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Pensions Bill

My Lords, I also add my congratulations to the Minister and the Government for recognising what was the most important part of this Bill—certainly the most controversial part. When it left this House it left it unamended but, if one had taken the temperature of your Lordships’ House, it would have been quite clear that the Government had to do something to ameliorate the problem which was so well put in very many amendments. The Government have listened, and taken on board that message. They went away and came up with a compromise for which we have to be grateful. I pay tribute to the noble Baroness, Lady Greengross, who put down the amendment that paved a way, in a sense, for the sort of direction that the Government have adopted; it might have cost another £1 billion, but, as they say in musical terms, it was close enough for jazz. The key issue here is that we have to recognise that, though the Government have taken this on board, it will mean a substantial improvement for women who might otherwise have been expected to work for an additional two years. As we have heard, these changes will cost £1.1 billion and affect 250,000 men and just under 250,000 women. I do not regard that as a sticking-plaster solution. It has not been put in place simply to hold the breach in the dam. Another part of the Age UK statement says it is a big step forward. It states: "““We can’t emphasise enough the great achievement””—" the great achievement— "““that this change represents as it will cost the government £1 billion in lost cuts to expenditure””." In fact, it will be just over £1 billion. I want to say a few words about political consensus because it can often occur around facts, information, data and reports as they are at a particular point in time, when it is easy for people to come together. However, as your Lordships will know, this has in fact been a changing, not stationary, landscape as people get older. The source of the then political consensus, Adair Turner, in his work on pensions reform, accepted that this was not a static process. Since he wrote his report, he has stated in unequivocal terms that if he had known then what he now knows about life expectancy, he would have gone further and faster in his recommendations. He said: "““If I was redoing my report I would be more radical, arguing for an even faster increase in the state pension age””." The facts are straightforward, are they not? Someone who reached the age of 60 in 1970 could expect to live until they were 78. I am averaging out men and women just to provide the feel for change. However, someone who reached 60 last year can now expect to live to the age of 88. We have already moved on 10 years since 1970. In an ideal world, all noble Lords would have liked the Government to go further, but we cannot do that without regard to the fiscal constraints that are with us, and are likely to be with us for some considerable time to come. We have record debt and must do all we can to reduce the burden that that debt will have upon our children and our children’s children. I do not know whether noble Lords have looked in the face of their children—as I have looked at mine, although my grandchildren are a little too young yet—and told them what the burden of older people would be upon them, and asked whether they thought it was right that we should pass it on to their children. My reading of what happened in the other place was that the Labour Party accepted that longevity changes had occurred and that changes had to be made to the current legislation. Therefore, the opposition amendment is fundamentally about affordability. What we are faced with is an unfunded promise of £11 billion of expenditure, as if it were small change. I do not regard the Government’s proposed £1.1 billion as small change; it is a very significant expenditure difference. I read the reports of the other place and was at first confused about what was being said—that it was a modest change representing only a thousandth of the national debt. I carried out two bits of investigation—the first was to find out what amount the national debt was, and we know that it is between £1.3 trillion and £1.4 trillion; and the second was to consult the Oxford University Press because I needed to know how many noughts there were in a trillion and in a billion, and I divided one by the other. I have that figure in front of me, because I worked it out. In fact, the proposal before us would add 1 per cent—I repeat, 1 per cent—to the national debt. That is a huge amount of money with which to expect to burden our children and our children’s children. The group of women about whom we are most concerned will be precisely those who will benefit most from the state pension reform that the Government recently outlined. It will particularly benefit women who have taken career breaks to bring up children, and who did not have the protection of state second pension credits or any home responsibility protection. I hope that the Minister in his reply will say a little more on this, particularly on the Government’s timetable for implementation. Already we have seen the value of existing pensions maintained in a way that the previous Government were unable to achieve. The triple-locked state pension will rise in line with earnings, by 2.5 per cent, or by inflation. Over time, this move should guarantee a more generous annual increase for the 12.4 million people who are paid a basic state pension. I urge your Lordships to resist the amendment because of its unaffordability and to recognise that we are making a very expensive change. We have taken forward the view of this House, and I urge noble Lords to resist the amendment from the Opposition and to support the Government’s amendment.