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School Governors and School Improvement

12.29 pm

Neil Carmichael (Stroud) (Con): It is a great pleasure to serve under your chairmanship—not for the first time, Mrs Main. It has always proved a success, and I expect it will do so today. It is great to see that my right hon. Friend the Minister for Schools survived yesterday’s activities, as we would expect. I am wondering where the reshuffled Opposition education team are. They will now be led by an historian, the hon. Member for Stoke-on-Trent Central (Tristram Hunt), which will certainly be interesting.

I want to talk about the importance of governors and governance, and to say that I enormously appreciate all that governors do. It is a tribute to our national life that 200,000 people are able and willing to serve as governors on our school and college governing bodies, and we should all thank them enormously. I have been a governor of several schools and colleges, so I know about the stresses and strains, the sometimes unsocial hours and the sense of accountability and responsibility that they normally feel: I have been there and done that.

I am pleased that there is an appetite for debate about school governors and governance. I was particularly glad that the Select Committee on Education, under the chairmanship of my hon. Friend the Member for Beverley and Holderness (Mr Stuart), agreed to hold an inquiry on school governance. That inquiry exposed some interesting issues that I want to discuss, although I will not do so in a detailed or completely comprehensive way. The inquiry certainly raised a few interesting issues, and the Government have responded. They were sometimes in agreement with the Committee, and sometimes less so, but they always considered what we said, which is a tribute to the Select Committee process.

The context of this debate is straightforward, in that we are experiencing and will continue to experience a changing structure of education, because more and more academies are coming on stream and there is more competition. Of course, the arrival of free schools will be a key factor in accountability as regards the role of governors and school governance.

Another key issue that informs the debate is the need to focus on performance and outcomes. Never before has the education system been in a situation where performance and outcomes are so pivotal to the debate, which is quite right, because it is absolutely essential to give every child a proper chance and a fair opportunity to perform as best he or she can. Nothing less than that will do.

The changing role of local authorities is another factor, on which we will touch throughout this debate. That factor should be recognised, because schools often used to have the local authority to help them along or to deal with issues, but schools are now more autonomous, and with that autonomy comes more responsibility.

There are also challenges, including the issue of children who are not necessarily best dealt with or given the best chances in their schools. That was brought out extraordinarily well by the chief inspector of schools and colleges, Sir Michael Wilshaw, in his report, “Unseen children”. We cannot allow that to happen. As people interested in education, we must drive forward the

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highest standards across our whole country, not just where something happens to be relevant to an individual MP. We must ensure that delivery is good all over.

That point is reinforced by the chief inspector’s focus on leadership and management in schools. I will not talk about individual schools—that would be inappropriate—but I will say that where we have good leadership and management in schools, we have a good chance of having schools that are good and have high standards of teaching and learning. That is what we should talk about in the context of school governors and governance.

I pay tribute to my colleagues on the Education Committee, first for agreeing to do a report on school governance and secondly for contributing to that report, because we had some lively debates—quite rightly. The report was important as another way of keeping the question of school governance and governors on the agenda, which we must do. As I have said, the structure of education is evolving, and one question that we must tease out is how we deal with accountability, in which school governors of course have a role to play.

In the Select Committee, we discussed in detail some issues that are relevant to this debate—for example, the size of school governing bodies. It is generally accepted that smaller committees sometimes achieve more than larger ones, partly because they are more dynamic and tend to rely more on individuals with specific gifts. We should therefore try to streamline governing bodies into smaller ones, so that they can be more dynamic, flexible and innovative. The Government agree, but it is important to make it absolutely clear why smaller governing bodies will improve performance and, to underpin that, the Government must be strong in making sure that governing bodies get that message.

Mr Graham Stuart (Beverley and Holderness) (Con): My hon. Friend, like the Government, seems intrinsically to believe that smaller governing bodies are necessarily more effective. Will he share with the House the evidence to back that up?

Neil Carmichael: I can do so, because the Education Committee looked into that issue, and if people read the report, they will see that answers to many of the questions I asked yield such evidence. We need to look at that evidence when we consider questions like the one asked by my hon. Friend, the Chairman of the Committee. That dynamic can be seen at work not just in school governing bodies, but often on company boards and in other organisations. It works, and it should be considered.

The role of business is very important. That arises in relation to the question of why we do not have the best interface between business and education, which is a general problem. For example, it is certainly a worry that only 28% of A-levels are in STEM subjects—science, technology, engineering and maths—when the business community is seeking a bigger pool of STEM-educated children and students.

Another issue is why more businessmen are not on school governing bodies, increasing that interface and bringing in leadership and management expertise. The Government have recognised that the Select Committee is right on that count, and we must ensure that we start to break down some of the barriers. The Government

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are right, and I hope that they will persist with the idea of creating a legal requirement to give people time off for service on a governing body.

