Pensions Bill [Lords]

Teresa Pearce Excerpts

Tuesday 18th October 2011 Commons Chamber

[Harriett Baldwin]

I welcome that sensible intervention. I think this will completely transform the landscape. I spoke about an individual with a £200,000 lump sum at retirement. If we multiply that by the up to 10 million additional savers that we could be looking at, it shows how this country’s savings culture is going to be transformed. The scale of the issue to which new clause 1 refers will get much bigger over time.

The Minister reassured us in his earlier comments that there is a cross-departmental working group. I certainly hope that that group will move quickly to come up with some firm recommendations. I know that all who are signatories to this particular new clause look forward to that. We look forward, too, to seeing the action that will come about as a result.

[Teresa Pearce (Erith and Thamesmead) (Lab)]

I strongly support the principle of auto-enrolment. As was pointed out by the hon. Member for West Worcestershire (Harriett Baldwin), it means that from 2012 onwards, millions of people will save for a pension for the first time. We need a low-cost, trustworthy system in the United Kingdom if we are to begin to lift future generations out of pensioner poverty.

I fully support the establishment of NEST, as currently only 50% of employees contribute to a private pension, and for many of those on lower incomes the current system is poor. Research has shown that if a typical British and a typical Dutch person save exactly the same amount for their retirement, the Dutch person will end up with a 50% larger pension under the current scheme. I believe that that is because in the UK it is often not clear how high pension charges can be. For instance, a person who is sold a pension and charged at 1.5% per annum may not realise that over the lifetime of the pension, 38% of their possible income could be lost to fees.

In the past, pension companies were unwilling to provide the low-cost pensions of the type needed under auto-enrolment, as they felt that the ordinary low-paid workers had what the industry deemed “unattractive lives”—a somewhat derogatory term which simply meant that it was not easy to make money out of those policies. Indeed, it was because of the failure of the current structure to provide such pensions that it was necessary to establish NEST.

I welcome auto-enrolment, I welcome NEST and I welcome new clause 2, but three points cause me concern. My concern about auto-enrolment was prompted by some of the evidence given to the Work and Pensions Committee relating to a lack of regulation. I was troubled to hear that there would be no restrictions on how workplace pension savings are invested, and no record-keeping requirements for providers. The meeting between the Select Committee and the Pensions Regulator gave me very little reassurance. It appears that during the drafting of the Bill, many interested parties gained concessions. Employers, whether large, small or micro—along with the pensions industry—have been pleased to note that restrictions will be placed on NEST, but not necessarily on other alternative providers.

I believe that the restrictions placed on contributions to NEST, a vehicle for workers whose employers have no pension provision, may push some employers who are new to the pensions arena towards less scrupulous pension providers, I realise that NEST is aimed at lower earners, but some of the restrictions placed on it may nudge employers who are baffled by the choices facing them towards a pension provider that does not have such restrictions, but may well provide an unattractive pension scheme for the employee. It appears that the industry and employers have been around the negotiating table, but that the employees’ voice has not yet been heard.

If employers reject NEST because of the contribution limit, or other limits, they may place employees in schemes with unfairly high charges. I am deeply concerned about the apparent lack of a quality test for schemes that would be deemed to be a qualifying alternative to NEST. We know from past mis-selling scandals that too few people understand how charges, and pensions, work, and that—as in the case of the mis-selling of endowment policies—it can take many years for such practices to come to light. I ask the Minister to consider, with the benefit of hindsight in regard to previous mis-selling problems, what measures he intends to take to ensure that we do not store up similar troubles with auto-enrolment outside NEST.

My second point, which the Minister has touched on, relates to the ban on transfers to NEST, which resulted from lobbying from the pensions industry and which will benefit that industry at the expense of employees in the scheme. Under the current rules, people who are auto-enrolled in a scheme and go into NEST will not be able to move existing pots into the scheme. Such a ban cannot benefit the very employees and future pensioners whom we are trying to assist; it can only support the industry. I believe that a modern pension in a modern age should be portable, and that provisions for transfers in and out of NEST should be included in the Bill even if they cannot be implemented immediately. I welcomed some of the reassurances given by the Minister in his opening remarks.

My third reason for concern is the three-month waiting period. Although I understand the need to balance the administrative burden for businesses, it means that half a million fewer people will be automatically enrolled. As has been pointed out twice already today, nowadays many people have 11 different employers over their lifetimes. I would support a reduction to one month. Nevertheless, employees are currently able to opt in to the system from the first day of their employment, but they need to know that they have that right. I urge the Minister to amend the measures to require employers to ensure that employees are aware from when they start their employment that they can opt in from day one and receive employer pensions contributions.

The pensions cap combined with the three-month opt-out and the inability to transfer into NEST will prevent casual workers and part-time workers—mainly women—from building a decent pot, even though that is our aim. I ask the Minister to consider these concerns and in his closing remarks to give the House further assurances as to how they can be addressed.

[Glenda Jackson]

I rise to speak in support of the new clause of the hon. Member for West Worcestershire (Harriett Baldwin). I also strongly endorse everything my hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) has just said. I, too, strongly support auto-enrolment. It offers a genuine breakthrough in attracting those people who presume that saving has nothing to offer them, which is not infrequently because their wages have been extremely low.

This scheme requires greater Government support, however. I was concerned by the Minister’s somewhat sanguine attitude towards what the established pensions industry is going to do. As the hon. Member for West Worcestershire said, millions of people will for the first time feel encouraged to begin to save for their future.

