Statement (Commons and Lords) on Pensions - July 19

Pensions

1.56 pm 

2.01 pm 

• Debbie Abrahams (Oldham East and Saddleworth) (Lab) 

  I thank the Secretary of State for his statement, and for arranging to let me have sight of it 30 minutes ago.

   

  Yesterday, the renowned expert on life expectancy, Professor Sir Michael Marmot, described how a century-long rise in life expectancy was

   

  “pretty close to having ground to a halt”

   

  since 2010, when this Government began their failing austerity programme. Last week, evidence from Public Health England showed how deep inequalities in healthy life expectancy remain, both regionally and between different groups in our society, including women, disabled people and black and minority ethnic groups. It is therefore astonishing that today this Government choose to implement their plans to speed up the state pension age increase to 68.

   

  Most pensioners will now spend their retirement battling a toxic cocktail of ill health, with men expecting to drift into ill health at 63, five years earlier than this proposed quickened state pension age of 68, and women expecting to see signs of ill health at 64. This national picture masks even worse regional inequalities. Men who live in Nottingham are likely to suffer ill health from the age of 57, a full 11 years earlier, under this Government’s shortened plans, than a state pension age of 68. The Government talk about making Britain fairer, but their pensions policy, whether on the injustice that 1950s-born women are facing or on today’s proposal to increase the state pension age to 68, is anything but fair.

   

  The Government claim that it is young people who will have to bear the burden of the state pension, but in fact it is the young who have to bear the burden of the cuts that they are facing already—cuts to education, housing and working age social security—as well as the Government’s endless extensions of the state pension age. Sadly, like much of the Conservatives’ policy platform, their approach to this matter appears to have changed little since their election manifesto. At that time, they promised to

   

  “ensure that the state pension age reflects increases in life expectancy, while protecting each generation fairly.”

   

  How does today’s statement meet the promise made in the manifesto, given the evidence on life expectancy that we have seen in the past week? What conversations has the Minister had with his new friends in the Democratic Unionist party, whose manifesto promised advocating

   

  “for the interests of our older people”?

   

  Perhaps, as the Pensions Minister astonishingly suggested in a debate earlier this month, the Government will force people in their mid-60s to seek out an apprenticeship. A constituent of mine, hearing that suggestion, visited our local jobcentre in Oldham, only to find that the adviser had no idea of any apprenticeship support or Government employment support available to a woman of her age. The Pensions Minister’s position was not one shared by Mr Cridland, who suggested that the social security system must be able to support those who find themselves unable to work. Perhaps Mr Cridland was unaware of the seven years of slash-and-burn policy on our social security system; the so-called “safety net” is increasingly inadequate, driving up pensioner poverty by 300,000.

   

  Labour wants a different approach. In our manifesto, we committed to leaving the state pension age at 66 while we undertake a review into healthy life expectancy, arduous work and the potential of a flexible state pension age. We want an evidence-based approach to build a state pensions system that brings security for the many, not just the privileged few, so that we can all enjoy a healthy retirement.

• Mr Gauke 

  Even by the standards of the Labour party, its approach to the state pension age is reckless, short-sighted and irresponsible. When the evidence in front of us shows that life expectancy will continue to increase by a little over one year every eight years that pass, fixing the state pension age at 66, as advocated by the Labour party, demonstrates a complete failure to appreciate the situation in front of us. Compared with the timetable set out by this Government, Labour’s approach will add £250 billion to national debt. Let us put that in context: it is almost twice as much as was disbursed into the financial sector following the financial crisis. Let us put it another way: spending in 2040 on the state pension would be £20 billion a year higher under Labour’s plans than under the plans we are setting out—that is almost twice the Home Office budget. Where on earth is this money coming from? Even the—[Interruption.]

• Mr Deputy Speaker (Mr Lindsay Hoyle) 

  Order. In fairness, I want to hear both sides so that we can make a judgment, and I am finding it very hard to hear the Minister. This is in a reply to the shadow Minister, so we all ought to be able to hear the answer.

• Mr Gauke 

  Thank you, Mr Deputy Speaker. Even the last Labour Government, who were not known for their fiscal rectitude, legislated to increase the state pension age to 68. Yet on top of a long list of unaffordable spending pledges, the Labour party now happily makes pledges on the state pension that it must know will cause unsustainable damage to the public finances.

   

  The facts are, based on the most up-to-date evidence, and clearly set out in the Government Actuary’s report and John Cridland’s report, that life expectancy is going up. Healthy life expectancy at the age of 65 is also going up. The Government have to face up to this long-term challenge and not pretend that it does not exist. We should celebrate increased life expectancy, but it has consequences for fiscal sustainability that cannot be ignored. The Cridland review is a serious piece of work with a clear recommendation on the pension age. In contrast with the Labour party, we will act responsibly and accept that recommendation.