I will finish by raising several points. The first is that we must strengthen the mechanism for imposing interim executive boards—IEBs—when schools are identified as failing. I believe that if an Ofsted inspection finds that a school is in serious trouble, there may well be a case for having an IEB, and the Select Committee suggested that Ofsted should be able to use its powers to impose one. The Government have said that there are other ways of solving the problems. If a school is in a federation or some other structure, they might get some assistance. None the less, we need to send a signal that setting up an IEB might just be the right option. It will not be right in every case or in every situation—for example, when a primary school is allied to another school—but it is certainly right for a secondary school that is failing in an obvious way.

There needs to be a pool of governors on those IEBs. Too many areas of the country do not have a sufficiently large pool of good people to be on IEBs. We need to redouble our efforts to find and properly train people. One structure that could solve that problem is the National College for Teaching and Leadership.

Jenny Chapman (Darlington) (Lab): I congratulate the hon. Gentleman on securing this debate. I support much of what he is saying, but I recommend that he looks at other models that promote collaboration between governing bodies. The experience from Darlington shows that a school can be turned around quickly by encouraging better collaboration, even when, as in Darlington, almost all the schools are academies.

Neil Carmichael: I thank the hon. Lady for her helpful intervention. That was one of my points. She is absolutely right, and I thank her for her support.

I want to touch on sub-regional structures, academy chains and other such structures that one might expect to find when schools collaborate. Collaboration certainly does make a difference. I suggest that some formal federal structure might be the answer in many situations. Mutual help, by which I mean learning best practice from others, getting support when there is a problem and being able to reach out for expert help, is really important. I accept the point that has just been made. I would even go further and say that the Government might want to consider making sub-regional structures more formal where that is appropriate. A horizontal or vertical structure, or a combination of both, is a good way of ensuring that the best leadership is available to schools. That applies to rural areas where there is a variety of smaller schools, or to a secondary school with a number of feeder schools.

Another point relates to the question of skills versus stakeholders. The Select Committee talked about that in some detail. It was right to do so, not least because I encouraged it to take on the issue. It has always concerned me that if schools are boxed in with certain stakeholders on their governing bodies, they might not be able to reach out for the appropriate skills. I have never been completely satisfied that all stakeholders are accountable to the body that appointed them or that they represent, so calling them stakeholders is, in some cases, an exaggeration. The Government need to focus on getting

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the right skills, and all barriers to that should be removed, which means that there should be considerably less focus on stakeholders and more focus on skills. I call on the Government to consider that point.

Richard Graham (Gloucester) (Con): My hon. Friend is making some powerful points. I expected as much, given his strong personal experience of both a further education college and a secondary school in Stroud. On the point he was making, does he agree that governors in constituencies such as Stroud and Gloucester are by definition volunteers and community-minded, and that given the right experience, training and help they can play an invaluable role in the success of a school? What more does he think the Government can do to help on the training side?

Neil Carmichael: My hon. Friend, whose constituency neighbours mine, is absolutely right. Of course we need to encourage people to become governors. We do not want to frighten them off, and good training is critical. The Education Committee has made some powerful recommendations on training, which the Government have largely accepted. The National Governors Association has constantly talked about the importance of training. I want also to highlight the work of the all-party group on education governance and leadership, which has produced 20 questions that feature in a number of reports, including those of the Wellcome Trust and our Select Committee. Those 20 questions include a reminder that we should focus on the training of governors. We must ensure that those training packages are up to scratch and relevant to the challenges of governance now, and not to what we think it was. The Government are right to talk about setting up memorandums describing what academies turn into and how governors should respond.

Jenny Chapman rose—

Mrs Anne Main (in the Chair): Order. This is a 30-minute debate, and the hon. Gentleman who called the debate has graciously allowed another colleague to speak for a minute or two. The Minister also needs to make a full reply. I therefore ask for any interventions to be brief.

Jenny Chapman: I am grateful for your guidance, Mrs Main. I shall be brief. In my experience, local authorities have always put on a great deal of training, but it was not well attended and its quality was questionable. How can we ensure that the quality of training is improved now that schools are far more independent?

Neil Carmichael: I have already mentioned the National College of Leadership and Training, and that is one way forward, but there are other organisations that are independent of local authorities that should be doing the training.

Finally, we all rely on good school governors and on volunteers to be school governors. The question of payment has been discussed by the Education Committee. There is a possibility of paying chairs of governing bodies because of their exalted status and their great responsibilities. That should remain on the table to encourage a kind of progression of governorship—from governor to chair. That might be part of the answer to the question of federations, structures, academy chains and so on.

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Mrs Anne Main (in the Chair): I call Mr Graham Stuart, who has two minutes.

