Oral Answers to Questions

Shailesh Vara Excerpts

Monday 9th May 2016 Commons Chamber

[James Berry (Kingston and Surbiton) (Con)]

18. What steps he has taken to increase the number of younger workers subscribing to pension schemes.

[The Parliamentary Under-Secretary of State for Work and Pensions (Mr Shailesh Vara)]

The Government continue to roll out the programme of automatic enrolment of all eligible workers into workplace pensions. Of those eligible workers, approximately half are under 40, and the largest increase in pension membership in 2015 was among those aged 22 to 29.

[Nigel Mills]

I welcome the progress the Minister has outlined. Now that we have announced the lifetime ISA, will he consider allowing people, especially young people, to be auto-enrolled into a lifetime ISA, rather than a pension, to give them a chance to save for a house and have improved financial resilience while they are young?

[Mr Vara]

The lifetime ISA can supplement somebody’s pension but is not a pension as such.

[Andrew Bingham]

Will my hon. Friend agree that the new state pension provides clarity for younger workers, who will now know what to expect from their state pension when they reach pensionable age? Will that not have a positive impact on how much they choose to save in a private pension, because, with this clarity, will come understanding and an ability to plan?

[Mr Vara]

I most certainly agree with my hon. Friend. The previous state pension system was extremely complex—it was difficult for people to know how much state pension they would get before they reached the state pension age—whereas the new state pension provides clarity from an early age as to what they can expect. In future, they will know that they can expect over £8,000 a year from the state—a solid foundation upon which to plan their own retirement savings.

[James Berry]

Having spent time with charities and high street banks in Kingston, I have been surprised by the low level of financial literacy they report, even among people with secondary and tertiary education. What steps will the Government take to ensure that young people receive the high-quality information and guidance they need, particularly on pension planning, which often feels a long way off to younger people?

[Mr Vara]

I thank my hon. Friend for that very good question. He will be aware that last October the Department and the Pensions Regulator jointly launched a refreshed communications campaign entitled “Don’t Ignore the Workplace Pension”, to help build on and maintain the success of the previous campaign in raising awareness of automatic enrolment. The campaign includes digital and social media advertising, as well as television and radio, and has helped to raise awareness and guide people towards further information.

[Jenny Chapman (Darlington) (Lab)]

It was pleasing to hear the Minister say that predictability and clarity were important in pensions. Will he apply those principles to the 2.6 million WASPI women?

[Mr Vara]

We have applied clarity, as I have said at the Dispatch Box on many occasions during the course of many debates.

[Chris Leslie (Nottingham East) (Lab/Co-op)]

The younger generation are more likely to be self-employed, and 15% of the workforce are now self-employed, yet only one third are saving into a pension pot. Will the Minister look at the recommendations from the Federation of Small Businesses, which is calling for incentives and support for self-employed pension provision?

[Mr Vara]

The hon. Gentleman raises a good point about a particularly important sector of our economy, and we will certainly look at anything put forward. I emphasise that the Government are keen to ensure that people, including the self-employed, think about and prepare for a better future in terms of their pension.

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

Pension saving has been undermined by the new lifetime ISA, a new gimmick from the Chancellor, which will promote ISA saving from taxed income over pension saving from pre-tax income—in other words, it is a convenient tool to increase tax receipts today. No employee will be better off saving into an ISA than through workplace pension saving. The Association of British Insurers has forecast that someone saving 4% of an income of £25,000 in an ISA would be £53,000 worse off by age 60. Will the Minister tell the Chancellor to stop his gimmicks, stop this nonsense and get back to pension savings? We need no more con tricks from this Government.

[Mr Vara]

I am sorry that the hon. Gentleman takes his usual hostile view to anything, without doing his research. Because of the auto-enrolment scheme pushed forward by this Government, there will be between £14 billion and £16 billion more in pension savings by 2020.

[Chris Skidmore (Kingswood) (Con)]

4. What recent progress he has made on reducing long-term youth unemployment.

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[Paula Sherriff (Dewsbury) (Lab)]

22. If his Department will introduce transitional protection for women adversely affected by changes in the state pension age.

[The Parliamentary Under-Secretary of State for Work and Pensions (Mr Shailesh Vara)]

Women affected by changes made in 2011 face a maximum increase in state pension age of 18 months, rather than two years, as a result of a Government concession, and will retire under the new state pension, which will be more generous for many than the previous system. No further transitional arrangements are planned.

