Pensions Bill [Lords]

Steve Webb Excerpts

Monday 20th June 2011 Commons Chamber

[Mr Byrne]

I am grateful to the hon. Gentleman for decoding the Secretary of State’s remarks and putting on record that there will be transitional arrangements. I heard about that only by looking this morning at certain blogs written by Liberal Democrat Members, who also expressed great confidence that there would be a compromise on this. We look forward to hearing a lot more about what that compromise will be. It is a shame that it is not in the Bill in time for this Second Reading debate. We would all understand the logic of this if we heard a little more from the Secretary of State about why the Government are introducing this measure.

The truth is that the Secretary of State used as a justification for his argument the idea that women in this position will somehow be living that much longer to enjoy their new pension. Well, they will draw cold comfort from that. The point is that it is simply not realistic for women in their late 50s, who are truly fearful about being given no time to adjust to their loss of income. Surely that is the critical point for us this afternoon. Women in their later 50s will have earned less over their lifetime; they have lower state pension and private savings than men; many have been unable to join a workplace pension and have interrupted their careers to look after their family; many will have stood down from jobs on the understanding that they would get that state pension early.

These are not simply my assertions; they are the Government’s own facts. The Pensions Minister was forced to tell my hon. Friend the Member for Leeds West (Rachel Reeves) that 40% of women aged 56 have no private pension wealth:

“The proportion of women aged 56-years-old who have no private pension wealth”,

he told the House on 10 March,

“is estimated to be 40%.”—[Official Report, 10 March 2011; Vol. 524, c. 1266W.]

What on earth are those women supposed to do with the measures in the Bill? On 4 February he admitted that the median pension saving of a 56-year-old woman is six times lower than that of a man, yet he tells us not to worry because he has a plan. He has a word of reassurance—[Interruption.] The Secretary of State should listen to the plan of the Pensions Minister. I think he will be rather pleased with it, as we were offered words of reassurance and comfort. On 14 February, the Pensions Minister said:

“One reassurance I can offer is that those women…will be eligible to apply for jobseeker’s allowance”.—[Official Report, 14 February 2011; Vol. 523, c. 681-82.]

They might, I think, call that the final insult.

There is not much that unites the House these days, but concern about this Bill is fast becoming one of those causes. I understand that even the Department for Work and Pensions Whip, the hon. Member for Norwich North (Miss Smith), who is not in her place on the Treasury Bench has said:

“I’m pressing Ministers on this because a number of women have raised it with me, and it so happens that members of my own family are in this group. It’s certainly an issue I sympathise with greatly.”

Her concern is widespread. I believe that the hon. Member for Cardiff Central (Jenny Willott) has told no less than the Deputy Prime Minister:

“I agree with the Age UK protestors: these changes should be reconsidered.”

Nearly half the Liberal Democrat MPs have signed an early-day motion that says that the Government should

“rethink its retirement timetable in the Bill so that these women have a fairer chance to plan and save for their retirement.”

Tonight, there is a chance to put a vote behind those words.

Who will vote to support the Pensions Minister? Once, he never tired of telling the Tories about the error of their ways. He was the man who once said:

“Pension policy needs to be stable and predictable years ahead, not made up on the back of a cigarette packet.”

That was still there on his website, www.stevewebb.org, on 6 October 2009. Alongside it, I found another rather apposite quote:

“It is typical of Tory policy to hit the poorest the hardest.”

That is still there on his website. This is the Pensions Minister who said:

“As ever when it comes to pensions, it is as if women are an afterthought. That is clearly not the way in which to change state pension ages.”—[Official Report, 9 March 2010; Vol. 507, c. 33WH.]

That was not on his website. That is what he said in the House of Commons in March last year. Tonight, we have the chance to help the Pensions Minister stand by his words and his record. I think that we should help him with his honour.

This is a Second Reading debate. We are supposed to be debating the principles of the Bill and we are then asked to vote on those principles. We are being asked to do this when it is perfectly clear that the Government no longer believe in the Bill. We are privy to reports in the newspapers that the Government might be working on another U-turn. I am not sure whether it is Conservative or Liberal Democrat Members who are behind it, although I know who will claim the credit. The Secretary of State told the Financial Times today that there are “issues and concerns” that need sorting out, while senior Ministers, says the Daily Mail,

“are telling the Chancellor he must think again.”

The Secretary of State, it says, is “sympathetic”. I have to ask, then: why are we voting on a Bill that the Government do not believe in? The Chief Secretary does not believe in it; the Pensions Minister does not believe in it; half of the Liberal Democrat Members do not believe in it; the Tory Whips do not believe in it. What on earth are we doing going into the Division Lobbies to vote to punish half a million women through a Bill that no one believes in? Will the hon. Gentleman answer that question now?