• Mr Iain Duncan Smith (Chingford and Woodford Green) (Con) 

  I commend my right hon. Friend for his statement. The Labour party used to work on a consensual basis, given the facts, but it has now departed from that. He is aware that we have a proud track record in reform, for example, in respect of automatic enrolment and the single tier. We also got rid of the default retirement age, where people were forced to retire when they did not want to do so. It is the Conservatives who have a proud record. The single figure that stands out starkly from this review is that if we do nothing about this, it will cost £250 billion more. That is not just a figure, as it will be borne by future generations, as they will have to pay excessive moneys. Given that the Labour party at the last election promised to get rid of the student debt and now reneges on that, does my right hon. Friend think that Labour will be doing the same very shortly on this one?

• Mr Gauke 

  I thank my right hon. Friend for his question. He makes some good points about the work the Government have done over the past seven years in terms of fuller working lives and helping more people to work longer, and he has a proud personal record in what he did on that as Secretary of State. He is absolutely right to highlight the irresponsibility of the position Labour Members had at the last election. Just as they have walked away from a deeply irresponsible position on student debt, I hope they will walk away from a deeply irresponsible position on the state pension age.

• Kirsty Blackman (Aberdeen North) (SNP) 

  I thank the Minister for advance sight of the statement. I can see why the Department for Work and Pensions did not want to publish this report by the date it was supposed to have been published by—7 May—because it would undoubtedly have lost the Conservatives more seats than they did lose.

   

  The SNP opposes plans to raise the state pension age above 66. We also have concerns about the fact that the Government have chosen the 32% rather than the 33.3%, which was the more gentle of the scenarios presented in the Cridland review. I am lucky enough to be a few days inside the 69 group, so I will get to retire at 69 rather than 70, which people a couple of weeks younger than me will retire at if the full extent of the 32% in the Cridland review is implemented.

   

  The SNP continues to call for the establishment of an independent savings and pensions commission. The Government are not doing enough to recognise demographic differences across the United Kingdom, and an independent review would look at those and take them into full account.

• Mr Gauke 

  John Cridland looked at exactly those issues and concluded that the divergence within the regions and nations on this matter was greater than the divergence between them. However, if the Scottish Government believe that there should be more support from the state for those approaching retirement age, they will have the power to provide it. If they wish to provide that support in Scotland—effectively, providing support a year or two years earlier than in the rest of the United Kingdom—they have the power to do that. I would not particularly advise them to do it, but that is their decision, and I really do not think there is a complaint to be raised with the UK Government on that front.

• Stephen Hammond (Wimbledon) (Con) 

  I commend my right hon. Friend for his statement. He is right to be tackling the issues of intergenerational fairness, but retirement is not about the state alone. What other measures, alongside this one on intergenerational fairness, will he propose to ensure that younger people can save for their retirement alongside state provision?

• Mr Gauke 

  One thing I would highlight, as my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith) did a moment ago, is what we have done on auto-enrolment. That means 10 million more people saving for retirement, which is a huge step forward. I am delighted with the success of auto-enrolment—the very low opt-out rates—and that is one example of how the Government are ensuring that people will have a dignified retirement, but we must remember that the public finances need to be in good order as well.

• Diana Johnson (Kingston upon Hull North) (Lab) 

  Bearing in mind regional health inequalities, what steps will the Government introduce in terms of social security to support those who will not be able to work until this later age?

• Mr Gauke 

  As a country we spend very large sums—something like £50 billion a year—on support for people with health and disability issues, and we will obviously continue to do that. That is the best way of supporting people who have health difficulties, rather than by having a lower state pension age, which would be unaffordable.

• Nigel Mills (Amber Valley) (Con) 

  I thank the Secretary of State, although perhaps with not too much enthusiasm, for delaying my retirement by a year. I think I am in exactly the range of people whose retirement has just been delayed. What plans does he have to learn from the issues that arose from previous increases in the retirement age about communicating to people that this change will affect them?

• Mr Gauke 

  First, I should say that the longer we can delay my hon. Friend’s retirement, the better that will be all round.

   

  In terms of communicating with those affected, we are giving something like 20 years’ notice today, but as we legislate in due course, it will of course be necessary to communicate properly with those who are affected. [Interruption.] It will be done properly. It is proper that we communicate with those people, and we will do so.

• Paula Sherriff (Dewsbury) (Lab) 

  What steps is the Secretary of State’s Department taking to ensure that older people are not subject to the Government’s punitive sanctions regime?

