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5.59 pm
Vera Baird (Redcar) (Lab): May I add my voice of welcome to the Bill, yet also add my voice to those of colleagues who asked the Government to consider options for compensating people who have suffered in recent years by losing out on pension after their firms had gone bust? I am a member of the Iron and Steel Trades Confederation and represent a constituency with
a steelworks. My constituents are highly unlikely to find themselves in the position of the Allied Steel and Wire workers, but they and I stand in solidarity with those workers in requiring justice for them.The Bill is good, but I am a tad disappointed that it does not do more, and especially that it will not tackle the poverty of those with incomplete contribution records and limited opportunities to save—they are usually called women. Women and pensions are a key political issue. Research from just before Christmas showed that three quarters of women aged between 55 and 64 said that they were unhappy with the Government's performance on pensions. The survey also showed that 91 per cent. of women believed that the Government should make a higher and better basic state provision a priority, and that 64 per cent. said that that should be their top priority.
It is not surprising that pensions represent an issue for women. Pensioners' incomes have increased by £7 billion a year since 1997 and, primarily through means-tested benefits, poverty among pensioners has been reduced by one fifth. However, one in four single women pensioners still live in poverty, and only 13 per cent. of women have a full state pension. In a moment I shall suggest a couple of matters that could easily be added to the Bill.
The future to which my hon. Friend the Member for Aberdeen, South (Miss Begg) referred will not be significantly better for women. The Government's approach on improving women's pensions—it is commendable—is to try to get women out into the labour market so that they may make their Beveridge contribution. They rightly point to better and cheaper child care provision, the reconfiguration and improvement of parental rights, increased maternity rights and significant support for one-parent families as having advanced women in the labour market. However, that is a slow way of proceeding toward getting good pension provision for women.
The Fawcett Society calculates that at the current rate of progress, it will take 80 years until women have equal pay. It is quite clear that it will take even longer until women who start their careers on equal pay 80 years hence—they will thus have the opportunity to contribute equally—will receive a pension provision equal to that of men. I must tell my daughter when she is about 20 that she will probably be poorer than her brother in retirement. She will have to tell my granddaughter the same thing, and my granddaughter will have to tell my great granddaughter that she, too, will probably be poorer in retirement than a man. It will be only my great, great granddaughter who will be able, in about 2084—that is not as cathartic or resonant as 1984—to tell my great, great, great granddaughter that she will have a chance of equal pay that would give her the opportunity to contribute to a pension that would be equal to that of men.
May I suggest a couple of small quick steps that could be taken through the Bill to accelerate the process ahead of 2084? The principal reason why women have poorer pensions than men is because they spend more time out of the labour market owing to their caring responsibilities. It is outrageous that there is no clear simple credit for national insurance contributions during that time. Two overlapping systems exist. Credit can be given weekly to people who are paid a carer's
allowance for looking after a disabled person for more than 35 hours a week, but that does not apply to the care of children. However, many women with children work less and reduce their pay below the lower earnings level, so they cannot get a stamp, yet they do not get the 35-hour carer's allowance.A second way of compensating women for being out of work is home responsibilities protection, but that is not a credit, so it does not give a stamp equivalent. It reduces the number of years that must be worked to qualify for a pension, and applies to parents of children aged up to 16 for the basic state pension and up to the age of six for the state second pension. However, it covers only a full tax year, so if a person goes back to work on 2 March after being at home with her children for the rest of the year, she will lose the entire year's home responsibilities protection and thus be a year light on her pension provision. I have to tell my right hon. and hon. Friends on the Government Front Bench that babies do not arrive on 6 April or whatever date is the commencement of the tax year. Nor do they mature at a rate that happily coincides with those intervals to allow women to comply with the discipline of home responsibilities protection. Is it not long overdue that we recognise that there should be a simple credit for caring of all forms. Surely society values caring at home these days just as much as it values going out to work. Is it not time that a Bill represented that by introducing a simple single credit system?
Could not the Bill easily allow more low-paid people to build up a state pension? The majority of people in low-paid, part-time work are women. Under the current system, anyone who earns less than the lower earnings limit—LEL—makes no national insurance contribution for that week and, therefore, does not build up any right to benefits. They are outside the system. Big changes have been made but 1.4 million women are still prevented from making national insurance contributions because they earn less than £77 a week. It is illogical that people can work an ordinary part-time week as half a normal working week and earn the national minimum wage but still not be within the lower earnings limit to be within the national insurance system.