[The Minister of State, Department for Work and Pensions (Steve Webb)]

It is unclear whether the right hon. Gentleman is going to vote against Second Reading—he has not said so yet. On the assumption that he is, he would have to find not just the £10 billion that his hon. Friends want to raise, but the £30 billion that this Bill saves. Where will he find £30 billion when all the money is gone?

[Mr Byrne]

I am glad that the Minister has raised that point. His own consultation, which closes on Friday, is examining the question of how savings can be made through acceleration of the granting of the state pension age later in life. That is an issue that should have been brought to the House for debate before we were asked to debate egregious measures that will hit half a million women. We should re-examine the timetable for the raising of the retirement age to 67, but that must be done on the basis of equal treatment of the sexes, and the principle that people should be given time to prepare.

We are sick of this confusion. We are sick of this chaos. We say to the Government today, “No more: you need to get a grip. Take this Bill away, and bring us a plan that you have had the decency to half think through.”

“The critical factor in pension arrangements is certainty. People need to be able to plan with certainty”.—[Official Report, 11 January 2011; Vol. 342, c. 179.]

Those are not my words, but the words of the Pensions Minister who is responsible for the Bill. Tonight the House will be asked to vote on a broken promise. We urge the Government to think again. We shall vote to oppose the Bill, and I urge others to do the same.

--- Later in debate ---

[Dame Anne Begg]

There are much wider issues with raising the state pension age such as the fact that, towards the end of their working life, many people may start to take on less paid employment because they have taken on caring roles. My generation of women is often called the sandwich generation in as much as they are looking after elderly parents or other elderly relatives as well as looking after their own grandchildren, to allow their sons and daughters to go to work. That is the generation that is caught by the anomaly—a generation of women who, perhaps, were not able to work throughout their married life and have not necessarily built up the national insurance contributions that will give them a full state pension.

I am curious about the Government’s argument that the flat rate pension will miraculously mean that all women will get a state pension, when my understanding is that that pension will still be based on the number of years of national insurance contributions. That was brought down to 30 years in the Pensions Act 2007, so women can already qualify. That Act also made it easier for carers to qualify for credits. I see the pensions Minister is about to jump up. Perhaps he can clarify whether the qualification for the flat rate pension will not be 30 years of national insurance credits.

[Steve Webb]

The hon. Lady raises serious points. She is absolutely right—for the basic pension, those credits are already in place. The problem is that many of the women we are discussing will have done their child rearing before credits for the state second pension came in, so they will still retire with inadequate state pensions, which would be corrected under our proposals.

[Dame Anne Begg]

So those women will still have to have the 30 years of credits, but in respect of the SERPS element they will be the winners. But for every winner in all these changes, there will inevitably be losers, and there will be those who have paid their SERPS all their working life, including women who have paid the big stamp but not the small stamp. They are the ones who often feel aggrieved. As the Minister knows, pensions policy is a minefield covered in all those booby traps. As soon as one presses down on one thing, another pops up, making it all very difficult.

It is the group of women who were born in 1953 and 1954 who are being expected, at very, very short notice—five years’ notice—somehow to change their whole financial planning for their retirement. As I pointed out to the Secretary of State in an intervention, when the equalisation came in the warning that people were given ranged from 15 to 25 years. The evidence that I received from Age UK showed that 20% of women still have not realised that they are not going to get the state pension at 60 but will have to wait until they are 64 or 65.

That proves not that we have been lax in trying to inform or educate women about what state pension they can expect, but that it takes a long time for such things to sink in and for people to make arrangements. In the case of the current proposal, the women who will be most affected have just over five years’ notice. That is unfair and I hope the Government will look again.

--- Later in debate ---

[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 ---

[The Minister of State, Department for Work and Pensions (Steve Webb)]

We have spent a worthwhile six hours, and I enjoy nothing more than debating pension reform. There were 24 contributions, and I want to respond to as many of the points raised as possible in the time available to me. Not all Members will have been present at the start of the debate, so it might be worth reminding them that this Bill is about more than clause 1, although clause 1 does two important things: it treats men and women equally sooner, and it responds to rising longevity by 2020.

The Bill contains two further major measures, however, which Opposition Members who vote against it would take away from us. The first is reforming auto-enrolment to make it work. That was the subject of an independent review that we set up last summer, which was conducted by highly respected advisers who want to make auto-enrolment work and get it in place next year. We have heard that many women in their late 50s have no private pension savings. Well, why is that? Who was in charge for the past 13 years? We want to make auto-enrolment work, and to get on with that. Voting down this Bill would stop us in our tracks.

