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Mr Watson: The right hon. Gentleman knows that I have always admired his ambition, but is he familiar with the Burkean maxim that change always brings certain loss and only possible gain? What appears to sit within the proposals he is outlining today is certain loss for many thousands of women facing retirement. Will he sketch out a little more how he intends to give them security, given that many trade unions—the Public and Commercial Services Union, Unite, GMB and Unison—have just voted for strike action? I strongly contend that fear about insecurity in retirement is fuelling that.

Mr Duncan Smith: It is always nice to be accused of having ambition. I thought I was supposed to have given that up a few years ago, but I will be tempted by the hon. Gentleman. Workers can still opt in. They must be told that they can opt in, and if they feel it is the right thing to do, auto-enrolment will still be open to them. I will not be tempted just yet on the other subject to which the hon. Gentleman refers, which is the pensions age. I will take an intervention from him, if he wishes, when we get to that. For the moment I want to stay on auto-enrolment. As I said earlier, I recognise that these are not absolutes. In other words, to get the scheme going we have taken some of these decisions, but we will see where that goes. If there is a very big drive for more to go into it, we will take that into consideration.

Amendments made in the other place will ensure that the strength of the certification test is maintained by requiring that I and subsequent Secretaries of State ensure that at least 90% of jobholders receive at least the same level of contributions under the certification test as they would have received based on the relevant quality requirement for automatic enrolment. Employers told us in discussions that the certification test will significantly ease the process of automatic enrolment.

I believe that these changes, taken together, will allow us to present individuals and businesses with a credible set of reforms that will bring much of the next generation into saving for the first time, which was Labour’s intention when in government, and one that we will pursue, thus beginning to improve the poor level of saving. There has been some talk, not necessarily by hon. Members here, about the possibilities of mis-selling. We have retained the powers to prevent excessive charging in automatic enrolment schemes and will use them as necessary and keep them constantly under review.

Part 3 of the Bill covers occupational pension measures, including a few relatively minor changes to the legislation governing the uprating of occupational pensions. The Bill amends existing legislation to set the indexation and revaluation of occupational pensions at the general level of prices. These changes are consequential amendments that follow the Government’s decision to use the consumer prices index as the most appropriate measure of inflation for benefits and pensions.

I remind the House that the key legislation for setting the statutory minimums for the revaluation and indexation of occupational pensions is not in the Bill, as we have already considered the issue in previous debates on the Social Security Benefits Up-rating Order 2010. This is not the time to revisit those debates, but no doubt someone will want to. Hon. Members might wish to note that all the Government will do is set out the minimum increases; if schemes want to pay more than the statutory minimums, that is a matter for them.

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I think that the move to CPI is supported, by and large, by Members on both sides of the House. That is certainly the indication I was given by the right hon. Member for East Ham (Stephen Timms) and his previous leader, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown).

We must also consider judicial pensions, although I am not sure how long Members will want to spend on them. Part 4 introduces provisions to allow contributions to be taken from members of the salaried judiciary towards the cost of providing their personal pensions benefits. I know that the House will be very worried that this might be too tough on members of the judiciary, but I will resist any pressure to reduce this provision. Judges currently pay nothing towards the cost of their own pensions, while the taxpayer makes a contribution equivalent to about 32% of judges’ gross salaries, which we think is both unaffordable and unfair to the taxpayer. [ Interruption. ] I sense that the House is united at least on that.

Nick Boles (Grantham and Stamford) (Con): Does my right hon. Friend agree that it is extraordinary that a party that professes a belief in equality failed to tackle this extraordinary unfairness in 13 years in office?

Mr Duncan Smith: I would like to be generous to Labour Members and say that they were thinking of the worst-off in society and hoped that they might be able to protect some members of the judiciary. We recognise that we cannot afford to do that, so we must make the system more responsible, fairer and more balanced for all, and these provisions will help us to do just that. It seems that the House is united at least on that.

That brings me to the area that I suspect most Members want to talk about—the state pension age. I believe that we will be able to secure a fairer and more balanced system only if we get to grips with the unprecedented demographic shifts of recent years. I will put the issue in context before moving on to some of the detail.

Back in 1926, when the state pension age was first set, there were nine people of working age for every pensioner. The ratio is now 3:1 and is set to fall closer to 2:1 by the latter half of the 21st century. Some of these changes can be put down to the retirement of the baby boomers, but it is also driven by consistent increases in life expectancy. The facts are stark: life expectancy at 65 has increased by more than 10 years since the 1920s, when the state pension age was first set. The first five of those years were added between 1920 and 1990. What is really interesting is that the next five were added in just 20 years, from 1990 to 2010.

Joan Walley (Stoke-on-Trent North) (Lab): On mortality rates, life expectancy has risen, but is the Secretary of State not aware of the huge inequalities between different parts of the country? We have not yet been allowed to discuss the detail of the equalisation of pensions, the unfairness and injustice of which 55-year-old women in my constituency want to discuss. Surely we ought to be looking at the detail of that, which the Bill simply does not do.

Mr Duncan Smith: I recognise the hon. Lady’s concern, but life expectancy has risen among all groups. I recognise also that some groups in certain parts of the country

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have a lower life expectancy—in pockets of the country, definitely—given the type of work they have done. The point is that, in setting and looking at pensions as we have done historically, that is one thing; the other thing is to look at the people in those conditions and ask, “Why is that the case?”

Surely we need to deal with the issue through public health policy, through the way in which we educate people and through the work experience and training that they receive, rather than by trying to do so through differential pensions. Importantly, if we tried to deal with it through pensions, we would be in the invidious and almost terrible position of telling one group of people that they were retiring at a set age and another group, “You’re better than them, you retire at a later age.” That would be an inequality and would be unfair generally, so the hon. Lady is right that there is an issue, but it is not right to deal with it through the pensions age; it is right to deal with it through public health policy.

Mr Frank Field (Birkenhead) (Lab): Given that the Secretary of State has told the House, and there is no reason to doubt him, that his proposals are based on fairness, it is reasonable to assume that before the Bill completes its passage we will see some changes to the way in which it treats women.

May I question the Secretary of State on a wider point, however? The Bill sets in motion measures not simply to equalise the state retirement pension age for men and women, but to increase it. Does he not accept, as my right hon. Friend the Member for Croydon North (Malcolm Wicks) has previously said, that people who enter the labour market early are usually those who live the shortest in retirement? Would it not be fairer for the Government to base eligibility for the state retirement pension not on a person’s age but on their contributory years?

Mr Duncan Smith: I know that the right hon. Gentleman and the right hon. Member for Croydon North (Malcolm Wicks) have raised the issue in the past. I recognise their background, great experience and genuine sense of a need to try to figure out a solution. I am always willing to listen to argument and debate that, but my concerns are twofold: first, I am not certain that we have the data going back far enough to be able to make the calculation, although I might be wrong; and, secondly, I return to the point that in the past we have not done things in that way, because it is very difficult to set out differential pension retirement ages for different groups. We are going to equalise provision for women and men, but now the debate is about breaking them apart, and that would lead us into all sorts of debates about unequal retirement ages.

Malcolm Wicks (Croydon North) (Lab) rose—

Mr Frank Field rose—

Mr Duncan Smith: With respect, I recognise the right hon. Gentleman’s point, and I will take an intervention from his right hon. Friend the Member for Croydon North, but this is a complicated and fraught area that we should not necessarily deal with in the Bill. Beyond it, I am willing to hear more.

Mr Watts: Will the right hon. Gentleman give way?

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Mr Duncan Smith: I give way to the right hon. Member for Croydon North.

Malcolm Wicks: I am encouraged by the Secretary of State’s thoughtfulness on the matter, to which I hope we will return in Committee. According to the Office for National Statistics, almost one fifth, or 19%, of men in routine occupations—manual workers, labourers and van drivers—die before they receive their state pension. As my right hon. Friend the Member for Birkenhead (Mr Field) has implied, those people have probably worked since they were 14, 15 or 16 years old—very different from those of us who did not start in the labour market until our early 20s. Some sensitivity about when people who have worked for 49 or so years can draw their pension is a matter well worth pursuing.

Mr Duncan Smith: As I said to the right hon. Member for Birkenhead (Mr Field) and repeat to the right hon. Member for Croydon North, I am always willing to look and to think carefully about what proposals there are—not for the purposes of this Bill, obviously, but in the future. I know that he has written—

Mr Watts: Will the right hon. Gentleman give way?

Mr Duncan Smith: May I just finish my answer to the right hon. Gentleman?

I am always happy to discuss the matter. There are complications, and there may be some issues about women, too, because contributions are an issue for many women at the moment, so we cannot take these things lightly. I recognise the work that the right hon. Gentleman has done, however, and I am very happy to discuss the issue beyond this Bill, as is the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb). For the purposes of the Bill, however, the right hon. Gentleman will forgive me if I stay to the point that we are going to equalise the retirement ages for men and women. The only question is, at what point?

Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab) rose

Mr Duncan Smith: I am going to make some progress, but I give way to the hon. Member for St Helens North (Mr Watts).

Mr Watts: The Secretary of State seems to indicate that there is a potential practical problem. Is it not the case that when someone nears retirement age the Department looks at how many stamps they have paid and how many contributions they have made, which must mean that it keeps track of how long people have been working? That would resolve the problem mentioned by my right hon. Friend the Member for Croydon North (Malcolm Wicks).

Mr Duncan Smith: As I understand it, the pre-1975 data are very patchy and messy. I do not want to get sucked into this debate now, tempting as it is, and never to get on to the rest of the Bill; I do not think the hon. Gentleman’s colleagues would thank me for that. I recognise the issue and I am happy to discuss it post the Bill, but he will forgive me if I do not go down the road that Labour Members want by adding that in all of a sudden. I am not going to do that; we are going to stay

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with what we have. I am happy to listen to their concerns and to see whether we can make changes in future, but I do not give any guarantees.

Tom Blenkinsop rose

Mr Duncan Smith: To be fair, I want to make a bit of progress, because a lot of people want to speak. If the hon. Gentleman wants to raise something else about the matter, I will give way to him later.

Pensions policy has not been updated accurately to reflect all the increases that I spoke about. I remind the House, however, that we are by no means alone in having to deal with this issue; others are making decisions about it. Ireland has already legislated for the pension age to be raised to 66 by 2014, and the Netherlands and Australia are increasing state pension age to 66 by 2020. The United States is already in that position, and Iceland and Norway are now at 67. Under existing legislation, the timetable for the increase to 66 in the UK was not due to be completed for another 15 years, yet the timetable was based on assumptions that are now out of date. The Pensions Act 2007 was based on ONS projections of average life expectancy from 2004. Those projections have subsequently increased by at least a year and a half for men and for women, so the situation is moving apace. That is why we are taking the necessary decision to look again at the timetable for increasing the state pension age. The Bill amends the current state pension age timetable to equalise men’s and women’s state pension ages at 65 in 2018 and then progressively to increase the state pension age to 66 by 2020. This new timetable will reduce pressures on public finances by about £30 billion between 2016-17 and 2025-26.

