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I beg to move, That the Bill be now read the Third time.
I welcome Gregg McClymont to his place. Notwithstanding our earlier little exchanges, I unreservedly welcome him. I am sure that he will be a great asset to his party, and I look forward to other clashes and debates that we may have as time goes on. I thank the Members on both sides of the House who served with distinction on the Public Bill Committee for their help in scrutinising the Bill. They have had to hang around for quite a long time, but we are where we are now. I also thank the Opposition for their approach to many of the positive debates on the Bill’s clauses. May I also extend my appreciation to my hon. Friend Mr Brady and Katy Clark for chairing the Committee sittings through those longer moments?
It is also right that I pay tribute to my hon. Friend the Pensions Minister for his commitment to taking this important legislation through this House. If there is anybody in government who has championed the cause of the low-paid in pensions, it is him. It is a privilege and pleasure to work with him in this coalition—a very firm coalition in our case. On a departmental point, may I back him up on what he said about one of our civil servants, Evelyn Arnold, whom Stephen Timms knows? She is retiring after a long time and has seen so many of these things go through, and it is right for us to thank those who serve us without normal comment. So, without question, I thank her for the time she has spent, on behalf of all parties in government, getting this sort of legislation through.
Over the past few months, a number of amendments were made that I believe have improved the Bill, and I shall run through them. With the blessing of the House, I do not intend to spend much time on them because we have been through them a lot. Amendment 1 related to the consumer prices index underpin, where we have listened to concerns and responded by ensuring that schemes that use the retail prices index will not have to uprate by CPI in the years when it is higher. We have heard the issues raised on deferred member charges and, having listened, we have extended an existing reserve power to cap charges to also cover deferred members. That enables the Government to protect all scheme members from high charges regardless of what might come in the future, which is an important feature. Thirdly, we have also made an amendment to clarify the definition of money purchase benefits in light of the Supreme Court’s recent judgment in Houldsworth v. Bridge, ensuring that schemes and members continue to have adequate protection.
The House will be aware that we have listened and responded to concerns about the women most affected by the accelerated rise in the state pension age. Last week we announced that no women will see their state pension age increase by more than 18 months. We have always been clear that our policy will not change and we will still equalise the state pension age by 2018 and increase it to 66 by 2020. We have, however, honoured the commitment I gave on Second Reading to ease the transition process for those who are most affected. I listened with interest to the debate, but the point that is sometimes missed is that the adjustment means that nearly 250,000 women will have a lower state pension age as a result of the change, as will a similar number of men: 500,000 people at a cost of just over £1 billion in the next spending period. We should not sniff at that.
Before I give way to the right hon. Gentleman, let me make a small point. I understand why the Opposition want to trumpet a great deal about this. Having sat in opposition, I understand that getting self-righteous about such things in defence of others who raise them is exactly what Opposition Members do. As some of my hon. Friends said earlier, however, unless the Opposition can guarantee that they will reverse the measure if and when they come into government, in essence they are doing something quite cynical by raising the hopes of women outside, knowing only too well secretly that they will never make the change. If I give way, I would like to hear that the Opposition absolutely plan to reverse this measure and change it in government.
One thing the Opposition are entitled to do is ask the Government to explain why they are doing what they are doing. At a time when the Government are increasing the state pension age by one year for many people, what is the justification for picking out 500,000 women and treating them more harshly than everybody else?
I think the right hon. Gentleman knows the answer to that question. It is wholly part of the process of equalisation and of moving everybody on at the same time for the extra year’s increase. That answers his point, but, as he knows in his heart of hearts—I consider him a reasonable man in his dealings most of all—the real point is that had Labour been in government, I suspect that they would have done almost exactly the same things.
The generation below my generation is likely to retire on a lower income in retirement, the first generation to do so, as a result of all the problems we have had with the economy—which the previous Government left for us and for which we never get an apology—and the reality that not enough people have been saving. We are about to condemn a generation of people who will struggle to save for their pensions and who will have to pay off elements of the debt that we—this generation going through Parliament—have overseen while at the same time paying for those who are already in retirement, and we must do something to help them rid us of that debt so that they do not pick up such a large proportion of it and are not saddled with it as they attempt to bring up their children and earn a living at the same time.