[Dr Whiteford]

Will the Minister give way?

[Steve Webb]

In a little while; I want to make some progress first.

The Bill’s third key element—which, again, voting it down would stop—is making judges put some money into their pensions. I think that Members were rather shocked when they discovered that the taxpayer put 32% of a judge’s salary into a judge’s pension, and that the judge in respect of their own pension entitlements puts a big fat juicy zero. This Bill will correct that. If the Opposition succeed in voting it down, they will stop us doing so. We need to make progress with the Bill, therefore. Second Reading is about the principles, and we stand firmly behind them.

In the debate, the shadow Secretary of State, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne)—who has rejoined us now—glossed over the auto-enrolment provisions and said the Labour party will vote against the Bill. That would leave £30 billion to be found, as that is what the Bill would put into the Exchequer. When asked where the money would come from, he replied, “Well, we’d move a bit faster on age 67” and then added, in brackets as it were, “in the 2030s.” For a former Chief Secretary to the Treasury to tell us that the way to find money for a problem in the next Parliament is to look to somewhere in the 2030s sounds vaguely familiar. The answer is always, “Tomorrow, and tomorrow, and tomorrow”—

[Mr Byrne]

Will the hon. Gentleman give way?

[Steve Webb]

In a second. [Hon. Members: “Give way.”] I will give way. The reason there is no money, as the right hon. Gentleman said, is because difficult decisions were always deferred to tomorrow.

[Mr Byrne]

I am grateful to the Minister for giving way. He is making his remarks with his customary eloquence. As the following figure has not been presented this afternoon, will he remind the House precisely how much the acceleration of the state pension age for women before 2018 will save? Is the sum about £1.2 billion—yes or no?

[Steve Webb]

Interestingly, the right hon. Gentleman and his colleague the shadow Minister are saying two different things. The right hon. Gentleman knows that the sum for the changes up to 2020 is £10 billion. His shadow Minister, the hon. Member for Leeds West (Rachel Reeves), says we should delay to 2020 and find £10 billion while he wants to vote against the Bill and find £30 billion at some time in the 2030s. I think the House knows where we stand on that.

I am grateful to those Members who took the trouble to address auto-enrolment, but the shadow Secretary of State glossed over that issue. He said we ought to enrol at £5,000, which is not the right figure, but let us accept it for the sake of argument. He then said we should not put up the threshold. Therefore, under his scheme with the threshold at £5,000, someone who earned £5,100 would be auto-enrolled on that £100, and as we start at 1%, they would have to put in £1—not £1 a week, but £1 a year, or 2p a week. That is what will happen if we do not let this Bill make progress. We will be requiring employers and employees to put 2p per week into the employee’s pension. Does the right hon. Gentleman think that might in any sense undermine the credibility of our proposals?

[Dr Whiteford]

I agree with the Minister that this issue has been glossed over in today’s debate, but in our debate on welfare reform last week great store was set by so-called mini-jobs. It seems to me that those are exactly the jobs that will not be included in auto-enrolment. Can the Minister understand why that fuels concern that a mini-job is simply a euphemism for a low-paid, low-skilled job that keeps women trapped in poverty?

[Steve Webb]

The hon. Lady will be aware of the national insurance floor of roughly £100 a week. Many of these mini-jobs, as she describes them, will be below that and would not be covered by auto-enrolment anyway, but once such people are above the threshold for national insurance, they will be able to opt in should they want to. Moreover, if a mini-job occurs later in life and they have some track record of a connection with pensions, they might well have a conversation with their employer about opting in and triggering the employer contribution.

[Several hon. Members]

rose—

[Steve Webb]

As there were 25 contributions to the debate, I want to try to respond to some of the points that were made, and then I will certainly give way some more.

My hon. Friend the Member for Cardiff North (Jonathan Evans)—indeed, Cardiff was well represented in the debate: by my hon. Friend the Member for Cardiff Central (Jenny Willott) and by the hon. Member for Arfon (Hywel Williams), who raised issues relating to Allied Steel and Wire—pointed out Labour’s track record on pensions. He was right to do so, because although one or two Opposition Members glossed over history, he reminded us of the 75p pension increase—something that can never happen again under our triple lock. He reminded us of the failure of the previous Government to get to grips with Equitable Life and of the tax grab by the previous Chancellor and Prime Minister on company pensions. That is not a proud record.

