Previous Section Index Home Page

The system must not be too hard and fast, as hours of care often fall at different times of the week, according to the arrangements that families make for looking after sick and elderly relatives. Carers perform an enormous duty for their own kith and kin that
16 Jan 2007 : Column 709
greatly benefits the country as a whole, and we must make it as easy as possible for them to make a legitimate claim.

Ms Keeble: Does the hon. Gentleman agree that local authorities’ social services departments could be asked to undertake the role that he describes if GPs were not willing to take it on or demanded substantial payment?

Sir John Butterfill: The hon. Lady anticipates me, as I was about to say that social workers could undertake that role, although not to the exclusion of anyone else. For example, if a GP believed that the degree of care given to a person in the course of a week was reasonable and necessary, then his certificate to that effect should also be acceptable. Some people give up their whole lives to caring, and one can only admire what they do. They should not suffer from having a lower pension in the latter part of their lives as a result of the care that they have given.

The change in national insurance contributions for those retiring before 6 April 2010 has been mentioned already. The current proposals for the reduction in qualifying years for those retiring after that date mean that the people who retire immediately before it will lose out considerably. It must be possible to construct some form of taper to remove that cliff edge: without it, an estimated 5 million women will suffer a very substantial diminution in their income for the rest of their lives. It should not be beyond the wit of the Government, in consultation with all other parties, to come up with a mechanism to deal with the problem.

In conclusion, this is a good Bill. An enormous amount of thought has gone into it, and I wish it Godspeed.

6.53 pm

Miss Anne Begg (Aberdeen, South) (Lab): I want to add my voice to the general consensus in support of the Bill. I am sure that that includes the Liberal Democrats, although they sometimes say one thing and then do something completely different. However, I am willing to believe the warm words uttered by the hon. Member for Yeovil (Mr. Laws), and that his party will support the Bill later tonight.

Consensus is important for a Bill like this. We get the chance to re-engineer the architecture of the entire pension system, in a way that covers both state provision and private occupational pensions, perhaps once every 50 years, so we must make sure that we get it right. Some changes will be inevitable as the years go by, but I hope that the solution offered by this Bill, and by the subsequent legislation to introduce personal accounts, will remain fundamentally unchanged for a long time, so that future pensioners get a fair and equal settlement.

I have been a member of the Work and Pensions Committee for six years, and it has been interesting to see how the emphasis in the pensions debate has shifted. In the early days, that debate was all about how to deal with existing pensioners, but in the past few years we have begun to think about what we can do for tomorrow’s pensioners.


16 Jan 2007 : Column 710

Although it would probably not be true to say that the question of pensions is on everyone’s lips, the subject used to be a matter for older people only. Now, younger people are talking about the provision that they will have to make for their later years. They may not yet understand what they will have to do, or be ready to make the necessary contribution to ensure an income in later life, but they are starting to consider their pension provision. I hope that the introduction of the national pension saving scheme and the personal account will give younger people an incentive, for the first time, to put money aside for later in their lives.

Lorely Burt: I totally agree with the hon. Lady that it is very important to get younger people to consider their future and their pensions. However, does she regret that the Bill will do nothing for existing pensioners, 3 million of whom will be dead before they gain any discernible advantage from the changes being introduced?

Miss Begg: Not every Bill does everything for everybody. This Bill is about tomorrow’s pensioners, and was never intended to be about today’s. As it turns out, greater longevity means that it will affect today’s pensioners, as some of them will still be alive to benefit from its provisions.

I am pleased to say that the Bill will be of particular benefit to women, and that is what I want to concentrate my remarks on, but women who have retired already believe that the introduction of the pensions credit has been a great help. The Government have come a long way since the election in 1997, when they inherited an enormous problem of pensioner poverty. Only 10 short years ago, pensioners were dying from a lack of food and heat in the winter. Then, being a pensioner very often meant living in poverty: now, pensioners—or old people as a whole—are no more likely to live in poverty than members of the general population. That is a remarkable turnaround, and shows what a huge effect the shift in public policy has had.

