[Relevant documents: e-petition 617603, Increase State pensions to £380 a week, and lower retirement age to 60; e-petition 581736, Move the State Pension age back to 60 for both men & women; e-petition 630163, Increase State Pensions to £416.80 per week & lower Retirement Age to 60 for All; and e-petition 587703, Reduce the state pension age to 63 for all.]
I beg to move,
That this House
has considered the matter of raising the State Pension age to 68.
I thank the Backbench Business Committee for providing the time for this debate, and Members for staying here on what I know is a tricky day for travelling. Some people may have somewhere more exciting to get to later in the evening, and I suspect we will not be able to drag this out until 7 o’clock, but you never know. There is plenty to talk about on pensions, and we can but try.
I wanted to hold this debate because the Government have recently received the periodic review of the state pension age from Baroness Neville-Rolfe. They have not yet published that review, but we have been seeing stories in the media suggesting that there may be an announcement in the Budget of a change in date for the increase in the state pension age to 68 from 2044 to sometime in the 2030s. I should probably declare an interest in that, depending exactly when that choice is made, it may change my own state pension date. That is on the record, but I have no idea what year the Government are thinking about.
I hesitate to say it, but this is actually a really important decision that will have a very significant impact on a lot of people. It needs to be made very carefully, and with very careful consideration of the impacts on people of different genders, backgrounds and occupations and on those in different parts of the country. Its impact for a manual worker will be very different from that for a professional, or someone living in an area with much lower life expectancy than, say, in the south-east of this country, and it is the same for those who have had a high-earning career rather than a lower-earning one. So it is quite a hard thing to get right, as various studies have shown. The other reason to be very careful is that the whole success of the pension regime depends on certainty and predictability, and if people start to think that nothing is certain or predictable, then they cannot have confidence, the whole basis on which we save for our retirement starts to become unclear and people start showing behaviours that we would much rather they did not show.
I actually support—I did support and I still support—the position the coalition Government got to in the 2010 to 2015 Parliament, in which we raised the state pension age to 66 in 2011 and brought forward the increase to 67 really quite considerably. That was based on the principle that we should get roughly a third of our adult life in retirement, and I think we should be very clear about sticking to that principle. However, it is right that, if life expectancy increases, that has to be paid for. If we are going to get longer in retirement, we have to find a way of paying for that. The inevitable impact is that we have to work a bit longer to pay for that. If there is a clear principle that we will spend about a third of our adult life in retirement, people can at least understand what the situation is and what may be coming down the line. I urge the Minister to not move away from that principle, to at least give people that understanding.
I fully support all the other pension reforms introduced by the coalition Government, including the successful roll-out of auto-enrolment and the introduction of the single-tier state pension, which was designed to say to people, “You will get a state pension and it will be above the poverty threshold, so there will not be any means test. If you save more and have your own private pension, you won’t be losing benefits.” It is therefore absolutely worth saving for that pension. The success of auto-enrolment ties directly into that. Everybody is clear that it is well worth their doing that.
May I take the hon. Gentleman back to a point that he made a moment ago about raising the pension age because of increasing life expectancy? That has always been the justification that has been given. However, at best, life expectancy is now stalling, and in Scotland it has been falling for the past two years. Does he agree that, in that context, it seems bizarre to use that information to raise the age further and faster?
I will come to that point in my argument. If we accept that we should stick to the principle that we get roughly a third of our adult life in retirement, the reason why we would increase the state pension age is that we have seen a three-year increase in life expectancy, and that should give us two more years on the state pension age. So for every 12 months life expectancy goes up, people should effectively get four months of that in retirement and expect to work for eight months of it. The hon. Lady is right: the data does not now show, sadly, life expectancy increasing, certainly not at the rate that was forecast by all the actuarial calculations at the time of previous reviews. The data for the 2018 to 2020 reference period showed that male life expectancy had fallen by seven weeks compared with the 2015 to 2017 reference period, and female life expectancy had gone up by half a week, or something really quite insignificant.
On that logic, we would be thinking, “Yes, we are due a periodic review and it would say that nothing has changed—in fact it has got a bit worse. There is nothing to see here, so let’s not make any more changes.” The Minister can intervene if she wants to say that that is what the review says, and we can all go home quite early, but I suspect that nothing is ever quite that simple.
I suppose what we are asking the Minister to confirm later in the debate is whether the Government will stick to the principle of people getting a roughly fixed proportion of their adult life in retirement, and whether they will therefore be guided by that 33% figure. The hon. Lady’s point would appear to suggest that the position is, if anything, worse than that at the time of the Cridland review six years ago and we should presumably come to the same conclusion as that. That is not what the media stories are suggesting. They seem to be saying that the increase to 68, scheduled for the mid-2040s, will come forward to perhaps as early as the mid-2030s—possibly around 10 years from now.
That leads me on to two keys asks of the Government, and I think they were principles that were previously set. First, increases in the state pension age should always come with 10 years’ notice, so we should never give people less than 10 years to have to change their retirement plans. Perhaps the Minister will confirm that there will be at least 10 years’ notice.
Furthermore, we should make one of these changes only every 10 years; we should not be making multiple changes. Had the Cridland review been handled differently, we could have had the increase to 66 from 2011, the increase to 67 in 2014, and then the move to 68 a few years after that. That would have been far too much change too quickly for people to handle.
