Personal Independence Payment
Baroness Altmann Excerpts(9 years, 9 months ago)
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Lord McKenzie of Luton
To ask Her Majesty’s Government whether they have any plans to amend the Personal Independence Payment mobility criteria.
The Minister of State, Department for Work and Pensions (Baroness Altmann) (Con)
My Lords, there are no plans to amend the mobility criteria in personal independence payment. The Government consulted extensively when designing the criteria, including a specific consultation on the “moving around” activity. The criteria provide a more consistent assessment for claimants with both physical and non-physical impairments, and there are now 22,000 more people on the Motability scheme than before PIP was introduced.
Lord McKenzie of Luton (Lab)
My Lords, I note the Minister’s reply. As she will recognise, this Question arises from a debate that was led by the noble Baroness, Lady Thomas of Winchester, about a month ago. That was about the qualifying criteria for the enhanced mobility component under PIP—particularly that those who could reliably walk no more than just 20 metres will not qualify, losing £35 a week and vital support to live independent lives. When the Minister responded to that debate, she asserted that claimants who cannot walk up to 50 metres would be guaranteed the enhanced rate. I think there has been some pulling back from that position, which is regrettable. Given that the Minister was clearly content to enunciate the policy relating to 50 metres, will she not now actively join others in seeking the reinstatement of the 50-metre benchmark as a research base measure of significant mobility impairment?
Baroness Altmann
My Lords, I have issued a correction of the response to the Official Report. It is indeed possible for those who are unable reliably to walk more than 20 metres to get the enhanced rate, but there is no generally accepted measurement of distance that will be recognised as appropriate. The aim of the enhanced rate is, and always was under DLA, to help people who are either unable or virtually unable to walk. Under PIP, the test is widened so that it is not just those who are unable or virtually unable to walk, but those who have barriers to mobility and who find it difficult to get around. These issues need to be addressed on a case-by-case basis. They are expertly assessed. Indeed, we engaged directly with the noble Baroness, Lady Thomas, subsequent to that debate as we want to get this right.
Baroness Thomas of Winchester (LD)
My Lords, I am grateful for that reply, but on the consultation that the Minister mentioned, the Government took absolutely no notice of more than 1,000 responses that were quite clear. My question is about the tribunal hearings. The Government’s own research shows that for claimants whose appeal is allowed, often their evidence is oral evidence, not just written evidence from doctors. In other words, the assessors are not asking the right questions, they are not listening to the answers, or the policy is too confusing. What is going on if that is the case?
Baroness Altmann
The noble Baroness obviously makes a very well-informed point. I can assure the House that the Minister for Disabled People is actively working on this; we want to get it right. We are trying to improve the original assessment. Obviously it is in everyone’s interest to get the correct decision as early as possible, so we are now giving assessors an extra 10 working days to help applicants gather their information. Many appeals succeed because they produce new evidence that was not available at the time of the original assessment.
Lord Shinkwin (Con)
My Lords, I welcome the fact that the Government recently facilitated a meeting between Atos, Capita and the Royal British Legion, where I was privileged to work as its head of public affairs. Will my noble friend join me in congratulating Charles Byrne on his appointment as the new director-general of the legion? Will she undertake to explore how more disabled people, such as injured veterans, might be encouraged to apply to be PIP assessors?
Baroness Altmann
I certainly join my noble friend in congratulating the new director-general. I have already been working on his excellent suggestion and have made inquiries about how many of our assessors are disabled. I am assured that applications for assessors are open to people regardless of disability. Indeed, we would welcome disabled people applying to be assessors as they would be very well placed to make these assessments, but we do not have the figures at the moment to be able to report to the House how many of our assessors are disabled.
Lord Low of Dalston (CB)
My Lords, nearly 14,000 disabled people have been forced to give up their Motability car following implementation of the new PIP rules on mobility. Motability provides a support package to anyone forced to leave the scheme as a result. This helps people to remain mobile, in many cases by purchasing a used car. What support will the Government give to Motability to enable it to provide the support package for those forced off the scheme?
Baroness Altmann
The noble Lord rightly cites that Motability offers a support package. It has volunteered to do so given its financial position, and very generously offered to help those who lose their Motability car. I stress that although some people lost their cars, overall some 22,000 more people now have a Motability car under the PIP scheme.
Baroness Sherlock (Lab)
My Lords, when the Minister wrote to me to put the record straight after the debate in the name of the noble Baroness, Lady Thomas, she conceded that her original statement that there was not a 20-metre rule was wrong. In fact, somebody who could walk 20 metres but not 50 metres could get the enhanced rate of PIP only if there was something else going on; for example, they might have a learning disability and struggle to plan a journey. When we come back to basics, this means that somebody who can walk only a very short distance, the length of two buses, will lose their Motability car simply because they will now fail a test they would once have passed. This test has been used for 35 years, is based on research evidence, and is used for the blue badge, the guidance on the built environment and lots of other tests. The Government got this one wrong. Will they not accept that now?
Baroness Altmann
The noble Baroness has significant expertise in this area. Once again, I apologise for the incorrect statement that I read out during the debate. However, I am assured that it is not a strict 20-metre rule and that some people who cannot walk more than 20 metres—of course, the reliability criterion is also important here—will receive the higher rate. I repeat that the aim was to ensure that we support at the highest rate people who are unable or virtually unable to walk. There is no one particular test—the 50-metre test is not a recognised one, either—for someone who is unable or virtually unable to walk. We are keeping this closely under review. It is widely accepted by stakeholders that PIP is now in a settled and improving state.
Life Chances Strategy
Baroness Altmann Excerpts(9 years, 10 months ago)
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The Minister of State, Department for Work and Pensions (Baroness Altmann) (Con)
My Lords, I, too, congratulate my noble friend Lord Farmer on securing this debate today, and also thank all Members from all sides of the House who contributed to the discussion.
This is a priority issue for the Government. When we talk about life chances, what we mean is a relentless focus—an all-out assault, as the Prime Minister calls it—on tackling the root causes of poverty in Britain today. It is about ensuring that every individual, no matter what their background, is able to realise their potential. Some people are held back by deep-rooted social problems. The life chances strategy will set out our comprehensive plan to tackle disadvantage and extend opportunity, as announced by the Prime Minister in his speech of 11 January. The strategy will describe how we are working across government to break down some of these barriers to opportunity and to transform people’s lives. This will be a cross-government initiative.
We have already introduced the new life chances measures through the Welfare Reform and Work Act, which will focus action on the root causes of child poverty rather than the symptoms. The Act introduces the new duty for the Government to report annually on children in workless households and children’s educational attainment—two of the five measures outlined by my noble friend Lady Stroud. We have chosen these measures because the evidence is clear that these are the factors with the biggest impact on child poverty and children’s life chances.
As the noble Baroness, Lady Sherlock, and many others have observed, we know that being part of a working household is the best route out of poverty. Children in workless families are around three times as likely to be in poverty as those where at least one parent works. As my noble friends Lord Lupton and Lady Jenkin and others have observed, this is important from the point of view of role models as well as just having more money coming in. Evidence shows that nearly three-quarters of poor workless families where the parents found full employment escaped poverty.
I am proud that this Government have a strong record on improving employment to date. The employment rate remains the highest on record, at 74.1% and with 31.4 million people in work. The number of children living in workless households is at a record low. It has fallen by 450,000 since 2010. That is 450,000 more children who now benefit from the role modelling, the health benefits and the economic security of living in a home where adults are going to work. The Government have introduced major structural changes to the welfare and tax systems to ensure that work always pays for families. This includes universal credit, changes to the personal tax allowance and the national living wage. I hear the concerns of the noble Baroness, Lady Sherlock, about universal credit, but it is designed to ensure that work pays. Indeed, my noble friend Lord Freud has already met the Resolution Foundation to go through some of its findings and some of the areas which its analysis may have missed.
Of course we all recognise that education can be central to transforming children’s futures. I recognise the contribution of my noble friend Lord Fink in this area, and the involvement of many Members of this House in the academies programme. It is clear that educational attainment is the biggest single factor in ensuring that poor children do not end up as poor adults. We are determined to deliver educational excellence everywhere so that every child, regardless of their background, reaches their potential. Let me set out briefly what we are doing to achieve this. The Government are raising standards with a rigorous new curriculum, world-class exams and a new accountability system that rewards those schools which help every child to achieve their best. In particular, the Government introduced the pupil premium in the last Parliament, which provides schools with additional money to raise the attainment of disadvantaged pupils of all abilities. It is up to schools to decide how to spend this funding.
I certainly agree with the remarks of the right reverend Prelate the Bishop of Truro on food poverty. We have invested £1 billion over two years in universal infant free school meals, for example. Our measures on education will drive real action and will make a big difference to disadvantaged children both now and in the future.
I echo the sentiments expressed by many noble Lords about the importance of the family and improving life chances via that most important element of any society. I certainly agree with, and support, the remarks of the right reverend Prelate the Bishop of Truro in that regard. We must continue to affirm and reaffirm the importance of families in helping to give their children the best start in life. I am personally passionate about the role that all members of the family, including grandparents—an often overlooked and underplayed element of many families—can play in improving the well-being of children.
We are doing more to support couples and parents during difficult times—and even to anticipate difficulties—with our relationship support programmes. The recently published report from the Early Intervention Foundation found that conflict between parents can have such a devastating impact on children’s mental health and long-term outcomes. That is why it is so important that we help every mother and father be the best that they can be. I agree wholeheartedly with the comments of the noble Baroness, Lady Tyler, about the importance of relationships in that regard. That is why we have already doubled the funding for relationship support and have increased the amount of free childcare to support parents. It is also why we have targeted those families that need the most help. Our troubled families programme has turned around 120,000 families that had complex and deep-rooted problems and we are extending this to 400,000 more families. It is another prime example of collaborative work across government, with DCLG working with my own department and others on this programme. I hope that noble Lords will recognise that the Government are indeed working on a cross-departmental basis on this important new strategy.
Our life chances strategy will include a wider set of non-statutory measures on the root causes of disadvantage, including problem debt and drug and alcohol dependency. These non-statutory measures will work alongside the statutory life chances measures in the Welfare Reform and Work Act and will help us to drive real action on the deep-rooted and complex social problems that so many disadvantaged people face. The Prime Minister announced in his speech in January several new policies to transform the lives of the most disadvantaged.
