Women’s State Pension Age
Ian Blackford Excerpts(1 month, 1 week ago)
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Mel Stride
That is once again a question about the timing, and I have given a clear response on that. I have given an assurance to the House that there will be no undue delay in our approach to these matters. That is the answer to the hon. Lady’s question.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
May I say to the Secretary of State that he needs to read the room? Let us remember that the ombudsman has said there has been maladministration. There is consensus across the Chamber that compensation should be paid. This is about women who paid national insurance in anticipation of receiving a pension, who were hit with the bombshell that their pension was being deferred—in some cases, by up to six years—with only 15 months’ written notice. Can we imagine what would happen in this place if it was announced that private sector pensions were being put back by six years? Rightly, there would be outrage, and there should be outrage about what happened to the WASPI women.
This was an entitlement taken away from women, who had a reasonable expectation of retiring denied to them. The Government should have recognised the failings and should have compensated those 3.8 million women years ago. Now that we have the determination of maladministration, let us ensure that this is not another Horizon or contaminated blood story and that the Government come back at pace with firm proposals that the House can discuss after the Easter recess.
Mr Deputy Speaker (Mr Nigel Evans)
Order. Can people focus on their questions, please? That would be really useful.
State Pension Age: Women
Ian Blackford Excerpts(6 years, 5 months ago)
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Ian Blackford (Ross, Skye and Lochaber) (SNP)
I beg to move,
That this House calls on the Government to improve transitional arrangements for women born on or after 6 April 1951 who have been adversely affected by the acceleration of the increase to the state pension age.
Madam Deputy Speaker, may I wish you and everybody else in the Chamber a happy St Andrew’s day for tomorrow? With your forbearance, I will just remark that today is the 50th anniversary of the mighty Hibernian football club defeating Napoli—with Dino Zoff in goal—5-0 at Easter Road, ensuring that they went on to the next stage of European football.
I am delighted to open the debate and to move the SNP’s Opposition day motion calling for mitigation for women born in the 1950s. We are here in support of the Women Against State Pension Inequality Campaign and its efforts to secure fairness for women affected by the acceleration in their retirement age. I am saddened that we are having yet another debate on this issue, but the fundamental fact is that the Government should have taken action to mitigate the increase in women’s pensionable age. There must be action. The 3.8 million affected women have waited simply far too long for effective mitigation.
Nick Thomas-Symonds (Torfaen) (Lab)
The right hon. Gentleman will recall that we both called for action well over two years ago when he and I were our parties’ respective pensions spokespeople. Does he share my deep frustration that we have still had absolutely nothing?
Ian Blackford
I welcome that intervention, and I certainly look back fondly on the period when he and I were holding the Government to account. When the evidence is before us that the women did not get appropriate notice and that the acceleration is happening so quickly, it is an absolute outrage that we have had nothing from this Government.
Lucy Frazer (South East Cambridgeshire) (Con)
This is an important debate on an important issue—I also attended the debate in Westminster Hall last week—but does the right hon. Gentleman accept that it is wrong to say that the Government have taken no action? In 2011, they ensured that no one waited for an extended period beyond 18 months.
Ian Blackford
I have heard about spinning, but let me deal with the facts. The hon. and learned Lady refers to the fact that the Government brought in the Pensions Act 2011, but that increased the acceleration. To say that the Government have mitigated the situation is a distortion of reality, and Government Members should stop spinning and tell the 3.8 million affected women the truth: the pensionable age is increasing by three months per calendar month. That is the reality. The Government should be utterly ashamed of trying to argue that they have mitigated things, which demonstrates that some Conservative Members simply do not get what is going on.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
The tragedy is that it falls to us to speak for the individuals who have suffered. I have a constituent in Dolgellau who was born 24 hours too late and now has to work for an extra two years and three months. The change has led to individual tragedies.
Ian Blackford
I am grateful for that intervention; I cannot really add much to what the hon. Lady says, because she demonstrates the ridiculous nature of the situation and why the Government must listen.
Tim Loughton
I am grateful to the right hon. Gentleman, who knows that I support this cause. Although I cannot be here for the rest of the debate due to its late start, if there is a vote, I will certainly support this innocuous motion. The measures taken in 2011 actually benefited men just as much as women, but this is very much a women-focused injustice. Some 33% of men approaching retirement expect to rely on just a state pension, but the percentage for women is as much as 53%, which is why this issue is so important to them and to all of us.
Ian Blackford
I thank the hon. Gentleman for that important intervention. He has been resolute on this matter over the past couple of years, and I know that the women are grateful for his support; I hope that he will be back for the vote later on. I am glad that he referred to the motion in front of us, because we had a choice of all sorts of things to lay before the House today, but the motion is laid in such a way—simply calling on the Government to put mitigation in place—that all the Members of Parliament who have shown support for the WASPI women can support it. Now is our only chance to show that we can stand up and do something for those women.
Several hon. Members rose—
Ian Blackford
I know that many Members want to speak, so I will make some progress and let people in later.
This is about women who have paid national insurance in anticipation of receiving a pension and have been hit with the bombshell that their pension was being deferred—in some cases by up to six years—with only 15 months’ written notice. Members should dwell on that. They were looking forward to retirement, but they received a letter telling them that they were going to get as little as 15 months’ notice of an increase in their pension age. Can anybody on the Government Benches defend that? Will anybody stand up and tell the House and the public that giving someone 15 months’ written notice of an increase in their pension age is acceptable? Is anyone prepared to do that? If so, I will happily give way.
James Cartlidge
We recognise people’s concerns about the notice, but to rectify the situation requires public funds. In a previous debate, the right hon. Gentleman said that his party’s position was to pay for that from the surplus in the national insurance fund. Is that still his party’s policy?
Ian Blackford
Well, there we are. Given the opportunity to defend the indefensible, we again get spin. Let me make things absolutely crystal clear. The national insurance fund is sitting at a surplus in the region of £30 billion, and that surplus has been generated by the women who have paid national insurance. All that we have asked for is that the women be given what they are entitled to receive. A pension should be seen as a right, but the Government have changed the terms and conditions of that right without consulting those who have paid in for a pension. As many of the campaigners have said, “We paid in, you pay out.”
This campaign is at the heart of SNP policy. We have long fought for the Government to rectify the shambles and give the WASPI women the pensions they rightfully deserve. I speak on behalf of SNP Members when I say that we will never rest until justice is delivered for the women affected. The Government have failed time and time again to address the injustices of a lack of notice for the acceleration of the state pension age. There is an opportunity today for the Government to admit that effective notice was not given of an increase in pensionable age. The process of increasing pensionable age must be slowed down.
Simon Hoare (North Dorset) (Con)
The right hon. Gentleman is speaking with his customary passion on this issue, which he says is at the heart of Scottish National party thinking. I am not an expert on devolved powers, but my understanding from reading the legislation is that the Scottish Government have the powers to rectify this issue if they so wish. He chastises the Treasury Bench for a lack of action, but we have seen no action from Holyrood that could give a lead to the Government.
Ian Blackford
There we have it. Does anybody here think the Scottish Government have power to introduce pensions? [Hon. Members: “No!”] I will tell the House why: it is because we do not have the powers. It is about time that Conservative Members stopped creating the impression that we have that power.
Let me be absolutely crystal clear. Power over pensions is reserved to Westminster. There is a bit of a clue, because pensions are paid out of national insurance. I would love the Scottish Government to have control over national insurance. Let me make it clear that if we had control over pensions in Scotland, we would make sure that the WASPI women in Scotland got what is rightfully theirs.
Simon Hoare
The Scotland Act 2016 does not preclude the right hon. Gentleman—
Ian Blackford
There is a very simple answer. I have respect for the hon. Gentleman, as he knows, and he should go back and read the 2016 Act, because it is crystal clear that we cannot introduce new benefits, nor can we introduce payments based on age. The fundamental point that needs to be made is that we are talking about the state pension in the United Kingdom, which is a reserved matter. It ill behoves any Conservative Member to try to create the impression that the people of Scotland and elsewhere have powers that we do not have. If Conservative Members want the Scottish Government to have the powers to fix this, then give us the powers. Give us control over pensions and we will fix it tomorrow.
Ross Thomson (Aberdeen South) (Con)
The right hon. Gentleman has asked us to tell him what powers the Scottish Government have to help in this situation. Well, under section 28 of the Scotland Act they can create a new benefit, and they can make that argument on the basis of, but not because of, old age—the Department for Work and Pensions has accepted that argument. Further, section 26 allows the Scottish Government to make short-term payments to people who need them,
“to avoid a risk to the well-being of an individual.”
The Scottish Government have the powers. They choose not to use them. [Interruption.]
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. I want to hear the right hon. Gentleman. I was about to try to quieten down the House in order that I might be able to hear him, but I realise that most of the noise is coming from those behind him. He is making an important speech, and those behind him are trying to support him, but they are being a bit noisy about it.
Ian Blackford
The simple fact is that the Scottish Parliament and the Scottish Government do not have the ability to introduce new benefits based on age. What is really important, and the hon. Member for Aberdeen South (Ross Thomson) should reflect on this, is that this is a failure of UK Government policy. Nobody can get away from that. Are the Conservatives in Scotland really saying that the Scottish Parliament and the Scottish Government should again clear up the mess left by this Conservative Government? The Scottish Government have already spent £400 million mitigating the worst effects of Tory austerity.
That is the reality—[Interruption.] I see the hon. Member for Moray (Douglas Ross) chuntering. Maybe he could answer this question. Was he one of those who signed the WASPI pledge? Did he say to his voters that he would stand up for the WASPI women? If he is true to his word, he has to come through the Lobby with us this afternoon, or his words will be shown to be meaningless and a fraud on the people of his constituency.
Mr Bob Seely (Isle of Wight) (Con)
I am concerned that the right hon. Gentleman is not willing to listen to Government Front Benchers. I am sympathetic to the WASPI women, of whom there are nearly 10,000 on the Isle of Wight, but the reality is that he can do something about it, but he will not. He is not taking interventions because he would rather score political points than fix this problem.
Ian Blackford
That is pathetic, absolutely pathetic, because it demonstrates well and truly that the hon. Gentleman has not been listening. I have listened to Government Front Benchers in debate after debate in which they have been given the opportunity to do something about this. We introduced costed proposals in the last Parliament. The Minister, like countless Ministers before him, wants to sit on his hands. He wants this issue to go away, and I can tell him that this issue is not going away.
Several hon. Members rose—
Ian Blackford
I will make progress before giving way again.
The Government have an opportunity today to do something about it. I remind the House that 250 Members of Parliament have presented petitions on behalf of WASPI women. That is 250 Members of Parliament who I expect to go through the Aye Lobby tonight. There is no point signing a petition unless they are prepared to go through the Lobby, otherwise they have duped the WASPI women. I trust that no Member would wish to do that.
Our motion is a simple one. It calls for mitigation. It is written in a way that allows all Members of Parliament to recognise the injustice that women born in the 1950s are facing, and it allows the Government to bring forward proposals. Let me state at the beginning of this debate that if parliamentary democracy means anything, the House must divide on this motion. The Government must either support mitigation, which we are calling on them to do, or they must have the guts to vote against it.
Now is the time for Members on both sides of the House to signal that we need to put mitigation in place. Let us stand up today for 1950s women, because I believe parliamentary arithmetic is on our side.
Mr Jim Cunningham (Coventry South) (Lab)
Will the right hon. Gentleman give way?
Mr Cunningham
I congratulate the right hon. Gentleman on securing this debate. He and I have been involved in a lot of debates. I think the Government can find this money. It is no good their trying to blame the Scottish Parliament. This is a UK issue, full stop. I assure him that I will be backing him in the Lobby today.
Ian Blackford
I am grateful to the hon. Gentleman. I hoped he would be backing me, and he has been resolute on this issue over a long period of time. He is absolutely right; we can find money on the magic money tree for Northern Ireland and, as I said in the Budget debate only last week, we found £70 billion for quantitative easing last year. A £70 billion cheque was written for the Bank of England to put into the financial markets, so do not tell us that the Government cannot find the money. Of course, the answer to the question is that the money is there because the national insurance fund is sitting on a surplus.
Ian Blackford
I must make some progress. I will not take interventions for a while.
The moment has never been so opportune for Members on both sides of the House to come together to do the right thing and to call for this long-standing error to be corrected. Conservative Members made a pledge to the WASPI women as recently as June 2017. Scottish Tory Members—I will not name them, but they know who they are—signed the WASPI pledge before the general election and claimed to be prepared to act against party orders on the issue. There has been a deafening silence from them on this matter since the election, and the heckling has gone.
The House might be interested to know that, in the constituencies represented by Scottish Conservative Members of Parliament, a total of 84,000 women are affected by this Government’s legislative changes. I ask this question of the Scottish Tories, in a friendly spirit, particularly to those who supported the WASPI women during the campaign: will they have the courage to join us in the Lobby this afternoon, or will they turn their backs on the 84,000 WASPI women in their own constituencies?
I flag up to them page 62 of the Scottish Conservative manifesto, which states:
“We will also ensure that the state pension age reflects increases in life expectancy, while protecting each generation fairly.”
So, today, Scots Tories, do the right thing.
Colin Clark (Gordon) (Con)
The nub of the matter is that people are living longer and contributions were calculated on the basis of people not living so long. Although I sympathise with what the right hon. Gentleman is saying, the debt burden would be increased on our children and grandchildren, and that is grossly unfair.
Ian Blackford
I am stunned. [Interruption.] I am speechless, because we should put that out in a leaflet. We are not talking about tea and sympathy; we are talking about WASPI women having to rely on benefits, and they are going to get nothing from the hon. Gentleman—that is crystal clear. It is obvious where he stands on this issue.
Today, these Tories should deliver the generational fairness they promised in their manifesto. I sincerely welcome the backing of some 37 Conservative MPs who expressed support for WASPI women during the general election—37 Tory MPs signed the pledge. We will be watching this afternoon, as will the WASPI women, and these MPs will be expected to do what they promised in the election campaign and stand up for the WASPI women. That support stretches from the Tory Back Benches across to the Benches of the Democratic Unionist party—to our friends from the DUP. Page 9 of the DUP manifesto contained a pledge to protect pensions, with the announcement that the DUP would:
“Support an end to the unfair treatment of women pensioners”.
I call on DUP Members to deliver on their pledges made to the WASPI women.
Sammy Wilson (East Antrim) (DUP)
I am disappointed at the tone that has been set in this debate. Despite the fact that we have a motion that could command widespread support, the tone of the debate has not been as I expected. Let me make something clear: we made a manifesto pledge on this issue, and the reason why I am here as my party’s spokesman is that we do support this and we will go through the Lobby on it. However, the WASPI women would be better served if we had a debate that was not divisive and not about point scoring, because there is no party—whether Labour, the Liberals or the Conservatives—that has not caused some of this problem.
Ian Blackford
I am grateful that DUP Members will be going through the Lobby, but let me point out that we are trying to set out the facts of the arguments in this House. These women have for too long been let down by politicians, so let us use the opportunity we have today to give them the result they deserve. Thanks to freedom of information requests, we learned that the Department for Work and Pensions only began writing to women born between April 1950 and April 1955 in April 2009, and did not complete the process until February 2012. So it was writing to women to inform them about changes in legislation that go back to 1995 but it did not start the formal notification period for 14 years. Taking 14 years to begin informing women that a pension they had paid into was being deferred is quite something. Can we imagine the outcry if a private pension provider was behaving in such a way? There would be an outcry in this House and, no doubt, legal action. When we consider that entitlement to a state pension is earned through national insurance contributions, where many women have made contributions over 40 years, this is stunning.
A woman born on 6 April 1953 who, under the previous legislation, would have retired on 6 April 2013 would have received a letter from the DWP in January 2012 with the bombshell that she would not be retiring then—she would be retiring in July 2016. That is three years and three months later than she might have expected, and this is with 15 months’ notice. That is what Conservative Members have been defending, and it is no wonder the WASPI women are insulted. We are talking about 15 months’ notice before what they thought was a contract they had with the Government was simply to be ripped up.
A pensions White Paper published in December 1993 stated:
“In developing its proposals for implementing the change the Government has paid particular attention to the need to give people enough time to plan ahead and to phase the change in gradually”.
Not much there that I would disagree with, but when you accept the need for people to plan ahead, you need to write to them and tell them.
Chris Elmore (Ogmore) (Lab)
I am secretary of the all-party group on state pension inequality for women, as the right hon. Gentleman knows. A serious point for WASPI women is the number of women in their 60s who did not receive a letter. Their pensions were deferred until they were 63, even though they should have received them at 60, but they were not told at the time of those deferments that they should have received them three years earlier. This is another scandal about how the DWP has not been honest in those letters. Does he agree that that is something else the Government should be looking to address?
