Wednesday 2 December 2015
[Geraint Davies in the Chair]
State Pension Age Equalisation
I beg to move,
That this House has considered the effect of state pension age equalisation on women born in the 1950s.
It is a pleasure to serve under your chairmanship, Mr Davies. I start by paying tribute to my hon. Friend the Member for Denton and Reddish (Andrew Gwynne), who was the first MP to raise this issue in Parliament in this Session. The debate is about the effect of the changes to the state pension age imposed on women born in the 1950s by the Pensions Act 1995 and the Pensions Act 2011, and I will focus on three areas: the acceleration of changes to the state pension age; the lack of appropriate notification from the Government; and the impact of the changes.
State pension age equalisation started with the 1995 Act. The then Conservative Government set out a timetable to equalise the pension ages for men and women at 65. From April 2020, women born in April 1955 or later would get their pension at 65. In May 2010, the coalition agreement stated:
“We will phase out the default retirement age and hold a review to set the date at which the state pension age starts to rise to 66, although it will not be sooner than 2016 for men and 2020 for women.”
That pledge was broken when the coalition Government decided to accelerate the planned changes, a move that would particularly hit women born in the 1950s.
My hon. Friend is making a powerful speech. Does she agree that the people who are treated most iniquitously are those born in 1954? My constituent Michele Carlile of Hanger Hill says that an extra six years were hiked on to her pension age with no warning. That generation did not have the equal opportunities that created independent pension funds, and they did not have free nursery places; they had bad divorce settlements from men. This is another example of how this Tory Government have treated women shoddily.
I agree, and I thank my hon. Friend for making those points so early in the debate.
The changes brought about by the 2011 Act affect the lives of millions of women born in 1954 and throughout the 1950s who are unfairly bearing the burden and the personal costs of increasing the state pension age. The changes were controversial at the time, and there was great debate about the need to address the unfair consequences of the Act. Speaking to Channel 4 News in May 2011, the director general of Saga said:
“Men won’t have any increase before 2018 and no man will have his pension increased by more than one year. Half a million women will. We accept that the pension age will have to rise but it is the timing and the broken promise that we feel is unfair. No money will be saved during this Parliament, so it’s got not about cutting the deficit. We don’t need to hurry this through to have a sustainable pension system…Many women are furious and desperate about how they are going to manage, particularly the more vulnerable women who may already have retired, who may be ill or be caring for someone. They may have made careful plans for retirement, only to have the Government pull the rug from under their feet. They can’t just work for longer, because they may have retired already.”
I congratulate the hon. Lady on securing a debate on this important issue, which has crept up on many of us and affects many more women that many hon. Members will have appreciated. Does she agree that, whatever one thinks about raising the pension age, probably the most scandalous thing is the lack of notice given to women? The 650,000 women most affected by the speed-up were born between April 1953 and 1955, and they have effectively been told between the ages of 57 and 59, a matter of months ahead, that their pension age is now no longer 60. For them, planning is just not possible.
The hon. Gentleman was here in 2011, when some of the affected women lobbied their MPs about the proposals in the then Pensions Bill. Saga commented:
“Putting pensions on a sustainable long-term footing does not justify the sudden increase being imposed on one group of women at such short notice”—
that is exactly the point he raises—
“especially when the Government knows that these particular women are more vulnerable than men and have little or no private pension wealth. Also, many are already out of the labour market and have made careful plans for their future, which are now in disarray.”
Ironically, the then director general of Saga is now the Conservative Minister for Pensions in the other place. When I wrote to her on behalf of a constituent earlier this year she told me:
“I tried hard in 2011 but there is nothing more I can do I’m afraid. It is not in my power.”
I congratulate my hon. Friend on securing this important debate. At the time, many of us pointed out the iniquities of the proposals. I commend her on continuing to try hard and on not giving up as quickly as the noble Lady appears to have done.
My hon. Friend spoke on Second Reading of the 2011 Pensions Bill, which I will address later.
Perhaps the Pensions Minister would benefit from understanding her powers. She was appointed after the general election, but her powers include the power to argue for changes needed to remedy injustice. I hope that Members on both sides of the House will focus on that injustice. The changes made in the 2011 Act were controversial, and hon. Members from all parties raised the particular impact that the changes would have on women born in the 1950s. As I have mentioned, the Secretary of State for Work and Pensions repeatedly referred to transitional arrangements on Second Reading, including, I think, in answer to a question asked by my hon. Friend the Member for Scunthorpe (Nic Dakin). The Secretary of State said:
“I recognise the need to implement the change fairly and manage the transition smoothly…I say to my colleagues that I am willing to work to get the transition right”.—[Official Report, 20 June 2011; Vol. 530, c. 50.]
The changes were not managed fairly, and the Secretary of State did not put transitional arrangements in place, which is why I applied for this debate to discuss the issues caused by the changes.
I congratulate my hon. Friend on securing this debate. This is an important issue, and every day now we are seeing issues that disproportionately affect women in this country. I spoke to two wonderful people from the Women Against State Pension Inequality campaign in my office on Friday, and they explained that they have not had any confirmation of any changes at any time. Surely that cannot be the case in this day and age. They should have received notification of the changes. This cannot be allowed to continue, and I am proud that my hon. Friend is continuing the fight on behalf of the Opposition to seek justice for these women.
I agree that a great injustice is being done. The lack of notice has been mentioned, but there is also a lack of information for pensioners’ groups. The pensioners’ parliament of Northern Ireland has recently visited the House of Commons, and it has held joint meetings with its equivalent in Scotland. The information is very light, and more consultation is needed. We need to do something about this.
The hon. Gentleman is right. One of the key points in the debate is that women born in the 1950s who are affected by the 1995 and 2011 Acts have had neither transitional protections nor appropriate notification of the changes that are now having such a significant impact on their lives.
I congratulate my hon. Friend on securing the debate. In relation to people affected by the 1995 Act, Steve Webb said that
“I accept that some women did not know about it, and not everybody heard about it at the time. Although it was all over the papers at the time”.—[Official Report, 8 October 2013; Vol. 568, c. 54WH.]
Inadequate notice was given, which is totally unacceptable.
I thank my hon. Friend for her intervention and for applying for this debate with me, so that we could get time allocated for it.
I turn to the conclusions of Paul Lewis, a financial journalist, on the notification of the changes undertaken by the Department for Work and Pensions, because notification is a key issue. He has investigated it thoroughly, alongside campaigners from Women Against State Pension Inequality. He has written:
“Millions of women had their state pension age delayed—in some cases twice and by up to six years in total—without proper notice. That is the only conclusion to be drawn from the details of how they were informed of the changes which have now been obtained from the Department for Work and Pensions.”
Paul Lewis reveals quite a detailed list of those changes, writing:
“The Government did not write to any woman affected by the rise in pension ages for nearly 14 years after the law was passed in 1995.
More than one million women born between 6 April 1950 and 5 April 1953 were told at age 58 or 59 that their pension age was rising from 60, in some cases to 63.
More than half a million women born 6 April 1953 to 5 April 1955 were told between the ages of 57 and nearly 59 that their state pension age would be rising to between 63 and 66.
Some women were told at just 57½ that their pension age would rise from 60 to 66. Women were given five years less notice than men about the rise in pension age to 66”.
He goes on to say:
“The Government now says that in future anyone affected by a rise in state pension age must have ten years’ notice.”
Indeed, the Pensions Commission has said:
“We have suggested a principle that increases in SPA”—
that is, state pension age—
“should be announced at least 15 years in advance.”
However, Paul Lewis concludes that none of the 1950s-born women had even 10 years’ notice,
“nor did the men affected by the change.”
Women who have planned for their retirement suddenly find that they have to wait up to another six years before they can retire. Many find themselves without a job, without a pension or pensioner benefits, and without money to live on. Many of the 1950s-born women affected by the changes are living in real financial hardship, and they feel betrayed by the Government.
I congratulate my hon. Friend on securing the debate. I am staggered to hear of the abject failure in notification and even more staggered to hear that the Pensions Minister does not feel able to do anything about it. Surely at the very least the Government should be able to ensure that these kinds of mistakes are not repeated in the future?
I congratulate the hon. Lady on raising this incredibly important matter. Does she agree that actually a political choice has been made? That political choice is that it is the women who will have to carry the entire burden of arranging their own transitional arrangements. For example, she mentioned that a comparatively small number of these women might have small pension pots. I have already had a number of women say to me that what they will do is use their pension freedoms to wholly draw down their pension, compromising their long-term future so that they can put in place their own transitional arrangements. That cannot be right.
The hon. Gentleman is quite right and I will come on to cases of how people are managing, citing my constituents and other people I have heard from.
Some of the women affected have been hit twice: by the original proposals in 1995 and by the acceleration of the changes through the Pensions Act 2011. Now they are angry and feel that they are bearing a disproportionate burden, as the hon. Gentleman has just said.
The acceleration of the changes to the state pension age can mean that women born just months apart, and who were possibly in the same class group at school, receive their state pension at very different ages. In some cases, a one-year difference in date of birth can mean a woman will receive her state pension three and a half years later than other women. The campaign group Women Against State Pension Inequality tells me that it is not campaigning against the equalisation of the pension age in itself; I think hon. Members will understand that that equalisation was going to happen. It is opposed to the way the changes have been enacted and to the lack of transitional protection for the women born in the 1950s who are hit hardest by the changes.
The women affected put their faith in a state pension system into which most of them had paid all their working lives. They expected that they would be treated fairly and that they would be told about major changes with sufficient notice. However, most of them were given short notice of these changes and some of them have received no information at all. The women affected believe that the Government have failed in their duty of care by not taking reasonable steps to ensure that they were notified individually and in a timely way. They have been left with inadequate time to plan for a major change to their financial circumstances, which has caused great uncertainty and worry for those who have been planning for retirement.
A number of constituents have given me examples that show the significant impact these changes are having on their lives. One of them has worked for more than 44 years and raised two children. She suffers with osteoarthritis. She tells me she that she suffered the indignity of having to attend the jobcentre, only to be told that she was entitled to just six months’ jobseeker’s allowance. Now she is unable to find work and has to use her hard-earned savings, which is a similar point to the one that the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin) made earlier. My constituent told me:
“I must watch my savings dwindle on living costs rather than enjoyment, I wish I had not bothered being frugal all my life, as by the time I get my pension I will be broke or dead.”
Another constituent, Christine, is 61 and has worked since she was 15. She has osteoarthritis in both knees and has had a knee replacement. She cannot apply for her pension until 2019 and she told me:
“I am one of those women you would say is ‘old school’. Worked hard all my life, no maternity leave, no help with child care, just got on with it. Carrying on working thinking you will retire at 60, but since then my retirement age has changed 3 times. There is no guarantee it will not change again. I will probably be dead before I am able to retire.”
Another told me:
“At the age of 61, I find myself unemployed…If the Government had not moved the goalposts, I would have been able to retire last year. How are you supposed to live on £75 a week?”
She tells me that she has a mortgage and her outgoings are double the size of her income.
A constituent of a colleague told me that she was born in 1954, which is similar to the case already raised by my hon. Friend the Member for Ealing Central and Acton (Dr Huq), and that she was given only two years’ notice of the changes to state pension age. She is supported by her husband now, as she has no income of her own. She suffers mental ill health and has been unable to cope with the assessment process for employment and support allowance.
Case after case that I have been told about show how many women in their early 60s have health problems that stop them working, or that they need to give up work to care for someone else.
In an article on the gender gap in pensions, the Fawcett Society points out that the Chancellor appears to be delighted with the savings he made from his policy on state pension age equalisation, despite the really negative effects on women born in the 1950s, which I have been outlining. Speaking of the Government’s changes at the Global Investment Conference 2013, he said:
“These changes…the savings dwarf almost everything else you do, I mean they are absolutely enormous savings. You’re not necessarily reducing the entitlement of people who are retired, you’re just increasing the age at which that retirement entitlement kicks in”.
Does my hon. Friend agree that this Government need to stop seeing people as just anomalies on a spreadsheet? The cases that she has highlighted are those of real-life individuals, and apparently there are 300,000 people born between 6 December 1953 and 5 October 1954 who have been hit twice by Tory pension changes, and these issues need addressing.
Indeed, and as I was just saying, the Chancellor made the comment:
“You’re just increasing the age at which that retirement entitlement kicks in”.
He went on to say:
“It was actually one of the less controversial things we have done”—
“and yet it has probably saved more money than anything else we have done.”
That relates to the point that the hon. Member for Kirkcaldy and Cowdenbeath made about “choice”.
In view of the fact that in the autumn statement we heard the Chancellor crowing about all the money he had found down the back of the sofa, should we not just learn lessons for the future but demand that something is done for these women, particularly those who have been hit multiple times and who have had their retirement extended by six years?
I agree with the hon. Lady.
As with the tax credit cuts that the Chancellor has just been forced to abandon, it is clear from a comment such as the one I have just quoted that he does not understand the impact of his policies on those affected by them. He does not understand what it really means to
“just increase the age at which that retirement entitlement kicks in”.
I have a constituent who is now forced to live off her savings after working and paying national insurance for 44 years, and another who is unemployed at the age of 61 and trying to live on £75 a week. Another constituent aged 61 has paid into national insurance for 44 years. She has been on sick leave, and when she moved on to half pay she was told that she had to start going to the jobcentre, where the staff treated her without dignity or respect. After 44 years, she still has to pay national insurance even though she is only on half pay. I have spoken to women who in their early 60s have been forced on to the Work programme. They find that demeaning after putting in a lifetime of work and contributions.
Other women have raised other important issues. Moving the pension age means missing out on pensioner benefits—even such things as a bus pass. That is difficult when an older partner has a bus pass and the 1950s-born woman does not and has to wait six years to get one. There is also no uniformity about concessionary bus travel, which is available at 60 in London, but not in other areas. The woman who told me that has to pay £7.50 to travel by bus to hospital. The women forced to wait until 65 or 66 for their state pension do not get free prescriptions either, and I have talked about the many health conditions which make that a key issue. Waiting up to six years for a state pension and other pensioner benefits will also hit carers who give up work to care. Carers UK tells me that women approaching pension age are much more likely to have caring responsibilities than men. One in four women aged 50 to 64 has caring responsibilities, compared with one in six men. A significant number of women with caring responsibilities decide or feel forced to retire early.
Indeed. As we are living longer, so the number of carers is increasing. A Carers UK survey this year found that nearly a third of the female carers who responded and who were aged 60-plus said that they had retired early to care. The problem for women who fall into that group is compounded because, as Carers UK knows, retiring early in itself has a long-term impact on family finances. Of female carers aged 60-plus who retired early to care, 36% said that they were struggling to make ends meet, and of those struggling 40% were using their own savings to get by. Marian, a campaigner from Women Against State Pension Inequality—or WASPI; it is remarkable how that is abbreviated—contacted me yesterday. She has given up work at the age of 62 to care for her mother and brother, both of whom have dementia. Her only source of income is a small private pension of £2,500. Her husband will have to support her until she is 65. Marian tells me she only found out about her changed state pension age when she looked it up online.
That is absolutely true. The two years’ notice is clearly an issue when someone is deciding to retire to care for two people with dementia, particularly when looking after two people with dementia saves the state a great deal of money.