As my noble friend Lord Holmes, the noble Baroness, Lady Tyler, and the right reverend Prelate the Bishop of Truro rightly stated, mental health issues must also be tackled. We are making a £290 million investment into mental health by 2020, which will mean, for example, that at least 30,000 more women each year will have access to specialist mental health care during or after pregnancy. We are committed to improving access to better services and promoting early intervention to address children’s and young people’s mental ill health issues before they worsen and we are investing an additional £1.4 billion over the next five years. We have also invested £120 million to introduce waiting time standards for mental health services for the first time.
I could not agree more with my noble friend Lord Farmer on the importance of stable relationships in ensuring better life chances and that it is about far more than just giving people money.
My noble friend Lord Holmes also made an important contribution in his powerful speech. I am pleased that he welcomes the Government’s sports strategy and I echo his commendation of organisations such as YoungMinds and comments on the importance of supporting those with both mental and physical needs. A healthy mind in a healthy body is certainly something that I fully endorse.
We are also making a £1 billion investment in the National Citizen Service, which will be extended to 60% of all 16 and 17 year-olds over the next few years, to show young people the power of public service. We will be using work experience much more creatively to give young people the encouragement they need to get into further education, employment or training when they leave school. We will also be supporting those with drug and alcohol addictions to help them to turn their lives around and fully recover.
I also agree with my noble friend Lord Hodgson about the role of the voluntary sector and the contribution that it can make. I know that other noble Lords also very much support that sector, which has a vital role to play.
As my noble friend Lady Jenkin mentioned, social networks are important, as are role models. She is absolutely correct to set out a number of the challenging issues faced by so many in society.
My noble friend Lord Young mentioned the importance of mentoring and careers advice, which, again, we are focusing on. It is true that there is more to be done on tackling housing and transforming housing estates. It is unarguable that this will have cost implications and I certainly assure my noble friend that we intend to pursue this energetically and with vigour.
Of course, I agree with my noble friend Lady Stroud, who knows so much about this area, about the importance of monitoring the impact of the life chances strategy and developing indicators, as well as a special focus on children in care.
Lord Kirkwood of Kirkhope (LD)
It is important that the Minister is able to give the House an assurance that the Prime Minister’s earlier exercise in trying to family-proof new legislation is continued through the rest of this Parliament. Can she give us an assurance that the legislation in the Queen’s Speech will be subject to the family-proofing that the Prime Minister set out some months ago in his speech?
Baroness Altmann
As the noble Lord is well aware, I cannot anticipate what will be in the Queen’s Speech, but I can certainly repeat that the family test is applied to all new policies developed by this Government.
My noble friend Lord Shinkwin made an emotional and passionate intervention on something that I feel very strongly about, and I certainly agree about the importance of considering all the requirements for a successful working life for disabled graduates, as well as the early encouragement of disabled children.
In conclusion, we have already committed to tackling the root causes of poverty. I am sorry that I have not had time to go into more detail about all the points that have been raised in this excellent debate. But I assure noble Lords that our intention is that, by putting people first and reiterating the importance of family in our new life chances strategy, we will, together, be able to transform people’s lives. Our forthcoming explanation of and further information on the life chances strategy will demonstrate how we and others across society will be able to achieve this.
Personal Independence Payment: Mobility Criterion
Baroness Altmann Excerpts(9 years, 10 months ago)
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Baroness Sherlock (Lab)
My Lords, I thank the noble Baroness, Lady Thomas of Winchester, for moving this Motion and for explaining carefully the nature of the problem that we address tonight. I am also grateful to all noble Lords who have spoken, many of whom I have heard address the same issue repeatedly. It is very good to hear them again tonight and I pay tribute to them and to the noble Lord, Lord Alton—he is in his place but has not spoken tonight—who again has been tenacious in his support of the issues around Motability for some time.
I hope very much that the Minister has come here tonight in a constructive spirit and ready to listen, because she has heard stories from people who know a great deal about this, have a great deal of experience and who know whereof they speak. As we have heard, the shift from DLA with its qualifying threshold of 50 metres to PIP where 20 metres became the new rule for the enhanced component has been very controversial from the outset. The change was hugely unpopular. The Disability Benefits Consortium reminded us in its briefing for this debate that when the Government consulted, 914 of the 1,142 respondents indicated a clear preference for extending the qualifying distance for the enhanced rate from 20 metres up to 50 metres. The arguments were compelling. As my noble friend Lord McKenzie has just made clear, 50 metres was a widely recognised, established benchmark based on research used by many other government departments and other measures around the world. It is clearly a sensible choice. By comparison, no case was ever made for 20 metres. It became increasingly clear to all concerned that in practice what was sought was a criterion that more people would fail, and that would therefore result in less money paid out. It was designed to save money, or more precisely to transfer money from disabled people to the Exchequer.
This is a significant loss. The noble Lord, Lord Low, pointed out that some half a million people could lose money and that this could be over £30 a week. But I want to reinforce the point that this is one of those benefits explicitly designed to deal with the extra cost of disability. We really risk losing that dimension of social security at our peril. This is not simply a handout: it is about recognising that for disabled people to do the things that other people take for granted—to take their children to school, have a social life and have a job—they need access to transport that is not provided for them by the state. There are two ways that we can deal with this. We can make our public transport system dramatically more accessible and cover the entire country or, for a fraction of that cost, we can carry on making payments to enable disabled people who qualify for this to go to Motability or elsewhere to get access to transport.
I pray that the day will come when the noble Baroness, Lady Grey-Thompson, will never have to drag herself on to a train again. Only she could manage it: those who are not Paralympic athletes might struggle. But I hope very much that that will not be the situation for very much longer. In the mean time, people need access to vehicles.
Crucially, we have already heard that some 14,000 people have lost their Motability vehicles after being reassessed for PIP. That is cracking on for half of all the reassessments, so there are some significant losses ahead of us. Also, we have heard compelling cases from various noble Lords, including the noble Baronesses, Lady Grey-Thompson and Lady Brinton, of cases where the assessment has gone spectacularly, farcically wrong. When the Minister comes to respond, I am sure the temptation in the brief at this point will be to say that these are isolated cases and things can always go wrong, but if they can go that wrong, something has gone wrong with the quality process somewhere down the line. It means that something systemic has to be addressed. The reality is that the system is not working. It is broken. Disabled people have suffered significantly already. They have suffered very badly from social security spending cuts in the last Parliament and in this one. While the U-turn in the Budget on PIP was very welcome, the Government are still cutting spending on disability benefits by £1.2 billion by the end of this Parliament.
I have some questions for the Minister. How many people does she now predict will lose the higher rate mobility component by 2020? How many will lose their Motability cars as a result of the PIP reassessment? Is she satisfied with the way that the “moving around” assessments are conducted? Finally, is she happy with the outcomes of the reduction to 20 metres? Is it working as the Government planned? I asked the Minister on 7 March how she felt the loss of Motability cars and other access to support would help the Government to tackle the disability employment gap. She reassured me that the Government were committed to halving the disability employment gap and said that the PIP approach was more consistent and fairer than DLA. The Government, we understand, will produce a White Paper on disability. If they are serious about tackling the disability employment gap and increasing opportunities for disabled people to participate fully in our society, they have to do something about this. I am pleased to support this Motion.
The Minister of State, Department for Work and Pensions (Baroness Altmann) (Con)
My Lords, I first assure the noble Baroness and the House that this Government have always been, and continue to be, fully committed to engaging with disabled people and organisations such as Disability Benefits Consortium and Disability Rights UK. I know that the Minister for Disabled People met the noble Baroness on 18 April to discuss the very issue raised in this debate. I also echo the sentiments of the Secretary of State during his Statement to Parliament last month. We are a one-nation Government committed to supporting everyone to achieve their full potential and to live independent lives.
Integral to that vision is ensuring that those with the greatest need are supported the most. We introduced the personal independence payment because disability living allowance was no longer fit for purpose. Under DLA, we assessed people purely on the basis of a disability, rather than considering individuals’ needs.
Baroness Thomas of Winchester
My Lords, I must disagree with the Minister on that point. I had an assessment, and nobody took any notice of the fact that I had a serious progressive condition. Therefore, my named disability did not count for anything, which is what the Minister just said.
Baroness Altmann
My Lords, I can only assure the House again that the aim of PIP is to make sure that the assessment looks at the individual and their needs, unlike the previous system, where there was no face-to-face assessment and decisions were made without the professional medical advice which we have brought in under PIP. Under DLA, too many people were given lifetime awards—that is at the heart of some of the problems we have been hearing about this evening—whereas under PIP claimants have regular reviews to make sure that the support they get reflects their current circumstances.
Unlike DLA, PIP considers mental health, cognitive impairments and other non-physical disabilities equally, but this is not just about trading off between mental and physical conditions, as the noble Baroness may have feared. It is about getting the right support that reflects current circumstances. Under DLA, people were not necessarily seen by an assessor. Neither is this about saving money—we are spending more on PIP, and more people have Motability cars now than when PIP started.
The system is working. Some 22% of claimants now receive the highest rates of both components compared to only 15% under DLA. Therefore, under PIP more people are getting more help. Some 22,000 more people are using the Motability scheme since PIP was introduced, and as noble Lords will be aware, for DLA claimants leaving the Motability scheme following a PIP reassessment, we have agreed a £175 million package of transitional support with Motability, including a £2,000 payment for most claimants.
PIP is performing well. We have now cleared well over 1 million claims for PIP, and the majority of claimants appear to be happy with their PIP decision. The suggestion that so many people are appealing and overturning their assessment is simply not the case. Only 5% of PIP claims have gone to appeal, and 40% of those appeals—not the 60% figure mentioned by the noble Baroness—were successful. Therefore, the proportion of PIP assessments which are overturned on appeal is 2%. When a decision is overturned it does not automatically mean that the original decision was wrong. Often claimants provide additional evidence not available to the original DWP decision-makers.
We are committed to engaging with disabled people, and that was fundamental to the design of PIP in the first place. We held a widespread consultation on the very topic of this debate—the moving around criteria.
