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Pensions Bill

I thank my noble friends Lady Turner and Lady Dean for precipitating the debate. They have set us a challenge. The issues that have come out during the passage of the Bill are extremely important Your Lordships’ House is hugely symbolic of the value of older people and the contribution they have to make to society. We are all very much walking the walk. I particularly emphasise the importance of the debate around health inequalities. We do not know exactly how health inequalities will precipitate changes in life expectancy in the future, particularly when having regard to childhood obesity and the effect of exercise, so it is extremely important that we have these discussions. Before I address the specific point with which the amendment is concerned, I should like to say a few words to remind the House why Clause 13 andSchedule 3 are essential to the Bill. It is common ground that, in common with many industrialised countries, we have seen dramatic increases in longevity during the past half century and a declining birth rate. Even though the rate of mortality improvement is expected to slow down somewhat in the coming decades, none the less the projections all point to further gains in life expectancy. We are not proposing to erode the gains that have already been made; rather, we are proposing simply to check the ever increasing length of time people can draw their state pension for, by increasing the state pension age broadly in line with the projected increases in average life expectancy. These improvements in longevity have not been confined to those in non-manual occupations. The ONS longitudinal study indicates that the average life expectancy for a male manual worker who reaches65 increased by more than two years over two decades ending in 2001, up from 12.3 years in 1977 to 1981 to 14.7 years in 1997 to 2001. At the same time, the proportion of male manual workers who are projected to survive to 65 is also improving, up from 71 per cent for those born in 1981 to 80 per cent for those born in 2001. That indicates that on the basis of past trends, the proposed increase in the state pension age should not result in a decline in either the proportion of those surviving to the new state pension age or in the number of years spent in receipt of state pensions. The proposed increases in the state pension age are an indispensable part of the pension reform package, because they are needed to ensure that the pension settlement will remain affordable in the long term—or, to put it another way, they ensure that the extra costs associated with a more generous state pension will be shared fairly between the generations. At the heart of my noble friend’s proposal in her amendment is the proposition that increasing the state pension age will disadvantage those who are unable to continue in physically demanding work beyond a certain age. During Second Reading she spoke about the important issue of ageing workers and heavy industry, as she has done again today. She also made the valid point, using the scaffolding industry as an example, that we should not justbe concerned about the specific employee but also about the effect of others working with him or her. I am entirely in agreement with her that people undertaking that kind of work should not be forced to continue in it beyond the limits of their physical capability. I also accept the point that many people leave such employment before the current state age. Where I am afraid I must take issue with my noble friend, however, is her conclusion that the solution must be to provide different state pension ages according to the type of employment, although I fully support her motives behind bringing the amendment forward and having this debate. Others around the Chamber have pointed to a number of practical difficulties with her proposal, not least in determining how long a person needed to be employed in a designated occupation to qualify and establishing over a person’s lifetime what periods of qualifying employment they had been engaged in. Added to that, I am sure there would be much more debate and argument over which specific employments would have a different state pension age and which would not. For example, who is to say that a construction worker working in a hard physical job should be considered different from someone who is not doing a physical job but none the less one that is very stressful? Decisions on these issues could have a perverse effect on people’s career choices, potentially incentivising them to remain in physically demanding jobs for longer than might be appropriate for them. As we know, the state pension was founded as a universal scheme. Successive Governments over the years have sought to build on it—and, dare I say, improve it—but we have not deviated from the idea of a common minimum age at which men and women may start to draw it. By 2020 that minimum age will be 65 for both sexes. As I have already said, our proposals for increasing the state pension age from 2024 are in line with projected increases in life expectancy. Thus, by the time we get to the first such increase, there will already have been further gains. It is fair to argue that a man of 66 in 2026 will be in the same position as, if not a better one than, a man of65 today. I submit again, therefore, that we are not making the present position any worse with these proposals. No one is suggesting that people in their 60s should have to continue in heavy, demanding jobs. However, the issues around ageing workers and whether they are able to continue in the same employment throughout their working lives need to be addressed—a challenge indeed—by overcoming the barriers that older workers face when they seek to enter employment or retain and learn new skills. That is something we are hugely committed to as a Government, and we are already starting work on it. For example, our Age Positive initiative encourages and engages with employers over issues of age diversity and a mixed-age workforce, and Jobcentre Plus provides tailored support for older workers through the New Deal 50 Plus. I am convinced that it would be of enormous benefit for us to invest more time in debating this issue, and I would value the opportunity to go on. We take it extremely seriously. As the noble Lord, Lord Fowler, said, it is a challenge, and the Government have committed to making significant increases in the number of older people who are working and gaining access to new skills as they get older. This is an issue not just for the DWP but across the whole Government.