Ian Blackford
Again, I am grateful for that intervention, and the hon. Gentleman is correct in what he says. This is yet another clear example of why there is absolutely no excuse for not collectively taking action today. We have a choice: we can recognise the injustices that the women have faced or we can sit on our hands and do nothing. This is about morality. It is about doing the right thing. The Minister can look up to the skies, but it is not going to remove the problem for him. I do not want to wait until the end of the debate and then get another 10 minutes of ignoring the reality of what is going on. We have had that for too long and it has to stop—it has to stop today.
The intent was there in the 1993 White Paper, but it was 2009 before any formal letters went out. Then we have the issue of phasing this in gradually. What we are dealing with is an increase in a woman’s pensionable age by three months for each calendar month that passes. It is simply scandalous that a woman’s pensionable age is increasing so rapidly. It is indefensible and it is not within the spirit outlined in the Government’s White Paper in 1993.
In October 2002, while giving evidence to a Select Committee, the DWP suggested that the role of the state was
“to provide clear and accurate information about what pensions will provide so that people will understand how much they can expect at retirement before it’s too late to do something about it.”
How does “before it’s too late to do something about it” equate with 15 months’ notice? How can the Minister, and how can anyone who is not going to support our motion today, support that lack of notice? It has gone quiet now, has it not?
James Cartlidge
The right hon. Gentleman has to find a way to pay for this and he did say that he would still use the national insurance fund. Ruth Kelly, the then Financial Secretary to the Treasury, said the following in 2003:
“The national insurance fund provides security for those contributory benefits. It is ring-fenced and cannot be used for other Government expenditure.”—[Official Report, 21 October 2003; Vol. 411, c. 231WH.]
Ian Blackford
The hon. Gentleman is going to have to do better. Of course this is ring-fenced—it is for pensions. Pay it out! That is what the Government are being asked to do. As I was saying, no formal communication took place until 2009 and the task was not completed until 2012. The DWP has to take responsibility for this failure to communicate and, crucially, for the lack of time that women have had to prepare for an increase in their state pension age. Rather than recognising that women deserved to be communicated with directly, the DWP issued leaflets headlined “Equality in state pension age”. Can anybody in this Chamber remember them? No, I do not recall seeing them either. That is no surprise, as DWP-commissioned research in 2004 highlighted that only 2% of respondents mentioned that they had been notified of changes to their pension age via a leaflet. That is the responsibility that the Government took to inform people. Frankly, it is an insult that the Government at the time thought that changes that affect a woman’s retirement age could be delivered with a leaflet. That was an abdication of responsibility and we have to take responsibility for that. We should all receive an annual statement from the DWP on our expected entitlement, just as we do from private pension providers.
Dr Philippa Whitford (Central Ayrshire) (SNP)
Will my hon. Friend give way?
Ian Blackford
I apologise to my hon. Friend, but I have to move on because of the time.
The failure to communicate was highlighted by a 2004 DWP report called “Public awareness of State Pension age equalisation”, which stated that only 43%—less than half—of all women affected by the increase in state pensionable age were aware of the impact on them. If the Government accept that women were not informed in a timely manner and therefore did not have time to react, why do they not accept their responsibilities? I am watching the Minister and he is looking away. He is not interested because he simply does not want to hear the facts. When will he accept his responsibility for the WASPI women and engage in a constructive manner?
The Government sent out 17.8 million letters on automatic state pension forecasts to men and women between May 2003 and November 2006 but—wait for it—the letters did not contain any information about state pension age. You simply could not make this up. What they did say was:
“If you want to know more about the changes to State Pension age, please see Pensions for women—Your guide… See page 10 for details about how you can get a copy of this guide.”
That, Minister, was no way to convey information. What should have been communicated was accurate, clear and transparent information. It was yet another failure to do that by the Minister’s Department—another massive failure to communicate from Government. What is he going to do about it? Nothing.
On 23 November 2016, in answer to a written question I submitted, the previous Pensions Minister, the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Watford (Richard Harrington), stated:
“The Government has committed not to change the legislation relating to State Pension age for those people who are within 10 years of reaching it. This provides these individuals with the certainty they need to plan for the future…We recognise the importance of ensuring people are aware of any changes to their State Pension age”.
I welcomed that statement, but that recognition of the need to ensure that people are aware of changes was not afforded to 1950s women. If that statement from the previous Minister in 2016 is to have any credibility, the current Minister has to accept that the women affected were not given that courtesy and the Government need to correct that today.
I shall set the socioeconomic scene in which female pensioners find themselves under this Tory Government. Only 52% of women are adequately saving for retirement, compared with 60% of men. Female pensioners have a net weekly income that is approximately 85% of that of their male counterparts. More than two thirds of pensioners who are living in poverty are women. In August, the Institute for Fiscal Studies revealed that the increase in state pension age has left 1.1 million women £50 a week worse off. The IFS looked into the Government’s reform of the state pension, which was needed to account for a longer-living population, and found that the move to increase the eligibility age for women from 60 to 63 meant that income poverty rates were “pushed up substantially” from 15% to 20%. That is just as a result of the increase in the pension age from 60 to 63. Is the Minister going to defend that? Are the Tory MPs from Scotland, bearing in mind their constituents, going to defend that? There has been an 8.7% rise in the chance of a woman aged 60 to 63 being in absolute poverty.
In my constituency of Ross, Skye and Lochaber, there are 5,400 women who were born in the 1950s and are affected by the changes to the state pension age in 1995, 2007 and 2011. Throughout Scotland, the figure is a staggering 347,000. New freedom-of-information figures have revealed that although almost 4,600 maladministration complaints relating to WASPI women have been received by officials at the DWP, only six investigations have been concluded. The process of dealing with the complaints has taken so long partly because the DWP has only three staff members dealing with the complaints. Three staff members dealing with 4,600 complaints—that is how seriously the Government are taking this issue. The delays have been so long that the pensions ombudsman has now forced the independent case examiner to streamline the process. What a farce! That is an indication that the Government simply do not take their responsibilities to the WASPI women seriously—another let down from this Government for 1950s WASPI women. The Government have a commitment to the WASPI women and should stop playing fast and loose with their rights.
In a Westminster Hall debate on 5 July, the Minister talked about employment or retraining opportunities for 1950s women, stating—wait for it—that the Government had “extended apprenticeship opportunities”. There we have it: women who in some cases have worked for more than 40 years can go on apprenticeship schemes. Later in his speech, the Minister claimed:
“I realise it is not going down well”.—[Official Report, 5 July 2017; Vol. 626, c. 143WH.]
It is little wonder, because 1950s women do not want apprenticeship schemes; they want their pensions.
Women born in the 1950s do not want to be pushed on to benefits, but that is what is happening. Between August 2013 and August 2017, the number of people claiming jobseeker’s allowance or universal credit across all ages fell by 42%. We welcome that, but the number of 60s-plus women claiming a benefit rose by 9,500—a 115% increase—while the number of women aged over 60 claiming employment and support allowance increased by 121,000. That is a massive increase of 413%—that is the reality of the sharp increase in the state pension age for women. The reality is that women are being denied their pension and this Government are forcing them on to benefits. The Minister has been ridiculed by, among others, the Financial Times, in which he was described as one in
“a line of pensions ministers with no interest in pensions”.
He certainly has no interest in women’s pensions. Today, the Minister must start to take an interest and do the right thing by putting mitigation in place.
It is nothing short of a disgrace that the Government found no remedy for the WASPI women in last week’s Budget. The Chancellor stood at the Dispatch Box and extolled the virtues of spending billions on Brexit, but he failed to address the injustice faced by female pensioners. Transitional measures to mitigate the issue would cost significantly less than the UK Government’s £30 billion figure. Last year, independent research commissioned by the SNP showed that the cost would be £8 billion. We can find billions for Brexit and billions for Trident, but not one penny for our pensioners, who are treated with contempt by the Government. It is bitterly disappointing that the Chancellor did not use the Budget to support the WASPI women. Once again, it falls to the SNP, by securing this debate, to be a voice for this campaign in the House and to press the UK Government to do the decent thing. They have got it wrong—admit it and fix it now.
Several hon. Members rose—
Guy Opperman
I will give way in a moment, but first let me address the issue in relation to Scotland. I was surprised that the right hon. Member for Ross, Skye and Lochaber (Ian Blackford) refused 10 times to give way. If I were him, I would say that he was frit, but I will not go down that route.
In addition to the substantial support that the UK Government are providing, which is worth £50 billion across the country and 6% of GDP, the Scottish Government now have significant new powers available to them to tailor welfare provision to people in Scotland. Although pensions remain a reserved matter, the Scotland Act 2016 has given the Scottish Government the ability to use a wide range of new welfare provisions.
My hon. Friend the Member for Aberdeen South (Ross Thomson) correctly set out the provisions of section 28 of the Scotland Act. There are of course section 24 powers as well. I refer all colleagues, on both sides of the House, to a letter written to my predecessor by Jeane Freeman, my opposite number in the Scottish Government. She says that the power under section 26
“is limited to providing help with ‘short term needs’, and those needs must require to be met to avoid a risk to a person’s wellbeing. That would not readily allow assistance to the majority of women most affected by the acceleration of increase in their State Pension Age. Their needs and the risks to their well-being would have to be assessed individually.”
There is an acceptance in that letter that, as Scottish Conservative colleagues have said, the powers are there. Those powers commenced on 5 September 2016. It is up to the Scottish Government to determine how they will use those powers, but—
Ian Blackford
On a point of order, Madam Deputy Speaker. I am asking for your guidance about what we can do, because the Minister, perhaps inadvertently, is seeking to mislead the House. It is absolutely crystal clear in the Scotland Act 2016 that the Scottish Parliament is not in a position to introduce benefits by reason of old age. That is quite clear, and the Minister should be truthful with the people of this country. He should stop blaming the Scottish National party and the Scottish Government for a responsibility that solely lies here with Westminster.
Sir Desmond Swayne (New Forest West) (Con)
Further to that point of order, Madam Deputy Speaker.
James Cartlidge
I think the hon. Lady is missing the point. I am not saying that to my WASPI campaigners. I am not full of righteous anger, so high on my high horse that my ears pop, like the right hon. Member for Ross, Skye and Lochaber (Ian Blackford). If we are to go out on a limb to that degree, we must have a credible policy. We must be able to say, “This is how we are going to pay for it.”
James Cartlidge
I do not think that I should give way again, but I will, because the hon. Gentleman was very generous to me. However, others wish to speak, so I shall wind up my speech immediately afterwards.
Ian Blackford
We have tabled a very straightforward motion that asks the Government to introduce mitigation measures. The hon. Gentleman has asked for costed proposals, but we gave him one last year in the Landman report, on deferring the increase in women’s pensionable age. It would have cost £8 billion. That is one option. We have done our work; the Government have not done theirs.
Ian Blackford
On a point of order, Madam Deputy Speaker. This is important. I pointed out earlier in the debate that the SNP published the Landman report last year and it was fully costed. The hon. Member for Redditch (Rachel Maclean) has made an error by saying that our proposal has not been costed. It has been costed precisely and she should recognise that.
Madam Deputy Speaker (Dame Rosie Winterton)
That is not a point of order, it is a point of debate, and it has simply reduced the time available for other people to speak.
Caroline Dinenage
We have taken forward transitional arrangements. It is insulting for Members from parties that have played their part in getting us to where we are today somehow to wash their hands of the matter. I will go on to make a few points, if the hon. Gentleman will forgive me.
Those who are able to work should support those who are not, confident in the expectation of similar support when they reach retirement. Today’s workers provide the support for today’s pensioners, and that is why it is so important that we have the right balance of the contributions that are paid in at present with the pensions that are being withdrawn, and that we adjust pension ages to maintain that balance. Women who retire today can still expect to receive the state pension for 24 and a half years, on average—almost three years longer than men.
As was outlined by the Pensions Minister, my hon. Friend the Member for Hexham (Guy Opperman), the Department for Work and Pensions has communicated the timetable for changes to the state pension age since they were first set in train 22 years ago. As my hon. Friend the Member for Redditch (Rachel Maclean) pointed out, in response to concerns raised during debates on the Pensions Act 2011 in both Houses, we introduced the £1.1 billion concession that has been mentioned, which staggered the changes and ensured that no one would wait more than 18 months for their pensions, compared with under the previous timetable.
Any further concession would cost significantly more. It would involve asking people of working age—more specifically, today’s younger people, as my hon. Friend the Member for Chelmsford (Vicky Ford) mentioned—to pay even more for it. Those outcomes simply cannot be justified.
Caroline Dinenage
I am not going to give way to the right hon. Gentleman. He made criticisms in relation to the Budget and the Chancellor, but he went on to speak for a considerable time today, taking more than 40 minutes for himself and depriving Back Benchers of the chance to have their say. I will make some progress—[Interruption.] I want to address some of the issues that have been raised by SNP Members, so if the right hon. Gentleman would like to listen, I will do so.
As has previously been stated—my hon. Friend the Member for Aberdeen South (Ross Thomson) pointed this out—if the Scottish National party disagrees with any of the UK Government’s welfare reforms, it has the power to do something about it in Scotland.
The right hon. Member for Ross, Skye and Lochaber (Ian Blackford) has mentioned on several occasions that the Scottish National party’s Westminster parliamentary group published a report by Landman Economics, which modelled—[Interruption.] I thought he would be keen to listen to this. The report modelled the impact of a number of options for compensating women affected by the 2011 Act. Of these, the Scottish National party’s preferred option was to abandon that Act entirely, returning us to the timetable under the Pensions Act 1995.
The SNP-commissioned report put the cost of this option at £7.9 billion for the period between 2016-17 to 2020-21. As it stands, that is simply unaffordable, but it has the double misfortune of also being wrong. The Landman report significantly underestimates the full costs of returning to the 1995 Act’s timetable. The Government estimate that the cost over that period would be about £14 billion—nearly double—and that figure includes the impact of lost revenue from tax and national insurance, which the Landman report does not fully take into account.
What is worse is that the SNP’s position applies the costs only to the five-year window between 2016-17 and 2020-21. The costs beyond this horizon are simply not included in the option put forward. If the changes we are implementing did not happen, the actual costs to working-age people would be more than £30 billion over an extended period, which is equivalent to over £1,100 per household. I am sure the right hon. Gentleman would like to justify that to his constituents.
The Scottish National party has also suggested using the national insurance fund to pay for the cost of scrapping the Pensions Act 2011. However, that is not the intended use of the fund, and it is worth reiterating that today’s national insurance contributions fund today’s pensions, with an excess of only two months’ outgoing payments at any given time.
The new state pension is actually much more generous for many women, who were historically worse off under the old system. By 2030, over 3 million women stand to gain an average of £550 extra per year as a result of these changes. The acceleration of the increase in the state pension age for both women and men is necessary to ensure the state pension system’s sustainability in the light of increasing life expectancy and more pressure on public resources. In fact, by 2035, there will be more than twice as many people aged 100 and over as there are now.
Failure to act in the light of such compelling evidence would be reckless. Given the increasing financial pressure that I have described, we cannot and should not unpick a policy that has been in place for 22 years. It is simply not affordable, especially when we take into account the fact that the average woman reaching state pension age will get a higher state pension income over her lifetime than an average woman reaching state pension age at any earlier point.
It is important to appreciate the modern lived experience of later life in the 21st century, which has altered significantly since the inception of the state pension in the 1940s. Longer life, better health and continued activity in later decades are reshaping the profile and participation of older people in our society. This includes sustaining work and other economic activity as those over 60 continue to learn, earn, contribute and participate.
Ian Blackford
On a point of order, Madam Deputy Speaker. We have just had an impassioned debate, and a clear and decisive result. This House has determined that the Government should bring in mitigation for the WASPI women. I am seeking your guidance as to what we now need to do to empower the Secretary of State for Work and Pensions to come to the Chamber, recognise parliamentary democracy, and put in place the Government’s plans to respect the motion that the House has passed.
Madam Deputy Speaker (Dame Rosie Winterton)
I think that the most useful thing I can do is read out the written statement made by the Leader of the House on 26 October in which she updated the House on the Government’s approach to Opposition day debates. She said:
“Where a motion tabled by an Opposition party has been approved by the House, the relevant Minister will respond to the resolution of the House by making a statement no more than 12 weeks after the debate. This is to allow thoughtful consideration of the points that have been raised, facilitate collective discussion across Government, especially on cross-cutting issues, and to outline any actions that have been taken.”—[Official Report, 26 October 2017; Vol. 630, c. 12WS.]
I think that it is very clear what the Government will do. The right hon. Gentleman may well wish to question the Leader of the House further tomorrow, during the exchanges on the business statement, about when there might be a response from the Government.