I would like to clarify what appears to be a widespread misconception regarding the differences between the mobility assessment in PIP and the mobility assessment in DLA. Many noble Lords have spoken of a “20-metre rule”, but there is no such rule. Some people believe that we have changed the assessment of a distance a claimant is able to walk from 50 metres to 20 metres. This is not the case. The higher rate of DLA was always intended to be for claimants who were unable, or virtually unable, to walk. This is still the case in PIP, but we have gone further. Under PIP, if a claimant cannot walk up to 20 metres safely, reliably, repeatedly and in a timely manner, they are guaranteed to receive the enhanced rate of the mobility component. If a claimant cannot walk up to 50 metres safely, reliably, repeatedly and in a timely manner, then they are guaranteed to receive the enhanced rate of the mobility component. I can assure the noble Baroness, Lady Brinton, that if a claimant is in extreme pain, they will be assessed as not reliably able to walk that distance. The reliability criteria are a key protection for claimants.
It was after my department’s work with the noble Baroness and noble Lords in 2013 that we set out these terms, not just in guidance but in regulations, confirming our commitment to getting this right. If a claimant cannot walk up to 50 metres without such problems, they will still be entitled to the mobility component at the standard rate. If they cannot walk that distance reliably and in the other ways in which we have protected it, they will be entitled to the enhanced rate. Therefore, the enhanced mobility component of PIP goes to those people who are most severely impacted and who struggle to walk without difficulty.
Lord Kirkwood of Kirkhope (LD)
The Minister is doing a comprehensive job of explaining the background, and that is important. However, will she accept that there is a great deal of frustration within the disabled community? In spite of repeated freedom of information requests to get some of the data and the metrics around the things she has just been describing, the department has hidden behind the view that these are ONS-qualified statistics and therefore it has to wait until they have been properly digested and published. My point is that this Motion is a request for urgent talks. We believe that this policy is going badly wrong. Will the Minister use her good offices to get the meeting that is being asked for so that the talks can look at what the data are telling us about the level of losses, which we have only the word of Motability to go on? It is doing the best that it can, but these are not comprehensive statistics. The fact is that, as we sit and speak this afternoon, we do not know the extent to which this policy is taking away the enhanced mobility component in PIP. That is dangerous, because if we do not get in touch with that information and use it to assess what is going on, we will not make this change early enough, and this policy will need to change.
Baroness Altmann
I thank the noble Lord for his question. I can assure him from my own experience that it is important that we have any statistics properly verified before they are released as official statistics. We will release relevant data, and if we have any further information, I will be happy to write to the noble Lord with any other data we can provide.
As regards the information that the noble Baroness, Lady Grey-Thompson, asked for on the amount of money spent on mandatory reconsiderations and appeals, we will provide written details of those costs.
Baroness Sherlock
My Lords, when the Minister was describing the 20-metre rule and 50-metre rule, I could see a lot of puzzlement around the Chamber. It may just be that I was not keeping up with her, so will she indulge the House for a moment and clarify that? I understood from the Government’s justification, included in the House of Commons briefing on Motability, that,
“We recognise that people who are unable to reliably walk more than 50 metres”—
and it goes on to say that they will get the standard rate, which will go,
“to those who cannot reliably walk between 20 and 50 metres”,
and the enhanced rate will be for below 20 metres. Therefore, can the Minister explain to us whether what I have described is not true? That is what the House of Commons briefing on this says.
Baroness Altmann
To reiterate for the noble Baroness, if a claimant cannot walk up to 50 metres safely, reliably, repeatedly and in a timely manner, they are guaranteed to receive the enhanced rate of the mobility component. Therefore, there is not a strict 20-metre rule. There is discretion, and an individual assessment is made. We take into account whether the person is in pain and whether they can reliably walk or manage on their own.
I can also reassure noble Lords that our door is open. We are happy to engage. The Secretary of State and the Minister for Disabled People regularly engage with disability groups. We would like to continue to do so. Clearly, we want to make sure that this new process is working. As far as we can see at the moment, it appears to be.
Lord Low of Dalston
I am aware that Ministers have regular talks with disability organisations, but the request behind the Motion is not that Ministers engage in general talks with them about a range of issues. The point of the Motion is to call on the Government to have specific talks directed at addressing the particular problem identified in the Motion and in the speech of the noble Baroness, Lady Thomas.
Baroness Altmann
I thank the noble Lord. The general point I am trying to make is that we are not convinced that there is the problem being identified or described by many noble Lords. If there are problems in the assessment process—of course, it relies on human beings and it is possible that, from time to time, an assessment may not be done correctly—that is why we have the appeals process. But the figure I quoted to the House, that 2% of the assessment appeals are upheld, does not currently suggest that there is a big problem. Indeed, it appears that the PIP assessment process is doing what we want it to.
The noble Baroness, Lady Grey-Thompson, asked about the healthcare professionals carrying out the assessment. They have to consider the reliability criteria as part of the assessment process, and they also have to be registered with a relevant professional body, such as the General Medical Council. They have to have a minimum of two years’ post-registration experience. They also undergo rigorous training and assessment. It is early days, but it seems that the process is working.
We would indeed expect the haemophilia example that the noble Baroness, Lady Grey-Thompson, asked about to be taken into account properly by the assessment process. All the evidence presented by the claimant, along with any obtained by the healthcare professional undertaking the PIP assessment, will be fully considered. Therefore, if a claimant is exposed to a high level of risk when undertaking certain activities, that will be taken into account. Claimants who require supervision when completing activities will receive the appropriate PIP award. I can also assure the noble Baroness that providers can undertake home visits where necessary.
The noble Baroness, Lady Brinton, asked the Government whether we are looking at effective value for money for taxpayers. This is indeed why we are moving from DLA to PIP. We want to ensure that we look at people and their condition with a face-to-face assessment, rather than under the previous system, so that we can spend the public money we spend on disabled people in the most appropriate manner. This issue was also raised by the right reverend Prelate the Bishop of Peterborough. We certainly agree that individuals must be treated as individuals, which, again, is the aim of PIP assessment as well as the Access to Work scheme.
The noble Lord, Lord Low, mentioned the consultation. We have undertaken extensive consultation. The department does not consider further consultation necessary, but as I said, we are more than happy to meet with stakeholders to discuss the PIP assessment and any suggested improvements to the guidance or working practices of the assessment providers.
I hope that I have addressed the points from the noble Baroness, Lady Masham, about the assessors we use. They are health professionals. Indeed, they must have knowledge of the clinical aspects and the likely functional effects of a wide range of health conditions and impairments. I can also inform the House that we have just implemented a new contractual regime that will drive further improvements to the assessment through independent audit and revised audit criteria, and that we regularly review the guidance for the PIP assessors.
As the noble Baroness, Lady Sherlock, rightly said, PIP is specifically designed to help disabled people meet the additional costs of a disability. We believe that the current assessment process is working. Indeed, as I stressed, more than 22% of claimants now receive the highest rate of both components, compared with only 15% under DLA.
Lord Alton of Liverpool (CB)
I have listened patiently to the Minister’s remarks during the course of the debate. Does she dispute the figure given by the 60 different disabled people’s charities that have made representations: that 13,000 scheme users have already lost their vehicles? Putting aside all the other arguments, some of which, as the noble Lord, Lord Kirkwood, said are impossible to dispute, that surely demonstrates that the scheme is not working and that people are suffering. Surely, on that basis, she will concede the point that the noble Baroness, Lady Thomas, made that there should at least be a meeting with those organisations that have expressed concerns to your Lordships.
Baroness Altmann
I thank the noble Lord, and I stress again that we were always aware that there would be people who would lose their Motability cars when we changed from a system that relied on lifetime awards and did not assess people’s current circumstances, to one that does. If someone’s is going through a PIP assessment whose circumstances have changed—who previously was not seen face to face, perhaps, and who had a lifetime award—and they are judged no longer to be unable, or almost unable, to walk, they will therefore not be entitled to the enhanced rate component and will lose their car. We knew that that was a result, but that is part of the process.
When making his Statement to Parliament, the Secretary of State said:
“I want to start a new conversation with disabled people”,—[Official Report, Commons, 21/3/16; col. 1269.]
and disability organisations. So I say once again that we are listening; our door is open. We have recently changed the rules, for example, for terminally ill claimants to ensure they no longer have to wait 28 days to receive the enhanced rates of PIP if they transfer from DLA. We are also revisiting our approach to award reviews to make better use of the evidence we already have, so that claimants do not have to give us the same information again if their circumstances have not changed. We are listening to the views of noble Lords; we want their views and those of disability groups; we value the expertise of noble Lords in this House and I say again that we are happy to meet the organisations.
Lord McKenzie of Luton
Before the Minister sits down, can we just revert to the discussion about the 20-metre and 50-metre rule, and whether it is a rule or not? As I understand it, she was saying that it is possible for somebody who can walk more than 20 metres to qualify for the highest mobility component. Of the total number of people who qualify, how many qualify on that basis and how many qualify because the 20-metre rule operates?
Baroness Altmann
Of course, I do not have those figures to hand and I do not know whether they are available. It is not a strict 20-metre rule—it is an indication—and I repeat that if somebody can walk more than 20 metres, they can still get the enhanced rate component; it does depend on the assessment.
I close by stressing once again that we—the department, the Secretary of State and Ministers—are happy to meet disability groups to discuss this issue, which is clearly very important and causing significant concern. I thank noble Lords for their contributions to the debate.
Baroness Thomas of Winchester
My Lords, I am extremely grateful to all noble Lords who have contributed to this short debate. It has been very illuminating. All the speakers have painted one picture; the Minister has painted a different picture, and we must have some meeting in the middle, somewhere, because it is not right to leave it as it is. I have heard from Citizens Advice, which is, after all, independent, as everyone knows. It says: “Our experience is that the quality of assessment continues to be poor and our advisers in local Citizens Advice across the country have identified the reduction of disability-related benefits generally, and the loss of Motability eligibility specifically, as an emerging and increasing issue in the past few months”. Something is clearly going wrong, but I am extremely pleased that the Minister has said that the department is willing to meet those groups that I referred to in my Motion, and I therefore commend my Motion to the House.
State Pension
Baroness Altmann Excerpts(9 years, 11 months ago)
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Baroness Wheatcroft
To ask Her Majesty’s Government how many people they expect to benefit from the new state pension, and what will be the average increase per person.