Those people have always been out there, but the existing pensions industry has done absolutely nothing to attract them into savings. If it is suddenly interested in this new market, I wonder what it finds so attractive. The Minister referred to the CBI, which is a confederation of major employers. However, from my point of view the real silver lining of the scheme is that it will attract employers who employ only a few staff and their employees.

I am not making a party political point here, but we are currently in a period when people’s standards of living are falling. The most recent report from the Institute for Fiscal Studies found that most people’s standard of living has fallen by 7%. That will serve only to reinforce the existing reluctance of small business men and their employees on low incomes to see any benefits in saving for the future, and the pensions industry does not seem in any way geared up to make it attractive.

My hon. Friend spoke about the mis-selling scandals of the past. I need only refer to payment protection insurance. The mis-selling of that was conducted by bankers, and at that time they were considered to be rock-solid people, although that assessment has now changed dramatically in this country and the entire world. There have been far too many examples of excessive charges. I have also referred to the impenetrable documents issued to us by our pension providers. The problem is not simply their length or the smallness of the print; they are completely incomprehensible.

I understand that the Government cannot simply say to everybody, “Listen, the only scheme you should go into is this new scheme, NEST.” However, as that option is not available to them, they must work with the existing pensions industry to ensure that safeguards are in place.

The Government have attempted to make some changes in another supposedly competitive industry: the energy industry. They have markedly failed, however. There is no genuine competition in that industry. We, the people who have to pay the bills, know that, and Which? has said it, as have Ofgem and the Government.

This measure is a major step forward and, as I have said, I absolutely endorse it, because it genuinely seems to be a way of ensuring that people can have a more secure future for themselves. Not only that, but we also hope it will relieve the tax burden for generations to come and it should give people a greater sense of being in charge of their own destinies. However, that is not possible if they are not absolutely satisfied and guaranteed that the pensions being sold are actually transparent and honest, and that the detail is specific and clear to them—

Pensions Bill [Lords]

Teresa Pearce Excerpts

Monday 20th June 2011 Commons Chamber

[Teresa Pearce (Erith and Thamesmead) (Lab)]

Like many Members, I have been inundated with e-mails and letters from women who will be affected by the acceleration in the state pension age. I declare an interest, in that I was born between 1953 and 1955, and will have to wait longer for my pension.

Last month I held a 90-minute Westminster Hall debate in which I outlined my opposition to the Government’s plans. The arguments that I put forward then still hold. The Government’s proposals are unfair, because they target a group of women based on when they were born and give them too little time to plan. These are women who have done the right thing—they have paid their national insurance contributions and planned for their retirement—and they should not be penalised by a Government who are moving the goalposts at the last minute. The Government are threatening to undermine confidence in the pensions system and some of the more positive proposals in the Pensions Bill, such as auto-enrolment, that are designed to improve pension coverage. However, people may think, “If the goalposts are moved at the last minute, why bother? We may make our contributions now, but who’s to say that the money will be there at the end, when we expect it?” That is the opposite of the Government’s intentions for pension reform, but it is a distinct possibility.

When I held my Adjournment debate, not a single Conservative MP spoke. I am encouraged that we have had such thoughtful and wide-ranging contributions from all parts of the House on this important issue today. I also hope that the opposition expressed in this debate will cause Ministers to pause and rethink their plans. My early-day motion on the issue has gathered 177 signatures from all political parties, so there is widespread support in the House for a rethink.

I would like to touch on the Secretary of State’s comments in today’s media. He said that it would cost in the region of £10 billion to drop the accelerated timetable, and that he would therefore stick to his plans. The Bill’s regulatory impact assessment says that the proposal will save no money before 2016, by which time the Chancellor says that he will have balanced the books. I am therefore unsure what the Secretary of State means. Is this about deficit reduction, or is it about fairness and equality?

I would like to touch on some issues that have already been covered and put some further questions to the Minister. What assessment has his Department made of the proposal’s effect on the number of unpaid carers and child minders in the UK? The accelerated timetable means that many people who would have taken up caring for relatives or provided child care when they retired, in order that the next generation could join the work force, will not be able to do so because they will be at work for another two years. That will have an important social policy impact. What assessment has the Department made of the proposal’s effect on volunteering and the Government’s big society agenda? People who have retired are not inactive; they volunteer at libraries, charity shops and lunch clubs. They also act as school governors and provide much needed care in our communities. If they are kept in the labour market for longer, they will be less able to volunteer in those ways.

I am also deeply concerned about unemployment among the over-50s. It is not easy for the women affected by the proposal to get another job or increase their hours to fill the two-year gap if they find themselves out of work, especially at such short notice. I receive many letters from constituents in their 50s who are willing to take any kind of work, but who are finding it impossible to get a job. It is not easy for people to return to the labour market once they have left. It is also becoming increasingly difficult to hang on to a job in later years. If women are expected to work longer, there needs to be work for them to do. That is particularly important given the current economic situation and the rise in unemployment. In looking for work, those women may well be competing against their own grandchildren in the labour market.

What projections and costings have the Government made for how many women affected by the proposal will have to claim employment-related benefits? Many women will not have enough savings to fall back on, particularly those who have been employed in low-paid work or who have taken time out to have children or act as carers. Will the Minister outline the measures that the Government plan to introduce to help them work longer? Will he comment on how women who are not in work are meant to balance their finances in the two-year gap, given that they will be eligible for jobseeker’s allowance for only six months if they have savings or will not be eligible at all—this is my understanding—if they have a small occupational pension?

