Department for Work and Pensions

Part of the debate – in the House of Commons at 2:08 pm on 2nd July 2019.

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Photo of Alison McGovern Alison McGovern Chair, Speaker's Advisory Committee on Works of Art 2:08 pm, 2nd July 2019

My hon. Friend makes an effective point—which I will come to—about the position of the WASPI women, born in the 1950s. They dealt with challenges in the labour market that I have never faced. They fought for the changes that my generation benefited from, and at their point of retirement the Government undermined them. I will say why I think that is contrary to the principles on which we operate the welfare state in this country and I thank him for that appropriate intervention.

Before I come to the principles, I shall address the purpose. What is the purpose of all the money spent by the UK’s biggest spending Department? What is it for? The spending has a simple principle—and Beveridge articulated it in his report, which really commenced the modern welfare state in the UK—and that is to smooth incomes. The idea is that we spend to allow people to take money from the system when their income is low and to pay in when their income is high. It is very simple. If we allow people to smooth their potential for getting wages and income over their lifetimes, on average people will be richer than if they have to cope alone in the hard times. If we allow people to use social insurance to smooth their income, we are all better off. We pay in when we can, we take out when we need: that is how it works. It has a simple purpose. How does the system do that? It operates by some simple principles. It is a huge amount of money, but our welfare state adheres to a straightforward and simple principle—the contributory principle, one that any student of Beveridge will know all about. The idea is that we all pay in when we can and we are all entitled to take out when we need.

Why have I made those points about the simple purpose and principles of the welfare state? I do not think that very much has changed since Beveridge’s time when it comes to the fundamental way that the labour market operates and the risks that people face in their lives that will make them poorer if we do not have an effective welfare state. We are still fighting the same evils that Beveridge identified, and the reasons people might not have enough to get by are fundamentally the same as they were when he wrote his report. The one that we all know about is old age, as my hon. Friend Mr Cunningham has already mentioned. That is why it is right that, in the 10 years since the crash, the incomes of pensioners in our welfare state have—by and large, with one notable, shameful exception—been protected. We have seen pensions keep pace with earnings and with the general movement of our economy. When the economy is growing, pensioners’ incomes have kept pace. We know that the uprating, the increase in spend on pensioners, has protected them from the possibility of poverty. No one wants to see people who have worked hard all their lives go without and struggle with poverty in their old age.

Of course, the WASPI women are an exception to that. The principle that they have paid in and that they should be able to take out in an equitable way has been undermined for them. For the reasons that have already been mentioned, that is shameful and must be changed.