The hon. Member for Aberdeen South (Dame Anne Begg), the Chair of the Work and Pensions Committee, made a characteristically thoughtful contribution and I am grateful for her support for our abolition of the default retirement age. The link to that issue has not often been made in today’s debate. The previous Government were planning to raise the state pension age to 66, 67 or 68—but to leave it legal to sack people for turning 65. There is a logical flaw there, and I am sure the House is ahead of me on that. It is therefore right that we have taken away employers’ ability to sack people for the “sin” of turning 65.

I am also grateful for the hon. Lady’s support for our going ahead with the National Employment Savings Trust and the flexibility around auto-enrolment in 2012. She asked whether our £10 billion estimate of the cost of delay to 2020 was a gross or net figure. It is a net figure, taking account of benefit offsets. However, a lot of the points that she and a number of other Members made would apply whenever we raised state pension ages. For example, it was the hon. Member for Erith and Thamesmead (Teresa Pearce), I think, who asked, “What will happen to volunteers? What will happen to carers?” Those are important questions, but they would of course arise whenever state pension ages are raised—and she supports a party that legislated to raise the pension age to 68. She is right that these issues need to be addressed, but they exist not specifically because of this Bill but because of legislation that is already in place.

[Mr Watts]

Is it not a fact that, if the Minister accepted the Opposition’s proposals, they would deal with the short-term problem, the long-term problem and the unfairness, and he would probably get more support from his own party?

[Steve Webb]

I am grateful to the hon. Gentleman for recognising that there is a long-term problem, which not all his colleagues have done.

My hon. Friend the Member for Grantham and Stamford (Nick Boles) made the point that this is not about the deficit. That is quite true—these measures do not save us money in the current comprehensive spending review period. However, I have a figure to present to the House: £1.3 trillion. That is the national debt at the end of this Parliament, even after our austerity measures. That is the legacy; that is the reason we need to get a grip on these matters.

As well as the 25 Members who spoke today, there were two almost silent voices—especially silent in the Opposition’s contributions. The first silent voice was tomorrow’s taxpayer. Labour wants to put the Bill into the 2030s. If we delay the changes, all these things will have to be paid for by someone else. As long as it is not the people who write to us—somebody else will pay, and they do not write to us, so that is fine. That voice needs to be heard.

The second voice that was not really heard much in the debate—although a few coalition Members did raise it—was that of employers. Of course, many of the Bill’s measures on auto-enrolment are about easing the burden it imposes, particularly on smaller firms, which are crucial to our recovery and the fundamental improvement of the economy. These measures strike a balance. The waiting period gives employers time to get people on the payroll. The threshold enables employers to take on people on a lower wage, with less bureaucratic burden. The voice of the employer and the costs and burdens on business were issues that the Opposition almost did not raise at all.

My hon. Friend the Member for Cardiff Central (Jenny Willott) was very generous in her remarks, supporting the measures on judges and on auto-enrolment. She quite properly raised concerns about the state pension age, but she made an important point about our state pension reform agenda generally. There are two sides to the state pension deal—when people get it and what they get. One Opposition Member this evening described the state pension as a pittance, but who oversaw it at that level for 13 years? We have brought forward, in our Green Paper, proposals for a single tier of state pensions set above the level of the means test. That is one of our reform options and that is the pension, if those proposals go ahead, that every one of the women we have been talking about today would get, so there is an issue about when they get the pension, but there is also, crucially, an issue about what they get. We are actively looking into that and I am grateful to my hon. Friend for raising it.

The hon. Member for Arfon asked about Allied Steel and Wire workers and the financial assistance scheme. I can confirm that I met them along with the Secretary of State for Wales and Dr Ros Altmann, who has done a huge amount of good work in this area, back in November and that I wrote to update the Secretary of State last week. We are aiming to provide forecasts for financial assistance scheme members once the wind-up process for schemes is completed. In the case of ASW, the scheme is still winding up, so the financial assistance scheme is not yet in a position to provide forecasts, but we hope to make progress later this year. The hon. Gentleman also asked about Dr Altmann’s ideas for getting money into the scheme and we have looked at trying to release value from annuities. That is not looking as hopeful as we had hoped but we are working hard to see if that can be done and I am grateful to the hon. Gentleman for making the point.