There are many such stories and examples. By not providing adequate notice of the change and by speeding up the process without putting in place any suitable transitional protection, the Government are failing to support the women born in the 1950s who are affected by their policies. Having promised much during debates, the only concession the Government made was to ensure that the additional increase in the state pension age could not be more than 18 months, but that small concession is of little comfort to those women who were not even informed of the change until very close to the age at which they expected to retire. They have worked hard and contributed to the system.
Throughout their lives, this generation of women has been disadvantaged in the workplace in terms of pay because of their gender. Even now, women in their 60s earn 14% less than men. Many of the women do not have private pensions. Until 1995, women who worked part-time were not allowed to join company pension schemes, and others did not qualify because they took time away from work owing to ill health or a caring role. Very many have no other sources of income, and they now find that once again they are being treated unfairly because of the way changes to the state pension have been enacted and because they are women.
I urge the Minister to look again at the issue and to look at ways of providing adequate transitional protection —the transitional protection that his ministerial colleagues repeatedly mentioned in the debates on the Pensions Act 2011.
Thank you, Mr Davies. I was not expecting to be called quite so early. It is a pleasure to join this debate, and I congratulate the hon. Member for Worsley and Eccles South (Barbara Keeley) on securing it. The key issue today is communication. I do not think anyone is arguing about the general move towards the equalisation of pension ages. Indeed, most of the decisions were made in 1995, as the hon. Lady pointed out. The issue is about how the women affected were communicated to and when.
The hon. Lady is right to say that women born after April 1953 had their state pension age increase accelerated under the previous Government. Paul Lewis referred to the three waves of women affected by the changes. Nothing changed for the first wave—the 1950 to 1953 group—but things changed for women born after April 1953. It is correct to say that the state pension age was accelerated for them.
Coming back to the point on communication, it is interesting that in recent evidence to the Work and Pensions Committee, the previous Pensions Minister said that it was unclear to him at exactly what stage people affected by the 1995 Act were written to. The Minister here today referred at DWP questions to a letter writing campaign from 2009 to 2010. Can he say more about that? For example, does his Department believe that that was the first stage at which women affected were written to, or was there an earlier campaign before 2009? That would be interesting to know. To some extent, the decision in December 2013 to give people affected by future pension changes,
“at least 10 years’ notice”,
shows that the DWP has taken on board the point the hon. Member for Worsley and Eccles South made on lessons learned.
I agree with my hon. Friend that the principle of equalising the pension age is not what is at stake in this debate. Given the clear confusion on who was told what and when, and the fact that such changes could not be made in such an accelerated fashion now for the very reason that he just mentioned, does he not agree that some form of transitional relief should be looked upon favourably? As the hon. Member for Worsley and Eccles South (Barbara Keeley) said, it is not just the amount of pension, but the delay in other benefits, such as bus passes and free prescriptions, that negatively impacts on those women who happen to have fallen foul of the changes, simply because of when they were born.
That is a perfectly valid point that is clearly part of the WASPI campaign, and the Minister will want to comment on it. “Transitional arrangements” is both a comfortable phrase and something with significant financial implications, and he will want to discuss that.
If the hon. Gentleman looks back at Second Reading of the Pensions Act 2011, he will see that the Secretary of State promised transitional protection again and again. It was not just mentioned in passing; it was how he dealt with a lot of the interventions about the issues.
I want to reiterate the communication issue, which is exactly what people were annoyed and fed up with on the doorsteps and when I spoke to women in my constituency in Eastleigh. They had worried and planned and made provision for their future, but the change to their future had not been communicated to them. They had not expected to face hardship because they were women and had been subjected to poor communication. I hope the Minister will tell us what we can do for this group of women who are very much affected by the multiple hit.
My hon. Friend makes a good point. Communication is at the heart of the matter. Part of the issue is about this almost impossible question: who really did receive what? I know that part of the WASPI campaign is about the many people who have said they never received the letter at all, and that will be a hard thing for the Minister or the Department to quantify. Paul Lewis, whom we saw at the Select Committee recently, said of the letters in his paper:
“Even those which did reach the correct destination may not have been read–‘more bumph from the government’ is a common reaction to such things.”
If a communication arrives at the destination but is not read or is swiftly recycled, that is a hard thing for the Government to deal with. Whether there are more effective electronic ways of communicating now that can be recorded, I do not know, but the Minister may wish to comment on that.
I hope that the Minister will respond to the point about the situation that women born in the 1950s find themselves in. There are some really difficult situations. There is no doubt about that. I can see that there is quite a good team here today in the Public Gallery to testify to that. Indeed, a lot of my own family are directly affected. None the less, because pensions are fiendishly complicated, it would be useful if the Minister could share with us some aspects of the current pensions situation, which might in a curious way help women born in the 1950s.
For example, there is a very generous rate of deferral under the old state pension system that would be applicable to women born in the 1950s. This advantageous rate means that someone can increase their pension by more than 10% a year if they defer taking the state pension. A woman born on 6 April 1951 could defer taking her state pension until the same date as her male twin by deferring for four years and thereby add more than 40% to her state pension for the rest of her life. Given the subsidised nature of the deferral scheme, many women who defer would end up with a better state pension than their male twin for the same national insurance record. That is quite a complicated thing to explain, but perhaps the Minister will confirm whether that is correct and how it might benefit some of those affected.
Does the hon. Gentleman agree that that presumes that the female in question is physically able to put off taking the pension and continue working? Although females on above average incomes will have some difficulty in adjusting in such a short timescale, the females on an average or below average income would find it impossible to make the adjustment to which he refers.
I will, Mr Davies. I was just taking as many interventions as possible.
The hon. Member for East Londonderry (Mr Campbell) is absolutely right. The deferral scheme depends on the individual’s circumstances. None the less, the actuaries would tell us that, on balance, most women will live longer than us men and that the four-year deferral may therefore be extremely advantageous for some people. It is just one example of the technicalities that are worth thinking about.
In conclusion, today’s debate is really important. The hon. Member for Worsley and Eccles South was absolutely right to have secured it. Women in their late 50s and early 60s are affected. There is a serious issue of communication. A lot of this will be hard to untangle, but if the Minister can shed more light on what did or did not happen between 1995 and 2009, that would help. There is a generic issue about what happens when Government communicate, but that communication is not read or is recycled. How can Government respond to that position of professed ignorance? Clearly, it would be fantastic if transitional arrangements could be delivered, but the financial cost may be considerable.
It is a pleasure, as always, to serve under your chairmanship, Mr Davies.
I do not want to repeat everything that has been said. I am grateful to my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) for securing this really important debate. I know that my constituents would want me to pass on their thanks to her for ensuring that their problems are discussed here. I also pay tribute to my hon. Friend the Member for Denton and Reddish (Andrew Gwynne), who cannot be with us today, but whose contribution on this issue has been valuable. He was the first to raise the issue in Parliament—he has done so persistently—and he is doing a great job of representing his constituents.
I want to tell the story of one of my constituents. She is one of the many women born in the 1950s who have contacted me to ask for help with the financial dilemma they face with regard to state pension provision. My constituent’s story is typical of many women, and I want to tell Members how she has suffered because of the 1995 and 2011 Acts. She was never informed in 1995 that her state pension age was changing from 60 to 65. From her own reading and from information picked up from various sources, she was led to believe that she would receive her state pension at 62. She was not happy with the two-year deferment of her state pension, but, as she said to me, she was fit and healthy at the time and did not understand the magnitude of the changes. Her view is that we lived in a different world at that time. She says that the welfare state had not been mauled, and the safety nets that were there to assist the poor and the sick have now been removed.
Like a lot of working-class, low-waged people at that time, my constituent was dependent upon her state pension as her main source of income at retirement, although she hoped to be able to save a little bit of money to supplement that. Unfortunately, as time progressed, she began to suffer serious health issues and was forced to give up work. She was born in 1957 and is doubly unhappy that she will now have to wait until she is 66 before she receives her state pension. She has very little in the way of private pension provision. She is forced to live on a minimal income, suffering from ill health, with the prospect of having to wait until 2023—eight more years—before she qualifies for her state pension.
My constituent is just one of many women who have contacted me about women’s pension inequality. It affects so many women born in the 1950s. It has been a common issue raised with me on the doorstep, in my postbag and by email, and no answers seem to be forthcoming. The Government justify the increase in pension age by saying that life expectancy is increasing, yet there is a real north-south divide in life expectancy. It is predicted that by 2030, women living in Kensington and Chelsea will have a life expectancy of 91.2 years, but for women in Manchester, in the north-west, it will be 84.7. Yet no consideration is given to those inequalities in the national imposition of increases in the state pension age.
The women affected deserve to be treated fairly. I call on the Government to consider the unequal treatment of women born in the 1950s and the inadequate notice they were given of the increase in the state pension age, and to revisit the transitional arrangements for those women.
It is a pleasure to serve under your chairmanship, Mr Davies. Indeed, it is a pleasure to follow the excellent contribution of the hon. Member for Heywood and Middleton (Liz McInnes), in which she cited examples of her own constituents who are affected.
I am grateful for being able to take part in this debate, and I congratulate the hon. Member for Worsley and Eccles South (Barbara Keeley), whose contribution touched on much of what she rightly said in a previous Westminster Hall debate on women and low pay, in which I had the privilege of summing up for the Scottish National party. She also touched on some of the points made by my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin) in a debate on guaranteed income for retirees led by my hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford). She made a great speech and set out the issues well. My right hon. and hon. Friends in the SNP agree with equalisation, but we do not support the unfair manner in which the changes have been made, and we want to see action on that. A transitional period is required to protect retirement plans for women. I thank the WASPI campaign and constituents in Airdrie and Shotts who have contacted me about this issue by email and on social media.
There are now three categories of people who are affected by the two legislative changes: women born between 6 April 1950 and 5 April 1953 will, under the 1995 Act, have a pension age of between 60 and 63 by March next year; women born between 6 April 1953 and 5 December 1953 will, under the 2011 Act, have a pension age of between 63 and 65 by November 2018; and men and women born between 6 December 1953 and 5 April 1960 will have a pension age set by the 2011 Act of between 65 and 66 by October 2020. What a guddle.
The 2011 Act has affected around 5 million people in total—approximately 2.6 million women and 2.3 million men, who now have to wait longer to reach pension age. It is clear that women did not get a fair notice period and were not allowed enough time to prepare. Most of those affected by the 2011 Act have had only about five years to prepare. Pension planning should be lifelong and should not be made on the hoof as people approach retirement.
I am afraid I do not have time.
The lack of time to prepare is simply unfair. Age UK has said that the revised timetable for retirement allows
“insufficient time to prepare for retirement”,
as my hon. Friend the Member for Banff and Buchan (Dr Whiteford) also said during the passage of the 2011 Act. With all due respect, it is for that reason that I have to disagree with the hon. Member for Gloucester (Richard Graham). These women are being financially penalised and let down on what they were promised for retirement.
Another issue is that women will be worse off than men, yet again. According to the Pensions Policy Institute, only 65% of women in the 55 to 59-year-old range and only 34% of women in the 60 to 64-year-old range are currently economically active. That means that women are in a poorer position to compensate for the changes through work, and it will be more difficult for them to save and plan for their retirement. More women are excluded from the scope of auto-enrolment, as well, so women will lose out further. Based on Department for Work and Pensions analysis published in 2013 and 2014, we can estimate that setting the threshold at £10,000, rather than the 2014-15 earnings limit of £5,772, excludes about 1.6 million people from the scope of auto-enrolment.
I sincerely hope that the Government will revisit the inequalities currently experienced by women born in the 1950s. The Minister can take steps today by agreeing to the terms of the WASPI petition and bringing forward the review from 2017 as a matter of urgency.
It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) on securing the debate.
All the facts are in the briefing note from the House of Commons Library, “State Pension age increases for women born in the 1950s”, so I need only repeat them. The Government said that the acceleration in state pension age equalisation would
“reduce the advantage currently enjoyed by women over men as a result of a lower pension age and higher life expectancy”,
but, because of their higher average earnings, men may be in a better position than women to offset any loss by paying higher additional contributions. The people whose lifetime pensions will be most affected are men and women born in 1954 who are on low incomes and would have been entitled to pension credit, for which the qualifying age has also risen.
When the 2011 Act was before Parliament, Age UK expressed concern that the revised timetable could leave many with
“insufficient time to prepare for retirement”
and would cause particular hardship for certain groups. We have heard about many individual cases today. In general, 10 years’ notice of a state pension age increase is considered appropriate. The Pensions Commission suggested that 15 years’ notice should be given, and that was the amount given in the 1995 Act. In contrast, some of the people whose state pension age was increased in the 2011 Act received only five years’ notice.
What was done to notify people? In a House of Commons debate in October 2013, then Pensions Minister Steve Webb said that he recognised that not everyone affected by the 1995 Act had been aware of it. Information about the increase in the state pension age did not reach the group of individuals who arguably had the greatest need to be informed. Levels of awareness were even lower among women who were economically inactive or in routine and manual occupations—that fact comes from a 2004 Department for Work and Pensions research report. WASPI said:
“Significant changes to the age we receive our state pension have been imposed upon us with a lack of appropriate notification, with little or no notice and much faster than we were promised—some of us have been hit by more than one increase.”
What should happen now? WASPI says that the Government should make fair transitional state pension arrangements for women born in the 1950s. The Government do not agree. They believe that it was enough to revisit the state pension age arrangements for women affected by the 1995 or 2011 Acts and amend the original timetable to cap the maximum increase at 18 months rather than two years. WASPI does not accept that, those affected do not accept that, and I do not accept that. I urge the Minister to use what powers he has to review the matter urgently, in order to ease the hardship and desperate negative impact on those affected.
It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate the hon. Member for Worsley and Eccles South (Barbara Keeley) on securing this important debate. She and other Members have been comprehensive in their critiques and made many of the important points already, so I can be helpfully brief.
I, too, have been approached by a surprising number of constituents who were born in the 1950s and are affected by the changes to the state pension age for women. They make a number of complaints that have already been raised in the debate. First, they complain about the information that has been made available to them. A number have told me that they have never received any notification from the Government about certain changes to their state pension age, or, at best, very little by way of comprehensible information.
Secondly, they complain of unfairness in treatment because of the very sharp method of phasing in the changes. Their sisters, colleagues, or, as the hon. Member for Worsley and Eccles South said, even classmates who are not much older or younger end up with significantly different pension ages. Thirdly, some feel that they have received a double blow. Their pension age was changed back in 1993 and, having made adjustments, they have been stung again. They ask how that can be fair.
Finally, and most fundamentally, the speed of the changes is a serious issue. Having worked their entire lives under the impression that they would be able to retire on a certain date, instead many of my constituents are seeing that date getting further and further away. These women have not had a chance to plan for that change.
The Government reckon they will save some £30 billion between 2016 and 2026 thanks to the changes made in 2011. I urge them to use some of that money and to think creatively about how to resolve some of the complaints, smooth the transition, and tackle the injustice felt by many of my constituents and women across the country. It is important to state that my constituents are not asking the earth. They are quite realistic about what can and cannot be done and understand that there will always be winners and losers and that lines have to be drawn somewhere. Nevertheless, the reforms can be made fairer, and the Government should be doing much, much more to make them so.
I congratulate my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) on securing this debate and on her excellent speech. There is not a great deal more that I can say, but I will try to add something. I also thank my hon. Friend the Member for Denton and Reddish (Andrew Gwynne), who has campaigned assiduously on this issue and would have added greatly to the debate if he were here today.