If we lowered the LEL to £65 a week, 200,000 women and 60,000 men would be brought into the system. If we pulled it down to £60 a week, 570,000 more women and 178,000 more men would be allowed to contribute. There is a further complexity linked to that. Many women have several part-time jobs. For instance, a woman might be a dinner lady at her child's school, or a care assistant at that school, and then, when her partner comes home at night, go out to work in a pub or a late-night shop. If none of those jobs gets her into the LEL, they cannot be aggregated to enable a contribution to be made. Surely it would not be difficult to make a change.
Sir John Butterfill: The hon. and learned Lady is making an interesting speech. I wonder whether it would not be simpler to say that everybody should be entitled to a pension regardless of their working record. We
could help to pay for the increased cost by making everybody receive the pension at 65 rather than at 60 or 65.
Vera Baird: I have not considered the issue of age. I would be obliged to the hon. Gentleman if he did not steal my denouement from me.
Those two small steps would speed up the journey to 2084 for women. Even if equal pay occurs then, a woman's pattern of work will still make it extraordinarily difficult for her to accrue full state pension rights on the current contributory basis. Those small steps would be only the start. If the Bill were to try to tackle these issues, a series of more extensive and more sophisticated carer accounting provisions would be required—pseudo contributions of one flexible sort or another would be necessary to try to fit women into what surely is now a redundant contributory mould.
The problem is not confined solely to the 87 per cent. of women who do not pay sufficiently on the Beveridge basis to get a full pension. In fact, 50 per cent. of current pensioners do not have a full state pension because they do not have the necessary contribution record. Complex knock-on effects follow from even the little steps that I have suggested to try to tweak the edges to improve matters for women and the poor, let alone the knock-ons from trying to take a more systematic and sophisticated approach. In addition, as the House of Lords Select Committee on Economic Affairs says, in order to work the system it is necessary to operate a complex accounting system to track national insurance contributions and credits over each person's working life to enable them to qualify for a full or basic state pension, which in any event will be supplemented in retirement by means-tested benefits for between half and three quarters of all retirees.
The Government's success in operating an active labour market policy to extend employment opportunities to all groups and ages means that few people can now shirk their responsibility of contributing positively to the economic welfare of the country.
The House of Lords report adds:
- "Virtually all citizens make positive contributions to the economy and society through their paid and unpaid work in the period between the end of their formal education and their retirement."
- "We therefore recommend that the basic state pension should be paid on the basis of citizenship rather than contribution record."
6.10 pm
John Robertson (Glasgow, Anniesland) (Lab): In the 1950s, when Richard Titmuss analysed the post-war welfare state, he drew a distinction between state and occupational welfare—the benefits that people derived from the state in which they are citizens and those that accrue through their employment. The growth of private pensions in recent decades has established that as a false dichotomy. Our population is ageing, and by 2021, about 20 per cent. of the population will be over 65. In my constituency, the figure will be closer to 40 per
cent. More private pensions alleviate some of the projected welfare costs of an ageing population, but they do not reduce the state's responsibility to ensure that all our citizens have the opportunity to have pensions sufficient to maintain their dignity in retirement.That responsibility requires the state to act, not always as provider, but sometimes as regulator or guarantor. The Bill establishes a framework to meet those changed realities, and right hon. and hon. Members have spoken in considerable detail about the way in which that duty is exercised. Since 1997, the state has done much to tackle pensioner poverty by increasing the basic state pension, and providing winter fuel payments, free television licences and sight tests, and the pension credit. The Bill tackles the other side of the equation, and as Members have said, the pension protection fund is a welcome means of preventing further pension losses.
The hon. Member for Havant (Mr. Willetts) could not accept that in 1995 the Conservative party got it wrong. Once again, we have had not had an apology, and the amendment reveals the politically opportunistic party that the Conservatives have become. They have not provided any help in looking at the problem of pensions, and only wish to attack and cause as much mayhem as possible without trying to solve the nation's problems. They have shown that they care not one jot for poorer pensioners. The hon. Member for Havant cannot even look after his own pensioners. In his constituency, 3,382 pensioners receive pension credit, gaining an average of £40.29 a week extra over and above the minimum income guarantee. In my own constituency, 4,418 pensioners receive an average of £46.46 extra a week. The Conservative party would introduce a blanket increase of between £8 and £10 across the board, so that people most in need would lose £30 to £38 a week. That is what we call politics.
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