State Pension Changes: Women

John McDonnell Excerpts

Tuesday 12th March 2024 Westminster Hall

[John McDonnell (Hayes and Harlington) (Lab)]

Sometimes we do not have a collective memory in Parliament. I will briefly go through some of the history of the last 10 years in which I and others have been dealing with this issue, because we need to learn its lessons.

In debates held here in 2015 we recognised the immense suffering people had gone through and the injustice of the case itself. Between 2015 and 2017 we tried to ger cross-party agreement for a compensation scheme, but it was rejected. As shadow Chancellor at the time I met with all the various campaigning groups, including the WASPI women, and we asked Bryn Davies—now Lord Bryn Davies—a prime pensions expert in the field, to develop a scheme, which we brought forward in 2019. In a normal electoral cycle it would have been implemented by agreement, hopefully by 2020-21, but it was not, as we had an election campaign at that time.

The scheme balanced compensation with ready implementation and was relatively straightforward and simple. However, at the time the argument against it was cost—that at £12 billion a year over a four-year period it was too expensive. The Government had already saved £200 billion from those affected women; £48 billion may well have seemed expensive, but I remind people that at that time interest rates were on the floor.

The compensation scheme was relatively cheap, would have been paid over a limited period of time and would have delivered compensation to those women. I believed it was a legal contingent liability anyway and that it should have been brought forward from the Contingencies Fund, even if we were then forced to borrow, relatively cheaply. Had that happened, that scheme would have been paid out by now and the affected women would have been compensated. The 216,000 women who have died would have received something—but tragically they are now lost.

The conclusion is that I do not want to be here in another five or 10 years’ time arguing the case. I agree with the hon. Member for Isle of Wight (Bob Seely): we have the autumn statement. A relatively simple scheme should be brought forward so that the money can get out the door very quickly. I fear there is no sense of urgency from the Government, so we must create a cross-party sense of urgency. My other fear is that the ombudsman will bring forward its final report and the compensation levels offered will be trivial, which would be unacceptable given the suffering that people have gone through.

I appeal to the Government to listen to hon. Members on both sides of this House. The Government rejected and opposed the our earlier scheme, and by doing so they have probably enhanced the cost of compensation now. Let us grasp the nettle. Sometimes tackling injustices can be expensive, but it is right.

--- Later in debate ---

[Paul Maynard]

I have already given way, and I am running out of time. I do apologise.

I have listened carefully to the arguments that have been made today. I would like to set out further the range of support available both for those making provision for their retirement and for those who have reached state pension age.

In 2016, the state pension was reformed with the introduction of a new state pension to be simpler and more sustainable. It had the clear objective of providing the foundation for private saving. In this way, the state provides a base to which people can add to provide the pension they want through their retirement.

The new state pension improves outcomes for many women, carers and self-employed people, who often did less well in the past. State pension outcomes are projected to equalise for men and women more than a decade earlier than they would have under the old system. On average, women receiving the new state pension receive about £18 a week more than women under the pre-2016 system. Under the new state pension system, women currently receive an average of 97% of the amount that men receive, compared with 85% under the pre-2016 system.

Automatic enrolment has helped millions more women to save with a pension, many for the first time. Participation rates for women are catching up with those for men. Pensions participation among eligible women working in the private sector was at 86% in 2022, up from 40% in 2012.

Pension credit is extra money to help with daily living costs for people over state pension age and on a low income. It tops up a person’s other income to a minimum of £201.05 a week for single pensioners and £306.85 a week for couples. People with a severe disability, carers and those who are responsible for a child or young person who lives with them can get more. Pension credit can also include extra amounts for certain housing costs such as ground rent or service charges. The pension credit case load is just under 1.4 million people, of whom 66% are female; in fact, of the total case load, 63% are single women. People receiving pension credit may also get help with other costs, including rent, via housing benefit, and council tax.

The latest statistics show that by 2021-22, the poverty rate for pensioners had decreased by two percentage points since 2010. For both female and male pensioners, there was a decrease of two percentage points over the same period. In 2021-22, there were 200,000 fewer pensioners in absolute poverty, after housing costs, than in 2010. By 2024-25, working-age and extra-costs disability benefit rates will increase by 6.7%, and relevant state pension rates, including the standard minimum guarantee in pension credit, by 8.5%, following the 10.1% increase in April 2023.

[John McDonnell]

Will the Minister give way?

[Paul Maynard]

I am about to conclude, because I have only a minute left before the hon. Member for Strangford needs to have his concluding say.

I thank the hon. Member for Strangford for raising such an important issue, which I know concerns very many people—thousands across each of our constituencies. I have the greatest sympathy for anyone who has found themselves in difficult circumstances, but I believe that the welfare state can be and is effective in providing support for those who need it. In particular, there is a range of established support that this Government provide for people either nearing or over state pension age. Additionally, we have made cost of living payments available to those who are most vulnerable.

As I have outlined, the Government take the matter of state pension age extremely seriously. The Department is committed to giving the best service it can, and we will very carefully consider the ombudsman’s final report.