There is no doubt in my mind that great hardship is being caused here. The unfairness and inequality stand out a mile. People have been hit twice—in 1995 and by the changes in 2011. One of the things that strikes me most clearly is that just because a person is born a few months either side of a particular date, they can lose out considerably. That patent unfairness is one of the key issues that my constituents have raised.
I have had numerous letters over the past few years about this issue. In October, a group of my constituents who support the WASPI campaign came to my advice surgery and set out starkly how the issue has affected their lives. That struck home to me how difficult and how much of a burden it is for women—particularly those in the 53 to 55 age group. They stressed that the main issue—some did not oppose the rise—is the way in which the change was implemented and the lack of personal notification in 1995 and 2011. Those aged 53 to 55 have been hit hardest.
My constituents also spoke about the financial hardship—we have heard examples of that today. Women in that period who became pregnant left work and, in many cases, never went back. That generation’s circumstances were different, in terms of the help and support they got and their ability to work. One of the key points that my constituents made to me is that they had no time to re-plan their lives; they reiterated that time and again.
The only available information was in the media, and that is not good enough. That seems to be part of the defence: the issue was discussed in the media and a few papers ran with it, so that is okay, but that is not good enough. The key issue for my constituents is not just that they are not able to plan, but that they have not been given enough time to add to their pension pots.
The hon. Member for Central Ayrshire (Dr Whitford) talked about the £27 billion leeway that the Chancellor found. This is a great example of how some of that money can be used, and if the money were used in that way, it would be reinvested back into the economy. The Government should look at that option and consider how they can recompense those women and make the change in a better way to ensure that they do not undergo financial hardship. I hope the Minister will revisit this issue.
It is a pleasure to serve under your chairmanship, Mr Davies. Like others, I thank the hon. Member for Worsley and Eccles South (Barbara Keeley) for raising this important matter. The turnout in the Chamber reflects its importance.
This issue was first highlighted to me in my first surgery by a constituent who is very active with the campaign group WASPI. I pay tribute to WASPI for highlighting these concerns. Since then, I have been contacted by many other constituents. It is abundantly clear that many women were not properly informed about the Pensions Act 1995. This injustice was not caused just by the Pensions Act 2011; it was compounded by the Department for Work and Pensions’ earlier mistakes. Like others, I have constituents who face a delay in reaching the state pension age not of two years, but of what they feel is a six-year whammy, which clearly causes a lot of emotional distress.
I talk about the 1995 Act because it illustrates the seriousness of the predicament that many women face. They plan to retire at a certain age and work all their lives with that goal in mind, but at the last minute that is taken away from them and they are left with hard choices. Do they work longer, do they use their savings or do they use the pensions flexibilities to retire when they originally planned?
It is clear that this is another tax credit-type issue for the Government. The figures and numbers look good on paper, but behind the statistics are the personal stories of the people—in particular, women—who are affected by the legislation. Like tax credits, it is clear even in this Chamber that this is becoming a cross-party issue. The Government should take heed of it, and not continue to put their head in the sand.
The 2011 Act breached the Department’s guidelines, which state that increases should have a 10-year lead-in or warning. That lead-in period was halved in the 2011 Act for most of the people it affected. People of both sexes, but perhaps more women, were affected by the economic crisis and the 2008-09 recession. For many people at that time, early retirement seemed like the right thing to do, but they now have to wait longer to reach to state pension age. They thought they were doing the right thing. They planned and felt comfortable, but they face potential financial hardship and emotional distress. A crumb of comfort for those who live in Scotland is that the Scottish Government’s policy on bus passes and free prescriptions means that our constituents are slightly insulated. They are not affected by the state pension increase.
I am sure that the Minister will tell us that the Government are looking after pensioners with the triple-lock system and the new single-tier pensions. But believe me, that is of no comfort to the 5 million people affected by the 2011 Act, and in particular to women born in the critical period in the early 1950s.
The last-minute changes to the 2011 Act cost an estimated £1 billion. Considering the surplus that we hear the Chancellor has got, I suggest that another few billion pounds would not go amiss in rectifying this wrong. I strongly urge the Minister to look at concessional arrangements for the future.
It is a pleasure to serve under your chairmanship, Mr Davies. I warmly congratulate the hon. Member for Worsley and Eccles South (Barbara Keeley) on securing this debate. She spoke with passion and demonstrated the human and social impact of the changes that will affect women in her constituency and throughout the United Kingdom. I thank all the speakers who have contributed to this debate. There has been a lot of passion and appreciation of the challenges that women face as a consequence of these changes.
I say respectfully to my colleague on the all-party group on pensions, the hon. Member for Gloucester (Richard Graham), who is passionate about pensions and knows a lot about them, that we accept that there are issues of communication here, but this is about not communication, but fairness. The Government must recognise that the transitional arrangements are not right, and, on the back of this debate, they must reflect on that and make changes.
Members on both sides of the House agree that it is important that we deliver fairness in pension provision. To that end, there is no doubt that the significant historical gender issues with pension provision need to be tackled. Although we have made progress, there are still substantial shortfalls in pension provision for women, and the challenge of securing dignity in retirement is affected by women’s longer life expectancy.
We have talked about communication and the women who have had multiple hits, but this issue is also about the fact that, during their working lives, those women had such difficulty in accruing a strong pension pot in the first place. Women who worked part time, as my mother did—my father died when I was quite young—were not able to contribute to a significant pension at all. My mother worked for the civil service in Belfast and was made to stop when she got married and had children. Women who got divorced, as she eventually did from my stepfather, got no decent share of a pension pot at all. Those women have faced prejudice through their whole lives, and now we want to solve the problem of equalisation on one tiny cohort of women. That is an unfair burden.
I absolutely agree. We are talking about the state pension, but my hon. Friend is right. That is why I referred to the gender issues in pensions. We must address not just this issue, but some of the other challenges that we face, such as the fact that women who work part time do not participate in auto-enrolment. There are many things we have to look at to ensure that women have dignity in retirement. Much has to be done.
The SNP warned about state pension age equalisation in the last Parliament, and it is disappointing that our concerns were not taken on board. I should state that we agree with equalisation, but we do not support the unfair manner in which the changes were made. A longer transitional period is required to protect women. My hon. Friend the Member for Banff and Buchan (Dr Whiteford)stated in this chamber in May 2011:
“The issue is not only the pace of change. It is the context of a lifetime of low pay and inequality faced by many women, and the old-age problems that are a cumulative effect of that. The Government had an opportunity here to tackle women’s inequality in old age, but so far they have, instead, arbitrarily targeted women born in 1954.”—[Official Report, 11 May 2011; Vol. 527, c. 436WH.]
What created this injustice that many woman born in the 1950s are facing? Let us go over the facts. The Pensions Act 1995 provided for the state pension age for women to increase from 60 to 65 over the period April 2010 to 2020. The coalition Government legislated in the Pensions Act 2011 to accelerate the latter part of this timetable, so that women’s state pension age will now reach 65 in November 2018. The reason cited was the increase in life expectancy since the timetable was last revised. As mentioned by the hon. Member for Worsley and Eccles South, some people in the north of England, and indeed in Scotland, have a much lower life expectancy and will not receive the full benefits that the legislation mentions. It had initially been intended that the equalised state pension age would then rise to 66 by April 2020. However, due to concerns expressed about the impact on women born in March 1954, who would see their state pension age increase by as much as two years, it was decided that that should happen over a longer period, with the state pension age reaching 66 in October 2020. We must go further.
A shifting of the entitlement by six months was wholly inadequate. Indeed, I would say it was a mean-spirited move by a Government who have failed the test of fairness in treating the women caught up in the changes. With this Government, it is not about doing the right thing but about doing what they can get away with. No doubt the Minister will trot out the line that the money could not be found to create a longer transitional period, but it is all about priorities. When they can find £167 billion to spend on nuclear weapons, they can find the money to do the right thing and look after their pensioners. On this and so many other issues, the Government have a faulty moral compass.
Women affected by the 1995 and 2011 Acts fall into the following groups. Women born between 6 April 1950 and 5 April 1953 have a state pension age under the 1995 Act of between 60 and 63 and reach state pension age by March 2016. Women born between 6 April 1953 and 5 December 1953 have a state pension age under the 2011 Act of between 63 and 65 and reach state pension age by November 2018. Men and women born between 6 December 1953 and 5 April 1960 have a state pension age set by the 2011 Act of between 65 and 66 and reach state pension age by October 2020. The 2011 Act affects around 5 million people—2.6 million women and 2.3 million men—who will now have to wait longer to reach state pension age.
Women did not get a fair notice period. The periodic state pension age reviews established by the Pensions Act 2014 seek to give 10 years’ notice. In 2005, the Pensions Commission suggested that
“a policy of significant notice of any increase (e.g. at least 15 years) should be possible”.
Why was that not delivered? The 1995 Act gave 15 years’ notice, did not take effect until 2010 and did not affect anyone aged 44 or over at the time of the announcement. However, some of those whose state pension age was increased by the 2011 Act received only around five years’ notice. That is simply not good enough. Those with the largest increases—18 months—got less than eight years’ notice. Age UK argued that the revised timetable could leave many with
“insufficient time to prepare for retirement.”
The previous Pensions Minister, Steve Webb, said that he accepted that the period of notice being given to some women was “the key issue”. He also said in a debate in October 2013 that he recognised that not everyone affected by the 1995 Act had been aware of it:
“I accept that some women did not know about it, and not everybody heard about it at the time.”—[Official Report, 8 October 2013; Vol. 568, c. 54WH.]
Is it not an obligation of Government to ensure that people are aware and can take action? Will the Government accept responsibility for that?
In a submission to the Work and Pensions Committee on the impact of the Government’s pensions reforms on men, the Pensions Policy Institute said:
“The previous changes legislated in the Pensions Act 2007 gave men an effective 17 years notice from the year in which the changes were legislated to the year in which the SPA increase started (2024). The current proposals are giving men just over 7 years of notice (2018).”
What a muddle. What a way to treat people who need to plan ahead for their old age. Within five years of the current state pension age of 65, only 54% of the male workforce is still economically active. It would be desirable to give 10 years’ notice because around 76% of men are still economically active within 10 years of the current state pension age of 65 and could therefore respond to the policy change by delaying their retirement if they need to.
The Pensions Act 1995 gave women an effective 15 years’ notice of the year in which the state pension age increase started, but the current proposals have limited that to five. Only 65% of women aged 55 to 59 are economically active, compared with around 76% of men, and only 34% of women aged 60 to 64 are currently economically active, compared with 54% of men. Quite frankly, those women do not have the time to put in adequate provision to compensate for the changes. The evidence suggests that policy makers should ideally give women more than 10 years’ notice of any future state pension age changes to allow them sufficient time to adjust their retirement plans or to save more while still working. The National Centre for Social Research stated in 2011:
“In 2008, fewer than half (43%) of the women who, at that point, would not be eligible for their state pension until they were 65 were aware of the planned change.”
Women cannot simply have their retirement age increased by four or six years without even knowing about it. Ultimately, it will lead to hardship, shattering retirement plans with devastating consequences, including poverty and ill health.
The change throws up the question of the position of women with multiple low-paid jobs in relation to automatic enrolment. Women will disproportionally suffer further under new changes to the state pension under the single tier when they have multiple jobs. More women are excluded from the scope of auto-enrolment and will lose out further. Employers are required to auto-enrol workers who are not already in a workplace pension scheme, are aged between 22 and state pension age and earn more than a minimum threshold. The earnings trigger for auto-enrolment was initially set at £5,035, with contributions paid from the same level. However, it has since increased on a number of occasions and is now £10,000, with contributions paid from a lower level—the national insurance lower earnings limit, which was £5,824 in 2015-16. Based on Department for Work and Pensions analysis, we can estimate that the threshold of £10,000, rather than the 2014-15 lower earnings limit of £5,772, excludes some 1.67 million people from auto-enrolment, 77% of whom are women. The Government must revisit the inequalities felt by women born in the 1950s and they must do so immediately.
It is a pleasure to serve under your chairmanship for the first time, Mr Davies. I congratulate my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) on securing the debate. The degree of interest in it and the number of contributions are testament to its importance.
My hon. Friend spoke well both about the transitional arrangements and the importance of notice, highlighting the fact that some people had to wait 14 years for notice under the Pensions Act 1995. The human stories that she put forward are extremely important. She also pointed out one of the supreme ironies that we face in this debate: the Pensions Minister in the other place, Baroness Altmann, campaigned on this issue in 2011 and showed some ability to bring about concessions. Now she is actually in a position of power, however, she claims that she does not have the power to do anything about it. I will return to her in due course.
There were a number of other contributions to the debate. The hon. Member for Gloucester (Richard Graham) spoke about the issue of communication, and I hope that the Department and the Minister will be able to answer in detail about what steps have been taken in that regard.
My hon. Friend the Member for Heywood and Middleton (Liz McInnes) spoke passionately about her constituent and highlighted what I am afraid is the growing problem of the gap in life expectancy between the wealthiest areas of our country and the less wealthy areas. She pointed, too, to the issue of those born in the 1950s, the very generation that should have been able to benefit from the cradle-to-grave welfare state introduced by Clement Attlee’s Labour Government of 1945 to 1951.
The hon. Member for Airdrie and Shotts (Neil Gray) set out precisely the categories of people who are affected by the changes. He spoke well about the unfair manner of the notice that was given and about the issue of transitional provisions. The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald) also spoke well about notification and fairness.
My hon. Friend the Member for Halton (Derek Twigg) highlighted well the issue of the generation born in the 1950s and the importance—which I will come back to—of people being given the time to plan their lives when changes in provision are made.
The hon. Member for Kilmarnock and Loudoun (Alan Brown) brought out the point about emotional distress extremely well. I echo his compliments to WASPI and other campaign groups that are trying to do so much for women born in the 1950s and about the unfairnesses that they face.
My hon. Friend the Member for St Helens South and Whiston (Marie Rimmer) highlighted well the hardship for certain groups. She also made an important point about levels of awareness, which vary up and down the income scale.
We need look at the central issues of this debate: first, transitional provisions, and secondly, notice. The hon. Member for Ross, Skye and Lochaber (Ian Blackford) made the point about transitional provisions, but let us be absolutely precise about what the Secretary of State for Work and Pensions said on Second Reading of the Pensions Bill on 20 June 2011:
“Let me simply repeat what I said earlier—it is a bit like a recording, but I shall do it none the less: we have no plans to change equalisation in 2018, or the age of 66 for both men and women in 2020, but we will consider transitional arrangements.”—[Official Report, 20 June 2011; Vol. 530, c. 52.]
I repeated that direct quotation to the Economic Secretary to the Treasury in a debate here in Westminster Hall on 17 November 2015. She promised that the noble Lady Baroness Altmann would write to me about it. The next day I tabled a written parliamentary question, and I received an answer from an Under-Secretary of State in the Department for Work and Pensions, the hon. Member for North Swindon (Justin Tomlinson). He said:
“Ministers discussed and considered transitional arrangements during the passage of the Pensions Bill 2011.”
Sadly, at the end of his reply he added:
“The Government will not be revisiting the State Pension age arrangements for women affected by the 2011 Act.”
I had that answer on 23 November.
In a letter dated 25 November, I received my answer from the Pensions Minister:
“To clarify, the Secretary of State made this comment when Parliament was considering the Pensions Act 2011. You will wish to note that, later on in that process, the Government made a concession to reduce the delay that anyone would experience in claiming their State Pension as a result of state pension age changes to 18 months.”