The Minister of State, Department for Work and Pensions (Baroness Altmann) (Con)
My Lords, by 2030 the new state pension will result in higher state pension payments for 6 million future pensioners, who will receive on average £10 a week more state pension, with 3 million women receiving on average £11 a week more and 3 million men receiving £9 a week more.
Baroness Wheatcroft (Con)
I thank my noble friend the Minister for those encouraging numbers. The old system was complicated and confusing, and many people were left uncertain of what their income would be in retirement. Does my noble friend think that the new system, which is not just higher but clearer, might encourage more people to save for their retirement?
Baroness Altmann
My noble friend is absolutely right. The aim of the new state pension is that people will have a much clearer idea of how much they can get from the state pension without extensive means testing so that it is clear and safe for them to save as they can on top of it.
Lord Rooker (Lab)
What estimate have the Government made of the result of less means testing, which means less passporting to other benefits for those who were means tested, who presumably will not now receive those benefits? What is the overall saving to the Government in that respect?
Baroness Altmann
The estimates are that the new state pension will be cost-neutral for the first few decades. Therefore, the aim is that we can give people security and an understanding of what they will get from the state system, and that, as we roll out auto-enrolment to ensure that every worker will have a private pension, it is safe for those workers all around the country to save for their future so that they can supplement their own income.
Lord Lawson of Blaby (Con)
My Lords, will the Government seriously consider ending the anomalously tax-free status of the winter fuel payment by consolidating it into the basic state pension, which is, of course, taxable?
Baroness Altmann
This Government have made an absolute commitment that winter fuel payments will be protected up to 2020. Any changes that a future Government may wish to make will be decided in due course.
Lord Stoneham of Droxford (LD)
One of the groups that particularly benefits from the high state pension, championed by my colleague Steve Webb in the last Government, is the self-employed. However, the proportion of self-employed in private pensions is disappearing over a cliff. What plan do the Government have to address this problem?
Baroness Altmann
The noble Lord makes an important point; it is one that the Government have already been looking at. The new state pension will give much more clarity and generosity to the base on which the self-employed can build. The new lifetime ISA may be an opportunity for the self-employed to save in a way that they might be more comfortable with, rather than locking money irrevocably into a pension in their 20s and 30s.
Lord McKenzie of Luton (Lab)
My Lords, we know, and the Minister has confirmed, that overall expenditure on pensioner benefits is projected to be broadly the same under the new system as under the old until about 2040. Thereafter, expenditure growth is slower, so the Government plan to save money. There will be winners and losers. In particular among the losing category will be those currently in their 20s and 30s. The Government are pocketing some £4 billion to £5 billion extra a year from national insurance contributions because of the abolition of contracting out. Following another Budget disaster this year, the Government were forced to commit that there will be no more welfare cuts this Parliament. Will the Minister confirm that this applies to all existing pensioner benefits and that the triple lock, including that applied to the new state pension, will be applied as now? Further, should the UK leave the EU as the result of the referendum, what route, if any, will the Government take to preserve existing reciprocal pension uprating arrangements?
Baroness Altmann
The noble Lord has asked about five questions. However, I can certainly reassure the House that there is an absolute commitment to protect pensioner benefits up to 2020, and the basic state pension and the full new state pension, through the triple lock. As regards the expenditure on state pension, the reason that there are losers, if you like, in the long run—although I would not call them losers—is that we need to make the state pension system sustainable. That is exactly what the new state pension system will do. Indeed, with the introduction of the state pension, 75% of women and 70% of men will get more state pension. In the long term, the aim is for the auto-enrolment private pension to make up for the loss of earnings-linked state pensions.
Lord Cormack (Con)
My Lords, I am sure that is very welcome news, but reverting to the question asked by my noble friend Lord Lawson, will my noble friend remind the House of the total cost of the winter fuel payment?
Baroness Altmann
The cost of the winter fuel payment is approximately £2 billion per year. It provides security for older people by ensuring that they have the confidence to spend money on heating their homes, which otherwise they might not do. We know how vulnerable older people are to the cold.
Children: Parental Separation
Baroness Altmann Excerpts(9 years, 11 months ago)
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Baroness Jenkin of Kennington
To ask Her Majesty’s Government what steps they are taking to prioritise the wellbeing of children when their parents are going through separation.
The Minister of State, Department for Work and Pensions (Baroness Altmann) (Con)
My Lords, we are prioritising the well-being of children by helping parents resolve conflict during separation. We have doubled funding for relationship support for couples to £70 million during this Parliament and our innovation fund has worked with around 30,000 separated families to help them collaborate in the best interests of their children.
Baroness Jenkin of Kennington (Con)
My Lords, we are all aware that post-conflict separation is very harmful for children and is often exacerbated by disputes over child maintenance payments, especially when government agencies are involved. Will my noble friend update the House on how the 2012 child maintenance reforms are working as regards payments made within family arrangements?
Baroness Altmann
My Lords, I am delighted to report that our 2012 reforms have been a huge success so far. They have incentivised separating families to make their own arrangements rather than using the statutory system as a default option, as co-operation between parents is clearly better for their children. Seventy per cent of clients using the service are choosing direct pay.
Baroness Tyler of Enfield (LD)
Will the Minister set out how her department is working with the Department of Health and the Department for Education to ensure that children whose parents are separating receive the support they need both through child and adolescent mental health services and counselling in schools?
Baroness Altmann
My Lords, the department is working with other departments in a cross-government strategy to support children, with a lot more funding for mental health issues and co-operation between the various departments.
Baroness Sherlock (Lab)
My Lords, “so far” is a telling phrase. The Minister talked about the CSA but the Government are in the process of shutting down all CSA cases and telling parents that if they want to apply to the new scheme they have got to hand over one-fifth of all the money to the DWP in fees. However, they are allowed to apply to the new scheme only if they first ring a phone line and let someone on the other end of the phone try to talk them out of it and tell them to go away and make a deal with their ex directly. Mrs Thatcher set up the CSA to make sure that parents pay for their kids even if they are separated from the other parent. If there are any grounds to the growing concern that parents will end up paying less money to children than they have in the past, will the Minister accept that the strategy has failed and needs to be reviewed?
Baroness Altmann
The noble Baroness clearly has significant expertise in this area, but I have to say that the current system, which was set up in 2012, does not automatically take 20% of the payments. As I say, the point of the new system is to encourage parents to make their own arrangements. It is only if they do not use the direct payment method that they will pay the additional premium for that service.
Baroness Butler-Sloss (CB)
My Lords, it is obvious that children who are not informed about what is happening to their parents when they are separating do much less well than those who are kept in the loop. What will the Government do to make this one of the really important aspects? Parents must let their children know, even at an early age, what is actually happening and make them part of the decision-making, or at least give them an understanding of what the future is going to be.
Baroness Altmann
The noble and learned Baroness makes another good point. We have been trialling interventions with our innovation fund where we are using the voice of the child to make sure that we include children in the conflict situation. We are also working with the Ministry of Justice to make those interventions work.
Lord Forsyth of Drumlean (Con)
My Lords, is my noble friend aware of the proposals from the Scottish Government, which will be implemented this summer, for every child in Scotland under the age of 18 to have appointed for them a state guardian whose job it is to make sure that the parents are doing their duty? Can she reassure the House that if Scottish parents or parents living in Scotland move south, this outrageous scheme will not be continued in England?
Baroness McIntosh of Pickering (Con)
My Lords, does my noble friend support the idea of child contact centres being made available in every local authority area to enable parents who are not of wealthy means to have contact with their children? Were one fortunate enough to have a Private Member’s Bill on this in the next Session, would my noble friend support it?
Baroness Altmann
My Lords, the Government are considering their future policy on children’s centres, which are currently the responsibility of the Department for Education, as part of the development of the cross-government life chances strategy. We will publish more details on that in the summer.
Baroness Hollis of Heigham (Lab)
My Lords, the Minister said that since the 2012 Act, the new arrangements have been a great success. How much additional money has gone to separating parents and their children; in other words, how much better off are those children, knowing that in the past many fathers would change their job, their address, their country and their name to avoid paying maintenance? Can she tell us how much additional money is going to children? If she cannot, because a lot of this is now voluntary, how does she know that it has been a success?
Baroness Altmann
I can assure noble Lords that we will be making a full report in the 30-month review of the scheme. However, the indications so far are that it has achieved its objective of helping parents agree between themselves how to arrange maintenance.
Baroness Deech (CB)
My Lords, the Minister will be aware that the cuts in legal aid have meant that parents, during the worst time of their lives, have been left to self-represent in court, struggling over the allocation of money to the detriment of the family. Will she tell the House if the Government have plans to reform the law on the allocation of money on divorce, preferably through my Private Member’s Bill?
Occupational Pension Schemes (Scheme Administration) (Amendment) Regulations 2016
Baroness Altmann Excerpts(10 years ago)
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Baroness Altmann
That the draft Order and Regulations laid before the House on 1 and 8 February be approved. Considered in Grand Committee on 14 March.
Child Support (Deduction Orders and Fees) (Amendment and Modification) Regulations 2016
Baroness Altmann Excerpts(10 years ago)
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Baroness Altmann
That the Grand Committee do consider the Child Support (Deduction Orders and Fees) (Amendment and Modification) Regulations 2016.
The Minister of State, Department for Work and Pensions (Baroness Altmann) (Con)
My Lords, these regulations were laid before both Houses on 8 February 2016. They enable the department to waive collection and enforcement fees on the 2012 child maintenance scheme for a specific group of cases for a limited period of time. This is to support a process that provides a safety net for parents with care. It will require non-resident parents with a poor history of meeting their child maintenance obligations to demonstrate a change in behaviour and prove that they could reliably be allowed to access the direct pay service on the 2012 scheme rather than having to pay collection fees in the new scheme. We will also introduce minor technical amendments to the existing powers to improve the effectiveness of regular deduction orders and lump sum deduction orders.
A comprehensive reform of the child maintenance system began in 2012 which aims to incentivise parents to collaborate in the best interests of their children and move us away from the idea that state intervention via a statutory child maintenance scheme should be the default option for separated parents. To achieve these aims, a programme to close all existing Child Support Agency cases began in June 2014. Closing cases gives parents the chance to consider which arrangement best suits their circumstances for the future, while access to Child Maintenance Options, a free and impartial service, ensures that they have relevant information available to help inform this important decision.
