Marie Trevelyan (Berwick-upon-Tweed) (Con)]

There are women in Northumberland who are likely to be in serious financial difficulty as a result of these changes. It will not be most of those affected, but it will be a few. My concern is for that small number of women. I would be most grateful if the Minister would agree to meet me and other Government Members to look at the small group of women who face such financial pressures.

--- Later in debate ---

[Mr Vara]

Ministers are always pleased to have meetings with colleagues, and I am more than happy to meet my hon. Friend and others.

[Several hon. Members rose—]

[Mr Vara]

I want to make some progress, because I am still on my first page.

[Sir Peter Bottomley (Worthing West) (Con)]

Will the Minister give way?

[Mr Vara]

I will give way, but then I want to make some progress.

[Sir Peter Bottomley]

My hon. Friend is saying some fair things about the Opposition and they do not like it. Will he turn his mind to a fair thing that I want to say about the women who are directly affected? The issue is that people who were born within 12 months of each other can have retirement ages nearly three years apart. That is where better transitional arrangements are needed. We all know that this Government have had to put right many things that previous Governments have got wrong, but this is something we need to get right for ourselves.

[Mr Vara]

I am grateful to my hon. Friend for his comments. If I am allowed to make some progress, I will talk about transitional arrangements and what we are doing.

[Mark Durkan (Foyle) (SDLP)]

Will the Minister give way?

[Mr Vara]

I will give way later, but I wish to make some progress.

There has been much debate about this issue, and we have had several debates about it in recent weeks. It comes down to two fundamental issues. First, there have been calls to undo the 2011 pension changes. The cost of that would be more than £30 billion. Secondly, there are calls by some to go even further and unravel the 1995 pension reforms.

[Helen Jones]

Nobody is asking for that.

[Mr Vara]

Yes, there are many people, including people in WASPI, who want to unravel the 1995 reforms. It is out there on the internet for people to see, so let us not try to deny the two options that are being debated out there. I said at the outset that I was going to talk about the substance of the matter, and I will talk about both those options.

[Owen Smith]

Will the Minister give way?

[Mr Vara]

I will give way in a moment, but I wish to continue.

If we unravel the 1995 pension reforms, as many people outside this place want us to do, it would cost £77 billion up to 2020-21, and the costs would continue to accrue after that period.

[Owen Smith]

The Minister repeats the calumny that the WASPI women are saying, “Do not equalise pensions, and get rid of the 1995 Act.” That is exactly what the Whips’ crib sheet says, but he knows it is not true. That was one comment made by one woman among the hundreds of thousands on Facebook. It is not what WASPI said to the Work and Pensions Committee, and it is not what it said in its petition. It is not true. Will he withdraw it?

[Mr Vara]

I am simply speaking from my personal experience of speaking to women. There are women who have said to me that they want the restoration of the 1995 rules. Colleagues in this House have had people in their surgeries speaking of 1995. The hon. Gentleman may not have had that—he may be out of touch, but the rest of us are not. When we talk of £77 billion or even £30 billion, we are not talking about a few million pounds or a few billion pounds. In both contexts, we are talking of tens of billions of pounds. That situation is simply not sustainable.

[Fiona Mactaggart (Slough) (Lab)]

When the hon. Gentleman says that £30 billion was saved as a result of the 2011 changes, what he is saying is that there was a transfer from one of the poorest groups in our society, which is women in their 50s. That group of women saw the largest growth in unemployment under the coalition Government and are more likely to have to work after retirement than men. When they do so, two thirds of them work on the lowest wage levels, unlike men who work after retirement, two thirds of whom work on the highest wage levels. What does he have to say about picking the pockets of the poorest women in our society?

[Mr Vara]

I will address some of the points that the right hon. Lady makes, because there is a broader context to this debate, rather than simply the issue of the pension age. Given the opportunity, I would like to make some progress.

People are living longer and leading healthier lives. Of course, that is to be welcomed, but it does increase the pressure on the state pension scheme. As a Government, we have a responsibility to keep it affordable and sustainable for future generations.

[Neil Gray (Airdrie and Shotts) (SNP)]

rose—

[Ms Ahmed-Sheikh]

rose—

[Mr Vara]

I would like to make some progress.

The changes that have been made are important in making the state pension scheme affordable and sustainable. They also reflect the way in which men and women lead their lives now, rather than the way they led them in the 1940s. I will come back to that point later.