The impact of the changes on women has been debated enormously, focusing particularly on certain cohorts. All but 12% of those affected will see their state pension age increase by 18 months or less. I recognise that some 1% of those impacted will have a state pension age increase of two years, but it none the less remains the case that those reaching state pension age in 2020 will spend the same amount of time in retirement as expected when the 2007 Act timetable was being drawn up. That is an important factor. There will be no change to the amount of time that they will spend in retirement—some 24 years, on average. In fact, the women who are affected by the maximum increase will still, on average, receive their state pension for two and a half years longer than a man reaching state pension age in the same year.

Fiona Mactaggart (Slough) (Lab): Which of the facts that the Secretary of State has cited was he unaware of 12 and a half months ago, when in the coalition agreement the Government signed up to not introducing these changes before 2020?

Mr Duncan Smith: As a coalition, we are, and continue to be, bound by the agreement. [ Interruption. ] The hon. Lady can shout at me in a second, but let me try to explain. There is a slight problem with that element of the coalition agreement. It was done in that way at the time, and that is fair enough, but we have since looked at it carefully and taken legal advice. The agreement talks about men’s pension age being accelerated to 66, which would breach our legal commitment to equalisation and then not to separating the ages again. There are reasons for needing to revisit that, and we have done so and made changes.

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Rachel Reeves (Leeds West) (Lab): The coalition agreement states that the parties agree to

“hold a review to set the date at which the state pension age starts to rise to 66, although it will not be sooner than 2016 for men and 2020 for women.'”

The Secretary of State’s provisions clearly breach the coalition agreement, so what has changed?

Mr Duncan Smith: With respect, I have just said that there are certain elements that would not be legal. That is all that I am saying. The hon. Lady can go on about this point as much as she likes, but I have answered her. She might not like my answer, but that is the one I have decided to give. The fact that the women who will be affected will remain on the same level of retirement but will be in retirement for two and a half years longer than men is an important feature. I stand by the need to equalise women’s state pension age in 2018.

Joan Walley rose—

Rachel Reeves rose—

Mr Duncan Smith: I give way to the hon. Member for Stoke-on-Trent North (Joan Walley).

Joan Walley: Will it not be 55-year-old women who pay the price? Will the Secretary of State give the House some indication that he will change his policy so as not to discriminate against that cohort of women?

Mr Duncan Smith: It will disappoint the hon. Lady, but I have no plans to do that.

Mrs Eleanor Laing (Epping Forest) (Con): My right hon. Friend is absolutely right in all that he is doing. No one can object to the equalisation of pension ages for men and women when we are fighting so hard for other areas of equality. However, does he recognise that for a particular group of some 300,000 women born in 1954 the transition arrangements are rather more difficult than for any other group in society? Although he should not change his policy, will he look at other ways to help that particular group of women?

Mr Duncan Smith: As I have made clear and will make clear later, the parameters of the Bill are clear and it is my intention to stand by those parameters. The ages will therefore equalise in 2018 and rise together to 66 by 2020. Of course, I am always happy to discuss these issues with colleagues from either side of the House, including those in the coalition. However, I make it absolutely clear that our plan is to press ahead with the Bill as it stands. The ages will therefore rise together to 66 by 2020.

Alok Sharma (Reading West) (Con): Does my right hon. Friend not think that the criticisms from the Opposition are rather rich? In September 2004, the then Secretary of State for Work and Pensions, the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson), told the TUC:

“This Government will not raise the state pension age”,

yet Labour’s Pensions Commission reported in 2005 that the pension age should go up, and in the Pensions Act 2007 the Labour party legislated to increase it for men and women.

Mr Duncan Smith: Indeed; I welcome that comment from my hon. Friend.

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Rachel Reeves: Is the Secretary of State honestly saying that the policy has been changed because of legal advice? If that is the case, will he publish that legal advice today before the winding-up speeches and before we vote? Will he also confirm that this is a breach of the coalition agreement?

Mr Duncan Smith: I do not publish legal advice, but if the hon. Lady reads the coalition agreement, she will see the reasons. I ask her to study it carefully.

I know that the hon. Lady is sincere in what she is saying, but I say one thing to her. She made it clear on the media earlier that it is the Opposition’s policy to move the rise to 66 to 2022 and for it not to start before 2020. That would cost £10 billion. She will presumably have worked that out. Where does she intend to get that £10 billion? We have heard nothing from the Opposition about debt reduction or the financing of future pensions. She should know that her policy would cost £10 billion, and she should consider that important issue.

Rachel Reeves: The Secretary of State rightly acknowledges that we have put forward proposals that would save £20 billion. [Interruption.] Has he looked at whether the increase to 67 could be brought forward, which would take us up to a saving of £30 billion? Can we find a compromise on those proposals, which would not cost women aged 56 and 57 so much money?

Mr Duncan Smith: We agree, then, that the hon. Lady’s proposals would cost us £10 billion. We are on Second Reading, and if she wants to raise the same point or table amendments in Committee, she can do so by all means. The Bill as it stands is exactly as we set out, with equalisation of the age in 2018 and the rise to 66. I have no plans to make any changes to that.

Several hon. Members rose

Mr Duncan Smith: I am going to make a little progress. We have more time, and I will give way to other Members later.

Mr Frank Field: Will the Secretary of State give way on this very point?

Mr Duncan Smith: I wish to make a few points, then I will give way to the right hon. Gentleman again. I think I have been reasonably generous, and I plan to continue to be.

As I said earlier, if we delayed the change as the hon. Member for Leeds West (Rachel Reeves) suggests, it would cost us something in the order of £10 billion. That would be an unfair financial burden, and it would be borne disproportionately by the next generation. In a country in which 11 million of us will live to be 100, we simply cannot go on paying the state pension at an age that was set early in the last century. We have to face up to that, and to the cost and affordability of state pensions, in all the changes that we make.

If the last Government had managed to get re-elected they would be facing much the same decisions. I recognise the need to implement the change fairly and manage the transition smoothly. I hear the specific concern about a relatively small number of women, and I have said that I will consider it. I say to my colleagues that I am willing to work to get the transition right, and we will. Some have called for us to delay the date of equalisation of

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the pension age, but I wish to be clear again that this matter is the challenge of our generation, and we must face it. That is why we are committed to the state pension age being equalised in 2018 and rising to 66 in 2020. That policy is enshrined in the Bill.

Mr James Gray (North Wiltshire) (Con): My right hon. Friend is being fair and sensible in his approach, and we admire his determination in introducing the Bill. I accept the cost of widening the transition period for the 2.5 million women involved, but will he give particular consideration to the small group of 33,000 women born in March 1954, on whom the change will bear down disproportionately harshly? Surely there is a way of finding a transition method that takes account of that small group of women.

Mr Duncan Smith: I repeat that the Bill that we have presented on Second Reading will retain the dates that we announced, but as I said earlier, I will quite happily discuss transitional announcements with anyone who wants to do so. I do not rule out discussions, but we plan to press ahead with the dates that I set out at the beginning of the process.

Mr Frank Field: The Secretary of State keeps insisting that he wishes to be fair, but the country increasingly thinks that he is being unfair to a particular group of women. The Opposition are not saying that his Department should not deliver the savings set out, but we are suggesting that they could be delivered in a different way. If he wishes to treat men and women equally, so that they make an equal sacrifice for the contribution that he has to make to the Exchequer, would it not be fairer to raise the state retirement age for both and women more quickly rather than collect £2 billion from a particular group of women?

Mr Duncan Smith: I think I have already covered that ground. I recognise the right hon. Gentleman’s concern, but I will not repeat what I have already said, because I do not think the House would appreciate that.

Nic Dakin (Scunthorpe) (Lab): I welcome the Secretary of State’s comments about his willingness to consider transitional arrangements. My constituents, the class that left Foxhills comprehensive school in 1970, who were all born in 1953-54, have written to me to ask why the pensions goalposts should be moved twice so close to their retirement. What would he say to those women?

Mr Duncan Smith: The only answer is that, so far, it is seven years away for women. I recognise the concerns, but I have had letters from the public stirred up by a number of people, and the facts have been simply incorrect. I am trying to set out the facts as we see them. The hon. Gentleman may disagree with us, but often people fear that something is going to happen overnight. There is some warning.

Jo Swinson (East Dunbartonshire) (LD): I think there is general acceptance that with increased longevity the pension age needs to be considered, including the current unfair distinction between men and women. However, there is a particular group of women who will be badly affected. I welcome the Secretary of State’s saying that he will consider transitional arrangements. Is he willing

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to consider with an open mind amendments in Committee and on Report, or other solutions that might be brought forward, to help that particular group of women?

Mr Duncan Smith: My hon. Friend tempts me enormously, but she will forgive me if I do not give in to that temptation. Let me simply repeat what I said earlier—it is a bit like a recording, but I shall do it none the less: we have no plans to change equalisation in 2018, or the age of 66 for both men and women in 2020, but we will consider transitional arrangements.

Dame Anne Begg (Aberdeen South) (Lab): Does the Secretary of State accept that some women in the group that we are discussing have already retired or signed early retirement arrangements in the belief that they would receive their state pension when they were 63 or 64? The original equalisation was announced 25 years in advance. For some women, the equalisation that we are considering is only five years ahead. Surely that cannot be right when we are asking people to plan long term for their retirement.

Mr Duncan Smith: I think that the hon. Lady refers to people who have retired early, at around 57, as far as I can tell from her calculations. Other than that, I do not think that there is a huge difference. I recognise what their due would have been, but the change is no different thereafter for all the others. I acknowledge her point—I am sure that we will deal with it when we get into Committee.

Several hon. Members rose

Mr Duncan Smith: I have given way a lot and I am not sure that we are going anywhere new on this. I have repeated myself several times. I will give way once more and leave it at that.

Dr Eilidh Whiteford (Banff and Buchan) (SNP): I want to emphasise the point that the hon. Member for Aberdeen South (Dame Anne Begg) made about people who have already retired. The latest health statistics show that healthy life expectancy for women and men does not necessarily keep pace with actual life expectancy. Many women in their 60s are trying to wind down their working hours because they are in poor health. The key point is not equalisation, but that people have not had time to plan for it. It is a great burden on people in the latter stages of their career who suffer ill health.

Mr Duncan Smith: I fully recognise the hon. Lady’s point. It applies to the whole debate. One could argue that even an extra year’s planning does not allow people time if they are not well. People living longer but being more ill is an issue for the health service—it is already having an impact on the health service. It is a reality—and a good thing—that people are living longer and are able to enjoy their retirement properly. For the most part, they can do that in good health, but I recognise that there are problems for those in poor health.

Mr Watson rose—

Tom Blenkinsop rose—

Mr Duncan Smith: Hon. Members will forgive me if I make some progress. I gave way to the hon. Member for West Bromwich East (Mr Watson) earlier, and, although

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I did not give way to the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), others want to speak, and I must conclude.