The Secretary of State is explaining why the state pension age needs to be raised and our amendments did not oppose the increase of one year. We are still waiting, however, for some justification why this particular group of 500,000 women must wait more than a year—longer than everyone else—to reach their state pension age.
I think I have explained that. As I said earlier and as the right hon. Gentleman knows well, the acceleration is about reaching equalisation in time to move the age to 66. We can bandy this subject about, but the point remains that the Opposition must come to terms with something quite important. The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East, who opened the debate on Report, suggested that £11 billion—he insisted on saying £10 billion, but I must tell him that the figure is £11 billion—was no great problem and not an issue in the great scheme of things. That is, in a sense, the problem. I remind him that to save £5 billion in real terms today straight off, we would have to cut the education budget by 10%. That is the nature of how we would have to find the money.
I simply say to the Opposition that I understand the rules of opposition—goodness gracious, we spent enough time in opposition ourselves—and the temptations that come with opposition, but realistically they should be saying to all those women that we have made a major move. We are prepared to spend an extra £1 billion to make sure that those who were excessively caught in that trap are not any more. I think that is fair and reasonable and that the Opposition need to explain to women up and down the land why they are making a big fuss about this when they know, cynically, that they would not overturn this if they came to government. That is a very cynical position to be in—to whip up this emotion outside and then calmly and quietly say, “Of course, we can’t change it.” I am afraid that is bad politics and bad decision making.
Perhaps the Secretary of State would like to hear what some of the women in my constituency think about the Government’s changes regarding their pension age. Their view is that the Government have made this very small change—it is a very small movement—which has nothing whatever to do with a concern for those women in their old age, because they are losing the women’s vote––and my constituents are not by nature cynical.
After listening to the Opposition tonight, they ought to be. One thing I will be certain to tell them whenever I encounter them is that at least I am being honest about what we are trying to do. We inherited a major economic problem, with a deficit that was out of control and burgeoning debt—the two are linked just in case the Opposition do not remember that. The reality is that, on both counts, we are charged with reducing the amounts. That is not something that is given to just a few Ministers—it is ultimately about taxpayers and about those who get pensions.
We have listened and we have done something quite significant—not small—to give way. To cap this at 18 months and spend £1 billion is, as my hon. Friends have recognised, a big step. Of course, in a perfect world, as Jenny Willott said, if all things were equal we would have loved to be able to do more, but the reality that we face is that this country has to get its debt under control. As I said earlier, the real burden is not going to fall on the shoulders of Glenda Jackson or on mine but on those of our children and grandchildren if we do not do something about that debt. I am not prepared to think to myself, “I must charge around and say that I am worried about this group or that group.” I have to say to them honestly, “All of us, together, recognise that we must do the best for the next generation coming through,” as well as doing our best, as the Pensions Minister said, for those who are due to retire.
With the amendments in place, I believe that the Bill has reached Third Reading with its fundamental principles firmly intact. I have repeatedly said that the Bill is, in large part, about the next generation—a generation who will have to pay for their parents’ retirement while footing the bill for their own savings and also for the debt.
I want to discuss auto-enrolment which, as the right hon. Member for East Ham rightly said, was started by his Government. We committed to continue it and I like to think that we have done that in the best spirit possible, taking into account the difficult financial considerations. The key will be getting many more people into saving. As he knows, some 9 million to 10 million people will be eligible under the new system. That is why we are taking forward plans for automatic enrolment into pension schemes—plans that were debated and widely supported across the House.
The Bill refines some of the parameters of automatic enrolment legislation and ensures that we take forward a model that will work for the individual, I hope, as well as for the employers who will be our key partners in delivering these reforms. There was a question about the three-month point and I wanted to make a point about those who are in work for three months in these firms and then move on—90% will move on, so the issue we are dealing with concerns a much smaller group than people have been leading us to believe. I do not agree with those who say categorically that this is a problem for growth. Auto-enrolment is good for the country, good for people who save and, ultimately, good for growth because it puts the economy on a firm footing, based on savings. I stand here today categorically prepared to take on anybody on that basis, and I will continue to do so, as will the Pensions Minister and, indeed, all of us. Others who support us on this include the TUC, the CBI and the National Association of Pension Funds. I hope that, as a consideration, we will move forward on this together.