I was going to mention some of the class issues affecting people’s life expectancy, but my right hon. Friend the Member for Croydon North (Malcolm Wicks), who is no longer in his place, went into that in great detail, and much better than I could. I would therefore like to end by asking the Minister about auto-enrolment and NEST—the national employment savings trust—which I broadly support. The three-month waiting period will mean that 500,000 fewer people will be automatically enrolled in a pension scheme. It is my understanding that workers will be able to opt in during that three-month period and receive the employer contribution, but people will do so only if they know that they have that right. Will the Minister assure the House that the regulations will require employers to explain that to jobholders from day one of their employment?

It is disappointing that NEST will not be allowed to deal with small transfers in and out, and sweep up small pensions from casual employment. Many people are employed dozens of times over their lives, many doing short-term jobs in, say, call centres. The reality is that we have a much more transient labour market. Provisions for transitions in and out of NEST should be included in the Bill, even if they cannot be implemented immediately. I very much look forward to the Minister’s response on those two issues.

Oral Answers to Questions

Teresa Pearce Excerpts

Monday 13th June 2011 Commons Chamber

[Mr Speaker]

Order. I remind the House that if we are to maximise progress, we need pithy questions and, from the Secretary of State and his colleagues, pithy answers.

[Teresa Pearce (Erith and Thamesmead) (Lab)]

T2. Members have already raised the issue of women born in 1954 who must wait an extra two years to receive their pensions, but those who have small occupational pensions paid for and planned for on the basis of the earlier retirement date and who then find themselves out of work before the later date will be adversely affected in terms of jobseeker’s allowance. Will the Minister review the rule and, specifically, the way in which it relates to those disadvantaged women?

[Steve Webb]

The hon. Lady is right: there is often an interaction between the rules governing benefits such as JSA, occupational pensions and state pension ages. However, in cases in which people’s state pension age has risen, the rules governing working-age benefits are exactly as they have always been. Provision will be made, whether through employment support allowance, JSA or, in the example given by the hon. Lady, an occupational pension. We are not talking about leaving people with nothing to live on.

State Pension Age (Women)

Teresa Pearce Excerpts

Wednesday 11th May 2011 Westminster Hall

[Teresa Pearce (Erith and Thamesmead) (Lab)]

It is a privilege to have the debate under your chairmanship, Mr Weir. I asked for the debate because, like many other hon. Members, I have been contacted by many women in my constituency who will be badly affected by the Government’s plans to accelerate the timetable for equalising the state pension age. That has come as quite a shock to many of them. They thought that they were nearing the end of their time in the labour market and had been looking forward to and planning for their retirement.

The Pensions Bill is due to be introduced in the House of Commons shortly, so I am grateful to have the opportunity to talk about the proposal in advance of its being spoken about in the Commons. I hope that this debate will also help to raise awareness of the issue among hon. Members and possibly their wives, sisters and mothers, and among other women who will be affected by the change but have not yet realised that.

All the main political parties accept that overall life expectancy is increasing and that the state pension age for women should rise and be in line with the age for men. I do not oppose the equalisation of the state pension age, nor do many of the women for whom I am speaking. In fact, they have already accepted an extension of the date when they will receive their pension. The issue is how the Government are going about accelerating that. Like many others, I think that the Government’s accelerated timetable is unfair and will have wider implications for our pensions system and for society as a whole.

It is worth taking a few moments to set out some of the background to the debate. Under the current timetable, women’s state pension age was scheduled to rise to 65 to be equalised with that for men in 2020. It was then to rise to 66 for both men and women by 2027, to 67 by 2036 and to 68 by 2046. Under the Government’s new plans, the state pension age for women will follow that schedule only up to 2016, when it will rise to 63. It will then rapidly accelerate to 65 by 2018 and to 66 by 2020.

The overall impact of the change means that 2.6 million women and 2.3 million men will have to wait longer than expected to qualify for their state pension. However, there is a small cohort of women who will be hardest hit by the change simply because they were born at the wrong time. I have to declare an interest as one of the 500,000 British women born between 6 October 1953 and 5 March 1955. They will have to work for another one to two years before they reach the state pension age. The women who will have to wait two years stand to lose £10,000 in pension income and up to £15,000 if they would be in receipt of pension credit. Under the Government’s plans, we will have a deeply unfair situation in which, for example, a woman born on or before 5 April 1953 will reach the state pension age at 62, but those born on 6 April 1953 will retire at 65. Many of the women who have written to me consider that age discrimination, and they have a point.

It is important to note that the proposal was unexpected—it has been sprung on these women. It was in neither the Conservative nor the Liberal Democrat general election pledges and it was not in the coalition agreement. The women who will be affected by the Government’s U-turn will not have enough time to plan for the further change in their circumstances.

[Mr Wayne David (Caerphilly) (Lab)]

Like many other hon. Members, I have constituents who are affected by this issue. For example, my constituent Mrs Janet Davies of Tydfil road, Bedwas, has been to see me and expressed very clearly the predicament that she faces. She was born in February 1954 and, as my hon. Friend said, stands to lose £10,000. What advice would she give Mrs Davies? How should she respond to the situation?

[Teresa Pearce]

I thank my hon. Friend for his intervention. I totally agree. The unexpectedness of the extension of the time is the problem. I really do not have an answer as to how my hon. Friend’s constituent will manage that. I will put some questions to the Minister later.

The accelerated timetable will start in 2016, so the proposal will affect women who would have previously reached the state pension age in about five years’ time. The worst affected will have to wait a further two years to reach their pension age, so they are seven years away from their pension date, which is well below the 15 years’ preparation time recommended by the Turner commission.

