HL Deb 24 March 1981 vol 418 cc1056-8

2.53 p.m.

Lord Winstanley

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government what would be the cost to public funds of a reduction of national insurance pension age for men to 63 years, if allowance is made for consequential job vacancies being filled by men or women who are at present unemployed.

Lord Cullen of Ashbourne

My Lords, if the pension age for men were reduced to 63, it is estimated that the net cost to Government funds for a full year, at November 1980 rates, would be in the order of £600 million. This estimate takes account of the savings resulting from consequential vacancies expected to be filled by people on the unemployment register.

Lord Winstanley

My Lords, while thanking the noble Lord for that Answer, so far as it goes, may I ask whether he would not agree that if we have to plan for major unemployment in the future it is surely very much better for all those concerned, and for society as a whole, that these enforced periods of leisure should come at the end of the working life rather than at the beginning?

Lord Cullen of Ashbourne

Yes, my Lords, but one cannot leave the financial aspect out of it altogether. The calculation of £600 million was based on the pattern of employment remaining the same as it is now, with men between 65 and 70, and two-thirds of the vacancies being taken up by those on the unemployment register. That is because all vacancies will not be taken up, nor will there always be qualified people available in the areas concerned to take them up.

Lord Derwent

My Lords, may I ask what the saving would be if the retirement age for ladies were raised to 63?

Lord Cullen of Ashbourne

My Lords, I could not actually tell you that, but I could say that if we made the pensionable age for both men and women 64¼ it would even itself out completely. But it might be rather difficult to sell the idea to women, who have been expecting to receive a pension at the age of 60.

Lord Shinwell

My Lords, is the Minister saying whether the proposition embodied in this Question means that, if I rendered myself unemployed, I would be entitled to all the money that emerges between 63 years of age and 96?

Lord Cullen of Ashbourne

My Lords, nobody deserves it more than the noble Lord.

Lord Shinwell

My Lords, then could I pursue the matter now that I understand that I deserve it? Is the Minister aware that I am not the only one concerned? I see around me and opposite me others here who are also concerned. There is a vast difference between 63 years of age and over 90. Obviously the Government owe some of us an awful lot of money!

Lord Cullen of Ashbourne

My Lords, things have changed a little in pension arrangements since the days when the noble Lord started work.

Lord Whaddon

My Lords, can the noble Lord clarify whether the figure of £600 million is calculated on the assumption that all the 63–65 year-old band would retire, or have any calculations been made as to the proportions of those who would retire and those who might wish to remain at work?

Lord Cullen of Ashbourne

My Lords, I tried to explain that. We are assuming that for people between 63 and 68 the pattern would be the same as it is now for those between 65 and 70.

Lord Avebury

My Lords, taking into account the saving in unemployment benefit that would have to be paid, has the calculation of £600 million also taken into consideration the income tax that will be paid by the young people who will find work as a result of this reduction and also of the indirect taxation such as VAT that will be paid on the additional purchasing power that would be generated?

Lord Cullen of Ashbourne

My Lords, I think all these matters have been taken into account.

Lord Kilmarnock

My Lords, arising out of the concern for the unemployed of the noble Lord, Lord Winstanley, would the Government consider raising the disregard figure which an unemployed person may earn while drawing unemployment benefits, particularly if they are thinking of taxing these benefits? May I further ask the noble Lord whether the Government would consider a two-tier unemployment benefit, allowing those who opt for the lower tier to earn on the lines permitted to pensioners such as the noble Lord, Lord Shinwell?

Lord Cullen of Ashbourne

My Lords, if I may, I will write to the noble Lord on those points.

Lord Wallace of Coslany

My Lords, would the Minister not agree that a lot of men at 65 cannot afford to retire at the present time, due to the increasing cost of living and the miserly approach of the Government?

Lord Cullen of Ashbourne

Or any other Government, I imagine one might say, my Lords. I am not sure that this is really a point I can go very far with.

Lord Leatherland

My Lords, would it not be cheaper and more beneficial than the suggestion made in the Question if an increase in pension were granted to those over 80 years of age? I am afraid I must declare an interest.

Lord Cullen of Ashbourne

My Lords, I think the noble Lord and his noble friend Lord Shinwell have a very similar view on this matter.

Lord Winstanley

My Lords, if jobs are to continue to be in very short supply, is it not high time that we started dividing such work as is available a little bit more fairly throughout the community as a whole?

Lord Cullen of Ashbourne

My Lords, I think I must make clear that it is very difficult to make any quick changes in this matter not only as far as the individual is concerned but also regarding the state and occupational pension schemes. In due course the earnings-related addition in the pensions will build up and then it will be very much easier to do these changes when people will be able to afford to retire on a slightly reduced pension.