I beg to move,
That this House
has considered the pension retirement age for construction workers.
It is pleasure to take part today, Mr Davies, and to see Members in attendance. I will open with a question: why does it always have to be the working class who suffer? The Work and Pensions Secretary says that Ministers will soon have to “grasp the nettle” to raise the state pension age to 68. It is working people who will bear the brunt of that, none more so than construction workers.
Last year, around 2.2 million people were working in construction across the UK, with 670,000—31%—aged between 50 and 64. In Scotland, around 160,000 people were working in construction, with 54,000 of that group aged between 50 and 64. It is estimated that around 100,000 people aged 65 and above are working in construction across the UK, with 4,000 of that age group working in Scotland.
Undoubtedly, those workers bring a huge wealth of experience and skills that they can pass on to future generations, but they face a pension black hole in many situations. Research by Unite has found that the majority of construction workers were not saving towards retirement. Estimates show that only 797,000 employees in the construction sector are paying into a pension.
I congratulate the hon. Member on securing today’s debate. The Pensions and Lifetime Savings Association has stated that there should be a single state pension age for all, but that flexibility should be introduced to allow people to receive their pensions earlier. Does he agree that the Government should support construction workers perhaps receiving their pension earlier, considering the physical toll that their occupation can have?
I agree entirely, and I will develop that point. Those 797,000 employees paying into a pension make up only 36% of the construction workforce. We are creating a destitute generation. Unite said:
“These figures are deeply troubling…Even if workers are saving towards a pension, there is no guarantee that they are saving sufficient amounts to prevent poverty in retirement. The way that construction is organised, with short-term engagements, rampant bogus self-employment and nefarious schemes such as umbrella companies, it is incredibly difficult for construction workers to have confidence in their continued employment so as to allow them to consistently pay into a pension scheme. The government needs to take urgent action to begin plugging this black hole in construction pension saving, the consequences of not doing so do not bare thinking about.”
The issue is clear. There is already a mental health crisis in the construction industry, and the pension black hole adds to the worries of workers. It is very much a male-dominated industry, and we know that men are three times more likely to die by suicide than the national average. Construction work has a variety of pressures, from tight contracts to long hours, time away from loved ones and managing budgets, not to mention the added stresses of the pandemic and now the rising costs of supplies.
The sector still has a macho culture that prevents many workers from seeking the help and support they might need, putting further stress on their mental health and wellbeing.
On the point about health, construction workers face certain occupational hazards such as exposure to asbestos, which can cause cancer and detrimentally affect their health later in life. Does the hon. Member agree that, due to the health risks to which construction workers are exposed, the Government should evaluate reducing their pension retirement age?
The hon. Lady makes an excellent point. The key part of this is evaluation. Let us make sure that we have all the evidence to back up the calls that we are making. The issue has been looked at, so let us take on board the assessments and do something with them. We know that an early retirement age is possible in other industries. I thank and pay tribute to the Library for the excellent briefing that it has prepared to support this debate, which lists a number of other occupations in which early retirement is possible. Footballers are one example; I think their retirement age is something like 35.
Scotland has the lowest life expectancy of all the countries in the UK. In Midlothian, life expectancy at birth was 81 for women and 77 for men in the years 2019 to 2021. Meanwhile, men in Knightsbridge, London, have an average life expectancy of 94, the highest in the country—nearly 15 years longer than the average male.
Unlike other countries, the UK has no provision for early access to the state pension under any circumstances. That is a critical point. We must consider why we need to be so prescriptive when it comes to this particular topic. Proposals for early access to the state pension have been discussed previously, in the 2016-to-2017 and 2021-to-2023 state pension age reviews. The situation is unfortunate. The issue will not go away. The pressures around it will become significantly more challenging and eventually we will have to grasp the thistle and actually take action on it, so why not now?
Canada and the USA have general provision for early access to pensions in exchange for lower pension amounts, and that could be considered as part of this. The normal minimum pension age, which is the earliest age from which someone can normally draw their workplace personal pension, has gone from 50 to 57 by April 2028. Some people in certain professions with a lower retirement age—such as sportspeople, as I mentioned—who had a right before April 2006 to draw their pension before age 50, may have a protected pension age, further widening the gap. However, construction workers do not have that provision.