All the changes should be put in the context of our recent Green Paper, which set out plans for fundamental reform of the state pension. They include the option for a single-tier state pension, set above the level of the means test, which would provide a decent foundation income in retirement for many of the next generation, who might otherwise be forced to live in poverty. Importantly, that includes many women and self-employed people who have tended to suffer poorer pension outcomes in the past, particularly women with caring responsibilities. The changes will be very beneficial for them. The Bill is therefore only part of the process, but it is critical as we take the necessary steps for the next generation. I believe that those are responsible choices for Britain, but responsible government is not always easy government. It involves commitment, tough decisions and a willingness to stay the course. We will not change from that—we will stay the course. We must try to secure our children’s future. The tough decisions are enshrined in the Bill, which I commend to the House.

5.9 pm

Mr Liam Byrne (Birmingham, Hodge Hill) (Lab): The debate is extremely important and I am glad that the Secretary of State approached his remarks with such care. It is an important debate because our treatment of older people in our country is one of the most important ways in which we judge the health of a society. Those people have made our country what it is today, and, in their retirement, we respect and honour a lifetime’s work.

Frankly, when we came to power in 1997, too few of our older citizens enjoyed either that honour or that respect. Nearly 30% of our pensioners were forced to live in poverty. The state pension had declined from 20% to just 14% of average male earnings. That is why we set about changing that picture with such speed, passion and determination. That is why we lifted 1 million pensioners out of poverty; why we lifted gross income for our pensioners by more than 40%; why we ensured that no pensioner must live on less than £130 a week; why we introduced the winter fuel allowance, free off-peak travel on buses and free TV licences; and why we increased tax thresholds to ensure that 60% of pensioners now pay no tax. We are proud of our record. It is now set out in the Government’s own figures that pensioner poverty in this country is at its lowest level for 30 years.

In dealing with such long-term issues, the House could legitimately have hoped that the Government would have built on those changes in a careful and consensual way. Instead, they have built nothing but confusion. Last Monday, the Secretary of State had to slap down his colleague the noble Lord Freud on whether there should be a cap on benefits; on Wednesday, we had the spectacle of the Prime Minister not knowing the consequences of his own Welfare Reform Bill; and today the Secretary of State has come to the Dispatch Box when this morning’s newspapers are full of stories of how his Bill might be shredded, not in this House but in the very Treasury that pushed him out to walk this plank in the first place. It is U-turns, confusion and

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blunder, and the poor Secretary of State is forced to sit there in the middle as the House of Commons’s very own Captain Chaos.

Nadine Dorries (Mid Bedfordshire) (Con): I thank the shadow Minister for giving way—I almost thanked “the Minister” in a throwback to another day.

Somebody—I am not sure who—left a note saying that all the money had been spent. Does the right hon. Gentleman agree therefore that some measures that we could not have predicted when the previous Administration were in power are now necessary, such as the ones proposed today?

Mr Byrne: Perhaps the hon. Lady would like to reflect on why, just over 12 months ago, the Government whom she is so proud to support set out a policy in direct contradiction to the one proposed in the Bill. I look forward to seeing which way she votes and how she justifies that to her constituents.

This afternoon, we must try to bring some order to that confusion, and establish which clauses we agree on, and which clauses the Government—and, I might say, the Treasury—need to rethink. The Secretary of State began with automatic entitlement, on which there is a measure of agreement—it is a rock that we should hang on to in that regard. The proposal for automatic enrolment of workers into workplace pensions is to be retained, which is important, because as a country, we under-save for pensions. In fact, 7 million could be under-saving for their retirements. Bringing those people into a pension system and creating a national pension scheme into which they might opt could lead to a step-change in savings in this country.

The previous Government were very careful to build that consensus, which we did patiently, beginning with the noble Lord Turner’s commission. I am grateful that the Government have not junked that proposal, but it is deeply regrettable that they are increasing the salary threshold to entitle an individual to auto-enrolment. It is also regrettable that they are introducing a three-month waiting period before people opt in.

I understand the trade-offs that the Secretary of State is trying to make, but frankly, he has made the wrong call. Why? The first reason is that the salary at which someone is automatically enrolled will be raised from £5,000 to nearly £7,500. The impact of that will hit 600,000 people—they will be much less likely to opt in to long-term savings. If the Government raise that threshold in line with the coalition’s ambition to increase the income tax threshold to £10,000, nearly 1 million people will be excluded, three quarters of whom will be women. Their loss, potentially, is £40 million of employer pension contributions.

The Government are proceeding in full knowledge of that. There is no defence of ignorance. Their review states:

“Many or most very low earners are women, who live in households with others with higher earnings and/or receive working tax credits. These may well be exactly the people who should be automatically enrolled.”

Yet the House has been presented today with proposals that could exclude more than 1 million people. We think, therefore, that the earnings threshold should be looked at again. And if that idea was not bad enough, the idea of a three-month waiting period makes it worse

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and in itself could mean 500,000 fewer people enrolling automatically in a pension scheme. The loss to them could be £150 million in employer pension contributions. Put those two things together and the average man or woman could lose nearly three years of pension saving—a 7% reduction in an individual’s fund. I am afraid that we simply cannot support that measure.

That takes me to the most audacious broken promise of the lot—the proposal to single out a group of 500,000 of our fellow citizens, all of them women, and say to them, “You know your plans for the future? Well, you can put them in the bin.” The Secretary of State might think it a relatively small and trivial number, but the Opposition do not.

Ben Gummer (Ipswich) (Con): Will the hon. Gentleman give way?

Mr Byrne: I will in a moment.

This unfolding chaos has been impressive even for a Government who have presided over U-turns on forests, sentencing reform and the reorganisation of the NHS, because we thought we knew where we were. The coalition Government made a wise move in appointing the Pensions Minister to his brief—he is a man who knows a thing or two about pensions. Indeed, in one of his first major speeches, he told his audience:

“I have become known as something of a bore at pensions conferences.”

We have no problem with that. Then we had the coalition agreement. I do not know whether anyone remembers the coalition agreement—it was important once. Page 26 reads:

“We will phase out the default retirement age and hold a review to set the date at which the state pension age starts to rise to 66, although it will not be sooner than 2016 for men and 2020 for women.”

For good measure, the Pensions Minister got to his feet a month or so later and said that the Government were committed to any change not being sooner than 2020 for women. Then, 118 days later, the Chancellor arrives on the scene. He stands at the Dispatch Box and says that

“the state pension age for men and women will reach 66 by 2020.”—[Official Report, 20 October 2010; Vol. 516, c. 956.]

Yet buried in the fine print, we learnt the truth—not the Pensions Minister, the Secretary of State or the Chancellor could bring themselves to that Dispatch Box and actually tell people straight that that policy set out in the coalition agreement was absolutely worthless. The truth was set out in the depths of the spending review, page 69 of which read:

“The State Pension Age will then increase to 66 for both men and women from December 2018 to April 2020.”

That is a promise well and truly broken. At least when the Lib Dems changed their minds about increasing tuition fees, they could pretend that they were just making things up to get elected, but this was a promise they made and broke in government. Just last summer, the Pensions Minister boasted of reforms in the system that he said included

“those who the system has always missed out such as women and the lower paid.”

20 Jun 2011 : Column 56

In his own Department’s review, he said that he wanted to look at the “particular challenge” for

“women pensioners. A group I have long worked for, and who are so often the poor relations in regard to pensions.”

I will let the House draw its own conclusions. One moment the Pensions Minister is offering to protect women pensioners, the next he is presenting proposals that will punish half a million women with a bill for up to £16,000.

Richard Fuller (Bedford) (Con) rose

Mr Byrne: I will give way, and perhaps the hon. Gentleman can explain the Pension Minister’s change of face.

Richard Fuller: The right hon. Gentleman was giving a discourse on integrity in pensions provision under the previous Government, which I think is important, because many of my constituents will be worried about this issue, and will be looking for integrity. He is very good with numbers—it is when he has to add them up that he has trouble—so I am wondering, on the point of integrity, could he answer this question? The Labour party has recommendations for how best to treat the women he is highlighting who are being impacted by the Bill, and those recommendations are costed at £10 billion. In the interest of integrity, will he please advise me and other Members where he would find the money?

Mr Byrne: Can the hon. Gentleman confirm that he has seen the costings given in the parliamentary answer provided by the Pensions Minister on 9 March 2011?

Richard Fuller: I have not seen those costings, so the right hon. Gentleman can enlighten me further.

Mr Byrne: The Minister gave an interesting answer, because those costings say that if, for example, we increased the retirement age to 67 by 2035—that is, if we accelerated the reform by one year—that would save £6.9 billion. However, if the retirement age was increased to 67 by 2034, by accelerating the increase by two years, that would save £13.7 billion. Therefore, the question for us this afternoon is: how much will be saved by accelerating the reform for those women who are now having to retire later, and who therefore confront trying to find all that money magically, in the space of just four or five years? Has that been traded off against other options, such as introducing advances in the retirement age later on? That is the question that we have to get to the bottom of in this Second Reading debate.

Richard Graham (Gloucester) (Con) rose—

Ben Gummer rose—

Richard Fuller rose—

Mr Byrne: I will give way in a moment.

Let us hear what the impact of the Government’s proposals will be, because the Secretary of State rather glided over this point. Some half a million women will receive their state pension at least 12 months later than they had previously been advised, with 300,000 women—those born between December 1953 and October 1954—experiencing a delay of one and a half years. For 33,000 women—those born between 6 March and 5 April 1954—that period increases to two years. For them,

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the loss in state pension will be around £10,000. For those on full pension credit, the loss will be closer to £15,000. Those women, with five years’ notice of the timetable change, have almost no time to prepare for their income loss.

Harriett Baldwin (West Worcestershire) (Con): Will the right hon. Gentleman give way?

Mr Byrne: In a moment.

We are talking about women in the age group that was asked by a Conservative Government in 1995 to set in train the equalisation of the state pension, a reform that we accepted, because it came with time to plan. However, that cannot be said of today’s proposal. This morning, Age UK warned that

“a sizeable minority are not even aware of the 1995 changes with nearly a fifth expecting to receive their State Pension at the age of 60.”

The Secretary of State’s proposals will now make that worse.

Richard Graham rose—

Harriett Baldwin rose—

Fiona Mactaggart rose—

Mr Byrne: I will give way to my hon. Friend the Member for Slough (Fiona Mactaggart), then I will give way to Government Members.

Fiona Mactaggart: I heard the Secretary of State refer in his speech today to legal advice that said that the Government could not keep to their original proposals in the coalition agreement. He did not make the House aware of why the Government cannot legally do what they originally intended, so has he made my right hon. Friend aware of why that is?

Mr Byrne: My hon. Friend makes an extremely good point, because I think that that was news to the House. We would certainly expect that legal guidance to be published before we get to the Minister’s winding-up speech. That guidance is a material point in a debate that is important to many people, as well as many right hon. and hon. Members, because this Bill has such a poor effect on women in this country—the people we represent.

Richard Graham rose—

Harriett Baldwin rose—

Mr Byrne: In two minutes.