It is important to remember that women are already at a significant disadvantage relative to men when it comes to pensions. The median pension saving of a 56-year-old woman is just £9,100, almost six times lower than that of a man, which stands at £52,800. Women’s pensions are traditionally lower because many have taken time out of paid work to raise children or to care for parents.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Like other hon. Members present, I have been contacted by many constituents on this issue, but I suspect that many more do not realise what is to happen or are only gradually realising and will be contacting MPs more and more. Is it not the case that as well as the obvious effects on incomes, what stimulates their anger is that they feel cheated by what has happened? As my hon. Friend said, the proposal was not in the coalition parties’ manifestos and it was not even in the coalition agreement, so there is no way the Government can claim that they did not know the financial figures and they have to make this cut. They knew what the financial figures were when they did not include the proposal in the coalition agreement, so this is a double betrayal of many women pensioners. Does my hon. Friend agree that as we are now seeing U-turns from the Government daily, perhaps this issue should be the subject of today’s U-turn?

[Teresa Pearce]

I thank my hon. Friend for his intervention. I agree. As I said, it is the unexpectedness of the change that is the problem. The women affected have worked all their lives and paid into the system, expecting something in return. They feel that they have done their bit, but they are not getting what they agreed to in the first place.

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

Does my hon. Friend agree that the situation is made more difficult because many of the women have been on low incomes and have not been able to make savings in other ways? Although they may have done the right thing and planned, they are now hit by this double whammy.

[Teresa Pearce]

I agree. These women have been unable to plan for this change. Already, their pension age was further away than that of the previous generation and now it is being pushed further away again. It seems that the nearer they get, the further away it goes.

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

My hon. Friend is being very tolerant of interventions. Is this situation not also symptomatic of the flaw in the analysis of why the pension age should be extended? For example, in the debate on Second Reading of the Finance (No. 3) Bill, one of our former Pensions Ministers made the point that if someone has been working from the age of 16, regardless of gender, by the time that they get to 60, they have paid 44 years of national insurance and have probably burned out. Extending the pension age for people who leave university at 25 after a postgraduate degree is not a problem; indeed, they probably have a very good private pension. However, for many ordinary working-class people—men and women—it means that they are being forced to work beyond the point at which their health allows them to carry on working. This is not just a problem for women, although I do not diminish the problem for them at all. It also affects people who have had a long working life in what are probably the hardest jobs in society.

[Teresa Pearce]

I agree: this is not just an economic issue or a gender issue, but a class issue.

As I was saying, many women have done part-time work or have taken time out of the work force altogether to raise children. Many women worked in part-time jobs at a time when part-time workers were unable to take out a private pension. Those women have worked for 40 years, paying their national insurance contributions. They were looking forward to the retirement that they expected to start at 60. They, and I, were disappointed when it was announced that the age of retirement would go up from 60 to 65 between April 2010 and April 2020, but we accepted that and planned accordingly. Now, these women find that just as they are nearing the end of their time in the labour market, the goalposts have been moved yet again.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

Some of the women in my constituency who have approached me about the issue have found out about the changes by reading about them in the newspaper. There has not been adequate information. Does the hon. Lady share that concern?

--- Later in debate ---

[Teresa Pearce]

I certainly do and I thank the hon. Lady for her intervention. It was not that long ago, and it was certainly after the proposal was first made, that if someone went on to the website to look at their pension forecast, it was still set at the old rates. I think that that has been changed now, thank goodness.

As I was saying, there has already been one movement forward so that people have to work longer. Now, there is another one. People are understandably angry about that and feel let down by the Government, because there was a covenant between them and the Government: “If you pay in, we’ll do this.” These people have done their part, but the other part is not coming forward.

Many people who are approaching state pension age have already taken steps to reduce their hours of employment or have taken on caring duties with elderly parents. Where their children are getting married, they have promised to look after their young grandchildren in the next few years, when their children return to the work force.

One constituent, Susan Harris, from Belvedere, was a teacher for 30 years. In 2005, she took early retirement and a reduced pension. She told me she had made calculations based on when she thought she would receive her state pension. She thought she was making an informed decision—she was planning. Sadly, she is now one of the unfortunate women facing a two-year loss in pension income. It is not surprising that she feels the Government are being unjust and have broken their promise to her about when she would receive her pension.

What assessment has the Minister’s Department made of the proposal’s effect on the number of unpaid carers and child minders in the UK? The accelerated timetable means that many people who would have taken up caring for relatives or providing child care when they retired so that the next generation could join the work force will not be able to do so, because they will be at work for another two years. The Government must consider that important social policy impact.

I would also be interested to hear the Minister’s thoughts on what the proposals will mean for volunteering and the big society. People who have retired are not inactive; they volunteer at local libraries, charity shops and lunch clubs. They also act as school governors and provide much needed care in our communities. If they are kept in the labour market for longer, they are less able to volunteer in those ways. In pushing people to work until they are much older, we are in danger of compromising activity outside the labour market, which we value very much.

It may not be easy for the women affected by the proposal to get another job or to increase their hours to fill the two-year gap, especially at such short notice. I am sure that I am not alone in receiving an increasing number of letters from constituents in their 50s who are willing to take any kind of work, but who are finding it impossible to get a job. It is not easy for people to return to the labour market once they have left, and it is becoming increasingly difficult to hang on to a job in later years, too. If women are expected to work longer, there needs to be work for them to do, and that is particularly important given the current economic situation and the rise in unemployment. In looking for work, these women may well be competing against their own grandchildren in the labour market.

Many women will not have enough savings to fall back on if they cannot hang on in the labour market. Women who have been employed in low-pay work, or who have taken time out to have children or to act as carers, will have few savings to cover them for the period between when they expected to retire and the proposed state pension date. Those women now face an uncertain future. Will the Minister outline the measures the Government plan to introduce to help them work longer? Will he comment on how women who are not in work are meant to balance their finances in the two-year gap, given that they will be eligible for jobseeker’s allowance for only six months if they have savings and will not be eligible at all if they have a small occupational pension?