12.48 pm

Mr Graham Stuart (Beverley and Holderness) (Con): My contribution might come in at under two minutes, Mrs Main. It is a great pleasure to serve under your chairmanship, to follow my distinguished colleague on the Education Committee, my hon. Friend the Member for Stroud (Neil Carmichael), and to see the Minister in his place and other colleagues in the Chamber. The Government recently produced their response to our inquiry and report. In the brief time I have, I want to focus on the opportunities for getting greater business involvement with school governing bodies. The CBI has offered to work with the Government, and the Government have taken that up, and are looking to work with other business organisations. We have a real problem with careers advice and guidance in schools. We know that we need to ensure that careers understanding is embedded across the curriculum. What better way to do that than by having governors from business bringing their understanding of local and national business to the governing body? There is a real opportunity for business organisations to stand behind those individual governors, and to provide them with resources, tools and a template to ensure that their school provides a curriculum and an experience that provides young people with the skills—soft as well as academic—that they need. There is a tremendous opportunity to strengthen our governing bodies and better to align our education system with the world of work that follows.

12.49 pm

The Minister for Schools (Mr David Laws): It is a pleasure to serve under your chairmanship, Mrs Main.

I congratulate my hon. Friend the Member for Stroud (Neil Carmichael) on securing a debate on this very important topic; on the work that he has done in founding and chairing the all-party group on education governance and leadership; and, of course, on the contribution that he and his hon. Friend, the hon. Member for Beverley and Holderness (Mr Stuart), who is the Chairman of the Education Committee, have made to the Select Committee’s report on this issue, which came out earlier this year and which we, as a Department, have looked at very closely indeed.

Our Department believes that school governance has a vital role to play in driving up school standards and pupil performance, and—as my hon. Friend the Member for Stroud himself mentioned—we recognise the dedication of the hundreds of thousands of volunteers who serve as school governors and who are passionate about supporting and improving their schools. The success of our education system relies upon the expertise and hard work of those governors, and we need more skilled governors to help schools to improve, particularly in many of the disadvantaged areas where school performance is, at most, inadequate.

Every school needs a high-performing governing body that understands its responsibilities and that focuses on its core strategic functions; that is made up of people with the relevant skills and experience; that operates efficiently and effectively through appropriate structures and procedures; and that strives for continuous improvement, in order to perform to its full potential.

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We need governing bodies that think innovatively and strategically to create robust governance arrangements, including across groups of schools, which is a point my hon. Friend mentioned in his contribution. It is this Government’s ambition that that is true of all governing bodies in terms of their quality standards, and I will say more about each of the key critical areas that we expect governing bodies to be able to address.

To begin, let me consider the core functions of governing bodies. In our view, high-quality governance is characterised by a relentless focus on three core strategic functions: first, setting the vision of the school; secondly, holding the head teacher and senior managers of the school to account for their educational performance; and thirdly, ensuring—of course—that the school’s money is well and properly spent.

Those functions reflect the criteria that Ofsted inspectors use when considering the effectiveness of governing bodies. All governing bodies, in both maintained schools and academies, should focus on these functions, leaving the senior leadership team responsible and accountable for the day-to-day management of the school. They should stay focused on these big issues and other specific statutory duties, and avoid being distracted by the myriad other things that might compete for their attention.

We believe that governing bodies are best placed to determine how to carry out their strategic functions, and their approach needs to reflect their own specific local circumstances and should be guided by Government only when that is genuinely necessary. That is why we have already reduced prescription and cut back on some of the unnecessary regulations that exist. Our ambition is that all governing bodies are made up of people who have the necessary skills and competencies to carry out effectively the demanding strategic functions that I have just outlined.

As my colleague in the Department, the Under-Secretary of State with responsibility for schools, Lord Nash, has said on previous occasions, in our view it is right that governors should be volunteers but they cannot afford to be amateurs in an area that is so critically important. We need to professionalise the quality of school governance, so that sitting on a board of governors is seen as being akin to the strategic responsibility of sitting on the board of a company or of a charity.

The best governing bodies identify explicitly the skills and competencies they need, and regularly audit the skills of their current members. They actively seek to recruit new governors and to invest in the professional development of their existing members, to address any gaps that might exist. Because governing bodies are best placed to determine the types of skills and people they need, we have given them more flexibility to decide for themselves the number and mix of governors that they need. Maintained school governing bodies can opt to reconstitute under new regulations, which my hon. Friend the Member for Stroud will know we introduced last year. Those new regulations allow the governing bodies to be smaller and more skills-focused, which is something I think my hon. Friend supports and which he has raised with my colleague, Lord Nash, on previous occasions.

We have also updated our model documentation, to give academies themselves much greater freedom in how they constitute their governing bodies. While our priority

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is to give governing bodies the freedom to decide their size for themselves, our view is that governing bodies should be no bigger than they need to be to secure all the crucial skills necessary for effective governance. In our view, it is not helpful to have anyone on a governing body who is in a passive or inactive role. In general, we think that smaller governing bodies are likely to be more dynamic and effective, as shown by the success of many of the tightly focused interim executive boards and by the testimony of many academy sponsors who need to reform the unwieldy governance in the schools they inherit. However, I will also accept the challenge put by the Chairman of the Education Committee, and the view taken by the Committee in its report, when I acknowledge that ultimately it is the quality of these individuals, rather than counting heads, that is particularly important.