Sadly, she also added:
“The policy was debated and passed into law, and there are no new arguments to consider.”
Can the Minister understand the intense disappointment that there will be about that response? The concession mentioned will come as little comfort to those affected by the changes. I urge the Minister not to give up, but to look at what can be done on transitional provisions. The hon. Member for East Worthing and Shoreham (Tim Loughton) made the point well in his intervention—do not slam the door shut on the women affected, who were born in the 1950s, as the Pensions Minister appears to have been doing in her letter.
Deeper matters are at stake in this debate. The hon. Member for Central Ayrshire (Dr Whitford) said that there is an issue about the ability of the affected generation of women to contribute to pension pots throughout their lives. Women born between 6 April 1951 and 5 April 1953 are not eligible for a single-tier state pension; a man born on exactly the same day will be. My hon. Friend the Member for Worsley and Eccles South brought out the dual impact of the increase introduced in the 1995 Act and the subsequent ineligibility for a single-tier pension—women have been affected not once but twice.
I put it to the Government that the issue of notice is fundamentally important. We talk about notice periods of 10 or 15 years because once people retire, their ability to top up their income is extraordinarily limited. Therefore, when we make changes to the pension age, it is vital that people are told about such changes in good time, so that they may change their lives to adjust to the new reality. That is the fundamental issue at stake. There is incredibly deep anger about the fact that appropriate notice was not given. I urge the Government not to turn their back on transitional provisions.
We have talked about the availability of money. I am one of the first people to say that there has to be an appropriate publicity campaign on auto-enrolment, but I raised my eyebrows slightly when I learned that in recent months the Department for Work and Pensions has spent £8.45 million on a multi-coloured teddy bear called Workie, which will apparently deal with the auto-enrolment awareness problem. It must be one of the most expensive teddy bears in British history.
The spending on the teddy bear is an indication of something deeper—the choices that the Government face. They can still make a choice to consider transitional provisions for those affected by the changes. I urge the Government to look again at transitional provisions, and not to slam the door on the 1950s women.
I congratulate the hon. Member for Worsley and Eccles South (Barbara Keeley) on securing the debate. I recognise that the subject is hugely important and I commend all the contributors, who have spoken eloquently and passionately. It has caused a huge amount of correspondence for all of us as Members of Parliament. In the course of my comments over the next 10 or so minutes, I shall address as many of the points made by colleagues as possible.
The debate provides me with an opportunity to set out the Government’s position on state pension age equalisation, in particular regarding women born in the 1950s. The acceleration of state pension age equalisation and the increase to the age of 66 under the Pensions Act 2011 achieved gender equality in state pension provision, while also saving more than £30 billion for the state, thereby ensuring the affordability and sustainability of our reformed pensions system. It is important to recognise that we must have a pensions system that is affordable and sustainable.
It is also important to remember that gender equality was one of the main purposes of the state pension age changes.
We have heard equality mentioned many times. The generation of 1950s-born women have not known equality in their lives, in pay or in pensions. Why should they carry the weight of the savings that the Minister has just lauded? Why should that group of women who have suffered so much inequality in their lives carry the weight?
I see that two or three Members are rising to their feet. I shall give way to the hon. Member for Ross, Skye and Lochaber (Ian Blackford), but I have only seven or so minutes and I seek to address a number of points already raised. I therefore ask Members to be mindful of the fact that the more questions I take, the less I get to put on the record.
I will be brief. I am grateful to the Minister for giving way, but this is about fairness. It is about women having the time to make adjustments and the fact that the period for transitional arrangements is too short. Such changes have never taken place in such a short period in the past. That must be addressed and there must be fairness for women. That can only be done by lengthening the transition period.
The hon. Gentleman speaks about fairness and transition arrangements, and I will come to that, but I repeat the point that there is a cost to all of this. I am trying to make this apolitical, but given that so much political comment has been made against the Government and the previous coalition Government that my party, the Conservative party, led, I gently remind all colleagues not to forget that between the Pensions Act 1995 and the Pensions Act 2011 there was the small matter of a 13-year Labour Government, which seems to have been conveniently forgotten in everything said about communication, concessions and so on.
I do not know how the 1997 to 2010 Labour Government can be responsible for the 2011 Act, or indeed the 1995 Act. First, the Minister talks about equality in the present, but we are talking about inequality that has taken place in the past and been suffered by this generation of women. Secondly, transitional arrangements are transitional by definition, so they do not necessarily affect long-term sustainability.
The hon. Gentleman has said nothing that had not already been said, and I will refer to issues as I progress.
Equalisation was necessary to meet the UK’s obligations under EU law to eliminate gender inequalities in social security provision. The five-year gap in men’s and women’s state pension age dated back to the 1940s and is not fair in a world where women’s employment opportunities have opened up and provisions are made for carers. I hope that all colleagues on both sides of the House agree with that.
The resources made available allowed the new state pension reforms to take place in the form that we have introduced, benefiting those women who would have had poor outcomes under the current system largely as a result of lower average earnings and part-time working. About 650,000 women reaching state pension age in the first 10 years will receive an average of £8 a week more in 2014-15 earnings terms owing to the new state pension valuation of their national insurance record.
To encourage and enable those who want to work longer is a priority for the Government. That is the real solution to ensuring a comfortable and fulfilling later life. People having fuller working lives would not only help our pensions system to remain sustainable but could greatly benefit the economy. Research by the National Institute of Economic and Social Research has shown that adding just one year to people’s working lives would add 1% to GDP a year.
Recent polling indicates that many people want to work longer. A YouGov survey has shown that 74% of people in their 50s who have not retired would like to be in work between the ages of 60 and 65. To help older workers in the labour market, the Government have extended the right of flexible working to all employees. In the same YouGov poll, more women than men said that they would prefer to work flexibly or part-time before retiring. Of course, working longer also provides the opportunity to build up a bigger retirement income.
We know that some people cannot work. For some, that is because they have caring responsibilities; others will suffer from disability, making the continuation of work difficult. We must remember that women affected will be eligible for the same in-work, out-of-work or disability benefits as men of the same age.
For those who cannot work because they have caring responsibilities, carer’s allowance will be available. Those who get carer’s allowance are also awarded national insurance credits automatically.
The Minister needs to understand that the question is not whether women born in the 1950s need more national insurance credits. Almost every WASPI campaigner I have met has 40 to 44 years of credits already. There is no question of their needing to pay any more national insurance.
I do not think that the hon. Lady speaks for everyone. I am sorry that she derides the additional benefits that the Government have sought to introduce; I am sure that some women out there will appreciate the fact that, in 2011, credits were introduced to help grandparents and other adult family members who look after a child under 12 to help working parents. It is noteworthy that independent analysis by the Institute for Fiscal Studies has shown that the rise in women’s state pension age since 2010 has been accompanied by increases in employment rates for the women affected.
The reforms would leave more of those women, and their male counterparts, who really need the state pension better off than if we had retained the current arrangements. That is a better use of taxpayers’ money than spending on transitional arrangements, which will inevitably prolong gender inequality. I am minded to say that removing state pension age gender inequality is right.
When the first contributory state pension was established in 1926, men who reached 65 could expect to live for another 11.3 years. In 2014, however, a man who reached 65 could expect to live for another 21.5 years. Importantly, the Government listened to concerns expressed at the time of the 2011 Act and shortened the delay that anyone would experience in claiming their state pension, relative to the 1995 timetable, to 18 months. That concession, which came after the speech by the Secretary of State on Second Reading that has been referred to, benefited almost a quarter of a million women who would otherwise have experienced delays of up to two years. A similar number of men also benefited from a reduced increase. The concession was worth some £1.1 billion in total, and, as a result, 81% of women affected will experience a delay of 12 months or less.
It is argued by some that these women were not given adequate notice of state pension age equalisation. I do not accept that. Following the 2011 Act, the Department for Work and Pensions wrote to all those directly affected to inform them of the change to their state pension age, using the address details recorded by Her Majesty’s Revenue and Customs at the time.
I am conscious of time, I so will conclude. The decision to increase women’s state pension age is designed to remove the inequality between men and women. The cost of prolonging this inequality would be several billions of pounds. Parliament extensively debated the issue and listened to all arguments both for and against the acceleration of the timetable to remove the inequality. The achievement of this by 2018 was considered and approved by Parliament and there are no plans to make any policy changes.
I have only a minute to say what I want to say. A concession that affects only 250,000 women and saves £1 billion is nothing when there are £30 billion of savings and millions of women affected. A concession for 250,000 is not enough.
We have talked about the millions of women born throughout the 1950s living without pensioner benefits and often without income, so they are often working through their savings. Carers are hit very badly. Does the Minister think that he could live on carer’s allowance? I am sure he could not. There is opposition from all parties on the Opposition side, who will continue to fight this campaign. The Government must not close the door on 1950s-born women in the way they are seeking to do.
Motion lapsed (Standing Order No. 10(6)).
Boulby Potash and Teesside Unemployment
I beg to move,
That this House has considered Boulby Potash job losses and wider Teesside unemployment.
I am grateful for the opportunity to have this important debate on the recent announcement by ICL Cleveland Potash to cut 700 jobs at Boulby in my constituency, and to have a wider discussion of unemployment in Teesside and east Cleveland. The job cuts announced at Boulby Potash have hit the community of east Cleveland very differently from the closure, following liquidation, of Sahaviriya Steel Industries UK; there are a number of reasons for that. [Interruption.]
Thank you, Mr Davies.
The first reason for the different effect is that my constituency, in the borough of Redcar and Cleveland, has the largest population of miners in the UK. It is more than fair to say that the announcement came as a complete surprise to almost everyone—except some members of the management, perhaps. Only two years ago ICL repeated announcements that the mine had 40 years of potash that could be accessed. That has suddenly fallen to two years’ supply. There had been no sign that the business was struggling, whereas, by comparison, debt and coal shortages were routinely reported for SSI. It was undoubtedly weathering the storm that commodity prices have suffered since the beginning of this year. However, there were none of the early indications that one might have expected, given that the potential job losses run to three quarters of current employee levels. The proposals set out that 700 jobs of a workforce just shy of 1,000 are to go by 2018, with half of that happening by the end of this financial year. If anything, the mining industry in my constituency and neighbouring constituencies appeared to be on the rise, with the proposed York potash project.
I cannot proclaim strongly enough how much of a staple Boulby Potash is in the east Cleveland community. Generations of families have forged livelihoods on the back of the mine since the early ’70s, and now for hundreds of them there is the potential for that livelihood to be stolen away from them. In the early days of the mine, relatives of such people lost their lives to create a working mine and provide good, well-paid jobs for the community. The workers have been given this news in the run-up to one of the most stressful periods of the year. Despite what former Ministers may say, there is never a good time for someone to lose their job, but there is something particularly cold about losing it—or at least being informed about losing it—at this point, in the run-up to Christmas.
The latest job figures that I have do not even cover the impact of the collapse of SSI. However, for the record, the sad fact is that in the two boroughs that my constituency covers, Middlesbrough and Redcar and Cleveland, there are now 6,887 jobless adults and 1,610 young people signing on. There is also an impact in County Durham, where Thrislington quarry in Ferryhill is now under threat because of the effect on the requirement for limestone, which is a prerequisite for the production of iron in a blast furnace. The Government decided to announce, on the very same day as the Boulby job losses, that three local tax offices that provide employment for hundreds of people will be relocated to a centralised hub, which is at best an hour’s commute away if traffic is good.
It is sad that the Government are contributing to the loss of jobs in our area. In my constituency hundreds of people—probably well over 1,000, and up to 2,000—have lost their contracting jobs related to all the industries that my hon. Friend has been speaking about. I know that it is not in the power of the Minister as an individual, but we need a whole-Government approach and an extension of the help package for the Teesside area, where unemployment is going up in contrast to what is happening in the rest of the country.
My hon. Friend must have read my speech earlier, because that is one of the things I shall be asking for. The sheer volume of unemployment at private industrial sites in the past two or three months is such that a profound response at Government level is required. I suspect that many people in my constituency do not know whether to laugh or cry at how far removed the Government seem to be, given the position they have taken about the plight of an area that could actually be a part of the northern powerhouse agenda.
To return to the specific matter of Boulby, I seldom sign early-day motions and propose them even more rarely, but in 2010 I proposed early-day motion 1179:
“That this House believes that it makes economic and environmental sense to purchase salt, grit and potash from domestic sources, particularly during periods of increased demand; supports local suppliers such as Boulby Potash mine in Middlesbrough South and East Cleveland constituency; notes the boost this would give to these suppliers; further notes that this would avoid the unnecessary environmental cost of transporting goods from overseas; and therefore calls on the Highways Agency and the Department for Transport to wherever possible purchase from British suppliers.”
I still believe that it would not be unreasonable for any Government to take such action.
I care passionately about the issue, as I do about the steelworks and the UK steel industry, and I have raised it in a range of forums during my time in Parliament. I will give two examples. In June I asked the Secretary of State for Environment, Food and Rural Affairs
“what assessment she has made of the need for security of supply of potash minerals”.
and I received the following response:
“Defra has not made an assessment of the security of supply of potash minerals. The UK currently has one domestic mine for supply and therefore depends on some imports. Import statistics provided to Defra by the Agriculture Industries Confederation show that 135,000 tonnes of straight potash fertilisers and 389,000 tonnes of potash-containing compound fertilisers were imported into the UK from a wide range of EU and non-EU countries in the 12 months to March 2015 making up approximately 40% of UK consumption.”
Well, that domestic mine has indicated that it will no longer produce potash by 2018, and I cannot comprehend why the Government had not made that assessment previously. I asked the same question a few days after the announcement by Cleveland Potash, and I was referred to the Government’s previous response. To me, that sends the signal that the Government are happy to live off imports from foreign companies while our own industry collapses. I appreciate that the response did not come from the Department of the Minister who is present for the debate, but perhaps she will enlighten me and fellow Members as to why there has been no such assessment.
I called for this debate not only to address the devastating news at Boulby Potash but to set out the scale of the unemployment that has befallen Teesside in the past two to three months.
Of course, a chance to develop opportunities for people in Teesside has been lost in the past few days with the Government’s ditching of £1 billion of support for carbon capture and storage. A major industry could be developed from that, with major benefits for Teesside. The first industrial CCS project was on the stocks, but now we find out that the Government have withdrawn all funding from it. I hope the Minister will address what the Government’s hopes are for that industry, although that may not be her particular responsibility.
I thank my hon. Friend for going into that point—I was not going to raise it. Stan Higgins, who works for the North East of England Process Industry Cluster, has said that that project is still on track and private investors are still interested, but when the number of programmes was cut from four to one the Chancellor never gave any budget detail about the capital requirement. There was always £100 million floating around, rather than the £1 billion that was promised. Now we know, because of a statement given to the stock exchange at 3 o’clock during the comprehensive spending review speech last week, that all public funding for CCS has been withdrawn.
I think we are missing a huge opportunity. I do not think that Teesside should have the project—I think we should have more than one. CCS is a clear solution for fossil fuel-intensive energy production, and it is acutely needed for manufacturing. If we are going to compete with our European competitors, as well as at least trying to make a fist of it against Chinese imports in any processing industry, we need to be able to provide cheap energy and remove the problems that green taxes and green costs are applying. Ultimately, the biggest point is that CCS provides the manufacturing industry with a solution to carbon dioxide emissions. The UK as a whole—never mind Teesside—is missing a huge opportunity to take hold of that technology and become a world leader in it.