Michelle Mitchell, the charity director of Age UK, has said that

“it’s difficult to see how women can plan properly when the government keeps moving the state pension age goalposts”.

The director general of Saga has said that

“to make just one cohort of women bear all the brunt of this in the very short-term will undermine the concept of planning for retirement over the long-term and cause real distress to the responsible women who have made careful financial retirement plans.”

Can hon. Members tell me how this can possibly be justified?

Harriett Baldwin: I thank the right hon. Gentleman for finally giving way. I speak with a lot of interest in this matter, as a woman in her 50s—[Hon. Members:

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“Surely not!”]—I know, shocking isn’t it?—who has seen her pension age increase, first by five years and now by a further year. However, does he accept that there is an issue with rising longevity and that we therefore need to push forward the retirement age of women such as myself?

Mr Byrne: Of course. The hon. Lady makes an extremely fair point, and that is why, after the Turner commission met and the Pensions Act 2007 went through this House, a clear timetable was set for how the state pension age should increase. [ Interruption. ] The Secretary of State is muttering from a sedentary position about how the longevity assumptions have now been increased. That is perfectly fair, and we should have a national debate about how the state pension age should be brought forward; indeed, the Pensions Minister has issued a consultation. It is just a shame that it closes on Friday, after this debate is concluded.

Richard Graham: The right hon. Gentleman made two comments about how the Bill treats women. He estimated that the cost of the changes to some women would be £10,000. Does he not recognise, however, that the change in the value of the basic state pension as a result of this Government’s commitment to linking it back to earnings will be worth more than £15,000? Will he also acknowledge that, as a result of the new flat-rate basic state pension being applied, a lot of women who would previously have lost out because of their caring responsibilities will now benefit hugely? Does he not agree that women will benefit from the changes in the basic state pension in those two ways?

Mr Byrne: Let us take the hon. Gentleman’s second point first. I understand that the proposal for a flat-rate pension is included in a Green Paper. It is therefore an early statement of the direction of Government policy. Given what the Government have managed to do to commitments in their coalition agreement, I am not sure how much water that proposal holds. The hon. Gentleman’s first point was more interesting, because he was comparing the benefit for someone on a pension under the lock introduced by the Government with a pension that is linked to prices. Going into the election, no party proposed to keep the pension linked to prices, so his calculation is purely fanciful. Indeed, the Pensions Commission said that we should re-link pensions to earnings in 2012. That was in our manifesto, and that is what we would have done if and when we were returned to office. I am afraid that the hon. Gentleman cannot make up fantasy numbers comparing the reality—

Richard Graham: The right hon. Gentleman is generous to give way again but, with all due respect to him, I am comparing the fact of what was delivered by one Government over 13 years with the fact of what has been delivered by this new Government within one year. The Gloucestershire Pensioners Forum, which was created by members of his own party precisely to campaign against the de-linkage made by the late Mrs Thatcher when she was Prime Minister—[Hon. Members: “She is still alive.”] Indeed she is. I meant to say “the former Prime Minister”. The Gloucestershire Pensioners Forum has now fully recognised the value of re-linkage, which this Government will introduce. It is a shame that the right hon. Gentleman does not recognise these facts.

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Mr Byrne: I am glad to hear that correction about Baroness Thatcher. I think that the hon. Gentleman would also accept his Government’s own figures, which show that pensioner poverty is now at its lowest level for 30 years. I am sure that he would accept that pensioner incomes increased faster than gross domestic product and faster than earnings over the past 13 years. That is why we are proud of our record of delivering on pensions.

Ben Gummer: In response to an intervention by the hon. Member for Slough (Fiona Mactaggart), the right hon. Gentleman said that the legal advice was news to him. It was not news to the House of Lords, however, as it was debated there on 15 February, at which point this matter was raised. Surely the real news appeared in the weekend’s newspapers, which have provided yet another bandwagon for the right hon. Member to jump on.

Mr Byrne: I do not know how much attention the hon. Gentleman has been paying to this debate, but we championed this issue before it came to the House of Lords and as it went through the other place. We will champion it through the House of Commons as well, until this bad Bill has been thrown out.

Mr Alan Reid (Argyll and Bute) (LD): I agree that, for a small group of women, the Bill is unfair. However, I was pleased that the Secretary of State said that he would be happy to look at transitional arrangements. The right hon. Gentleman has been very good at criticising the Government, but will he please tell the House what the Labour party’s plans are?

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

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

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

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

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he told the House on 10 March,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

This is a Second Reading debate. We are supposed to be debating the principles of the Bill and we are then asked to vote on those principles. We are being asked to do this when it is perfectly clear that the Government no longer believe in the Bill. We are privy to reports in the newspapers that the Government might be working on another U-turn. I am not sure whether it is Conservative

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or Liberal Democrat Members who are behind it, although I know who will claim the credit. The Secretary of State told the

Financial Times

today that there are “issues and concerns” that need sorting out, while senior Ministers, says the

Daily Mail


“are telling the Chancellor he must think again.”

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

The Minister of State, Department for Work and Pensions (Steve Webb): It is unclear whether the right hon. Gentleman is going to vote against Second Reading—he has not said so yet. On the assumption that he is, he would have to find not just the £10 billion that his hon. Friends want to raise, but the £30 billion that this Bill saves. Where will he find £30 billion when all the money is gone?

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

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

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

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

Several hon. Members rose

Mr Deputy Speaker (Mr Nigel Evans): Order. As Members can see, this is a popular debate. Although I am not introducing a time limit at this point, if Members do not exercise restraint themselves, one will be introduced.

5.36 pm

Jonathan Evans (Cardiff North) (Con): Let me begin by drawing the House’s attention to the Register of Members’ Financial Interests, which shows my connections with the pensions industry over many years.

As you know, Mr Deputy Speaker, you and I entered the House on the same day back in 1992, but this is the first opportunity that I have had to observe the right

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hon. Member for Birmingham, Hodge Hill (Mr Byrne) in full flow. I have often wondered how he managed to reach such an elevated position in Government in such a short time, and having listened to him today, I am still wondering.

I was staggered by the right hon. Gentleman’s opening remarks, in which he said how proud he was of his Government’s record on pensions. Is he utterly unaware of the destruction of the private pensions system in our country wrought by his former leader, and of the revelation that when the Labour Government were elected in 1997, the National Association of Pension Funds said that the end of dividend tax credit would mean the end of at least half the defined benefit schemes in our country? In fact, we have seen much more than that brought about as a direct result of the Labour Government’s policy. I believe that it was forecast to cost our private pensions system at least £50 billion. Is the right hon. Gentleman proud of the fact that under a Labour Government a record number of pension funds closed to new business? Is he proud of the record of a Labour Government who gave pensioners an increase of merely pence? I can tell him that people in my constituency remember that event.

Sheila Gilmore: Will the hon. Gentleman give way?

Jonathan Evans: I will in a moment—unlike the right hon. Member for Birmingham, Hodge Hill, who was not prepared to hear these remarks from me.

Two years ago, the state earnings-related pension scheme was not increased by even one penny by the Labour Government. That is an illustration of how much we can trust Labour on pensions.

Sheila Gilmore: Government Members constantly raise the subject of the 75p pension increase. It is not necessarily a choice that I would have made, but it is the choice that the Labour Government made at the time. The hon. Gentleman should bear in mind that that increase was introduced during the first couple of years of that Labour Government, when they were following Conservative financial rules.

Jonathan Evans: I am trying to get my head around the idea of Tony Blair standing at the Dispatch Box and taking his instructions from my right hon. Friend the Member for Richmond (Yorks) (Mr Hague). It is a little bit too difficult for me to accept.

I think it important for us to recognise real concerns that have been raised throughout the country. All Members of Parliament have received many letters, e-mails and other representations relating specifically to the proposals to increase the age at which the state pension kicks in and the impact that that will have on a number of people, not least women.

Mrs Anne Main (St Albans) (Con): Before my hon. Friend moved on from his powerful previous argument, I wish he had remembered to add to his list the discreditable way Equitable Life victims were treated. Their pension shortfall dilemmas were kicked into the long grass for many years.

Jonathan Evans: I am grateful to my hon. Friend for making that observation, but I hope she will forgive me for not going down that road. If we were to do so there

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would be no time left for the debate in hand, because we would all be pointing out the many Labour shortcomings on pensions.

There has been a lot of misinformation about the proposals we are debating. I listened to a staggering example of that at 9.30 this morning on Sky News, when the otherwise excellent Charlotte Hawkins said that today we were going to vote on a proposal to make women work a further five years before receiving their pensions. It amazed me that that could be said; I am sure it must have been a slip of the tongue. Later, I opened my e-mails and came across a letter from a lady who will be required to wait a further two months as a result of these proposals, but who stated that she believed she will have to wait a further six years. That highlights the exaggerations, and in some cases the dishonesty, in the campaign that has been waged against the proposals.

Harriett Baldwin: Did my hon. Friend also see last week’s Age UK survey, which found that 20% of the women affected by the previous Government’s changes to equalise the pension ages of men and women had not realised what was going to happen to them?

Jonathan Evans: Indeed, and one of the difficulties in this regard is to do with the first change, to which almost all e-mails refer: that women were getting the pension at 60 and that that is now gradually being moved up to 65. The right hon. Member for Birmingham, Hodge Hill referred to his family being affected. Well, my wife is affected by these changes, but we in this House were aware of them because we legislated for them in 1995. [Interruption.] Yes, we have known about them, but we have known about them only here, because there has not been much dissemination of this information outside the Chamber to the rest of the public. [Interruption.] I am grateful to the hon. Member for Slough (Fiona Mactaggart) for indicating that that is so. The idea that the retirement age might then be moved up to 66 is not new. It was debated in this House back in 2007, and legislation was put on to the statute book. What we are doing now is moving the first of these dates forward, and in my view that is necessary. It is perfectly clear that a significant saving will be made.

The Secretary of State made a typically sensitive address, which was well received on both sides of the House, and not only because he said he was prepared to listen. I am staggered that any Minister who says they are prepared to listen to an argument is treated with contempt from the Opposition Benches. [Interruption.] Absolutely: it is an indication of what Labour Members were used to when their party was in government. I commend my right hon. Friend on his approach, however, and I am impressed by the sum of £30 billion.

The Opposition propose that we should not take these steps for a while, and that we should instead return to a 2020 or 2022 timetable. The argument that everything the Government do is being done too fast is a familiar Opposition refrain. It in effect suggests that we can somehow just pass the responsibility on to succeeding generations and not grasp it ourselves. I think we must grasp it ourselves, but that does not mean

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I am unsympathetic to the arguments about that specific cohort of women who are affected in a particularly negative way.

I know there were debates on these measures in the other place, but I am not persuaded that we must defer taking them to beyond 2020. I am not going to talk about the implications of the equality legislation so often supported by Opposition Members, even though that may have led to a situation whereby what was stated in the coalition agreement cannot now be put into effect. However, what I am certainly uncomfortable about is any woman having to wait more than an additional year. My right hon. Friend the Secretary of State will be aware that Sally Greengross—Baroness Greengross, a Cross Bencher widely respected in this area—put forward a compromise proposal that has much merit, based as it is on the idea that no woman waits for more than a year. The restriction was limited in that way, and the measure was exceptionally intelligently crafted.

