Pensions Bill

John Redwood Excerpts

Tuesday 29th October 2013 Commons Chamber

[Sheila Gilmore]

One of the issues that has come up in the course of all the debate about the single-tier pension is the decision that the Government have taken to bring to an abrupt end to the provisions that previously existed for women in particular—I shall talk primarily about women, although men could be in this position—to be able to derive a pension or years towards a pension from the contributions of their spouse. That dates back to a different world. When the state pension system was set up in the post-war period, there was an assumption that the standard pattern for married people was that one person, normally the man, would be the main breadwinner, and the woman would spend considerable periods out of the labour force, and perhaps not even work at all after marriage. Indeed, although they were about to go, there were still marriage bars on certain types of employment, so time out of employment was not just a question of choice; it was sometimes a question of necessity.

Things have changed and, although it can still be a necessity, for many women the amount of time out of employment can be very short. The arrangement in the original proposals was that a woman could receive a derived pension from her husband’s contributions—currently approximately 60% of the full state pension—or receive benefit if she was widowed or divorced. For someone widowed after retirement who was receiving only the 60% pension—sometimes referred to as the married couples pension when both bits are put together—it would be increased to a full single person’s pension, regardless of whether she had made contributions during her working life. For those who are divorced, there is currently provision in the system to inherit and carry over a spouse’s contribution record if it is better than one’s own. That can be beneficial to women, and some men, in building up a pension record.

Other changes that have taken place include crediting certain types of contribution that are not entirely financial. As well as the credits people receive during periods of unemployment when they are claiming benefit, successive Governments have introduced credits for periods of child care and for caring for other relatives, and that can make up some gaps. There are still some people—a decreasing number, without a doubt—who will end up in a position where they do not build up sufficient contributions in their own right. If the right to obtain these so-called derived benefits is taken away, there will be a group of people, primarily women, who, post-2016 when the new arrangements come in, will have less than they would have expected to get before that date. They will be in a worse position than they would have been previously, and that will have all sorts of consequences.

People have reasonable expectations of the rules. Age UK gave an example of someone who had specifically asked the Department for Work and Pensions for advice on whether she should start making contributions relatively late in her working life. She was told not to do so, because she would not be able to work to receive nearly as much as she would be getting in any event. That advice was given in good faith and at the time she accepted it in good faith, but it is now too late for her to make up the difference.

The Government estimate that there are 40,000 women in this position. I am not sure whether there is certainty about that figure, because I do not know whether a full survey has been carried out. However, 40,000 is not a huge number. New clause 5 asks for a full review to ascertain how many women are in this position and what the cost would be of allowing them to continue to benefit from derived rights for a transition period—it would not be for ever.

[Mr John Redwood (Wokingham) (Con)]

Does the hon. Lady have any idea how much money, on average, these ladies might be losing?

[Sheila Gilmore]

I do not know off the top of my head, which is why I am asking for a review. We might be talking about 40,000 women who clearly will not be getting a full pension, but certain of them will have made some contributions; it is not that they will have no contributions. The Work and Pensions Select Committee looked at this and recommended transitional arrangements for those within 15 years of the state pension age when the new arrangements came into force. It is not for ever, it would not go on and on, with a very long tail; but it would provide for those who quite reasonably made plans on the basis of particular expectations.

I have heard two arguments from the Government. The first was a generalisation about how the world had changed. Yes, of course it has changed, and we are not talking about most or all women doing this for ever. Just saying, “Well, the world’s changed”, is not a good enough answer to the fact that some women will suffer detriment if transitional arrangements are not put in place. The second argument was that apparently—I am not sure any figures have been offered up—an increasing number of these women were living abroad. It conjured up images of women much younger than their husbands and living abroad—I do not know whether the Minister had Filipino brides in mind. Nevertheless, it cannot be beyond the ingenuity of the DWP to ensure that people do not take undue advantage. Like I said, these arrangements would not last for ever.

There are a variety of reasons why somebody might not have contributed. They might have made a positive choice not to contribute or they might have been doing voluntary or care work before credits were allowed or without appreciating that they were allowed—we know that a lot of people are eligible for carer’s credits who have not claimed them. There are a variety of reasons. Others will have been in very low-paid or short-hours part-time work and earning below the level of contribution, and they might have concluded that it did not matter too much because of the derived right.

We debated this matter in Committee and I hope that the Government will this time be prepared to accept my new clause. Then, when we have carried out the review, a decision could be made about whether to proceed with transitional arrangements.

--- Later in debate ---

The reason is that, in 1947, we were not expecting to get inflation. If we did not have inflation, we would not have the problem. If the Government say that they will not provide exceptions to clause 20 and that no pensioner overseas will get an increase, at least we would have consistency. But that is not what the Minister is proposing. It might be helpful if he could confirm that either now, or if and when he comes to speak.

[Mr Redwood]

Does my hon. Friend know whether the requirement to uprate in the European Union countries is a European requirement that the Government can do nothing about or a Government choice?

[Sir Peter Bottomley]

The Government chose and Parliament endorsed that we would have free movement of people and of benefits in this sense, but the Secretary of State will no doubt be able to answer my right hon. Friend with greater certainty. The essential point is that as a country joins the EU—or even EFTA—the entitlement to increases in pensions comes with it.

When preparing my thoughts on this matter, I might have anticipated that the Prime Minister would say that he would give consideration to calls for a wider review of the issue. I might also have expected him to conclude that he was not minded to pursue such a review at this time. That is the gentlest form of saying no that I have come across.

I suspect that, as and when we extend voting rights to British nationals living overseas, either for a period of 15 years or for even longer, as many other countries do, our Members of Parliament who represent those overseas resident voters will start putting the pressure on, and that change will come. The Prime Minister might be anticipating that. He might see the sense and justice of such a change, but, given his position, he has to say no to a lot of popular causes. Perhaps the justice element for which is so rightly praised in the Commonwealth has not quite come to his mind yet.

In fact, I received a letter from the Prime Minister about half an hour ago confirming what I had anticipated. He has said that

“the case for not departing from the position of successive Governments is clear.”

I have already pointed out how the position has changed in respect of the reciprocal arrangements. His letter goes on:

“To do so would cost hundreds of millions of pounds at a time when the pressure on a welfare system is considerable and when we are asking many people who live in the UK to make sacrifices.”

That could be an argument for cutting off increases for all overseas pensioners, but that is not going to happen. The anomaly will continue. It has carried on from 1972 to 2013. If I am still here in 20 years’ time, will Ministers still be trotting out the same arguments that they used in 1972? I jolly well hope not.

I pay tribute to the leaders of the International Consortium of British Pensioners in Canada and Australia. They have had work done by Oxford Economics to make the case for the health care savings. We all know that the majority of costs to the national health service are incurred by people in the last years and weeks of their lives. Which of the people living overseas are the most likely to return to this country for their end-of-life health care? I suggest that it is those living in the United States, whose insurance might have run out and who cannot meet the costs, and people in Europe who might want to return to this country to be treated in a health service they know and in a language they are used to. I doubt that many people would come back from New Zealand, Australia, South Africa or Canada.

The health care question was what prompted us to call for the whole of Government review. I pay tribute to my hon. Friend the Member for North Thanet (Sir Roger Gale), who came with me last week when the Prime Minister very kindly gave us the opportunity to put some of these points to him.