Last month, I asked the Under-Secretary of State for Work and Pensions, Laura Trott, about the potential merits of lowering the state pension age for construction workers. She argued against reforming the current system, saying:
“The Government believes that the principle of having a State Pension age that is the same for everybody is fundamental in the UK. It has the merit of simplicity and clarity including giving a clear signal to those planning for retirement.”
So we are sacrificing a generation of workers for the sake of “simplicity”.
A recent survey by the Chartered Institute of Building again showed the scale of the problem. Many employees cannot afford to retire because of inadequate pension plans and because they have no alternative financial investments to support themselves. The organisation called for construction employees to be encouraged to consider retirement plans and to set aside a sufficient amount to support themselves for possibly the next 20 to 30 years. However, in the face of a cost of living crisis, that has become even more challenging than it was. The CIOB said that clear information needed to be provided, with a focused campaign to help construction workers, and I support that call. However, I would go one step further and say that we need a full review into the issue of pensions and the construction industry.
In March, Baroness Neville-Rolfe said that builders, electricians, plumbers and manual labourers should be allowed to retire on a state pension earlier than office workers who had stayed on in further education. Her report said that the UK Government should look at changing the rules to allow manual workers to access their pension pot early. She recommended that those
“who have performed physically demanding roles over many years” should be allowed to access their pension early, because they had a higher likelihood of developing health problems than other people, yet there has been nothing—no change and no impetus to help hard-working people. A full review would be the first step on the road to righting this wrong and the first step towards stopping an entire generation being flung on the financial scrapheap. After a lifetime of hard manual work, the ultimate ignominy for construction workers is to face poverty in their twilight years.
Construction workers literally built this country. We talk of levelling up and growing the economy, and, dare I say it, we have had a Government who talked about building hospitals—I do not know how many hospitals they eventually got to. None of that happens without construction workers. We need new homes, and that does not happen without construction workers. They deserve so much better, and this could be the starting point to achieving that.
As my hon. Friend Owen Thompson mentioned, 2.2 million people work in construction, without whom there would be no offices, factories, roads, schools or homes. Although we place great value on having a roof our heads, we undervalue the people who build them.
Following on from that, a concerning skills gap is growing in the UK construction sector, which means that existing employees have to work longer hours on site to compensate for that gap. Does the hon. Member agree that if the skills shortage is not addressed, many construction workers will experience fatigue and might be burdened with poor health and retirement outcomes?
I could not agree more. When I left school in the late 1970s, it was no longer fashionable to take on trades. Everybody had to go to college, no matter what the course was, and we lost the skillsets in my local shipyards and in construction for plumbers, joiners, platers, fitters and all those skills. If we look at the average age now—they are getting into their 50s—there has been a gap of sometimes 20 or 30 years before we have taken on new apprentices. We are taking on new apprentices now, but the experience that we lose when these older guys leave is immeasurable. So they are staying on later and later and working longer into what should be their retirement life, sometimes in very physical jobs in very difficult circumstances.
As we approach a general election, a lot of MPs will be asking themselves, “Should I stand again?” For many who, like me, are over 60, age will be a factor in making the decision. Nights like last night, when we were here until 8.30 in the evening walking round and round—I think it was 20 times—would make anyone reconsider their working life.
As for the physical aspect of construction work, I spent the weekend gardening. When I say gardening, I do not mean bedding plants and potting sheds; I mean using industrial petrol-driven machinery. Trees, bushes and grass all got the treatment. My green credentials might have taken a battering, but I can assure Members that the replanting of more appropriate species will take place in the near future. My point is that at 63, hard labour for me was a few hours interrupted by cups of tea, chocolate biscuits, a natter with the neighbours and much stroking of my beard as I perused the damage that, obviously, I was doing. My effort was minuscule compared with the contribution made day in, day out, year in, year out by construction workers and the effect that that has on their joints, muscles and tendons. Mine was minor compared with the toll that years of construction work results in.
When I was 17, I worked on building sites and spent the day carrying bricks, mixing cement and moving raw materials around for the skilled workforce to utilise. I cannot imagine what state my body would be in if I had done that job all my working life. And yet we ask those workers to work in freezing conditions during the winter and increasingly hot conditions in the summer. The job we do must have a bearing on the age we retire at.