Those key principles that we established were not that different from what the Labour Government did in previous pension Acts when they brought in pension age rises. It is overwhelmingly in the interests of a stable pension system that we keep those fundamental principles in place. We do not want to end up in another situation like we had with the Women Against State Pension Inequality Campaign, where women—and I met many of them in my constituency—genuinely did not know that their state pension age was going up significantly until they tried to claim it or thought they were about to get it, only to in some cases find out that it was another five or six years away. That is why we need to ensure we have that certainty in place. I know that that was changed in the Pensions Act 1995, so everybody had at least 15 years’ notice for most of it, but people just were not told, or at least not in a way that they understood or noticed. We need a clear, stable pension architecture, as was established under the coalition Government, with a single-tier state pension above the poverty threshold, so that people could save for themselves and had predictability.
This is not random conspiracy theory nonsense. Articles are occasionally written by people who just do not believe that when they get to retirement age, their state pension will be there, or that they will ever get to it. In fact, there was an article in the Daily Mail raising exactly that point. Reading other stuff around, we see that there is a general pervasive fear that people will never get to state pension age—that it will always be pushed just out of reach and they will never actually get there. That is why we need to be absolutely clear that that is not what we are trying to do here. We have a predictable and reliable state pension system that people can factor into their retirement savings and then use to plan for the later years of their life. I am sure the Minister will be able to reaffirm that that is absolutely the Government’s position.
There is a question about whether the Government are minded to make a change. I think the Cridland review suggested that we could have brought the change forward to the late 2030s, at least, so it should not be a complete surprise if we think that 2044 is probably too late and would result in that figure of roughly 33% becoming a bit generous and people getting a bit longer than that. We need to set out the rationale for that pretty clearly and try to work through how we can help people who will be put in the most difficult position by that change. Intriguingly, the Cridland review said that if the Government are after Budget savings, increasing the state pension age is not a very clever way to do that. Instead, the review recommended abolishing the pension triple lock, which, I suspect, is not a view that has great support around Parliament. Hopefully this latest review does not re-recommend that, and the Government will not accept it if it does.
There were, though, some sensible analyses and recommendations as to what we can do to help people who are out of work in their mid-60s because they are either not really fit for work or not realistically going to get a job then. How do we give them financial support when we cannot give them their state pension? Do we subject them to full universal credit conditionality, or can we find a way of giving them a better experience? The review recommended potentially allowing people to access the state pension a year early, having a benefit equivalent to the state pension at least a year early or having a tapering-off approach to UC or UC conditionality, in case people fall out of work at just the wrong point.
I am not actually aware that the Government have ever really put in place any of those measures, so that would be another ask of the Minister. If the Government are thinking of making a change, while we do need the notice, can we also put in place a plan early for handling those who will be the worst affected by the change? I think we will need that for the rise to 67, anyway, which is coming up much sooner. It is just not realistic for people who fall out of work very late in their working life to get another job, and leaving them in financial trouble for those last few months before they get their pension seems to be a rather inefficient and cruel situation. Hopefully we will have made some progress on that before we get to the next pension age.
I would also like to say that I do not think handling this sort of issue as part of the Budget process is necessarily sensible. This change will not affect the public finances this year or next year, or, actually, the next Parliament; it may not be until the Parliament after that, or possibly even the Parliament after that, when this triggers any financial savings. There is not, as far as I can tell, any real Budget sensitivity to how the Government make this announcement, so I do not think we need to have a shroud of secrecy over what the Government are thinking of doing.
What the Government should do is publish the Neville-Rolfe review. It would be helpful if Baroness Neville-Rolfe could appear before the Work and Pensions Committee and explain the findings of her review. I think she has been brought back as a Minister in a different Department, so I am not entirely clear whether that would be permitted. Could we have a Minister from a different Department answering questions about a review they led before they were a Minister? I cannot think of any reason why not. Perhaps the Minister could confirm that the Government would be happy for her to come and explain the findings of her review. We could then have an open consultation about the content of that review and come up with a coherent policy, rather than it being dropped out by the Treasury and perhaps consulted on afterwards. The fear is always that once something has been announced, there is much less chance of it being changed.
I hope that the Government will get the feeling from this debate that people are concerned about there being further rises in the state pension age before we have had a chance to assess fully the impacts of the rise to 66—let alone the rise to 67 that is coming. I think we all recognise that it is a difficult situation and that it is worse for different parts of the country, worse for people in different occupations and possibly worse for women than for men. It would be useful to understand those implications and how we can mitigate them before we make any further decisions.
Fundamentally, if life expectancy data is not going as has been forecast, we should respond to the facts as they change and accept that our policy on expected changes to the state pension age can change as well, that we do not need the increases to come as fast and as often as we had thought, and that we should just leave things as they are. Let us hope that life expectancy starts to increase again. We can make these decisions then, rather than rushing into things that really hurt people, that bring uncertainty to the pension system—we do not need that—and that will probably not bring any financial savings for several Chancellors.
I look forward to hearing what the Minister has to say. Let me restate my point: our pension architecture and the foundations on which we have been trying to build the system are all still there and are robust, and we can all rely on them.
I congratulate Nigel Mills on securing this Backbench Business debate, which gives us the chance to ask for the Government’s views on this topic of great importance and enormous public interest. I am delighted that the Pensions Minister, Laura Trott, and the former Pensions Minister, Guy Opperman, are in their places on the Front Bench.
I agree with much of what the hon. Member for Amber Valley said. The idea of spending a third of adult life in retirement is a sensible yardstick to run with. He made the point, in passing, about the importance of implementing the recommendations of the auto-enrolment review, and I agree with him that that is important. We are repeatedly told that it will be done in the mid-2020s, but time to implement it before 2025 is either running out or has possibly already run out.
In my remarks, I will focus on the process we are in. I recall the wise words of David Cameron, who said:
“Sunlight is the best disinfectant.”