First, I want to tackle one issue head-on. Many hon. Members have talked about the need for transitional arrangements. I point them towards the extensive debates and discussions that took place when the legislation passed through Parliament. Let me quote Hansard from the day on which the Pensions Bill received its Second Reading in June 2011. The Secretary of State made it very clear that equalisation of the state pension age would take place in 2018. He said that

“we have no plans to change equalisation in 2018, or the age of 66 for both men and women in 2020, but we will consider transitional arrangements.”—[Official Report, 20 June 2011; Vol. 530, c. 52.]

Yes, he said,

“we will consider transitional arrangements.”

Four months after the Secretary of State said those words, and after he had considered the matter further, a concession or a transitional arrangement—call it what you will—was indeed considered by this House and included on Report. That transitional arrangement was worth over £1 billion and reduced the delay that anyone would experience in claiming their state pension from two years to 18 months. So when people say that transitional arrangements should have been made, I simply ask them to look back at the record, to consider what was said and to consider what was subsequently done four months later. There were transitional arrangements. They passed through the House, there was extensive debate, there was extensive engagement with the relevant stakeholders and it was done.

[Neil Gray]

I think that this is the fourth debate I have attended in which the Minister has responded on these issues, and his answers on this injustice are still woefully inadequate. Talking of injustice, will he answer my constituent, Shiona Airlie, who is four months outside this measure and was only notified in 2012 that she would have to wait a further four years—less than a year before her 60th birthday? Where is the justice in that? How is it fair after she has paid into the system for all of her working life?

[Mr Vara]

I will address the issue of notification later.

[Kirsten Oswald (East Renfrewshire) (SNP)]

The Minister’s description of Hansard and the discussions that took place in this House was extensive, but the ladies concerned do not know about that. It is surely unreasonable to expect them to read Hansard to understand what their pension arrangements should be. Women in my constituency are coming to my surgery to tell me of the significant changes that they and their families will experience because of this policy. It is not good enough and the Minister must listen and act.

[Mr Vara]

The hon. Lady is absolutely right that the public are uninterested in Hansard. My point was that people in this House who are speaking in this debate should read Hansard. Rather than simply saying, “Where are the transitional arrangements?”, they should recognise that transitional arrangements were made.

[Graham Evans (Weaver Vale) (Con)]

Is it not a fact that people were not aware of the Pensions Act 1995? We had 13 years of a Labour Government that spent £5 million on communication. Is it not the complete failure of the previous Labour Government that failed the women involved?

[Mr Vara]

My hon. Friend is right. In 13 years of government, Labour—with 10 Pensions Ministers and nine Secretaries of State for Work and Pensions— completely failed these women and now refuses to accept any responsibility or to acknowledge the arithmetic of the pensions budget. Labour Members seek to put the blame on those at this Dispatch Box without making any contrary proposals. They refuse to commit themselves. As I said earlier, the luxury of opposition is being able to speak about spending huge sums of money without having the responsibility of taking the political decisions that we have to take.

[Several hon. Members rose—]

--- Later in debate ---

[Mr Vara]

I have given way many times and I am afraid that we are now getting to a stage at which MPs are simply repeating points that have already been raised. I am mindful that many hon. Members wish to speak. Nobody can accuse me of not being generous in giving way, but I wish to make progress.

The changes that were made, and the transitional arrangements made in 2011, benefited a quarter of a million women who would have otherwise have had a delay of up to two years. For more than 80% of those affected, the increase in the time period will be no more than 12 months. The House voted for this amendment to the Bill and a concession was called for. A concession was considered by the Government, proposed by the Government and accepted and voted for by this House. The Government promised to consider transitional arrangements in 2011 when the legislation was going through, and that is exactly what the Government delivered—a reduction in the time period from two years to 18 months at a cost of £1.1 billion. That shows that the Government were listening to the concerns of Members and responded to them at the time.

[Carolyn Harris (Swansea East) (Lab)]

Exactly how much of that money went to the women concerned?

[Mr Vara]

The hon. Lady needs to appreciate that the concept of dealing with pensions and money is that the concession was made—

[Carolyn Harris]

I know the answer. How much?

[Mr Vara]

That concession was made by the taxpayer—[Interruption.] It was made by the taxpayer, and the total cost was £1.1 billion—

[Carolyn Harris]

How much?

[Mr Vara]

As I have said, and I am sorry that the hon. Lady has not got the message yet, and that she does not appreciate that the time was shortened by six months—[Interruption.]

[Madam Deputy Speaker (Natascha Engel)]

Order. There is a lot of shouting out now. If the Minister wants to take an intervention, he will, but if we could stop shouting it would help us proceed with the debate.

[Mr Vara]

Another reason that some have called for the legislation to be revisited is that they felt that notification needs to be reconsidered. I simply do not accept that the Government have failed to make every effort to notify the women affected.