I have read Lord Freud’s responses to this debate. He said that the proposal would cost not £10 billion, as the Opposition suggest, but only £2 billion. Given that I want to husband public resources—and that we apparently have the Opposition’s support for shifting retirement ages forward from 2034 and 2044 to dates that are significantly earlier, saving perhaps £2 billion—I am much more attracted to the idea of matching that saving and making far greater savings elsewhere.

Lord Freud responded to the debate by pointing out the gender equality legislation—the equality provisions of European law—that might make this a difficult proposition. However, I am not persuaded that my right hon. Friend the Secretary of State’s Department lacks minds sufficiently sharp to overcome this difficulty. [Interruption.] Yes, I am absolutely sure that the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), could draft the legislation required; but if not, he has all the necessary skill within his Department.

I am very happy to tell all of my constituents who have written to me on this issue that, because of what is happening with longevity, it is fair, if we are asking men to wait a further year, to ask women to wait another year. There are those who say it is a double whammy because we are also seeing equalisation from the age of 60, but that is already a part of the architecture and cannot be taken into account. I am certainly prepared to argue that case.

I want to make two final points that are connected not with this issue but with other aspects of the Bill. In it, adjustments are made to the financial assistance scheme. Many of my constituents have been affected by the collapse of Allied Steel and Wire. On the question of the general attitude of Labour toward pensioners, many of ASW’s pensioners know the “assistance” they got from Labour: none whatsoever. That is the reality. However, the truth is that, under the financial assistance scheme, many people are not even going to get the 90% that was flagged up as their likely reimbursement. I hope we get opportunities to address that issue. I am looking across at my hon. Friend the Member for Arfon (Hywel Williams)—I do not know whether I should call him my hon. Friend; he might be offended by that. My hon. colleague and I have discussed this issue, and it is

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important that we return to it to address some of the injustices in the operation of the financial assistance scheme as it affects ASW pensioners.

Malcolm Wicks: Will the hon. Gentleman give way?

Jonathan Evans: On that issue only, yes.

Malcolm Wicks: Will the hon. Gentleman at least acknowledge, in fairness, that it was the last Labour Government who set up both the financial assistance scheme and the pension protection fund, which, whatever the difficulties, have helped many tens of thousands of people who were going to lose their pensions?

Jonathan Evans: The right hon. Gentleman and I have known each other for many years and he knows I have the highest respect for him. I certainly accept that we eventually ended up with that legislation, but it took a long time to get there. However, he was material in trying to achieve that.

Let me also say a word about the effects of auto-enrolment. I was staggered to hear the right hon. Member for Birmingham, Hodge Hill tell us that he does not like the proposals on auto-enrolment. I have to say that I am concerned about the impact of our continually increasing the personal allowance—as I understand it, that is going to be part of our policy—if we are just going to link the personal allowance figure to the level at which auto-enrolment kicks in. I am reassured by what my right hon. Friend the Secretary of State says about keeping this under review, but the movement from £5,000 to £7,000 is not, as described by the right hon. Member for Birmingham, Hodge Hill, an attack on poorer workers. The reality, on the information that we have, is that those people would be worse off if they were within the scheme.

Mr Duncan Smith: May I tempt my hon. Friend with a thought about why the right hon. Member for Birmingham, Hodge Hill made such an issue of this? I wondered whether he was searching for a reason to vote against the very policy that his Government, when in power, wanted to bring in, because there is nothing else in it with which Labour disagree.

Jonathan Evans: I am aware that the Forum of Private Business does not like the fact that the Government have not made more adjustments in this area, and of course the Government would like to have a situation in which all parties were on board at the end of the review, but the proposal of the right hon. Member for Birmingham, Hodge Hill has virtually no supporters, save perhaps for those within the union movement—surprise, surprise. The reality is that the proposals we are taking forward are overdue, but there has been too much misinformation about this change. Ultimately, I want to see a situation in which no woman has to wait more than a year longer than she had expected to wait, but the linking of that issue with a 25-year lead-in to the equalisation of pensions at 65 by those engaged in this campaign has been deliberately misleading and has not served the interests of all the people who have written to us.

Mr Deputy Speaker (Mr Nigel Evans): Thank you for your time constraint.

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5.51 pm

Dame Anne Begg (Aberdeen South) (Lab): It is a pleasure to follow the hon. Member for Cardiff North (Jonathan Evans), but I will disagree with quite a bit of what he said.

I am disappointed about the change in the financial assistance scheme from the retail prices index to the consumer prices index, particularly in relation to Richards Textile factory in Aberdeen, which went bust with the collapse of its pension scheme. Although the very hard work of many Labour Back Benchers ensured that those pensioners did not lose all their money, they still feel aggrieved that they do not have the same cover as those who subsequently entered the pension protection fund and that they do not get quite as much as those covered by it.

Let me start by saying which parts of the Bill I agree with to show that not everything in it is bad, although quite a lot is. I agree wholeheartedly with the lifting of the default retirement age and I only wish that my Government had done that. I have a friend who has been told by his employer that he has to retire at 65 and he does not want to, but unfortunately his birthday falls on the wrong side of the divide.

I am also very glad that the Government are going ahead with the national employment savings trust. There was a bit of worry at the time of the election that some people in business who were not too keen on it, particularly on auto-enrolment, might put pressure on the coalition Government, who I am glad resisted. NEST is certainly the way forward for occupational pensions, to ensure that there is pension cover for everyone and that most people will not have to depend on the basic state pension as their sole income in retirement. That is very important.

I also agree with the proposal to bring auto-enrolment forward to July 2012 for large companies. If they are ready to go, the sooner the scheme gets up and running the better and the sooner it is tested the better, because part of the reason for rolling out auto-enrolment is to test how it works in practice.

So those things are all good, but that is as far as that goes and there are issues of concern. Like my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne), I am concerned about the lifting of the auto-enrolment earnings threshold by £2,500. I tried to intervene about this early in the Secretary of State’s speech, but lots of other people were jumping up and down at the time. The problem is that low earners might not always be low earners. Auto-enrolment is important in getting people into the scheme as soon as possible and in ensuring that even low earners are enrolled in a pension scheme. If those people continue to earn similar amounts for the rest of their working life, the scheme might not have the returns that they would expect, but no one knows, at the start of their working life, what their eventual earnings will be and we should always err on the side of caution in ensuring that people enrol. The raising of the threshold could result in about 600,000 people not being enrolled who otherwise would have been. It has been said that those people could opt in, but it is highly unlikely that many people on such low incomes would do so. If the Government introduced a foundation pension or a pension for the state, which the Secretary of State put into context, the scheme would make a difference for people making such low contributions.

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Even someone earning just over £5,000 a year could make a valuable contribution to their eventual occupational pension.

I worry about that issue and I worry when I hear that the threshold might go up to £10,000 or more in future, because the whole point of auto-enrolment and of NEST was to make things easy, to make belonging to an occupational pension fund a no-brainer and to ensure that everyone who was in work would automatically pay into an occupational fund. People who are not auto-enrolled and who are not in the pension fund will lose out on the employers’ contributions as well, so they will lose out not only on their potential pension earnings towards the end of their life but on what we often think of as deferred wages in the employers’ contribution.

I am also concerned about the introduction of the three-month wait, for many of the same reasons I have just given. The shadow Secretary of State has already made the arguments, which are important to remember.

All those issues could probably have been swallowed if they had been the only things we were concerned about, but the big sticking point in the Bill, which I suspect most Members will be talking about this afternoon, is the acceleration of the state pension age, particularly the anomaly that hits the 500,000 women who at very short notice will have to wait more than a year for their pension. I wonder whether the Government have analysed exactly who will lose out as a result of the measures and which women will not be in work at the age of 66, when they get their state pension. The figure of £10 billion has been bandied around for how much it would cost not to go ahead with the proposal, but I suspect that is a gross figure. I do not know whether the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), has any idea how much the welfare bill will go up as a result of people’s falling out of work before they reach the age of 66.

I agree that it is right that the state pension age should rise and indeed inevitable that it will rise, and I accept that there are issues to do with longevity, but I am concerned that we are potentially creating not the pensioner poor but a group of people who become the new poor because they have fallen out of work in the last years of their working life and are struggling to get by on benefits. It is not good enough for the pensions Minister to say that for anyone who falls out of work before reaching the state pension age and who does not have a pension they can draw early, there is always jobseeker’s allowance or employment and support allowance. The contributory element of JSA lasts only six months and the Government propose that the contributory element of ESA will last only a year. Nowadays, women expect to have their own wages, but their qualifying for income-related JSA or ESA will depend on the household income and whether they have a working partner. For many women, that misses the point. Quite a few women in my constituency say, “I’ve only got a pension of £1 a week.” What they mean is that they have 60% of their husband’s pension and £1 a week on top of that, but they still see that £1 a week as their pension and they feel very aggrieved about that.

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Dr Whiteford: Does the hon. Lady share my concern that the healthy life expectancy for men in Scotland is currently 60 years and for women is 62 years? In that context, a dramatic increase in the pension age for those people is simply displacing on to the benefit system the burden that will have to be met.

Dame Anne Begg: Indeed. The hon. Lady says more eloquently what I was trying to say about displacing people out of pension age into the working age poor. There is nothing to be gained for those people if all we are doing is delaying when they get their state pension. There will be the odd situation that when people retire, their income will go up, rather than people being able to work until they reach retirement age.

Pamela Nash (Airdrie and Shotts) (Lab): Does my hon. Friend agree that, as we are coming out of carers week, the Government should remember the 37% of women affected by the state pension age increase who will not be in the work force in the last years of their working lives, as the Government call it, and who have responsibilities caring for an elderly or ill relative or for their own grandchildren? They will be among those who suffer most as a result of the increase.

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

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

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

Dame Anne Begg: So those women will still have to have the 30 years of credits, but in respect of the SERPS element they will be the winners. But for every winner in all these changes, there will inevitably be losers, and there will be those who have paid their SERPS all their working life, including women who have paid the big stamp but not the small stamp. They are the ones who often feel aggrieved. As the Minister knows, pensions

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policy is a minefield covered in all those booby traps. As soon as one presses down on one thing, another pops up, making it all very difficult.

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

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

Duncan Hames (Chippenham) (LD): In her intervention, the Chair of the Select Committee made the excellent point that some of the women we are talking about have already left the labour market, having taken early retirement. Does she agree that the Government have a special responsibility to those former Government employees who they persuaded to take early retirement instead of a redundancy option and who now find that they will not have access to a state pension as part of the plans that they would have made when deciding to leave their employment as civil servants?