He argued—rightly, in my view—for a culture of openness in government. One of the results of his view was the 2010 protocol on publication of all Government social research, which was most recently updated last year. It states:
“Principle 1: The products from government social research and analysis will be made publicly available”,
and that research should be published “promptly”, within 12 weeks of completion.
For a number of years, that was, to their credit, the Government’s approach. In 2017, when the first review of state pension age was undertaken for the Government by John Cridland—as the hon. Member for Amber Valley has pointed out—his report, and the report of the Government Actuary, were both published on
I have often expressed great regret that the Department, for some reason or other—perhaps reflecting a different approach across Government—has abandoned the practice set out by David Cameron and instead now resists publication of research and analysis, or delays it for as long as it possibly can. Preventing public discussion no doubt has the benefit of allowing Ministers to avoid having to answer difficult questions, but it has the disastrous drawback of worsening policy outcomes. The policy cannot be informed by public debate before the decisions are made, because the evidence that would allow a debate is not available. The Government publication protocol was watered down a little last year, but its essential gist remains unchanged. It says, for example:
“The primary purpose of social research commissioned and conducted by government is to inform…policy and delivery, but it also plays a role in wider policy debate.”
That is quite right, but, as we have discussed in the Chamber on various occasions, in the DWP the requirements of the protocol are simply ignored. They are not being fulfilled.
I have been hoping very much that the new ministerial team will turn over a new leaf and take a more enlightened approach. Indeed, the new Secretary of State has hinted that he is considering the advantages of greater openness. But here we have a flagrant example of his predecessor’s bad habits of hiding analysis and evidence until it is convenient to the Government to release them. Instead of publishing the evidence four months before the Government’s decision, as was done in 2017—around the time the former pensions Minister, the hon. Member for Hexham, was appointed—the Department is keeping the evidence hidden until it makes its announcement “early in 2023”. Presumably, as the hon. Member for Amber Valley has suggested, that will be at the time of the Budget next month.
In my brief contribution to this important debate, I mainly want to press the Minister to publish now both the report by the independent reviewer, Baroness Neville-Rolfe, which the Secretary of State received on
The Select Committee has published today an exchange of letters with the Minister on the subject. When asked why these reports are not being published before the Government’s announcement as they were for the 2017 review, the Minister, who is in her place, replied that
“this is a different publication schedule to the last review, the issues are still under consideration and so we think this approach is more appropriate.”
In other words, they appear to be saying, “We don’t want anyone to see the evidence until we have made up our mind. This is still under consideration, so we think it is not appropriate to publish the evidence.” Surely, there ought to be a public debate about all this before the Government make their decision, not afterwards. This instinct of hiding things, not disclosing them, and not complying with the requirements of the cross-Government protocol is very damaging to the Government’s ability to make good policy.
Surely, Ministers should take advantage of public debate to inform their decisions, rather than refusing to show anyone the evidence until after the Government have made up their mind. What has become of David Cameron’s belief in sunlight? We are talking here not about confidential advice to Ministers—there is no requirement to publish that—but rather about expert analysis that will eventually be published, and which sets out the evidence that will underpin the Government’s decision. Publish it now so that everybody can see it. The protocol says that
“analysis should be published promptly…as early as possible following agreement of the final output.”
So it should be. The recent independent review was announced in December 2021. The terms of reference said that it should explore what metrics the Government should take into account when considering how to set state pension age. They stated that it should include a consideration of recent trends in life expectancy in every part of the United Kingdom; whether it remained right for there to be a fixed proportion of adult life that people should, on average, expect to spend over state pension age, and what metrics would enable state pension costs, and the importance of sharing those fairly between generations, to be taken into account.
The Select Committee agreed months ago that once Baroness Neville-Rolfe’s review had been published, we would take evidence on it, including from her, as the hon. Member for Amber Valley said, before the Government announced their decision. Now that the Government are unwilling to publish the analysis before they announce their decision, we clearly cannot do that.
The Sun has reported that the Government plan to raise the state pension age from 67 to 68 as early as 2035, which will affect everyone who is 54 and under, instead of 10 years later, as set out in current legislation. Is that the right thing to do? Well, we need to see the evidence. The key evidence is about future projections of life expectancy. As we heard from the SNP spokesperson, Patricia Gibson, emerging evidence shows that the trend of rising life expectancy is not what it was before the pandemic.
One of the expert witnesses at this morning’s meeting of the Select Committee said, “Mortality seems to have peaked, because one reason why there was increasing mortality was that the second world war lifestyle was ironically quite healthy for people, and the numbers are now going down quite a lot.” We were discussing something else this morning, and I do not know what evidence the witness was drawing on there, but I do not know what evidence the Government will draw on either, because it has not been published and it should have been. There should be no delay in publishing it.
Cohort life expectancy statistics are produced every two years. A new set is expected this year. The latest, 2020-based projections show life expectancy at 65 still rising, but at a slower rate than in previous releases. Of course, the 2020 figures did not take any account of changes arising from the pandemic. The change in projection has prompted some commentators to call for the planned rises in the state pension age to be abandoned, or at least to be slowed.
Lane Clark & Peacock took the latest Office for National Statistics life expectancy projections and reran the 2017 calculations of the Government Actuary’s Department. They concluded that any move from 67 to 68 would not be needed until the mid-2060s rather than the mid-2040s, and certainly not by the late 2030s, as suggested by The Sun. They also suggested that the move from 66 to 67, which is currently scheduled to be phased in over two years from 2026, could be put back until the end of the 2040s. They went on to argue that if further ONS statistics show relatively lower life expectancy growth, that could imply further delays to planned increases, and perhaps even abandoning the planned rise to 67.