On the answer given to my hon. Friend the Member for Midlothian by the UK Government, the UK Government believe that
“the principle of having a State Pension age that is the same for everybody is fundamental in the UK” but I disagree. They say that it
“has the merit of simplicity and clarity including giving a clear signal to those planning for retirement”,
but what is that clear signal? Is it “Frankly, we don’t care”? Is it “Just be grateful you are not dead already”? Or is it “We don’t appreciate your hard work over all these years”? I suggest it is a combination of all three.
Finally, we have acknowledged that people in many professions can and do retire earlier already—that happens. It is time we extended that to the unsung heroes that are our construction workers.
It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate Owen Thompson on securing today’s debate, and I thank him for his work in this important policy area. I also thank colleagues from across the House who have taken part in the debate. I will address a number of issues, including the wellbeing of construction workers, how they can take their pension early in some cases, the importance of support for people looking for work and, indeed, the state pension age.
I turn first to the wellbeing of construction workers and those in similar industries. I think it is fair to say—I hope we all agree—that construction is clearly a very important industry. Despite improvements to health and safety, there are still significant risks to workers in the industry, and I believe that it is important for the Government to take action to protect workers and to reduce risks at work. As has been noted by the shadow Secretary of State for the future of work, my right hon. Friend Angela Rayner, we need a new deal for working people, and an incoming Labour Government will create the right and safe conditions for proper competition and growth.
I am pleased to support the need for safety, both as a shadow Minister and as a constituency MP. There is much more to do to improve safety at work, and further action should be taken in this important area. For example, I believe that there needs to be a review of health and safety at work to make sure that outdated legislation is fit for purpose—something that I think other Members may have implied but that was not commented on. I also believe that those who are not able to work should receive support. There needs to be welfare reform to help support more people to make the breakthrough into sustained employment and, indeed, to progress in work. Without action, we risk condemning a generation to a life on the margins.
Today, unemployment is up, with 1.3 million men and women unemployed. The number of people out of work due to sickness has risen to a record high of 2.5 million, and 760,000 young people are not in education, employment or training—all at a time when we have millions of vacancies in the labour market. That is why reform is so urgent. After 13 years of Conservative Governments, too many people are trapped on welfare, sadly going nowhere. It is an unforgivable waste of their potential. We need reform, and we need new thinking.
I want to talk about the state pension and to briefly recap on some of the changes to state pension age, because there has obviously been a lengthy discussion of aspects of the policy. From the 1940s until April 2010, the state pension age was 60 for women and 65 for men. Legislation to increase the state pension age was introduced in stages, with the Pensions Act 1995 including provisions to increase the state pension age for women aged between 60 and 65 in a series of stages between April 2010 and 2020, to bring it into line with the state pension age for men. The Pensions Act 2007 made provision to increase the SPA from 65 to 68 in stages between 2024 and 2046, and the Pensions Act 2011 brought forward the completion of the increase in the women’s SPA to 65 to November 2018.
As a result of those Acts, the current timetable is for the SPA to rise to 67 between 2026 and 2028, and to 68 between 2044 and 2046. The announcement that the Government are not going ahead with accelerating the state pension age rise is welcome. It is the right decision, but it is the clearest admission yet that a rising tide of poverty is dragging down life expectancy for so many. Life expectancy appears to be stalling and even going backwards in some of our poorest communities, as was hinted at by hon. Members who spoke earlier. I am afraid that that is a damning indictment of 13 years of failure under the current Government and, indeed, the coalition Government. I hope the Minister will acknowledge that later.
The hon. Member for Midlothian has called for the state pension to be available early for some construction workers, and I appreciate that he spoke about that today. As I said, I congratulate him on securing the debate. However, I believe that the approach he suggests could lead to a series of unintended problems for the Department for Work and Pensions in administering the state pension. It is important to remember that other help is available, and I want to see the help and support improved. I would also like to make a broader point to him: it is very important that our pension system offers security and predictability for people of working age who are saving for a pension. I am grateful to him for securing today’s debate, and I look forward to hearing the Minister’s response to the matters raised.
It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate Owen Thompson on securing the debate and passionately putting forward his case. I congratulate Ronnie Cowan on the debris and disaster that he wreaked upon his garden last weekend—mighty will be the photographs, I am sure. It was also good to hear the points set out by my friend Margaret Ferrier.