I want to focus for a moment on women who have worked in low-pay or manual jobs, because class differentials need to be taken into account, as my hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty) said. The Minister has defended the accelerated timetable on the basis of fairness and has said that a balance must be struck as life expectancy continues to rise, because we cannot expect the workers and companies of today to shoulder all the costs. However, while overall life expectancy has increased by 5.5% for women and 6.5% for men, it has not increased uniformly, and there are still deep socio-economic and regional differences in average life expectancy. Office for National Statistics figures show that women’s life expectancy at the age of 65 is highest in the royal borough of Kensington and Chelsea, where women can expect an additional 26 and a half years. However, in Greenwich and Bexley—the two London boroughs that cover part of my constituency—the figures are much lower, at 20 and 21 years respectively. Women’s life expectancy at 65 is even lower in Glasgow city, where women can expect just an additional 17 and a half years. The 2010 Marmot report into health inequalities found that people living in the poorest areas live seven years less on average than those living in the richest areas.

Women in poorer areas, many of whom are from working class backgrounds and have been in low-income jobs, will be hardest hit by the accelerated timetable. They are the least financially equipped to deal with the change, and their lower life expectancy means they will get less time to enjoy their retirement. There is also the issue of women manual workers, who will struggle to continue to work if their jobs are physically demanding. A constituent in Plumstead recently wrote to me, saying:

“It is particularly hard on me because I am a manual worker. I have already been ‘pacing myself’ if you like, for my retirement. I don’t think I will physically be able to continue fork lift driving and hulking boxes around at the later age. If I’d known I would’ve changed my job but it’s too late now. It’s not fair on me.”

I was hoping that my right hon. Friend the Member for Croydon North (Malcolm Wicks) would be able to make the debate, because he has done some excellent research on the impact that the accelerated timetable will have on men and women of different social classes. I hope the Minister is aware of that research and that the Government will take it into account.

Although the proposed accelerated timetable directly affects a comparatively small group of women, its impact will be felt more widely. Extended family members may have to contribute financially to help women cover the costs of the period between when they expected to get a pension and when they actually receive it. The change will also affect many men of pensionable age because they cannot claim pension credit until their wife or partner reaches pension age. The change will therefore affect the whole household.

The Government need to think carefully about what they are asking of a small group of women who have worked hard all their lives. These women are being told to pay a disproportionate cost with little notice. They have earned a decent retirement, but many fear they will be too old and frail to enjoy it. A constituent from Belvedere wrote to me recently to say:

“I have been working since I was 16, have paid all my contributions and was looking forward to enjoying my retirement. But now it looks like I will be too old to do anything except watch telly if they keep altering the age. I suppose the Government does not care about the people who vote them in.”

[Alison McGovern (Wirral South) (Lab)]

Does my hon. Friend agree that one of the wider consequences relates to trust in the pensions system? When daughters see their mothers being somewhat misled, and when they see the Government change their plans in this way, they lose faith in our pensions system, and we can ill afford that.

[Lilian Greenwood (Nottingham South) (Lab)]

rose—

[Teresa Pearce]

I give way to my hon. Friend.

[Lilian Greenwood]

I want to pick up the point raised by my hon. Friend the Member for Wirral South (Alison McGovern). A constituent in Wollaton told me that she has always worked full time. She was raised on national assistance as the fifth child of a recently widowed mother. She lived by the rules as she knew them, she saved and she made pension contributions. When she heard the Minister on the radio, she rightly felt that she did not want to be claiming benefits at the end of her life; she wanted a pension that she had contributed to and earned. Is that not absolutely right? As my hon. Friend said, many people will feel that it simply is not worth making contributions to a pension if it is going to be pulled out from under them just when they need it.

[Teresa Pearce]

I thank both my hon. Friends. That is exactly the point I was coming to. Moving the goalposts at the last minute has implications for public confidence in our pensions system, which has already taken a knock as a result of the changes to public sector workers’ pensions. The unfairness of the Government’s accelerated timetable could undermine some of the more positive changes in the Pensions Bill. Clauses 4 to 9 are about automatically enrolling people in a workplace pension and creating the national employment savings trust. That is a positive step, which will do much to boost confidence in our pension system and address the low take-up of pensions, particularly among low-income workers.

However, the accelerated timetable will make it harder for the Government to achieve that, because people will note that Ministers are happy to change the pension rules at the last minute. That will undermine confidence in the pensions system, which already suffers from low confidence among members of the public. Like the change to public sector pensions, the proposed change undermines public trust. People are likely to think, “If they move the goalposts again at the last minute, why bother? We may make our contributions now, but who’s to say the money will be there at the end when we expect it?” That is the opposite of the Government’s intentions on pension reform, but it is a distinct possibility. Will the Minister consider that point? I hope he will address it in his closing remarks.

The proposal has been developed too quickly. In the past, pensions Bills have been the product of detailed reviews that have taken an holistic approach to pension reform. Pensions policy needs to be planned stage by stage and for the long term through reviews such as the current workplace retirement income commission, which is led by Lord McFall. I am concerned that the Government’s hasty inclusion of the current proposal in the Pensions Bill will mean that key issues, such as socio-economic and regional differences in life expectancy, are not given the proper consideration they are due.

In making any changes to legislation, the Government should ensure that no group is disproportionately impacted on, and none more so than the post-war generation of women, who have had to battle for rights all their lives—from the Equal Pay Act 1970 to the Sex Discrimination Act 1975 and the Employment Protection Act 1975. Women born in the 1950s have seen so much change that they did not expect to be battling still—battling against a rapid acceleration of the pension age, which falls purely on their shoulders. I ask the Government to pause and look at the bigger picture before making these unpopular changes.