We have the Minister with responsibility for coal here today. There was a meeting on Friday in my constituency about offshore underground coal gasification. I wonder if that could also create high-powered, high-value jobs in our constituencies on Teesside. I would be obliged if the Minister could tell us what her Department’s attitude would be to that sort of project coming forward.
My hon. Friend must have the password to my laptop, because he is quoting my speech verbatim.
To go back to the issue of unemployment, Teesside has endured a tsunami of job losses recently—I genuinely feel that that statement is proportionate. I mentioned the closure of SSI, which has had an impact on its supply chain and on other related businesses with a link to the steel industry. That does not include the contractors affected, nor the loss of the Caparo steel site in Hartlepool. In Stockton, 700 contractors were left shattered at Air Products as it halted the construction of a second gasification plant. Admittedly that is because of technical issues, not economic ones, but no timeline has been given for when construction will be brought back, so those men and women will have to find alternative employment. Jobs will also inevitably go following the relocation of offices by HMRC, as my hon. Friend highlighted. On top of that, local councils and public services continue to feel an unprecedented squeeze on finances due to reductions in central Government funding, and job losses will inevitably follow.
I have spoken at length about the 700 job losses at Boulby. Hopefully I have made it clear that the labour market across Teesside and east Cleveland is beyond crisis point. Governments are meant to make the lives of their citizens easier and provide support in tough times. I cannot call what the Government are doing inaction, because they made the HMRC decision, but they have somehow made—or endeavoured to make—the situation worse in a difficult period.
My hon. Friend makes an excellent point about the HMRC job losses. As far as his own constituency is concerned, if those jobs now have to be consolidated, people will have to travel to Waterview Park or Longbenton. The journey for those people, especially from places such as Guisborough in his constituency, will be some five hours, and that simply is not sustainable. Those jobs, as he and I have experienced in the past, will simply wither on the vine. Is that not an accurate statement of what will happen on Teesside?
My hon. Friend accurately portrays the difficulty of not only the lack of jobs but the geography of the area.
I have mentioned the high number of private sector industrial jobs being lost, but we cannot forget the impact on well-paid, stable, sustainable public sector jobs, or the follow-on impact on small businesses. People are used to walking into their local tax office or simply picking up the phone to talk to someone there. Admittedly the Government have a reasonable agenda in trying to move towards an online system, but small businesses, in some cases, do not have the know-how, the capital or the time to do use such a system. They need to pick up the phone and get help immediately. I will go into that later.
The fact that we have just under 8,500 people officially registered as unemployed—I hasten to add that that figure is from before the job losses I am talking about today were recorded—shows the sheer degree of human waste and squandering of talent that this Government are presiding over. If those people were in productive work, they could be helping to build a better future and a better economy for Teesside. It is a waste of talent and a waste of human potential, and that is what makes the job losses even more devastating.
As a lot of the industries affected are specialised, finding suitable alternative employment is not straightforward, and the level of pay certainly cannot be matched by other local employers. If we take the example of face workers at Boulby, although their core pay is £28,000 to £29,000 a year, after bonuses they are probably getting somewhere in the region of £40,000 a year. The average income in the Tees valley is more around the £20,000 to £21,000 mark, so we are talking about 700 workers who are on double the area’s average wage. That will have a huge economic impact downstream. We do not have any more of the large-scale heavy industry employers to which there would be a good chance of skills being transferred.
Although welcome, the projects in the pipeline, such as the MGT Power plant, are some time away. If the Government are serious about the northern powerhouse, they must act in the meantime. The future of Skinningrove’s special profiles and the Teesside beam mill near Redcar is still uncertain. Leading figures from across Teesside have argued for a number of years for the need to diversify the economy away from large employers that are highly susceptible to the economic market, while keeping them in place. That continues to be the case, and sadly the fears have become a reality.
We must intervene, knowing that the market fluctuates, and help with the diversification. We cannot simply sit here and say, “This is the market,” again, allowing thousands of people to be shed, because I fear that the skills those people carry will inevitably go to other areas. That will have fiscal implications for our local area and its ability to pay for local services, especially in a political culture where our Government are devolving more and more to our local areas, while the ability of areas to retain their own wealth is being eroded and depleted.
This coming Saturday, I suspect we will all be supporting the Small Business Saturday initiative. It is more vital than ever that small businesses in my constituency are supported, because they need to grow and provide more employment opportunities for my constituents. Creating a mixed economy will require risks to be taken. However, to support and develop our existing process industries on Teesside, we need Government commitment to supporting developing projects such as the Teesside Collective so that it becomes the go-to location for future clean industrial development and Europe’s first CCS-equipped industrial zone. We need our area to be seen and developed as a prime location for the use of Durham coalfield gas—a non-conventional gas that is 50% cheaper than conventional gas—via gasification, so that we can address green costs and taxes for industry and ensure a cheap, indigenous energy supply.
My hon. Friend makes the case perfectly, as ever. Furthermore, if we had a CCS plant alongside our own supply of cheaper, higher quality gas, that would be an industrial strategy in and of itself, and private investment would flock there. I hope Lord Heseltine will report that back to higher levels of Government.
The two large-scale measures I have just described would be the basis of reigniting a new emphasis on industry upon the Tees, and I dearly that hope Lord Heseltine will seriously consider pushing and developing them under the Government’s inward investment fund for the Tees industrial conurbation.
In the interim, however, what my area needs is far more profound. We await a proper response to the five industrial asks for the steel industry. The SSI steel taskforce that I sit on with my hon. Friend the Member for Redcar (Anna Turley) needs to be immediately extended to cover the entire Tees Valley Unlimited local enterprise partnership area and to involve other MPs in the area. It is hopelessly unacceptable for the Government to leave that taskforce, with much less financial aid than promised, to deal with the unemployment circumstances of one industrial site and to wholly ignore the plight of workers at Air Products, Caparo, Boulby and their downstream contractor workforces. That has left me and my hon. Friends from the Teesside conurbation in the invidious position of being able to feed back help to ex-SSI workers, but absolutely nothing to others workers affected by job losses. Our job is to serve all our constituents, and having a two-tier system with preferential treatment for some steelworkers and nothing for potash face miners completely undermines our position as democratically elected representatives to this place.
There is another issue for the Government. Apart from Boulby Potash being the UK’s only domestic potash mine, supplying 60% of the British market’s potash, it is also of strategic importance as the UK’s largest domestic supplier of rock salt. A reduction in manpower will severely undermine the mine’s ability to produce, or indeed ramp up, production at critical strategic points in time for required increases of rock salt during heavy winters that the UK may suffer. Will the Minister tell me what assessment the Government have made of rock salt production and what contingency they have in place? Is she willing to meet with me about that strategic civil matter as a matter of urgency, given that the 45-day consultation at the mine began some time ago? The necessity of keeping any skills potentially required for a sudden increase in rock salt production at the mine during a cold winter in the coming months will undoubtedly have an impact on production levels.
Finally, my No. 1 ask, even if there is only one thing we can deliver today, is for those affected by redundancies at Boulby Potash to be included in the support package being provided to those at SSI, with the additional funding required to do so, so that all taxpaying workers in my area get the Government support they deserve.
I do not know whether the hon. Member for Redcar (Anna Turley) wanted to speak too, Mr Davies, but if she does, I will take as many interventions as she would like to make. That is never a problem.
I know—I only have 10 minutes.
I congratulate the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing the debate. Obviously, we do not agree politically, but I would be the first to pay tribute to the continuing work that he does on behalf of his constituents. He has come here with a list of demands, and quite properly so—there is nothing wrong with that. As far as I am concerned, the usual rules will apply: if I do not answer any of the questions that he has asked, my officials will of course answer them later, and the same goes for interventions that other hon. Members have made.
The announcement that Cleveland Potash plans to shed 220 direct jobs along with another 140 contractor jobs is extremely bad news. I would be the first to concede that, and as the hon. Gentleman said, it comes at a particularly difficult time for this part of our country in the wake of the closure of the SSI plant at Redcar. The impact is not lost on this Minister, nor on the Government: it is bad news for those workers and their families. The hon. Gentleman is right that there is something about the run-up to Christmas that makes these things all the worse.
I am very grateful to the Minister; she is extremely kind. Will she apply her mind to the plight of those workers who were employed through agencies in respect of the SSI crash, and who are now having to go to the redundancy payments service and are not getting a return, notwithstanding the fact that they are producing P45s to show that they were employees? They are being told that they were self-employed and that there is nothing down for them. Will she please use her good offices to extend the rescue package to include those people?
I will certainly look at that, and I am more than happy to discuss it with the hon. Gentleman afterwards. However, if I may, I will talk about the situation at Boulby, which is, of course, the subject of the debate.
The Government, unfortunately, cannot alter the level of potash reserves. We stand ready to provide support to the Cleveland Potash workers through the Jobcentre Plus rapid response service. Let me say to the hon. Member for Middlesbrough South and East Cleveland that, as the hon. Member for Redcar knows, when it comes to some of the rather peculiar decisions that are often made by jobcentres, saying, “You can’t have funding for this,” or, “You can’t do that,” I urge him to give me the examples—my door is always open to him and to other hon. Members—and I promise I will always do whatever I can to unglue some of the ridiculous rules that seem to exist. We cannot mess about. People are in danger of losing their jobs and we need to make sure that the support available for them is real support that delivers.
Our aim is to help all the workers who are affected, even though a final decision has not been made. However, I think we all know and understand where we are going in this unfortunate situation. I am told that the Department for Work and Pensions has already made contact with Cleveland Potash to see what can be done to limit the impact on staff, and officials in my Department are discussing how the company can provide the most effective support to the workers who will be affected.
I am pleased that the owners of Cleveland Potash have committed to the long-term future of the mine, particularly in developing their polysulphate product line. The commercial exploitation of that product is supported by the Government. In due course, as the product becomes more acceptable in worldwide agriculture, I hope that more jobs will come back to the mine.
This loss comes after significant job losses in the Tees valley, particularly with the liquidation of SSI, but also given what has happened with Caparo’s operation in Hartlepool and the pause—and it is a pause, we are told—in construction announced by Air Products in Cleveland. Let us hope it is just that—a pause—and that all then goes well. I know from my meetings with those directly impacted by the SSI closure how difficult a time it has been for everybody. That is not lost on me.
I thank the Minister for her generous offer to me. I will not take up too much time, because I am conscious that there is not a lot left.
I want to echo the point that my hon. Friend the Member for Middlesbrough (Andy McDonald) made. A number of people have come to me who are still experiencing ongoing issues, including unpaid overtime. People who are unsecured creditors have been told that they will not be allowed any of the money that was owing to them from the official receiver. There are also agency workers—particularly those working for Jo Hand, which is a company that went into liquidation a few days before, then set up under another name—who have not been entitled to a penny, so we have a number of outstanding issues. If it is okay, I will take the Minister up on her kind offer and get in contact with her directly about those issues. I would appreciate her support in taking them forward.
Yes, I urge the hon. Lady to write or email me and I will make sure all those concerns are directly acted upon. If we can help and make a difference, we absolutely will.
I am conscious of the time, so for the record I want to make a few points quickly about Her Majesty’s Revenue and Customs, which a number of hon. Members have mentioned. In terms of that decision, 2018-19 is the time when the changes will be made. It is important to note that they are not happening overnight; there is a period of time.
On the comments by the Secretary of State for Department for Environment, Food and Rural Affairs, I will take that up—I cannot comment now because I genuinely do not know anything about that. I hear what the hon. Member for Middlesbrough South and East Cleveland said about CCS. May I also say that we have changed the procurement rules? This is really important. Our new directive—our new rules on procurement—basically say that there are now no excuses for not buying British. It really is a big shift, not in Government policy but in the whole attitude and approach. We are making sure that people really do not have any excuses when it comes to procurement—they should buy British.
I also mention the appointment of Lord Heseltine of Thenford, which I know was controversial. It was my idea—I put that absolutely clearly on the record—to bring him in, because he is somebody who gets stuff done, who can bring folk together and who can connect various bits of Government to make sure that Tees valley now gets the inward investment, for example through working with Lord Maude, who sits in my Department and is responsible for trade and all that UK Trade & Investment does. I thought, and continue to believe, that it was a very good idea to bring somebody in with the experience and clout, if I can put it that way, to lead in the Tees valley and bring all these different people, ideas and resources together, so that we get exactly the sort of way forward and future for this part of the country that it absolutely needs and deserves.
Let me also put it on record that I am really proud of the huge amount of work that the Government have done, because it is not all bad news for the Tees valley, even though it has been a really bad few months. There is no debate about that—it has been dreadful. I do not disagree about the job losses and the numbers—they speak volumes, of course. However, we must not forget the huge amount of investment in the Tees valley, with the devolution deal and all that that will bring to the area. The area has huge resources in its people, its skills and its colleges. Notwithstanding this unfortunate time, it still has a great story and a huge future.
I remain to be convinced about the value of the devolution deal, but I welcome Lord Heseltine’s involvement in the project. I hope that the Minister might arrange for him to have “CCS” and “coal gasification” on his pad when he starts to decide what he can do and uses the clout that she is talking about.
I absolutely undertake to write to Lord Heseltine specifically on that point. For the record, the hon. Member for Middlesbrough South and East Cleveland does not only make speeches; he comes to me and makes his case to my face. I make no complaint about that, because he is doing his job. It would be great if more MPs took up such issues in the way that he does—apart from when we fall out, of course.
In all seriousness, however, I undertake to ensure that Lord Heseltine gets a copy of the debate. If the hon. Member for Stockton North (Alex Cunningham) or anyone attending or listening to the debate wishes to write something to me for forwarding, I will ensure that Lord Heseltine knows about people’s desires and dreams—what the hon. Gentleman would describe as things that can be realised as a reality and as a way forward, and that is important.
As the Minister is aware, the SSI site is a crucial piece in the jigsaw of the future of Teesside. A number of people have contacted us locally with plans for and ideas about what to do with the site, but they have struggled to get any response from the official receiver—things have been very quiet on that front for the past couple of weeks. Will the Minister be able to give a poke to encourage a response?
I absolutely undertake to do that.
The big ask from the hon. Member for Middlesbrough South and East Cleveland was for the support package. The package is very good and I am proud of the work that it is already doing. I will always remember the securing of those 50 apprenticeships as something we achieved—ensuring that those 50 young people continued their apprenticeships. I pay tribute to everyone who took them on. I am always willing to listen, but at the moment there are no plans to extend the support package.
Motion lapsed (Standing Order No. 10(6)).
Commuter Services (Chelmsford to Liverpool Street)
[Nadine Dorries in the Chair]
I beg to move,
That this House has considered commuter services from Chelmsford to London Liverpool Street.
It is a pleasure to serve under your chairmanship, Ms Dorries. I pay tribute to my right hon. Friend the Member for Witham (Priti Patel), who was the Essex representative on the taskforce set up by my right hon. Friend the Chancellor of the Exchequer to look at rail services from Liverpool Street through Chelmsford and Ipswich and up to Norwich, better known as the “Norwich in 90” project. I pay tribute to her for the work that she did before retiring from that committee on becoming a Minister, when I replaced her as the Essex representative. I am delighted to see that my right hon. Friend the Member for Saffron Walden (Sir Alan Haselhurst) is present. He has worked very closely with me and other local MPs on the perennial problems of rail services between Chelmsford and London. He also provides an added bonus through the work that he does on the West Anglia line from Stansted down to Liverpool Street.
