My Lords, to try to pre-empt any teasing I shall apologise for putting my notes on a stand, but the alternative is to have them in very large font.
I support the equalisation of the pension age, although I think it has been too compressed. However, one cohort of women feel that they have been unjustly treated. I want, in particular, to raise the issue of those women born between April 1951 and April 1953. Women older than them will have retired at a younger age and enjoy their pension for longer. Women younger than them will qualify for the new higher pension. They are caught in the middle. They have experienced up to three years’ delay in receiving their own BSP from the age of 60, only to find that men born in the same year as them will, unlike them, get the new state pension.
Men are sailing smoothly towards the new pension, and for them nothing has changed. Women have faced mounting instability as their pension age is deferred. They have waited longer but got nothing for it, and they cannot afford to defer which, if taken as a pension increment, might bring them to the new state pension level. This is essentially the problem of government introducing a new and very welcome state pension, while being still in the process of equalising the state pension age. I recognise the difficulties that inevitably come with that.
I suspect that the Minister will say that given that women are drawing the old pension for two extra years, and that given women’s greater longevity, they will on average—and I bet it will be another mean average, not a median—be better off than men. There will be a sort of bell curve; they will be better off at the beginning, then not better off, and if they live that long, there will be a crossover point where women who live longer—it could be at 81 or 82—finally draw ahead in this lottery.
Averages, as the Minister knows very well, are deceptive. A working-class woman is likely to live less long than most of your Lordships—male Lordships—in the House at the moment, and therefore those figures will not apply. We will return to that debate obviously at much greater length when debating life-expectancy increases. Therefore any particular women may well be worse off.
However, it was noticeable that the Minister in the other place, while using those arguments in the debate on this issue in the first amendment there, did not draw the Committee’s attention at any point to the pension credit rules. Those rules are very interesting, very relevant, and, I think pretty devastating of the Government’s case. Is it not funny that they were not mentioned?
At the moment, many poorer men who have dropped out of the labour market between 60 and 65 are able to draw full pension credit on equal terms, ages and rates with women who are getting the BSP plus pension credit. In the same way—and this is, of course, part of the European directive on equality—men could get a winter fuel payment or a bus pass at the same age as women, which was at women’s BSP age, from 60 on, not at their own retirement age. The same rule applies to pension credit.
Therefore, when women’s BSP age was 60, men could draw pension credit to top up their IS for five years before becoming eligible for their own BSP at 65. When women’s BSP age rose to 62, men could draw pension credit from 62 until their retirement age—there are no cliff edges for them. They are now effectively getting an income the same as the BSP and the same as women at age 63.
Currently 167,000 men between 60 and 65 draw pension credit. That tops up their income support of nearly £70 to the standard pension credit figure of nearly £140. It doubles it. Incidentally, a higher number of men between the ages of 60 and 65 draw pension credit than the number of men between 75 and 79. To put it another way, just under a fifth of all men who draw pension credit—although some, of course, may be in couples—draw it before their state pension age. That is great for them. However, unlike women, when they reach 65, after 5 April 2016, they move smoothly on to the new and more generous state pension. We did not hear a word of this down the other end but, in other words, men have had a double protection: pension credit on women’s terms, followed by the new state pension on men’s terms. Not only were they not disadvantaged by being male, they were actively protected and, to that degree, favoured.
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As I say, I thought it odd that the Minister did not choose to mention that in the other place. Instead, he spent most of his speech comparing this cohort of women with those women younger than them and those women older than them, to his satisfaction. He may well be right, statistically. However, he did not compare them with men, which was the whole point of the discussion, after all. Again, it is curious. By contrast women face a delayed retirement age, with of course no access to pension credit before it, but will then not be able to move on to the new pension when they reach retirement. You can understand why they feel they have been discriminated against—because, compared to men of the same age, they have.
The Minister may remind us of the cost of this amendment—some £150 million to £200 million, we were told down the other end. I remind him that, as the pension age rises for women until it reaches 65, thousands of men will each year drop out of the pension-credit-receiving cohort—they run alongside the women’s increasing pension age—until, by 2018, no man or woman will receive pension credit until they are 65, and then only if they fail to qualify for the new state pension. In 2009-10, 235,000 men aged 60 to 64 claimed pension credit, giving them effectively the same income as a woman on BSP. By May 2013, there were 167,000 men—that is today’s figure—a drop of almost 70,000, because women’s pension age had risen by 18 months. The savings from that drop in men no longer claiming pension credit would go a long way to meeting the cost of this amendment. I do not have enough stats to do a proper calculation; I have tried, but I can only guesstimate: for every year of the BSP age raised for women, the Government make—I think—up to £175 million of savings from men who drop out of the eligible cohort for pension credit. Obviously those savings will end when women equalise at 65, but in the meanwhile those savings could be set against the putative cost of a lower figure—some £150 million—for this amendment.
The Minister may say that those savings are not available as they have already been built into HMRC forecasts. He may not use that argument at all—I do not know—but, if he does, why would he accept that? HMRC has already claimed for itself all the savings from the rise of women’s state pension age, and all the £5.5 billion coming from the NIC changes. If it now claims the pension credit cohort savings from men as well, the pattern seems to be that all savings go to HMRC, so by definition there is never any money available to correct even quite honest anomalies or injustices.
Finally, the amendment applies only to women ordinarily resident in the UK. The Minister will know that there is well established case law on “ordinarily resident”, “habitually resident” and the like. This should ensure that the money does not flow to overseas women with little or no connection to this country, which the Minister in the other place was so anxious to avoid. Steve Webb moved amendments in the other place to that effect on bereavement benefits in July, so it is clearly appropriate to add this new subsection.
I do not accept the Government’s argument. This cohort of women is not gaining a lower pension but for two years longer compared to men, which in government eyes sort of evens things out. On the contrary, the pension credit rules have given protection to men—no cliff edges—which is now effectively denied to women. As that protection for men falls away as women’s pension age rises, it offers savings which, so far as I can tell, would substantially finance this amendment. That is fair, realistic and affordable; I hope that the Minister agrees and will think again. I beg to move.