HC Deb 30 November 1993 vol 233 c929

Finally, I can announce one further decision which will have little immediate effect, but will certainly make a considerable difference to the affordability of the modern welfare state in the next century.

After careful consideration, the Government have decided that the state pension age should eventually be equalised at the age of 65. The change will be phased in over ten years, starting in the year 2010, so it will not affect anyone currently aged 44 or older. By the year 2020, the state pension age in Britain will be broadly in line with that of most of our industrial competitors, although we will still have more generous arrangements than in the United States, where the pension age is to be equalised at the age of 67.

All developed countries are making similar changes for similar reasons. Women nowadays tend to spend more of their lives in paid employment. They also live longer than men. Pension schemes need to recognise this, and end the current discrimination between the sexes.

In the next century, the ratio of working people to retired people will fall sharply, and the burdens on taxpayers will rise. The Government's decision will moderate those burdens, eventually by some £5 billion a year, and so help to ensure that they are sustainable. The basic pension is, and will remain, a cornerstone of the welfare state. The Government are committed to it and to retaining its value.

The proposals on social security overall that I have announced today will in themselves save some £2½ billion a year by 1996–97. Nevertheless, even taking these savings into account, we will still be spending £5 billion more on social security in 1996–97 than we planned last year. The social security budget will continue to grow in real terms, but at a more affordable rate than we have seen in recent years. At the same time, we have honoured our manifesto commitments, we have fully protected the real value of pensions and benefits, and we have provided generous help with fuel bills.

These are not short-term measures to deal with today's problems. The Government have the courage to take a clear and far-sighted view of the modern social security system. We must make sure that it is a system that future generations will be able to afford. This Government will never take part in any attempt to dismantle the welfare state. We intend to see a better welfare state, well run, well judged and one that meets the priorities of modern society. My right hon. Friend the Secretary of State for Social Security will fill out the details in his uprating statement tomorrow.