Dame Anne Begg: I could not agree more. It is imperative that we get that sorted out now. I am sure that other local authorities will not be any different from my local authority, which knows that cuts are coming. My local authority managed to have a funding black hole of £25 million. Before there was any economic disaster in any other part of the world, it happened in Aberdeen. I will not talk about that being a Liberal Democrat council, but it was. That has resulted in large numbers of local authority employees—not only women, but predominantly women—being offered early retirement, which councils have been encouraging their employees to take because they do not want to go down the route of compulsory redundancies.

People have been signing up and are still signing up for early retirement without the full knowledge that what they are signing up for is a lower pension that will not be supplemented with the basic state pension when they reach the age of 63 or 64, as they thought it would be. In some cases, they may have to wait another two years. Their entire financial planning was based on the expectation that they would get whatever the basic state pension would be at that time. It is £105 now, so it will be more than that, and the flat rate pension may have come in. They were expecting at least another £100 a week in the income that they have worked out they will need to survive.

The short notice is the injustice. The Government must look at this again. They cannot leave out this group of women, who did not have the chance to build up their pension protection but who took on the burden of care in the community, saving the Government billions of pounds. The same group of women have had to fight many of the equality battles, yet it is being hardest hit,

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and it cannot be right that, because of the acceleration, the Government are making them pay the price not of deficit reduction—according to the coalition, the proposals will not apply until after the deficit is meant to have gone—but of the longevity of other groups.

I accept the Secretary of State’s point that the coalition Government discovered that their proposed acceleration was illegal. It would probably be illegal under European law because the Government had already said that they would equalise the pension age of men and women. That makes me wonder what else in the coalition document might be illegal. Has someone been through it with a fine-toothed comb? If that was such a glaring error, have others sneaked into the coalition agreement, or was it just this issue where someone failed to notice that signing up for the equalisation of the state pension age might not be fulfilled by the words of the coalition document?

I will vote against the Bill because it fails on the basic principle of fairness, and in pensions policy fairness is all. When those now sitting on the Government Benches were in opposition, fairness was all they talked about. The previous Labour Government went a long way in introducing fairness into the pensions system. Pension credit was certainly a revolutionary policy that lifted many pensioners out of poverty and transformed the incomes of many pensioners, who saw their incomes double when Labour was in power. Fairness must be at the heart of pensions policy, but the Bill does not pass the fairness criterion.

6.10 pm

Jenny Willott (Cardiff Central) (LD): The Bill has been somewhat hijacked by the women’s pension age issue, but as the hon. Member for Aberdeen South (Dame Anne Begg) has said, there is much in it that is very good and extremely uncontroversial. There are other proposals that are good, but which some people find controversial, such as those on judges’ pensions. Funnily enough, a number of speakers in the other place became extremely worked up about that. As the Secretary of State said, judges currently make no contributions to their pensions. The only thing they contribute to is survivors’ benefit, for which they pay the princely sum of 2.4% or 1.8% of their salary, depending on the scheme, but they get an extremely generous pension at the end of it. I understand that one in six judges draws a pension of more than £67,000 a year, which puts them in the top 0.01% of pensioners, as the employer contribution is around one third of the salaries. The hon. Lady has just said that fairness is all in pensions, but clearly that does not seem fair to an awful lot of people. At a time of great debate on public sector pensions, there is no reason for judges to be exempt from reform. There seems to be a clear consensus in this place, if not in the other place, that that needs to be tackled as soon as possible.

I also welcome much of the rest of the Bill. The introduction and simplification of many of the opt-out arrangements is really important. The hon. Member for Aberdeen South and I were members of the Work and Pensions Committee in the previous Parliament and did a lot of work on the arrangements for the National Employment Savings Trust and how to ensure that people on low incomes are encouraged and supported to save for retirement. Like her, I welcome many of the

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Bill’s proposals and think that it is really important that the measures are being introduced. Hopefully, the tweaks will overcome some of the problems identified during the passage of the Pensions Act 2007, which most people supported. Many of the concerns that were raised related primarily to small businesses and those on the lowest incomes and are covered by the Bill.

I am also glad that the Bill will set up a system that will make it easier for people on low incomes to save, because that has been a problem for far too long in this country and needs to be tackled. Although the level of means-testing is still an issue and therefore for some of those on the very lowest incomes, as employers will also contribute to pensions, it will be more worth while under the system in the Bill and the previous Act for more people to save.

However, like the hon. Member for Aberdeen South, I am afraid that I will do what I am sure everyone in the debate will do and raise the concerns about the proposals on the women’s state pension age. I am sure that you, Madam Deputy Speaker, will be sick to the back teeth of people complaining about the women’s state pension age by the end of the debate, as I am sure will the Minister. [ Interruption. ] You are far too charitable, Madam Deputy Speaker.

I agree with the Government that the state pension age needs to rise. In 1970, someone retiring at age 60 could expect to live a further 18 years. Last year, the figure was 28 years. There has clearly been a significant change in demographics in this country, which has to be reflected in our pensions system. We cannot expect people to work until they drop, but the more time they spend in retirement, the more strain that puts on the public purse.

That issue goes hand in hand with pensioner poverty. The right hon. Member for Birmingham, Hodge Hill (Mr Byrne), who is no longer in his place, talked about the progress he felt the previous Government had made on pensioner poverty. Progress was made, but last year there were still 2 million people of pension age living in poverty, which is unbelievably high for a rich country such as the UK and a disgrace. Unless we seriously overhaul the pensions system, pensioner poverty will continue to be a problem. The longer people live, the less an occupational pension is likely to pay out, for those who are lucky to have them, and the longer they will have to live in poverty after they retire.

We must invest in the state pension in order to tackle pensioner poverty, which is one reason that I welcome the steps that the Government have already taken to bring in the triple lock, which has been a Liberal Democrat policy for a number of years. By linking the basic state pension to earnings and instituting the triple lock, pensioners will hopefully take home £15,000 more over the course of their retirement than they would have done under the previous Government’s policies. That will start to make a difference to levels of pensioner poverty.

What I think will really make a difference is the Pensions Minister’s plan for a flat-rate pension, if and when he is able to introduce that and work it through the House. As has been announced, the plan is for all pensioners with contributions of more than 30 years to receive a flat-rate pension of around £140 a week,

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uprated by inflation, from 2016. For many people, particularly women in the cohort which has been referred to today, that would be a significantly higher basic state pension than they currently receive. There is particular concern about those women, many of whom do not have private savings and do not necessarily have a full contributions record, as we have discussed in relation to the state second pension. The people who are likely to be penalised by the rising state pension age will benefit significantly from the introduction of a flat-rate pension.

We should not be trying to tackle pensioner poverty simply by increasing the burden on those in society who are working. Wages are flat at the moment and prices are rising, and the Secretary of State has laid out the change in the ratio of pensioners to working people in the population. We need to do something more fundamental. We need to create a sustainable way of managing our ageing population, rather than continually increasing the demands on taxpayers. The Turner commission and the 2007 legislation accepted the premise that, as longevity increases, so the state pension age must rise, but we have now learned from the most recent figures that the situation has changed even more than was understood when the commission carried out its work. We need to take that into account if we are to have a sustainable pension scheme that people can trust for the long term. The Government are right to look at raising the state pension age, and if the flat-rate pension is introduced in 2016, although hundreds of thousands of women will have to work longer, they will get a better pension in the end, which is a trade-off that many will feel is worth it.

As many Members have mentioned today, it is the cohort of women born in 1953 and 1954 who will feel the greatest impact of the change, particularly the 33,000 born in March 1954, who will have to work two years longer. Like other Members, I do not believe that the plans currently laid out are fair for those women. People need time to plan for their retirement, as the hon. Lady for Aberdeen South said. A number of Members have said that those women will have five years’ notice, but my understanding is that it will be seven years before facing the situation, so I would be grateful if the Minister clarified that. Seven years is not a very long time in which to plan whether to work for another two years. In order to keep the public support that we need for such long-term plans, pensions must have full support across this House and among the public as a whole.

Stephen Lloyd (Eastbourne) (LD): I concur with every single word that my hon. Friend says. Owing to the difficult decisions that the coalition Government are making on the economy, I am confident that, by 2018, 2019, 2020, the challenges will have been met and the Government will be able to listen to Back Benchers from all parts of the House and move the change back to 2020. The difficult decisions that will have been made by then will mean that the economy is ready and able to sustain such a move.

Jenny Willott: I thank my hon. Friend for his intervention, and it will be interesting to hear what the Minister says to that when he sums up the debate. I am sure that during the debate several suggestions will be made on how to tackle the issue, and that is one.

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The changes have to feel fair, but the current proposals do not. The hon. Member for Aberdeen South said that fairness is extremely important, and as the Pensions Minister has said it is extremely important that the basic state pension, whatever its structure, has to feel fair, because it has to last a long time and be free from arbitrary political intervention. The current proposals, however, do not pass the fairness test.

Mrs Main: The hon. Lady, who is making a powerful speech, seems, like me, to agree with an awful lot of the very good that is in the Bill, and it would be a shame to ditch the baby with the bathwater, as Opposition Members plan to do tonight. My hon. Friend the Member for Cardiff North (Jonathan Evans) has come up with an interesting proposal, and her hon. Friend the Member for Eastbourne (Stephen Lloyd) has just come up with one as well. Does she agree that Second Reading is the time to do so and to take such ideas into Committee? Like me, the hon. Lady will, I hope, have been encouraged by the sympathetic noises from Government Front Benchers, who are listening to the sensitive arguments from Government Members.

Jenny Willott: I absolutely agree. As the hon. Lady says, the point of Second Reading is that we have the opportunity to air a whole load of different options and concerns about the Bill, and as she says also, there have already been a couple of proposals for tackling the issue. I am sure that we will hear more as the debate goes on.

I completely agree that the Bill contains a huge amount that is valuable and important, so I am concerned about the Opposition saying that they will vote against it as a whole. Our constituents, living in our local communities, will be disappointed that the Opposition have taken that approach to the legislation and are not prepared to give a Second Reading to its positive elements.

Dame Anne Begg: I am sure that the hon. Lady received a large number of e-mails and letters from her constituents who are affected by this particular anomaly. Did any one of them say that she should vote for the Bill, or did they all encourage her to vote against it?

Jenny Willott: To be honest, I cannot remember whether anybody asked me to vote against the Bill. Most writers of the letters and e-mails that I have received raised concerns about the particular proposal in the Bill, and I agree with them. As I have already said, I share their concerns and have issues with what is proposed, but the whole point of Second Reading is that we have the opportunity to raise our concerns and to send the Bill into Committee, where people will be able to go through it clause by clause, to debate what the alternative may be and to have a chance really to scrutinise it. Today’s debate is not the time just to chuck it away.

Dame Anne Begg: If there are no changes in Committee and the Bill returns to the Floor of the House in the same position as it is in today, will the hon. Lady vote against it?

Jenny Willott: I cannot possibly say what I will do at that stage, because we do not know what shape the Bill will be in. I put the Bill in the safe hands—I am

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sure—of the Pensions Minister and of colleagues from all parts of the House, who will be able to look at it, try to refine it and send it back to us in the best possible shape. At that point, like all hon. Members, I will be able to decide whether to support it in its entirety.

