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9 Mar 2010 : Column 25WH—continued
"We will hold a review into bringing forward the rise in the state pension age from 65 to 66, but starting no earlier than 2016 for men and 2020 for women".
I would be grateful if the hon. Gentleman corrected his statement and pledged to correct his website on this matter.
Harry Cohen: No, because the hon. Gentleman's quote says that the Conservatives would be prepared to rush the rise forward to 2016 for men and to 2020 for women. The Pensions Policy Institute, speaking about raising the pension age to 66 for men from 2016, has said that every man under the age of 58 will be affected and will have to save an extra £55 a month to bridge the gap of the lost year of pension. That is the burden that the Tories are prepared to put on men, and it would affect women as well.
I think that the Tories are also prepared rapidly to bring forward the date of implementation of the higher ages and that, although this has not yet been stated, the pension age will become 70 within a short time under the Tories. I ask the hon. Gentleman what the Conservative
party will put in its manifesto. If it shirks this issue and is elected, it will have no right to bring in a higher pension age; it has to be specific about its proposals before the election, not after it.
Steve Webb (Northavon) (LD): The shadow Chancellor has argued that the Conservatives will restore the earnings link by the end of the next Parliament, which will be 2015, and he claims that the money to do that will come from raising men's and women's pension ages. However, if men's and women's pension ages do not rise under the Tories until some distant point in the future, they will not have the money to restore the earnings link, so they will have to do precisely as the hon. Gentleman has indicated. Does he share my view?
Harry Cohen: That well-made point explains the situation. I think that the pension age will go up to 70 if the Tories get elected.
Lord Turner, the chair of the Pensions Commission, has set the scene for the Tories, and he is a former bosses' leader, so we all know that he is sympathetic to them. According to one report, he told the BBC in August last year
"that there were arguments made during his review that the pension age go up to 70 by as early as 2030."
"If I was redoing my report I would be more radical, arguing for an even faster increase in the state pension age".
That clearly contrasts with what he said in his report.
Mr. Hands: Will the hon. Gentleman just remind us which Government actually commissioned the Turner report?
Harry Cohen: We all know that it was a Labour Government. However, Lord Turner also said in his report:
"Some people suggest that this expense should be offset by raising the state pensions age to, for instance, 70. This would however have the disadvantage that the losers would be those on lowest income: both because they will typically have worked for longer and because they have shorter life expectancy in retirement."
Bob Spink: While the hon. Gentleman is reminiscing, will he remind us which Government broke the earnings link?
Harry Cohen: Indeed. It was a Conservative Government. That cost pensioners enormous sums and increased pensioner poverty enormously.
Angela Eagle: My hon. Friend mentioned the Turner report, which was not purely the property of Lord Turner himself, but the result of a commission. Does my hon. Friend agree that the Turner commission said:
"we do not believe that a rapid increase over a short period (e.g. to 70 by 2030 as was suggested in some submissions to us) is required"?
Harry Cohen: Yes-that is a good point. I am amazed by Lord Turner's change of stance; perhaps he is positioning himself in the belief that there is going to be a Conservative Government. I am particularly amazed by that change given that there has been a recession in the interim.
Let us be clear: the Tories now see the raising of the pension age as a budget deficit measure. Deficit reduction drives their policy on raising the pension age. However, why should workers ready for retirement be denied it and have their financial security removed from under their feet to meet the cost of an economic crisis caused by the bankers?
The commission used the "living longer" argument to justify bringing in a longer-term change in the pension age, but that argument is deeply flawed. The situation is not helped by the fact that the actuaries who peddle that position have a vested interest, because insurance companies, big business and the Government, who want to cut bills, are their main clients. Living longer is mixed up with issues related to healthy ageing, but let us be clear about the "living longer" argument.
Recession, with its unemployment and poverty, reduces life expectancy. I am acutely aware of the fact that that was what a report said about people who have insufficient money in retirement, given that it was in the same week that the House unfairly docked my £65,000 resettlement grant. We should just look at the example of Russia's transformation to capitalism. The economic collapse cut life expectancy by a huge amount. Under the Tories, we had three recessions, at least two of which were incredibly deep, and we have now had an awful recession under Labour, thanks to the bankers. Although it is true that the NHS, which has been well funded until now, has kept many more people alive, it is likely to have to endure a period of cutbacks which, if the Tories are elected, will probably be severe.