That shift began with the introduction of the pension credit. I make no apology for the element of means-testing involved, nor for the steps that the Government took in introducing it, as the policy was absolutely correct. My hon. Friend the Member for Northampton, North (Ms Keeble) was right to say that increasing the basic state pension or restoring the link with earnings would have had no impact on the poorest pensioners, or on the 1.5 million women who did not qualify for the basic state pension.

Urgent action needed to be taken, and that is what the Government did in the years immediately after 1997. The pension credit lifted 2 million pensioners out of absolute poverty and more than 1 million out of relative poverty, and the Government now have a breathing space. They are therefore able to look at tomorrow’s pensioners, including those women who have yet to retire, to see what needs to be put in place so that they can benefit from the basic state pension. That is what the Bill is about—making sure that more and more women will qualify for the basic state pension when they retire. The Government have chosen to achieve that aim by reducing the number of years needed for eligibility for the basic state pension and by changing the qualifications, especially for carers.


16 Jan 2007 : Column 711

The hon. Members for Runnymede and Weybridge (Mr. Hammond) and for Bournemouth, West (Sir John Butterfill) both talked about the cliff edge for national insurance contributions in 2020, when, depending on a woman’s age, she could be just one day short of benefiting from the 30-year contribution period. Both cited the number of women who would be affected by the change, but that is not necessarily the number who will be disadvantaged by it. The figures do not take into account the fact that a large number of those women will already be receiving pension credit, so the level of the basic state pension or its contributory elements will not matter; almost all their pension will be made up by pension credit. None the less, I urge the Government to look into some form of smoothing mechanism, to make sure that the cliff edge is not so absolute. However, I accept that there has to be one at some stage; there has to be a specific day when the qualifications change.

I had planned to speak about the more generous carer’s credit, but my hon. Friend the Member for Northampton, North went into detail about the definition of a carer in her speech. She set out how a carer could qualify for credits towards contributions to the basic state pension. However, I urge the Government to consider how different caring roles can add up to the 20 hours a week set as the threshold. Eligibility should not be dependent on only one job; for example, women of my age who have looked after their children may have gone back to work but dropped out again in their 50s to look after grandchildren and an elderly relative. The individual elements of such care might not add up to 20 hours, but in combination they could easily do so.

The hon. Member for Bournemouth, West suggests that GPs should make judgments about care for people with disabilities or ill health. I have to disagree: GPs are not qualified to make judgments about the amount of care an individual needs. They can determine whether someone is ill and what medical care they need, but I do not think they would welcome having to make judgments about social or personal care; it is not in their remit. I say that as someone with a disability. Just because a doctor may be able to diagnose my condition, they do not necessarily understand its effects on how I live my day-to-day life. Putting such matters into the hands of GPs makes them medical rather than social judgments.

Sir John Butterfill: Of course I understand that a wide range of people could make such decisions; I merely suggest that GPs could be one of them. I am reinforced in that view by a case that I discussed with the Minister in November, in which the GP was prepared to put in writing his view that the patient needed at least a certain quantity of care over a week. There will be variations from case to case, but in some cases a degree of medical knowledge, which a social worker might not have, would be essential in evaluating the situation. We need a range of expertise.

Miss Begg: Indeed, and we need to ask GPs if they would be willing to take on that role. The Government should not land things on various professionals without asking their opinion; they need to be engaged in the debate.


16 Jan 2007 : Column 712

Everything in the Bill that makes it easier for women to build up their national insurance credits is to be welcomed. As those provisions are implemented, and more and more women begin to qualify, it will make sense to restore the earnings link to the basic state pension. I regret not that we did not restore the link, but that the pensions debate has been sidelined into that narrow category. It made for an easy slogan, but there was not always full understanding of what restoring the link meant. When I spoke to pensioner groups, I discovered that they had different interpretations. Some, like the Government, thought it meant restoring the annual upgrading to match the annual increase in earnings. However, some pensioners thought it meant making sure that the basic state pension was a percentile of the average wage, while others thought it meant they would receive backdated payments amounting to what would have been paid in the annual uprating from the date when the link was broken to the day it was restored.