The former pensions Minister but two—I think— Steve Webb, who is now a partner at Lane Clark & Peacock said:
“The Government’s plans for rapid increases in state pension age have been blown out of the water by this new analysis. Even before the Pandemic hit, the improvements in life expectancy which we had seen over the last century had almost ground to a halt.”
Those are important public policy questions. They should be debated in Parliament and among the public before the Government announce their decision, so that that public and parliamentary debate can inform the Government’s decision. We should not just see the evidence after the Government have announced what they plan to do, because changing the Government’s mind at that point will not happen.
A wide public debate should take place now, but it cannot happen unless the independent review and the Government Actuary’s report are published before the announcement is made. I ask the Minister to resist the temptation to keep the documents hidden for even longer and instead to remember the wise words of David Cameron, and to be open and publish those two key documents.
It is a pleasure to follow Sir Stephen Timms. He is very knowledgeable about these matters, as his comments demonstrated; I thank him for them. I am grateful to my hon. Friend Nigel Mills for securing the debate and to the Backbench Business Committee for agreeing to it, because statutory pension age and pension amounts are of such importance to my constituents in Dover and Deal.
For a person of my age, the statutory pension is like one of those Scottish mountains. It is an optical illusion: as we get ever closer, it seems that there is just that bit further to go. When I started my working life, my pension age was 60. When it was changed in 2010, I was already roughly two thirds of the way through my expected working life. Should the pension age be raised to 68, a woman of my age, at current rates, will have lost out on the equivalent of between £59,000 and £77,000. That matters because of the basis on which I began paying national insurance contributions when I started work.
The first point that I would like to raise on behalf of all pensioners-to-be is that pensions are an unusual area because the rules on grandfathering rights that are usually applied are simply not followed. Surely it would be fairer to use the basis that applied at the point at which people started to work and started to pay national insurance contributions. If someone’s pension age is to be changed, it should be changed in the first third of their expected working life, not right towards the end. No one affected by a date change can go back in time to take out an ISA, top up their pension or use their income differently, as they might have done if they had known that such changes were due. People affected by the changes might have made different decisions if they had known that they would have to work for considerably longer, and it might have made a difference to their quality of life at an older age.
Secondly, people might have made different career choices or made career changes if they had known that they would have to work for longer. Thirdly, the expected extra years of work—eight whole years, in the case of women of my age—may mean that people will need extra skills training and support during their working life. If the pension age is to be extended even further, budgetary consideration will need to be given to support for lifelong learning, with leave being given for skilling up and study being prioritised for people affected by the change.
For many people, the ages of 60 to 68 represent a period in which, in the eyes of bosses or fellow workers, they may be considered past the peak of employability. I am pleased to say that that is not the case for contributions in this place, but age discrimination in our society is very real. I suggest that no further changes should be made to pension age unless such age discrimination is firmly and clearly tackled.
If we want people to work later in life, we have to give them the tools, support and legal protection that they need to do so. That is all the more important because age discrimination in particular terms and conditions of employment is currently perfectly legal. If the pension age is to be extended, the law needs to be changed. Age discrimination, like any other form of discrimination, is humiliating, demeaning and damaging. We do not want to subject people to it by making them remain in work while such prejudice continues.
I have a constituent, Stephen, who at the age of 66 —the current statutory pensionable age—is facing just such lawful age discrimination. He has worked for a very large Kent company for more than 30 years. He is an effective, respected and well-liked employee with a fantastic track record of work. When Stephen reached his 66th birthday, he did not get a birthday card from his bosses; he got a letter to the effect that it was not possible to sack him on grounds of age, so instead they were terminating his life insurance, his health insurance and all his other insurance benefits.
Stephen was doing the same job at 66, at 66 minus one day and at 66 plus one day, but now he does not get the same money’s worth in relation to his contract of employment. If he falls ill, he cannot get the same access to speedy private healthcare that other people working for the company can. If—heaven forbid—he died, his wife would no longer have compensatory insurance. However, he is doing exactly the same job as someone else. It is the same job he did before, and the same job he will do the day after. The attitude demonstrated by the company communicates to him and to the wider employment community in Kent that it thinks a person who is older is worth less. We must tackle that issue if people are to stay in the workplace longer.
I have looked into the policy considerations that are sometimes put forward. The first, essentially, is that an older person does not need to work. As a woman who has been in the workplace for quite a long time now, I remember a time when employers would say that a woman did not need to work, did not need to get the same bonuses as a man, and did not need to be offered overtime, because it was men who had families to feed. We have outlawed that, because equal pay at work is not about who is doing the work, but about what the work is. Allowing age discrimination, as we do now, sends a message that an older person is not worth the same as a younger one. The continual changes in the pension age also send a clear message that older people’s safety, stability and security in managing their own lives are not a priority.
The second reason put forward is that it becomes more expensive for everyone—the premium for the company itself goes up—if older people are included in corporate benefits, or global benefits, beyond the statutory age. To apply that logic, would it be okay to disallow health cover in an employment context to someone who had a chronic condition that could give rise, or had given rise, to needing that policy? Of course not; we would say that that was discriminatory and wrong. At the heart of equalities law is the fundamental view that employers cannot discriminate between those they employ based on characteristics that are not relevant to whether they can carry out the job. By continuing a discussion of the type that has been happening about the pension age moving and whether people will be supported in older-age working, we are failing to address this absolutely dreadful discriminatory environment.