[Catherine McKinnell]

Will the Minister give way?

[Mr Vara]

I will not give way, as I wish to make progress.

Following the 2011 Act, we wrote to all those directly affected to inform them of the change to their state pension age. About 5 million letters were sent by the DWP and the sending of the letters to those affected was completed between January 2012 and November 2013. Letters to those whose state pension age was set by the 1995 Act only were sent between April 2009, when Labour was still in government, and March 2011, when that process was finished by the coalition Government. As a result of those efforts, in 2012 a survey by the DWP found that only 6% of women who were within 10 years of receiving their pension thought that their state pension age was still 60.

The shadow Work and Pensions Secretary mentioned several surveys and was somewhat selective in those to which he referred. The one done by the DWP, which runs and is in charge of the pension scheme, has a fair amount of validity and, as I say, only 6% of women who were within 10 years of receiving their pension thought that their state pension age was still 60. As for the original 1995 changes to the state pension age, in 2004 nearly three quarters of those between 45 and 54 were aware of changes to women’s state pensions. Our communications campaign has focused on raising general awareness of the changes and encouraging those closest to the state pension age to get a personalised state pension statement.

[Richard Graham (Gloucester) (Con)]

I am grateful to the Minister for giving way and, despite the chuntering from those on the Labour Front Bench, I can assure him and everyone else that this is my question. We heard earlier from the shadow Secretary of State that he believed that the communication on this been absolutely appalling. He overlooked the fact that his own Government estimated that 75% of women had been informed. He also overlooked the fact that according to evidence to the Select Committee there were 600 mentions of the 1995 Act found in the media at that time. According to the briefing on the state pension legislation, 17 million automatic forecasts were issued by the Labour Government between 2004 and 2006—[Hon. Members: “Speech!”] Does my hon. Friend agree that although undoubtedly some women were not informed, many were?

[Mr Vara]

I am grateful to my hon. Friend for putting those facts on the record. I am, however, sorry that as he was making those points of substance, all he got was the yah-boo politics that we can expect from the Opposition. I am afraid that the truth, as anyone watching this debate at home can see for themselves, is that the Opposition do not want to know the substance or the facts. All they are interested in is the politics, but this is far too important an issue to be treated with the political naivety with which some Opposition Members are treating it. This is an important subject and the Government are dealing with it and treating it with the seriousness it deserves.

[Catherine McKinnell]

I thank the Minister for giving way, and he is clearly in a difficult corner, but I wondered whether he could clarify whether the Government now accept that women—well, anybody—need at least 10 years’ notification of a pension change in order to plan and prepare. If the Government now accept that, will he explain why that does not apply to this group of women?

[Mr Vara]

The hon. Lady will be aware that Governments have to take difficult decisions at times. Considering the state of the economy and the financial position that this Government came into—she will be aware that one of her own colleagues said that there was no money left—and considering the longevity of both men and women, the Government had to take difficult decisions, as all Governments of both shades have to. This Government had to take difficult decisions and we took them because they needed to be taken.

[Tommy Sheppard (Edinburgh East) (SNP)]

The women of this country will be watching this debate and listening to the Minister’s comments with a mixture of concern and disappointment. He is giving us history lessons and is trying to apportion blame. We have a material problem now that the Government need to address, so he should stop looking backwards and start looking forwards, and start caring for the women of this country. This House has already said by an overwhelming majority that it wants the Government to look again at the transitional arrangements: has the Minister looked again at them, has his position changed since the last time this House debated the subject and will he tell us what his change of position is?

[Mr Vara]

If hon. Members did not give mini speeches in the middle of my speech, I could reach my conclusions. I will answer the hon. Gentleman’s question in due course. We cannot look at the changes to women’s state pension age in isolation without acknowledging the significant changes in life expectancy in recent years, the huge progress made in opening up employment opportunities for women and the wider package of reforms. First, on life expectancy, the reason for all these significant reforms is that people are not just living longer but are staying healthy for longer. In just a decade, the length of time for which 65-year-olds will live in good health has surged by more than a year. That is welcome news, but it puts increasing pressure on the state pension scheme, and the Government—any Government—have a duty to ensure the sustainability of the state pension system. It would have been irresponsible for this Government, or the then coalition Government, to have ignored those developments.

[Nic Dakin (Scunthorpe) (Lab)]

Does the Minister agree that all Governments have the responsibility to be fair to the people of this country? Women are affected by the goal posts moving, and the benefits that they would get at retirement age have gone as well. This is a double whammy for that group of women who have worked hard all their lives.