Finally, I want to touch briefly on the consumer prices index uprating and judicial pensions. I know that everybody in the House is worried about the judicial pension scheme that is going through in the Bill, but none the less we will press on. As I made clear on Second Reading, the Bill makes a few relatively minor changes to the legislation governing the uprating of occupational pensions. It amends references to the retail prices index to read instead the “general level of prices” to ensure consistency with the rest of the legislation. It does not specify the measure for the general level of prices. I am pleased to see that the Opposition support us in all of this, although after talking to some Opposition Back Benchers, I do not think they were aware that the Government and the Opposition are apparently as one on CPI.
On judicial pensions, I will simply say that this is a key part of building a more responsible pension system, and I am pleased that the provisions have received the widespread support of the House.
I shall conclude, as others may want to speak. When we introduced the Bill, we were clear about the principle behind it: a desire to secure a better deal for our children through incentivising saving and sharing the costs of retirement more evenly between the generations. I hope there are more changes to come, with the other pension reforms that my hon. Friend the Minister spoke about, which will incentivise saving and give people a base income in retirement that they can understand and calculate. These changes should be seen in the light of all those wider reforms. We are currently working on that state pension design and consulting on the option of a single tier. All this will, I hope, provide a better deal for many women and self-employed people who have historically tended to suffer poorer pension outcomes. The changes that we are making to our retirement system are designed to put it back on firm foundations, establishing a new and fairer settlement between young and old.
I return to one point. It is a challenge to any Opposition, I guess, to have been in government and created something of which they are justifiably proud—auto-enrolment. We wanted to continue with it and we have done our level best to do that. That is the most important and powerful part of this Bill of reform. Given the importance of auto-enrolment, and notwithstanding all the heat and light generated by the Opposition’s arguments today about the level and the speed at which the state pension retirement age has moved, when they sit down and consider what is in the Bill that we are about to pass—automatic enrolment to improve the savings and outcomes for people in future years—I hope the Opposition will do the right thing and support the Bill. On that basis I commend the Bill to the House.
The Bill certainly has some welcome features, as well as some very regrettable, unwelcome features. I shall touch on both aspects in my contribution.
The recommendations of the Pensions Commission chaired by Lord Turner were broadly accepted across the House. As Pensions Minister at the time, I was extremely impressed by the energy and commitment brought to their task by Lord Turner and his fellow commissioners, John Hills and the now Baroness Jeannie Drake. They were successful in putting together an all-party consensus, which has endured. We will continue to work consensually with the Government as far as we can for the strategy that was developed in the review.
The first element of that was auto-enrolment into a low-cost national scheme. I agree with the Secretary of State about the significance of that change and I welcome his confirmation that the Government will not move away from their commitment to auto-enrolment. The second element was an increase in the state pension age, and re-linking the level of the state pension with earnings was the third.
But it is not fair for the costs of this trinity of measures to be borne disproportionately by any one group in society, whether that group is defined by age, occupation or gender. The Bill would unfortunately affect some groups far more than others. We have just had a debate touching on the fact that young people and agency workers, who move jobs more frequently than average, are likely to lose many months of employers’ contributions because of the changes, as well as the chance of building up a savings habit, because of the introduction of a waiting period in auto-enrolment. Up to a million people on low wages would be left out of auto-enrolment owing to the increase in the level of the earnings threshold. But most significantly of all, and this is what gives us a real problem with the Bill, half a million women aged 56 and 57 will find themselves waiting up to 18 months longer for their state pension, and a third of a million will be waiting a full 18 months extra, with too little time to plan for the change. That is a serious problem.
We welcome the Government’s recognition that the original Bill was wrong, and what we have now is certainly a welcome change. I make no bones about welcoming the change that has been made, the concession in response to the big and entirely proper campaign that took place, but the Bill still leaves half a million women in the lurch. My hon. Friend Rachel Reeves led the argument against the original ill thought-out plans, and I welcome the change that has occurred, but, with so many women still affected, Ministers cannot claim that they have solved the problem.
We understand why the state pension age is being increased by one year for many people, because the Secretary of State set out why and our amendments did not oppose the increase, but what has struck me about tonight’s debate is that no Government Member supporting the Bill has provided any justification why it is being increased by more than one year for half a million women—and not for a single man. What is the justification for picking out that group of half a million women and treating them more harshly than everybody else?
