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Pensions Bill [HL]

I thank the noble Baroness, Lady Drake. We could get into a long debate here that perhaps would not be hugely valuable. The figures for life expectancy, healthy life expectancy and disability-free life expectancy are all moving up. They are moving up at slightly different rates for different people, but the general movement is in an encouraging direction. Healthy life expectancy is moving up almost as fast as life expectancy—just slightly slower. I come back to the point about the state pension age and the amendment of the noble Baroness, Lady Turner. A state pension age that is different for different groups would take us further away from the goal of a new flat-rate, single-tier pension based on contributions, which is simple to understand. It is important for the state to be clear how much someone will receive in retirement, and it should be equally clear about when they can receive it. A variable state pension age will not help this. Now is not the time to bring in further complexity by introducing bespoke state pension ages for individuals. Adding to the complexity of this concept is the problem of defining prolonged ill health or arduous and dangerous employment. It might seem straightforward to produce a list of health conditions and occupations, but our direction with welfare reform is precisely the opposite, away from categorisation of people towards individualising and looking at how they can function and what they are doing. We are looking towards assessing each person’s appropriate pension age. Then we begin to get into very difficult territory, which we will discuss under the personal independence payment and the capability assessment. I need not spell out for a third time how difficult that is. People are working longer and are living longer and healthier lives. We need a system that takes into account recent changes. I must accept, with regret, that some people, due to ill health, have to leave work before they reach state pension age. However, it should be acknowledged that support is already available for those people. Although they may not be entitled to a state pension immediately, that does not mean that they are left with nothing. As my honourable friend the Minister for Pensions recently said, it is not a case of going from a £97 pension to zero: working age benefits will continue to be available for those whose state pension age has increased and those who are unable to work because of health problems. They may very well be able to claim employment support allowance. Support through other benefits and credits is available today and will continue to be available in future, whatever the state pension age. Indeed, the introduction of universal credit will make it much easier to see precisely what entitlements are. We need to ensure the sustainability of the state pension system and our proposals strike the best balance between the impact on individuals and fairness to the taxpayer. I should make one slightly technical point, to which I think many noble Lords will be sympathetic. Changes to the state pension age should be made only following agreement in this place and another place. For the Government to be able to vary the provisions of the schedule through regulation is a significant power, and one which should not be treated lightly. I turn to Amendments 11 and 14. The arguments remain the same. It is vital that our system strikes that balance. I thank the noble Baroness, Lady Drake, for tabling the amendments and allowing us to consider the role of income-related support for those over a specified age. The amendments would keep the pension credit qualifying age in line with the existing legislative timetable for women's state pension age. Their effect would be that the pension credit qualifying age would diverge from the women's state pension age from 2016, as proposed by the Bill. The amendments, while seeking to ensure that the pension credit qualifying age cannot be higher than the state pension age, also leave the door open to retaining a pension credit qualifying age below the state pension age—possibly permanently. That seems to me to be based on a fundamental misapprehension. The underlying assumption seems to be that by keeping the pension credit minimum qualifying age pegged to state pension age, we seek to attack the incomes of older people. That is just not the case. We think that, for all people of working age, the appropriate form of support is a working-age benefit. The Government introduced the Welfare Reform Bill, which sets out the proposals for universal credit by 2016. There is widespread support for the principles underpinning universal credit—in particular, the principle that work should always pay. We should define people of working age by using the state pension age, not that of pension credit. We have used that only because state pension age has not been equal between men and women. The upper age limit for universal credit will be set at the pension credit qualifying age. That ensures that the appropriate work-focused and work-related support is targeted at those of working age. Providing an arbitrary age for pension credit which breaks the link with state pension would also compromise that important aspect of welfare reform. If it is not state pension age, when should it be?