It was good to hear from the shadow Pensions Minister, Matt Rodda, who is also a friend of mine. I am no longer the Pensions Minister, because I was shuffled off that mortal coil by the previous Prime Minister, but I am standing in as a deputy today. I apologise on behalf of the actual Pensions Minister, my hon. Friend Laura Trott, who has a long-standing engagement outside the House of Commons that has been pre-booked for a considerable time, so I notify the hon. Member for Midlothian that she means no discourtesy to him or the House by her absence. I will endeavour to be an able replacement for the Pensions Minister, but she is most definitely carrying forward the torch of the Department’s policy on an ongoing basis.
This has been a debate about all matters construction, and it is right and proper that a full declaration of previous ability be made. I was a painter and decorator for the best part of nine months. I helped to build various buildings on labouring sites, just like the hon. Member for Midlothian, and I was briefly a roofer in my student days. “Opperman” means “upper man”—the man thrown up on the roof in days gone by to catch the tiles as they were thrown up there—so I come to this debate with great support for the construction industry. The hon. Gentleman was entirely right to laud, as others did, construction workers’ contribution to society, whether that is in Scotland, in the United Kingdom or throughout the world. It is to our credit that we have a thriving industry.
The hon. Gentleman raises a legitimate, fair and fundamental point: whether someone is a construction worker or any other person doing a heavy, physical, manual job, how does the state provide for them on an ongoing basis as they age and reach the designated retirement age? With due respect, we have to bear in mind that at all stages there is the issue of intergenerational fairness, because all pensions—this point is not always grasped—are paid by the taxpayer of today, who has to make a contribution to satisfy the number of pensioners, which is going up massively.
Bluntly, we pay more in pensions than ever before in this country. The new state pension went up to £203.85, which is an increase of £18.70, in April 2023. The hon. Gentleman will be aware that the benefit system was enhanced by over 10% in the Budget. We have never paid more in state pensions than we currently do.
Many construction workers are self-employed and will therefore have no private pension, or a limited one. Does the Minister agree that we should recognise that facet of the construction sector and look at how pension education can be improved in the sector?
As the person who pioneered Pension Awareness Day, which I can strongly recommend, and many other pension policies during my five years as the Pensions Minister, I strongly endorse the hon. Lady’s point and encourage the sector unions to get involved in that. To be blunt, some were better than others. I had the honour and privilege of speaking twice at the Trades Union Congress annual conference; I think the first time was a legitimate invitation, but the second time I believe the invitation was probably just repeated by mistake. Making the case to union and sector colleagues for what we are trying to do is very important. I take the point.
The hon. Lady brings me nicely to the issue of which pensions are available. There are three types. There is the state pension, which obviously depends on the extent to which the individual pays national insurance contributions. Pretty much every employee in the construction sector will be paying national insurance contributions as part of their employment, and there is no question but that the self-employed should also be a part of that. The state pension should kick in in the usual way, so that will arrive at a particular time.
On top of that are the reforms brought in originally by the Labour Government, through the Turner commission, in 2003 and subsequently legislated for by the coalition in 2011-12 and expanded on by the coalition. I am referring to automatic enrolment. I accept that not everybody in the construction sector is in an employed job, but I will come to that point in a second. Automatic enrolment is an undoubted cross-party UK success story— I knew it was going well when the Pensions Minister from China requested a meeting to discuss how we were trying to get a workforce motivated and saving in a way that they could not necessarily do previously.
It was clear that the pensions system in the 1980s, the ’90s and the noughties was declining in terms of the private contributions that we wished to see. The defined benefit system was declining and the defined contribution system needed to grow. Putting it to the individual was difficult—I will come in a second to the point that the hon. Member for Rutherglen and Hamilton West made about the self-employed—but automatic enrolment has transformed private pension saving in this country. Saving 8% on an ongoing basis, as we are now doing, with a contribution from the employer within that and some support from the taxman, is massively helpful.
Let me give the stats. As of May 2023, we were almost at 11 million employees, having started in 2012. In 2012, the number of people who had a private pension was 42%; that has now gone up to 86%. Young people were at below 30%; they are now at 85%. Women were at just about 40%; they are now at 87%. The stat that I have for construction workers, which I am assured was provided by my predecessor but one, is that construction workers with private pensions have gone from 30% to 79%. Obviously, that is those who are in an employed situation, but it clearly shows a dramatic improvement on the situation that would have applied if we had been having this conversation 11 years ago, prior to the introduction of automatic enrolment.