Where parents believe a statutory solution would be best for them, they can apply to the new 2012 scheme, which is operated by the Child Maintenance Service. New, simplified calculation rules and improved IT systems are delivering better outcomes for parents and children. At the same time, fees and charges are helping to incentivise parents to consider closer collaboration and use a direct pay service, while also providing a contribution towards the cost of running the service. This policy change is predicated on the view that encouraging parents to co-operate when arranging child maintenance payments is likely to lead to less confrontation between parents, and this is ultimately normally in the best interests of the children.
When approaching case closure, we are of course mindful of the need to take careful steps to reduce the risks of child maintenance payments being disrupted, particularly for those cases where money is flowing only as a result of enforcement action being undertaken on the old CSA cases. We want to address concerns raised by stakeholders following the public consultation on case closure undertaken in 2012.
The last segment of cases that we will close—segment 5 —will include those cases where money is flowing as a result of enforcement action. But to try to give clients an opportunity to avoid charges, as well as giving a chance for future co-operation between parents who may have been in conflict previously, we want to introduce a new positive test of compliant behaviour for these previously recalcitrant non-resident parents. This is known as a compliance opportunity. The compliance opportunity will take place during the first six months of the 2012 scheme case for this group. During that time, the non-resident parent is required to pay half of their maintenance liability via the collection service by a non-enforced method of payment such as direct debit.
In order to ensure that the parent with care is protected, we will issue a deduction from earnings order to the non-resident parent’s employer to collect the other half of the ongoing maintenance liability directly from the non-resident parent’s wages, wherever this is possible. This payment safeguard aims to minimise disruption for the parent with care during the compliance opportunity. Where the non-resident parent misses even one payment, they will fail the compliance opportunity and prompt action will be taken to resume collection of the full amount of maintenance by the enforced method of payment already in place, with the collection and enforcement charges applied. Only in circumstances where the non-resident parent is not at fault will an exception be made.
If all payments are made, the non-resident parent will pass the compliance opportunity and have a chance to continue paying child maintenance directly to the parent with care in future. So the outcome of the compliance opportunity will inform a decision over whether a 2012 scheme case should be a direct pay arrangement, which does not attract collection fees, or a collect and pay arrangement, where CMS manages collections and the usual fees are charged.
The initial proposal, outlined by the previous Government, was to offer the compliance opportunity in the final six months of the closing CSA case. It would be offered to all clients regardless of whether they intended to apply to the new 2012 scheme. This would have meant expending resources unnecessarily, including significant investment in the CSA computer systems close to their retirement date. However, it is now our intent to move the compliance opportunity to the first six months of the new case. It will then be offered to those who choose to apply to the 2012 scheme before their CSA case closes and cannot agree between themselves on whether their new case should be managed on the direct pay service or the collect and pay service. We have consulted with stakeholders and they are supportive of this approach.
We will administer cases on the collect and pay service type for the duration of the compliance opportunity, which will allow us to use an enforced method of payment as a payment safeguard. Ordinarily these actions would attract collection and enforcement fees on the 2012 scheme, but we are committed to delivering a compliance opportunity as it protects the interests of the parent with care and can help to maximise the number of effective arrangements on the new 2012 scheme. The fee waiver that will be introduced under this instrument is required in order to be fair to both parents while testing the reliability of the non-enforced payments. That is considered necessary for the successful delivery of this essential measure.
The instrument will also make some technical amendments to clarify the existing rules governing regular deduction orders and lump sum deduction orders to allow them to include collection and enforcement charges. RDOs and LSDOs are enforced orders that are used to secure child maintenance liabilities by deducting money directly from non-resident parents’ bank accounts. The provisions in these regulations will put beyond doubt that we are able to collect the fees and charges associated with the new 2012 scheme, as well as the maintenance liability, and collect CSA arrears that have been moved to the 2012 system. This is in line with existing policy, and these provisions aim to put the legal position beyond doubt.
I am satisfied that the instrument is compatible with the European Convention on Human Rights, and I commend it to the Grand Committee.
Baroness Manzoor (LD)
My Lords, I have a couple of questions for the Minister. First, there is no mention of CSA arrears in the new compliance opportunity in these 2016 regulations. Will the Minister expand on how those cases will be dealt with? Secondly, what does the Government’s analysis show about subsequent child maintenance outcomes where cases involving children have closed, particularly as the Minister has mentioned that IT systems were providing much better outcomes?
Baroness Altmann
My Lords, I thank the noble Baronesses, Lady Manzoor and Lady Sherlock, for their questions. I will try to offer reassurance and some responses.
Both noble Baronesses mentioned the issue of arrears. The aim of this compliance opportunity is to test behaviour. Once the compliance opportunity has been either passed or not passed, if the case moves on to direct pay, the parents will be able to agree among themselves how to deal with the arrears; if the compliance opportunity is failed, it is clear that we will need the collect and pay service to collect arrears as well. We are moving the segment 5 cases on to the new scheme before the arrears have been cleansed, so the arrears relating to such cases will still be being assessed and cleansed in order to be accurate while the parents are moved on to the 2012 scheme.
We are not offering the compliance opportunity on the previous scheme, as the previous Government originally suggested, partly because that would mean that we would be offering every parent the compliance opportunity, while not all parents will transfer to the 2012 scheme. From an efficiency point of view, that would not be optimal. Also, the cost of upgrading the old IT systems and the amendments that would need to be made to them to accommodate the compliance opportunity on the old system would be significant, so moving everyone on to the 2012 scheme is much more efficient and cost-effective from the taxpayer or funding perspective. We will also focus on those parents who will use the 2012 scheme rather than include all those who may have no intention of doing so.
I welcome the fact that the noble Baroness, Lady Sherlock, has no objection in principle to these changes. I will just refer to her question of clarification about the RDOs and the LSDOs, which I specifically tried to answer in the last part of my opening speech. It is not a policy change; this is merely to try to ensure beyond doubt that there is the ability to collect not just the maintenance and the arrears on the 2012 scheme but the fees and charges that are associated with the 2012 scheme. Obviously, I apologise if that was not clear, but I hope that I have now made it clear.
The 2012 scheme will still be statutory. If people are on the 2012 scheme, it is no longer merely a voluntary scheme—they will have paid their fee to be on it and it will be statutory.
As regards the tools for enforcement for self-employed people, which is an important issue, the vast majority of cases have earnings, but for those where there is self-employment the compliance opportunity will consist of allowing the non-resident parent to pay 100%, rather than 50%, by a non-enforced method. However, after any payment is missed, the usual enforcement action will be taken. Part of the issue here is that we are moving people on to the 2012 scheme—it is not reactive, where they have requested to come across. As I understand it, we are trying to make sure, in response to stakeholder representations, that we do not impose collection charges before giving people at least some chance to prove that they can be trusted to make the payments reliably.
On the question of the numbers and the timings, which the noble Baroness, Lady Sherlock, requested, given the range of data that the noble Baroness has asked for, I will write to her to confirm these points.
As regards the collection of arrears and why the compliance opportunity does not include payment towards the legacy arrears, as I have said, this compliance opportunity is primarily a measure of behaviour and is designed to give the non-resident parent the chance to show that they can proactively manage their child maintenance obligations. This is based on the belief that, the more parents we can encourage to agree among themselves arrangements such as maintenance, the better this is in the interests of the children.
So it is not a question of trying to force people, or cajole them against their will, with no purpose. The purpose of the exercise is to try to encourage more parents not to rely on a statutory scheme to enforce the collection of child maintenance but to have the ability to agree among themselves, while obviously, as the noble Baroness says, giving them this behavioural nudge and indeed the financial incentive to do more to come together, in the interests of their children, to arrange child maintenance. The noble Baroness is right that the Government are committed to this scheme in the interests of the children. That is the overriding and most important element of our efforts in this area.
I was asked how successful the new scheme is. It is too early to provide that analysis, but we will be completing the 30-month review by the end of 2016, and we are currently testing, assessing and investigating what is happening on the scheme. We have commissioned research that is being undertaken to identify the kinds of questions that the noble Baroness has rightly asked. The noble Baroness, Lady Manzoor, also asked for that assurance. I assure both noble Baronesses that we are investigating how the system is working and what is happening to the families who do not come across to the 2012 scheme, as well as what is happening to the families who do. However, it is early days.
On the question of the number of cases that are coming across, the migration of cases on to the 2012 scheme is being very carefully managed and assessed. Cases do not move over in large numbers until we are satisfied that the particular segment that is being moved over is doing so successfully. That is really important, given the experiences that we had with previous schemes, where there was perhaps a little too much hurry in managing large numbers of cases without ensuring that all the underlying systems and processes were in place to make sure that they would be handled successfully.
That is where we currently are. We are moving across and, so far as we can tell, the programme is going very successfully. It is being carefully handled and managed. We are also ensuring, as much as we can, that the order in which we are transferring cases across also helps to ensure that those who move on to the 2012 scheme are likely to have a more positive experience. That certainly seems to be the case: the number of complaints and queries is much lower than we might have expected.
The Child Maintenance Options service seems to be helping families to come together in the interests of their children and to understand more what needs to happen in order for them to be able to make a successful agreement. Child Maintenance Options has a calculator to help parents to work out how much maintenance needs to be paid; previously, they would often have been unaware of that, or would have had to have gone to court or have gone through some other procedure in order to assess it, but they can now do that themselves. Two out of three parents using the new Child Maintenance Service are already opting not to rely on the state to collect and pay maintenance on their behalf, so again the new system’s aim of significantly reducing the numbers of parents for whose child maintenance the state is responsible seems to be being achieved.
Baroness Sherlock
I thank the Minister for answering some of my questions but I confess to disappointment that she was not able to provide any figures at all, given that I gave her office a few hours’ notice that I would be asking for that information, which ought to be in the public domain. However, I shall look forward to the letter expressing the figures in detail.
There are two questions which either the Minister did not answer or I expressed poorly—I take full responsibility for her answering a different question from the one I asked. The first question was on the timing of the compliance opportunity. I was not trying to ask her—I apologise if I did—why she was not doing the compliance opportunity on the existing scheme, as opposed to the CMS. What I was asking was: why did the Government not delay the compliance opportunity until the arrears had been moved across as well as the ongoing maintenance, so that the compliance opportunity could then be done on the entire liability of both ongoing maintenance and arrears? She said that it was testing behaviour, but that tests only the willingness to pay a small amount of that, and the arrears may be significant.