The third and final reason given is that a disincentive to recruit older workers would be created, because the costs I have mentioned would be higher for the company. I agree that we do not want to create disincentives to employing older people, particularly if we are to require people to work for years and years more than they had expected, but the argument sounds awfully similar to the well-known discussion about whether the cost of maternity leave would dissuade employers from employing women who become pregnant. We outlawed that, and we know that a woman can still add value, be productive and be effective when pregnant, so why are we making people work longer? Why are we raising the statutory pension age and communicating from this Parliament that it is okay to discriminate against older workers? It is not, and it is wrong—all the more so if the pension age is raised from 66 to 68, because we would be raising it above an age at which employers are already discriminating against workers, as I have illustrated. Unless we tackle age discrimination, we will continue to have an environment in which it will be very difficult for people who are working in older age.
As these pension changes are brought forward, I do not feel that enough has been done to support, encourage and incentivise employers to look favourably on an older workforce. For example, national insurance contributions could be reduced for older workers. Also, if people are excluded from benefits by reason of the current law, older workers should receive money or money’s worth in cash or vouchers to make up for the work benefits that have been removed from them.
By way of conclusion, I am not persuaded by the arguments for increasing the pension age further or discriminating on the grounds of age. It is simply not acceptable. There is no justification for the treatment of my hard-working and loyal constituent Stephen with the discrimination he has faced in his workplace. If the pension age is to be raised again and we are going to keep making these changes, forcing people to stay in work for longer, age discrimination must be tackled first. We should be taking steps now to change behaviours in the workplace to make sure that older people who now have to work longer will be able to do so and will be treated fairly and equitably. We should be outlawing this outdated and discriminatory law against older workers.
I congratulate Nigel Mills on securing this debate. How to calculate the state pension age is an intensely technical topic, but it fundamentally impacts on people’s lives, and what we have heard so far this afternoon illustrates that, because there is a great deal of consensus across the Benches. I congratulate Mrs Elphicke on her speech and the areas she covered.
Obviously, it is our job on the Opposition Benches to scrutinise the Government, and I do not expect the Minister to pre-empt an independent review process, but I absolutely agree with the Chair of the Work and Pensions Committee, Sir Stephen Timms that we should be publishing any reports and looking at this issue before the Government make a final decision in the public space. This debate is an opportunity for the Government to make a political statement to commit to some of the existing methodologies we have used to date for the state pension age, and primarily that means keeping it based on life expectancy.
We have heard significant concerns today that planned pension ages might be accelerated, and that does not fit with what we are seeing with life expectancy. As Patricia Gibson said in her intervention, life expectancy is not increasing. In fact, the evidence suggests it is falling, so far from seeing the retirement age going up faster, we should be seeing no change or at the very least a slowdown in planned increases.
It is highly technical, looking at actuarial tables to work out statistics, but it is important that we do not forget the faces behind the figures. In fairness, the WASPI women have made sure that we never forget the faces again. I am sure that every Member here, including the Minister and me, will have spoken with WASPI women in their constituencies about what they have suffered as a result of process failures with previous age increases. I have met many of the representatives who come to Parliament on fiscal event days. They often stand in the cold and damp waiting all day to be heard. I urge the Minister and Members across the House to meet them, if they have not done so previously.
Although this debate is about the future, I cannot mention the WASPI women without talking about their ongoing right for compensation. They have been waiting years now, and thousands have died without ever seeing a penny. The ombudsman is expected to report within a matter of months, but the only thing that has taken longer than their investigation is the Government’s inability to decide to do the right thing and to promise to follow the results of that report. I hope the Minister will make reference to that in her closing remarks.
The Government must learn lessons from what has happened to the WASPI women. If we are going to see changes, they must be communicated early and fully. People must be able to plan ahead. Age UK suggests 10 years as the length of time in which people need certainty to plan for retirement, as the hon. Member for Amber Valley mentioned. I hope that the Government can continue to commit to that.
I said it was important to remember the faces behind the figures, and it is vital that the Government remember that life expectancy is based on averages, and that all people are not alike. There are already people struggling to work to 66 through no fault of their own. Manual workers, whether farmers or factory workers, are just more likely to struggle to keep up as the impact of a life of labouring catches up with them. The fictional police sergeant Catherine Cawood of “Happy Valley” may hopefully be reaching her retirement from the police on Sunday night in the concluding episode of the series, but she will be 56 when she does so. That is because we accept that police officers are not necessarily physically capable of being able to chase offenders or fight or do any of the physical things we expect. We may hope, however, that Catherine Cawood, as well as going to the Himalayas, can also continue to contribute in a part-time work capacity elsewhere.
Health problems for many mean that people cannot work full time. Part-time working is increasing, and many people have caring responsibilities. This is the generation of sandwich carers who take care of their parents, their children or grandchildren and, when needed, their partners. There is of course a benefit to the economy, and to older workers themselves, of continuing to work if they can. If that is the Government’s aim, I implore them to see that increasing the state pension age, when we are not seeing a corresponding rise in health and life expectancy, is not the solution. People might be living longer, but they are not necessarily doing so in good health.
There are steps that the Government could take. I continue to champion the needs of unpaid carers, many of whom are in the pre-retirement age bracket. I welcome the Government’s support for my Carer’s Leave Bill, which will have its Third Reading on Friday, and look forward to their support as it passes through the Lords, but there is still much to do. Reforming carer’s allowance, securing flexible working as a day one right, offering more training and respite for carers, and investing in local services such as day centres would all help, as would more re-training, as the hon. Member for Dover mentioned, and a greater understanding of what is keeping older workers out of the workforce. We need to ensure that there is a social security net for people who have paid in and who, for whatever reason, cannot manage those final few years. That would be more effective at encouraging people to work longer, even past retirement age, than just forcing people somehow to soldier on.