In line with the core functions that I have outlined, governing bodies should not necessarily see themselves as the primary vehicle for ensuring meaningful engagement with parents and other stakeholders. It is vital that the governance of the school is informed by the views of parents, and for that to be done well it requires dedicated and appropriate arrangements. So, while there are still rules that governing bodies need to follow on how they are constituted, the emphasis should be on recruiting governors for the skills that they can individually contribute. After all, all governors—no matter what constituency they are drawn from—are there, once they are around the table, to govern in the interests of pupils and not primarily to play a representative role.

People from the world of work can bring a particular range of transferrable and relevant skills, as my hon. Friend the Member for Stroud mentioned in his contribution. That is why we plan to work more closely with the CBI and other business partners to engage more businesses in actively promoting governance to their employees. Forging links with business can be of huge value to schools, but the strategic nature of school governance also means that employees develop key skills that are often of benefit to them and indeed to their own employers.

The Government already fund the School Governor’s One Stop Shop to offer a free service to schools and local authorities, in order to help them to find new and highly skilled governors. The number of governors that SGOSS has recruited has risen year-on-year to nearly 1,600 volunteers in the financial year to date, compared with 1,400 for the same period last year. I hope that my hon. Friends will promote the work of SGOSS to local authorities and schools in their constituencies.

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Governing groups of schools can be highly effective, and it can also bring many benefits. In particular, it can help to drive up standards by enabling governing bodies to compare and contrast across schools, thereby creating more robust accountability. It can also enable highly skilled governing bodies to have an impact in more schools. We in the Department encourage governing bodies to put aside any issues of territorialism, and to consider—where it is appropriate—forming a single governing body across a federation of schools. Alternatively they can, of course, consider a multi-academy trust or an umbrella trust, which benefit from the greater freedoms of academy status.

Before I talk about what happens when there are issues or problems, I need to address the importance of governing bodies striving for continuous improvement, and the ways that we are helping them to improve. To achieve the very best for the children in their school, every governing body needs to reflect regularly on its effectiveness and performance, and governing bodies should not be shy of paying for high-quality training and development to help improve their skills and effectiveness. There are many options, including the expanding offer from the National College for Teaching and Leadership. As my hon. Friend the Member for Stroud will know, the NCTL has also developed the national leaders of governance programme to provide free peer mentoring support for chairs. We are looking to develop the number of NLGs, with another 150 being selected this year.

I now come to the crucial role of Ofsted. It is a sad fact that in too many schools governance is still weak and does not create enough robust local accountability for standards in schools. When Ofsted identifies underperformance, we share the view expressed by both its chief inspector and my hon. Friend the Member for Stroud that there is a need for urgent and timely action.

In each particular case, there will be various considerations in determining the appropriate response, which will not always be the need for an interim executive board; for example, some governing bodies may themselves decide to seek a sponsored-academy solution. For that reason, we do not envisage this sort of recommendation being made in the inspection report before the various contextual factors have been taken into account. However, good, clear reporting by Ofsted on the weaknesses in governance will help to inform decisions on what action would be appropriate.

This Government recognise and celebrate the role of governors, and we are committed to improving the quality of governance in the ways that my hon. Friend has indicated today.

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Women’s Pensions

1 pm

Mr Iain McKenzie (Inverclyde) (Lab): It is a pleasure to serve under your chairmanship, Mrs Main. I was delighted to be granted this debate, which is extremely relevant and important to many thousands of households across the country, including in my constituency of Inverclyde. I also thank the Minister for his time today.

In these uncertain times, when it can be difficult to find a good employer, and a good employee pension is even more difficult to find, many could be forgiven, as in the past, for counting on their state pension—an agreement they believe will deliver on their regular contributions. “Thank goodness,” they might think, trusting that all those deductions from their pay over the years will finally secure a reasoned and equal pension in retirement. They could never have foreseen or taken into account the Government’s recent pension reforms, which many believe to be unfair. I am, of course, talking about the reforms to the state pension age, and particularly how those reforms have disproportionately affected women born in the early 1950s.

The Government’s intention was to introduce a single-tier state pension from April 2017, but as the Minister will be aware, in this year’s Budget that date was brought forward to April 2016. I accept that that is good news for thousands of women, but it still excludes the group on which I am focusing. I believe we all welcome the single-tier pension, but there is one major injustice that can be identified within that new system. Implementing the single-tier pension on 6 April 2016 means that there is a group of women born between 6 April 1951 and 5 April 1953 who will not be eligible for the single-tier pension, even though a man born on the same day will qualify, because the pension age will be unequal on implementation day in April 2016.