As to the second question, I did not quite understand what the Minister said about why the Government did not want to use the compliance tools available to them on self-employed non-resident parents. What is the reason for assuming that they do not need enforcement in the way that employed parents do? She could, I presume, use deduction orders as they are used now. She did not explain why that would not be the case.
Baroness Altmann
I will try to be a little more forthcoming with some figures, but, as I say, I will write to the noble Baroness with a more detailed reply. So far, 700,000 to 800,000 segment 3 and 4 cases have been moved across. When all cases are finished, there will be 800,000 to 900,000 cases expected to come over on to the 2012 scheme. I apologise to the noble Baroness that I may have omitted to answer the two specific questions that she asked me. It is not that she was not clear; it is that I was unable to keep up with all the questions.
The timing of the compliance opportunity is partly to ensure that we can successfully complete the migration of the old cases on to the new system in time to be able to close the existing IT systems before they run out of their usable life. There is a timing issue of requiring to get on with the compliance opportunity for segment 5 so that we can meet the end deadline for closing the 1993 and 2003 IT systems without incurring significant extra cost. If we were to delay until all the arrears had been cleansed on the old system, that might well take us beyond the period. By moving segment 5 across slowly now, we are trying to test how this compliance opportunity is working in a small number of cases, as I described earlier, and how the new system is working for those cases before we ramp up with these significant additional thousands of cases that still need to come across and meet the end deadline. This migration and the new system are being very carefully managed. It is a massive undertaking. We know the problems we have had with IT systems in the past, and we do not want those to happen with the new system.
Also, we would have had to either let everyone have direct pay or charge everyone for their ongoing maintenance. That is why we have not used the tools for the self-employed people. We are giving them the opportunity that we believe we have to give them. We cannot collect arrears until they have not paid. As I understand it, the deduction orders and the lump sum deduction orders will help us collect arrears but we cannot consider arrears from the old scheme as arrears in the new scheme, so we would either have to deem all the self-employed as unreliable payers, and therefore we could then enforce collection and charges, or give them the opportunity to prove that they are unreliable before we then take the fees for the collection and charges.
If further clarification is required, I will write to the noble Baroness. However, as I understand it, those are the bare bones of the issue. We can expand on that.
I thank noble Lords for their contributions to the debate and for their constructive approach to today’s proceedings. This Government are committed to ensuring that those parents who choose to apply to the statutory 2012 child maintenance scheme benefit from a successful and stable arrangement for payments in the interests of their children. Introducing a compliance opportunity will ensure that non-resident parents with a history of non-compliance should not access the direct pay service unless they have demonstrated a change of behaviour. This aims to help parents with care have confidence that their new arrangement will suit their circumstances and work in the best interests of supporting their children. I commend this instrument to the Grand Committee.
Occupational Pension Schemes (Scheme Administration) (Amendment) Regulations 2016
Baroness Altmann Excerpts(10 years ago)
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Baroness Altmann
That the Grand Committee do consider the Occupational Pension Schemes (Scheme Administration) (Amendment) Regulations 2016.
The Minister of State, Department for Work and Pensions (Baroness Altmann) (Con)
My Lords, in my view, the provisions in these regulations are compatible with the European Convention on Human Rights. By way of these draft regulations, we have responded to concerns raised by stakeholders by making some changes to ensure that occupational pension scheme governance requirements work as intended.
We already have over 6 million workers automatically enrolled into pension saving. We expect this to rise to around 10 million by 2018. Therefore, it is vital that pension schemes are well governed, particularly as most workers will not have made an active choice about their scheme or investments. With this in mind, we introduced new governance requirements from April 2015 in the Occupational Pension Schemes (Charges and Governance) Regulations. These cover occupational pension schemes providing money purchase benefits. They include annual statements regarding governance, certain requirements for processing financial transactions, appointing a chair of trustees responsible for signing the annual statement, and further requirements relating to the default arrangement. We also wanted to strengthen the independent oversight of schemes used by multiple employers, so in those regulations we introduced additional governance requirements for relevant multi- employer schemes. Under these requirements, relevant multiemployer schemes must have at least three trustees, and the majority of all trustees, including the chair, must be independent of providers of services to the scheme. These independent trustees must be appointed for limited terms and by open and transparent recruitment processes. The trustees must also make arrangements to encourage members or their representatives to make their views on matters relating to the scheme known to them. This could be done through members’ panels, annual general meetings or similar.
These additional governance requirements do not apply where the employers are part of the same corporate group, as we considered these schemes to be closer in nature to single employer schemes and thus less likely to require these additional member protections. These regulations amend the definition of “relevant multiemployer schemes” to ensure that it captures both commercial and industry-wide schemes that promote themselves to unconnected employers. Under these new regulations, a corporate group scheme may consist of one or more holding companies and subsidiaries of such companies.
We also made a temporary exemption from these additional requirements, until April 2016, for schemes set up by statute. This was because we wanted to carry out further work on their current governance arrangements before deciding whether this exemption should continue. I should also add that the National Employment Savings Trust is exempt from these additional requirements, as it already has rigorous governance requirements set out in law.
These governance measures cover occupational schemes offering money purchase benefits regardless of whether they are used for automatic enrolment or not. In addition, they exclude schemes where the only money purchase benefits offered are from additional voluntary contributions.
I recognise that pension law is complex and technical, and sometimes we need to change it to ensure that it does the job we want it to do. Since last April, some stakeholders have told us that the way in which we currently define a relevant multiemployer scheme has the unintended consequence of bringing corporate group schemes, which may undergo mergers, acquisitions or disposals, within the additional governance requirements, thereby causing an employer to become unconnected from the group. We have addressed these concerns by way of these draft regulations, which will amend the definition of a multiemployer scheme to ensure that such corporate activity does not bring a corporate group scheme within the additional requirements unless it promotes itself as open to unconnected employers.
I appreciate that the pre-existing governance arrangements for schemes set up by statute may be a good reason to continue their exemption from the additional governance arrangements. However, as I am sure the Committee will agree, we need to have better regulatory safeguards in place for the future across the pensions landscape. These draft regulations will not extend the temporary exemption for multi- employer schemes set up by statute. On balance, we considered that there was no significant reason to provide a further exemption from good governance standards. However, we will give such schemes up to six months to comply with the requirements for the appointment of independent, non-affiliated trustees.
Lord McKenzie of Luton (Lab)
My Lords, I thank the noble Baroness, Lady Altmann, for introducing these regulations in such a clear manner. We share the commitment to the importance of schemes being well governed. It is accepted that these regulations are generally focused on several technical amendments following on from governance requirements that were introduced last year, driven in part by the requirement to ensure that the growth of money-purchase schemes flowing from auto-enrolment is fit for purpose.
As we have heard, the thrust of these amendments seeks: to put beyond doubt that multiemployer group schemes are excluded from the additional governance requirements; to remove the chair of NEST from the required appointment timescale, because this is otherwise dealt with in statute; to allow a deputy to sign the chair’s statement when the latter is not in place; to enable a statutory override where scheme rules are in conflict with the trust deed requirements; and to let those schemes established by statute have a limited period to comply with the trustee appointments so that the current exclusion can expire—as well as some other tidying up.
We have no quarrel with those amendments, but seek clarification on just one aspect. In regulation 4, the substituted sub-paragraph (2ZA)(a)(ii), participating employers are “connected” if, inter alia, they are,
“are or have been partnerships, each having the same persons as at least half of its partners”.
The test seems to be a head count rather than being a sufficient commonality of shares of partnership activities. Is this what was intended?
That having been said, I should like to return to some points that my colleague, Angela Rayner MP, raised when these matters were debated in another place, particularly as they received scant response from the Minister in the Commons. Of course, we know that our Lords Minister, particularly being forewarned, will be able to do better. These issues concerned the growth of multiemployer schemes or master trusts. It was said that there is no official list of master trust providers although as many as 70 or 80 could be operating at the moment. What is the Minister’s understanding? My honourable friend cited two pieces of evidence given to the Work and Pensions Select Committee, one from the ABI and the other from the Pensions Regulator. The former pointed out that:
“Trust-based … schemes (including master trusts) … are not currently subject to the same stringent regulatory standards as contract-based schemes, which are regulated by the FCA”.
The latter pointed out that:
“Due to their scale, commercial purpose and design for use by multiple employers, master trusts represent different risks to members and consumer protection … master trusts themselves are not authorised prior to market entry and the regulatory framework is not designed for similar levels of ongoing supervision”,
unlike providers regulated by the FCA.
Does the Minister share these concerns? To what extent if at all has the position been ameliorated by the governance arrangements that we are discussing today? Is it satisfactory that the take-up of the voluntary master trust assurance framework seems to be so low? Does the Minister have an update on the previous figure of just five schemes? Is the Minister satisfied that the fit and proper persons test is being applied rigorously? Is it the case that master trusts are not protected either by the Financial Services Compensation Scheme or the Pension Protection Fund and is this an acceptable position?
The Minister will have read the Hansard record of other concerns expressed in the debate. I will not go over them all. It is understood that the Minister is on record as asserting that legislation is needed, particularly to deal with master trusts given their proliferation and the ongoing progress of auto-enrolment. We will have to wait and see what is in the Queen’s Speech in a few weeks’ time but one way or another, there are substantial issues here that need to be addressed.
Baroness Altmann
My Lords, I thank the noble Lord, Lord McKenzie, for his remarks. I am grateful that he shares our commitment that schemes should be well governed and welcome that he has no quarrel with our proposed regulations on these measures. I shall try to respond to some of his questions.
The noble Lord asked if the Minister shares the concerns that have been raised, and I can tell him that the Minister does share those concerns. It is true that trust-based schemes are not subject to the same regulatory controls. The authorisation of master trusts and trust-based schemes is the responsibility of HMRC. There is a “fit and proper persons” test now, but clearly even if that is applied rigorously more protection may be required. That is under active consideration. Such schemes are not, unless they are defined benefit, protected by the Pension Protection Fund, and even if the assets are protected by the FSCS, it is true that the costs of winding up the scheme could be deducted from the protected assets. Therefore, there is still a requirement for us to make sure that we protect as many people as possible in auto-enrolment and protect their pensions. These regulations, however, will ensure that there are improvements in governance standards. They will ensure that multiemployer schemes are better run and will clarify the governance requirements, which of course are such an important part of our pension system, to ensure that trustees are in place who can protect the interests of members.