State Pension Age for Women
Ian Blackford Excerpts(6 years, 10 months ago)
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Justin Madders
My hon. Friend is right that there is an arithmetical inevitability about this matter. That is a tribute to the WASPI campaign and the way in which campaigners focused on people who stood for Parliament and gained their support. Given the timescales and the people we are talking about, the sooner something comes forward, the better, because the women cannot afford to wait another five years until the end of this Parliament. I urge the Minister, as my hon. Friend has suggested, to come up with proposals sooner rather than later.
As we have seen following the election, Ministers have changed their minds on a range of matters, so why should the WASPI campaign be any different? Anyone who has spoken to campaigners cannot help but be moved by the compelling case that they make. I have met many of them and they have told me about how they have been affected. Many have received little or no notice at all about changes to their pension age, forcing them to reconsider retirement plans or, worse still, rejoin the jobs market some time after they thought that they would not need to work again.
I have heard from constituents who volunteered to take redundancy to save the jobs of younger colleagues on the false assumption they would receive their pension at an earlier date. They deserve better. It is no longer acceptable when we hear the Government say that change is unaffordable. As we have heard from various Members already today, we need only to look at what has happened in Northern Ireland in the past week to know that where there is a political imperative, money can be found.
Justin Madders
I will not give way any more.
What about the cost in unintended consequences? Constituents have told me that the position they find themselves in now has had a detrimental impact on their mental health. That has a cost to the public purse as well. If the moral and financial arguments are not persuasive, perhaps the Minister will reflect on the message that this sends out not only to the WASPI women, but to everyone.
The state pension is part of the social contract that the Government have with the people of this country. It is an important part of the state’s guarantee to people that if they pay their taxes they will be looked after in their old age or when they fall ill or otherwise face misfortune. If people do not trust the Government to deliver on that promise, we are heading down a road that we will come to regret.
Mhairi Black (Paisley and Renfrewshire South) (SNP)
It is a pleasure to serve under your chairmanship, Sir Edward. I was going to congratulate the hon. Member for Easington (Grahame Morris) on bringing this subject to the House again, but I actually find myself wishing that he had not, because I cannot believe that we are still debating it. I am absolutely scunnered with banging on about the injustice to this group of women. The fact that we have to have another debate is an absolute disgrace and says a lot about the Government and their priorities.
We are at the stage where these debates are almost scripted for me. I know exactly what is going to come back from the Government Benches and, like most people here, I know what I am going to say. We have heard the Government argue, “Well, the 1995 Act gave 15 years’ notice. That is exactly what the Turner commission recommended, so what is the problem?” Let me say it as clearly as possible: the problem is that nobody knew about these changes. The first letters were not sent out until 2009—14 years after the changes. To put that in context, I have been alive only eight years longer than that. That is 14 years in which consecutive Governments sat on their backside and did nothing, and the Government are now complaining that women are—quite rightly—angry that they never knew about the changes.
The thing is that the Government did not tell us about this issue with their hands in the air and say, “Aye, you’re right, sorry. We got that a wee bit wrong.” The information came from the hard-working women behind me in the Gallery through freedom of information requests and constant letters to the Government. The Government have been nothing but obstructive and downright stubborn the whole way through this campaign and since the issue was raised—so much so that the SNP actually went away and re-did its own work. We used our own money to commission our own report, which shows that this issue could plausibly be sorted and the legislation could at least be amended a wee bit.
All it would take is £8 billion spread across five years. That is a substantial amount, but as was said by the hon. Member for Gloucester (Richard Graham)—I had the pleasure of serving with him on the Work and Pensions Committee—the idea that the Government will genuinely stand in front of everyone here and say, “We can’t afford it,” is quite frankly laughable. It has been pointed out many times that they found £1 billion for a deal to cling on to power, but they say they cannot find the money to give women the pensions they are due.
Ian Blackford
My hon. Friend is a very reasonable person; let us see whether we can help the Government. We know that the national insurance fund has a surplus of £30 billion. Let us lay to rest the myth that there is a black hole. The Government Actuary’s Department’s own figures suggest that that fund will remain in surplus until at least the mid-2030s. May I suggest to the Government that they use that surplus? Women have paid in to the fund; let us make sure they get their pension, and let us do it today.
Mhairi Black
Not surprisingly, I agree with that statement. I heard some muttering from the Government Benches about how that is a lot of rubbish. Let me just say this: if that is a lot of rubbish in their heads, they should bring their plans forward. They do not get to criticise other parties’ plans when they have not even bothered to come up with their own.
Like I say, the debate is almost scripted, because I know that the Minister will say at some point, “We did look at this in 2011 and we did make the concessions at the time.” I guarantee that the Minister will say that. Let my reply be this: that is not how the world works. That is not how society works. If citizens come to them with a time-sensitive problem and say, “This still isn’t working,” it is the Government’s job to listen. It is not the job of the Government to look back and go, “We talked about that a couple of years ago, so I’m afraid there’s no movement there whatsoever.” If that is the case, I am looking forward to the next time the Army needs new funds, the next time this Parliament needs doing up, and so on. The idea that we cannot afford it is ridiculous.
Fundamentally, the worst part of this whole issue is that these women are targeted. The Government like to sit back and act as though these women are just unfortunate casualties of austerity and say, “Our hands are tied; we can’t do anything.” That is not the case; they are targeted. These are women who have suffered pay inequality and social inequality all their lives. We even heard earlier that women were told to use their husbands’ pensions. Society has changed a lot since then. What are we doing for these women now? And what about lesbian couples—women who are in equal marriages with other women? Are they just expected to bear the brunt? [Interruption.] It is not even a double whammy; it is a quadruple whammy at this point.
I am amazed that I feel the need to point this out. These women are blameless. They are guilty of nothing. They have done nothing wrong other than, for instance, not reading the back pages of the Financial Times in 1995. The only other two things they are guilty of are being born in the ’50s and being women. The Government do not get to plead that this is all in the name of equality; when only women are suffering under their definition of equality, it is time for them to reassess that definition.
Fundamentally, Governments should look after their people. When their people are coming to them and saying there is problem, it is their job to fix it. Let me put a little reality into this. I got an email today from a WASPI woman. I cannot remember where she is from—it is somewhere in England. She told me that her friend committed suicide after seeing the general election result because she could not face what would happen to her. Citizens are committing suicide over an issue that could be solved just like that—an issue that the Government could do a U-turn on at any given moment.
The Government managed to fork out a magical £1 billion to cling on to power; they must really want the job of having to fix these things. When they can find £1 billion for self-interest, they do not get to claim that money is the reason they cannot help.
The Government quite rightly dropped their manifesto pension plans—two of them in total, I think—because they saw how damaging, unworkable and unpopular they would be. That was wise. In actual fact, I have a bit of respect for them for being able to go, “Aye, we got that wrong, guys, so we’re pulling back. We’re listening to you.” I say, I hope for the last time: just drop one more plan. Realise that this issue is cross-party and affects people from different backgrounds and different areas. These are people’s mothers, aunties, sisters and cousins. Please do the right thing. Do the job of the Government—fix the problem and start looking after people.
State Pensions: UK Expatriates
Ian Blackford Excerpts(7 years ago)
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Ian Blackford (Ross, Skye and Lochaber) (SNP)
It is a pleasure to follow the hon. Member for Worthing West (Sir Peter Bottomley), who made a gracious and fine speech about why this House, working cross-party, must deal with this issue. I commend all the other Members who have spoken in this debate, too. Let me say to the Minister that I suspect this is the last time in this Parliament that we will be discussing pensions matters. I have always enjoyed our spats across the Dispatch Box. I know he is an honourable and decent man, and I ask him to reflect carefully on all the speeches made this afternoon and to give us an indication that the Government are prepared, on the basis of affordability, to deal with this very real injustice that too many people are facing.
I am grateful to the Backbench Business Committee for granting this important debate on a motion standing in my name and that of the hon. Member for North Thanet (Sir Roger Gale). I am also grateful but saddened by the fact that we have to be here today debating this issue, which is fundamentally about fairness and which should, as has been said, have been resolved many decades ago.
The motion addresses the rights of just over 1 million UK pensioners who live overseas. We are talking about those who have paid national insurance on the basis that the payments made to the UK Exchequer entitle an individual to a UK state pension. When someone makes national insurance contributions, building up their entitlement, there is nothing that suggests that their right to a full pension will be determined by where they choose to live in future. Each individual has earned that entitlement, and it should be honoured. It is a simple matter of entitlement in what ought to be a contractual arrangement.
The Government repeatedly call the state pension a benefit, but that argument is undermined by the basic principle that entitlement is earned by making contributions. To achieve a full UK state pension, a person needs to have accrued 35 years of payments. In such a regime, why should someone’s place of domicile affect their rights? The UK is the only member state of the OECD that does not confer full pension rights, including the annual uprating of pensions, to those who have made contributions. It is simply not right that we discriminate against pensioners because of where they live; and let us make no mistake: that is what it is—discrimination. It is a failure of the United Kingdom to accept its responsibility to give full pension entitlement to those who have earned that right.
A person’s entitlement to the annual uprating of the state pension is determined by what country they live in. Some 679,000 UK pensioners who live in other countries do get the annual uprating, but there are 551,000 whose pensions are frozen at the level at which they first received their state pension when living abroad. Someone who is now aged 90 who had retired aged 65 in April 1991 would, had they qualified for pension uprating, now be receiving £119.31 per week; if their pension was frozen at the 1991 level, their weekly pension would be £52 per week. That is without justification. Such an individual would have lost out on £39,489 of pension income over a 25-year period as a consequence of their being in receipt of a frozen pension and denied their full rights. Think about what that means: by refusing to grant uprating, we are impoverishing our pensioners.
The average amount received by a pensioner with a frozen pension is just £2,258 per year, whereas the average for a pensioner living in the UK is £7,198 per year. We are denying pensioners income that rightfully ought to be theirs. Many will have to receive support from relatives, or perhaps they will have to return to the UK, where the cost of supporting such elderly residents is invariably higher when health and other social costs are taken into account. We also have to think about the fact that many people came to this country to work, often for many decades, and want to return to their country of origin in retirement. Such folk are put off by the reality of potentially being penalised through the receipt of a frozen pension. Where is the humanity in this? Where is the dignity in stopping people who have given long service to this country and paid their way retiring as they wish? They want to know that they will receive their full pension rights. This is a wrong that we must deal with. People who come to this country should not be penalised when they choose to go home.
Other countries see the current situation as a diplomatic grievance, and that will no doubt be a factor when the UK discusses trade deals. Other countries are going to turn around and say, “You want a decent relationship with us, but you are not prepared to treat your pensioners who live in our country fairly.” The fact that we are unique in the OECD in not accepting our obligations does not go down well with other Governments. We need to show leadership, and that we will stand by those who have earned a pension entitlement.
The International Consortium of British Pensioners has been mentioned by many speakers. I commend the consortium for the work it has been doing with the all-party group and the research it has conducted, which shows that because of the lower health and social care costs of somebody not living in this country, there is a saving of £1,575 for every pensioner who moves abroad. Such savings would partly offset the costs of annual uprating.
The House debated frozen pensions on 11 May last year. This debate follows other debates on this matter going back over the past few decades. The hon. Member for Worthing West mentioned Winston Churchill at the turn of the century; indeed, his grandson, also Winston Churchill, was involved in this matter, too. I have been sent a copy of a letter sent in 1993 by the younger Winston Churchill, the then Member for Davyhulme, to a retired pensioner living in Australia called Victor Humphries. Churchill stated in his letter that he hoped the
“Government may be shamed into taking steps to honour its commitment to expatriate pensioners”.
He went on:
“I have no doubt that if sufficient weight of Parliamentary support can be demonstrated for redressing this clear injustice, the Government will have no alternative but to back down.”
Winston Churchill was right in 1993, and all the Members who have spoken in this debate are right in 2017. It is shameful that, collectively, we have not yet dealt with this issue.
There is, of course, a topical aspect to the debate. Brexit hangs like a black cloud over this issue. Of the 679,000 UK pensioners who do receive an annual uprating, 492,000 are currently protected by the social security provisions of the EU single market. What is going to happen to the rights of those 492,000 UK pensioners post-Brexit? Will the Minister commit today to the continuation of the annual uprating for those living in EU member states? We often hear from the Government how they want to protect the rights of UK citizens living in Europe. Many of those citizens will be listening to or will hear about this debate. They will be concerned about their pension rights to the extent that, in the absence of any guarantees, many will consider whether they might not be able to afford to continue to live in an EU member state. The Minister can deal with that uncertainty today.
Jeremy Lefroy (Stafford) (Con)
Does the hon. Gentleman agree that it is inconceivable that this Government, or the Government after the election, would not guarantee uprating to British pensioners who live in the EU 27? As my hon. Friend the Member for North Thanet (Sir Roger Gale) said, it is therefore inconceivable that justice would not come at the same time for the people who have been denied it for so long. That would be discrimination of the worst sort.
Ian Blackford
I concur 100% with the hon. Gentleman; he is absolutely right. We have the opportunity today to deal with this matter and with the uncertainty facing UK citizens who live in Europe. That would be the right thing to do. As has been demonstrated, the cost of doing this for other British citizens would not be all that great. We can actually deal with this matter today if the Minister will recognise that it is a matter of good faith. As we go into the election campaign, I implore us all to make the commitment, collectively, to deal with the injustices we are discussing. If he so chooses, the Minister can remove the uncertainty today, or he can at least give us an indication that the Government are prepared to do something about this issue.
A further 186,000 UK pensioners live in countries with which the UK has a historical bilateral agreement on social security, including the US. A total of 551,000 UK citizens live in countries in which their pensions are frozen, with the largest numbers being in Australia where there are 246,000, and Canada where there are 144,000. The all-party group has met members of the Canadian diplomatic community, and I can tell the House that they are less than impressed with the behaviour of the UK Government on this matter. We are offending our international friends with our failure to take action.
We often hear about a postcode lottery; this is a national lottery, but one in which 551,000 British pensioners are paying the price. I am glad that the motion has cross-party support, and hope that the Minister will recognise the nature of that support and that we are all appealing to the Government to signal that there is an obligation on them to see sense on this matter. I look forward to the Minister’s response, and I hope we will hear from him that the Government are prepared to take action. It is about doing the right thing, and standing up and recognising that all pensioners, irrespective of where they live, deserve to be treated equally.
When we consider that the Government are lifting the limit on the period that UK citizens may live abroad but vote here from 15 years to their entire lifetime, we have to ask why the Government would want to confer voting rights on UK pensioners but deny them full pension rights? Perhaps the Government should reflect on the fact that more than 1 million UK pensioners live overseas. Those pensioners may have a reason to want to register to vote in this coming election campaign, given the infringement of their pension rights. As the hon. Member for Worthing West mentioned, there are 264,000 registered overseas voters—400 per constituency. Can Members imagine the threat to MPs up and down this country if frozen pensioners and others decided that they were going to exercise their franchise? With an election coming, a rise in registrations may just help focus the mind of the Government. What drives the decision-making process of the Government? Is it cost saving, or is it about accepting our obligations to meet a commitment to paying pensions regardless of country of residence?
I appreciate that the Minister will have been told by the Treasury not to offer anything. I know that he is a loyal Government servant and I understand his position. Let me, if I may, try to help him by strengthening his arguments with the Treasury. The right hon. Member for Tatton (Mr Osborne), the previous Chancellor of the Exchequer, said during a debate on the Pensions Bill in the 2003-04 session, when acting as the shadow Chief Secretary to the Treasury:
“If the system worked in the way that most people think, it would not matter where a person lived.”––[Official Report, Pensions Public Bill Committee, 18 March 2004; c. 256.]
I have to say that, on this occasion, I agree with him; it should not matter where a person lives. I appeal to the Minister to reflect on the words of his friend, the former Chancellor of the Exchequer. Those words were spoken when the right hon. Gentleman was in opposition, but each and everyone one of us should be judged by our deeds in government. It is not good enough to say the right thing when in opposition and then, when in government, claim that it is all about cost. We should be judged by our deeds, and today we have that opportunity. I implore the Minister to do the right thing on this issue today.
I have faith that the Minister will listen to reasoned argument and recognise that this is an injustice that needs to be corrected. Let me deal with the issue of affordability. The Government like to claim that the cost of unfreezing pensions is unaffordable. Ministers have sometimes cited numbers in the billions, but any such claim is highly misleading. The motion for debate proposes the withdrawal of the Social Security Benefits Up-rating Regulations. That would include previously frozen pensions in this year’s 2.5% increase, which would cost £30 million. Assuming that this inclusion continued in subsequent years, the total cost would rise by around £30 million extra each year.