Those who were crying—a very Scottish word that means “call”—for the restoration of the link may not all have been calling for exactly the same thing. The Government should make it possible for almost everyone to qualify for the basic state pension. The contribution need not be monetary, as it obviously is in the national insurance scheme; it could be social, based on the time people have given in their caring role. The wider the Government can spread the net, to ensure that as many people as possible qualify for national insurance credits, the wider the coverage of the basic state pension and the more sense it will make to restore the link. Before we even consider restoring the link, we have to make sure that it is as easy for women to qualify for the basic state pension as it was, in general, for men; otherwise we shall merely have expanded the inequalities inherent in the existing system.

I urge the Government to go slightly further than the Bill proposes—I hope that the Liberal Democrats will be pleased with my suggestion. The hon. Member for Yeovil was correct to say that I would have preferred a universal pension. That would be the ideal, but I accept the reason why the Government have not, in the short term, used residency to determine who should qualify for the basic state pension. There are difficulties in defining who is resident because the data have not been collected. It will take some years to build up the database, so it is more sensible to adopt the proposal in the Bill and reduce to 30 the number of qualifying years for the basic state pension. That will achieve the same outcome, but much more quickly.

Perhaps to the disappointment of the hon. Member for Yeovil, the universal pension that I envisage would be at the basic state pension level. We need a means of getting the necessary coverage so that everybody who has lived in the UK for 15 or 20 years will receive the basic state pension. The Liberal Democrats and the Scottish National party propose a citizen’s pension, but it is unaffordable as it is tied into somehow—I am not sure exactly how they are going to do it—eliminating means-testing.

I thought that I understood the citizen’s pension until I heard today’s debate. I had thought that it would be set at a sufficiently high level to minimise, although not eliminate, means-testing and that the qualification would be based on residency. If that were the case,
16 Jan 2007 : Column 713
those who had previously paid national insurance contributions in the UK, but now lived abroad, would qualify for the citizen’s pension. However, the hon. Member for Yeovil said that they would not, so I do not know whether the citizen’s pension is based on residence or contributions or what. It cannot be both, so we need to be much clearer about what it would be based on.

Mr. Weir rose—

Mr. Laws rose—

Miss Begg: I will give way in a few moments.

I understand why the Government went down the road that they did. On the political front, the people who would benefit from a citizen’s pension are campaigning for it at the moment, but if we were proposing that those who had contributed through national insurance would benefit from it, they would now be campaigning on the basis that they had paid all that money so why should those who had paid nothing receive the same as them? On the basis of equity, the debate would have changed. As I said, I understand the political reasons behind the Government’s maintenance of the contributory principle. A great deal of work remains to be done to change people’s perceptions or feelings about the fairest way of operating a state pension system—that people should get something for something.

Mr. Laws: To clarify the issue, does the hon. Lady understand that what the residence criterion means for the citizen’s pension is that the number of years of residence in a country rather than national insurance contributions provide entitlement? That is totally different from being resident in a country at the time when the pensions are paid.

Miss Begg: I still do not know how many years are involved, so perhaps the hon. Member for Yeovil will intervene again to clarify whether it is 10, 15 or 20 years. If it is 10 years, it means that anyone who has lived in Britain for 10 years and then moves anywhere else in the world will qualify for a full citizen’s pension in the UK—even though they spent only 10 years living here and are no longer living here.

Lynne Jones: However, if they had been working, they would have paid national insurance contributions for their 10 years of residence, so I do not understand why it is so substantially different. It was, after all, Turner whose preferred solution was a citizen’s pension. Many others who have contributed resent the fact that people who have made no contribution in national insurance are still eligible, if they have no other benefits, for the means-tested benefits—and often at a higher rate.

Miss Begg: So what of a married woman who has run off with some American toy boy and has never paid national insurance contributions? Just because someone is resident in the country does not mean that they are paying national insurance contributions, so we are back to the same problem. Part of the reason for the Bill is that not everyone was qualifying under the
16 Jan 2007 : Column 714
contributory principle. What Lord Turner proposed was not the citizen’s pension as devised by the other political parties, but one as an element of a universal pension. It was not based on the contributory principle. The two are different.