As regards employment rates for those aged between 50 and the statutory pension age being on a gradual upward path-I stress the word "gradual"-during good economic times, the first Turner report said:
"The absence of major macroeconomic shocks comparable to the recessions of the early 1980s and early 1990s has meant that fewer workers in their fifties have been made redundant; while for those who have faced redundancy, the general tightness of the labour market has made re-entry into the labour market easier".
Well, not now, and that should be taken into account.
The Turner commission's first report said:
"The recently launched English Longitudinal Study of Ageing...will provide a far better evidence base on the impact of ageing, but unfortunately not for many years."
On health and ageing, it said:
"Analysis on this issue is frustratingly incomplete...From these data we simply do not know what the truth is."
One key point that the report made was:
"Major inequalities in life expectancy and health between socio-economic groups may make across the board increases in retirement ages infeasible and inequitable, unless those differences erode over time."
However, there is no sign that they are likely to erode significantly over time.
The report did, however, state that early inactivity for men aged 55 to 59 is concentrated in the lowest two and the highest wealth quintiles, with the lowest two quintiles describing themselves as sick or unemployed. The Pensions Policy Institute pointed out that
"there is a significant transition from full-time or part-time employment into 'inactivity' past age 59. Approximately 80 per cent. of men aged 55-59 are in employment, falling to 60 per cent. aged 60-64, and only 20 per cent. aged 65-69."
Let us say it as it is. For most people over the age of 65, and sometimes earlier, the workplace is an incredibly hostile environment, particularly for those in the lower wealth quintiles. That will not be changed any time soon.
I favour people being able to work longer. That is what the Work and Pensions Committee said in its report, and the law should be changed to make that possible. However, it should be a matter of choice, not a question of forcing people to do so when they are being denied the financial security of a pension.
John Mason: I agree with the hon. Gentleman's points and I suspect that his constituency is a bit like mine. With the best will in the world, a lot of men-and women for that matter-who do very physical work and are outside a lot of the time are physically not able to carry on at that level by the time they get to 60. Perhaps another job would be fine, if there was another one that was suitable, but they are just not able to do the kind of job they have been doing for 40 years.
Harry Cohen: The hon. Gentleman makes a good point, particularly about manual trades and people from lower-income backgrounds.
I agree with the Government's pension paper of December 2002, "Simplicity, security and choice: Working and saving for retirement", which said:
"It is important that people have the choice to work beyond age 65, whereas raising the State Pension age would leave many of those on low incomes with no option but to continue working."
"An increase in State Pension age would also reduce long-term public expenditure"-
that is why it is attractive to the Tories. However, the paper continued to say that that
"would disproportionately affect lower-income people who rely more on state benefits in retirement. The same people tend also to have lower life expectancies, and so, with fewer years in retirement, they would see a disproportionate reduction in their income. The effect might be particularly severe on those who have done manual work for long periods in heavy industries, in which there is a record of low life expectancy."
That is exactly why I believe that raising the pension age without addressing that structural unfairness would be one of the biggest boosts to inequality in this country for decades.
Here is what the Marmot review, which was published last month, had to say:
"More than three-quarters of the population do not have disability-free life expectancy as far as the age of 68. If society wishes to have a healthy population, working until 68 years, it is essential to take action to both raise the general level of health and flatten the social gradient."
I have no confidence that that will happen if the Tories get in. The Pensions Commission found that there was a major gap in life expectancy between socio-economic classes, affecting both men and women, and it is not narrowing. I believe that it will worsen with the raising of the pension age.
There has also been change with the introduction of the employment and support allowance, which is what a working-age person who could not draw a pension would have to live on. That is less than the basic state pension, and considerably less than what used to be called the minimum income guarantee for pensioners.
That, in my view, makes raising the pension age unacceptable for most workers, but especially those from poorer backgrounds, and I oppose it.
Pensioner poverty is quite extensive. The Select Committee has discussed the fact that, despite a marked decline since 1997, there are still 2 million pensioners in poverty, and 1.1 million who live on less than 50 per cent. of median income, which it describes as unacceptable. The basic state pension is too low, and it falls too far short of removing poverty in retirement for all pensioners. The argument is that many people now have savings and private pensions to supplement their income, but I would add that many do not. The supplementary income argument is used to drive down the relative worth of the basic state pension. I believe that that will continue, especially with a Conservative Government, and that that argument will be used, in time, to break the link with earnings again, if it is ever brought in. I do not approve of that argument by which the basic state pension can be allowed to decline, as it inevitably means extensive pensioner poverty.