The ICBP has historically campaigned for pension parity, bringing currently frozen pensions up to UK levels immediately, which would cost £580 million, but that is not what is being proposed today. Any higher number cited by the Government involves looking at the cumulative cost over a longer period, which is not how new policies are usually assessed and is therefore misleading. The additional cost of uprating at 2.5% over the next five years would have a cost in year one of £30 million, rising to £33 million by year five, by which time it would have a cumulative cost of £158 million. Let me put that in context: the bill for UK state pensions is currently £86.8 billion. Partial uprating is equivalent to 0.03% of current pension spending.
Let me assist the Minister again. We are all aware that there is a separate national insurance fund, and we know from the Government Actuary’s Department that it is anticipated that that fund will have a surplus of £30.7 billion this year. Clearly, the cost of doing this can be met from the surplus that currently sits in the national insurance fund. Of course this is affordable. This is about our obligation to our pensioners and the human cost of not meeting those obligations. We need to listen to the voices of those who are discriminated against by our failure to pay full pension entitlement.
I will close now with some quotes. I know that the hon. Member for North Thanet has eloquently presented us with some human experiences, but let me just add to them, because at the end of the day it is the cost for the individuals that should concern us. Abhik Bonnerjee is 72 years old and now lives in Kolkata, India. After contributing to the British economy for 38 years, he is now scared of losing his home as he is struggling to survive on his frozen pension. He is considering moving to an unfrozen country. He said:
“The Government should be doing more, especially for Commonwealth countries, and MPs can’t explain why they are not.”
Bernard Jackson, 91, moved to Canada, but was forced to return to the UK in order to obtain his full pension. He said:
“I was brought up to believe that Britain was a fair country. It’s a disgrace, it has to end. It’s terrible to meet pensioners over here who say they have to come back to Britain because they can’t manage.”
Mr Virendra Sharma
This is an opportunity for the Minister to say today that Britain is still a fair country, so that the people can get social justice in other countries.
Ian Blackford
I am grateful for that intervention. I agree with the hon. Gentleman, and it is up to us to demonstrate that fairness. Why should people who have emigrated from the UK be put in this position? They have a pension entitlement, but they have to return here to get what is theirs. That cannot be right. That is not something that we should support.
Joe Lewis, 90, lives in Canada and has recently lost his wife. He will be moving back to the UK as he can no longer cope with his frozen pension. After suffering a severe fall, Joe is increasingly struggling to afford living and medical costs. The only way he can make ends meet is to use up all his savings. Joe says:
“All I want is my full state pension, which I have paid into my entire life.”
Why should Joe not get something for which he has paid? That is the salient point. Joe and everyone else we are talking about have paid national insurance. This is an entitlement.
George Gray, 77, now lives in South Africa. He paid national insurance for 48 years until reaching retirement at 65. He was completely unaware of frozen pensions until it came to applying for one. He states:
“I was even told that getting our state pension was not a right, but merely a benefit from the British Government that could be amended at any time - but I’ve paid for it all of my working life.”
Anne Puckridge, 90, now lives in Canada. She worked in the UK up to the age of 76, paying mandatory national insurance contributions, and now has a frozen pension. She says:
“The Government should be doing more, especially for Commonwealth countries, and MPs cannot explain why they are not.”
Jane Davies, 70, now lives in British Columbia, Canada. She worked in the NHS for more than 20 years, helping hundreds as she worked in rehabilitation and elderly care. She was unaware that pensions could be frozen. She has said:
“It’s outrageous when you think that it’s mainly Commonwealth countries that are affected, especially when Canadian pensioners living in the UK receive a full pension.”
That is why the Canadian Government are so exercised about this. They pay a full pension to their citizens living here, and yet we fail to reciprocate.
Wendy Moss now lives in Australia. She moved there in 2002 and was completely unaware that her pension would be frozen. She says:
“I am looking into a potential return to the United Kingdom, but need to ensure that my family can make the journey back with me.”
In conclusion, these stories are heartbreaking. Let this House show that we can deliver compassion and recognise injustice. Let the Government commit to fixing this issue before we go out and campaign. Let us show that we are prepared to do the right thing. When we are back, I will look forward to legislation being passed to fix this and to fix the injustices for the WASPI women as well.
Richard Harrington
Well, it is about the subjectivity of those words, if I may say so. I will try to address some of the points he made, but I cannot successfully answer his cricket team question. However, given that our civil servants will probably have less to do over the next few weeks than they have had to do over the last few weeks, I will formally write to him. As a child, with “Wisden” and everything else, I would probably have been able to answer his question myself, but I am afraid I cannot do that now.
As I was about to say before I was hit for six by that intervention, the United Kingdom state pension is payable worldwide, regardless of the recipient’s country of residence or their nationality. I say that formally on the record because were I a member of the public watching the broadcast of this debate or reading it in Hansard, I could quite easily get the impression, when we talk about scandals and things like that, that people were leaving the country and not getting their pension at all. The state pension is paid to people who are entitled to it when they leave the country, but increased—“uprated” is the expression in this context—abroad every year only when the recipient is in certain areas: in the European economic area, Switzerland, or a country with which the UK has a specific reciprocal agreement that allows for uprating. This is a long-standing policy that has remained consistent for about 70 years, and, as has been said, it has been the policy of consecutive Governments of all persuasions.
I recognise that this subject arouses strong opinions, and some of the language used is very concerning. Please do not think, Madam Deputy Speaker, that I think that the language used has been improper in any way, but it is very strong language about people suffering hardship and so on.
Ian Blackford
Does the Minister appreciate that there is clear evidence that people who have gone to live abroad have come back because they do not feel they can manage on a frozen pension? There is clear evidence that people feel that they have been affected quite significantly by that situation.
Richard Harrington
I do not disagree with that, but people also return for many other reasons. When people decide to emigrate and live abroad, they do it for a number of reasons. They take into consideration the cost of living generally and the cost of property, or food, drink and entertainment—whatever it may be—and the pension is part of that. Similarly, when they decide to return, part of the reason might be whether their pension increases by the rate of inflation, but I suspect that there are many other reasons as well—for example, ill health, getting older, and family issues. I could not dispute what the hon. Gentleman said—in fact, I would never try to dispute what he says—but it is part of the picture and it is not right just to pick out that particular point.
I felt it my duty when taking on this portfolio to speak to as many people as possible. In November last year, I attended a meeting at Lancaster House—a very grand venue—where there were leaders from the overseas territories. It was a big Joint Ministerial Council. I met many of the people mentioned by my hon. Friend the Member for North Thanet, from Montserrat, the Falkland Islands and elsewhere. They were very impassioned people who gave a series of speeches that were basically saying the same thing. That has been reflected in what has been said today. Several hon. Members, including my hon. Friend, referred to people not having parliamentary representation. That point was made strongly by the hon. Member for Leeds North West (Greg Mulholland). I was born and brought up in that constituency, so I accept what he said about its minority communities; I was a descendant of one of them. I could only say to the people at the conference that I was there to listen. It seemed from what they told me that Ministers of all persuasions have politely declined such an invitation before. I know that this is a very impassioned debate. People do feel very strongly about it, and it is not something that I take lightly.
Several contributors, including my hon. Friend, said that because all workers pay their national insurance contributions towards their state pension there is a moral right that they should receive an uprated state pension wherever they live. Moral rights are very subjective, but I know exactly what was meant. However, the rate of contribution paid has never earned entitlement to the indexation of pensions payable abroad. That reflects the fact that the scheme overall is primarily designed for those living in the UK, and it operates on a pay-as-you-go basis. Contributions paid into the fund in any one year contribute to the expenditure in that year. That is the way that public finance works. The contributions provide a foundation for calculating the benefits, but they do not pay for those benefits.
The hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) mentioned the national insurance fund. It is convenient to bring this up in debates, but in reality there is no surplus in the national insurance fund because it is all used to pay contributory benefits. It is basically a system of public accounting. The £16 billion that was mentioned is two months’ expenditure. It is just an advisory level for the fund suggested by the Government Actuary because it is a prudent working balance. It is not like having a bank account where we can say, “Oh, we’ve got a surplus—let’s use it.”
Ian Blackford
We all understand and accept that it is a pay-as-you-go system, but that does not detract from the fact that when someone pays national insurance, it is on that basis that they are earning entitlement from that mechanism. As for the national insurance fund, the surplus is actually £30 billion, and it needs to have—the Minister is right—two months’ cashflow within it, which is £16 billion. So the point remains the same—the money is there to do this.
Richard Harrington
I think, as we do on many things, the hon. Gentleman and I will have to agree to disagree on that, but we both fully understand each other’s arguments, I am sure.
The point about cost has been made very coherently. The Government generally take the view, of course, that the first priority is to ensure that older people in this country have an adequate income in retirement. Uprating all state pension payments in full to the rate currently paid in the UK, regardless of the recipient’s country of residence, would cost about an extra £500 million a year, increasing significantly over time. While that may not have been specifically argued for in this debate, people in favour of the motion are talking about a moral argument, not a legal argument. Many of us are here because we believe in moral arguments generally in our political lives, and I hope in our personal lives as well. That is why many of us do the job, so please do not think that I am pooh-poohing the idea of a moral argument. However, both systems of calculating this could be seen as being based on a moral argument.
This debate has been predominantly about so-called partial uprating. I understand this to mean not to uprate fully but to uprate the current level of state pension that the person is receiving through the triple lock or equivalent from a future date, and only pay uprating going forward with no arrears. I had to look at that very carefully when I saw that we were having this debate, because partial uprating can mean different things in different contexts. It is superficially a very attractive argument to say, “We could do this because it’s a few million pounds a year—tens of millions, not hundreds or billions.” It is not like the cost involved in the case of the WASPI women; the hon. Member for Ross, Skye and Lochaber correctly mentioned that some independent research has been done on that, which I have read very carefully. That would cost billions of pounds, but this is about tens of millions of pounds, which, on the face of it, sounds like small change within the full scale of Government expenditure.
Pension Schemes Bill [Lords]
Ian Blackford ExcerptsWednesday 29th March 2017
(7 years, 1 month ago)
Commons ChamberRead Full debate Pension Schemes Act 2017 View all Pension Schemes Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 29 March 2017 - (29 Mar 2017)
Ian Blackford (Ross, Skye and Lochaber) (SNP)
May I associate myself with the remarks made by the Minister and the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) about the events of last Wednesday? We should reflect on the fact that those events were unfolding outside this Chamber while we were having our debate. Our thoughts are very much with those who, in the line of duty, defended our interests, including the police officer who lost his life, as well as with the others who lost their lives, those who have been injured and all those who have been affected.
As we have this debate, we should reflect on the responsibility that all Members have to build an architecture that creates a climate in which consumers around the UK can safely invest in pension schemes and savings, and in which there is an element of trust. I broadly welcome the Bill’s role in improving the landscape. It is an important step forward in so far as it puts in place the necessary protection for those who are investing through auto-enrolment. It is crucial that we have the regulation in the Bill.
Like the Labour spokesperson, the hon. Member for Oldham East and Saddleworth, I would have been happier if the Government had accepted some of our amendments. Having said that, I was very much encouraged by the Minister’s response last week, particularly to an amendment I tabled regarding section 75 of the Pensions Act 1995. I welcome the commitment to revisiting this issue. As has been said, the Bill has to be seen in the wider context of what we are seeking to achieve on pensions.
Two of my new clauses were not selected for debate, one of which was on the establishment of a pensions and savings commission. I still believe that the Government should consider that proposal, because an awful lot is going on in this landscape, some of which was described by the hon. Member for Oldham East and Saddleworth. There is the forthcoming review of auto-enrolment. We have had the Cridland review, the Green Paper on defined-benefit pension schemes and the FCA paper. I think that there is a willingness among all of us to work collegiately to improve the interrelationship of all these factors. I look forward to the debates that we will have in taking this forward. This all comes back to my point about how we can create further confidence so that we get effective saving in the pensions landscape.
I put this in the context of the Green Paper, one of the most striking features of which is the indication at its beginning that the average defined-benefit pot is £7,000. We all have to accept that pension savings are not at an appropriate level. We all want people to save to such an extent that they can have dignity in retirement through both their workplace pension and the state pension provision. I look forward to working with the Government on the review of auto-enrolment. While we are improving the protection for today’s consumers, we need to do more to protect other people, particularly a lot of women who have been excluded, such as those in part-time jobs who are below the threshold, and the self-employed.
I applaud the Government for what they are doing. While the Bill is a very necessary step forward, there is much more that we can do by working together for the mutual benefit of those who invest in pension schemes.
Question put and agreed to.
Bill accordingly read the Third time and passed, with amendments.
Oral Answers to Questions
Ian Blackford Excerpts(7 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Richard Harrington
I would like to be able say that it is enough, but I do not think it is. The steps we intend to take should make prosecutions for scam cold calling much easier. If I am asked the question again in the future, I hope to be able to answer in the affirmative.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
On the issue of accurate and clear information, the Cridland report, published last week, stated:
“An increase of the State Pension age every ten years—and by only one year per decade—represents an appropriate pace of change”.
Does the Minister agree with that statement? If so, will he revisit the issue of the WASPI women, who face an increase in the state pensionable age of more than five years this decade?
Pension Schemes Bill [Lords]
Ian Blackford Excerpts(7 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Ian Blackford (Ross, Skye and Lochaber) (SNP)
I rise to speak to new clauses 6 to 9 and amendments 5 to 9. I am disappointed that new clauses 10 and 11 were not selected for debate.
Mhairi Black (Paisley and Renfrewshire South) (SNP)
Does my hon. Friend agree that it is because of such examples as he has touched on of unincorporated businesses at risk of losing personal assets that it is so pertinent that the Government bring forward the solution right now rather than wait for the opportunity to pass?
Ian Blackford
I am grateful to my hon. Friend, who is absolutely right. These are complex issues. That is why we make the suggestion that we are willing to work with the Government on this. We have to find a solution to this because at the end of the day ordinary people who have done the right thing could now be faced with losing their house, and that cannot be right. This issue has to be resolved.
There are a number of options for the UK Government to consider but each one has complications for the pension schemes, employers and scheme members. We urge the Government to weigh up the interests of employers with the need to protect benefits for pension scheme members. The former Pensions Minister in the other place, Baroness Altmann, indicated that she would look closely at how a solution could be reached to this complex issue. We need the same assurances from the Minister that he will work to find a solution for the industry and use this Bill to bring forward a solution.
SNIPEF’s four objectives are to achieve an amendment to section 75 debt legislation, as its main concern is for those involved in the unincorporated businesses that my hon. Friend mentioned who are at risk of losing their personal assets including their homes. It wants the Government to conduct a review of the actuarial methods used to value pension scheme liabilities, as it believes that the calculation of section 75 employer debt on a full annuity buyout basis is inappropriate and detrimental to non-associated multi-employer schemes given current economic conditions. It argues that orphan debt in any non-associated multi-employer scheme should be excluded from the calculation of section 75 employer debt. It suggests that provided the scheme is deemed to be prudently funded, the PPF acts as guarantor of last resort for orphan liabilities. It also believes that any changes in legislation should apply retrospectively to all employers from 2005. It would be helpful to get the Government’s view on this request. SNIPEF recently met the Minister, and it has advised SNP MPs that he confirmed that the objectives may have been incorporated within the Green Paper. We are now interested to hear the Government’s view as to whether they have identified a solution.
I want briefly to make passing reference to my two new clauses that have not been selected for debate, and signal my disappointment about that. New clause 10 would require the Secretary of State to identify support for women affected by the changes to the timetable for state pension age equalisation. We are disappointed that a pensions Bill has not been brought forward to deal with the pressing injustices within the pensions system.
Mhairi Black
Does my hon. Friend agree that by missing this opportunity the Government are wilfully ignoring it, much like they are ignoring the WASPI women themselves?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We do not discuss new clauses that have not been selected. We have to deal with what is before us and that is the new clauses on the selection list. I know that the hon. Gentleman wants to stay in order by dealing with those, not those that have been omitted.
Ian Blackford
Thank you, Mr Deputy Speaker; I am happy to receive the guidance that you have given me. I simply wanted to put on record that we had missed the opportunity to debate the measures today. I know that we will have the opportunity to raise these two issues again, so I will skip on without making any further reference to them.
The SNP believes that we need to look holistically at the problems inherent in the system and build on opportunities such as auto-enrolment. Only by giving pensions thoughtful consideration can the Tories get this right. With alarm bells ringing about the injustices facing the WASPI women, and concerns that we could see another hike in the state pension age, even the idea that the Government are contemplating reviewing the triple lock post 2020 is deeply troubling. If I may say so, we know that only by delivering an independent Scotland can the SNP deliver dignity in retirement.