Of course, there is a balance to be struck. The pension age must be both effective and sustainable. I agree that it must realistically reflect how long people can expect to live after retirement. We all see adverts pop up on our social media about how to retire at 40, but we know the Government could not be expected to fund such a period. Knowing that there is a balance means also making the expectation of the state pension realistic. I want my children, and my children’s children, to have it to look forward to one day. Our younger generations have suffered the outcomes of Brexit, of covid and of the cost of living crisis. Owning a house is a dream, not a reality for far too many. Future generations deserve the same promises, the same security as those that came before. We must not pull up the ladder.
I urge the Government to use this opportunity to reassure the House that they will follow the rules on determining retirement age by looking at life expectancy, protect those who struggle to work later in life and help those in work who can do so. Too often in recent years the Government have trailed potentially detrimental pension changes only to withdraw them later. Today’s debate gives them an opportunity to make sure that that is not the case in future.
I echo the appreciation of Nigel Mills for bringing the debate on the state pension age to the Floor of the House today. There is great concern that, according to reports, the UK Government plan to accelerate their current timeline for increasing the state pension age again, raising it to 68 by 2034. That means that those born in the 1970s or later could soon be told that a review of the increase in state pension age will further delay their retirement. If the Minister can tell us that that simply will not happen, we can all just go home and not worry about it, as the hon. Gentleman and Wendy Chamberlain said. We would all be delighted.
It is bad enough that the state pension age is due to rise again from 66 to 67 by 2028. It is even worse that the women born in the 1950s had their state pension age increased with little or no notice, a move that has robbed them of tens of thousands of pounds of their hard-earned and expected state pension, throwing many of them into deep poverty and unnecessary hardship. That is all bad enough, but now we face the prospect of the Government planning to bring forward the increase in retirement age from 67 to 68 from 2046 to affect anyone now aged 54 or younger.
The Minister may say that no final decision has been taken, but how can anyone, having witnessed how women born in the 1950s have been treated, have any real faith that the Government understand how the increase in retirement age would have a disproportionate impact on those who have worked all their lives for poor pay? The UK already has one of the lowest pensions in Europe, and these plans will have an impact on millions of people, many of whom are already struggling financially. Age UK has said that
“any Government decision to accelerate the rise in Pension Age will condemn millions to a miserable and impoverished run up to retirement—and often beyond too”.
So many people are already in poor health by the time they reach their state pension and they are already suffering financial hardship.
As the hon. Member for North East Fife said, probably every one of us has spoken to women born in the 1950s, and when we do they tell us that the biggest UK Government swindle in recent memory was robbing their generation of their rightful state pensions at the age of 60. Many discovered, often by sheer accident, that their anticipated pension would not arrive until years later, as there was equalisation with men. The anger, sense of betrayal and disappointment was only inflamed when UK Government Ministers bizarrely and insensitively insisted that this provided an opportunity for the women affected to train for new careers. Some of them then formed the Women Against State Pension Inequality Campaign, which continues to campaign for the injustice against them to be recognised and remedied. They must be given the compensation that is their right and I applaud the work they have done, because those women faced delays of up to six years to access their state pension, one in four of them now struggle to make payments on crucial bills and one third are in debt, with single women the worst affected. So that we can avoid this happening again, will the Minister tell us what impact assessment the UK Government have carried out, or will carry out, on any further proposals to accelerate the rise in the state pension age to 68 by 2034 or, indeed, to accelerate it at all?
It seems to the people outside this Chamber who are worried about this or who have experienced this, as the WASPI women have, that this Government have developed a taste for robbing people of their hard-earned state pension. The website Interactive Investor calculates that bringing forward to 2034 the increase in someone’s pension age to 68 could mean a lost year of full state pension of almost £17,000 for workers aged 46. Royal London insurance found that more than half of those aged 55 and over are likely to have the state pension as their main income, with 1.5 million of those in pre-state-pension years, and 31 % with no savings at all to fall back on. Many of them are also struggling with caring responsibilities as well as financial ones.
Pensioners relying on state pension as their main source of income are more likely to have already undergone a working life of low pay, and they are more likely to have health challenges in retirement and a shorter life expectancy. They are also the pensioners who simply cannot afford to retire early, even when health problems occur. Raising the retirement age even further will therefore have a disproportionate effect on poorer older people who will enjoy fewer retirement years.
A review of the state pension age in 2017 established that people should expect to spend one third of their adult life in retirement. As we know and as has been said, life expectancy in the UK is, at best, stagnating, which seriously undermines the case for raising the state pension age. I am afraid that those considerations will not have an impact on Government thinking and that the very logic they have used in the past for increasing state pension age—rising life expectancy—will not apply. If that is the case, I would remind the Minister that not only have life expectancy rates stalled across the UK, but they have actually fallen for the second year in a row in Scotland. Perhaps the Minister would like to factor that in when determining the state pension age. According to the UK Government’s own argument and the logic they have used so far, the state pension age should perhaps even be falling.
The UK Government must abandon any further acceleration of the state pension age across the UK. I hope that all parties will oppose that and commit to continuing that opposition beyond the next election. As the hon. Member for Amber Valley said, if you keep tinkering with, accelerating and rising the state pension age, you create uncertainty and undermine the whole concept of a state pension, perhaps fatally undermining it for future generations.