• Mr Gauke 

  The number of sanctions is down by about half in the last year. We have a welfare system that has at its heart the principle of conditionality for many benefits, and to enforce conditions it is necessary to have a sanctions regime. However, the vast majority—something like 98%—of benefit claimants are not sanctioned.

• Kwasi Kwarteng (Spelthorne) (Con) 

  With respect to the statement, my right hon. Friend will be aware that 300 people reached the age of 100 in 1952, when Her Majesty the Queen came to the throne; last year, it was over 13,000. Is he surprised, as I am, at the irresponsibility and recklessness of the Labour party in resisting some of these measures?

• Mr Gauke 

  I do not know whether I am surprised any more by anything that the Labour party does, but it is disappointing. The reality is that we have an ageing population, just as every similar country does. We all have to respond to the facts, and the facts are that, as the population ages, and as life expectancy—and indeed healthy life expectancy—improves, it is necessary for the state pension age to reflect that. To deny that is just to deny common sense.

• Chris Bryant (Rhondda) (Lab) 

  I had hoped that the Minister was coming here today because he had seen the light; that he had realised that the women from the 1950s have been dealt a terrible set of cards by this Government; that he was going to compensate them; that he was going to make good on the injustice that has been done to them; that he was going to make sure that every single person who was not even notified by the Government that they would be caught by the proposed measures would be compensated; and that he was finally going to acknowledge that women in my constituency who are in their 60s, who say to me that they are completely clapped out because they have had tough, laborious jobs all their lives, are the very people one of his Ministers said should now take up an apprenticeship. How dull are Ministers?

• Mr Gauke 

  I am not sure I would want to call my constituents clapped out, but there we go. The position when it comes to those born in the 1950s, just as with this announcement on those born in the 1970s, is that we have to balance the need and the desire to provide a dignified retirement with the fact that state pensions have to be paid for, and it is unfair on taxpayers if we do not have a state pension age that reflects life expectancy. That is all we are saying, and it seems to me to be very hard to argue against.

• Richard Graham (Gloucester) (Con) 

  The Secretary of State is absolutely right to go ahead with the main recommendation in the Cridland report, which, critically, gives advance notice of more than 20 years to those who will be affected, thereby distinguishing this Government’s record from that of the previous Labour Government, who failed to communicate adequately their changes to women’s state pension provision. Will my right hon. Friend confirm, first, that there will be a comprehensive communication programme to make sure everybody knows about these changes in advance and, secondly, whether the Government accept the Cridland report’s other recommendations, on means-tested benefits, working past the state pension age and the auto-enrolment review?

• Mr Gauke 

  We are looking carefully at the other Cridland recommendations. Obviously, there are issues that have an impact across Government, but it is right to move swiftly on the key recommendation—on the state pension age—to give people as much advance notice as possible. However, my hon. Friend makes a good point about the communication process and so on, and those things will need to be determined nearer the time. As I said, we are 20 years away from the point at which this change takes effect, but we are determined to ensure that it is brought to the attention of all those who are affected.

• Mr Geoffrey Robinson (Coventry North West) (Lab) 

  On the issue of the WASPI women raised by my hon. Friend the Member for Rhondda (Chris Bryant), the essence of their complaint, in some respects, is the fact that some of them were not even notified of the change that had occurred. Some were notified late, some were notified after it happened, and some received no notification at all. This point has been put time and again to the Government, and it is about time they came up with an answer to it. Instead of driving the WASPI women to take court action, why do not the Government give them a fair deal?

• Mr Gauke 

  Some 5 million letters were sent out to the addresses that the Government had. As I say, the changes made in the 1995 Act were many, many years in advance of when they took effect. None of those women born in the 1950s had had their state pension age put back by more than 18 months by the Pensions Act 2011.

• Ms Nusrat Ghani (Wealden) (Con) 

  Demographic pressures are felt acutely across East Sussex, where we have the most 85-year-olds, most of whom live in my constituency. With life expectancy increasing at birth and at older ages, can my right hon. Friend confirm that, looking ahead, people, including those who live in my constituency, can expect to receive more state pension over their lifetimes than generations before?

• Mr Gauke 

  That is absolutely right. Looking ahead, every generation will spend more years, on average, receiving a state pension than the previous generation. That is a very good thing, but it is right that we get the balance right. If Governments do not address this issue, we end up with a crisis, end up having to move quickly, and end up with sharp increases in the state pension age. That is what we are avoiding through the responsible approach we are taking today.