I turn to amendment 5, which would mean that the financial sustainability of the scheme funder had to be taken into account when assessing the financial sustainability of a master trust scheme. The Association of British Insurers has told us that insurance companies already hold a very significant amount of capital under the European regulatory framework for insurance, solvency II. In our view it would not be reasonable, nor is it necessary, for insurers to be required to hold separate or additional capital on top of that to meet their new obligations as master trust providers under the Bill. We would like to hear assurances from the Government that insurers will be exempt if they already adhere to FCA and PRA regulatory and financial sustainability requirements.
Amendment 6 allows for exceptions to the requirement that a scheme funder must only carry out activities directly relating to the master trust scheme for which it is a scheme funder. Amendment 7 makes provision for the Secretary of State to define “restricted activities” by regulation, including a list of specific activities restricted to minimise the risk of loss by master trust scheme funders. Through these amendments, we acknowledge that there may be circumstances in which the scheme funder requirements in the bill should not apply. The amendments state that the requirements need not apply to firms whose activities are already restricted by virtue of existing regulation.
The ABI has said that, in particular, the Prudential Regulation Authority rules mean that insurance activities of the scheme funder that are not directly related to the master trust scheme are transparent and do not threaten the solvency or sustainability of the master trust. The ABI says:
“This is a sensible and pragmatic approach”.
It would be useful to understand what additional requirements will need to be met for firms to be exempt from the scheme funder requirements. It would also be helpful to gain an assurance that the Government are committed to working with the industry throughout the development and consultation process for the regulations.
Amendments 8 and 9 provide the Pensions Regulator with an alternative to stopping payments to the schemes under section 5(b) of a pause order. Amendment 9 is consequential on amendment 8. The Bill creates a new power enabling the Pensions Regulator to make a pause order requiring certain activities to be paused once a trust has experienced a triggering event. That includes accepting new members, making payments, accepting contributions and discharging benefits. The TUC is concerned about the impact of a pause order on a member’s savings because there are no mechanisms in place to allow ongoing contributions to be collected and held on behalf of a saver. We contend that it is unacceptable for a member to be penalised, and in effect to lose wages in the form of employer contributions, because of events out of their control. The Society of Pension Professionals has said that it will be necessary to ensure that the period of effect of a pause order cannot start before the trustees actually receive notification of the pause order. That would mean that any contravention could occur only after the trustees are were receipt of the order. Without this, they argue the trustees could be in breach of a pause order, through no fault of their own, if a direction is not complied with during the period between the date on which the regulator makes the order and the date on which the regulator notifies the trustees of it—for example, if new members joined the scheme in that period contrary to a direction under clause 32(5)(a).
The Government should clarify whether they intend to take action to protect savers now, as we are disappointed that our amendments were defeated at earlier stages. I look forward to hearing the Minister respond. We have sought to work constructively with the Government to enhance the Bill, which we broadly welcome. We affirm our position of wishing to work with the Government where we can to create an environment in which workers can have faith and trust in pension savings.
We should all desire to develop a landscape in which pension saving is encouraged, allowing us to ensure that all our pensioners—from both their own provision and the state pension—have dignity and security in retirement. The Bill helps us along that road, as far as the regulation of master trusts is concerned. There is more to do to enhance auto-enrolment, and I look forward to working with the Government to take steps to include those who are currently excluded from pension savings, particularly the self-employed and many part time workers, especially women.
In closing, although I welcome the Bill, I reflect on the fact that it was necessary for me to put down a prayer last night on frozen pensions after the Government again brought forward a statutory instrument to freeze the pensions of hundreds of thousands of British pensioners who are being denied their full rights. In pushing the measure through, the Government have denied Members of this House the right to debate the matter. I encourage all hon. and right hon. Members to sign early-day motion 1097. I hope that if we can, as I believe we can, demonstrate broad cross-party support against this measure, the Government will have the grace to bring forward a debate on this matter before recess. This early-day motion has already been signed by Members from six parties, including the Government party. I encourage them to listen to us on this matter, as part of proceedings on the Bill.
Pension Schemes Bill [ Lords ] (Fourth sitting)
Ian Blackford ExcerptsThursday 9th February 2017
(7 years, 2 months ago)
Public Bill CommitteesRead Full debate Pension Schemes Act 2017 View all Pension Schemes Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 9 February 2017 - (9 Feb 2017)
The Chair
I understand that following the debate this morning, Mr Blackford no longer wishes to move new clause 8. Is that correct?
Ian Blackford (Ross, Skye and Lochaber) (SNP)
That is correct.
New Clause 11
Asset protection for unincorporated businesses
“The Secretary of State must, by regulations, make provision to amend section 75 of the Pensions Act 1995 in order to protect unincorporated businesses at risk of losing their personal assets including their homes.”—(Ian Blackford.)
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss the following:
New clause 12—Review of actuarial mechanisms for valuing pension scheme liabilities—
“Within six calendar months from the day on which this Act comes into force, the Secretary of State must conduct a review of the actuarial mechanisms used to value pension scheme liabilities under section 75 of the Pensions Act 1995.”
New clause 13—Non-associated multi-employer schemes: orphan debt—
“The Secretary of State must, by regulations, exclude from the calculation in section 75 of the Pensions Act 1995 the orphan debt in any non-associated multi-employer scheme.”
Ian Blackford
It is a pleasure to serve under your chairmanship, Ms Buck. I thank the Committee for its assistance in taking new clauses 11 to 13 earlier than planned.
New clause 11 would help to deal with an issue facing plumbers in Scotland. Plumbing Pensions (UK) Ltd was established in 1975 to provide pensions for the plumbing and heating industry UK-wide. The scheme is managed by a group of trustee directors appointed from nominees of the Association of Plumbing and Heating Contractors in England and Wales, the Scottish and Northern Ireland Plumbing Employers Federation and Unite the union. The scheme has more than 36,000 members and assets in excess of £1.5 billion.
Under section 75 of the Pensions Act 1995, employers may, in certain circumstances, become liable for what is known as a section 75 employer debt. That debt is calculated on a buy-out basis, which tests whether there would be sufficient assets in a scheme to secure all members’ benefits by buying annuity contracts from an insurance company. Legislation specifies that a section 75 employer debt becomes payable when an employer becomes insolvent, winds up, changes its legal status or ceases to have any active members in the scheme. Although we must be mindful that the purpose of those rules is to protect pension benefits, the way they are currently framed creates problems for some stakeholders, and we are sympathetic to SNIPEF’s concerns, which I know it has also raised directly with the Minister.
The solution is not clearcut. There are several options for the Government to consider, but each has complications for pension schemes, employers and scheme members. We urge the Government to balance employers’ interests with the need to protect benefits for scheme members. The previous Pensions Minister, who sits in the House of Lords, indicated that she would look closely at how a solution to this complex issue could be reached. We need the same assurances from the current Minister that the Government will work to find a solution for the industry. They could use the Bill to bring forward such a solution.
SNIPEF aims to achieve an amendment to the section 75 debt legislation. Its main concern is for unincorporated businesses where people risk losing their personal assets, including their homes. It wants the Government to review the actuarial methods that are used to value pension scheme liabilities, as it believes that given the current economic conditions, the calculation of section 75 employer debt on a full annuity buy-out basis is inappropriate and detrimental to non-associated multi-employer schemes.
SNIPEF argues that orphan debt in any non-associated multi-employer scheme should be excluded from the calculation of section 75 employer debt. It also suggests that, provided that schemes are deemed to be prudently funded, the Pension Protection Fund should act as guarantor of last resort for orphan liabilities. SNIPEF believes that any changes in legislation should apply retrospectively to all employers from 2005. It would be helpful to hear the Government’s view on that request.
As I mentioned, SNIPEF recently met the Minister, and it has advised several MPs that he confirmed that those objectives could be incorporated in a Green Paper, but I want to use the opportunity of the Bill to address these matters. We are eager to hear whether the Government intend to include a solution in the Bill, and I look forward to the Minister’s comments.
The Parliamentary Under-Secretary of State for Pensions (Richard Harrington)
It is appropriate, given the temperature in which we are working, that plumbers are mentioned. I only wish that some of them were in the Public Gallery to make repairs so that hon. Members would not have to wear their coats.
I joke about that, but I accept that this is a serious matter. When it was brought to my attention, it was my duty and pleasure to meet representatives of not just the plumbers but others. The Government are not ignoring the issue. Although some stakeholders have run an effective public campaign, as is their right, it was the job of the Department for Work and Pensions anyway to get to grips with this, despite the fact that MPs have contacted us individually, such as the hon. Member for Ross, Skye and Lochaber—
Richard Harrington
Thank you. I have finally got it. I shall provide tuition for other hon. Members.
This issue is important. For the record, I should remind hon. Members who are not as familiar with it as the hon. Member for Ross, Skye and Lochaber why the employer debt legislation is in place. It is to help ensure that members of salary-related occupational pension schemes receive the pensions they worked for and have been promised when their own employer cannot provide them. I think everyone would agree that that is a noble aim. Were that not a rule, it would have led to even more difficulties.
When I see representatives of those in such positions, I try to think about this key question: if they are not responsible for the debt, who is? Someone has to be responsible for it. As hon. Members will have picked up from the hon. Gentleman’s speech, people who have been working quite properly and, typically in this field, running their own businesses find themselves with—I do not know what the legal term is—a contingent liability that could be called upon. It is not as though they have received an invoice or a demand, or people have been banging on the door to repossess something, but it is understandably on their minds that that could and might happen, which is a serious matter.
Ian Blackford
That is exactly the point. We are talking about often small businesses that have done the right things in making sure their employees are protected and have adequate pension provision, but there is a sword of Damocles hanging over them with the worry and uncertainty, caused purely by this debt, that they may lose their businesses and houses.
Richard Harrington
I accept the hon. Gentleman’s point. We all agree there is a problem. I do not see how anyone could disagree with that. These people are simply in an unfortunate position, but the Government have to decide, “If not this, what?” and “What are the alternatives?” The hon. Gentleman said, as the groups involved have, that the debt should be passed to the Pension Protection Fund, which everyone would agree has been a very successful mechanism. We mentioned the Maxwell case before lunch. The PPF was intended to deal with failing schemes. It is paid for by the levy payer—by all the successful pension schemes—and I am sure they complain because it is a significant amount of money, but everyone would agree that it has been successful.
In this case, we would place an unfair burden on the PPF, because we are not talking about failing schemes. Many of them are successful and proper. That is why I mentioned a contingent liability. If it is your liability— I do not mean yours, Ms Buck, but anyone’s—it is real to you. It is not quite as real as having an invoice or a demand, but it is there all the time. I do not deny that. However, passing the debt to the PPF would place an unfair burden on the PPF and its levy payers.
Like so many issues facing defined-benefit schemes, the problem is complex and finding a solution is difficult. I accept that it is for the Government to address it. That is what we are elected and paid for. But like everything else in government, there is not an instant, easy solution. It is worth highlighting the fact that the Government have already made significant changes to the legislation in response to representations made by some employers. A number of mechanisms have been made available in employer debt regulations whereby only part of the debt or none may be payable. There are eight such mechanisms in legislation. A wide variety of circumstances can arise, because there are a lot of diverse scheme structures. The best example, which has been discussed with the plumbers and those making similar representations, is flexible apportionment arrangements, which permit an employer debt attributable to the departing employer to be shared among the remaining employers. That sounds attractive, but it is part of a triangle of previous employers, remaining employers and the PPF—it is about which of them gets kicked with this liability. Each group is obviously going to be in favour of the others getting it. I say that not to cast any aspersions or to make a value judgment, but it has to go somewhere, and in the end that is for Government to decide. On the face of it, however, that would be such a solution.
New clause 11 calls specifically for a change by regulations to the employer debt legislation in the Pensions Act 1995. It is aimed at providing protection for the owners of unincorporated businesses. Many of the plumbers who have made representations happen to be self-employed because that is the structure of their business, but they are not self-employed and running a large business. They just happen to be a business owner who is self-employed. A mandatory provision to protect one group of employers from their responsibility for an employer debt, for which there may be personal liability, again boils down to that debt needing to be met in some way by others in order to safeguard members’ pensions. It is true to say that such an approach would also conflict with existing employer debt provision that recognises the wide range of employers who participate in occupational pension schemes. It does not differentiate between different types of business structure in relation to employer debt duties.
Secondary legislation, in the form of the 2005 employer debt regulations, already includes a range of mechanisms to facilitate the management of an employer debt when an employer ceases to employ active members of a pension scheme. The regulations operate so that in some circumstances, only part of the debt or no debt may be payable. Those regulations are currently under review. We had a call for evidence about the operation of employer debt legislation in non-associated multi-employer schemes. We needed to call for evidence because there are losers and winners. It is the role of Government to try to assess interests, and some form of judgment has to be made. This area of legislation is extremely complex, and we have to check and consider things carefully.
I reiterate that we are not kicking the can down the road—it is not that we do not want to make a decision. It is a complex issue, and we are looking to consult on specific proposals in the very near future. In any case, a whole range of new proposals might come about in our Green Paper on defined-benefit schemes. If I say the release of that Green Paper is imminent, that could mean anything from tomorrow onwards, but it will be very soon.
Ian Blackford
I think the Minister will accept that I am trying to be helpful to the Government in trying to find a resolution to this situation. Let us look at the wording of new clause 11 again:
“The Secretary of State must, by regulations, make provision to amend section 75 of the Pensions Act 1995 in order to protect unincorporated businesses at risk of losing their personal assets including their homes.”
I would be content if we could get an assurance that the Government are willing to work together with us to solve this problem. The Green Paper will be coming forward, and I appreciate that the Minister has said he is prepared to look at this matter and see whether there is a resolution that can be found that would not have any unintended consequences,. I seek assurance from the Government that that will be the case. I know the Minister cannot be too prescriptive about the Green Paper at this stage, but I hope there is willingness to ensure that these issues of actuarial valuations will be taken into account in it.
The Chair
Order. I remind hon. Gentleman that he is making an intervention, not a speech.
Ian Blackford
Sorry, Ms Buck; I will sum up. I am trying to get to a consensus, so that we can work together on this.
Craig Mackinlay (South Thanet) (Con)
It is a pleasure to see you in the Chair and to serve under your chairmanship, Ms Buck. The experience of the hon. Member for Ross, Skye and Lochaber comes through very clearly.
I hope I can offer some help to the Committee. I realise that this is a complex area, but the hon. Gentleman’s new clause does not actually encompass the extent of the problem, which goes further. Under the old rules—extra-statutory concession C16 on the winding-up of companies, which was used widely until 2012—a group of directors or owners could wind up a company using a very informal method, but that did not cease their liabilities to that company. That liability extended for 20 years afterwards. That was then formalised under section 1030A of the Corporation Tax Act 2010, which gave a statutory basis to the informal winding up of companies with assets of less than £25,000. That provision is still used very widely. Directors or owners of such companies being wound up under that statutory method could still face 20 years of future liabilities, so although the hon. Gentleman has identified a problem in the system, it does not just apply to unincorporated associations.
The effect of the section 1030A of the 2010 Act, which came into force on 1 March 2012, is that directors and owners of slightly larger companies are going down the route of a formal liquidation, which terminates their liabilities for ever more. However, hundreds—if not thousands—of old, smaller companies using the old extra-statutory concession will still be caught by a section 75 notice. This is a very wide issue that does not apply only to unincorporated associations, so I do not think the hon. Gentleman’s new clause is enough to close down his concerns on future liabilities. Personally, I accept the Minister’s assurances, but I think this is the start of a wider debate as to how those liabilities can be cut down.
In the hon. Gentleman’s new clause 12, there is a problem with determining the proper value of a pension liability. It is not as sharp as just the transfer value that is often given, and we will need in future to be a little bit cleverer in how we actuarially assess pension liabilities.
Ian Blackford
On the basis of the Minister’s response, I will certainly not push the new clause to a vote. We have received assurances that the Government will look at these issues; I hope they will not only be addressed in the Green Paper, but that there is the possibility of legislation as a result of that. I think we all recognise—there is a consensus on this—that we have to make sure we can resolve this problem for the benefit or incorporated and unincorporated businesses. On that basis, I will happily leave things as they are for now. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 2
Investment Strategy
“(1) A Master Trust, after taking proper advice, formulate an investment strategy which must be in accordance with guidance issued from time to time by the Secretary of State,
(2) The Trust must consult scheme members on—
(a) the Trust’s assessment of the suitability of particular investment and types of investment;
(b) the Trust’s approach to risk, including the ways in which risks are to be assessed and managed;
(c) the Trust’s policy on how social, environmental, and corporate governance considerations are taken into account in the selection, non-selection, retention and realisation of investments;
(d) the Trust’s policy on the exercise of the rights (including voting rights) attaching to investments; and
(e) the right of scheme members to consider non-financial issues relating to their investments and be consulted on these issues.