That does not mean that one should not address the points that have fairly been raised about the self-employed. Having done 20 years as a self-employed individual, let me make the point that if one is self-employed, one has the perfect right to sign up to one’s own pension. One has the perfect right to join NEST, the National Employment Savings Trust, which is the easiest automatic enrolment provider. There are many different sectors that are relevant. I started out as a—much thinner—jockey and then became a lawyer. Construction workers can set up their own self-employed pension, which is of course tax-deductible as to earnings on an ongoing basis, and many in the construction industry take advantage of that.
However, I accept that there is a cohort that is not saving as it would like to, notwithstanding the three potential ways in which that happens. Along with a state pension that has increased, one has to be aware of the 2016 reforms, which were introduced by a previous Government and set out the new state pension, which was introduced to be simpler and better for a whole cohort of society. To be fair to the hon. Member for Midlothian, he set out the Pensions Minister’s approach previously. This is in a context where there is the universality of the state pension, but more importantly, we have had this for 75 years, and the modern state pension has very clear rules—the hon. Gentleman set them out—about the time at which one can get entitlement. Those rules help to make it both affordable, because it is paid for by the working taxpayer, and sustainable, so that it can continue to be the foundation of income in retirement for future generations.
There is some evidence from some countries—I accept the hon. Gentleman’s point—that one can have an earlier acceptance of part of one’s pension in some cases, but there is a lesser sum. There is genuinely an issue with being careful what you wish for, though. The reason why the Cridland review and the Neville-Rolfe review are sceptical about this, as the hon. Gentleman set out, is that the state pension is there to provide a basic form of support in our old age, such that the state can then say, “We assess that this contribution of taxpayer funding—of GDP—is the amount that we will set aside to try to support those in difficulties by reason of their age, such that they are now pensioners.”
On top of that, there is £30 billion-worth of housing support, there is pension credit support worth many thousands of pounds, and there are a huge number of other additional benefits, such as the winter fuel payment, which is going up by £300. The hon. Gentleman alluded to the fact that things like the cost of living are more complicated; he will be aware that we have spent £94 billion over the past couple of years to support the most vulnerable, including those on benefits, those in receipt of the state pension and particularly those in receipt of pension credit. That support is ongoing. The rises in winter fuel payments are a good example, with the extra £300 coming in plus the ongoing energy support grant.
It is clear that special arrangements for certain groups would rapidly lead to calls for similar arrangements for other groups. How can I put it delicately? I was not a very good jockey—I broke 26 bones in my body in my limited and short career, and my life expectancy and longevity as a jockey were highly limited—but I was able to transfer those skills, some would say interestingly, into being a lawyer and a Member of Parliament. But there are plenty of other professions that would then come forward, and that is a very significant issue for the state. It is worth having a proper conversation about this, because ultimately the state has to decide how much of a tax contribution should be taken from the working population to address these problems. There are inherent problems that would undermine a universal state pension age and its clarity.
Having worked in the Department for Work and Pensions for the past eight years, for my sins, I can strongly assure the hon. Member for Midlothian that the administration of the state pension is a marvel, but it is also incredibly complex. The moment that there were an introduction of a differential assessment, it would create a logistical conundrum, to say the least, and would require administration on an epic level. Getting such a thing correct—I suspect that as the hon. Gentleman proposes, all these things would have to be assessed, including with a prior medical assessment—is extraordinarily difficult. With respect, that approach was comprehensively rejected by the Cridland report. I accept that one paragraph of the Neville-Rolfe report seems to suggest that certain people do so; I think it talks about people who are 65 with 45 years of national insurance contributions. It is something that can be legislated for, because this Government or any future Government will have to legislate for the state pension situation in the next two years.[This section has been corrected on
I will make a couple of brief points that I think are relevant to how we approach people who have done one job but are struggling to continue in it. First, they would obviously rather be working than on welfare, but we have never paid more welfare support: this country has never given more to the disabled and to those on welfare support. There is a copious amount of support out there. On reskilling, the hon. Gentleman will be aware of the Augar review, the lifelong learning pledge and the efforts that are being made to create further education not just for people aged 18 to 24, but for older workers, in a whole host of ways.