The Government’s changes to the state pension have consistently hit hard-working women, and now the single-tier pension will let down 700,000 women across the UK. That is simply not good enough, and it is unacceptable to that group of women. For the single-tier pension to be successful and to achieve its designated goal of equality, it should treat women and men of the same age equally. When the Government’s White Paper was originally published, my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) was quick to spot the issue. He identified that, as a result of the 2017 implementation date, 429,000 women will not receive the flat-rate state pension, even though a man of the same age will.

Jim Shannon (Strangford) (DUP): I congratulate the hon. Gentleman on bringing this matter to the House, and I look forward to the Minister’s response.

Does the hon. Gentleman share my concern, as I suspect that he and many others do, that some ladies will have to work to the age of 72, or possibly 73, thereby holding back a job from an 18-year-old, who will be put on jobseeker’s allowance? Is there not a better way of balancing the issue?

Mr McKenzie: The hon. Gentleman makes a very good point. The age to which such women are being asked to work will affect not only them but younger

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generations who are looking for jobs. I will expand on how working longer affects longevity, and how the argument about longevity does not apply to all of those women.

It is important to note that 80,000 women born in the early 1950s have already had their state pension arrangements changed by the Pensions Act 2011. Surely the Government cannot continue to claim that the new Pensions Bill is fair. What is the Government’s justification for making a change that is unfair and unjust for hundreds of thousands of hard-working women across the UK?

In my constituency alone more than 600 women born on or after 6 April 1951 and before 6 April 1953 will be deprived of, on average, £884 a year, which I think we can agree is not an insignificant sum to lose out on in these tough financial times. Those women are rightly angry at what they see as the dual adverse impact of an increase in their pension age and their non-eligibility for the single-tier pension. I have met many of the affected women in my constituency, and they have expressed their dismay and disgust at the policy. Possibly the phrase that best describes the fate of those women is “So near, yet so far away.” How would the Minister and his Government colleagues feel if, after planning for their retirement date and making what savings and plans they could, they were told they had to work for longer and would be excluded from the new single-tier pension scheme? I suspect they would agree that it is simply not fair.

These women, most of whom left school at 15, have been paying into the system year after year after year. They have made the necessary savings and plans for their retirement, and above all they have spent a lifetime working hard, paying taxes, keeping a home, caring for their families and, naturally, looking forward to their retirement. With all of that, they hoped and expected to receive their state pension at the age they had come to expect. Those women will now be forced to wait longer to retire, and they will miss out on the new £144 a week single-tier pension for the rest of their lives; indeed, they will now receive about £127 a week. Once again, does the Minister find that fair?

Although the coalition Government are fond of quoting a figure of some £4 billion as the overall cost of including these women, the Department for Work and Pensions published an estimate showing that the true cost is closer to £220 million. In his evidence to the Select Committee on Work and Pensions, the Minister agreed that those women will be financially worse off than a man of the same age. He also stated that 90% of those women would fare better because women live longer. It is a weak point for the Government to claim that those women may recoup the money they lose out on because women live longer. Life expectancy differs vastly across the country. Life expectancy from boundary to boundary in my constituency varies hugely—by as much as 10 years—which means the policy is extremely unfair and unequal for the women I represent.

Women born in Inverclyde in the 1950s have worked in some of the toughest industries our country has ever seen. Mills, sugar refineries and shipyards are extremely heavy industries that have had a huge impact on the health of women in my constituency, resulting in a much shorter life expectancy than in other parts of the

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UK. Even late in their employment life many worked in the electronics industries, which are perceived by some to be less demanding and hazardous than the industries of the past. The electronics industries, however, still exact a health toll on my constituents and reduce the longevity of the women who transferred their skills from the mills, sugar refineries and shipyards to the sunrise electronics industries of the 1980s and 1990s. Those women might have worked alongside chemicals, for example, that we have now discovered eat holes in the ozone layer and are thus banned from use even in aerosols. We are yet to acknowledge, accept or see the effects on their health.

The industries of the ’80s have yet to produce their health casualties, but the evidence thus far paints a bleak future for many hard-working women in my constituency. We need only ask the women who are fighting past employers for recognition of responsibility for cancer clusters to know that, for many, catching up on their pensions will not be an option. If that level of inequality in working conditions and life expectancy exists within a community the size of Inverclyde, it beggars belief to imagine the differences facing larger communities throughout the United Kingdom.

Let me tell Members about Mrs Angela Hurrell, who lives in my constituency. Angela was born on 26 March 1953. Her retirement plans have changed drastically, as she will not reach pensionable age until 6 March 2016—four weeks before the introduction of the single-tier pension. Angela will now work until she is 62 years and 11 months old, and she will receive the old pension figure of approximately £127 a week. She will be £884 a year worse off than a woman born just 10 days later. For her, it is truly a case of so near, yet so far away.