(3) The Trust must review the strategy at least once a year, and revise if appropriate
(4) The Trust must revise the strategy at any time if there is any significant change to the information included in it.
(5) In the event of (4) above, the Trust must consult with scheme members, and the revise the strategy in the light of comments made.
(6) The Secretary of State may make regulations with a view to ensuring that the information disclosed under subsection (1) is provided in a timely and comprehensible manner.”.—(Alex Cunningham.)
A Master Trust must include an investment strategy which outlines what the Master Trust should consult scheme members on in areas of investment.
Brought up, and read the First time.
Alex Cunningham (Stockton North) (Lab)
I beg to move, That the clause be read a Second time.
Welcome to our walk-in fridge, Ms Buck. I had a discussion with the Government Whip, the hon. Member for Winchester.
Alex Cunningham
I was talking about the conversation that I had with the Government Whip about whether we should invoke the Factories Act. He reminded me that, unhelpfully, said law does not apply to the Palace of Westminster. The Minister mentioned kicking a can, and I remember playing kick the can in the street as a young boy. Perhaps you can provide us with a can, Ms Buck, and we can have a game after we debate the next new clause to warm ourselves up.
New clause 2 continues our theme of transparency and member engagement. It is designed to improve the way that master trusts consult their members about their investment strategies and ensure that members are aware of the guidelines that trustees establish for the management of members’ assets. The new clause would modernise the approach to fiduciary—I find that word even more difficult to say than “Lochaber”—management of savers’ assets and update the statement of investment principles approach currently required of master trusts. A master trust would have to have an investment strategy and consult scheme members about that strategy and about socially responsible investment—commonly known as environmental, social and governance issues.
Until now, every occupational pension scheme has been legally required to prepare and maintain a statement of investment principles, which is expected to cover the trustees’ plans for securing compliance with their statutory duties, their policies on investments, risks and returns, and how they will exercise their voting rights. In short, it allows trustees to consider factors that they believe will influence the financial performance of their investments and consult members about those issues. As long as pension funds can show that any investment or policy decision was made on a fiduciary basis and members were consulted, they can avoid the charge that they have not considered members’ best interests.
Public opinion tends to position the average citizen as a helpless bystander in this drama, but in fact it is their money that underpins the entire system. Anyone with a pension is, indirectly, an owner of Britain’s biggest companies. The new clause seeks to create a world in which people feel that their savings give them a positive stake in the economy and a voice in how the companies in which they invest are run. Although we may hope or even expect that scheme members have a say, the reverse is true: power has become increasingly concentrated in the hands of a relatively small number of opaque and unaccountable financial institutions. As the Kay report showed, those institutions often face systematic pressures to act in ways that may not serve savers’ interests. Direct accountability to savers is a vital component of a healthy economic and financial system. As millions more savers are about to enter the capital markets through pensions auto-enrolment, now is the right time to build a more accountable system.
In June 2011, the Government invited Professor John Kay to conduct a review of UK equity markets and long-term decision making. The Kay review considered how well equity markets were achieving their core purposes—to enhance the performance of UK companies and enable savers to benefit from the activity of those businesses through returns to direct and indirect ownership of shares in UK companies. The review identified that short-termism is a problem in UK equity markets. Professor Kay recommended that company directors, asset managers and asset holders should adopt measures to promote both stewardship and long-term decision making. He stressed in particular:
“Asset managers can contribute more to the performance of British business (and in consequence to overall returns to their savers) through greater involvement with the companies in which they invest.”
He concluded that adopting such responsible investment practices would prove beneficial for investors and markets alike. In practice, responsible investment could involve making long-term investment decisions, as well as playing an active role in corporate governance by exercising shareholder voting rights.
I hope that master trusts will want to consider the Kay review’s findings when developing their proposals, including what governance procedures and mechanisms are needed to facilitate long-term responsible investing and stewardship through the funds that they choose for members to save into. The UK stewardship code published by the Financial Reporting Council also provides master trusts with guidance on good practice in monitoring and engaging with the companies in which they invest. The new clause would ensure sure that trustees are guided by the members of the scheme whose money they invest.
In recent decades, efforts to improve the way companies are run have focused heavily on making directors more accountable to their shareholders—for example, the recent introduction of a binding “say on pay”—but the job is only half done. Ownership rights are exercised largely by institutions that are themselves intermediaries. Accountability to the underlying savers who provide the capital remains weak. The logical next step must be for institutional investors to extend the same accountability they expect from companies to the savers they represent.
The UK stewardship code was introduced in the aftermath of the financial crisis to address concerns that shareholders were behaving as absentee landlords. Rather than being enforced by regulators, it is a voluntary code that relies on scrutiny from below to promote compliance, mirroring the corporate governance code for companies. The investment regulations currently require master trusts to set out within the statement of investment principles the extent to which social, environmental or corporate governance considerations are taken into account in the selection, retention and realisation of investments, but savers are left out of the loop. Just as I have argued for greater engagement with members on other issues, I believe it is needed here too.
In addition, accountability should build trust in the system even among those who do not choose to engage, thus encouraging people to keep saving. That is an important consideration in a market where just 7% of retail investors trust investment firms to do the right thing and consumers cite lack of trust as the No. 1 reason for opting out of private pension saving. Practical objections on the grounds that savers are not interested or not capable of engaging with their money simply perpetuate a vicious circle of disengagement. Savers may be put off by the language of investment, but that does not mean they are not interested in where their money goes. The onus must be on the master trusts and the wider investment sector to communicate with savers in a way they find meaningful. Likewise, savers may lack understanding of the technicalities of investment, but there are many matters on which they are qualified to comment, including the way their scheme behaves as an owner of major companies or its policy on social, environment and governance issues.
Transparency is necessary, but not sufficient for a more accountable investment system. Savers must also have the right to engage directly with decisions about their money, in the same way that shareholders engage with companies. Of course, we are not suggesting that all savers should be consulted on every decision. In our view, engagement with savers has three key elements. Savers should have the right to be consulted about investment policies, particularly those that should be firmly grounded in the views of savers, such as socially responsible investment policies. It is sometimes argued that since savers will inevitably disagree, acting on their views can prove difficult, but that objection can be refuted by example: schemes such as the National Employment Savings Trust demonstrate the possibilities of using face-to-face engagement with savers to inform the development of policy. Savers should be able to subject decisions made on their behalf to healthy scrutiny and challenge. While companies are obliged to hold annual meetings at which the board accounts to their shareholders, no such requirement extends to pension schemes.
Making capital markets more answerable to the individuals whose money they invest offers a potential lever for rebuilding trust in the City and for promoting more responsible and long-termist corporate behaviour. Such accountability must be nurtured over time by institutional investors such as master trusts, other pension savers and civil society in general. As Mark Carney said back in 2013, if it is
“finance that becomes disconnected from the economy, from society, finance that only talks to itself and deals with each other, that becomes socially useless.”
We have an opportunity here to change the landscape that sees pension savers as passive uninterested participants by engaging with them on decisions that affect their lives. When I started this speech, I said I was continuing the theme of member engagement. The new clause would extend what currently happens in relation to investment decisions, and I commend it to the Committee.
Ian Blackford
Before the hon. Gentleman concludes his speech, I wanted to ask about subsections (3) and (4) of the new clause, which state:
“The Trust must review the strategy at least once a year…The Trust must revise the strategy at any time if there is any significant change to the information”.
Can he explain what form that review would take and what role investment advisers would have, if any, in that review?
Alex Cunningham
That is an extremely difficult question to answer. [Interruption.] Everyone can laugh, but the Government talk about regulations and laying down guidance, and I hope that they would be able to provide the necessary guidance.
Ian Blackford
This is actually a very serious point. The hon. Gentleman’s new clause would require an annual review, so it is pertinent to ask how that would be conducted and what role, if any, investment advisers would have.
Alex Cunningham
There has to be a role for investment advisers, but the crux of my point is that members should have some say in the investment decisions that affect them.
Ian Blackford
Can I deduce from that that the hon. Gentleman actually has no idea how such reviews should be conducted?
Alex Cunningham
That is not exactly the case. It is clear that we need a set of circumstances in which members are properly engaged, equipped and informed. If they are, they will be able to contribute.
Richard Harrington
I absolutely agree with my hon. Friend; member engagement and involvement sounds very good—it is a laudable objective—but I have been around for nearly 60 years, of which I was in business for nearly 30, and I do not feel qualified to assess an investment strategy. I say that not to insult the vast majority of people, but because, although independent financial advisers and accountants may be able to do that, it is almost impossible for an individual to do so. We have to look at a way of ensuring that the investment strategy is the correct one for the majority of members, and that the regulatory system, the supervisory system and so on are in place. Hon. Members mentioned NEST, which already has more than 4 million members and 230,000 employers. This idea is very interesting but not at all practical.
I remind hon. Members that trustees play a key role in managing assets. They have overall accountability for the investment strategy. They have a legal duty; the hon. Members for Stockton North and for Ross, Skye and Lochaber—I can just about manage to say that now—used the expression “fiduciary duty,” and the trustees have a fiduciary duty to the members.
Laudable as new clause 2 is, pensions legislation already includes requirements for investment decisions to be transparent and in the best interests of members. The Government fully recognise the possible impact of investment decisions on members’ retirement outcomes. Even without the new clause, the Bill will add to those requirements. Clause 12(4)(d) already sets out that regulations made by the Secretary of State
“may include provision about…processes relating to transactions and investment decisions”,
while clause 12(2) states:
“In deciding whether it is satisfied that the systems and processes used in running the scheme are sufficient…the Pensions Regulator must take into account any matters specified in regulations”.
The new amendment would duplicate the provisions for master trust schemes that already exist under the Occupational Pension Schemes (Investment) Regulations 2005. The regulations require trustees of all schemes with 100 or more members to set out a statement of investment principles for their scheme. That statement must be made available to members on request and
“must cover…their policies in relation to…the kinds of investments to be held…the balance between different kinds of investments…risks, including the ways in which risks are to be measured”
and other key issues. The trustees must ensure
“that the statement of investment principles…is reviewed at least every three years…and without delay after any significant change in investment policy.”
Most people who are automatically enrolled into pension schemes are likely to remain in their scheme’s default fund and will not actively engage themselves in the governance of the scheme. That is why legislation makes requirements about governance and oversight of these matters, and why most schemes, including master trust schemes, need to provide a default strategy that covers similar areas.
Finally, multi-employer schemes have a legal duty under the Occupational Pension Schemes (Scheme Administration) Regulations 1996 to make arrangements to encourage members of the scheme or their representatives to report their views on matters that relate to the scheme, including areas about which the new clause proposes that the trustees should consult scheme members.
Ian Blackford
I am listening carefully to the Minister, and I broadly agree with him. Obviously there will be ongoing reviews of investment strategy, which should be communicated to members where appropriate. One way in which that could be done, as a matter of best practice for these schemes, would be for a statement of investment principles to be mailed to members as part of the annual report. That would give more clarity on the direction of travel of the fund’s investments.
Richard Harrington
As usual, the hon. Gentleman makes a very sensible suggestion, which should be considered. However, I believe that everything in the new clause is already included in legislation and that it is therefore unnecessary, so I urge the hon. Member for Stockton North to withdraw it.
Pension Schemes Bill [ Lords ] (Third sitting)
Ian Blackford Excerpts(7 years, 2 months ago)
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Richard Harrington
The hon. Gentleman is correct, but of course it is at the discretion of the regulator, which will be dealing with all the circumstances. It could also be a very short period—that is the intention. I hope he agrees that the regulator has to have flexibility to deal with the specific circumstances of a particular case.
The scheme would have to be in a triggering event period, which means that one of the key risk events, which I explained previously, has occurred in relation to the scheme, the obvious one being that the scheme funder has become insolvent. Alternatively, the order could be made in relation to an existing scheme if it has submitted its application for authorisation and the decision on that application is not yet final. To satisfy the criteria, further conditions must be met. The regulator has to be satisfied that if a pause order is not made, there is or is likely to be an immediate risk to the interests of members in the scheme or the assets of the scheme.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
I am listening carefully to the Minister. We all understand the circumstances that would end up with a triggering event and what he describes as the potential insolvency of the scheme funder, but we have all been keen to make sure that in those circumstances the assets of the plan holders are protected. I want to tease out with him that scenario where we believe that the funds are protected. On the basis of the fear and alarm that could be spread when people see that their pensions are not being paid, I have a predilection for making sure that both payments into funds, whether it is a new fund that is created in the short term, or payments out of funds are maintained. There is a threat to confidence in master trusts and auto-enrolment if there is a pause in payments being made. On the basis that it always should be the case that the fund assets are protected, although I understand that there are certain circumstances where the regulator may want to take particular action, we have to be careful to scope out exactly what those circumstances might be.
Richard Harrington
The hon. Gentleman tries to tease things out from me and I am afraid I have to tease him back by saying that it is impossible to state the particular circumstances of every case. I was going to say later, in response to SNP amendment in this group, that no one wants to cause panic among members. There are many triggering events and there will be cases where the regulator might need to issue one of these pause orders, but they will be sorted out hopefully quite quickly; that is the idea. I do not see how, in those circumstances, writing thousands of letters to people would not cause precisely the kind of panic and lack of confidence that we are all trying to prevent.
I will return to that point. As with everything in the Bill, this is not a question of one side making stupid points and the other making sensible points; this is about trying to envisage different circumstances that might arise. It is my duty and my job to make sure that the regulator has flexibility, although I quite understand the hon. Gentleman’s point of view.
Ian Blackford
I absolutely understand and have no reason in principle to believe that the regulator may not have to have such a power. However, I am trying to understand what kind of event might lead to such action taking place if it is the case that plan holders’ assets are protected. Is it to do with any particular costs of administration for delivering all this? I am not clear what kind of event might lead to such action having to be taken.
Richard Harrington
It has been mentioned that, for example, suspicions of fraudulent activity might, in extremis, be such an event. Alternatively, the regulator might not yet be satisfied with respect to the administration of the scheme. The pause order clause is intended to apply in extremis. I am certain that most things will be taken care of in the normal course of things, but we felt that the regulator needed that power in extremis. That does not necessarily mean that the sky has to be falling in. A pause order might be used to concentrate people’s minds on resolving the situation quickly. Nevertheless, the power is there. It can be used
“during a triggering event period…if…the Pensions Regulator is satisfied that making a pause order will help the trustees to carry out the implementation strategy.”
The order is designed for quite particular and limited circumstances. I know that we keep using sledgehammer and nut analogies—on Tuesday I mentioned kernels— but I really believe that if it did trigger the kind of communication that the Opposition referred to, it might cause a major panic, which is something that we have to avoid and that the system exists to resolve.
Ian Blackford
It is a pleasure to see you back in the Chair, Mr Rosindell. I know that, in the interests of brevity, we are considering this slightly the wrong way round, in that I will speak to the amendment that the Minister has already responded to.
We all share the desire to ensure that the plan holders’ funds are protected in both the accumulation and decumulation phases. We are concerned about the impact of a pause order on a member’s savings, as there are no mechanisms in place that allow ongoing contributions to be collected and held on behalf of the saver. I know that the Minister has said that there are issues about where the funds would go and what kind of protection would be given, but those are exactly the kinds of things that we have to resolve in this Committee. It is clear that any additional contributions that savers make at a time of a pause order have to be protected properly, but surely it is within our gift to architect that properly.
It is unacceptable that a member should be penalised, and in effect lose wages in the form of employer contributions, due to events that are out of their control. The Society of Pension Professionals has also said that it will be necessary to ensure that the period of effect of a pause order cannot start before the trustees receive notification of the pause order. That would mean that any contravention could occur only after the trustees are in receipt of the order. The society argues that without that notification, the trustees could be in breach of a pause order through no fault of their own if a direction is not complied with during the period between the date the regulator makes the order and the date the regulator notifies the trustees of it. That could happen, for example, if new members joined the scheme in that period contrary to a direction under clause 32(5)(a). The Government should clarify whether they intend to take action to protect savers.
Richard Harrington
Mr Rosindell, before we end our debates on this clause, I would like to make a point of clarification regarding an error on my part. In previous sittings, when I was referring to the regulations generally, I said that they are subject to the affirmative procedure. However, I made a mistake in referring to clause 28 in that context, because the negative procedure applies there. I apologise for that. Obviously, it was not done on purpose. I hope that Members will forgive me.
Regarding the amendment itself, I have adequately covered the points that have been raised, and I reiterate the Government’s position that we reject the amendment.