Why are those women being picked out for worse treatment? We have been given no justification at all, except that it will save a lot of money. No doubt it will, but the Secretary of State has a responsibility to develop a policy that can be defended, that has some rationale to it, not simply telling us, “Well, this is going to save us a lot of money.” There needs to be some justification for the change that is being made, and no justification—at least none that I can understand—has been made at all for picking out that group of half a million women.
The Pensions Policy Institute recommends that 10 years’ notice be given for people to plan for a change in their pension age, and the Turner report recommended a longer period, but the plans in the Bill still give some women as little as five years, and that is simply not enough. It is just not fair to those affected to impose on them such a big change with so little notice.
Those women have relied on an implicit contract of reasonableness and fairness between government and citizens when planning their retirement, and, if the truth is that government cannot be trusted to keep its side of the bargain, how are people expected to plan for pensions saving at all? Pension saving is inherently long-term in character, but it simply will not happen if the Government make a habit of sudden policy lurches that undermine the assumptions on which people have been encouraged to build in the past, so it is no wonder so many women feel so badly let down by what the Government have done.
We are talking about a 10-year period beginning in 2016. Under the coalition’s plans, unless they are to continue the current effectively zero-growth policy indefinitely, those savings are about the long-term sustainability of the pensions system, and we support, as our amendments tonight supported, the proposal to find further savings, if necessary, by bringing forward the date at which the rise to 67 years old occurs, as long as people have time to organise their affairs and to plan accordingly. The sudden unpredictable lurch, not mentioned by either coalition party in the general election campaign or in the coalition agreement, has caused the problem.
As my hon. Friend Gregg McClymont stated on Report, our objection to this part of the Bill is that it achieves these very large savings solely at the expense of one age cohort of women, apparently on a wholly arbitrary basis. The data are very clear. Women have substantially lower savings than men, yet a group of women—older women who have the least time to plan for the change—are being asked to bear the cost. The Bill simply fails the fairness test, and for that reason, in particular, we cannot support its Third Reading. We understand that Ministers are worried about rapidly plunging popularity among women voters and we are told that they are puzzled about why that is happening. They should just take a careful look at the unfairness in this Bill, and they will find a ready explanation there. We will not support that unfairness in the Lobby tonight, and no one else who values fairness should do so either.
The third of a million women with a wait of an extra 18 months will lose, just in state pension, pension payments averaging £7,800, and if one allows for pension credit and other passported benefits, we are talking about significantly greater sums still. Those women, if they are not working at the moment, will find it hard to find new jobs in the current labour market. Given that
37% of them are currently not in work, how are they supposed to make up that shortfall? We have been given no answers to that question.
As I think we would all agree, the design of the future pensions system should maintain inter-generational fairness. Imposing such large costs on one group of women means that the Bill fails to meet that fairness test. What became of the Burkean compact between generations to which Conservatives once subscribed?
Is the right hon. Gentleman able to answer the question that was posed by several hon. Members earlier in the debate, and then again by the Secretary of State, about whether and he and his party would plan to repeal the proposals on women’s pensions and pension age if they were to come into government after the next election, given that the changes would not have taken place by that time and they would have the opportunity to do that were they so minded?
My hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East answered that question earlier in the debate. Our view is that there have been too many changes and we would not propose yet another. The hon. Lady needs to explain the justification for picking out this particular group of half a million women and treating them more harshly than everyone else whose state pension age is being raised only by one year. For a third of a million women, it is being raised by a year and a half, and for half a million, it is being raised by more than a year. We have had no explanation and no attempt at a justification. Is it an accident or some kind of mishap? It certainly should be put right, and sadly it has not been put right in the changes that the Government have made.
There are other problems in the Bill. It dilutes the plan for auto-enrolment that was supported across the House. The proposals will leave many low-paid and agency workers outside auto-enrolment, and we think that they should not be left behind. Moreover, the gains from these exclusions, in lower costs for employers, will be small. It would be quite wrong to exclude people just because they work for small companies, as the Conservative party donor Adrian Beecroft is apparently arguing. I greatly appreciate the assurances that we have had about that during the debate, and I hope that Ministers will continue stoutly to resist any such moves if they are promoted from elsewhere in the coalition. The Pensions Commission made it clear that extending the benefits of pensions saving to more people who work for small firms is one of the prizes from this reform, and we must not throw it away.