• Robert Jenrick (Newark) (Con) 

  I am the father of three young daughters. Office for National Statistics figures say that one of them will live to be 100, and that by the time they retire, there will be only two workers in this country for every retired person. Does the Secretary of State agree that it is blindingly obvious that we need to take the steps that he has outlined today? It should not be a cause of regret—it should be a cause of celebration that our children and grandchildren are going to live to such a grand old age—and it should be treated on a cross-party basis as the perfectly responsible action that any Government should be taking.

• Mr Gauke 

  My hon. Friend puts it very well. It is a cause of celebration that life expectancy is improving, but along with changes in life expectancy, inevitably, there are changes in the state pension age, as the change announced today demonstrates.

• Chris Philp (Croydon South) (Con) 

  Does the Secretary of State agree that thanks to the financial responsibility shown hitherto, we have managed in the past seven years to increase state pensions quite generously by £1,250 a year, and that is why pensioner poverty has gone down?

• Mr Gauke 

  My hon. Friend is absolutely right. In order to do that, we need to take responsible decisions on the public finances as a whole, including on the state pension age. That is what we will continue to do, even if we will not get Labour’s support.

• Kevin Foster (Torbay) (Con) 

  As someone who had their state pension age increased to 68 back in 2007, along with everyone slightly older than me and everyone younger than me, I have listened with incredulity to some of the comments made this afternoon. How does this compare with the situation in other countries—for example, the Republic of Ireland? Presumably it is not just a challenge unique to the United Kingdom.

• Mr Gauke 

  My hon. Friend is absolutely right. We are seeing increases in the state pension age in the Republic of Ireland, in the Netherlands, and in Denmark. It is what responsible Governments do and what responsible parties support. Unfortunately we have only one responsible party in this country.

• Matt Warman (Boston and Skegness) (Con) 

  I pay tribute to the Cridland report, which is, in part, as excellent as it is because John Cridland was educated at Boston Grammar School in my constituency. Does the Secretary of State agree that by taking responsible, brave decisions, and having reviews such as the Cridland review, we avoid the situation that countries such as Italy find themselves in, where the pension age has to be increased, in one go, by four and a half years? This is the responsible thing to do and the fair thing to do.

• Mr Gauke 

  My hon. Friend is absolutely right. We could have put this off, failed to address it, or kicked it into the long grass, but it is important for the future of this country that we have a Government who are prepared to take these long-term decisions, securing inter-generational fairness and ensuring that we provide more certainty to pensioners that there will not be the need for the sudden changes that may be seen elsewhere.

  ---

  • The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con) 

    My Lords, with the leave of the House, I shall repeat an Oral Statement given in another place by my right honourable friend the Secretary of State for Work and Pensions on the state pension age review. The Statement is as follows:

     

    “Last year the Government commissioned the Government Actuary and John Cridland CBE to produce independent reports to inform the first review of the state pension age required under the Pensions Act 2014. I am very grateful to John Cridland for his contributions to the evidence base. Over the course of his review, evidence was put forward by a wide range of people and organisations. I am grateful to everyone who took the time to engage.

     

    Today I am publishing the Government’s report on this review. This Government are determined to deliver dignity and security in retirement, fairness across the generations and the certainty people need to plan for old age. In the review, I am setting out how we will achieve these things. As part of this publication, we have set out a coherent strategy targeted at strengthening and sustaining the UK’s pensions system for many decades to come.

     

    This is about the Government taking responsible action in response to growing demographic and fiscal pressures. That is why today I am announcing the Government’s intention to accept the key recommendation of the Cridland review and increase the state pension age from 67 to 68 over two years from 2037. This brings forward the increase by seven years from its legislated date of 2044-46, in line with the recommendation made by John Cridland and following careful consideration of the evidence on life expectancy, fairness and public finances.

     

    In 1948, when the modern state pension was introduced, a 65 year-old could expect to live for a further 13 and a half years. By 2007, when further legislation was introduced to increase the state pension age, this had risen to around 21 years. In 2037 it is expected to be nearly 25 years. As the Cridland review makes clear, the increases in life expectancy are to be celebrated, and I want to make it clear that, even under the timetable for the rise that I am announcing today, future pensioners can still expect to spend on average more than 22 years in receipt of the state pension.

     

    However, increasing longevity also presents challenges to the Government. There is a balance to be struck between the funding of the state pension in years to come and ensuring fairness for future generations of taxpayers. The approach I am setting out today is the responsible and fair course of action. Failing to act now in light of compelling evidence of demographic pressures would be irresponsible and place an extremely unfair burden on younger generations.

     

    While an ageing population means that state pension spending will rise under any of the possible timetables we have considered, the action we are taking reduces this rise by 0.4% of GDP in 2039-40—equivalent to a saving of around £400 per household, based on the number of households today. Our proposed timetable will save £74 billion to 2045-46 when compared with current plans, and more than £250 billion to 2045-46 when compared with capping the rise in the state pension age at 66 in 2020, as the party opposite has advocated.