Alex Cunningham
I am afraid I have to disappoint the Minister. I am not going to withdraw the amendment. The bottom line is that there is always a real possibility—a quite long word with an extremely long meaning—that there could be a failure in the system, and that failure could result in a loss of income to some of the most vulnerable people in our society. For that reason, I intend to press the amendment to a Division.
Ian Blackford
I will support the amendment. We have to feel satisfied that there are reasoned arguments why a pause order should be made and why payments should not be paid to pensioners. I am certainly willing to listen to further arguments, but I do not think a clear case has been put for why it should be made, except in very extreme cases of fraud and so on, and that case has not been made. Equally, in terms of retaining confidence, I wish to press our own amendment on the basis that it is important that plan holders continue to make payments, even in a triggering event. I want to test the will of the Committee and press our amendment to a Division as well.
Question put, That the amendment be made.
Richard Harrington
As hon. Members will be aware, what we are now discussing is not restricted only to master trusts; the rest of our discussions today have been. It is a bit of a change. We are now talking about all occupational pension schemes.
The clause will cap exit charges and member-borne commission, which is the sort of thing we all want. Like most of the measures in the Bill, it relates to what we all accept is a problem; in this case it is exit charges—where they come from, who pays them, how they are calculated and so on. The hon. Gentleman refers to protecting members, which I perfectly understand, but that is the point of the legislation. I say that in case anybody reading about the Bill in Hansard or elsewhere thought that the Opposition were trying to protect members and the Government were not. The intention of the Bill is to protect members. I have laboured that point—I hope that the hon. Gentleman will excuse the pun on his party’s name—because it is fundamental.
The clause amends the existing legislation—the Pensions Act 2014—to allow regulations to be made that enable a term of a relevant contract on charges to be overridden if that contract conflicts with a provision in those regulations. I emphasise that the power will allow for a contract to be overridden only if it conflicts with a provision in the regulations, which will ensure that relevant contracts are consistent with regulations and will provide certainty to the parties involved.
At this point it might be helpful if I clarified that the clause is distinct from previous clauses in the Bill that refer to charges, which all relate to the proposed master trust authorisation scheme. The discussions on charges and capping before now were specific, whereas this discussion is general. We intend to use the clause alongside existing powers in the 2014 Act to make regulations clearly to cap or ban early exit charges. Those charges are any administration charges paid by a member for leaving their pension scheme early when they are eligible to access pension freedoms, which in the past they would not have faced at their normal retiring date.
I mentioned early exit charges before in a different context. Cynical commentators might say that providers impose those charges to take advantage of a situation—a kind of last hurrah—because they know they are going to lose the value of a pension. The industry’s converse argument, which I have some sympathy with, is that they calculate the value of a pension over a period of years, and early exit means that value may then be x years minus 10. That is not a ridiculous argument, but the Bill makes it clear that the Government do not have much sympathy for it.
As has been mentioned, the Financial Conduct Authority will make rules to ensure that the cap or ban on early exit charges in personal and workplace pension schemes, which they regulate, will comes into effect on 31 March 2017. That has already been approved by Parliament through amendments to the Financial Services and Markets Act 2000, which broadly allows for a contract to be overridden. The consultations we undertook on early exit charges and member-borne commission showed that the charges generally arise in contracts between trustees or managers of certain occupational pension schemes and those who provide administration services to the scheme.
Our existing powers in schedule 18 to the Pensions Act 2014 enable us to make regulations that override any provision of a relevant scheme where it conflicts with a provision in those regulations. For example, we have used that power in relation to the appointment of service providers in the scheme administration regulations. The reason we are taking this new power is that the existing power does not extend to the contracts under which these charges arise. That is why clause 42 contains a power to allow the overriding of a term of a relevant contract that conflicts with a provision of the regulations under schedule 18. What is a relevant contract? It is defined as one between a trustee or a manager of a pension scheme and someone providing services to the scheme.
The regulations that we intend to make will apply to charges imposed from the date the regulations come into force, even where these arise under existing contracts. We expect the regulations to come into force in October this year, so it is not a long difference. It is a difference for legislation reasons, but on the scale of things it is not a lot.
Richard Harrington
If the hon. Gentleman would bear with me, I will answer the question asked by the hon. Member for Stockton North before giving way, unless it is really urgent.
Ian Blackford
My point is in relation to new clause 8, which I have tabled. I want to be clear that the Minister is saying that there will be no exit charges for anyone exiting a master trust, whether a new saver or someone who is currently in a master trust plan. If the answer is in the affirmative, I would be happy not to press new clause 8, because it would be superfluous.
Richard Harrington
I will come to that point in a minute, if I may first respond to the question from the hon. Member for Stockton North—I am not ignoring what the hon. Gentleman has just said, but I think that the answer will become apparent.
There was public consultation in 2015 that concluded in August. Since then we have had various discussions with providers and other industry bodies; we are really trying to get everyone involved. Again, we do not want to be unfair to one side or to create loopholes that should have been anticipated. I think that the hon. Member for Stockton North will accept that this area is complex.
Richard Harrington
If I may, I will answer the question from the hon. Member for Ross, Skye and Lochaber concerning new clause 8 and the point about no exit charges from a master trust. I confirm that when a master trust is closing the scheme cannot levy a charge for leaving. I believe that responds to his question, unless I misunderstood it.
Ian Blackford
No, I do not think it does. To be absolutely specific: in any circumstances of any exit of an individual from the master trust there would be no exit fee. If the Minister is responding to that statement in the affirmative, I would happily withdraw new clause 8, if that is permissible.
Richard Harrington
When the master trust is closing it cannot levy a charge. That is as clear as I can be. Perhaps we can discuss the point in more detail. I am not trying to mislead the hon. Gentleman and he knows that, I hope.
The pensions market is continuously evolving and modernising and that extends to charging practices. It may be necessary to alter the charges requirements at pace to reflect any changes in the pensions market that may disadvantage members. I revert to the point I made to the hon. Member for Stockton North: that is the purpose of the whole exercise; we are doing it for that reason. That is why we intend to consult on the draft regulations later this year. I am aware that people outside the House, and sometimes hon. Members, groan when a further consultation is announced, as though the Government are doing it to kick the can down the road. I can assure them that that is not the case. We intend to get it right and public consultation is very important.
The regulations would also be subject to parliamentary scrutiny, as I have explained, through the negative procedure. The Delegated Powers and Regulatory Reform Committee was content with that approach because it would allow future legislation to be amended quickly to provide the member protection that the hon. Gentleman and I both want.
Before I conclude on this clause, I will address the point made by the hon. Member for Ross, Skye and Lochaber. I have learned the name of his constituency now and look forward to visiting. He was satisfied by my answer to his earlier question but he wants to know what happens if the master trust is not closing. In that case, the normal exit charge protections apply; there is no difference. I believe that is a clear answer to his question.
Ian Blackford
The proposed new clause contains a principle that I think we would all like to encourage concerning member engagement. There is the issue of democracy and the fact that these are members’ funds, and I think that we all get that point. The salient point for me is that addressed by other hon. Members: trustees are to act in the best interests of their members. We all recognise the duty and obligations that trustees must have. It is important, whether they are independent or member trustees, that they are aware of their responsibilities.
The key matter, in what is becoming a very complex world, rightly with increasing regulation, for which we understand the reasons, is that trustees can discharge their obligations and duties. Although I would encourage member trustees to be involved, and it is important that they are given adequate training, I would find it difficult to support the compulsion in the proposed new clause that member trustees must make up 50% of the board. That would be the case in an ideal world.
Alex Cunningham
I did not say 50%. That was an example. We would need a situation in which we can have some member trustees.
Ian Blackford
Reference has been made to member trustees making up 50% of the board, which is something I could not support. I can support the general principle that member trustees should be represented, that there should be elections and that they should be able to take the time they need to devote to this and get proper training, but I cannot support at this stage having compulsion as part of that, on the basis of the responsibilities that trustees have to represent all member interests.
Craig Mackinlay
I can understand the laudable aims of the hon. Member for Stockton North, but where such boards have had member participation, the reality has not always been a fantastic success. I had an oblique interest in the Maxwell pensions fiasco because I belonged to a firm of chartered accountants appointed to look into that big mess, so I have some experience of that. I was also a member of the Joint Committee that looked into the BHS pension schemes, which also had member participation. That really did not come out as a great success. There was no issue of fraud, but were those employee members really tough enough to stand up to an overpowering sponsoring employer?
What we have is different from the occupational pension scheme arrangement, for which I think it is good, right and proper for its members to participate. We are considering master trusts, in which thousands of employers may be involved. I am sure that there may be only a few hundred master trusts that would bother to adhere to the new clause’s regulations after they come into place. The National Employment Savings Trust is probably going to be the biggest master trust for some time to come, with possibly millions of employees involved, and I cannot understand how on earth we could have an election process involving millions of people and different employers.
Craig Mackinlay
I thank my hon. Friend for outlining further the complexities of what the hon. Member for Stockton North is proposing. What we are looking for from master trusts is that they are well run, safe and that they actually perform for the pensioners of the future. With the greatest respect, the administrative costs of what he is proposing could actually outweigh any positive parts that he thinks will come out of it, so I cannot support his new clause.
Ian Blackford
I know that the hon. Member for Stockton North has stated that he is not asking for a majority of trustees to be elected, but that is exactly what new clause 1 calls for—it calls for at least half of the trustees of a scheme to be member trustees. I just wanted to clarify that point. For that reason, I cannot support the new clause.
Question put, That the clause be read a Second time.
State Pension: Working-class Women
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Ian Blackford (Ross, Skye and Lochaber) (SNP)
The hon. Lady is giving a graphic account of the difficulties that Mrs Tenniswood and many other women have faced. Mrs Tenniswood has paid national insurance contributions for 42 years. Is it not the case that somebody in her situation was doing that under the impression that that was a contract with the Government—an entitlement to a pension? The hon. Lady has described how Mrs Tenniswood has had to write and ask for her pension statement, but the Government should have communicated with Mrs Tenniswood. That failure of communication has not allowed people the time to properly prepare, which is the real damage caused by the changes.
Chi Onwurah
The hon. Gentleman is quite right—there is a sense of a broken contract between the state and hard-working citizens. The failure to give adequate notice means that the changes could not have been planned for. The consequences of many life decisions that WASPI women have taken are now that they face many years of reduced income that they could not have anticipated.
Mrs Tenniswood’s experience is far from unique. One woman told me that she has a neck injury and spondylitis —two debilitating diseases that would exclude her from many jobs. She said:
“I do not want to be forced to work until I drop.”
Why should she be? Another woman told me that she had recently been diagnosed with osteophytic lipping in her hips. She said:
“I am not so mobile as I once was. I cannot possibly carry on getting in and out of a car with the chemist’s deliveries—”
that is her job—
“30 to 50 times a day.”
Alison Thewliss (Glasgow Central) (SNP)
I had not intended to speak this afternoon, Mr Flello, because I expected the debate to be over-subscribed. I am sad that more hon. Members are not here to speak on behalf of working-class women. I have looked into the figures, and I understand that 2,410 women in my constituency are affected by the changes. The figure for the whole city of Glasgow is 23,100 women. That is no small number; it is a huge number, in a city that has had heavy industry and long-standing economic deprivation. Those women have worked damn hard for that money and they deserve the pension they thought they would get. I am hugely disappointed that successive Governments did not do more to notify them. Those who got in touch with me at my surgeries and through my office spoke of their shock that they were not told that they would not have the life they had planned for their expected retirement after working so hard in so many heavy industries for low pay, sometimes with pay discrimination. They were shocked not to be told and to find themselves without the retirement they had expected.
The number of women who have been in touch with me is nowhere near 2,410. We can all do more every day to make sure all the women affected know that we are on their side and fighting for them. I pay tribute to the WASPI campaign in Glasgow, which is doing so much to achieve that. I was proud to go to the demonstration in George Square last year, but there were not 23,000 people there that day. This is the tip of the iceberg. The women are finding out not from the Government, but through the WASPI campaign, social media, their families and friends and their own networks. That is the sad thing. The campaign is great, but it demonstrates how much these women have been let down.
One woman I must mention—or I will be in serious trouble—is my mother-in-law. She has worked all her life and has had the goalposts moved not once but twice, with loss of access to her pension for six years. She had planned and worked hard for her pension and it is hugely disappointing that the Government have left her in this situation.
Ian Blackford
One thing that annoys me is that the Government keep saying that no woman has suffered an increase in their pensionable age of more than 18 months. That is patently not true. As my hon. Friend has just said, some women have seen a six-year increase in their pensionable age. The Government should start telling the truth.
Alison Thewliss
My hon. Friend is absolutely right, and I commend his campaigning on this issue. Women have been cheated and it is entirely unfair. The Government expect many of them to seek work. I met a constituent outside Bridgeton Jobcentre a few weeks ago when campaigning against its closure. She was 62 and she was in absolute pieces because she had been called to the jobcentre. She had moved between employment support allowance and jobseeker’s allowance. She is not fit to work. She had been through a traumatic experience. Her daughter had died. She has poor physical and mental health and she told me about her pension age, which has added insult to injury. She has been through enough in her life. She deserves peace of mind and time to enjoy the retirement she should have.
Instead, at the age of 62, the Government expect that woman to go out and seek work, which, given the condition she is in, is pretty unlikely. Having spoken to her, I cannot see that many employers would consider her a good employee prospect, given her circumstances and the experience she has had in life. What employer will say, “Yes, we will take her on. She may be here for a couple of years, if that, because her health is poor, so she might not be here for long.”? Sadly, she is not a good prospect. She has worked all her life and she is tired. She is done and she deserves the time and peace she thought she would have. She deserves a dignified retirement.
Life expectancy in the east end of Glasgow is significantly lower than in other parts of the country and other parts of Glasgow. On the train from Bridgeton to the west end, there is a huge gap of eight to 10 years in the life expectancy of people on the same train line because the heavy industry and its legacy has meant that some women have suffered ill health all their lives. Some have suffered as a result of the industries their husbands worked in. Women were expected to launder their husband’s clothes and have suffered asbestos-related conditions. That has not been recognised well enough. These women have worked very hard and they deserve a dignified retirement.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
It is a great pleasure to serve under your chairmanship, Mr Flello. I thank the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) for securing this debate and putting across vividly the impact on women in her constituency. My hon. Friends the Members for North Ayrshire and Arran (Patricia Gibson) and for Glasgow Central (Alison Thewliss) spoke about the human cost of what has happened and the fact that so many women have been denied what is rightfully theirs.
I dearly wish that none of us were here today because the case has been made time after time, and it is time that the Government started to take notice. The phrase, “doing the right thing” has been used, but when reflecting on all that has gone on, not just all our debates but the 245 Members of Parliament who have lodged petitions on behalf of the WASPI women, the Government must respond to the pressures those women have been under.
What we cannot get away from is that the women rightly feel let down and that they have not had adequate communication. The point has been made, and no one disagrees that equalisation should take place, but it must happen fairly. This affects so many women— 2.6 million throughout the UK and 243,900 in my own country of Scotland. Many of those women are working-class and have faced particular pressures. There is an opportunity here today for the Government to admit that a wrong has been done and that effective notice was not given of an increase in pensionable age, and to recognise that the process of increasing pensionable age must be slowed down. It must be slowed down before it is too late.
I want to pick up on the issue of a pension being a right. Frankly, I am sick fed up of hearing the Government say that this is not a right but a benefit. They cannot get away with weasel words, because that is all they are, Minister. All these women, including many of the women sitting here and the women from Newcastle upon Tyne Central, have paid 42 years-worth of national insurance contributions. If that does not give them a right to a pension, I do not know what does. It really is about time that the Government accepted their moral and ethical responsibilities and stopped hiding behind the language that this is not a contractual obligation.
As my hon. Friend the Member for North Ayrshire and Arran said, if what has been done had been done by private pension providers, you can bet your boots that the ombudsman would have been involved. You can bet your boots that those pension providers would have been taken to court, so for once, when you stand up this afternoon—I appreciate that you are not the Pensions Minister and are here in another guise. I apologise for using the word “you”, Mr Flello. I am asking the Minister to recognise that this is not about benefits. It is about women who have paid in, and it is about time that they got their just rewards.
We often hear that the issue is affordability, and the point was made about austerity. The Government cannot run away from the fact that there is a national insurance fund and that fund is sitting, in year 2016-17, with a surplus of more than £30 billion. We have heard about mitigation, and different proposals have been made. We in the SNP have tried to contribute to that by commissioning our own research—the Landman Economics report, which was published last year—and it has been ridiculed and brought into question by the Government.