My hon. Friend the Member for Ipswich (Ben Gummer) gets the prize for making the sharpest intervention. He pointed out to the shadow Secretary of State the legal advice and comments made by my noble Friend Lord Freud in the House of Lords on 30 March. I know that my hon. Friend reads little else and I am grateful to him for drawing those comments to our attention. [Interruption.] As the right hon. Member for Birmingham, Hodge Hill has asked the question, let me tell him the answer before he asks again. My noble Friend was responding to an amendment that would have slowed the process at which we equalise the men’s and women’s state pension age. The right hon. Gentleman will know that we are on a process of equalisation, and the legal issue is that we deviate from equalisation if at any point we widen the gap. The coalition reference to moving men in 2016 and women in 2020 would widen that gap. The issue is directive 79/7, which

“deals with the progressive implementation of the principle of equal treatment for men and women in matters of social security…Any change we now wish to make needs to be considered in relation to the position left by the 1995 Act.”—[Official Report, House of Lords, 30 March 2011; Vol. 726, c. 1279.]

That is on the record and has been for several months.

[Mr Byrne]

I am grateful to the Minister for finally setting out that legal advice to the House, but he must answer this question: why was the commitment in the coalition agreement if there was a law that made it impossible?

[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—

[Sheila Gilmore]

Will the Minister give way?

[Steve Webb]

As I have five minutes to respond, I had better not.

My hon. Friend the Member for Gloucester made a characteristically thoughtful contribution. I am grateful to him for that. He raised the issue of intergenerational fairness, which goes to the heart of the Bill. It is why we need to progress with it and debate it through the House. A number of our constituents who have written to us about the Bill imagine that this is the only chance we get to debate it. We will be in Committee right up to the final day before the summer recess, I am delighted to say, and we will return to it on Report, so there is ample opportunity to debate and discuss the Bill.

The hon. Member for Sunderland Central (Julie Elliott) raised the issue of manual labourers. I accept that that is an important point, which needs to be addressed. My hon. Friend the Member for Salisbury (John Glen) quite properly raised the issue of long-term principles. I hope he will respond to our Green Paper consultation, which looks specifically at age 67 and 68, mechanisms and processes. Those are the principal issues that we are trying to raise.

The hon. Member for Erith and Thamesmead, who tabled the relevant early-day motion, asked about transfers into NEST and so on. As she knows, the idea of NEST was to get the thing going and to cater particularly for people who might not otherwise have access to a pension. Once that roll-out is complete in 2017, the whole system will be reviewed and the issue of transfers-in will be looked at as part of that review, so I can give her that assurance.

My hon. Friend the Member for York Outer (Julian Sturdy) supported the Bill and said that good governance is about taking decisions in the long-term interests of our country, which is what the Bill does. I thank him for that. The hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) raised issues about auto-enrolment. I have already pointed out why we are doing it and the balance that we are trying to strike. My hon. Friend the Member for South Dorset (Richard Drax) spoke about the fragility of private sector pensions. I agree with him. That is why it is vital that we move ahead with the Bill and make auto-enrolment work, rather than delaying it, as the Opposition want.

The hon. Member for Oldham East and Saddleworth (Debbie Abrahams) asked whether people will be able to work in their later years. I can tell her that women are already, on average, leaving the labour market after state pension age. In 2004 women on average left the labour market at 61.6 years. In the past six years that has gone up by more than a year, so there are already trends of longer working lives. We need to build on them.

The hon. Member for Glasgow North East (Mr Bain) said that other countries are following a different path. I can tell him that they are not. Other countries are raising their state pension ages and in some cases raising them faster than we are. My hon. Friend the Member for Edinburgh West (Mike Crockart) supported many aspects of the reforms. I congratulate him on a very well researched contribution. I am grateful to him for the principles that he set out—simplicity and making auto-enrolment work—and I note his comments about the state pension age changes.

On that issue, which has clearly been the focal point of the debate, let me sum up the position. We heard a number of hon. Members raise their concerns about the state pension age. The Government’s position is clear. We are not simply living longer; we are living longer at a faster rate. The improvement of five years in life expectancy at pension age took 70 years between 1920 and 1990. The next similar improvement happened in 20 years. The improvement in longevity is like a runaway train. We must address that. Those who vote against Second Reading are not just deficit deniers, but longevity deniers. They need to recognise the real changes.

My right hon. Friend the Secretary of State, in his characteristically resolute way, confirmed that the Government believe that we need to equalise more rapidly and reach age 66 as the retirement age more rapidly, but he also said that he recognised that we need to implement that fairly and manage the transition smoothly. He went on to say that he heard the specific concerns about a relatively small number of women and that he was willing to work to get the transition right. I am committed to doing the same, together with him.

If the House were to reject the Bill tonight, those who vote against must tell us where £30 billion will come from, how they will make auto-enrolment work and why judges should not have to pay for their pensions. I commend the Bill to the House.

Question put, That the Bill be now read a Second time.