[Mr Vara]

The Government have a duty to all their citizens, and they have to take difficult decisions and perform a balancing act. It is important to bear that in mind when people are talking about spending £30 billion-plus, or £77 billion. Those are serious sums of money, and difficult decisions have to be taken to achieve that balancing act.

[Several hon. Members rose—]

[Mr Vara]

I will make progress. The landscape for women and employment has completely changed since the 1940s. Female employment is now at record levels, with more than 14 million women in work—a record rate of nearly 70%. The number of older women aged 50 to 64 in work is also at a record high, with over 100,000 more older women in work than this time last year. Indeed, over the past decade, women have on average stopped working later than 60. In 2015, the average age was 63, and we know that more women than men would prefer to work flexibly or part-time before retiring.

[Mr Kevan Jones]

My hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) just said to the Minister that we need at least 10 years for these notifications to be brought in. Is he confirming that this group of women, some of the poorest people in the country, are paying for the planned deficit reduction? What does he say to my constituent, Jayne Manners, who is disabled and cannot make up the six years that she has lost from this scheme? What transitional help can he give her?

[Mr Vara]

The hon. Gentleman in part repeated a question that was asked earlier, and I refer him to my previous answer. I will turn to other issues later, given the opportunity to make progress with my speech.

We need a pensions system that recognises the changes that have been made, in the same way that we have responded to the need to support older workers in the labour market. We have abolished the default retirement age and extended the right to request flexible working to all employees, and we are working with businesses to encourage the employment and retention of older workers.

[Peter Dowd (Bootle) (Lab)]

On transitional funding, is it about time that the Government started tackling rich corporate tax dodgers and stopped dodging poor women pensioners?

[Mr Vara]

I am sure the hon. Gentleman is delighted that he was able to score his cheap political point.

Let me turn to our wider reforms. We inherited one of the most complex state pension systems in the world, and too many people did not understand what they could expect upon retiring. From April this year, we are introducing a simpler state pension that will give people a clear picture of what the state will provide so that they can build their own savings. We have a triple lock, so that pensioners will see their basic state pension go up by at least 2.5% every year, as it has since 2011. That means that from this April, pensioners will receive a basic state pension that is more than £1,100 higher a year than at the start of the last Parliament. It is important for people to look at matters in a broader context, rather than in the single-issue context that many colleagues seem to be speaking about.

[Lady Hermon]

I am genuinely grateful to the Minister for at long last allowing me to intervene. In response to an earlier intervention by a Conservative Member who has now left the Chamber, the Minister replied that Ministers are always happy to meet party colleagues to discuss difficult cases. Unlike the Minister for Pensions, who sits in the other place, this Minister has refused to come to Northern Ireland and meet women who were born in the 1950s and who are adversely affected by this change. Will he please have the good grace to agree to come to Northern Ireland and meet my constituents in North Down, and other women affected by this issue, and explain why the Government will not introduce transitional measures?

[Madam Deputy Speaker (Natascha Engel)]

Order. Before the Minister replies, 25 Members wish to catch my eye and we are hoping to have a Division at about 4:50 pm. We still have another Front-Bench opening speech, and we are getting tight on time. Interventions have been very long, but if the Minister could start concluding his remarks, we might be able to get everybody in.

[Mr Vara]

I take on board what you say, Madam Deputy Speaker, and I am coming to a conclusion. I am more than happy to meet colleagues, but I am afraid the venue would have to be negotiated. It is not every day that I go to Northern Ireland, but if the hon. Lady wants a meeting with me I am more than happy to meet her here in London.

We have ensured that more people are saving for their retirement by requiring employers to enrol their staff on to a pension with our auto-enrolment scheme. In addition to those reforms, we have continued to protect and build on a range of other pensioner benefits, including a permanent increase to cold weather payments, protection of winter fuel payments, and protection of free bus passes.

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

Will the Minister give way?

[Mr Vara]

I will not give way. Hopefully the hon. Lady heard what Madam Deputy Speaker directed.

We are providing greater security and choice for people in retirement, while also ensuring that the system is sustainable for the future. That is a record on pensions and pensioners of which Conservative Members can be proud. Parliament has extensively debated accelerating the changes to the state pension age. We listened to all arguments for and against at the time of the Pensions Act 2011, and we made transitional arrangements.

We are far behind other countries in Europe on equalisation—Germany, Denmark, the Czech Republic and Greece have already equalised the pension age for men and women. We must look to the future, not persist in looking backwards. These changes are about putting our pensions system on a secure financial footing, rather than continuous confusion for those affected and further debate. We should build on the high levels of awareness that we already have, and continue to promote flexibility, choice and security for older people. There are no plans on the part of the Government to make policy changes.

[Several hon. Members rose—]