Sheila Gilmore: If the hon. Lady or other Members table an amendment in Committee on the issues that she says she is concerned about, will she vote for them, as she did not when the Welfare Reform Bill was in Committee?

Jenny Willott: We have no idea who will be on the Committee for the Bill before us, so I cannot possibly comment on what amendments might or might not be tabled or on who might or might not support them.

The Government should, however, think again about these plans and find a way to make them fairer for the worst affected women. We have already heard a number of proposals, and I was pleased that the Secretary of State made it clear that he is open-minded and willing to listen to what options there are. It was important for us to hear that this afternoon.

Annette Brooke (Mid Dorset and North Poole) (LD): I concur with my hon. Friend. The importance of today is that the strength of feeling about this one aspect of the Bill is aired, that Ministers convey the feeling that there will be a response and, most importantly, that there is a response that makes this part of the Bill fair.

Jenny Willott: I agree. My hon. Friend has spoken in the House in recent weeks on the issue and on her concerns about its fairness, and I am sure that Ministers are listening and taking that message on board.

I appreciate that this is a difficult and costly area in which to make any changes. The figures are mind-boggling, and a few months here and there will make a significant difference to the cost, but it cannot be beyond the wit of man to find a way to smooth the process in order to ensure that that small group of women does not end up being so badly affected. I have every faith in the Government and, in particular, in the Pensions Minister, who is generally regarded as one of the UK’s foremost experts on pensions. He has done a huge amount of work in the past on women’s pensions, helping thousands of women to get the money to which they are entitled, so I put him on notice today that I trust him to resolve the issue. I am sure that, if he cannot do it, nobody can.

6.26 pm

Hywel Williams (Arfon) (PC): The upshot of the Bill is that many people will have to work longer than they expected, and at short notice. That is the point. People will have made their plans, but they will no doubt have to be changed if the Bill goes through.

I am sure the Minister knows better than I that pension planning is a long-term business, and that is why there is such value in cross-party consensus, in stability, in fairness and in any change being slow and clear. Those are, I think, the Pensions Minister’s own views, and that is one reason why there have been constant problems since a previous Conservative Government broke the consensus on pensions almost 30 years ago—a consensus that the Turner changes in the 2007 Act re-established to an extent.

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I, too, have received a lot of correspondence, with constituents and others expressing lots of concern at what they see arising from the Bill as a sudden change, which, they also contend, does not have broad support across the parties or among people throughout the UK. Some see the change as a fundamental break in the social contract between government and people, while others accept that as life expectancy lengthens so too must the length of the working life, but all object to the change in the implementation time scale that the Bill proposes.

Hon. Members have already said that an estimated 5 million people born between 1953 and 1960 will have to wait longer to reach state pension age. Although the wait for the majority of people will increase by less than one year, about 500,000 women born between October 1953 and April 1955 will have to wait more than an additional year and 126,000 women born between December 1953 and October 1954 will have to wait up to two years, losing about £10,000 in pension. Those are the facts as we understand them.

Men and women on low incomes who are reliant on pension credit and have no private pension savings will be most affected by the changes, and we have many such people in Wales. A great deal has been spoken about the gender effects of the potential changes, and women will be hit hardest, but there are also effects on disabled people and potential effects on ethnic groups.

We have also heard about class effects. I, too, have looked at the Age UK briefing, and it states for example that a higher percentage of people in social classes D and E are unable to work on, with one third of such women, at least, being in ill-health. Age UK also points out that awareness of the changes among people in classes D and E is very much lower.

There are also national and regional effects, which have had less attention. The changes will hit some sectors of society harder than others, and we in Wales, as in Scotland, have more people in those sectors than other parts of the UK. In Scotland, life expectancy is four years below the European average at 76 for men and 80 for women. Glasgow has the lowest life expectancy in the UK—71.1 years for men and 77.5 for women. These people will be severely hit.

Jonathan Evans: The hon. Gentleman is right about life expectancy numbers. Somebody with a fund who has a poor health record will get a bigger annuity than somebody who has a healthy record. How would he resolve that in terms of the state pension situation? He seems to be saying that he would not change the current arrangements.

Hywel Williams: A large number of people are unable to get an annuity in the first place because they do not have that sort of pension. Nobody is arguing against the fact that life expectancy is extending—of course, that should be welcomed. However, the fact that the change is being brought in quickly will particularly affect certain groups in relation to class, gender and where they come from.

The effects in Wales will be much more pronounced. That is demonstrated by figures for July 2009-10 on the composition of the work force taken from the ONS

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publication “Regional Trends”. The average proportion of the population in the UK who are managers and senior officials is 15.6%, the figure for the south-east is 18.3%, and the figure for Wales is 13%. Managers and senior officials will not be hit as hard by the changes, because they have other sources of pension income and live longer. In Wales, we have fewer such people who are able to depend on a decent pension and expect to live longer; unsurprisingly, the south-east has many more. Likewise, in the case of process, plant and machine operatives, the UK average is 6.7%, the figure for the south-east is 5%, and the figure for Wales is 7.3%. As regards people in elementary occupations, the UK average is 11.1%, the figure for the south-east is 9.7%, and the figure for Wales is 11.8%. Workers and future pensioners will be disadvantaged in Wales, as in the rest of the UK, but the effects there and in Scotland will be more pronounced.

Plaid Cymru Members welcome the continuation of automatic enrolment in pension schemes. Given the increases in short-term employment, casualisation and multiple part-time jobs, we share Age UK’s concern about the earnings threshold, particularly the possible negative impact of the three-month waiting period and its effect on staff who might not stay in the job for long enough. We have the same concern about those who have multiple low-paid jobs and therefore may not reach the threshold and be excluded.

In a speech I made some months ago, I expressed reservations about the indexation process, so I will not labour that aspect. My final point is about the Pension Protection Fund, which was raised by the hon. Member for Cardiff North (Jonathan Evans) and is referred to in part 3 of the Bill. The PPF came about partly as a result of pressure put on the former Labour Government by Members in all parts of the House arising out of the ASW steelworkers scandal: a very difficult situation in which the Government had to be persuaded—I use that word advisedly—to act. Unfortunately, the ASW campaign is still ongoing. I recently met some of the workers, and I have tabled early-day motions and attended meetings on the subject, as has the hon. Member for Cardiff North. In November 2010, the pensions specialist Dr Ros Altmann suggested possible ways in which the coalition Government could assist the ASW workers. Will the Minister tell us what progress is being made in that case? That would go a long way towards responding to the campaign by those workers.

6.35 pm

Ben Gummer (Ipswich) (Con): The salient fact of this debate is that by the time it finishes at 10 o’clock, the average age to which we and our constituents might expect to live will have increased by an hour and a half. If I were to speak for 10 minutes or a quarter of an hour, which I will not, then merely in the course of my speech average life expectancy would have increased by four minutes. I hope that that is compensation for what hon. Members are about to endure.

The simple fact of demography that for every hour that passes 15 minutes is added to the age to which we, as a population, can expect to live forces us to revisit the state retirement age—the age at which people stop paying taxes and start depending largely on the fruits of others’ labours. It is a fact that is unlikely to change in the half century to come. In fact, if the experience of

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the past few years is anything to go by, the acceleration of our expected mortality rates will only increase, rendering irrelevant and insufficient all the predictions on which we currently rely. There is near consensus that maintaining the existing pension age is unaffordable and that we should correct that by ratcheting up the state pension age year by year to reflect increasing life expectancy.

However, I am worried by the idea that by the mid part of this century, asking people to retire at 70—incidentally, the age intended by Lloyd George in his great Act of 1908—will be seen as the way to fix this problem, because we may not correct everything that we hope to correct just by increasing the state pension age and doing everything contained in this excellent Bill. Although I support the intention of the Bill and the immediate steps that it takes, the Government need rapidly to revisit the conventions and means by which successive Governments address the central problem of increasing life expectancy and the effect of that on the Exchequer and those working to fund it. Otherwise, we will again end up in a situation that is unsatisfactory and inadequate. It is unsatisfactory because with every increase in the state pension age, we inflict another set of injustices and unfairnesses on those who are approaching that moment in their lives. The predicament of the relatively small group of women we have been debating is a sure indication of far greater problems to come for Governments in future years.

Because we are facing this cross-generational challenge, it is incumbent on us to try to forge a consensus between the parties about the rules by which we deal with pensions policy. One of those rules is suggested by the example of the women who are particularly affected by the Government’s proposed changes. When times are normal—these are not normal times—there might be a rule whereby people are given at least 10 years’ notice before we change their pension entitlements or the age at which they can claim them. Perhaps the case of the class of ’53, as they call themselves, is the test by which the Government will be measured in this respect.

Although I understand why the Government might fairly ask that people work an additional year to deal with the horrendous deficit and national debt we have been left, to ask a relatively small group of people to work an additional two years with six years’ notice is a very big ask, not least because it calls into question other excellent parts of the Bill that are designed to encourage saving. We cannot ask people to save and then give them no time in which to do so. I hope that in considering a way to smooth the edge of this part of the legislation, the Government will not only fashion a compromise for the women who are being asked to work an additional 13 to 24 months, but thereby establish the first set of conventions by which successive Governments can deal with this issue.

Another unfairness in the Bill, which was not intended by the Government, results from the change from RPI to CPI for uprating. Many of my constituents who are on occupational schemes, mostly from British Telecom, have found that their pensions have been changed only two years after they were renegotiated between the trustee and the pensioners. The trustee claims that it has been forced to do that by the rules of the scheme. My constituents and I would be interested to know the degree of consideration the Minister gave to the effect that his changes to the uprating regulations would have

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on the occupational schemes of previously nationalised industries, because they have had a very adverse effect on people who thought that they had funded schemes.

Those are the unfair and unsatisfactory parts of the Bill, which I consider to be largely good. I understand that the Opposition supported the change from RPI to CPI, but on a temporary basis. With characteristic innumeracy, they therefore miss the central challenge that confronts us, which is not just the deficit that we must deal with between now and 2016, but the period after that. There is an idea that in 2016 the deficit will somehow come to an end, we will be finished with our problems, and we can then extract the cheque book from our pocket and go on another splurge. That will sadden people, because if we did that, we would find ourselves with one of the highest debt to GDP ratios in the developed world—higher than most of our developed competitors and significantly larger than almost all of our developing competitors, just at the point at which they move up the value chain to meet us on high-end manufacturing, learning-based skills and value-added services.

At that point, we will be faced with a demographic scene that is not much altered from the one the Government look at now. We need only look at the support ratio to tell us that. It currently sits at about four workers per pensioner—the lowest in the history of the state pension. Under the Pensions Act 2007, it would decrease by 2023 to 3.11 workers per pensioner. That figure will improve under the Bill to 3.35—a difference of 6%. At that point we will still be slipping down, and none of this changes the central projection to 2058—150 years after the introduction of the state pension—when there will be 2.74 workers per pensioner. There will then be fewer than three workers for every pensioner they must support.