Let me also highlight the case of Angela’s friend, Mrs Maureen Hamill, who is also a constituent. Maureen is a hard-working self-employed local business woman. She was born on 27 March 1953, and her retirement plans, like Angela’s, have changed drastically. Maureen is on her feet all day and works long hours. She does not have the luxury of reducing her working hours, which means that if she is unable to work, her business closes. Despite all that, Maureen will also be excluded from the single-tier pension. Again, she seems to have been born too early, to be retiring too late and to be £884 a year worse off. We can see a pattern forming: so near, yet so far away. I hope the Minister will agree that that does not sound like the fairer system his Government promised.

Angela and Maureen are no different from the hundreds of thousands of other women from across the country whom I could have mentioned. As with many women close to retirement age, every pound is important to them in these difficult financial times. They are but two examples of ordinary, hard-working women in my constituency who deserve to be treated fairly. They simply ask to receive the same improved pension a man the same age will receive.

The inclusion of the women I have talked about would allow the Government to fulfil one of their goals: a universal new state pension built on fairness and equality. I accept they have improved the Pensions Bill, but if the parameters have been changed once to include thousands of women, why can they not be changed again, so that we can end the inequality for the women I have talked about? I urge the Minister and the Government to think about the examples of Angela and Maureen

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and about the 700,000 women across the UK who share their circumstances. I hope the Government will reconsider. Let it not be so near, yet so far away for these 700,000 women.

1.12 pm

The Minister of State, Department for Work and Pensions (Steve Webb): Good afternoon, Mrs Main. I congratulate the hon. Member for Inverclyde (Mr McKenzie) on securing the debate. He took part in the Second Reading debate on the Pensions Bill.

I want to start by addressing some of the factual errors in what the hon. Gentleman said. I believe that he was speaking in good faith, but some of the central arguments he advanced were factually wrong, and it is important to get the facts on the record. He talked of the 700,000 women who were born between 6 April 1951 and 5 April 1953, and I am pretty sure he said that the Government had put their pension age up; in fact, he probably said it several times. However, this Government have not put their pension age up at all—that is a statement of fact. The Pensions Act 1995 began the process of equalising the pension ages of men and women at 65 over the decade from 2010 to 2020. The increase in pension age beyond 60 for these women was therefore legislated for in 1995. It was not a short-notice change, although I accept that some women did not know about it, and not everybody heard about it at the time. Although it was all over the papers at the time, these women were a long way from pension age and probably turned the page when they saw the word “pension”, so I accept that some women did not know about this. However, the idea that these women have had a short-notice change to their pension is completely factually incorrect; they have not, and their pension age was set 18 years ago. It is important to put that on the record.

The Government have indeed changed some pension ages for women who reach pension age after 6 April 2016, and every woman for whom we have increased the state pension age will get the single-tier pension. There are therefore two sets of women: those who will not get the single tier, but whose pension age has not increased beyond that which was legislated for 18 years ago, and those who have had a further increase, but who will get the single tier.

The hon. Gentleman said that we should treat men and women the same, but he will understand that men and women have different state pension ages. Under the previous plans, that would have continued until 2020, and under our plans, it will continue until 2018. If we treated men and women the same in relation to single tier, it would be hard to argue that we should not treat them the same in relation to state pension age. It would be hard to say that men get single tier but have to wait until they are 65, while these women do not get single tier but can get a pension at 63 or earlier. It would be hard to say that these women should have the good bit of the deal—the single tier—but not the bad bit that the men have.

That goes to the nub of the hon. Gentleman’s point about his constituents. I entirely accept that many of them have worked in physically demanding jobs and may therefore have reduced life expectancy. As a result, however, being treated as a woman and getting a pension

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at 61 is far better than being treated as a man. If, hypothetically, I accepted the hon. Gentleman’s argument, and we said to every one of these 700,000 women, including his constituents, “It’s not fair. You can have men’s rules, not women’s rules,” we would make those women wait up to an extra four years for their pensions. Given everything the hon. Gentleman has said about their likely life expectancy, that would be absolutely perverse. It is dreadful that these women have a reduced life expectancy to the extent that they do, but given that they do, it is far better for them to have the women’s rather than the men’s state pension regime. The comparison with men does not, therefore, help the hon. Gentleman’s case.

The hon. Gentleman compared someone—he gave the example of Angela—who reaches state pension age just before April 2016 with someone who reaches it just after. He came up with a figure of £884, and it took me a while to work out where he got it from. He compares £127, which is the pension of someone such as Angela, with £144, which is the single tier, and he multiplies the difference by 52—I think that is where he gets his number from. However, that is not the right comparison. The reason someone such as Angela gets £127 is that, on average, women get smaller pensions than men, and they have fewer qualifying years and less from the state earnings-related pension scheme. Even if we apply the single-tier rules to someone with Angela’s contribution history, therefore, she would not get £144 on average, because she would get about another £6 a week, not another £17. The hon. Gentleman therefore trebles the difference that the single-tier calculation would make. That is the second thing to say.