Tax breaks and tax credits for the wealthy are enormous. Limiting them, as the TUC suggests, could save £10 billion, and such an approach would be reasonable. For example, the TUC says that
"just 3.1 per cent. of the taxpayer population receive 31 per cent. of all tax relief, averaging £18,750 a year".
If it were capped to £5,000 for those earning more than £100,000, that would raise £10 billion a year, which could make a significant contribution to closing the deficit. The TUC points out:
"People earning between £70,000 and £100,000 on average claim £4,500 in tax allowances, so a £5,000 limit for those earning more than £100,000 seems a fair limit".
I agree with that, and it seems to be the right way forward. The basic state pension could be raised over time to an above-poverty level, and tax could be properly applied to overall income so that it could be paid for, including by wealthy pensioners.
I heard the Prime Minister say that the cost of the two wars that we have just had was £18 billion beyond the core defence budget. The Defence Secretary added yesterday on the radio that there is another £5 billion to come next year for Afghanistan. The approach was being described as "money no object". I believe that with no war, and with a degree of will, proper income for pensioners could be arranged without raising the pension age.
11.27 am
John Mason (Glasgow, East) (SNP): I did not realise that I would be the only other Back Bencher to speak. I think I will probably take a bit less than half an hour for my few comments.
I congratulate the hon. Member for Leyton and Wanstead (Harry Cohen) on securing the debate on an extremely important issue. I do not know his constituency well, although my brother used to live there, and I have been to one of its football grounds. However, I assume that in the east end of London the problems and issues are similar to those in the east end of Glasgow. There are many questions in the debate, and perhaps not many clear answers. Perhaps we cannot expect them, but it is important that we should debate the issues.
The first point I want to touch on is about individualisation and personalisation. We heard those words a lot during the passage of the Welfare Reform Act 2009. We had assurances from Ministers that people would be treated as individuals and that there would be personal care for people. However, the reality that many of us see in our constituencies is that when people go to the Jobcentre Plus office or deal with the UK Border Agency or any of those huge departments, they do not get individualised or personalised care. That is a big concern, as we deal with such a wide range of older people in society.
The health of people when they reach their 60s or 70s-or even earlier-covers a phenomenal range. My mother is 82 and in very good health, but I know many people in Glasgow, East who are worn out in their late 40s or 50s because of ill health, and many other issues.
Although average life expectancy is going up, as the hon. Member for Leyton and Wanstead said, the range of life expectancy is huge. Male life expectancy in my constituency remains at below 70. If we make 70 the pension age, theoretically no one would get there, although I accept that there is a range. Although life expectancy at the top end goes up and up, at the bottom it does not do so to the same extent.
People's ability to work varies hugely as they approach retirement, as does their desire to work, but it depends on the kind of work that they have been doing. The skills of older people vary, too. They may have used largely physical skills, doing outside work in parks, on the streets or wherever, or they may have done the sort of intellectual work that we are more used to. Another factor that has not been mentioned is that of caring, and the many caring responsibilities that many older people have these days. In the past, they were often quite light-seeing the grandchildren or the great-grandchildren once in a while-but for many they are now quite onerous.
As I said, male life expectancy in my constituency remains at under 70, and in some parts of Glasgow, including in parts of my constituency and nearby, it is well below that. I suspect that that is the case in other parts of the United Kingdom. Yet only a few miles away some people live for considerably longer, as they would in this part of the world.
Steve Webb: The hon. Gentleman is making a characteristically thoughtful speech. He will accept, I think, that the differences that he describes have always been there. It has always been the case that the hard-pressed manual worker dies at a younger age than the professional. Those differences will always exist, and whatever the pension age it will always have a differential impact. Is it the hon. Gentleman's view that those differences militate against ever changing the pension ages; or, if the average is moving up but we still have dispersion, does he believe that it would justify some upward movement?
John Mason: Yes, but we need to be reasonable. However, there is broad acceptance. The hon. Member for Leyton and Wanstead said that there had not been much debate or controversy about the original changes in the rules. I do not have a problem with the idea, nor do my constituents or society at large, that the pension age will gradually rise. The question is how we are to deal with the wider range of ages.
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