I hope to show today that the campaign against the Government’s accelerated timetable has broad support. Earlier this year, I tabled early-day motion 1402 urging the Government to drop the timetable. It has already been signed by 138 Members from all political parties. Charities such as Age UK and companies such as Saga are also campaigning against the accelerated timetable, and it is very rare for the Daily Mail to back something that I am saying, so we really do have broad support. Some 10,000 people have signed the Unions Together “Hands Off Our Pensions!” petition, and I can see that many of them have contacted their local MP to ask them to attend the debate today, and I am grateful for that.

I hope that the Minister will consider carefully the points I have raised and those that will be raised by other Members, and, most importantly, listen to the voices of the women themselves. I strongly urge him to drop the unfair plans to accelerate the equalisation of the state pension age—it is a shabby way to treat Britain’s grandmothers. People will embrace change, but only if it is implemented slowly and fairly.

--- Later in debate ---

[Steve Webb]

Yes, we have. All our costings make assumptions about the proportion of people who would find themselves on benefits. Hon. Members have asked what people will live on between 64 and 66. Clearly, there will be a range of responses. Some people will go on working longer. Seven out of 10 people in the cohort that we are discussing—those born in 1953 and 1954—are in work at the moment.

Several people raised the important issue of different socio-economic groups. Across the socio-economic scale, life expectancies are rising. We cannot use the fact that there are differences between different groups—as there have been probably for ever, and certainly for the past century—as an argument for doing nothing. That argument would apply under the proposals of the hon. Member for Leeds West. If we raised the age a year to 66 in 2020, it would have exactly the same impact on the different socio-economic groups. Her proposal would have exactly the same impact on the numbers of carers and volunteers aged 64 to 66. Many of the points made by hon. Members in this debate about the impact on that age group would apply exactly, only four years later, or six years later under her proposals. We need to make a distinction between things that will be inevitable as the state pension age rises and the consequences of doing it more rapidly, which has been the focus of this debate.

Members have asked about caring responsibilities. We might not have expected this, but it is striking that the number of women within this age cohort who say that they have caring responsibilities is falling, partly because of social and demographic change. In 1993, of the women who are now in the 55 to 59-year-old age cohort, 15% had caring responsibilities, but, in 2010, the figure halved to 7.1%. Again, that suggests significant changes and that people are living longer and working longer. I suspect that caring responsibilities are being taken on, but that that is happening later in life than it would have previously.

[Teresa Pearce]

Does the Minister agree that it is possible that the percentage of those with caring responsibilities is falling because they already have to work longer to get their pension? It is not because their lifestyles have changed or because they are different types of people, whether older or younger. The fact is that they cannot take on that responsibility, because they already have to work well into their 60s.

[Steve Webb]

That does not apply to the figures I quoted, which relate to the difference between 1993 and 2010. All of the women in 1993 had a state pension age of 60, but all of the women whom I was talking about are under 60—they are currently in their late 50s. A diminishing proportion of the women about whom we have been talking have caring responsibilities, although that may change.

The issue of moving the goalposts has been mentioned and I think that one Member said that we are happy to change the pension age at the last minute. We have set out in our Green Paper a consultation on how we should do this beyond 66 in the longer term. In other words, what is the right balance between notice, keeping up with longevity, and fairness for those who have to pay national insurance for the increased longevity? There is a dilemma. Ideally, we would give people huge amounts of notice.

Oral Answers to Questions

Teresa Pearce Excerpts

Monday 28th March 2011 Commons Chamber

[Steve Webb]

My right hon. Friend is absolutely right. I spend a good deal of my time going out around the country talking to pensioners’ groups. I shall be talking to one such group in Birmingham on Wednesday, and I will tell them that restoring the earnings link for the first time in 30 years will provide a firm foundation and dignity for pensioners. That is long overdue.

[Teresa Pearce (Erith and Thamesmead) (Lab)]

T8. Under new welfare rules, jobseekers will be required to undertake mandatory work activity placements such as stacking shelves for 30 hours a week for at least four weeks, and if they do not comply, their jobseeker’s allowance could be withheld. Can the Secretary of State tell me what safeguards are going to be put in place to prevent exploitation and whether sanctions will be placed on Work programme providers if it is found to be occurring?

[Chris Grayling]

The whole point about the mandatory work activity programme is that we listened to the advice of our front-line advisers on what they felt could make the biggest difference to the people they are working with. That is what this programme is designed to achieve in giving people an opportunity to step up their work search by getting involved in more full-time activity to get themselves focused on the challenge ahead. There will clearly be safeguards. Ultimately, the most important safeguard lies in the discretion of our front-line staff. There is no obligation for any staff member to sanction an individual if they judge a sanction to be inappropriate. They know and understand when a sanction is necessary, and when it is not, and that is guidance that we will continue to give to them.

Welfare Reform Bill

Teresa Pearce Excerpts

Wednesday 9th March 2011 Commons Chamber

[Teresa Pearce (Erith and Thamesmead) (Lab)]

All Members agree that the welfare system needs reform, and I welcome attempts to simplify the benefits system and make work pay. We need a welfare system that helps those who can work to do so, by supporting people into good, well-paid, meaningful work, and properly supports those who cannot work. However, I have serious doubts about the Bill’s effectiveness, and I am worried about the impact that some of its provisions will have on vulnerable people in my constituency.