Let me return to my earlier point: as we expand the net of qualification under the contributory principle through national insurance contributions—or, indeed, through credits, which should satisfy my hon. Friend the Member for Birmingham, Selly Oak (Lynne Jones)—it may become sensible in future for residence to become an easier means of identifying those who should receive a basic state pension. At the moment, that is not possible and it will continue not to be possible in future unless at some stage the Government begin to collect the data that would allow people to prove their residency. If that were part of the Bill, it would allow future Governments to decide whether to change the basis in years to come—without having to redesign the architecture of the basic state pension.

If we are talking about a pensions system that will last well into the century and for the next 50 years, it may make sense to give future Governments the flexibility to make that choice if they so want. I urge the Government to look further into that. [Interruption.] I am pleased to hear the agreement of the hon. Member for Yeovil about that; it may be one of the few things that we agree on. My proposals are practical, but unfortunately the introduction through the Bill of the citizen’s pension tomorrow would not be possible and I accept the Government’s reasons why it would not.

I have spoken much longer than I intended to. My final point is a matter of concern to me, which is why I tried to intervene on the hon. Member for Bournemouth, West. The hon. Member for Angus (Mr. Weir) has already put forward the arguments that I would have made if I had been able to intervene. I had serious concerns about the raising of the state retirement age. It may be because I was born in 1955 and, as a female, will be the first of my generation not to receive her state pension until she is 65. Perhaps that concentrated my mind. I suspect that the hon. Member for Bournemouth, West is slightly older, so perhaps that is why he suggested raising the retirement age much sooner. It may be easier, as it will not apply to him or his generation.

I had serious concerns, as do a number of the trade unions, about the raising of the state retirement age simply because of the different demographics throughout the country. Where many men have worked in heavy industry and lived in the most industrialised parts of the country—Glasgow is a good example—the average life expectancy can be as low as 59. People die before they even reach the current state retirement age. I have to say that that is not just a matter of geography or education, but more a consequence of poverty. Unless the Government can ensure that the next generations do not live in poverty—the Government’s avowed aim to lift children out of poverty by 2020 is crucial—the children born in poverty today will not enjoy the same longevity as those born to middle class parents. We must ensure that we lift those children out of poverty so that they can live as long as their more affluent neighbours—and the job has to start now.


16 Jan 2007 : Column 715

The package of proposals from Lord Turner included the raising of the state retirement age, and part of building a consensus is that individuals involved in the process have to accept some things that they like less than others as part of that overall package. That is what consensus building is all about—recognition that some parts of the population do not like certain aspects, but they should nevertheless agree to them if they are acceptable and will work for the vast majority of the population. I have thus swallowed my objections to raising the state retirement age, though the long lead-in time is absolutely right and it is dependent on the Government getting their public health policies and their anti-poverty strategy right. It will affect only people younger than 47, who will have the chance to enjoy the same benefits after retirement as everyone else.

I have taken up quite a long time. I welcome the Bill and I look forward to the following Bill on personal accounts. I raised the issue of the trivial commutation level with Secretary of State. Getting that level right will be important in answering some of the concerns that the Liberal Democrats have expressed about whether it will always be right to save and whether there will be some—again they will predominantly be women—who may not benefit because they have small amounts of saving. If we get the trivial commutation level right, being able to take a lump sum, without affecting means-tested benefits, would help to answer some of the questions. This is a good Bill and I am delighted about the change that it will make in the lives of women. They will be able to contribute to, and will qualify for, a basic state pension and they can look forward to a level of income that means that they will be able to enjoy their old age and the years that they have to live beyond retirement age.

7.21 pm

Mr. Quentin Davies (Grantham and Stamford) (Con): I congratulate my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) on an excellent and thoughtful speech. It showed, not surprisingly, that he has a considerable grasp of the subject. He showed good sense in accepting formally on behalf of my party the Government’s pension credit system, which I think we should accept. However, in all frankness there was one matter on which he did not convince me and I want to touch on it briefly. It is quite useful for these matters to be discussed in public in time to influence the second Bill—the personal accounts Bill.


Next Section Index Home Page