[Mr Cunningham]

Will the new Secretary of State look again at these transitional arrangements? Will he also see whether or not the cost of this could be offset by some adjustments in his budget?

[Mr Vara]

The Secretary of State made it absolutely clear earlier in these questions that he has no intention of revisiting this issue.

[Julie Elliott]

Why has the Minister not used the opportunity of a majority Conservative Government to put right the wrongs of the last Government, which have had an impact on some 4,290 women in my constituency, by introducing proper transitional arrangements—or is this just compassionate Conservatism in action?

[Mr Vara]

During the debates in 2011, the then Secretary of State for Work and Pensions and the then Pensions Minister said on Second Reading of the Pensions Bill that they would go away, consider and reflect, and they did precisely that: on Report, they made a concession worth £1.1 billion and reduced the timeframe from two years to 18 months. Transitional arrangements were put in place, and at a substantial and significant cost, notwithstanding the very tough economic climate at the time.

[Kate Hollern]

Recently, the Minister for Small Business, Industry and Enterprise talked about how

“people have been working…for up to 30 years and paying into a pension fund in the expectation that…they will have a certain amount of money on which to live”.

She went on to say that

“there is an increasingly good case to be made for the right thing to be done by people”.—[Official Report, 25 April 2016; Vol. 608, c. 1183.]

Given the sudden change in the retirement age for women, how can the Government justify this rank hypocrisy from one Minister to another? Will the Secretary of State bring fairness for those women? In his new role, he has an opportunity to show that he will consider things fairly and support the Minister for Small Business, Industry and Enterprise.

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[Mr Speaker]

That would render it orderly. I am very grateful to the hon. Member for Bolsover (Mr Skinner) for proffering advice, especially from a sedentary position.

[Mr Vara]

With permission, Mr Speaker, I will take the hon. Lady’s reference, “from one Minister to another” slightly broadly and remind her that, following the passing of the Pensions Act in 1995 there were 13 years of Labour government during which a succession of Secretaries of State for Work and Pensions and pensions Ministers did absolutely nothing to try to alter the system that she and her colleagues now seek to change.

[Barbara Keeley]

While Ministers do nothing, my constituents and other people are really suffering. My constituent, a woman born in the 1950s, told me:

“I feel anxious and distressed about how I am going to manage without an income in what has been, for my generation, the expected retirement age.”

It is six months since we had our first debate on this, so will the Minister and the Secretary of State now commit that civil servants will assist with costing the various options for transitional arrangements that have been put forward by Labour?

[Mr Vara]

The hon. Lady asks for a costing. During the 2011 debate the cost was calculated to be £1.1 billion, and there is no intention to revisit the issue.

[Paula Sherriff]

Does the Minister accept that there were significant failures from his own Department to communicate the changes to the state pension age, and does he think it unacceptable that some women found out about the changes only months before they expected to retire?

[Mr Vara]

In 2012, a survey compiled by the Department for Work and Pensions found that only 6% of women who were due to retire within 10 years thought that the pension age was still 60. Moreover, in 1995, people were able to ask for an estimate of when they were likely to retire, and in 2011 more than 5 million people were sent a letter to the address that Her Majesty’s Revenue and Customs then had informing them of the changes.

[Jason McCartney (Colne Valley) (Con)]

14. With an all-party group on the WASPI campaign being set up later this week, will the Secretary of State confirm that he is willing to meet a cross-party group of MPs and some members of the campaign to discuss the matter further and to open up some good communication?

[Mr Vara]

I know that my right hon. Friend the Secretary of State is more than happy to meet the all-party group. I know that he, like the rest of us, has met some members of the campaign in his constituency, but he is certainly keen to meet the all-party group.

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[Steve McCabe (Birmingham, Selly Oak) (Lab)]

The latest analysis shows that the young people referred to in Question 3 stand to lose between £30,000 and £20,000 over their retirement, as a direct result of Government policy. Will the Minister explain how that contributes to intergenerational fairness?

[The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)]

The whole purpose of the auto-enrolment system is to make sure that people can supplement the state pension. At the moment, 10 million people are eligible for auto-enrolment, and we expect 9 million of them to take up that offer. Those 9 million people will end up saving and, in many cases, saving more than they do at present.

[Mr David Winnick (Walsall North) (Lab)]

Is the Secretary of State aware that he will be assessed on how far he is willing to stand up to the Chancellor over cuts that hit the most vulnerable? His predecessor was not willing to do that until the last moment. Has the Secretary of State got more courage and guts than his predecessor?