I will slightly push back on the hon. Member for Inverclyde, who was slightly disparaging on the skills situation. I believe that there have been about 5,454,000 apprenticeships since 2010. That is a pretty impressive record on apprenticeships, which have massively increased.
But the point I was making was that we picked that up after two or three decades of neglect. What we have been missing in between is the experience that people have gathered during that time.
Normally I am very happy to have a go at the 13 years of Labour Governments, but I say respectfully that there was a trend by successive Governments throughout the years that university was the way ahead. That was particularly the case with the Blairite ambition that 50% of all students should be going to university. There is clearly a role for university, but I would like to think that the coalition Government and this Conservative Government have majored on apprenticeships. I urge the hon. Gentleman to read the debate I answered last night—I have been busy—because it was specifically about skills and further employment, with which we are trying to support people.
One way we are supporting people is through the midlife MOT, which is very relevant to the hon. Member for Midlothian. The midlife MOT is mentioned in the Cridland report—I think it is on page 72. It is set out in quite a lot of detail; it is a project that I have pioneered in copious detail for the last six and a half years. I cannot stress enough the difference it is making. The midlife MOT now exists in jobcentres for those who are unemployed; it exists on a private sector basis with the three trials that we have going; and pretty much every large pension provider is now running it. It looks at wealth, work and wellbeing. It is massively appropriate to reskilling those who are 45 to 55 and are struggling to work out the way ahead.
The evidence so far is that the midlife MOT is a very successful innovation. The private sector is very much in support of it. If the hon. Member for Midlothian and his union have not read the Aviva review, I urge them to do so. Put bluntly, the midlife MOT is part of the suite of options that the Government have, along with the business champion for older workers, who I have met repeatedly and is doing good work, and the support for returnerships, which the Chancellor set out in copious detail in the Budget. There are also opportunities for retraining, whether those are in sector-based work academies or in the skills bootcamps run through jobcentres up and down the country, whereby if an individual becomes unemployed they can be retrained in alternative employment so that they can return to the workforce.
In respect of those with health conditions and the disabled, the hon. Member for Midlothian will be aware of the health and disability review that has been published by the Secretary of State for Work and Pensions and the Minister for Disabled People, Health and Work. It looks at exactly how we get people with long-term health conditions and those who are disabled back into work.
Secondly, there is the unquestioned ability that has been shown by so many people. There are now 4.9 million people who are disabled but still working, as of the most recent figures from quarter 3 of 2022. That is an increase of 2 million people. It is a testament to this country that we are now much more open to taking people with health conditions or disabilities into work. Again, that is something that I think will make a difference.
A couple of other points have been made. I have talked about the two state pension age reviews. I would also make the point that for those who are struggling and vulnerable, there has been £94 billion-worth of support.
In conclusion, I believe it is right to restate the point that for 75 years the state pension has had a single issue and receipt date. That will continue for the near future, but Parliament will decide those matters on an ongoing basis with whoever the Government are in future. In those circumstances, I commend this speech to the House.
I thank Margaret Ferrier and my hon. Friend Ronnie Cowan, as well as the shadow Minister, Matt Rodda, and the Minister, for taking part in the debate, but I have to say that I am disappointed in the responses from the shadow Minister and the Minister.
I think perhaps we are coming to the issue with different perspectives. The Opposition and the Government’s point of view is “This is what it would cost,” whereas mine is “Let’s put the health and wellbeing of the individual first, and then we can work out the other bits.” I am not saying that one is better than the other, but they are different ways of looking at the issue. I agree with the Minister that there is a conversation that still needs to be had. Is the approach of simply asking the price tag enough to decide whether we should or should not do something? Just because something is difficult, that does not mean that we should not do it.
I hear the Minister’s point about auto-enrolment. However, I gently suggest that a high volume of people signed up with a private pension does not automatically mean that they are going to have enough to support them in retirement. There is more still to be done. I welcome the start of the conversation, but it needs to continue. We need to change the mindset on the issue and move away from simply saying, “This is what it costs, so we can’t do it.” Let us look at it in a more rounded way and make it about the wellbeing of the individual.
Question put and agreed to.
That this House
has considered the pension retirement age for construction workers.