     

    It is the duty of responsible government to keep the state pension sustainable and to maintain fairness between generations. That is why the Government are aiming for the proportion of adult life spent in receipt of the state pension to be up to 32%. We believe that this is a fair deal for current and future pensioners. We will carry out a further review before legislating to bring forward the rise in the state pension age to 68, to enable consideration of the latest life expectancy projections and to allow us to evaluate the effects of rises in the state pension age already under way.

     

    This Government have a proven record on helping people plan for their retirement. Alongside our automatic enrolment scheme, which has already brought the benefits of private pensions to nearly 10 million people since its inception, we have set out plans to enhance the availability of impartial consumer advice through schemes such as the single financial guidance body and the pensions dashboard. Today, people have a much better idea of what their pension will be, bringing more certainty and clarity. This is something the Government will build on, making it easier for people to seek advice and make effective financial decisions.

     

    I want Britain to be the best country in the world in which to grow old, where everyone enjoys the dignity and security they deserve in retirement. At the same time, we need to ensure that the costs of an ageing population are shared out fairly, without placing an unfair tax burden on future generations. To deliver this, we need to make responsible choices on state pension age”.

     

    I commend this Statement to the House.

  3.46 pm 

  • Lord McKenzie of Luton (Lab) 

    My Lords, I thank the Minister for repeating the Statement and for advanced sight of it. We have been waiting keenly to see how and when Ministers would finally respond to the Cridland report but, frankly, the response is disappointing. Only yesterday Sir Michael Marmot described how a century-long rise in life expectancy was,

     

    “pretty close to having ground to a halt”.

     

    John Cridland himself acknowledged in his report that inequality in pension outcomes remains, with certain groups in particular at risk of lower incomes in retirement. There are significant variations in life expectancy across socioeconomic groups.

     

    Yet in this Statement, the Government have confirmed their intention to accept the headline recommendation of the Cridland report: that the state pension age should rise to 68 over a two-year period between 2037 and 2039. Astonishingly, there is nothing whatever in the Statement to acknowledge the issue of inequality in income and life expectancy. There is nothing in it about the huge variations in life expectancy in our country, or about how the Government will address improvements in morbidity—people’s general health—not keeping pace with people’s life expectancy. There is nothing about the wide variations in retirement income.

     

    I would like to ask the Minister some questions. The Conservative Party election manifesto promised that it would,

     

    “ensure that the state pension age reflects increases in life expectancy, while protecting each generation fairly”.

     

    How does the Minister justify that promise, given this Statement? The Statement says that the Government will carry out a further review before legislating to increase the state pension age to 68, in order to consider the latest life expectancy projections and evaluate the effects of rises in state pension age already under way. Does that mean that Ministers may not enact the rise in state pension age to 68 after all? Is this a policy or just an aspiration?

     

    What is the Government’s position now on the triple lock? Cridland recommended that it be abandoned; Labour pledged to keep it; the Tory manifesto pledged to ditch it from 2020 and move to a double lock, but the DUP rather likes it. Can the Minister clarify the Government’s position on the future of the triple lock? What is her response to the Cridland recommendation that those with caring responsibilities and ill health should be able to access pension credit a year earlier than the state pension age?

     

    Labour has pledged early access to pension credit as a way to protect the WASPI group of women, who found themselves suddenly facing an increased state pension age without enough notice to enable them to plan. I hear that the Prime Minister was looking for ideas. Would she perhaps like to adopt this one? What is the Government’s plan to communicate with people who will be affected by the change in the state pension age? What lessons have they learned from the debacle of their previous repeated accelerations of changes in the state pension age, resulting in so many WASPI women struggling in their final years of working life? What assurances can they give the House that this will not happen again?

     

    The Minister referred to plans for the single financial guidance body and its support for consumers, but is not the state pension excluded from its operations, subject to amendments we will be considering later?

     

    What is the Government’s stance on the other Cridland recommendations? Will they commit to not raising the state pension age by more than one year in any 10-year period? Do they agree that conditionality in universal credit should be adjusted for those approaching state pension age to ease the transition into retirement? Do they accept the idea of statutory carers’ leave along the lines of SSP? What about the proposal that those over state pension age should be able to part draw down the pension, deferring the rest?

     

    This Statement raises more questions than it answers. We can only hope that the report, when we have had a chance to study it in detail, will elucidate some areas. Labour want a different approach to this pensions crisis, which means more work for millions and absolute chaos for 50s-born women who have already had their state pension age quietly pushed back. In our manifesto, we committed to leaving the state pension age at 66 while we undertake a review into healthy life expectancy, arduous work and the potential for a flexible state pension age which recognises years of work and contribution, as many other countries currently do. This would be an evidence-based approach that looks to understand the varied experiences of working people across the country and to respond to their needs.

  • Lord Kirkwood of Kirkhope (LD) 

    My Lords, I am grateful to the Minister for robustly repeating the Statement. My eye was drawn to the last phrase, which she read with a flourish: “and this is what the Government are doing today”. What are the Government going to do next week on some of these matters, particularly in relation to the triple lock? I support the questions addressed to the Minister by the noble Lord, Lord McKenzie. Most importantly—this was also addressed by the noble Lord, Lord McKenzie—if the Government are to secure dignity and security for retirement, at their next review they will need to look not just at average income data but at latter-day morbidity data as well.

     

    The one thing that is missing from the Government’s Statement and response is the fact that the totality of the policy is missing. The Government need to move in a way that releases and uses the £74 billion that we will save by this move in the public policy field between now and 2045-46 to mitigate, as Cridland suggests, some of the transitional protections and to make it easier for those who are reaching retirement but who are less able to work—the disabled, carers and people of that kind. I hope the Minister will be able to say that by the next review these transitional and support questions will be addressed using some of the savings that we are obviously making from this important policy announcement this afternoon.

  • Baroness Buscombe 

    My Lords, I thank noble Lords for their response to the Statement. We believe it is really important that we have a seriously responsible approach to this. The Opposition’s wish to fix the state pension age at 66, even though they legislated to increase the pension age to 68, demonstrates a failure to appreciate the situation. Their approach would add £250 billion to national debt spending in 2040, which is equal to £20 billion a year borne by future generations. It is hugely important that we take these steps now, act responsibly and with care, and focus very much on intergenerational fairness.

     

    The noble Lord, Lord McKenzie, asked about life expectancy. We will of course look at all life expectancy data very carefully, particularly following the report by Sir Michael Marmot. The current ONS projections are that life expectancy will continue to increase, but there is uncertainty around the rate of change in future life expectancy, which is why the state pension age review mechanism ensures regular six-yearly reviews. Long-term trends of increasing life expectancy mean we need to balance the needs of pensioners with the working-age generations who fund the pensions and health and care needs of an ageing population. As for the possibility that life expectancy may be falling, the latest ONS statistics show that 65 year-olds in the UK are expected to live over half of their remaining life in good health: 11.1 years for women and 10.3 for men. Healthy life expectancy has also been increasing over recent decades and, at age 65, has been relatively stable as a proportion of total life expectancy since 2000.

     

    The noble Lord, Lord McKenzie, spoke about regional unfairness. John Cridland, in his report, concluded that there are no practical or workable ways to factor in variations in life expectancy, and there is no evidence of regional options being any fairer or more targeted at disadvantaged groups. Allowing early access to the state pension on a reduced basis would risk leaving people with an inadequate pension. Also, disadvantaged groups should be assisted, through working age, through the benefits system rather than through changes to the state pension age.

     

    As for the triple lock, that will remain in place for the remainder of this Parliament. The noble Lord, Lord McKenzie, also asked about whether we are going to go ahead with this or not. We have said that the Government have decided that the rise in state pension age to 68 should take place between 2037 and 2039; however we will carry out a further review before legislating, to enable consideration of the latest life expectancy projections and to allow us to evaluate the current rises in state pension age.

     

    In relation to carers, the new statutory entitlement to carer’s leave is a BEIS-led policy. The Government are reviewing long-term carers’ leave entitlements and will set out our plans in due course. Carers will not be disadvantaged by increases to state pension age. As society ages, and care needs increase, it is important that carers are able to combine caring with paid employment or to return to paid employment when their caring duties allow. We are working with employers nationwide to encourage the adoption of carer-friendly employment policies. Under universal credit, carers are provided with more flexible support, because their claims can remain open even when they move into work. The Government’s Fuller Working Lives strategy, published in February 2017, sets out proposals to help carers combine work and care. The Government remain committed to the provision of a safety net to support pensioners who, for whatever reason, do not have a full state pension.

     

    We are very much focused on improving communications. The intention is to provide people with adequate notice to give them clarity and certainty over their state pension. People can now use the online Check your State Pension service to get a forecast of their state pension, find out when they will reach their state pension age, how they may be able to improve their state pension and view their national insurance contribution record. Indeed, since its launch in February 2016, over 4.5 million state pension forecasts have been viewed online up to the end of June 2017. But, for any future changes, we will seek to make the position clear at least 10 years in advance. We recognise the need to provide transparency for future pensioners to facilitate effective retirement planning. The Department for Work and Pensions is looking at how best to take advantage of emerging technologies in the coming years, to build greater engagement in financial planning for later life.

     

    The noble Lord, Lord McKenzie, also referred to the state pension. We will be discussing that very issue later this afternoon when we are in Committee on the single Financial Guidance and Claims Bill. The Opposition Front Bench also asked whether we are supporting John Cridland’s proposal to increase the state pension age once per decade, which means the next increase would not occur until 2047-49.

     

    We do not support John Cridland’s proposal to commit to only one year’s rise every 10 years, as this would limit the Government’s ability to respond to future changes in life expectancy and would go too far in removing the link between when we change state pension age and the proportion of life people can expect to spend in receipt of state pension. However, we recognise the need for appropriately spaced rises. In the past, the UK has been slow to take account fully of life expectancy increases. This has led to changes to state pension age in three Acts of Parliament in the past 10 years, as noble Lords will know.

     

    Thanks to the action we have now taken, however, the UK state pension is now on a firmer footing. The state pension age review framework should maintain that position through its greater responsiveness to changing life expectancy projections. This will ensure a stable state pension system in the future. That is our focus: a sustainable pension so that future generations can enjoy a state pensions.

     

    Using the 32% proportion of adult life spent over state pension age as our longer-term benchmark balances the need to maintain an affordable state pension against the need to give people clarity about what they can expect from the state: security in retirement and confidence in the value of private pension savings. I hope this in large part covers the questions raised by the noble Lords opposite.

  4.03 pm 

  • Baroness Drake (Lab) 

    My Lords, it is the role of the Government Actuary, as set out formally in legislation, to advise the Government on trends in life expectancy to inform the state pension age. His duties are quite clearly set down in that respect. The John Cridland review was intended also to embrace wider considerations, such as socioeconomic differences and other matters, so it is disappointing that the Statement does not respond on any such issues at all—not one. I was quite surprised by that, so I take the opportunity to raise one associated issue that was addressed by John Cridland and on which he made a recommendation.

     

    We know that auto-enrolment has seen the rise of defined contribution workplace pension saving as a mass market, and it is anticipated that some £1.7 trillion will be held in workplace schemes by 2030, which is all good news for pension savings. However, as more workers save into DC schemes, the financial capability challenge gets greater, because millions have to manage more complexity and choices. I ask the Minister: will the Government take the opportunity of the Financial Guidance and Claims Bill, the purpose of which is to raise the capacity of people to make informed financial decisions, to implement John Cridland’s recommendation and put into legislation universal access for all those in their 50s to get a mid-life financial MOT?

  • Baroness Buscombe 

    My Lords, I thank the noble Baroness for her question. I am conscious that she knows an enormous amount more than I do about the whole issue of pensions. A number of wider recommendations were put forward by John Cridland, and the Government have been listening responsively to the whole question of a mid-life MOT. This will be part of an ongoing review process. Whether or not it is right for that to be in the legislation on the single financial guidance body is another issue, but I assure the noble Baroness that the Government believe that this, among other recommendations, is seriously worthy of further review and discussion.

  • Baroness Neville-Rolfe (Con) 

    My Lords, I welcome my noble friend’s responsible approach and agree on the scale of the financial challenge that we face and the need for a big shift in the interests of intergenerational fairness, especially given the problems that youngsters have in buying their own homes, which are of course another form of support in old age. My question is different: why are the Government not going faster, bringing these changes in more quickly and, perhaps, going further up the age range?

   

  • Baroness Buscombe 

    I thank my noble friend for her question. Together with my noble friend, I have the good fortune to have not so young children with young families. They are questioning how sustainable even our current proposal will be, given that the burden on the next generation of funding public services in this country is ever increasing. I have talked to some in their late teens and early 20s who seem surprised that the working age should cease at 68: they think it should go on rather longer. Indeed, your Lordships’ House is an example where people want to and are capable of working late into life. There is no question but that we should keep the whole issue of state pension age under review. That is why we have set out a clear pathway for the future.

  • Baroness Hollis of Heigham (Lab) 

    My Lords, I think we all share the Minister’s view that any future settlement needs to reflect life expectancy, fairness and public finances, but the fourth question, which she referred to briefly in response to the noble Lord, Lord Kirkwood, is not mentioned at all in the Statement—although John Cridland has tried to address it in meetings that we have had with him where some of us have pressed him on this issue—which is healthy life expectancy. We know that the gap in life expectancy between men and women is narrowing, which is good. We also know that the gap in life expectancy by social class—As and Bs as opposed to Ds and Es in the old census formula—is widening. For them, for every extra year of life expectancy, anything between six and 10 months of it will be in very poor health. In other words, every year gained in life expectancy for the bottom third of our population is a year in poor health. Therefore, people can leave their working life without a healthy year of retirement in their future: they will start with disability. The Minister mentioned that there would be responses in the benefit system to those in that situation. Will she move away from the concept of benefits and all the problems associated with universal credit, PIP and the rest of it, which are now coming through in horrifying forms, and instead think about the expansion of pension credit, which is much more closely connected to pensioner incomes rather than working-age incomes, as a way of ameliorating the situation of those who are unable to draw their state pension at an early enough age, denying them even a single year of healthy retirement?

  • Baroness Buscombe 

    I thank the noble Baroness for her question. We are trying to look at what a suitable state pension is that rises in line with life expectancy and is fair across the board. I know the noble Baroness is very keen on the whole issue of fairness across all the socioeconomic areas, as it were. We are quite clear in our minds, having studied Cridland, that the reality is that our strategy is built on a solid evidence base that has been aided substantially by the two contributions from John Cridland and the Government Actuary. In fact, Cridland’s review took into account evidence provided by over 150 stakeholders. The question of life expectancy has gone up for all socioeconomic groups over the last 30 years, and for all constituent countries of the UK over the past decades. As I say, John Cridland did extensive work on this and concluded that a universal state pension age remains the best system as it provides simplicity and clarity, which enables people to plan for their retirement. As I have said, Cridland concluded that there are no practical or workable ways to factor in variations in life expectancy, and there is no evidence of regional options being any fairer or more targeted at disadvantaged groups. Allowing early access to the state pension on a reduced basis would risk leaving people with an inadequate pension. We believe that disadvantaged groups should be assisted through the working-age benefits system rather than through changes to the state pension age.

     

    It is important to add that we should not see the issue of increasing the state pension age as one whereby we are bringing in a situation that is necessarily making it more difficult for people as they grow older, given that older workers can bring decades of valuable knowledge and experience to the workplace. This is all seeming rather doomy, but actually we should celebrate the fact that life expectancy is increasing. There are now 8.7 million people aged 50 to 64 in work, which is a record high, and more than 1.2 million people aged 65-plus who choose to remain in work. In 2017, we launched the Fuller Working Lives strategy in order to encourage more employers to take advantage of the benefits that older people bring. We are calling on employers to boost the number of older workers, not write people off once they reach a certain age.

  • Lord Boateng (Lab) 

    My Lords, it may be that I am just getting older and more irascible and that I am just another angry old man, but I really do not see what there is to celebrate if you are old and poor and doing a manual job. It is perfectly true that life expectancy is increasing, but it is not getting any easier to get older. Surely we all understand that. What is lacking from the Statement and the Government’s response is any sense of justice around the process of being old, poor, disabled or a carer.

  • Baroness Buscombe 

    My Lords, I have to say I entirely disagree with the noble Lord. I listened to some of the comments made by his party in another place and I found them shocking in relation to the way that old people are referred to, as if old people are somehow rather useless and “worn out”—I think that was one of the expressions used at the other end. My young, who will be hitting retirement when this comes into fruition, would take that very poorly. We are looking for every opportunity to find ways to improve healthy working lives for everyone. If one was a little more positive about this, one would accept that it is totally unfair to ask young people today and tomorrow to be saddled with such an enormous burden as the party opposite want to impose on the young people of today and those who are very much in their youth. The idea of the party opposite is that we should add £250 billion to the debt because—even though it legislated to increase the retirement age to 68—it now says that, somehow, we are not being kind to people in poor health who are unable to work up to the state pension.

     

    The welfare system provides a safety net for those experiencing hardship, with a range of benefits tailored to individual circumstances. Indeed, the Government are committed to supporting the vulnerable, spending around £50 billion a year on benefits to support disabled people and people with health conditions, which equates to more than 6% of all government spending. I recognise that this change will have a bigger impact on people with lower life expectancy, but we agree with Cridland that a universal state pension is important for simplicity and clarity for planning purposes. There have been substantial improvements in life expectancy at 65 across all socioeconomic groups over the last 30 years. This means that change is needed for fairness between the generations.

  • Lord Kerr of Kinlochard (CB) 

    My Lords, the Minister mentions “fairness between the generations”. Would she apply that eloquence to explain the retention of the triple lock?

  • Baroness Buscombe 

    My Lords, I simply repeat that we have decided to retain the triple lock for the remainder of this Parliament. I had rather hoped that noble Lords who take advantage of it would welcome it.