With regard to the figures, over 90% of members who automatically enrolled into master trusts have been enrolled into those schemes that had signed up to the master trust assurance framework, which ensures that some quality features apply but is not, in and of itself, sufficient as a guarantee. It is a good indication of well-run schemes. There are a number of large master trusts available for auto-enrolment, and the Pensions Regulator is obviously trying to signal to employers that they have been through some quality assurance testing. Again, that is important because the worker who is auto-enrolled into a pension scheme has no control over the scheme chosen for them by their employer. It is therefore essential that we help employers to know how to choose a good pension scheme for their staff that is safe and secure, and indeed that they do so.
Well-run master trusts can and do offer good value for consumers and their employers, and of course we are keen that this market develops in the right way. We are aware that there are some potential issues and, as I am sure the noble Lord is aware, we are working with the Pensions Regulator to improve protection and ensure that the right protection is in place, which is likely to require legislation. We will come back to the noble Lord when the measures can be further elaborated upon.
There are a number of governance requirements that master trusts already have to meet under the current law, and I believe that the voluntary master trust framework covers seven schemes—is that right? I understand that it covers five at the moment, but others are in the pipeline. Still, we need to be sure that we are exploring, and will succeed in achieving, other protections in addition to those that already exist as auto-enrolment moves forward. Currently the contribution levels are extremely low, but numbers will increase—contribution levels will be quadrupling by 2019—so we must ensure that we have protections in place for those who enter auto-enrolment in the coming years.
On the noble Lord’s question about the head-count issue in partnerships, the purpose of the definition of “connectedness” is to help schemes to establish the degree of connection within a corporate group or partnership. If they are sufficiently connected, it can be exempted from the requirements. The partnerships definition is designed to ensure that two employers that are partners share a sufficient number of partners—that is, at least half—in order to be connected. This is about not just numbers but connection. As long as the multiemployer scheme is multiowner only because of connected employers, it is treated more like a single-employer scheme, but if a scheme promotes itself to bring in other employers rather than just being within the group then it is a multiemployer scheme, and we are trying to clarify that with these regulations. We hope that that will be clear.
Lord McKenzie of Luton
I will perhaps expand a little on the question, although maybe we should follow it up outside this session. I understand the thrust of employers needing to be “connected” for these purposes and, so far as partnerships are concerned, connection looks to be driven by a certain commonality of numbers of partners. However, numbers of partners may not tell you very much about where the weight and financial interest of any particular partner is. It would have been quite easy to construct something where you had a sufficient number of partners but all the clout and financial substance was with just one or two partners. I wonder how the “connected” rules would operate in those circumstances. I am afraid that this is a bit of a nerdy issue, and maybe we should deal with it outside this session if the Minister is not able to cover it fully today.
Baroness Altmann
I am happy to try to cover it if the answers that I have given are not sufficient. One of the crucial tests here is whether a scheme is promoting itself to outside employers rather than being part of a group. If a company is being taken over or if shares are changing hands, but it is all within the same group, same company and same partners, it is likely to be considered a connected scheme rather than a multiemployer scheme and therefore exempt. However, if there are other issues that the noble Lord would like me to elaborate on outside this debate, I am happy to explore those.
Baroness Drake (Lab)
I was not going to come in on this regulation but the Minister’s comments have prompted a question in my mind. If a company is in the corporate group and participating in a pension scheme—so it does not come under the definition of a multiemployer scheme—and that company then leaves the corporate group but continues to participate in that pension scheme, would that automatically transfer it to the status of a multiemployer scheme?
Baroness Altmann
The noble Baroness raises an interesting point, which I myself have explored. It is the case that if an employer leaves a previous group but the employees are still part of that scheme, it will be considered a connected scheme because the members are still part of the same group. The group stays in the scheme, so in that circumstance it would still be part of the group rather than becoming a multiemployer scheme, as long as it is not then opening itself to promotion to attract other employees and employers. I hope that that answers the noble Baroness’s question.
Baroness Drake
I do not want to labour the point but I am still not clear in my mind: if you have a corporate group of companies and one of them literally is divested in some way, and it continues to use that pension scheme but is no longer part of the corporate group, what status does that trigger? I am happy to pursue this question offline.
Baroness Altmann
Regarding these regulations, as I have just described, if employers that are outside the group can fit within these corporate scenarios—that will include where an employer was part of the corporate group but has now left the group and continues to participate in the scheme—they are considered a corporate group scheme.
Lord McKenzie of Luton
If that is the end of the exchange, I thank the Minister for a very full and quite frank response. It is very helpful to get that on the record.
Baroness Altmann
I thank the noble Lord. I am grateful for noble Lords’ careful attention and scrutiny of these draft regulations. We believe that good governance is fundamental to securing good member outcomes and these draft regulations will help ensure that schemes are better run, in members’ interests. The regulations that we have put forward today will make amendments that will help to clarify the scope of the governance provisions. I am grateful for Members’ contributions to this debate. I hope I have set out the need for these regulations, and have responded as best as I can to the matters raised. If necessary, I will continue to answer any further questions that noble Lords may have. I commend these draft regulations to the Committee.
Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2016
Baroness Altmann Excerpts(10 years ago)
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Baroness Altmann
That the Grand Committee do consider the Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2016.
The Minister of State, Department for Work and Pensions (Baroness Altmann) (Con)
My Lords, this order, which was laid before the House on 8 February 2016, reflects the conclusions of this year’s annual review—required by the Pensions Act 2008—of the automatic enrolment earnings thresholds. The review considered both the automatic enrolment earnings trigger, which determines the point when someone becomes eligible to be automatically enrolled into a workplace pension, and the qualifying earnings band, which determines the earnings levels in relation to which the enrolled employee and their employer have to pay contributions into a workplace pension.
The order sets a new upper limit for the qualifying earnings band and is effective from 6 April 2016. The earnings trigger and the lower earnings limit are not changed within this order. The lower earnings limit remains as set in the Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2015. The earnings trigger also remains that set in the Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2014.
Automatic enrolment continues to make workplace pension saving the “new normal”. The proportion of those enrolled who later choose to opt out remains low, at 9%, according to the Employers’ Pension Provision Survey 2015, which is well below the original programme assumption of 28%. Our new awareness campaign, launched in October 2015, Don’t Ignore the Workplace Pension, builds on previous campaigns that sought to normalise pension saving among individuals and is designed to prompt employers—small and large—to find out about their duties and the process of automatic enrolment.
Automatic enrolment continues to bring into its target group those least likely to save for retirement. Low-paid workers and women, who are often likely to be low earners, have traditionally been underrepresented within workplace pension savings. Since 2011 the private sector has seen a 24-percentage-point increase in eligible female participation in workplace pensions, and in 2014 there was no gender gap in participation, with 63% of both eligible men and women participating.
This positive trend is expected to continue as we enter automatic enrolment’s most significant stage: the phased rollout to small and micro employers from now on. Last year saw the successful staging of the first tranche of small and micro employers. Over the next 12 months, more than 700,000 small or micro employers are projected to have started enrolling their employees into a workplace pension. Many tasked with this legal duty are not commercial enterprises but individuals who employ single members of staff, such as nannies, home helps or personal care assistants. At this crucial stage of implementation, it is therefore more important than ever that when deciding the thresholds for joining and contributing to a workplace pension we strike the correct balance between minimising the administrative burden on employers and ensuring that as many people as possible save in a workplace pension.
To describe the impact of the order, I turn first to the qualifying earnings band. This sets the earnings levels within which an automatically enrolled employee and their employer have to pay a proportion of the employee’s income into a workplace pension. Past reviews have generally linked this to the national insurance bands and this has been uncontroversial. As I signalled in my Written Ministerial Statement on 15 December 2015, the lower limit for the qualifying earnings band will remain unchanged and aligned with the national insurance lower earnings limit of £5,824. This order will align the qualifying earnings band upper limit with the new national insurance upper earnings limit of £43,000. By maintaining the alignment with the national insurance thresholds, both at the point where contributions start for low earners and are capped for higher earners, the overall changes to existing payroll systems are kept to a minimum. This decision therefore both ensures simplicity and minimises the administrative burden of compliance for employers in 2016-17.
The order does not change the earnings trigger. This remains at the value set in the 2014-15 order. This trigger is the earnings level at which individuals are eligible to be automatically enrolled into a workplace pension scheme by their employer. We have decided to maintain the existing automatic enrolment earnings trigger for 2016-17, so it will remain at £10,000. Due to anticipated wage growth, and with maintenance of the earnings trigger, we expect that an additional 130,000 individuals will now meet the earnings criteria and be brought into the automatic enrolment population. Of these, we estimate that 71%, or around 91,000, will be women. Individuals earning below the £10,000 earnings trigger but above the lower earnings threshold will still have the option to opt into a workplace pension and benefit from their employer contributions, should they wish.
In conclusion, the decision to maintain the earnings trigger at £10,000 will increase the number of low earners and women who meet the earnings criteria, and who are therefore automatically enrolled into a workplace pension. This decision will increase the total numbers saving into a pension and total savings. It is expected to further increase the number of women eligible to enrol, or be re-enrolled, into a workplace pension.
The decision to maintain the alignment of the lower and upper earnings qualifying bands with national insurance contributions thresholds maintains simplicity, and ensures that there are no new potential administrative burdens on employers at a crucial stage of the programme’s wider rollout. The order therefore ensures that automatic enrolment will continue to provide greater access and opportunity for more individuals to save into a workplace pension with the help of their employer, and those enrolled will have a chance to build up meaningful pension savings. I commend the order to the Committee.