The third thing is that there is an issue about people qualifying just before and just after midnight on 5 April 2016. However, in general, the 700,000 women the hon. Gentleman discusses will, on average, draw their pension—yes, it may be £6 a week less—for anything between two and four years longer than a man born on the same day. Indeed, women who reach pension age after April 2016, who he feels are treated favourably relative to the 700,000 he talks about, will have state pension ages of 63, which will soon rise to 64, then to 65 and then to 66 not longer after that. With their slightly younger sisters, I take the point that there is the “minute to midnight, minute after midnight” issue, as there inevitably is with any change, but the next cohort of 700,000 women and the cohort after that will overwhelmingly have to wait many years longer for their pensions. It is therefore quite hard to argue that the 700,000 women the hon. Gentleman is talking about are in some sense uniquely discriminated against, when another 700,000 who are coming down the track will have to wait years longer for their pensions, and when their older sisters had a tougher regime previously. Let me explain what I mean by that.

The 700,000 women the hon. Gentleman is talking about get a full basic state pension for 30 years of contributions or credits, but a woman who reached state pension age just before 6 April 2010 needed 39 years. Constituents who are just a couple of years older than the women he is speaking for might well be aggrieved that their younger sisters, who he feels have had a rough deal, get a pension after 30 years, when they had to do 39 years. He talked about hard-working women in his

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constituency, but how does the woman who retired on 5 April 2010, after 39 years, feel about the woman who retires on 6 April 2010 and who gets a full pension after 30 years? She might well be very aggrieved.

I happen to think, broadly speaking, that reducing the number of years required was a move in the right direction. We have balanced things up in the single tier. The reduction from 39 years was a good thing, but that was a cliff edge too—much more of a cliff edge than what we are doing in 2016, because that reduction was pure windfall: from 6 April 2010, it was 30 years, not 39, for a full pension, and there was virtually no transition and no difference in state pension age to speak of. If we put the pre-April 2016 women through the new system, on average they get £6 a week more—we think the figure will be about that. However, on average, those 700,000 women are working fewer years than the post-2016 women, because state pension ages have been going up. That seems broadly fair, in my judgment.

The hon. Member for Strangford (Jim Shannon) raised the issue of women’s longer working lives, and asked whether that was bad news for the young unemployed. That is an argument that we hear a lot. This country and other countries have tried pensioning off older workers. In the 1980s we had something called the job release scheme, for example, which tried to do that. All that it did was put lots of men in their early 60s on pension, while it did nothing for youth unemployment. On the whole, young unemployed people are not very good substitutes for the recently retired. They do not slot into the vacancies. I appreciate that it could be argued that everyone would move up, but the evidence is that the older worker, on average, is a highly productive, valuable member of the work force. Pensioning off older workers who still make a contribution means that the economy as a whole suffers. The Institute for Fiscal Studies considered schemes for getting rid of older workers and encouraging younger workers in countries across the developed world, and there is no evidence that the younger workers benefit from pensioning off the older ones. If anything, the evidence is that the economy benefits from older workers, and that young people benefit, too.

Jim Shannon: I appreciate the Minister’s detailed response, but the idea of someone leaving early and creating a job is that the jobseeker would move into the lower echelons of the job market, and those in the middle rank would move up; it would be a sort of circle.

Steve Webb: That is what I meant—I was gesturing, but that will not be in Hansard. It could be argued that the person retires and everyone else moves up a step, and the young unemployed person comes in at the bottom; but what has been lost is the productivity, skills and experience of the older worker. If that worker has not been adding anything to the firm, then fine—get rid of them—but they are. That is the point. On average—not in every case—older workers are, by definition, the most experienced; they are often very productive and less likely to take time off sick than slightly younger people. They contribute a huge amount. The evidence from around the world—not from Government research but from work by the Institute for Fiscal Studies and others—is that pensioning them off does not benefit younger workers. There is not a battle between the

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generations; in many ways they are complementary, because the older, experienced worker can mentor, and use their skills to bring on, younger workers.

Mr McKenzie: I thank the Minister for his detailed response, but I cannot help but think that his argument about elderly workers not retiring to release jobs to younger workers implies that employers should hold on to employees as long as possible, even when they are near retirement age and want to retire.

Steve Webb: The hon. Gentleman is putting words into my mouth. I am saying that older workers, on average, are very productive. Clearly there comes a point when our productivity declines, as we get much older. We should bear in mind that the 700,000 women who are the subject of the debate are in their early 60s. I think that many of the hon. Gentleman’s constituents would be offended at the suggestion that they are not productive, valuable members of the work force. We do not say that employers should be forced to go on employing them if they want to stop working, but the evidence from the IFS has debunked what has been called the lump of labour fallacy—the idea that there is a lump of labour to be done, and so it is possible to knock out an older worker and slot in a younger one. That neglects the valuable contribution of older workers.