I have always made it clear that our favoured option, option 2 in the report, which calls for the slowing down of the increase in pensionable age, which would take a further two and a half years, would cost, in the lifetime of this Parliament—I stress “in this Parliament”—an additional £8 billion, but the Government have told us that we are wrong and the figure is £30 billion. The Government should sit down with me and go through our calculations, which are based on the Treasury model. They need to stop traducing the SNP and admit that the £8 billion figure is correct and that they can meet that cost out of the surplus that they have today in the national insurance fund. I say that because the payments into the national insurance fund have come from these women. This is about their entitlement and the fact that in the course of this Parliament, the Government could easily meet that obligation. When will the Government start to listen and actually do the right thing?
Thanks to freedom of information requests, we learnt that the DWP began writing to women born between April 1950 and April 1955 only in April 2009 and did not complete that process until February 2012. It wrote to women to inform them about changes in legislation going back to the Pensions Act 1995, but they had taken 14 years to start the formal notification process. It was 14 years after the legislation had been passed before the Government bothered to write to people. Taking 14 years to begin informing women that a pension that they had paid for was to be deferred is quite something. Can we imagine the outcry if a private pension provider behaved in such a manner? There would be an outcry in this House. Considering that entitlement to a state pension is based on national insurance contributions, the Government have an obligation to act in a fair manner. They have changed the entitlement to something women have paid in for with an expectation of retiring at age 60, and when the goalposts were moved, the Government could not get round to informing the women in a timely manner.
A woman born on 6 April 1953, who under the previous legislation would have retired on 6 April 2013, would have received a letter from the DWP in January 2012 with the bombshell that she would now be retiring on 6 July 2016—three years and three months later than she might have expected, but with only 15 months’ notice. We are talking about 15 months’ written notice that what she thought was a contract the Government had willingly ripped up. That is exactly why the Government have a duty to act: women born in the 1950s have not been fairly treated.
The lawyers Bindmans have published a guide to DWP maladministration in the WASPI women’s case, and let us be in no doubt that it is maladministration that we are talking about in this instance. The paper is a damning indictment of a failure to communicate effectively and directly with the women involved. It refers to the events that led to a change in women’s pensionable age, beginning with a White Paper in December 1993 that stated:
“In developing its proposals for implementing the change the Government has paid particular attention to the need to give people enough time to plan ahead and to phase the change in gradually.”
There is not much there I would not agree with, but when we accept the need for people to plan ahead, we need to write and tell them. The intent was there in the White Paper in 1993, yet it was 2009 before the Government acted.
Then there is the issue of phasing in gradually. I would not define that as increasing women’s pensionable age by three months for each month that now passes. The pensionable age will increase by three months in the month of February and by another three months in March. That is not gradual. It is scandalous that women’s pensionable age is increasing so rapidly. It is not within the spirit of what the Government outlined in their original White Paper.
In October 2002, while giving evidence to a Select Committee, the DWP suggested that the role of the state was
“to provide clear and accurate information about what pensions will provide so that people will understand how much they can expect at retirement before it is too late to do something about it”.
How does the statement
“before it is too late to do something about it”
equate with the 15 months’ notice that women were given? It was far too late, and the DWP must accept that women were not given appropriate notice, and must put in place mitigation. I might add that it was stated that the lead-in time in the original White Paper in 1993 allowed plenty of time for people to adjust their plans, but people can do so only if they are aware of it.
We also had the DWP public policy statement from March 2002, which stated:
“It is widely accepted that the department has a duty to give information or advice to inform the public about any new policies and developments that may affect them and crucially keep them informed on a continuing basis on their rights and responsibilities. It would be unreasonable for the department not to do this.”
I could not agree more. Where, then, were the letters to the women to inform them of the changes? This was 2002. The DWP has to take responsibility for that failure to communicate and, crucially, for the lack of time that women have had to prepare for an increase in their state pension age. Rather than recognising that women deserved to be communicated with directly, the DWP issued leaflets headlined “Equality in State Pension Age”. Can anybody in this Chamber remember those leaflets? No? I did not think so. I do not recall seeing them.
Ian Blackford
It is interesting that a Government Member is actually laughing about this, because that defines what the problem is. There are women who are really struggling, and the Government laugh. You should apologise and you should accept responsibility for this and stop demeaning the women—
Robert Flello (in the Chair)
Order. The word “you” refers to the occupant of the Chair.
Ian Blackford
I apologise, Mr Flello, but you can understand the anger that the women feel. A Member of Parliament on the Government Benches laughing when we are discussing this important issue is beneath contempt, and the Member should actually stand and apologise to the women who have been affected by this, rather than sitting there smugly as he is.
As I mentioned, it is no surprise that women were unaware of the changes because when the DWP commissioned research in 2004 it highlighted that only 2% of respondents mentioned that they had been notified of changes to the state pension age via a leaflet. Perhaps the hon. Member for Rugby (Mark Pawsey) wants to rise and try to defend that—quite frankly, it is indefensible. It is an insult that the Government at the time thought that changes affecting a woman’s retirement age could be dealt with by a leaflet. That is an abrogation of responsibility and each and every Member who refuses to do something is culpable.
We should all receive an annual statement from the DWP on our expected entitlement, just as we do from private pension providers. Why has that not been happening? Do the Government not know where we all live? [Laughter.] It is a fair question. Why were the women not written to? Why have we not had an answer to that question? Why did it take all the years that it did? The case is not defensible—it is shameful—and the way the Government still refuse to accept responsibility is shameful.
The failure to communicate was highlighted by a DWP publication in 2004 called “Public awareness of State Pension age equalisation”, which found that only 43% of all women affected by the increase in state pensionable age were aware of the impact on them. If the Government accept that women were not informed in a timely manner and therefore did not have time to react, why do the Government not accept their responsibilities?
We also know—you couldn’t make this up—that the Government sent out 17.8 million letters to men and women between May 2003 and November 2006 on automatic state pension forecasts but, wait for it, they did not contain any information about the state pension age. That is quite remarkable. Letters were written, but they were just the wrong letters—they did not have the important information. They said, “To find out more about the state pension age for women, please see ‘Pensions for women: your guide’. See page 10 for details on how you can get a copy of this guide.” That is no way to convey information. The Government should have communicated accurate, clear and transparent information. That was another massive failure to communicate.
At some point, rather than hand wringing, the Government have to take responsibility, because 2.6 million WASPI women have been let down. I am going to wind up because I realise that time is pressing. Research in 2011 by the English Longitudinal Study of Ageing found that by 2008 only 43% of women affected by the change were aware of it. Just think about this: over half of women who were expecting a pension at age 60 were going to be denied that. I cannot imagine the shock when they realised that they were not going to get what they thought was rightfully theirs. It is not the women who are at fault; they have paid in, expecting a pension. It is the Government who have let them down and it is the Government who have a moral and ethical responsibility to do something about it.
Robert Flello (in the Chair)
Order. May I gently suggest to hon. Members that, while I appreciate that there has been other business in the Chamber, we are on the wind-ups and Members really ought to be here for the debate rather than coming for the wind-ups? I will allow my hon. Friend a very brief intervention on this one occasion, because I am sure he has been in the Chamber previously up until now, but I remind Members that they really need to be in for the entirety of the debate.
Mr Jim Cunningham
I will be very brief. I apologise, Mr Flello; I was actually over in the Chamber because there were some important debates there as well and I cannot be in two places at once even if I would like to be. This is a timely debate because next month we will have the Budget. If the Chancellor can find billions for high-speed rail and other issues, surely he can find a couple of billion to give these women a decent life.
Ian Blackford
That is a very good point. We can find the money for high-speed rail. We can find, at the drop of a hat, £170 billion or more for Trident renewal. We are even due to debate the renewal of this place. If I were given a choice, I would want to make sure that the WASPI women were compensated and not that £7 billion was spent on reforming this place. That can wait, but the WASPI women need their money and they need it today.
The DWP told the Select Committee on Work and Pensions last year:
“Until 2009, direct communication with people affected by increases in state pension age was very limited.”
The Government must reflect on that and on the fact that women have not been properly informed. The Pensions Minister, in a parliamentary answer to me on 23 November last year, stated:
“The Government has committed not to change the legislation relating to State Pension age for those people who are within 10 years of reaching it. This provides these individuals with the certainty they need to plan for the future. We recognise the importance of ensuring people are aware of any changes to their State Pension age”.
We have put an option to the Government that is affordable and is about doing the right thing. The Government should agree with us. Frankly, I do not want to see any of us back here again. It really is about time that when the Minister rises today, she recognises the wrong that has been done. For the love of God, do something—do the right thing.
Robert Flello (in the Chair)
Order. May I remind the Front-Bench speakers that in 90-minute debates it is customary to make 10-minute speeches? I am being more generous because we are not so pushed for time, but 10 minutes is expected and not what we just had. Thank you.
The Parliamentary Under-Secretary of State for Welfare Delivery (Caroline Nokes)
It is a pleasure to serve under your chairmanship, Mr Flello. I congratulate you on having chaired this debate in a fair and exemplary manner, and for allowing those Members who were busy elsewhere in the House this afternoon the opportunity to speak, even if just briefly in an intervention. Important debates have been taking place this afternoon, and important work has been done in Bill Committees.
It is only right that I should take this opportunity to thank the hon. Members for Ross, Skye and Lochaber (Ian Blackford) and for Swansea East (Carolyn Harris) for being here. I know that they have been much occupied with the Under-Secretary of State for Pensions, my hon. Friend the Member for Watford (Richard Harrington) in the Pension Schemes Bill Committee, which explains why I am here instead of him. I thank the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) for opening the debate and hon. Members from all parties—and all parts of the British Isles, with the exception of Northern Ireland—who have contributed. It is most unusual for the hon. Member for Strangford (Jim Shannon) not to be present.
In recent decades, there has been a huge shift in how people spend later life. We are living longer, staying healthier for longer and leading far more active lifestyles, regardless of our age. More and more people are proving that age need not be a barrier to achieving great things. Some of the Olympians whom we sent out to Rio last summer were among the oldest athletes on record. I, for one, celebrate the fact that age increasingly places no bounds on those wishing to achieve new goals, try new things and play an active part in society.
The new state pension was introduced as a key reform to the UK pension system. The Government recognised that the pension system needed to change in response to the demographic and behavioural shifts of recent decades. For most people, we know that work is beneficial. It not only provides an income and a bedrock for saving, giving people greater control over their lives but crucially, the evidence shows that for most people, being in work can be immensely beneficial for both physical and mental health. The social and cultural benefits of remaining in work are sorely under-recognised. This Government’s pensions strategy does not focus only on the benefits to people. We know that the skills, experience and talents that older workers bring to organisations are invaluable. Older workers still have an incredible amount to offer.
It is also true that the living standards of pensioners have risen significantly, but we must remember that not all pensioners are in the same position. More than 1 million pensioners rely solely on the state for their income. That is why we introduced the triple lock in 2011 and have committed to continuing it over this Parliament. As well as guaranteeing increases to the state pension, we have fundamentally reformed it. Under our reforms, people will have a much better idea of what their pension will be, bringing more certainty and clarity where previously there was confusion. That design is integral to the Government’s ambition to provide a better foundation on which people can plan and build for a secure retirement. We want to make life easier and more comfortable for people in retirement.
Ian Blackford
How can people plan and build for retirement with 15 months’ notice of an increase in their retirement age?
Caroline Nokes
The hon. Gentleman will of course know that I am referring to the new state pension. That is exactly why we are introducing it, so that people have more certainty and clarity than previously. As well as being simpler, the new state pension will give more to many of those traditionally less well served in the past. By 2030, around three quarters of new pensioners will get a higher state pension than if the old system had continued. More than 3 million women will get around £550 more each year. It is estimated that women reaching state pension age in 2016-17 will receive more state pension on average over their lifetime than women ever have before. We have also created new pension freedoms that mean that savers have more control over their money and can use it in ways that suit them. In the new pensions marketplace, we are helping people make the right decisions for them through things such as Pension Wise, which provides free, impartial information.
I am pleased that Members from all parties agree that it is right that we have equalised the state pension age for men and women. It is part of the DWP’s wider objective of eliminating gender inequalities in social security provision.
Caroline Nokes
I draw the hon. Lady’s attention to the specific title of the debate, which I believe I am covering: “That this House has considered the effect of state pension changes”. I have dealt with the new state pension thoroughly, and I hope that we will all acknowledge that we have indeed had a significant change with the introduction of the new state pension.
Ian Blackford
On a point of order, Mr Flello. I suggest, with regret, that we have not actually discussed the motion in front of us today. Unless the Minister does that in the short time that she has available, when we come to the appropriate point in the debate I will have no option but to move that we have not considered this matter.
Robert Flello (in the Chair)
I am not totally convinced that that was a point of order. Let us see how the debate continues.
Caroline Nokes
Sixteen minutes, then.
In addition, independent research by the Institute for Fiscal Studies has shown that employment rates for women aged 60 and 61 have increased as a direct result of the changes in state pension age.
Ian Blackford
I must respectfully ask the Minister whether she has any idea of the disrespect that she is showing to the WASPI women by refusing to directly address the point that we are discussing. It has been pointed out that women have not been given effective notice. What are the Government going to do about it?
Caroline Nokes
I thank the hon. Gentleman for making another intervention, but he will be aware that I have 15 minutes in which to come to that point, and I have really only just begun.
The Government recognise the particular barriers that women face to remaining in the workplace and we have been quite clear that more action is needed to address them. For instance, we know that women with more children tend to take longer career breaks, which can impact on their retirement income. We also know that giving women the opportunities they need to continue working in later life, whether in a full-time or part-time role, is the best way in which we can help mitigate some of that impact, while of course making provision for those who may be unable to work or may have difficulty working. It is interesting to note that someone who draws on their pension pot at 65 instead of 55 and continues to receive average earnings for those extra years of working could increase their pension pot by half as much again. That is why we plan to do everything we can to change attitudes towards employing older female workers.
On a recent visit to the jobcentre in Eastbourne, I was struck by something that was said to me by a work coach who I met there. It was her view that women aged over 50 and seeking work were the most optimistic of the people she worked with and tried to place into jobs. It was that cohort who were the most open-minded and enthusiastic about trying new roles and learning new skills. My hon. Friend—and, indeed, neighbour—the Member for Eastleigh (Mims Davies), who is no longer in her place, raised absolutely that point. Actually, older women have the most flexibility and, as work coaches have said to me, the most open-minded attitude to trying new roles and being prepared to take on new challenges regardless of age. That is immensely encouraging. It tells me that what the Government are doing through the fuller working lives strategy, which the hon. Member for Newcastle upon Tyne Central mentioned earlier and which was published last week, is the right course of action.
I have seen at first hand the value that offering older workers a new opportunity can have; it can truly transform their lives. I am proud of the commitment that I have witnessed from work coaches up and down the country. The hon. Lady might also recognise that the claimant count in Newcastle, which she referenced earlier, is down by 28% since 2010. The female employment rate in the UK now stands at 69.9%—a near-record high.
Ian Blackford
On a point of order, Mr Flello. May I ask for your guidance on whether what we are hearing from the Government is indeed in order, given the subject of this debate?
Robert Flello (in the Chair)
Again, I do not think that that is a point of order; it is a matter for the debate.
Caroline Nokes
I reassure that the hon. Lady that I will come to that point.
The fuller working lives strategy adopts a very new approach: it is led by employers, who rightly see themselves as the ones who understand the business case and can drive change. Specifically to support older claimants, the Department for Work and Pensions has introduced older claimant champions from April 2015 across each of its seven Jobcentre Plus groups. It plans to roll the initiative out to each of the 34 districts. These champions will work with work coaches and employers to raise the profile of that age group and highlight the benefits of employing older jobseekers. In addition, the Government Equalities Office continues to work with the Women’s Business Council to tackle the outdated assumptions that some employers make about women, particularly mothers.
In “Building our Industrial Strategy”, our Green Paper published last month, the Government set out how we will test ambitious new approaches to encourage lifelong learning to help adults who want to upskill or move around the labour market during their career. However, we recognise that some women may wish to continue to work and are unable to do so, so we continue to spend £90 billion a year on working-age benefits in this country. The welfare system provides a safety net for those of working age, and there are a range of benefits tailored to individual circumstances. The system is designed to deal with the problems, such as unemployment, disability and coping with caring responsibilities, that affect those who are unable to work and are therefore in most need as they approach their state pension age.
Ian Blackford
I suggest to the Minister that she should stop wasting everybody’s time and concede that she is not going to do anything, so that the WASPI women can get on with legal action and take the Government to court.
Caroline Nokes
I am sorry that the hon. Gentleman has become so frustrated. He will be conscious that I could still fill another nine or 10 minutes or so. There are some very important points that I would like to make and I am sure that people will want to hear them. If he continues to chunter—[Interruption.]