Baroness Drake (Lab)
My Lords, these regulations provide an annual event for me. While I consistently recognise the success of the department in rolling out auto-enrolment, and we have all been pleased by the power of inertia to sustain low levels of opt-out, in previous years I have been increasingly frustrated by the number of women being excluded from auto-enrolment because of the rather aggressive way in which the earnings trigger was increased. Last year I came with a little more humility and was pleased to see that the earnings trigger was being maintained at £10,000 rather than tracing the tax threshold, and of course I am pleased that it is being maintained at £10,000 again. Those are the positives, and I am a “half full” person, but even a “half full” person still wants the extra half-glass that remains empty. I continue to remain concerned that only 38% of the eligible auto-enrolment population are women. In my view, that is still too low. A core principle in designing the new private pension system was that it should work for women, and I do not think that that principle is being met with in that percentage level.
Lord McKenzie of Luton (Lab)
My Lords, I thank the Minister for introducing this order. We support the progress which has been made on auto-enrolment and we should take this opportunity to pay tribute to those who helped to create it. My noble friend Lady Drake was there at the start, or indeed before it, and she has expressed her concerns that the system still does not seem to be dealing adequately with the concerns and needs of low-paid women. It will be interesting to hear the Minister’s response to all that.
In her introduction, the Minister referred to the fact that those between the LEL and qualifying earnings can opt into the system. Do we have any data about how many actually do that? I think she cited that there was equality in 2014, in so far as 63% of eligible men and 63% of women opted in. The trouble is that the numbers of men and women were not equal, which meant that many more men opted in, so her statistic was a bit unfortunate.
As my noble friend Lady Drake has recognised, freezing the earnings trigger for a second year has a modest impact in drawing more people in and will help women, who are of course disproportionately represented among the lower paid and have missed out on auto-enrolment previously. One of the effects of freezing the trigger at £10,000 is a widening gap between the contributions and the income tax threshold, which means that, as a practical matter, those who are on the net pay tax relief arrangements are not actually getting effective tax relief. There are, of course, two ways in which you can get your tax relief: one is through the net pay arrangement and the other, the name of which escapes me—
Lord McKenzie of Luton
It is indeed relief at source. I am grateful to the Minister. What is happening to try to ensure that those people who are subject to the net pay arrangements are getting their tax relief? I am not quite sure what the arrangement with NEST is. I think that relief at source, which generally operates for NEST, will obviously cover a good many people, but how many people are missing out? These are people at the low end of the income scale who are not getting their tax relief, which was an important ingredient of the overall arithmetic.
Has there been any progress on aggregating mini-jobs for the purposes of the trigger and qualifying earnings band? If our noble friend Lady Hollis were here rather than in the debate on the Housing and Planning Bill, she would be on her feet extensively.
Lord McKenzie of Luton
It was about people with mini-jobs being able to aggregate to reach the thresholds. We understand some of the practicalities, but has any progress been made on that?
I have another question to which I genuinely do not know the answer, about the impact of zero- hours contracts and fluctuating earnings on take-up arrangements. Looking at the varying pay periods, how does this work when somebody is within a pay period and above the threshold for one month but not for the subsequent period, so that they fluctuate in and out of the system? I think those were all the questions that I had. We will obviously not be opposing these provisions, and I look forward to the Minister’s response.
Baroness Altmann
My Lords, I thank the noble Baroness, Lady Drake, and the noble Lord, Lord McKenzie, for their excellent contributions. I certainly join in the tribute paid to the noble Baroness by the noble Lord for her role in setting up and being responsible for the successful programme of auto-enrolment.
I am delighted and welcome the fact that the noble Baroness welcomes the decision to freeze the earnings trigger. I am also delighted that she is as pleased as we are with the low opt-out rate and that, so far, this programme has indeed been a real success. All the points raised by the noble Baroness are valid, and are ones that I have raised in the past. However, there is a further reason why we have to be mindful of where we set the earnings trigger, and be very careful as we move forward with this policy not to derail what is already such a success. Part of the reason why it is such a success is that there is widespread consensus among employers as well as the pensions industry that this is the right thing for the country. Employers have accepted—willingly, in many cases—the idea that it is normal, and should be normal, for an employer to be responsible for not only the national insurance and tax of their employees but also a pension for their workforce.
However, as the noble Baroness knows, that consensus was hard won. It was the result of a very long period of negotiation and renegotiation, part of which concerned the costs to the employer. Although the earnings trigger is higher than might have been expected a few years ago, we have put other burdens on employers. Were we to reduce the earnings trigger significantly at this stage, given that we have the rollout of the national living wage, the apprenticeship levy and other elements that will impact on employers’ labour costs, it would be right to be mindful and careful about how quickly we move to include significantly more people in pension saving. However, notwithstanding that, as I said, 130,000 more people will be brought into pension saving—71% of whom are expected to be women—as a result of keeping the earnings trigger at the £10,000 level rather than moving it up, as was one of the considerations.
The noble Lord, Lord McKenzie, also referred to women. I once again confirm that the coverage of pensions for eligible workers is the same for women and men. As most noble Lords are probably aware, I would certainly like to see more women being brought into auto-enrolment. In time, I am sure that we will be able to do that. Of course, they can now opt in anyway if they are earning more than £5,824 a year and receive an employer contribution. That still means that they do not get the same behavioural nudge, but I can report that the latest figures suggest that 5% of those who are not eligible and are earning below the relevant figure are opting into their employers’ pension scheme. It is a start. I hope that, in time, we will go further as we establish this as the norm and as more workers become aware of the fact that this could be effectively free money from their employer, and that a significant extra contribution on top of their own pension savings is on offer if they wish to take it up. Of course, it takes time for those messages to come through.
As the noble Lord may well be aware, the issue of net pay arrangements is something significant that I have raised since I became aware of it a few months ago. Clearly, it is not acceptable that the very lowest earners might be required to pay about 20% to 25% more for the same pension as someone who earns more than them. That is the potential result of their employer choosing to use this net pay arrangement-type of scheme rather than a relief-at-source scheme.
Motability
Baroness Altmann Excerpts(10 years ago)
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Baroness Thomas of Winchester (LD)
My Lords, I beg leave to ask the Question standing in my name on the Order Paper and declare an interest in that I have a Motability car myself.
The Minister of State, Department for Work and Pensions (Baroness Altmann) (Con)
My Lords, there are now more people on the Motability scheme than before the personal independence payment was introduced and there is £175 million of transitional support for those who lose entitlement. Personal independence payment maintains the key principles of disability living allowance while better targeting support at those with the greatest needs. The Government are committed to its safe, secure rollout and have no plans to reassess it.
Baroness Thomas of Winchester
Notwithstanding what the Minister has said, does she not agree that it is one thing for a working-age person not to receive enough points at the first assessment to be entitled to a Motability car but quite another to have your existing Motability vehicle snatched away, not because you have got better but because the test has been made impossibly harsh? Does that not run counter to the Government’s aim to halve the number of disabled people who are out of work?
Baroness Altmann
The Government are absolutely committed to supporting disabled people but the disability living allowance was inconsistent and subjective whereas the personal independence payment assessment is more consistent and fairer.
Lord Walton of Detchant (CB)
My Lords, is the Minister satisfied that the individuals chosen to assess the nature and significance of the disability of disabled individuals are properly qualified and trained to carry out such assessments, and that in doing so they employ well-defined and reproducible criteria?
Baroness Altmann
My Lords, the Government are satisfied that those who carry out the personal independence payment assessments are qualified to do so—and indeed, reports suggest that the assessments are running better than the previous DLA regime.
Baroness Campbell of Surbiton (CB)
My Lords, considering the numbers of PIP recipients who win on appeal, does the Minister agree that it would be much fairer to leave the Motability car with the person while they wait for the appeal decision to come through, especially if the car has had an expensive adaptation?
Baroness Altmann
My Lords, the time taken for appeals is being reduced. Certainly the first step is mandatory reconsideration, which in general takes place before the Motability car needs to be returned, as there is a seven-week period. However, the long-standing policy of the department is that if it is assessed that somebody is no longer entitled to a car, it must be removed pending appeal.
Baroness Sherlock (Lab)
My Lords, the Minister thinks that the system is working better. One must ask: for whom? The BBC reported in February that 14,000 disabled people had had their Motability cars taken away from them, which is 45% of the 31,000 who had had an assessment. If that scales up, we will see hundreds of thousands of disabled people not having access in future to a Motability car. So I ask the Minister again the question put to her by the noble Baroness, Lady Thomas of Winchester: how does this contribute to the Government’s aim to halve the disability employment gap?
Baroness Altmann
The Government are absolutely committed to halving the disability employment gap and we understand that being reassessed for any benefit can be a challenging time. That is why, after discussions with my department, Motability announced a £175 million package of transitional support. Those who lose their cars can get £2,000 for a new one or can buy their old car, and are given time to adjust. But the idea of the reassessment is that the DLA was inconsistent—many people had lifetime awards—whereas PIP offers a more consistent and fairer approach.
Lord Campbell-Savours (Lab)
My Lords, should not the mileage on the clock of one of these vehicles determine how long the vehicle is held for, as against the age of the vehicle?
Baroness Altmann
The current rules we use for assessment allow people to buy their used Motability car if they so wish—but the rules of the scheme have been carefully set and assessed.
Baroness Doocey (LD)
My Lords, are the Government confident that the four reliability criteria are being clearly explained to claimants by all health professionals in view of the high success rate of PIP appeals?
Baroness Altmann
The success rate of the appeals in PIP has much more to do with the fact that the appeal case hears far more evidence and the person who appeals has had time to put forward their arguments. The appeal would normally hear new and different evidence from that which has been placed before the assessor in the past.
Baroness Grey-Thompson (CB)
My Lords, does the Department for Work and Pensions monitor the accuracy of assessments by Maximus and Capita? What action is being taken against assessors who make inaccurate assessments? Perhaps this could be an opportunity where disabled people could be employed.
Baroness Altmann
A very small number of the cases actually go to appeal. At this moment we are confident that the processes in place are doing the work that they need to do.
Baroness Hollis of Heigham (Lab)
My Lords, I estimate that perhaps 200,000 people who currently have Motability cars will lose them as a result of the PIP activity. Very many of them will appeal, and they will win. Given that the Minister has accepted, admitted and shared with the House that the appeals procedure is infinitely more reliable than the original PIP decision by virtue of the additional information that it has, can I ask her to reflect on the previous answer that she gave so that people can keep their cars until their appeal has been completed?
Baroness Altmann
The current level of appeals is extremely low and we do not wish to give people any incentive to appeal. I also point out to noble Lords that more people are getting Motability cars now than before PIP was introduced.