Pensions are a double-sided promise. On the one hand, we, as parties engaging in government or opposition, must give people the security to know what they will receive in their retirement. That is why I urge the Government to look carefully at the women who will be particularly affected by this change, and at those who are coming to the end of their working life in the public sector. As many of their accrued rights as possible must be respected, because that is what was promised to them, whether or not it was prudent to do so at the time.

In understanding that, we have to be far more brutal with the younger generation, which has many more years to work. Frankly, younger people will not be able to have a pension of the size that their parents and grandparents have come to expect, because of the horrendous deficit and the enormous debt that we have been left by the previous Government—larger than those of almost all our competitors around the world. As a result of that debt, we will have less to spend on education, training and infrastructure improvement. [ Interruption. ] The hon. Member for Glasgow North East (Mr Bain) smiles, but it is true that as a result of the actions of his Government, we have less to spend on things that will grow the economy and there will be fewer tax receipts to pay for the welfare state that we have come to expect as a nation.

Jonathan Evans: I wonder whether my hon. Friend picked up on the remark from the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), when challenged on the cost of his proposal, that money could be raised

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by bringing forward significantly the current programme for retirement at the ages of 67 and 68. Perhaps we should bank that promise from the Opposition before it evaporates like so many of their remarks.

Ben Gummer: What I found surprising about that comment from the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) was that it completely ignored the sensible intervention by his colleague the right hon. Member for Birkenhead (Mr Field), who made quite plain the difficulty of bringing forward the state pension age rise too quickly because of its manifest unfairness on manual labourers, who have a much lower life expectancy than others. That is a central problem that we have to deal with and a reason why the state pension age will become inadequate. At some point, we have to address that unfairness, whether by measuring the length of period worked or by doing far more than has been done so far to improve the occupational health of large numbers of people in this country.

We come back to the essential problem: there is not only no money now, but there will be no money for many decades to come if we are to have the money to invest in growing our economy. Frankly, we will have no welfare state to pay for if we do not address these big issues now. We will be lying to future generations and forcing upon them a generational theft if we are not straight with them now about the reality that confronts them. That is my generation, as much as it is that of the hon. Member for Leeds West (Rachel Reeves). We will be expected to save considerably more and receive considerably less from the state. [ Interruption. ] The hon. Member for West Ham (Lyn Brown)—she is a Whip and I will not criticise her—is huffing and puffing away, but the fact is that between 2002 and 2006, the structural deficit was run up, inflicting this problem on generations of people to come. The worst affected will be those on low incomes and the unemployed—the very people her party was founded to protect.

We must be honest with future generations and correct the small inadequacies in this Bill. I urge the Minister to look carefully at the long-term reforms that are needed in our pensions system if we are not to come back here year after year to let down pensioners on the promises that were given to them in ages past.

6.48 pm

Malcolm Wicks (Croydon North) (Lab): Back in the 1940s, Aneurin Bevan referred to the ageing of our population as the “peculiar problem” of the era. When one thinks of the controversies just of the last few weeks over the national health service, the quality or lack of it in our care homes, and now the pension age, one can see how prescient the Bevanite analysis was.

I will argue that pensions policy is at its best when it has an understanding of the pace and grain of people’s lives and of the society—an understanding of how people work, their employment patterns, care patterns and family patterns. Looking back, one can see examples of that. Lloyd George—a reminder that there were once great Liberal reformers—was urged to introduce the first old-age pension, albeit at a slightly measly 70 years old, because working people were, rather peculiarly and in a sense for the first time, outliving their working

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lives, so it was asked where their incomes would come from. Thus occurred the birth, more than 100 years ago in this Parliament, of the first old-age pension. Much more recently, around the 1970s, Barbara Castle and other Secretaries of State realised that the national insurance system was inadequate when it came to women’s caring responsibilities, and credits started to be built into it.

My question is whether, by introducing uniform state pension ages—I listened with great care to what the hon. Member for Ipswich (Ben Gummer) said on the matter—we are now fashioning a policy that makes sense given the different life cycles of people in this country depending on their occupation and social class.

I think about my own family’s experience. My dad and my mum left school at 14 to work, and my dad had jobs in the market in Islington long before that age. At that time, the vast majority of people left school at that type of age. If they worked through to 65 or so, they would have been working for half a century or more. I did not get my first proper job until I was 21. I remember my nan from Islington—Hansard must record “nan” not “nanny”, because I do not want to excite Conservative Members—saying to me when I was 16, “Malcolm, why haven’t you got a job yet?” She just could not understand why I was not yet working.

My own three children were fortunate enough to go to university and then do some postgraduate qualifications—one of them very ably taught, by the way, by a young lecturer at Bath university, whose name I temporarily forget. I often wonder what happened to him. I refer, of course, to the Minister of State, the hon. Member for Thornbury and Yate (Steve Webb). My children did not get their first proper jobs, rather than holiday jobs, until their early to mid-20s. That is a pattern among certain middle class and professional families.

Today, some people coming up to claiming their state pension will have left school at 15 or 16, but some will not have got their jobs until their late teens, early 20s or even mid-20s. Are we being sensible when we say that people who have worked in hard, tough manual jobs for a very long time should be able to claim their state pension only at the same time as those of us from cosier professional and middle-class backgrounds? That is the issue that I wish to explore today.

The proposals in the Bill are based on certain assumptions, and two in particular. One is that the generalisation about life expectancy is true for all social groups. Others have questioned that assumption. I had an opportunity to intervene on the Secretary of State about it earlier, and I want to question it in a little more detail. The Minister of State and the House have heard my argument before. Alongside the gender issue, which is hugely important, there is the social class dimension, which the data show mainly affects men. It needs some airing and some debate, and I would argue that it also needs some solution. There is the assumption about life expectancy, which is broadly true but with some important qualifications, and also the assumption that if we keep raising the state pension age—and occupational pension ages, by the way, although I know that is another debate—the market will respond and jobs will be available. I want to question that assumption, too.

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Mr Denis MacShane (Rotherham) (Lab): I was shocked when a constituent of mine, Mrs G. E. Smith, came in to see my at my last surgery. She will be 60 next month, and she was hoping to retire. She works in an exhausting cleaning job in a sawmill. I think Ministers have no idea what life in hard manual work is. She is shattered and wants to retire, but she has been told that she now has to go on another year, which will be injurious to her health. The Government have no idea of how what we used to call the working class suffer.

Malcolm Wicks: I imagine that that woman might have been categorised by the Office for National Statistics, rather inelegantly, as being part of the social class of “routine occupations”. That includes many women who are cleaners, and men who are manual labourers, van drivers or packers—heavily demanding work. Can they all look forward to living to 80 or, as the Minister likes to remind us periodically, to 100? Actually, they cannot.

The class differences are most pronounced for men, but they also exist for women. Here are the ONS statistics. Almost one fifth of men from the lowest social class—19%—die before reaching the existing pension age of 65. We talk about pension ages, but sadly a lot of these guys are already dead by that point. That 19% figure compares with just 7% from social class 1. For women, the respective figures are not so stark, but 10% in routine occupations die before the current pension age of 60—not like my right hon. Friend’s constituent, I hope, but with that type of job—while the figure is just 4% for those from the professional classes.

Steve Webb: Will the right hon. Gentleman give way?

Malcolm Wicks: I am pleased that the Minister wants to intervene, but may I add another statistic? I have given him a lot of notice of this point, and a wonderful briefing paper has been presented, so I hope there might be some solutions. An additional pension penalty is paid by the poorest groups. Whereas the great majority survive to get the state pension, they then draw it for fewer years than people from the top social classes, because of earlier mortality. Life expectancy at 65 is 18.3 years for men from social class 1, which is professionals, but it is only 14.1 years for those from social class 5. That four-year difference is the same for women. A double pension whammy affects people from the poorest social classes, and that should at least raise a question in the Minister’s mind about whether the general policy that he is pursuing—to be fair, it is the general policy that my party’s Government were pursuing—is on the right track.

Steve Webb: The right hon. Gentleman is making a characteristically fascinating contribution. He is citing different social groups, but does he accept that the sizes of those groups are changing? His idea would have been brilliant in 1975, but in designing a pensions system for the 21st century and beyond, is he not trying to solve a problem that is diminishing with every passing year?

Malcolm Wicks: I was solving many other problems in 1975—they were so numerous that I cannot think of an example. I believe that there are solutions to the problems. They might be complex, but if the Minister will bear with me I will come on to them.

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I first wish to make my other contrarian point about the general assumption that it will be all right if we keep raising the state pension age—and indeed the occupational pension age. It is about employment patterns. At the moment it is not the case that 90%-odd of men and women are working until they are 65 and 60 respectively, and that if we keep increasing the pension age by a year or two there will be jobs available. That is not the situation at all. Labour force survey data show that almost a quarter of men aged 50 to 64, and more than a quarter of women aged 50 to 59, are classed as economically inactive. Many of them are not working at the moment. Why do we assume that there will be jobs for them if they have to work for a few more years? More specifically, 39% of men aged 62 are currently not working. By the age of 64, the figure is 52%. Among women aged 58, two years before their current state pension age, 36% are not working. The assumption that general life expectancy increases will benefit everyone and the at least implicit assumption that jobs are available are at least partly illusory.

I am not challenging the demographic logic, or the fact the state pension ages—and, may I say in a reasoned way, occupational pension ages—have to increase. Of course they do. That is the logic of demography, and it helps us safeguard our welfare state system. I ask, however, whether the situation is right for a man or woman who left school at 15 or 16. They may have had caring responsibilities or periods of unemployment, but they will have essentially worked for 49 or so years. They currently get their pension at 65, in the case of men. Is it right that they should be on the same playing field as the professional person who left university and did not do the type of job that my right hon. Friend the Member for Rotherham (Mr MacShane) described, as a packer, cleaner, steelworker or miner, but who is from the professional classes, rather like many of us who are currently in this room? Is it right that the same state pension age should apply to both groups? I do not think that that is a state pension system that is in line with, or goes with the grain of, people’s lives. It does not seem fair to many people.

I meet many people from professional classes—politicians, business people, think tankers and broadcasters—who dread retirement. They want to keep working. They are hale and hearty and often at the top of their game. They want to carry on working, and that is a good thing. [Interruption.] My right hon. Friend the Member for Rotherham gives an important example. In 10 years, he will constitute another important example.

That is right and proper, but people who have done physically demanding work are literally worn out in an old-fashioned sense. Some of the steelworkers I met when we set up the Pension Protection Fund were physically worn out. They do not want to keep working for another couple of years. They want to retire to have a well deserved rest.

What is the answer? I think that we should try to calculate the records of those who left school at 15 or 16. I know that it is a challenge for the civil service. I have not got the briefing paper—the Minister has it and I am sure that he has read it. Given national insurance records, employment records and perhaps income tax records, should not we be able to calculate that people who have worked for 49 years can retire at the age of 65—for men and women in due course—rather

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than assume that they can carry on working? It is a big issue for social administration and it needs a bright Minister to tackle it. The Minister should give it rather more attention than I think he has given it so far.