Even talk of accelerating the state pension age feels like a grubby smash and grab of people’s hard-earned pensions to try to fill the black hole in the UK’s finances, which is a consequence of 13 years of austerity. That austerity started under Labour’s Gordon Brown and has continued ever since, compounded by the damage of Brexit to which Labour is fully signed up, cynically and disingenuously pretending that there is such a thing as a good Brexit after all. Labour knows that, but it is so desperate to win seats in England, it will say anything. But the public are watching.
To raise the state pension age further is bad enough. To raise it even faster than originally planned as a cost-cutting measure is unforgivable. People in Scotland were told in 2014 that the only way to protect the state pension was to vote no to independence. Here we are nine years later, and the state pension does not support the minimum standard of living. Pensioners have already been short-changed by £6,500 on average, due to the state pension underpayments to around 237,000 older people, and a further 100,000 potential underpayments that have been identified, which will take a year to correct. Let us not forget how easily the Government discarded their manifesto commitment to retain the triple lock, the abandonment of which means that current state pension payments are £520 less than they otherwise would have been.
We must all learn from the huge injustice perpetrated on WASPI women—I applaud their campaign for justice—but we cannot permit even more people to be robbed of tens of thousands of pounds of their rightful state pension as life expectancy stalls or even falls in Scotland. Meanwhile, our Government desperately seek to fill their financial black hole because of their own incompetence, and therefore have decided to pick a fight over pensions. That is an outrage. In the dying days of this Government, as they thrash around seeking to pick the pockets of others to pay for their own economic mismanagement, we must say that enough is enough.
Pensions are an incredibly important issue. People who have worked hard and contributed all their lives deserve a decent pension in retirement. The state pension has been a crucial part of all our lives in this country for a very long time. I thank the Backbench Business Committee for securing today’s debate, and Nigel Mills and Members across the House for their contributions.
I am sorry to say that there has been a certain amount of unhelpful briefing in the media about a possible change to Government policy on state pension age. I urge the Government to stop that, and to raise issues in this House rather than in the media. If Ministers are serious, they should discuss the future of pensions policy with the public and the pensions industry in a proper public consultation. The current speculation fuelled by off-the-record briefings is hugely unsettling for people who are saving for a pension and trying to plan for their future. Ministers should remember that families and pensioners are living through an unprecedented cost of living crisis and facing huge pressures on household budgets. The last thing that people need is further stress and uncertainty.
We are living in challenging times, with inflation rates that the country has not seen for more 40 years. To make matters worse, as the IMF reported earlier this week, the UK faces the worst economic outlook of any major economy. After 12 years of economic mismanagement by the current Government, we are stuck in a period of persistently low growth and, unfortunately, persistently high inflation. As a direct result of that mismanagement, the Government are now trying to cut public spending. They have reduced spending on the state pension before by failing to increase pensions in line with inflation until April this year. That means that pensions have failed to keep up with the huge rise in the cost of food and fuel that has hit pensioners in the last six months.
Independent research by the Pensions and Lifetime Savings Association using data from Loughborough University showed the scale of the Government’s failure. It showed that the basic state pension has now fallen below the cost of living. The PLSA put the basic cost of living for a single pensioner at £12,800, more than £2,000 above the basic state pension, which will be £10,600 in the financial year 2023-24.
The Government’s mismanagement of the economy and their desperate attempts to cut public spending form the backdrop to today’s debate. This is made even worse by Ministers’ disregard for pensioners, the House and the public. The Government’s pattern of behaviour is in stark contrast to the way in which Governments have conducted themselves in the past. As I mentioned earlier, there has been a long-standing convention that pensions policy is based on evidence and agreed by consensus. For example, when the evidence showed that life expectancy was increasing, there was a discussion about the impact on the state pension age, and it was agreed that it should be gradually increased. The UK already has one of the higher state pension ages among OECD countries.
Following extensive consultation about the impact of increased life expectancy in the 2000s, the Government established the Pensions Commission to look into the issue. As a result, and after a great deal of discussion, it was agreed that the state pension age should be raised. The Pensions Act 2007 provided for it to be increased from 65 to 68 in stages over the period between 2024 and 2046. I should stress that those increases were agreed at a time of steady rises in life expectancy. The current situation is somewhat different, to say the least. As we heard earlier, there is clear evidence of a stalling of the increase in life expectancy. Data from the Office for National Statistics on healthy life expectancy between 2018 and 2020 shows a downward trend in most regions of the UK, and the situation for some pensioners seems to be even worse, with a fall in life expectancy among some groups since 2010. We have heard several examples of that today, and there are others.
There is also clear and, in my view, deeply troubling evidence of local disparities, with gaps of about 10 years between the average life expectancy of some people—often those living in better-off areas—and that of their neighbours living in less well-off areas comparatively nearby. The full impact of the pandemic on long-term health is unclear, and there seem to be a growing number of older people of working age who are suffering from serious health conditions. That evidence needs to be considered carefully.
I appreciate that time is limited. Let me end by saying that the Government are letting down both pensioners and people saving for pensions. They have broken with the long-standing convention that pensions policy is developed on the basis of evidence, through consultation and discussion. I hope the Minister will address these issues in her speech. I know that she does prefer to consult, even if some of her colleagues do not always follow that approach.
I thank my hon. Friend Nigel Mills for raising this important issue, and all the other Members who have contributed to the debate.
The Government remain committed to ensuring that older people can live with the dignity and respect they deserve, and I absolutely reaffirm that the state pension is and will remain the foundation of state support for older people. As has already been pointed out today, changes in the state pension age have been made in a series of Acts by successive Governments from 1995—when the state pension ages of men and women were equalised—onwards, following public consultations and extensive debates in both Houses.