The Secretary of State is absolutely right to argue that this is a pro-growth, not an anti-growth, change in making it possible for more people to save for a decent retirement. Of course it is right to be concerned about the plight of small firms in the zero-growth economy that we seem to have. I commend to the Government the national insurance holiday for small firms that take on additional workers that is proposed by my right hon. Friend the shadow Chancellor. We remain strongly supportive of the policy of auto-enrolment. We are disappointed, however, that the Government are seeking to water down the proposals around which the all-party consensus was hard won.
We welcome the consensus on the basic building blocks for a more sustainable pensions system, but the Government are quite wrong to load the cost of change so disproportionately on one group of half a million women. For a long time, they did not listen to those women at all. When they did, they came forward with a half measure. The sense of grievance that they have instilled in the women affected will not be readily dispelled. We are pleased to have won a concession, but many people will still be deeply disappointed. For that reason in particular, I urge Members to decline to give the Bill a Third Reading.
I am glad that the politicians who sat in this House when I was born and was growing up in this country did not decide that the burden of debt was so great that they could not introduce the reforms that brought us the welfare state. It was not their view that they should stop planning, being optimistic and working towards a better future for their children and grandchildren. Despite the national debt being eye-wateringly high, our predecessors in this place were prepared to go ahead with reform and change.
Today, we have heard several speakers, including the Pensions Minister and the Secretary of State, argue that the Opposition are somehow being unfair to future generations, whereas the Government are being fair, because we would burden people with more debt. I think that our predecessors did the right thing for us. In fact, it was so much the right thing that I suspect it created the problem that we now have with longevity. The incredible improvements in life expectancy over the past 50 or 60 years have their roots in the creation of the welfare state.
My parents, and I suspect the hon. Lady’s parents, had rationing after the war because the situation was so serious, and it was not good for many years after that.
Rationing, oddly enough, did a lot for people’s health and well-being. For some people in Britain at that time, it did not represent a worse standard of living, although it may have done for others, because during the 1930s many families struggled to put food on their tables because of unemployment.
The point that I was making is that the vision was not constrained by the debt. Things were difficult in many ways in the post-war period, but the Government of the day were nevertheless of the view that one had to plan for the future. I am not a great pessimist about debt. I feel that the whole thing has been grossly misrepresented by Government Members. In the early years of the last decade, the Government reduced the debt. Debt was very high in the period of the last Conservative Government, which people appear to have forgotten. It is not the case that the last Labour Government simply set about building up that debt in some sort of systematic way, to the detriment of future generations, as is suggested.
Of course we have to address how to cease having annual financial deficits, and then in the medium to long term we have to reduce debt. However, at the moment the signs are at the medicine that the coalition parties are applying is not working. The chances are that, the way things are going, we will get to the end of this Parliament with a greater debt. We are already borrowing more than was projected last year, which is indeed quite frightening, but it means that we need to consider what we want to do.
I am not going to make too much of this point, because various people have made it earlier, but all Governments make choices about what they spend money on. We do not believe that the choice to accelerate the pension age rise for women is the right one. There are others that could be made, and we would be making them if we were in government. It has been said in this debate and others that if we cannot immediately identify some cut equivalent to any spending that we suggest is justified and fair, we are somehow being irresponsible. I do not accept that.
I suggested earlier a couple of things that I thought we could do, for example not ending the 50% tax rate, as some Government Members seem keen to do. The idea keeps being floated. We could also consider how we provide tax relief on the pension contributions of people on higher-rate tax earnings, because that is a huge giveaway to those who are already better off. There are a number of choices that we could make. I know that this is not the view of everyone on the Labour Benches, but personally I am not in favour of going ahead with Trident. Some of my colleagues agree with me and some do not, but the important point is that there are always choices.
I was going to say that we had driven people out of the Gallery in this debate, because when I started to speak it was completely empty. However, people have now obviously come in to hear me. People often see the subject of pensions as a bit of a bore and not very exciting, but it is hugely important. I regret greatly that the very good pensions legislation that Barbara Castle introduced, which brought in the state earnings-related pension scheme, was completely destroyed by the last Conservative Government. Had that not happened, many people would be very much better off now.
Although I very much agree with auto-enrolment, I am afraid I do not see it a complete substitute for that legislation. However, we must not move away from auto-enrolment, and I very much welcome the guarantees from the Secretary of State and the Pensions Minister that they will not agree to any delay in its rolling out. Nevertheless, for the reasons that my right hon. Friend Stephen Timms gave, I am not in a position to support the Bill tonight.