Clearly there is a limit. The hon. Gentleman mentioned the age of 72 or 73, although the statute book takes us only to 68 at the moment, so I am not sure where he got that from.

Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab): I am pleased to serve under your chairmanship, Mrs Main. I was going to ask the Minister about the lump of labour, which comes down to the argument that there is a fixed amount of labour in the economy. My view is that it is probably much more complicated; will the Minister expand on that a wee bit? Is there a demand issue as well? I take the point made by the hon. Member for Strangford (Jim Shannon) about people moving up a rung, but if we assume it is more complicated and stickier than that, there is a demand issue to do with the goods and services that older, wealthier workers are likely to buy.

Steve Webb: The very complexity of the issue is the reason for the IFS examining what happens across the developed world. It looked at different sorts of labour markets and different labour supply and demand conditions. Systematically, it found no evidence for the hypothesis that getting rid of older, more experienced, productive workers benefits the young unemployed.

Jim Shannon rose—

Steve Webb: I hope that the hon. Gentleman will forgive me, but as this is the debate of the hon. Member for Inverclyde, I will continue to respond to his speech.

The hon. Member for Inverclyde raised the issue of what it would cost to bring the women in, and he suggested some inconsistency in the figures. To make things clear, typically a woman who reaches state pension age will draw a state pension for more than 20 years. There is a profile to the costs, but on average the extra spending would be a couple of hundred million per

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year; £200 million times 20 is £4 billion, so there is no inconsistency in the numbers. One is an annual figure and one is cumulative. I hope that that clarifies that point.

The hon. Gentleman asked about bringing forward the single tier. Of course, in an ideal world I would do it tomorrow. It is a good reform, and I am grateful for the Opposition’s support for the principle, but there are many things that need to be sorted out before we bring it in. The biggest of those—apart from programming our computers, which I am advised takes a while—is the impact on company pension funds. Having a single pension means there is nothing for people to contract out of. We have two pensions, at least, at the moment. There is a second state pension that big firms’ employees can contract out of. With a single pension, there is nothing to contract out of, so we abolish contracting out.

That means that the biggest pension funds in the land, which are currently contracted out, will contract back into the state pension scheme, and will face an increase in their national insurance costs—because they will lose the rebate—and then will have the option, under our Bill, of re-jigging their company pension scheme to recoup the cost. So, for example, because people will now be getting more from the state, rather than relying on the company scheme, the company might reduce the accrual rate of its scheme, or something like that. To do that, it will need actuarial valuations and will conduct long consultations with its employees.

We are advised by the Confederation of British Industry, the National Association of Pension Funds and others that even doing it in 2016 is tight. They argued at one point that 2017 was tight. Even if it were reasonable to bring the change forward for the reason that the hon. Gentleman has given, I think that 2016 is as soon as we can reasonably do it, not least because the primary legislation, subject to the will of Parliament, will not be through until Easter 2014. Secondary legislation will then be needed on the abolition of contracting out. We will have to consult on that, and it all takes time. I find it frustrating; there is always far more of a lead time on such reforms than one might imagine.

There is one other thing that I want to deal with. It is not a point that the hon. Gentleman made, but it has been made about the group of women in question. People sometimes ask why they cannot just be allowed to choose—perhaps to retire on the current pension, reach single tier, and then choose the better pension, if it would be better. One of the difficulties is that single tier does not cost any more overall. It is not a windfall. We have not found some money down the back of a sofa, which we want to pump into some pensions but not others. It is the same money, but it is being spent better. As a result, there are bits of the system that are less generous, and an example that I can give relates to widows.

Under the current system, when a woman’s husband dies the widow can claim a state pension based on his contributions and, in many cases, get a full basic state pension of £110 a week or so. Under single tier, the claim will be on the basis of someone’s own contributions, so a woman who, for example, opted into single tier because she would get £133 and not £127, but whose husband died the next day, would find she could not claim quite the same combination of widow’s benefits

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that she could under the old system; or she would not be able to claim the savings credit, whereas her sister, a few years earlier, could, because she was under the old system. I have no idea—I could not advise a woman on 6 April 2016—what it would be best to choose, because I do not know when her husband will die, or whether the savings credit will come into play, not just on the day when she claims but at any point through her whole retirement. We just do not know. If we gave people that choice and they made the wrong one, would we have to opt them back in again? Would we have to advise them? It would create great complexity.

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In sum, we believe that the reform is a good, positive one, spending the planned budget in a better way. The women in the age group in question have had no state pension age increase from the Government. What the Government have given them is the triple lock, which means that they will get a bigger pension under our policies than if those of the previous Government had been carried forward.

Question put and agreed to.

1.29 pm

Sitting adjourned.