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Raising of the Pension Age

The debate has been revealing and interesting, and I congratulate my hon. Friend the Member for Leyton and Wanstead (Harry Cohen) on securing it and on his speech. Although I did not agree with every aspect of his analysis, as ever he showed great insight. He has a great record of pursuing issues of pensioner well-being and poverty through the Work and Pensions Committee, of which he ought to be proud. My hon. Friend spoke about the unpromising start of the national employment savings trust. This is a landmark pension reform and its size and complexity should not be underestimated. It deals with the biggest gap in pension saving, which concerns those on medium and lower earnings in the private sector. When it is up and running, it will give up to 10 million people—including 7 million to 9 million new savers—guaranteed employer and Government contributions to a workplace pension for the first time in many years. At present, the default option is no saving at all, and that has been happening since the previous Conservative Government made the changes to personal and private pensions that destroyed pension provision in this country. This landmark reform has been achieved through consensus across the board. Although my hon. Friend does not agree with all aspects of it, I hope that he supports the use of inertia, which means that people will be enrolled automatically. This is the best chance that there has been for a long time to improve the saving and retirement prospects of many people who currently have no savings to call on. The state pension age was set at 65 for men and women in 1925 and was reduced to 60 for women in 1940. As hon. Members have said, the only change since then has been through the Pensions Act 1995, which legislated to equalise the state pension age in phases starting from this year, with the pension age for women rising to 65 by 2020. That gave a 15-year warning that equalisation would take place. One reason for that legislation was to ensure an equalisation of benefits, which is required under European law. In the shadow Chancellor's speech at the age of austerity conference—if I may call it that—he announced dramatically that he would be straight with the British people and that he would put on record exactly how he would pay for the desirable aim of re-linking the basic state pension to earnings. It is nice when a sinner repenteth, as it was the Conservatives who broke the link 30 years ago. He announced dramatically that, in this age of austerity, he would bring forward the increase in the state pension age to 2016—he did not mention the gender of those who would be due to retire and nor did he speak of a review—and he then announced the amount of money that would be saved, as the hon. Member for Northavon (Steve Webb) said. In that age of austerity speech, the shadow Chancellor implied strongly that the two things would happen at the same time and that one would pay for the other. He cited that as an example of a Conservative Government-in-waiting who would take tough choices, and set out that they would give a little bit with one hand and pay for it by taking a little bit away with the other. It was only when he was questioned following the speech that the policy began to unravel and look slightly messy. The Conservatives had clearly forgotten that the women's pension age was due to rise to 65 over the next 10 years under legislation passed by the previous Conservative Government so that it would be equalised with that of men by 2020. Moving on to the implications of the shadow Chancellor's dramatic announcement on state pension age at the age of austerity conference, it appeared that the policy could cost men who are now six years away from retirement £8,000 in a year because they would have to work for longer. Women would have to make a similar sacrifice and it could cost them up to £15,000. Conservative central office realised that the shadow Chancellor might have misspoken, to use a popular term, so the Conservatives then said there would have to be a review. The default option, following that bold, dramatic announcement, was therefore a review, and that was the position to which the hon. Member for Hammersmith and Fulham (Mr. Hands) attempted to stick doggedly this morning, even though what would happen under that review seems already to have been decided. That review, however, would get us into a messy situation and give rise to questions that the hon. Member for Northavon and I have sought to bring to the fore. Under European law, the state pension age has to be equalised—that is the view of the EU Commission. I know the shadow Chancellor and many of his friends on the Conservative Front Bench try not to take much notice of that institution but, nevertheless, we are signed up to the basic rules that it promulgates, one of which is that there should be equal access to pensions and other such benefits across the genders. Those of us who remember the introduction of winter fuel payments will know that the disparities in the pension age meant that men over 60 took the Government to court so that they would be allowed to access those payments, even though they were not retired, and they succeeded under European law. Since 1995, the British Government have said that they will equalise the state pension age gradually to give people the appropriate time to plan for their retirement so that they know exactly when they will be due to retire. It is hard to imagine that the EU Commission would be happy to be suddenly confronted with a new non-equal pension age that was clearly against European law and that had been promulgated on a whim at a Conservative party conference in an age of austerity speech. I suggest that the hon. Member for Hammersmith and Fulham gets his party's lawyers to take a much closer look at what seems to be the mess of Conservative policy on the retirement age. One thing is absolutely clear: Conservative policy is in a terrible muddle. Even if it were not, it would certainly cost all men who would have to work a year longer and were six years away from retirement in 2010 an extra £8,000 a year in forgone pension. In addition, if the policy could be put in place in the way in which the Conservatives intend, which I doubt would happen, it would cost women who were due to retire in 2020 at least £5,000, and perhaps an average of £15,000. The Conservatives need to have a closer look at what on earth they are doing. Clearly, however, people in their 50s who are looking forward to retirement will know that, should there be a Conservative Government, they would certainly lose out as their retirement age would be changed in a fast and arbitrary way. I agree with the hon. Member for Northavon that making such sudden changes to the retirement age in a short space of time would be less than helpful. Such a policy would not allow the people who were caught up by the changes to plan for them appropriately, and would create uncertainty about the retirement age in the future.