Regrettably, I was not here for the opening remarks of my hon. Friend Sheila Gilmore, but we are clearly of one mind. I share with her the total refusal to accept the Government’s interpretation of the situation in which we find ourselves. The Secretary of State made a passionate plea that the debt should not lay a burden on our children and grandchildren, but that plea would have played rather more resonantly with me were it not for the fact that his Government are punishing our children and grandchildren even as we speak.
My parents and grandparents had absolutely no qualms whatever about laying on my generation the burden of debt incurred by fighting and winning a second world war, and I have to say that I am extremely grateful to them for that. I also point out to the Secretary of State that in the intervening decades, the opportunities that were presented to me and millions like me in this country by, as my hon. Friend said, the introduction of the welfare state, had been not only unheard of but undreamt of by people from the social and economic background from which I came. Therefore I, like her, simply refuse to accept that the choices the Government are making in every single area of our national economic life will promote growth, provide a way forward or benefit this country.
I would be more prepared to believe that the changes to the pension system that the Government have introduced—which, as my right hon. Friend Stephen Timms said, are grossly unfair to women—were driven by the harsh economic climate, which the Government constantly pray in aid, were it not for the fact that that measly six months will save only £1.1 billion. The Government borrow something like 10 times that amount every week. I simply cannot make the figures match—but then neither can they.
I struggle to see the hon. Lady’s logic in comparing a debt carried over on behalf of the nation for the second world war with a pension debt that results from the demographic fact of an ageing population for whom we must pay. Is she saying that £1.2 billion is a measly amount? If so, where would she find the other £10 billion that the Labour party are committed to spending by not voting for the Bill?
I trust that the hon. Lady would allow me to use my own adjectives—“measly” is not a word that would immediately spring to my mind to describe £1.1 billion. The fact is that the six-month “pause”, which might be a better word to use as far as the hon. Lady’s view of the economy is concerned, will apparently save the nation £1.1 billion. That saving will not come in until next year, and it is doing nothing to fill the current hole. That sum is a fraction of what the Government are borrowing week in, week out, because they have markedly failed to do anything to create growth in this country. They have done little or nothing to stimulate our economy. The hon. Lady may smile and shake her head, but I was taught that the only way to get something is by earning it. That is the only way to settle debt.
The hon. Lady is plucking fantasies out of the air—fantasies that the Government have been running for months. The money is certainly not paying to ensure that every child in my constituency has a school place, or that every elderly person in my constituency has secure meals on wheels, or that day centres for the elderly remain open. The Government have done nothing to encourage young people to believe that they have a future. Whatever they are doing with the money, they are certainly not stimulating growth in the country.
I must return to the issues that we are supposedly debating. The Government have imposed a gross unfairness on one half of our people: women. That unfairness is absolutely unacceptable. As I had occasion to say to the Secretary of State in an intervention, for many women in my constituency, the changes to the Bill are nothing more than a cynical attempt by the Government to re-attract the female vote, which, as they read every day in the papers, they are losing.
On the one hand, the Government have introduced this Bill, but on the other, they protest that one of their central planks is ensuring greater equality for women. They say that they want more women in the boardroom, and greater wage equality and equality of opportunity, but then they decide that when a woman has worked all her life—as has been said, she will probably have been in low-paid work, doing two or three jobs at the same time, not least looking after her family, including both children and parents—and when her employment potential is nil, she must struggle on until the state pension comes in.
I strongly and heartily endorse many aspects of auto-enrolment. I do have concerns that the Government will not introduce sufficient teeth to ensure that, if the existing pensions industry does regard auto-enrolment as a business that they would wish to enter, the proper safeguards would be in place to ensure that it remains genuinely competitive, open and transparent, so that people who have never before considered having a pension will not find—as most of us do at the moment—the pension papers to be totally obfuscating so that we are no wiser about where our money is going or what the charges are after reading them.
It will not be possible for me to vote for this Bill, but I strongly endorse auto-enrolment. I urge the Government to think again, even at this late stage, about trying to eradicate this gross unfairness from the Bill.
It will not surprise hon. Members to learn that I welcome the Bill. The issue of women’s state pension age has been discussed in full already today, but there is much else in the Bill to be welcomed. Many of the measures have broad support across the House, as we have already heard this evening. Auto-enrolment is, as Glenda Jackson said, critical to many people who up to now have had no pension savings and have not been in a position to save for their retirement. It is fundamental, and I support it now as I supported it when it was proposed by the previous Government.
