The McFall report published this week contained a stark warning - fourteen million people are not saving for a pension. There are a whole set of reasons for this - private pensions are complex, costly and inefficient. Past pension mis-selling scandals have not enhanced the industry's reputation either, which is why when we were in Government we planned for auto-enrolment of everyone at work and legislated to establish the independent National Employment Savings Trust for employers who do not offer a company pension scheme to cover these people.
As Shadow Environment Secretary, I wanted to see what effect the changes that the Tory-led government made to Labour's plans for universal pension coverage would have on rural and farm workers. According to House of Commons library statistics, the agricultural sector has the lowest rate of private sector pension provision of any industry. 83% of employees do not have a private work pension - that's 106,000 people. By contrast over half of employees in the manufacturing sector have a private pension, and 79% in the gas and electricity sector have one.
In Government, Labour legislated to introduce auto-enrolment for workplace pensions meaning that people would have to 'opt out' of a pension rather than 'opt in'. Employees would be automatically enrolled in company pension schemes, or a new provider - NEST - built especially for employees who need to save more, from 2012 unless they were on less than £5000 or chose to opt out. But the Government changed the goalposts for temporary and low-paid workers in their Pensions Bill.
Their Pensions Bill will change the salary level at which someone is auto-enrolled from around £5,000 to around £7,475. Pensions Minister Steve Webb has indicated that this will rise in line with the income tax threshold, and therefore looks set to increase to £10,000 over the next few years. This will exclude 15,000 people who earn less than £10 000 a year in the agricultural sector from company pension provision. It will also affect part-time workers who may have 2 jobs earning over £10,000 a year but which separately do not qualify them for the threshold.
The Bill also proposes an optional 3-month waiting period before an employee needs to be enrolled. There would be no obligation on employers to ensure that a pension scheme is in place for 3-months, disproportionately affecting seasonal and short term contact workers (Labour planned enrolment from day one). This will affect at least 37,000 seasonal and temporary agricultural workers, a figure widely accepted to be an underestimate.
So of the 106 000 agricultural workers without a pension, 37 000 seasonal and 15 000 low paid workers will be excluded from the start thanks to the government's changes to Labour proposals. A total of 52,000 workers in farming and agriculture will lose out, according to House of Commons Library research which I commissioned or more than half of the 106 000 rural workers who do not currently have a pension.
The rural economy has already been hit by the Tory-led Government's reckless cuts which go too far, too fast. Families and businesses in rural areas are already feeling the squeeze from wage freezes, higher food and energy bills and financial insecurity. Living costs in rural areas are estimated to be 10-20% higher than in urban areas. The Joseph Rowntree Foundation states that high petrol costs, lack of affordable housing, cuts to buses, poor access to employment and slow broadband speeds, are responsible for this "rural premium."
Labour is already campaigning against Government plans to abolish the Agricultural Wages Board which sets pay rates for 140,000 farm workers in England. We will now be stepping up our campaign on pensions as part of our joint 'Back the apple - a fair deal for the countryside' campaign with Unite the Union.
The Government should make it easier for people in rural areas to save for their retirement, not harder. The rural economy is already bearing the brunt of the Government's ill-thought out economy policy. It now seems rural workers are missing out not just on jam today but also on jam tomorrow.
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