We have a perennial problem on the line from Chelmsford to London. Chelmsford is a major commuting city, with about 8,000 people commuting down to London to work every day, as well as people commuting in to work in Chelmsford. They rely on a reliable, fast service to enable them to get to their place of work on time. I am sure Members will be aware that there is nothing more frustrating than constant delays in the service that mean that people do not get to work on time. Part of the problem is historical. The original line was built in a slipshod way to get a railway up and running swiftly. It has only two tracks: an up track and a down track. There is very little opportunity to increase it to more than two tracks, particularly in places such as Chelmsford where it goes through the city from one end to the other. What with the building of housing, offices and other public places, it would not be feasible to increase the number of tracks on the line.
I am pleased, though, that the Government have accepted the case for improvement. It is expected that, at the beginning of the next decade, an eight-mile loop line to the north of Witham will allow fast trains to overtake slower trains and contribute to increasing capacity on the line to Liverpool Street. I welcome the investment and congratulate those responsible for upgrading the track and improving the electrification—to be fair, that investment came from the last Labour Government as well as the coalition Government and the current Government. Such things are done, but obviously one does not see them as one sees new rolling stock. It is unseen work, but it is crucial to improving reliability and journey times.
Sadly, despite the latest official statistics showing an improvement in the reliability figures, that is not reflected in passengers’ impressions, as shown in Transport Focus surveys. It is interesting that on the Great Eastern main line, which goes through Chelmsford, overall satisfaction declined from 77% to 71% between spring 2014 and spring 2015. Given what my constituents have had to put up with over the past two months or so, I suspect that the current figure is even lower. Similarly, the levels of satisfaction with punctuality are poor. On the main line, the satisfaction rate is about 73%, and the overall figure for how delays are dealt with is a mere 33%. That is not acceptable in this day and age.
Too often, particularly on a Monday morning, there is utter chaos on the line. One of the main causes is the overrunning of weekend engineering works, which are the responsibility of Network Rail. Given the problems at London Bridge and Ipswich, one would have thought that Network Rail would have finally got its act together to ensure that overrunning work was not a regular problem, but unfortunately it is. For example, a week ago last Monday the whole line came to a grinding halt because of overrunning engineering works, which were compounded by the track repair machine having broken down on the line. My constituents were unable to travel on the line until around 11 o’clock in the morning, which is unacceptable.
Since then there has been another problem that was the responsibility of Network Rail. It put a late-running freight train—I believe it was coming from Felixstowe—on the line at the beginning of the morning rush hour, bringing absolute havoc to the trains. Given that a freight train does not have the same timetable requirements and needs as a commuter passenger train, what possessed Network Rail to run that late-running freight train during the morning rush hour? It was inevitable that that would have a significant impact on the efficiency of the commuter trains to Chelmsford or Liverpool Street, depending on where people work. That is very poor and seems to indicate a lack of planning and, quite frankly, of common sense.
We also have regular problems with signal failures, and sometimes electrification problems. There is sadly an issue with suicides, although they are obviously not the fault of Network Rail or the people who run the rail services. The line in question and the east of England do not have a good record on that. The British Transport police, local authorities and Greater Anglia, which runs the train service, are doing a tremendous amount of work to seek to minimise the problem, but sadly it happens too often. One hopes that the measures they are taking to minimise it will be successful.
We also have problems with the service itself, because trains break down, or doors jam mid-journey and will not shut, which of course causes delays. Those are historical problems owing to the fact that the rolling stock operating on the line is in excess of 30 years old. In this day and age, with so many people relying on an efficient, effective and punctual rail service, we should not be putting up with such antiquated rolling stock. That has to be dealt with.
On top of all that, my constituents are paying considerable amounts of money to use the service. If a zone 1 tube fare is not included in the ticket, a standard-class season ticket currently costs £3,728. Thanks to the actions of my right hon. Friend the Chancellor, who has stopped RPI-plus rail price increases, it will be rising in January by just £36 per annum, to £3,764. That is a relief compared with some of the previous increases, but my constituents say, quite reasonably, that if they are paying that sort of money they want a reliable service. If we break down the total on the assumption that people travel for 48 weeks of the year, over five years we come out with a current price of £15.53 per return journey, rising to £15.68 from January. For that price, people not unreasonably demand a reliable service.
The question is, what can we do to improve the situation? My first plea to the Minister is that Network Rail should be gripped and have the facts of life explained to it. It should have better planning for its engineering works to ensure that they actually finish when they are meant to. I warn the Minister that Network Rail is closing the network late on Christmas eve for a number of days to do major repair works. I think that is acceptable, because far fewer people use the railways during that period and that work needs to be done to ensure that the infrastructure is up to scratch. We must also ensure that there are no muck-ups by Network Rail and that the work finishes when it is meant to, so that engineering overruns do not cause utter chaos for our constituents trying to get to work on the first day of the running service.
The franchise is critical to the future of the line. With the new franchise, we want a commitment to provide new rolling stock—no ifs, no buts; we do not want sloppy seconds from elsewhere on the network. We want new rolling stock that is reliable, faster and can brake quicker so that we get the speeds up, have a more efficient and effective service and build on the infrastructure investment. We have to meet the “Norwich in 90” commitment. If we do that and adhere to the recommendations in the taskforce report, which my right hon. Friend the Chancellor enthusiastically endorsed and accepted, journey times in Chelmsford will improve. With new rolling stock, the new station that will be built at Beaulieu Park in the north-eastern part of Chelmsford, and the loop just north of Witham, which will allow faster trains to overtake slower trains, we can ensure that that happens.
I accept that our railways are like a supertanker: we cannot change everything overnight, particularly given the historical basis, but we can introduce short-term measures to ensure the service is regular, punctual and does not cause grief to my constituents. We can certainly take a grip of Network Rail. I suggest that we introduce a few more incentives to ensure that if it fails it gets punished with fines, as it was after the London Bridge disruption. We need fines that actually have an impact to concentrate the minds of those who are planning. My constituents deserve a better service for the season ticket price that they pay for their travel to and from work.
I wish to add a footnote to the speech of my right hon. Friend the Member for Chelmsford (Sir Simon Burns). I entirely endorse what he said; he hit on all the important matters that are of joint concern to my constituents and his. I stress the point that he made about the rolling stock. If Network Rail can find its way to making one or two track improvements in the short term, perhaps by eliminating crossings, the next most critical thing is the acceleration characteristics of the rolling stock, of which Network Rail should take advantage. In an intense timetable, the additional minute here or there can be crucial.
The class 321 stock, which provides most of the services to Chelmsford and beyond to Colchester, is old, unreliable and does not have the necessary acceleration characteristics. I am delighted that some emphasis has been put on that in the invitation to tender for the new franchise. I hope that the Minister, when choosing the franchisee for the next period, will ensure that rolling stock is given its proper due.
Ultimately, we need extra track capacity on the line if all the different ambitions of commuters, travellers and the Members of Parliament who represent them, right along the length of the line, are to be satisfied. They cannot all be satisfied within the present track configuration. We also need to hold out hope that Network Rail will realise the capacity limitations.
It is a pleasure to serve under your chairmanship, Ms Dorries. May I say for the record that, like my right hon. Friends the Members for Chelmsford (Sir Simon Burns) and for Saffron Walden (Sir Alan Haselhurst), you assiduously campaign on the railway service for your constituents?
It is incredibly important that we continue to talk about the issues on the line, as my right hon. Friend the Member for Chelmsford does. We discussed the challenges on the line on 28 January, and my right hon. Friend the Member for Saffron Walden also attended that debate. Since then, there has been a series of steps forward to improve services for the 8,000 commuting constituents of my right hon. Friend the Member for Chelmsford and for others from further afield. However, there have also been some real challenges. I will set out some of the things that are happening and offer some words of reassurance about what we will be looking for in the new franchise, which will start in October next year.
A series of performance improvement plans have been put forward by Abellio Greater Anglia in conjunction with its work with Network Rail, which have been approved by my Department. They were first given one in April 2014, to which it responded. Indeed, the performance, measured by the public performance measures, started to improve. However, it then dipped because, as my right hon. Friend pointed out, there were ongoing issues relating to signalling on the lines, and there was unfortunately a series of fatalities on the line.
Some services on those lines, such as those running into Enfield, were then devolved to Transport for London. In fact, those were the higher performing services, in terms of punctuality, so a new baseline had to be set for what good looks like for the remaining services. The Department is still having that conversation, so at the moment there is no firmly agreed baseline for the PPMs, although it is worth noting that the numbers on punctuality started to tick up in the summer before taking an unfortunate dive in the past couple of months. The reasons for that are severalfold, but they fall into two main groups. First, there was a series of fleet issues, partly relating to the old rolling stock. Secondly, there was a series of infrastructure problems, particularly relating to the classic adhesion problem of leaves on the line. Research I have seen shows that the preparation of the lines and the scraping-off of the leaves is not what it could be and is not done as assiduously by Network Rail as it is in other parts of the country. That is definitely something to work on.
As my right hon. Friend the Member for Saffron Walden said, capacity on the line is so stretched that a minute of delay exacerbates a series of problems for many commuters. Sadly, the ongoing station improvements at Chelmsford, which we all welcome, are a long way behind schedule as a result of a contractual dispute between the original contractor and the train operating company that has to retender. The train operating company is working hard to fix that problem. My right hon. Friend the member for Chelmsford said that there were some serious engineering overruns. Although there have been only four main ones over the past 12 months, their impact has been substantial. As he rightly pointed out, the most recent caused a shut-down of services at 11 am.
There has been a root-and-branch transformation of Network Rail’s approach to engineering works, particularly after the problems we saw last Christmas. Whether the works are major or minor, there is now a zero-tolerance approach to overrunning. The route operating directors are far more involved in decision making. I am disappointed that that is not coming through in these cases. I am particularly disappointed to hear about the late-running freight train, because it is policy that freight is always sequenced behind passenger trains, particularly during commuting hours, so I am disappointed to hear that that has not happened.
There are infrastructure problems on the line, but my right hon. Friend and other colleagues will welcome the fact that, since we last spoke in January, £170 million has been invested in railway lines from London to Norwich on a series of upgrades, and there has been a £20 million investment at the start of this short direct-award franchise, which includes the refresh of the existing rolling stock and some improvements on the class 317s and 321s.
I want to say a couple of words about disruption before I turn to the challenge of rolling stock and what is specified in the franchise. We are at a critical point for the railways. We are investing an unprecedented amount in railway and, indeed, road infrastructure over the next five years and that investment has to deliver on the ground. It is no good saying, “We have 2,000 engineering projects and, oops, three of them went bad.” That is unacceptable when thousands of people face disruption. I am pleased to tell my right hon. Friends here today that there has been an enormous review of engineering plans, a lot of contingency planning, and an evaluation of what happens in stations. I personally met the gold commanders at the various stations to assure myself to the best of my ability that the works will happen. The train operating companies have been present in all those review meetings.
It is fair to say that we are waiting for the new franchise to unlock the journey time improvements that we know are so crucial to the “Norwich in 90” campaign. I congratulate my right hon. Friends present, including my right hon. Friend the Member for Witham (Priti Patel), who has just joined us, because the aspiration would not be so advanced without Members’ assiduous campaigning. I hold it up as the poster child for what people need to do if they are trying to make improvements through rail spending in a region. However, until the franchise is in place and we get firm performance measurements, we will not see the level of improvement that we all expect, particularly for those constituents paying £3,728 a year.
We are in the process of letting the invitation to tender. I pay tribute to Members present for highlighting the importance of new rolling stock, but I want to say gently that the days of the Department absolutely specifying exactly what train operating companies should buy and do are over, which is a good thing. The commercial sector is involved in the industry so that it can bring its best innovation to bear, but the specifications that we have put in the franchise cannot be delivered without new rolling stock on many routes or substantial improvement to the newer existing rolling stock. I think we will all be pleased with what comes back in the bids. In this invitation to tender, the emphasis on rolling stock quality is greater than it has ever been. Its importance is firmly recognised
However, I do not want Members to feel that everyone is sitting around doing nothing and waiting for the franchise to happen. I have just been reading the correspondence that my right hon. Friend the Member for Chelmsford has had with the current managing director of the franchise holder, Abellio Greater Anglia, in which he says that it has
“engaged an external company to assist us in a major transformational change for our Engineering Team.”
The company is really trying to nail down the planning-led approach to engineering. The letter continues:
“The stated objective is to increase productivity by 30%, which will lead to greater reliability and availability”.
The franchise holder is therefore working hard to improve operations with the existing fleet.
I want to touch on suicide, about which my right hon. Friend the Member for Chelmsford has spoken movingly before. While the instances of suicide on the line have actually fallen on a year-on-year basis, it is still an absolutely tragedy when it happens and it can create enormous disruption for passengers. AGA is addressing shortfalls in measures to prevent suicides and is working on all sorts of services, particularly from organisations such as Samaritans, with which AGA is working closely, but it is an ongoing battle. New technology, such as intelligent CCTV that can identify people who exhibit behaviour known to result in a possible attempt on their life, is being trialled in the new control room in Romford, but it will take time to roll the programmes out across the network.
I will finish with a couple of quick points about fares and the future approach to the railways. I was pleased to hear my right hon. Friend talk about the fact that fares have been held down by an RPI-plus-zero accelerator this year and for the duration of this Parliament. It will be the first time in 10 years that fares will rise more slowly than wages, which is a good deal that is worth some £700 million over the Parliament to rail users. For that money, however, commuters from our constituencies expect to get a reliable service. With all the investment, it is imperative that franchise holders deliver their services, which is why the franchising process has been improved and is securely focused on passenger benefits, and that, ultimately, Network Rail delivers on its responsibilities in a way that does not create disruption through late-running engineering works.
Does the Minister agree that the rail service operator tends to get the blame for problems such as overrunning engineering work, faulty track or signal failure because it is at the sharp end, although it is in fact not responsible? Network Rail and its maintenance department are responsible. We do not want both organisations at each other’s throats, but it seems a little rotten for the rail operators to get the blame every time.
As a former Rail Minister, my right hon. Friend understands this better than almost anyone. He is absolutely right to say that various players are involved in problems that occur, but our constituents do not care. They just want to pay their fare, feel that they are getting a reasonable quality journey and get to work and then home to their families on time. One-off disruptions are clearly a problem, but the really insidious problem is the daily disruption on the parts of the network where we are undertaking massive improvement plans which leads to people being unable to say when they are going to pick up the kids from day care or when they will be in for a meeting in the morning. We are focused on such issues and we are addressing them. Most fundamentally, whether it is Network Rail or the operator or my Department, it is about putting the customer front and centre of railway decisions.
I will share briefly my theory of railway management. The railways have historically been run by gentlemen—only 17% of the workforce across the whole network is female—who probably had trainsets on their bedroom floors as little boys, but the problems with trainsets are twofold. First, all the trees are evergreen—bits of broccoli will do—and do not shed their leaves, so leaf adhesion is never a problem. Secondly, there are no teeny-tiny passengers to stuff into the train as it whizzes around the floor. I have been told by a departed senior person in the railway industry that were it not for passengers, the timetabling would be perfect. I assure all Members here that that my Department and I utterly reject that view. We will do all that we can, working with Network Rail and the operators, including Abellio Greater Anglia, to ensure that passenger interests are put front and centre of this unprecedented investment in railways.
Question put and agreed to.
I beg to move,
That this House has considered benefit sanctions.
I thank you for taking the time to chair the debate, Ms Dorries; it is a pleasure to serve with you in the Chair. I also appreciate the time that right hon. and hon. Members from across the House have taken to be present in Westminster Hall, especially given our sombre and difficult discussions in the main Chamber.
It is important to state that the Scottish National party accepts the need for some level of conditionality in the social security system and that sanctioning has been part of the system for many years. However, of great concern to us is the evidence that points to claimants being sanctioned in a hasty manner and at an increased rate, and the evidence that social security sanctions link directly to the exponential rise in the use of emergency food aid, or food banks.
We cannot allow conditionality and sanctioning to be a fig leaf for social security cuts. There is strong evidence that sanctions are being applied too quickly, with half of them being overturned on appeal. People cannot live off fresh air, so it is understandable that the Trussell Trust, the Poverty Alliance, Oxfam and others have directly linked increased food bank dependency to social security sanctions, delays in welfare payments and low incomes.
I will focus my contribution this afternoon on the report of the Select Committee on Work and Pensions entitled “Benefit sanctions policy beyond the Oakley Review”, which was published on 18 March this year, and on the written statement from the Secretary of State in response, dated 22 October. The report stated that
“expert and academic witnesses reported that the international evidence on the specific part played by the application, or deterrent threat, of financial sanctions in successful active regimes was more nuanced and far from clear-cut.”
Evidence from the University of Oxford and the London School of Hygiene and Tropical Medicine highlighted their comparative analysis of the social security sanctions systems applied in the European Union and in the USA, which indicated variable effectiveness in getting claimants back into work and that the UK’s system was one of the most punitive.
What was of great concern to me was the Committee’s view that it was
“concerned that support for claimants was likely to reduce or stop during a sanction period, as the claimant might stop engaging with JCP or the contracted provider.”
That correlates with the anecdotal evidence that I have from constituents, family members and friends who have decided against claiming the social security support to which they should be entitled because of the undue stress and aggravation that the system places on them, including sanctions, work capability assessments and threatening letters—often wrong—about alleged overpayments. We should not be getting ourselves into a place where people are becoming so exasperated by the system that they are self-denying the support available to them, whatever the consequences.
The Oxford and LSHTM research examined official data on sanctioning rates, employment rates and benefit off-flow from 2005 to 2014 in 375 local authority areas in the UK. The study found no relationship between local sanctioning rates and employment rates, but it found a strong relationship between sanctioning rates and off-flow, and that that relationship had become stronger since 2011, when there was an escalation in conditionality brought about by the introduction of the mandatory back to work schemes, followed by the changes in the Welfare Reform Act 2012.
For 2011 to 2014 the study estimated that for every 100 jobseeker’s allowance sanctions applied there was an associated off-flow from JSA of 42.4 persons. The study claims that only about 20% of those leaving benefit following a sanction reported having found employment, so what about the rest? Part of my primary concern is that the sanctions regime is being used as a fig leaf for social security cuts, whether direct or indirect, and that there is little evidence that the stated aim of Government regarding sanctions—that they push people into work—is playing out in reality.
That view is supported by Crisis in its March 2015 publication, “Benefit sanctions and homelessness: a scoping report”. The report highlights the fact that the number of JSA sanctions per 100 claimants has almost tripled between 2001 and 2014; that the average monthly number of JSA sanctions has rocketed from 35,000 up to October 2012 to nearly 85,000 thereafter; and that there has been a threefold increase in employment and support allowance sanctions between March 2013 and March 2014. I do not believe that all of a sudden, upon the election of the coalition Government and beyond, jobseekers and social security claimants became less compliant. Something else appears to be in play.
The Committee report was damning about the sanctions regime as it stands. The Secretary of State’s response was published in the House on 22 October. It focused on three main areas: the so-called yellow card sanctioning system; automated sanctions letters; and the at-risk or vulnerable groups. I will address each in turn.
The statement was a step in the right direction—we acknowledge that—but my colleagues and I none the less have significant concerns about the direction of travel. The Work and Pensions Committee called for a full and independent review of the sanctions regime, which we in the SNP have long called for, but the Secretary of State announced a trial yellow card system. A 14-day warning is welcome and a step in the right direction, but the introduction of the trial yellow card system shows that the existing regime is failing. Perhaps the Government will consider a real yellow card system, which would have not only a 14-day timescale for appeal, but a “first offence” warning without sanction. Perhaps the Minister will consider that.
I am also concerned that the Department will be reintroducing the automated system for sanctions letters, which will open the regime up to more mistakes being made than is already the case. I hope that the Minister will advise what support will be made to claimants to allow them to appeal quickly and at no cost to them. I would also appreciate the Minister’s guidance on how incorrect sanctions will be avoided under the automated system. At present, according to the Government’s March figures, 50% of the sanctions dished out are overturned on appeal. The Secretary of State said in his statement that the yellow card system would be trialled “early next year”, but no further detail has been forthcoming. Perhaps the Minister present will give this debate an exclusive and explain where, when and how the trial will work.
A commitment was also made to consider extending the at-risk group to include homeless claimants and those with mental health conditions, which would be important—that is important to all Members. I hope that the Minister will consider the issue carefully. My pitch today is for the Minister’s consideration to end in confirmation that people with mental health conditions and the homeless will be included in the at-risk groups and therefore exempted from the most excessive sanctioning levels. We want a root-and-branch review, but the immediate introduction of protections for those with mental health conditions and for those who are homeless will provide protection in the interim.
The Crisis report that I quoted earlier suggests that not only are homeless people disproportionately at risk of being sanctioned, but that sanctions in themselves increase the risk of homelessness as claimants are forced to cut back on housing costs. Clearly, homelessness only pushes people to the margins of society and further from the labour market, so we have strong evidence that sanctions force people into temporary and long-term destitution.
Where is the evidence to suggest that the stick is forcing people into work, which is what the Government claim as they apply the sanctions? How does removing people’s ability to pay their bus fare to a job interview, to buy an appropriate interview outfit, or to buy the food that they need to think clearly help a jobseeker into work? My argument is that it does not. Sanctioning simply pushes people further from the labour market and into destitution. Indeed, it would appear that the Government are struggling to justify sanctioning as well. In August this year it was discovered that in order to convince the public of sanctions’ worth, the Government had used fabricated quotations from fictitious people talking about their positive experiences of the welfare and sanctions system.
We cannot ignore the clear and absolute need for a full and independent review of the sanctions regime. There is little or no empirical evidence to suggest that sanctioning aids people into work that is relevant to their abilities and desires—never mind well paid or secure work—while there is a plethora of evidence that the existing set-up is driving people towards food banks and poverty. The Government cannot stick their head in the sand about the consequences of austerity at all costs and the impact of sanctioning social security claimants.
In conclusion, I appeal directly to the Minister: if she cannot listen to me or the SNP, will she please listen to the cross-party Select Committee, or to the likes of Oxfam, the Poverty Alliance, the Trussell Trust, Crisis and a swathe of other third sector organisations about their concerns about sanctioning, and will she instruct an independent review of the system? While such a review is carried out all sanctions should be halted as a new system is agreed.
I thank you, Ms Dorries, for your time this afternoon and I thank right hon. and hon. Members for their consideration.
It is a pleasure to serve under your chairmanship, Ms Dorries.
The UK Government brought in the sanctions regime to tackle the perceived culture of worklessness, which they used to justify the introduction of sanctions and conditionality as measures to change people’s behaviour and to incentivise people to find work. However, as I have recently been involved in the Welfare Reform and Work Bill Committee and listened to many hours of evidence from stakeholders, I know it is widely accepted, except perhaps by this Tory Government, that sanctions have a negative impact on people and our society. They are linked to poverty, homelessness, debt, stress, anxiety and mental health deterioration.
Recent studies suggest that the Government’s introduction of sanctions on JSA claimants has led to a significant rise in the number of people leaving unemployment benefits, but, as has already been mentioned, they are not returning to work. After June 2011 an estimated 43% of people who received sanctions went on to leave JSA altogether. As my hon. Friend the Member for Airdrie and Shotts (Neil Gray) mentioned, less than 20% of that group are recorded as having found employment.
Sanctions do not appear to help people return to work; they appear to help people slide out of view, and that in itself has huge implications for the welfare system. Despite a number of groups highlighting that, there has still been no comprehensive cost-benefit analysis of sanctioning, looking not just in narrow terms of unemployment benefits but at the bigger picture of health, homelessness and other social costs.
Sanctions come from a black and white place where people need to be punished for not doing as they are told. However, as we all know, life is not that straightforward. How can someone battling mental health or addiction who, owing to their chaotic lifestyle, misses an appointment be expected to respond to sanctions that ultimately plunge them into greater chaos?
The welfare system was designed to be a safeguard to help and support people in a time of need, yet that safety net has been ripped from under many people’s feet, leaving them vulnerable, in extreme hardship and in some cases at very real risk. Both Crisis and the Joseph Rowntree Foundation have said that sanctions are responsible for a significant increase in homelessness and rough sleeping. According to Quarriers, one in three homeless young people has been sanctioned.
Having worked in the Department for Work and Pensions for 20 years, I know that staff are in an impossible position when implementing these regimes. They often take the brunt of the claimants’ frustration and anger at the system. When I worked there, sanctions were used in extreme cases. They have their place, but a decision to impose them was not taken lightly. However, it seems that they are now the norm, leaving people destitute.
According to the Money Advice Service, a fifth of adults in the UK are over-indebted. In my constituency, 22% of people have reported being at least three months behind with their bills. Almost a third of them have a household income below £15,000 and rely on state benefits. Imposing sanctions, even for a short time, can throw hard-up families into arrears on rent and household bills that can take them months or even years to recover from. It could be argued that hardship payments are available, but people need to jump through hoops to get them and they are stripped of their dignity in the process.
People on universal credit have to pay back their hardship payments at a rate of 40% of benefits: the same amount by which hardship payments are less than benefits. In essence, universal credit sanctions last 3.5 times longer than their nominal length. These people do not need a brutal sanctions regime; they need a fairs day’s work for a fair day’s pay. People do not want to be on benefits. They want to be safe, have a roof over their head and food in their belly and to have some money in their pocket to spend. Austerity measures mean cuts, cuts and more cuts, with less spending resulting in fewer jobs.
The answer is to take measures to increase employment and grow the economy and then allow the DWP to revert to supporting people into employment, addressing the barriers to that and allowing staff to do their jobs. The key to doing that successfully is a positive relationship between the DWP adviser and the claimant, with the adviser having the autonomy and resources to address barriers to work.
It is a pleasure to serve under your chairmanship, Ms Dorries. I thank the hon. Member for Airdrie and Shotts (Neil Gray) for bringing the constantly relevant issue of benefit sanctions to Westminster Hall today. I am afraid that, in the time I have, I will barely be able to scratch the surface of trying to understand the Government’s approach to sanctions, which needs a comprehensive mauling. I do not have time to do a lot, but I will give it a try.
Before we can decide whether a system is fit for purpose —this applies to any policy—we first need to establish what it intends to achieve. The official Department for Work and Pensions line is that the system will help “motivate” people to look for work. Though Ministers insist that their approach to sanctions is backed up by evidence, it has never been quite clear where their supposed evidence is. It certainly does not come from the Department itself.
Recently, when I asked Ministers for statistics on the number of people who have moved into work after being sanctioned, they admitted that they had no idea. I refer the officials to question 11860, which I asked on 14 October and was answered on 21 October. Presumably there are therefore other reasons for their apparent obsession with the conspicuously “tough” approach brought in with the new rules, which are like sanctions on steroids. They were introduced in 2012 and our suspicions should have been raised when the DWP sent out press releases boasting of the record numbers of people being sanctioned.
In a typical release last year, the then Employment Minister, now unemployed—many in Wirral West would say deservedly—Esther McVey presented those figures as evidence that the Government were
“ending the something for nothing culture.”
If this system is about anything more than political posturing, the Government are doing an awfully good job of hiding it. After all, their own impact assessment for the 2012 changes acknowledged that there simply was not evidence to show that harsher sanctions would actually lead to more people moving into work. What we now know, thanks to a study published not by the Department but by academics from the Universities of Oxford and London in January, is that many of those who were sanctioned between 2011 and 2014 stopped claiming benefits altogether, but just 20% did that because they had found work.
Sanctions not only do not help people get into work, but make that much more difficult. That is especially true for those most in need of help with the transition from unemployment into work. People with mental health problems, for example, now make up a majority of people in the work-related activity group within ESA. In a survey conducted by Mind last year, 83% of people in that group said that the so-called help they had received, either from jobcentres or Work programme providers, had actually made their mental health worse, and 76% said that their experiences caused them to feel even less able to work than before. We have those findings on the one hand and on the other we have a sixfold increase in the number of sanctions for people on ESA.
The Government should go beyond their rhetoric and take a good hard look at the impact that these sanctions are having in the real world. Of course, most of us are already painfully aware of the reality behind that rhetoric. We have seen the evidence not just in our constituency surgeries, but in the ever-growing lines of people queuing outside our local food banks.
According to the Trussell Trust, since the new regime was introduced in 2012, 83% of food banks have seen an increase in the number of people urgently needing their help. We all acknowledge the extraordinarily valuable service that food banks provide in our local communities, especially to the most vulnerable, but that is not the only reason we have to be grateful for the Trussell Trust’s work: in recent years, it has scrupulously documented the stories people tell when they go to food banks, explaining why they need help. That has made an extremely important contribution to the wider sanctions policy debate.
The record compiled by the Trussell Trust provides the most comprehensive document we have had to date of the nastiness and ineffectiveness of the Government’s approach. Examples from food banks across the country include: sanctions in Richmond for missing appointments, despite not having enough money for the bus fare; sanctions in Birmingham for not providing enough evidence of applying for jobs online, even when the person involved told them they could not use a computer; sanctions in Nottingham for missing appointments to attend funerals and for visiting a loved one in hospital; and sanctions in Crosby for missing an appointment because the claimant was going to a job interview—an irony that seems to be lost on Ministers. If there is any logic or reason behind any of that, I simply cannot see it.
The Labour party agrees with the Scottish nationalists on this issue. It is not that we do not believe that there should be some form of conditionality behind jobseekers obtaining benefits, but frankly, the sanctions regime has gone far too far. Such stories—there are plenty of them, and plenty more where they came from—make a mockery of the Government’s claim that sanctions apply only to those who fail to “play by the rules” or who are
“wilfully rejecting support for no good reason”
as the former Employment Minister used to say.
It should now be clear to anyone capable of thinking straight on sanctions that the entire system is so fundamentally broken that it is almost beyond repair. We urgently need a root-and-branch reform, and we can do that only on the basis of evidence. We therefore ask yet again, as does the Work and Pensions Committee, for a full and independent review to consider the fundamental questions of what these sanctions are supposed to achieve, whether they are working and, even if they are, how much they are costing.
That is what my colleagues and I have pushed for repeatedly during recent debates on the Welfare Reform and Work Bill. As the Bill moved through the Commons, we tabled an amendment to it in Committee and on the Floor of the House that would have forced the Government to set up a comprehensive independent review to address those issues. Every single Member on the Government Benches voted against establishing such a review. I asked the Minister this question at the time, and I will ask her again today: if the Government are so sure of their ground when it comes to sanctions, why are they so frightened of an independent review? Exactly what are they afraid of? I am still waiting for an answer to that question, but I am not holding my breath.
Order. There has been some confusion, which I will put down to the fact that SNP Members are new and may not yet be fully au fait with how Westminster Hall and Parliament work. It is normal practice, when a Member wants to speak, to catch the eye of the Chair and to rise. I left time, following the speech by Mr Gray, for other Members to rise, and nobody gave any indication that they wanted to. This is unusual, because the Opposition Front-Bench spokesperson has already spoken, but given that we are okay for time, you may make some brief points, Mr Boswell. Although my daughters frequently accuse me of having eyes in the back of my head, I cannot read your minds and do not know that you want to speak.
It is a pleasure to serve under your chairmanship, Ms Dorries. I thank my hon. Friend the Member for Airdrie and Shotts (Neil Gray) for securing the debate and for his insightful and informed speech on the subject. We represent neighbouring constituencies, and I see he has become as aware of and concerned as I have about the extent of benefit sanctions in the North Lanarkshire area and their far-reaching impact on not only the individual being sanctioned but their family, who are also affected.
I welcome the contributions made by all who have participated in the debate. I think I can safely say that every Member in this Chamber will have met constituents who have faced unfair benefit sanctions. The other week, I heard from a constituent who was faced with a four-week sanction after failing to attend a jobcentre meeting. The reason he missed the meeting was because he had a job interview—ridiculous! He is currently in the process of appealing the DWP’s decision, but in the meantime, he is faced with the prospect of trying to get by in the run-up to Christmas without any income whatever.
As has rightly been stated by many hon. Members, benefit sanctions have made a direct, substantial contribution to the increased use of food banks. From October 2014 to October 2015, the Coatbridge food bank has seen a 35% increase in referrals. According to Chris Baxter, the food bank’s manager, a substantial contributing factor to that increased use is benefit sanctions. I thank Chris and his staff for their efforts.
On a point of order, Ms Dorries. I do not know if this will help with your chairing, but may I make it clear that the Labour party sees entirely eye to eye with the Scottish nationalists on this issue? There is unlikely to be anything they raise that I would want to argue with them about.
In addition to causing a rise in food bank use, benefit sanctions contribute to the rising fuel poverty seen throughout these isles. According to Citizens Advice Scotland, benefit sanctions have directly contributed to the 130% rise in fuel poverty in Scotland, with 40% of Scots now living in fuel poverty—a statistic I find completely unacceptable.
Ultimately, benefit sanctions condemn the individuals faced with them to a cycle of poverty, given the impact on food poverty and high-interest debt, as many individuals take out long-term loans with high interest rates. Benefit sanctions also condemn the children of the people faced with them. We now live in a country where a growing number of people are punished for being poor—poor and paying for it—from the day they are born, and are provided with little means by which to escape poverty, so that they will always be poor. That needs to change, and ending the system of inhumane benefit sanctions is a first step in that direction.
It is an honour to serve under your chairmanship, Ms Dorries. I thank my hon. Friend the Member for Airdrie and Shotts (Neil Gray) for securing this important debate.
The Government continue to claim that the claimant commitment ensures that requirements for claimants are reasonable, but their own research shows that around half of claimants say that the commitment contains actions that do not take account or consideration of their personal circumstances, are unrealistic or simply do not increase their chances of finding work. The Government are ignoring Work and Pensions Committee recommendations, and I hope the Minister will be more receptive today and note my concern that those recommendations do not appear to have been adequately considered.
Sanctions remove all of a claimant’s jobseeker’s allowance and all of the personal allowance component of ESA, leaving people in a position of utter destitution. Hardship payments are supposed to be available to people who have been sanctioned. However, unless they are deemed vulnerable—a very tight definition that does not even consider homelessness as a sign of vulnerability—they cannot apply for two weeks.
I can put myself in the shoes of those who fall foul of the sanctions regime. If I were reliant on benefits to survive, I would probably have little or no savings. I honestly do not know how I would survive for two weeks with no income. Even if I were successful in my hardship application, I would receive only 60% of my sanctioned benefit. I have concerns that the current system has the potential to push otherwise law-abiding people to criminality in order to survive. It is abhorrent for people to face destitution, and it is thoroughly heartless of the Government to continue with such a ruthless system. I welcome the private Member’s Bill promoted by my hon. Friend the Member for Ochil and South Perthshire (Ms Ahmed-Sheikh), which seeks to introduce automatic hardship payments for sanctioned claimants and to remedy some of the problems in the current system.
The sanctions regime is also incredibly unfair on front-line staff in jobcentres. I am aware of a recent incident at a jobcentre in my constituency that resulted in staff having to phone the police. The reason for the incident was that a person who had been sanctioned and, as I understand it, not adequately notified of the sanction, visited the jobcentre to protest, and the situation escalated. That does not seem to be an isolated incident. From what I can tell, there is a broken process in place.
In summary, I would like responses from the Minister to the following questions. Can figures for the number of people arrested during their sanction period for shoplifting offences be provided? What is the reasoning behind the two-week hardship rule, and has it been recently reassessed? What consideration has been given to the private Member’s Bill on automatic hardship funding and to the practices of notification of sanctions for all those affected?
It is a pleasure to serve under your chairmanship, Ms Dorries. I congratulate the hon. Member for Airdrie and Shotts (Neil Gray) on securing the debate, because it not only allows all Members to reflect their reviews on this important issue, but gives us a chance to discuss conditionality alongside full employment and how we can encourage and support people back into work. The hon. Gentleman raised points that we have discussed previously. As he is a new spokesman for his party, I congratulate him on that and I look forward to working with him.
The debate has been wide-ranging, but I would like to start by restating the importance of conditionality and the role that that plays in our welfare system, and I will outline the principles behind the use of sanctions as part of the approach to help move people into employment. The hon. Gentleman and all hon. Members have made important points about the system, and I will outline some of the recent developments and the improvements that we are making following the recent report on sanctions by the Select Committee on Work and Pensions as well as the independent Oakley review.
The role of conditionality is best highlighted by the independent Oakley review, which said that sanctions are
“a key element of the mutual obligation that underpins both the effectiveness and fairness of the social security system.”
The words “effectiveness” and “fairness” are particularly relevant, because we know from claimants that there is a positive impact on behaviour. Nearly three quarters of people on jobseeker’s allowance and more than 60% of those on employment and support allowance say that sanctions play a role in helping them to understand the system. They have the claimant commitment in particular, but it helps when it comes to seeking employment and it provides a framework for them. The number of sanctions has fallen by around 40% in the last year, and ESA sanctions have stabilised as well. We should recognise the point about mutual obligation that the Oakley review describes and that sanctions can provide the right support for people to move into employment.
I do not really understand what the Minister is saying. Perhaps she can help me by explaining it a little more. Is she saying that claimants say that it is helpful for them to have sanctions and that without sanctions, they would not understand what the system was?
We know from claimants that the principle of conditionality and the claimant commitment have a positive impact on behaviour. Nearly three quarters of people on JSA and over 60% of those on ESA say that sanctions make it very clear to them that they will follow the rules, in terms of the claimant commitment and their discussions with work coaches. Those rules will also help them to gain employment, so they understand the discussions and dialogue that take place with them with regard to conditionality.
Further to that point and the helpful intervention from the Labour shadow Minister, does the Minister not accept that, when a claimant has been sanctioned, that removes their ability—for a long time, because these are often cases involving people who have very little means—to access the services and job interviews and all the other issues associated with getting back into work? Does she not accept that and see, in a number of cases, that it is clear that the sanction has damaged the claimant’s ability to get back into work?
Specific to individuals who have been sanctioned, first, there is a proper process on sanctioning, so we must not lose sight of that. That process includes a tailored claimant commitment and an action plan, so that individuals know what is expected from them, and importantly, the support that they will access and get from jobcentres and work coaches. The hon. Gentleman also mentioned mental health, which I will come on to. With regards to the proper process on sanctions, we have safeguarding and hardship payments, and those provide the support arrangements for people who are subject to a benefit sanction.
As I said, a sanctions process is in place. It is a proper process that includes the claimant from the start, so the claimant is fully engaged in the process, the discussions and the claimant commitment or the action plan, which clearly states what is expected of them.
On the overturning of sanctions and appeals, I cannot comment on individual cases, but I emphasise that the claimant commitment and the action plan are undertaken with the claimant from the start. The parameters are there. The individual knows exactly what is required of them. Importantly, it is a two-way process, with work coaches and the jobcentre. They set out not only what the claimant commitment is and what is expected from the individual, but importantly, the support that they will provide to that individual.
I know that a few cases were highlighted. The hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) mentioned a couple of cases. I am very happy to look into those, if she would like to share them with me after the debate, and to work through those individual cases with her. I will come on to the point made by the hon. Member for Airdrie and Shotts about individuals with particular conditions, such as mental health conditions, or with caring responsibilities or disabilities. Individuals have different circumstances, as we all recognise. It is absolutely right that individual circumstances, conditions and responsibilities are taken into consideration and that claimants are given a full opportunity to provide the good reason for not complying when a decision is made by the decision maker.
Coming back to the point about process, there is, of course, the opportunity to have a mandatory reconsideration, whereby there is a further opportunity, on an individual basis, to provide information and for more facts to be considered.
The Minister is being very generous in taking as many interventions as she has. She has moved back to process, on which I wanted to ask her a question. She said that the number of sanctions is going down, but a large number of people are moving on to universal credit, and the Department for Work and Pensions does not publish statistics for those who have been sanctioned on universal credit, as I understand it. Will the DWP undertake to start publishing statistics on people who have been sanctioned who are getting universal credit?
If I may, I will come back to the hon. Lady on that point. She will be fully aware that universal credit is being rolled out and will be rolled out fully by April next year. However, I will come back to her on the point about UC and sanctions.
I was making the point about the process and support for claimants with health conditions. In addition to looking at any other cases that Members would like to raise with me, I make the point that jobcentre staff are trained to support claimants with health conditions, and mental health conditions in particular, during their job search and have access to more expert advice if that is needed. With that, we are ensuring that safeguarding measures are put in place to protect vulnerable claimants, particularly ESA claimants, with mental health conditions. We have a process and a system whereby ESA claimants, when engaged with the jobcentre, can receive a home visit from a visiting officer, should that be required. It is also fair to make the point that, with the Work programme, providers must make every attempt to engage on a face-to-face level if they identify a claimant as vulnerable.
The debate gives me the opportunity to raise with the House the fact that for mental health claimants in particular, the Government have outlined a new joint unit, very much focused on the Department of Health working with the DWP, looking at individuals with health conditions and health barriers—mental health being one of them—and at how we can provide more tailored and integrated support to help those claimants, many of whom, it is fair to say, are on employment and support allowance and are furthest away from the labour market.
More than 60% of ESA claimants say publicly and frequently that they want to work, but we need to find the right journey and support for them to get back into work. This Government have just started that important work through the new joint health and work unit of the two Departments. That is a positive step forward, and I look forward to working with all right hon. and hon. Members to see how we can advance.
The hon. Member for Airdrie and Shotts mentioned the yellow card early warning system, which was announced in response to a recommendation by the Work and Pensions Committee in its recent report on sanctions. Its Chair, the right hon. Member for Birkenhead (Frank Field), welcomed our response and, importantly, our willingness to engage with the Committee to ensure that the conditionality system works as it should. In our response to the Committee, we announced that we would trial a sanctions warning system giving claimants a further two weeks to provide evidence of good reason before a decision is made. It is important that that will strike the right balance between fairness and conditionality. We intend the trial to operate in Scotland from March 2016 and to run for approximately five months. A full evaluation of the trial will be undertaken, and the findings will be available from autumn 2016. As I said, I am happy to discuss the findings and the roll-out as it continues.
We have responded positively to the independent Oakley review. As a result, we have worked with behavioural insight experts to enhance our engagement, our approach and the way in which we communicate sanctions. We have published a JSA sanctions fact sheet through Government channels; we are improving the clarity of the JSA and ESA hardship application process; and we are making improvements to the payment process to ensure that payments are made within three days. We are very clear about that, as we stated in our response to the Work and Pensions Committee. We have accepted all 17 of the Oakley recommendations to improve the process, and we will undertake a number of improvements to JSA and ESA sanctions. The Chair of the Select Committee made it clear that he is pleased that the Government accepted its approach and many of its comments on sanctions, and particularly our willingness to change.
Food banks have been mentioned. We are trialling the DWP working with food banks in Manchester, and we will report back on the observations from that.
In conclusion, the employment support offered by jobcentres has been based on conditionality, but it has also been personalised to help people into employment with wide-ranging provision of skills and employability support. There are clear expectations on people under the conditionality system, such as work search expectations, which we have touched on in the debate. A key part of our employment and support programme is the principle of conditionality, and we will keep our sanctions process under constant review to ensure that it continues to function effectively and fairly. We will also work with the Work and Pensions Committee, and we will take on board the views and comments that have been aired this afternoon.
I thank all Members for their contributions. They have all been fair, but also have shone a light on what is going on for many hon. Members locally. My hon. Friend the Member for Ayr, Carrick and Cumnock (Corri Wilson) made an impassioned speech based on her knowledge of the system from her working life. That brought great scope to the debate.
My hon. Friend the Member for Coatbridge, Chryston and Bellshill (Philip Boswell) made another fantastic speech, elaborating on local issues that we share, as we represent neighbouring constituencies. I am sorry that given the circumstances, which are understandable, he could not elaborate further, particularly on issues such as fuel poverty. I know he was very keen to get across points about that.
My hon. Friend the Member for Rutherglen and Hamilton West (Margaret Ferrier) made good points about how any one of us who might find ourselves relying on social security support at any point in our lives would respond to being sanctioned. She also mentioned the Bill being promoted by our hon. Friend the Member for Ochil and South Perthshire (Ms Ahmed-Sheikh), which I fully support.
I greatly appreciate the comments of the Labour shadow Minister, the hon. Member for Islington South and Finsbury (Emily Thornberry). I thought that her position was rightly very close to that held by the SNP. She reiterated that the research showed that just 20% of the 42% of people who had left JSA after being sanctioned had reported finding work. I thank her for her supportive comments and for her flexibility over how the debate happened this afternoon.
I also thank the Minister. I appreciate her personal comments to me, but also the way she made her contribution. She acknowledged that the points that Opposition Members have been raising are important, and I welcome that. She mentioned hardship payments. We have to realise that they are at a level far less than the normal income that people are used to. Even though people are receiving those payments, we have to consider the impact on their lives in the short, medium and long term.
The Minister said that circumstances had to be taken into consideration, but she stopped short of saying that the at-risk groups would be expanded to include people with mental health conditions and the homeless. I hope that we can work on that over time. She said that 60% of ESA claimants say that they wish to get back into work. My experience is that far more would work if they could, but they feel that they have been unfairly assessed. The cuts to ESA that are to come will hinder people who need that extra support to get back into work, particularly those with mental health conditions. I hope that the Minister will take that issue away and consider it with colleagues.
I thank the Minister, my colleagues, the Labour shadow Minister and you, Ms Dorries. I look forward to making further progress on these matters in the coming weeks and months.
Question put and agreed to.
That this House has considered benefit sanctions.