We have to get more people saving for their retirement. Far too many people have no savings at all, and when they retire they depend entirely on the basic state pension. It was not designed to provide an adequate living; it was designed as a safety net. But for an awful lot of people it is their sole retirement income, and that is something that we need to change. For years we have been grappling with how to get more people to save, especially those on the lowest incomes. Auto-enrolment is critical, because we need to make it as easy as possible for people to save. We need to make it as easy as possible for businesses to administer, so that it becomes a no-brainer: people will automatically save for retirement without thinking twice about it, and so put themselves in a better position for their retirement.
Pensions are such an important issue to get right. It is not glamorous, people do not understand it, and it is very complicated. Even when I have conversations with other hon. Members about it, their eyes often glaze over. It is not an issue that people want to discuss, but it is our duty to try to make it as simple as possible for people so that as many as possible have some savings put away for their retirement and can retire in more comfort. That ties in with what my hon. Friend the Minister said earlier about the need to get means-testing out of the system, so that people know that whatever they save while they are working will benefit them in their retirement. We need to ensure that a flat-rate pension is introduced as soon as possible so that people who work, on however low an income, know that whatever they put aside during their working lives will benefit them when they retire, that they will have adequate retirement pensions, and that they will not have to rely on just the basic state pension.
I am saddened that many hon. Members feel unable to support the Bill—
I am grateful to the hon. Lady for giving way at this late hour on Third Reading. She is making a very impassioned speech about women who should save for their retirement, and that is right—but what would she say to the 500,000 women who have made savings and thought about what will happen when they retire, but who will now have to wait 18 months longer for the state pension?
I am sorry that the hon. Gentleman was not able to be in his place earlier when I explained all that. We had a long debate on that exact point earlier. The whole point of Third Reading is to be able to expand on the issues, and I wish to put on record the fact that I am very supportive of auto-enrolment, as are many other hon. Members, and on the capping of fees, as well as other measures in the Bill that are crucial but have not had as much attention as women’s pensions have. I hope that hon. Members will reconsider and feel able to support the Bill this evening, so that we can ensure that more people save for their retirement and do not have to live in poverty.
Stephen Timms set out his misgivings about the Bill. I share some of his trepidation about the effects on the group of women that we have discussed, but I shall be supporting the Government because I disagree with the hon. Members for Edinburgh East (Sheila Gilmore) and for Hampstead and Kilburn (Glenda Jackson), who sought to set out our financial position and compare our debt to that after the second world war. I wish that our financial context was as simple as just the size of the national debt. I have the figures and charts on my iPad: shortly after the second world war the Government were running a surplus—the second largest run since the second world war. It was beaten only in 1970. I would make another point about how the welfare state was founded.
In terms of annual expenditure, I do not disagree with that, but the surplus was so high partly because personal taxation levels were considerably higher than they are today.
I am grateful for the hon. Lady’s point, because she seems to have pre-empted me—as I rewind on my iPad back to the chart showing taxation. [Interruption.] Between 1940 and 1950 the total level of taxation taken out of the economy rose from about 12% to 40% and it has stayed at about 40% since 1970. The context therefore is very different. The Government can only fund themselves through taxation, borrowing and currency debasement. If I wind forward and have a look at the charts on currency debasement, I can tell her that we have been furiously debasing the currency since 1971, which is the reason for the current mess we are in.
I also point out to the hon. Lady that the Bank for International Settlements has provided a number of charts setting out the debt projections for most of the western world, all of which look catastrophic. For example, in the United Kingdom—[Interruption.] Aren’t iPads useful! The BIS tells us that on the trajectory we inherited from Labour, our national debt would have reached 500% of gross domestic product by 2040. By then our debt interest payments would have been one quarter—
Order. I am sure that the hon. Gentleman is using his iPad very well, but I hope that he will come to Third Reading, which he should be mentioning.
The financial context now is quite different from that in previous years. If the Government were not to address the pensions crisis within a realistic financial context, we would have a financial catastrophe. We would find ourselves, by 2040, attempting to spend one quarter of GDP on debt interest. It would be catastrophic—and much as my heart goes out to those ladies who I wish were not being affected by the Bill, because of the financial position in which we find ourselves I shall, of course, support the Government.