The state pension age is currently 66, and will increase to 67 in 2026-28. As was mentioned by Matt Rodda, Labour legislated for it to increase to 68 in 2044-46, but, following the Cridland review of 2017, the current Government policy is to bring the increase to 68 forward to 2037-39. That is the baseline; we are required under law to review it every six years, and that is what is now being undertaken.
As we heard from my hon. Friend the Member for Amber Valley, the coalition Government of 2010 to 2015 were committed to the “core principle” that people should spend, on average,
“up to one third of their adult life drawing a State Pension.”
They were also committed to giving individuals at least 10 years’ notice of any changes affecting them. The first review of the state pension age following the Pensions Act 2014 was undertaken in 2017, informed by both the Government Actuary’s report and the independent report undertaken by John Cridland. As I have set out, Cridland recommended bringing forward the increase in the state pension age to 68 from 2044 to 2026, as set out in legislation, to 2037 to 2039.
The two documents from 2017 to which the Minister referred were published four months before the Government’s announcement. Why have the Government not published the documents before their announcement this time around, and will she do so now?
I had a suspicion that the right hon. Gentleman might bring that up. As he rightly pointed out, I have written to him today to explain the rationale behind this, but I will confirm that both documents will be published in full. I look forward to discussing them with his Committee in due course.
As I have said, they will be published in full. On the timing of publication, there is work going on in Government to undertake the review. Once it is finished the documents will be published.
The 2017 review was based on a recommendation to aim for “up to 32%” as the average proportion of adult life spent in receipt of state pension. The review used 2014-based life expectancy data. The Government accepted those recommendations, subject to a further review, before tabling the requisite legislative amendments. The savings from bringing forward this rise to 68 have already been included in published fiscal forecasts.
As part of the second review, the Secretary of State is considering evidence from two independent reports. The first, a report from the Government Actuary, assesses the latest life expectancy projections from all regions of the UK. There has been a lot of talk about life expectancy today, so I want to put on record the fact that the most recent projections from the Office for National Statistics show a slower rate of improvement in life expectancy than those that informed the Pensions Act 2014 and the Pension Schemes Act 2017. Nevertheless, despite the slower improvement rate, ONS projections continue to show increasing life expectancy over time, and the number of people over state pension age is expected to continue to rise. I can also confirm for Wendy Chamberlain that the review will consider the latest recommendations, as well as a wide range of other evidence, before reaching any conclusions about the state pension age.
The second report that will be taken into account is an independent report by Baroness Neville-Rolfe, which will consider recent trends in life expectancy and the range of metrics that we could use when setting the state pension age, including the metrics mentioned by my hon. Friend the Member for Amber Valley. We will publish both documents in full. With respect to the question of whether Baroness Neville-Rolfe will appear before the Select Committee on Work and Pensions, that is a matter for the Committee and for her.
Alongside examining the implications of the latest life expectancy data, the Government review is assessing the costs of an ageing society and future state pension expenditure, as well as considering labour market changes and people’s ability and opportunities to work up to state pension age, bearing in mind recent trends in life expectancy.
My hon. Friend the Member for Amber Valley highlighted the position of those who cannot continue to work. The review will evaluate the impact of previous changes to the state pension age for all individuals, including those with long-term health conditions or disability. The Government continue to provide substantial support for people who are unable to work.
My hon. Friend Mrs Elphicke made some important points about age discrimination. The Government’s business champion for older workers, Andy Briggs, spearheads the Government’s work to promote the benefits of older workers and multigenerational workforces across England, influencing them strategically and by offering practical advice. I will ensure that my hon. Friend’s points about discrimination are passed on to the Department for Business, Energy and Industrial Strategy.
The review will aim to keep the right balance between affordability, sustainability and fairness between generations. The review has not yet concluded—it is very important to emphasise that, given some of the comments today—and I will not pre-empt its outcome. The Government are committed to ensuring that older people have dignity and security in later life, regardless of where in the UK they are living. The Government introduced further targeted support, including cost of living payments of up to £900 for the most vulnerable households and an additional £1 billion, including Barnett impact, to enable the extension of the household support fund in England in the next financial year. Since 2010, the full yearly amount of the basic state pension has risen by over £2,300 in cash terms. That is £790 higher than if it had been uprated by prices, and £945 more than if it had been uprated by earnings. For the first time, from April 2023, the full rate of the new state pension is worth over £10,000 per year.
Automatic enrolment is having a transformational effect on private savings. Over 10.8 million people have been automatically enrolled in a workplace pension, helping to deliver about an additional £33 billion into pension savings in real terms in 2021 compared with 2012. The hon. Member for North East Fife mentioned the PHSO inquiry. She will know that that is ongoing, so it would be inappropriate for me to comment on it until it concludes.
The Government are committed to ensuring that the state pension continues to provide the foundation for people’s retirement income and are proud of the support they have given pensioners since 2010. I welcome today’s debate and thank my hon. Friend the Member for Amber Valley. As I have outlined, the Government take the setting of the state pension age very seriously. I look forward to being able to discuss this matter further—I am sure we will—when the Government finally publish their second review.
I thank all Members for taking part in the debate and the Minister for responding to it. I do not think anybody spoke in favour of bringing forward an increase in the state pension age. I hope the Government will factor it in that, on a cross-party basis, there is not a lot of inclination for that. I hope we get to see the completed review in relatively short order, and that no decision will be taken until it has been published and there has been a chance for further consultation and consideration. I do not see any need for a rush, so I hope the Government will take a consultative approach. With that, I thank all those who took part.
Question put and agreed to.
That this House
has considered the matter of raising the State Pension age to 68.