I shall first raise some concerns that I have about how the Bill has been drafted and presented. Almost all the charities and organisations that I have been in touch with have raised legitimate concerns about the speed of the legislation and particularly the lack of detail. There is a heavy reliance on regulations and secondary legislation that makes it difficult for Members and others to scrutinise how the welfare reform agenda will work in practice. Clause 11 on housing costs, for example, is only 30 lines long. There is little detail or analysis of how child care costs, free school meals and council tax benefit will be covered under universal credit.

One of the most concerning aspects of the Bill is that some of its provisions are still under consultation. For example, clauses 69 to 72 propose the abolition of the social fund, yet the Department for Work and Pensions consultation on its proposed replacement is still open and does not close until 15 April. Abolishing the central fund and handing the emergency money to local authorities without ring-fencing is likely to create a postcode lottery. It is not right that this provision is included when we do not know its full impact and people have not had a chance to submit their views. I strongly urge the Secretary of State to withdraw any clauses on which consultation is still open.

One of the reforms in the Bill that will affect my constituency most is the changes to housing benefit. Capping local housing allowance rates and setting them at the 30th percentile of local rents rather than the median from April will create affordability problems. Many people will see a shortfall between their benefit and their rent. Plans to introduce regulations to uprate LHA rates based on the consumer prices index will make the problem worse. The DWP’s own impact assessment states that CPI is expected to rise by 2% each year, but rental costs will rise by 4%. This will break the link between housing benefits and actual rent costs, and means that many families will struggle.

The change will push many LHA claimants in London further out to areas like my constituency, Erith and Thamesmead, which has some of the cheapest housing in Greater London. This will place a great strain on our already overstretched housing and local services. The other possibility is that people will simply be unable to find any affordable accommodation, and will be at risk of debt and homelessness. Everyone should be entitled to a secure home. I urge the Secretary of State to think again.

Another of my concerns about is the proposal in clause 111 to apply a £50 civil penalty for claimant error. The proposal will affect the most vulnerable claimants—those who have difficulty filling out forms, those whose first language is not English and whose literacy skills are poor—and people who inadvertently miss out information. More importantly, it appears to link error with fraud, something that Ministers have done far too often recently and this afternoon, the most obvious case being the Chancellor’s announcement in the comprehensive spending review statement that over £5 billion was lost to benefit fraud. As we heard today from the hon. Member for Kingswood (Chris Skidmore), the figure is £1.5 billion. The DWP’s latest central estimates of total fraud and error across the Department shows that roughly the same amount of money was lost in claimant error as through official error by the Department, but we do not talk about departmental fraud. I urge the Secretary of State to reconsider the proposal to introduce a £50 civil penalty for claimant error, as well as the heavy sanctions in other clauses.

I was pleased that the Secretary of State decided not to proceed with plans to impose a 10% housing benefit cut on anyone who had been out of work for a year. That sanction did not make sense, and similar provisions in the Bill need to be reconsidered. A sanction-led approach does not make sense when we are facing huge public sector redundancies, a knock-on effect in the private sector and a weak growth rate which means that jobs simply are not available. There are 2.5 million people unemployed and fewer than 500,000 vacancies in the economy. I am already receiving a significant number of letters from constituents, many of whom were recently made redundant late in their careers, who are desperate to work but cannot find employment.

I have visited local colleges, where highly motivated young people are gaining qualifications in the hope of getting an apprenticeship or a job, but they are fearful because they know that the ratio of claimants to Jobcentre Plus vacancies is 12 claimants to every three vacancies. People need help overcoming barriers to work. They need personalised support, and a Government with a growth strategy to create jobs. A sanction-based approach will only cause severe hardship for the people who need the most support and further stigmatise people on benefits, setting neighbour against neighbour. I also fear that it will mean a significant increase in child poverty rates in this country.

Finally, I dispute the assertion by the Secretary of State that the welfare state is only for the most vulnerable. It is not: it is for each and every one of us. It is in effect a national insurance system into which people pay when they do not need it so that it is there when they do. It is a system in which contributions have just gone up by 1% for everyone in employment, but all they can expect is a cut in pensions and benefits. Overall, I support the principle of universal credit, and I am in favour of simplifying the benefits system and creating work incentives, but in the context of £18 billion of welfare cuts—

[Madam Deputy Speaker (Dawn Primarolo)]

Order.

Tackling Poverty in the UK

Teresa Pearce Excerpts

Thursday 10th June 2010 Commons Chamber

[Teresa Pearce (Erith and Thamesmead) (Lab)]

I am grateful to the House and to you, Madam Deputy Speaker, for allowing me this opportunity to speak here for the first time. I have listened carefully to the debate, and I extend my congratulations to the hon. Members who have made varied, interesting and eloquent speeches.

This is the first maiden speech by a Member for Erith and Thamesmead, as my predecessor, John Austin, made his maiden speech, in 1992, as the Member for Woolwich, before my constituency was formed for the 1997 election. John Austin is a man who served his community for more than 40 years, first as a councillor, and then as mayor, leader of the council and, in this place, Member of Parliament. During his time here, he took up many causes, fighting tirelessly against injustice and, in particular, for women’s rights. I commend especially the work that he did in the Council of Europe on human trafficking. John Austin is one of the handful of men I have met whom I could truly call a feminist.

Like many other urban areas, Erith and Thamesmead has a long and proud multicultural tradition. It is an area where people come to settle. One of our primary schools is called Windrush, in honour of those who came from the West Indies in the ’50s and ’60s to help Britain rebuild after the war. Many Vietnamese boat people also put down roots in the area in the 1970s. Erith is also the place where Alexander Selkirk, the real-life model for Robinson Crusoe, landed in 1711, when he returned home after many years on a desert island. My constituency is truly a place of homecomings. Over the past decade we have also had a fast-growing African community, which has settled here and intends to make the area its home—so much so, that during the forthcoming World cup, I am sure that the people in that community will be cheering just as loudly for England as they will be for their native Nigeria or Ghana.

The area also consists of places such as Abbey Wood, Belvedere, Lesnes Abbey and Plumstead, where during the late 19th century we had a wonderful football club named Woolwich Arsenal. The team played there until just before the first world war, when Woolwich was dropped from the name and they moved north of the river. I am not quite sure what happened to the club after that. In the north of the constituency, we boast a grade I listed building that has been described as

“A masterpiece of engineering—a Victorian cathedral of ironwork,”

which is a lovely way to describe the Crossness sewage works. Crossness houses the Victorian beam engines, which have been lovingly restored by the Crossness Engines Trust, a registered charity that since 1987 has overseen the restoration project.

In the mid 19th century, Crossness was part of the visionary work of Sir Joseph Bazalgette, who built the London sewer network that cleaned up London and wiped out the cholera epidemics that had previously killed hundreds of Londoners every year. It is ironic that Sir Joseph’s great grandson is Peter Bazalgette, the TV executive who brought the phenomenon of “Big Brother” to Britain. Whereas Sir Joseph spent much of his life trying to get rid of unwanted waste from the homes of the nation, some might say that his great grandson has done quite the opposite.

I have lived in Erith and Thamesmead for more than 30 years. As for my political motivations, the hon. Member for Corby (Ms Bagshawe) said that she was inspired to enter politics by Mrs Thatcher, and I have to say that I was too, albeit for what I imagine were completely different reasons. I was born in 1955, a child of the welfare state. That welfare state helped my family and millions of families like us to have opportunities that previous generations could only dream of: a free health service; a right to education; and a national insurance system that people pay into when they do not need it, but which is there when they do. The welfare state gave me a ladder, which I fully used and which, in turn, has enabled my two daughters to achieve their full potential.

All those things were Labour developments of which I am proud, just as I am proud now of Sure Start, the future jobs fund and the national minimum wage, which are all key building blocks in the fight against poverty. If there is to be dignity in work, poverty pay has no place in the 21st century. In my previous career, tax, national insurance and the national minimum wage were my fields of expertise. I came across no end of imaginative ways that employers would try to get around paying the minimum wage, but who really pays when business pays poverty wage rates? It is the rest of us—the taxpayers—who pay, subsidising the low-paid through the benefits and tax credit systems, while the employers pocket the profit. As we have heard here today, the best way out of poverty is through work, but it must be work that pays a living wage.

Now is a crucial time economically. The economy is beginning to grow and borrowing is falling. To put that at risk by cuts to the public sector and to job opportunities places us in grave danger of having a double-dip recession. Anyone who, like me, has sat in a jobcentre week after week will know that cuts to services such as the future jobs fund will cut not waste, but opportunity, hope and life chances.

The coalition seems to promise so much change, yet its cuts preclude the change that my constituents need. Indeed, the only change the coalition will bring to Erith and Thamesmead is a change for the worse, by cutting the jobs programme, which, along with Sure Start and the national minimum wage, has brought the first effective reduction in poverty in Erith and Thamesmead for a generation.

I know that the job of government is to govern for all the people, not just for those I consider to be my natural constituents. Contrary to some, however, I believe there is such a thing as society and no matter what people’s income or voting tendency, we all live within it. Policies that help the weak, the vulnerable, the unemployed and the disadvantaged thus add to the quality of life of all of us. There is no point at all in paying less tax if someone lives a life with bars on their windows and a personal alarm in their hand.

I also understand that government is about making tough choices. Life is about tough choices, but by tough, I mean strong and durable, not cruel or severe. It is vital for the recovery that we keep people in work. Unemployment reduces national wealth and tax revenues. To insist that we protect jobs is not socialist sentimentality; it is economic common sense.

People in Erith and Thamesmead earn below the average wage and have higher unemployment. One of the reasons for that is that their transport connections are poor. Thamesmead was built in the 1960s and the Jubilee line was meant to run there, but that never happened. Thirty years later, there are 30,000 residents without a station. West of Tower bridge, there are 24 crossings and to the east, just two Victorian tunnels, a ferry and a toll bridge at Dartford. It is not difficult to see that that makes accessing the work and business opportunities in the city all the more difficult for people who live where I do.

I am pleased that the London Mayor and I seem to agree on something, which is that the Abbey Wood line of Crossrail must go ahead. People living in Thamesmead can see the bright lights of the city three miles across the river, but to get there they must travel by foot, by bus, by train and by the docklands light railway, and it takes over an hour—the same amount of time it takes the business traveller from Paris or Antwerp to get to City airport, flying close over the heads of Thamesmead residents.

The people of Erith and Thamesmead are not without pride or without aspiration. They band together to run voluntary and community groups: they run local history projects, they clean the canals, they mentor young people, they serve meals at the pop-in parlours and they help the disadvantaged and elderly through their temples and churches. They are a true coalition, a coalition of the willing who just want to be given a chance.

Finally, I would say that a place such as Thamesmead will be a test of the Prime Minister’s big society. This is the big society that is meant to re-localise the economy, re-capitalise the poor and re-democratise power. If the big society is to mean anything other than a slogan, the Government need vision—and a vision of a cross-capital rail link is vital not only to the economy of London, but to that of the UK as a whole. The vision of a living wage, upgraded year on year, is vital to the fight against poverty. I hope to be a strong voice for Erith and Thamesmead residents, making sure that they are able to access the opportunities that should be available to them, living in the south-east corner of a world-class city.