Pensions are one of the great challenges of our age, so it is pleasing that we have been able to adopt a cross-party approach. It was begun by the previous Government, who set up the Turner review, and has been taken forward by this Government in, by and large, a sensible way—although there are areas of great concern.
Auto-enrolment is a positive development that, judging by speeches from across the House, is supported widely by Members on both sides. It will provide protection for people in their old age, and is a good thing. However, it is unfortunate that the Bill, as currently constructed, will hit young people and agency workers by putting in place a waiting period that means that they will not get all the entitlements that they should do early in their pension-building life. It is even more unfortunate that women aged 56 to 58 will be significantly penalised in a way that fails any test of fairness that the House, or anybody outside it, might apply.
Does my hon. Friend agree that Government Members, in trying to defend the Bill as it now stands—with the Government’s changes—are trying to pass off an improvement as a solution? They are trying to present a mitigation of the scale of an injustice as justice itself. Those of us who will be voting against the Bill on Third Reading do not believe that we have an acceptable casualty level among the women he is talking about, or that they were selected fairly or necessarily.
My hon. Friend makes the point clearly and soundly. My right hon. Friend Stephen Timms made it absolutely clear this evening how unfair this Bill still is, and why anyone with any sense of justice and fairness should vote against it. It is outrageous for the Government to come here this evening with a mealy-mouthed effort to satisfy the women up and down this country. I urge all Members of this House to vote against the Bill.
The Opposition and Government agree on many things in the pensions debate. It was the previous Labour Government who introduced the Turner commission that looked into the ageing population and the need to sort out pensions, but that is not to say that a certain group of women—about 500,000 of them—should be penalised. [ Interruption. ] Government Members are smiling and talking, but we are talking about 500,000 women who will be drastically affected by the pension cuts. Everybody talks about how we do not have enough money, but the Government have found tens of billions of pounds for quantitative easing, and they can waste £3 billion on the unnecessary transformation or reorganisation of the NHS, and yet they find it difficult to find money for those ladies.
The Labour Government also wanted to introduce auto-enrolment, but under our proposals many more people would have benefited through enrolling automatically at £5,000; now the figure is £7,475, which means that 600,000 people will not be able to enrol automatically in a pension scheme, which again will hit women disproportionately. The Government have indicated that the rise is in line with income tax, but we know that in the next few years or so the increase will continue, which will exclude 1.5 million to 2 million people, as compared with the Labour party’s original plan. The Government have also introduced a three-month waiting period before auto-enrolment, which they predict will result in 500,000 fewer people being automatically enrolled in a pension scheme. We estimate that each person will have about 11 different employers overall. I know that it is very late—there are only three minutes to go—but in light of what has happened and the fact that 500,000 women will be affected, along with 600,000 people who will be affected by the changes in auto-enrolment, I would urge the Government to reconsider.
Hon. Members have claimed that the Labour party did nothing about pensions when it was in power, but we should remember that in 1997, after years of Conservative government, the biggest challenge that we faced was tackling pensioner poverty and improving older people’s quality of life. Between 1979 and 1997, the state pension declined from 20% of average male earnings to 14%. In 1997, 29% of our pensioners were living in poverty, which was absolutely disgraceful. Between 1997 and 2010, Labour made huge achievements, of which we are proud. Average gross pensioner income increased by more than 40% in real terms, ahead of the growth in average earnings. More than 1 million people were lifted out of poverty, with no pensioner living on less than £130 a week, compared with £69 a week in 1997.
The winter fuel allowance, free off-peak travel on local buses for 11 million people over 60, free TV licences for the over-75s and an increased threshold to ensure that 60% of pensioners pay no tax at all have made a difference. Those policies cost money, and of course money was spent, but this Government might remember that, when they were in opposition, they agreed to all Labour’s expenditure plans. For them now to turn round and say that they did not know what was going to happen, or that they did not know how much money there was in the Treasury, is completely wrong. The coalition agreement stated that there would be cross-party consensus on this matter, and at that point, the Government knew exactly what the state of the finances was. At the last minute, however, those promises have been reneged on, and they are not the only ones—
Debate interrupted (Programme Order, this day).
The Deputy Speaker put forthwith the Question already proposed from the Chair (
The House divided: