National Risk Register

Baroness Altmann Excerpts

Thursday 4th June 2020 Lords Chamber

[Lord True]

My Lords, I profoundly agree with my noble friend about the importance of these matters. The report from PHE is an important start but, as my colleagues in other responsible departments and the public health authorities have said, we need to build on it and go forward. That stage of work is being undertaken and I would underline the absolute commitment of the Government in this area.

[Baroness Altmann (Con)]

My Lords, the latest risk register, published in 2017, highlighted planning for a flu pandemic as one of the major risks faced by the country. It mentions measures taken to prepare with PPE and infection control protocols. Can my noble friend outline for me, or write to me on, how those protocols and PPE preparations were specifically targeted at the most vulnerable people in the country: those living in care homes or in the social care sector?

[Lord True]

On the detailed and very important point that my noble friend raises, we will provide her with the details that she asks for. The flu requirement for PPE is slightly different from that for Covid, which is different from flu in its symptoms and hospitalisation rate. My noble friend will understand that—but, again, I believe that the Government have made a determined and effective response.

Income Equality and Sustainability

Baroness Altmann Excerpts

Wednesday 6th May 2020 Lords Chamber

[Baroness Altmann (Con)]

My Lords, I too thank the most reverend Primate and wish him well for his retirement. Of course, income is not the only determinant of individual well-being and there will always be richer and poorer in every society, but a vital social and moral issue for the aftermath of this crisis is to see a greater contribution from the better-off to help lower-income groups and alleviate poverty. I will focus on three issues: the role of monetary policy, debt and fiscal policy in addressing income inequality.

Monetary policy’s quantitative easing boosted the assets of wealthiest groups and asset owners while increasing housing costs for the less well-off and younger citizens. As a result, households have taken on extra debt for life’s essentials, thus exacerbating income and wealth inequality.

Rising debt levels were based on expectations of ongoing employment that have been frustrated by the crisis. Will my noble friend the Minister ask his department to look into ways in which the socially damaging side-effects of QE can be mitigated by policies to redistribute wealth and income windfalls?

The crisis will see millions more people relying on state support. This requires not simply increased tax rates but a wider tax base. The offshore-based entities that have made massive windfall profits during this crisis—from so much business moving online, for example—must pay a fair share of the support for our population. Taxation of turnover in UK markets, rather than profits that can be moved outside this jurisdiction, and more progressive property taxation—as mentioned by my noble friend Lord Young of Cookham—are just two examples. I hope that this crisis will lead us to a more equal society.

Tax Avoidance

Baroness Altmann Excerpts

Wednesday 29th April 2020 Lords Chamber

[Lord Agnew of Oulton]

I take on board the noble and right reverend Lord’s points, and I would be interested to see the five criteria that he mentioned. I reiterate that the thrust of our approach has been to support businesses that are active in this country with premises and people. In a way, our approach is quite similar to that of Poland, because we require that foreign businesses have a permanent establishment here. I reassure the noble and right reverend Lord that we have taken a huge amount of action over the past 10 years to clamp down on poor tax practice.

[Baroness Altmann (Con)]

I support the Government’s broad, sector-wide approach to helping to preserve jobs as an emergency measure, but the companies based offshore that have avoided paying taxes in the UK have in many cases made windfall profits from those at home in isolation. Echoing the remarks of the noble Baroness, Lady Kramer, should we not look at ways of introducing windfall taxes so that these companies contribute fairly to the taxpayer’s support for other firms that have suffered Covid-related losses as a consequence?

[Lord Agnew of Oulton]

I think that most of us share the noble Baroness’s views on abusive tax measures by companies. Apart from all the measures that we have introduced over the past seven or eight years, we announced that we will legislate this year in a Finance Bill for 2021 to strengthen HMRC’s existing anti-avoidance powers to make it more difficult for promoters, in this case, to sidestep their obligations. We will continue to bear down wherever we can.

Economy: Update

Baroness Altmann Excerpts

Tuesday 28th April 2020 Lords Chamber

[Lord Agnew of Oulton]

I thank the noble Baroness. On insurance, I did not hear my noble friend Lord Callanan’s response, so I do not want to conflict with what he may have said, but the key thing here is that when one takes out a general business policy, one has the option of an extension for pandemic cover. The problem is that I think most businesses did not elect to do that, so it would not be right then to impose that cover on insurers retrospectively through the route suggested by the noble Baroness.

On paying council tax rather than business rates, as I have mentioned before, we have put together a package of some 11 types of support for businesses, ranging from the very smallest to the largest, including such things as the deferral of tax liabilities. I believe that there are 1.3 million self-employed people on self-assessment. Deferring will provide that whole cohort with some £13 billion in cash flow. So a range of measures is there. It is important for noble Lords to look in the round at the support that we are offering.

[Baroness Altmann (Con)]

In light of my noble friend stating that record levels of debt will result from this virus, and in light of the Bank of England purchasing significant amounts of conventional gilts, might he ask his colleagues whether they are considering liaising with the DMO to issue specific gilts for pension funds which have more than £1 trillion? That could be invested in mortality or longevity gilts, CPI-linked gilts and LPI-linked gilts to assist those defined benefit schemes that have significant problems in light of the current circumstances, to match their liabilities more accurately.

[Lord Agnew of Oulton]

My noble friend makes a very good point. It is certainly an idea that I will take back to the Treasury for further discussion. We issued war loans in both of the last world wars and it took a long time to pay them off, but it is a way of ring-fencing the efforts that we will have to deploy to bring the country back from this awful business. So I thank my noble friend for her very sound suggestion.

EEA Nationals (Indefinite Leave to Remain) Bill [HL]

Baroness Altmann Excerpts

2nd reading (Hansard): House of Lords
Friday 19th July 2019 Lords Chamber

[Baroness Altmann (Con)]

My Lords, I congratulate the noble Lord, Lord Oates, on introducing the Bill and on his steadfast dedication to protecting our country’s reputation at this vital time.

This is a question not just of the rights of good people who have chosen to work and live in our country but of honour, trust and decency. Are we a country that keeps our word? We have heard from other noble Lords of the unequivocal assurances given to the 3 million EEA nationals who are living here, that they would be automatically granted indefinite leave to remain in the UK, with rights no weaker than now. Instead, as so eloquently described by the noble Lords, Lord Oates and Lord Kerr, and my noble friend Lord Cormack, they are being offered a settled status based on immigration regulations which can be changed by Ministers, and which are not even set in primary legislation. This will offer a code—no physical proof or stamp in a passport—and it must be applied for by a strict cut-off date, so if someone is unwell or unaware and misses the deadline, they will lose out. That is hardly an automatic grant of the indefinite leave to remain they were promised. The House of Commons Home Affairs Committee also supported a declaratory approach, with physical proof of approved rights.

So I add my thanks to the noble Lord, Lord Oates, for producing the Bill, which I fully support, and I urge the Minister on the Front Bench—whom I welcome very much to this debate—to offer, if she can, some words of support or assurance to the House that she will take this seriously and bring it back to the department for further discussion.

As so many noble Lords have said, we should have done this right at the start of the Article 50 process. We have treated these good people inhumanely. They have been subject to uncertainty—we have not taken the moral high ground. So, again, I urge the Minister to relay the desire to act, albeit belatedly, with honour and decency that has been expressed in this debate, to demonstrate that our Government’s words can be trusted—especially at this late stage, when a new Prime Minister will seek to reopen negotiations with the EU, which it has spent so long drawing together and which it has said it is not willing to reopen. I urge the Minister to consider the calls to fast track this piece of legislation now and show good will and appreciation towards the EEA citizens who perform such important work for us all, which should have been present right from the start. The Bill does what would have been needed and what we can still offer in a spirit of good will. It has my full support.

I also add my words of support, as expressed by my noble friend Lord Cormack, to the noble Baroness, Lady Hayter, for all the work she has done, and I express my regret at the way she has been treated, notwithstanding that I welcome the noble Lord, Lord Kennedy, who is here today.

Breathing Space Scheme: Consultation Response

Baroness Altmann Excerpts

Wednesday 19th June 2019 Lords Chamber

[Lord Young of Cookham]

The second part of the noble Lord’s question is easier to answer than the first. Any overpayments to the DWP will stop. People will not have their benefits docked if part of their benefit is an overpayment of a previous benefit; that will stop from day one. Likewise, if they have been overpaid universal credit and it is being docked because that is being paid back, that will stop on day one. On financial capability, I remember the noble Lord’s interventions during consideration of the Bill referred to by the noble Lord, Lord Stevenson. I mentioned in passing the work of the Church in financial education, but the noble Lord’s question deserves a more substantive reply than I can give at the moment. Perhaps I could write to him about progress on developing financial capability.

[Baroness Altmann (Con)]

My Lords, I declare my interest as set out in the register, as an adviser to a social enterprise which helps people in debt to manage and consolidate their debt more cheaply in the workplace. I congratulate my noble friend the Minister on this Statement, and in particular I congratulate our honourable friend the Economic Secretary to the Treasury, who has clearly listened carefully to the debates and points made on this issue. The extent of the measures announced today goes a long way towards proving that he is genuine in saying that this issue, which we have worked on extensively across this House, is close to his heart. I pay tribute also to the noble Lords, Lord Stevenson and Lord Sharkey, who were instrumental in this area, and thank the Government for introducing something so necessary. I have one brief question. Will the Minister find out what plans the department has to make sure that these schemes are publicised, so that those who need them are rapidly directed to the help that will be available?

[Lord Young of Cookham]

May I, in turn, compliment my noble friend, who was a Minister at the DWP and can perhaps claim some maternity regarding some of the policies we are now discussing? She made a very valid point about the role of your Lordships’ House. I recall the debates on the Bill; it was improved as it went through, partly as a result of the intervention of the noble Lord, Lord Stevenson. My noble friend mentioned publicity, and I entirely agree. When the time is right and we are ready to launch the new scheme, it should of course be well publicised so that those in financial difficulty know that it is available and, crucially, how to access it.

Economy: Personal Savings

Baroness Altmann Excerpts

Thursday 12th July 2018 Lords Chamber

[Baroness Altmann (Con)]

It is a pleasure to follow the right reverend Prelate, and I, too, congratulate my noble friend Lord Leigh for initiating this debate on the important issue of the fall in the savings rate. I also offer my congratulations to my noble friend Lord Lilley on his brilliant maiden speech. We all look forward to hearing many more words of wisdom from him in the coming years.

This is a debate about the role of savings in economic growth, building a stronger and fairer society, and promoting personal savings and the savings habit, which is surely an element dear to the hearts of most of us Conservatives and, indeed, most of us in this House across all parties. I congratulate my noble friend the Minister and the Government on some of the excellent initiatives that have been introduced to promote and build up a savings culture once again. Many of us have been concerned that that savings culture has been lost or damaged in recent years, partly due to the Bank of England’s emergency measures of quantitative easing, which have driven interest rates down so low, and have caused serious problems to pension schemes in this country.

The introductions of auto-enrolment and the pensions freedoms have been excellent opportunities to increase the coverage of pensions and make them more user friendly. In addition, we have had the Pension Wise service, which will be merged into the single financial guidance body, which is something that we could and should have had years ago—a national scheme that will help individuals better understand how to manage their money and pensions. Indeed, it will include debt, too.

The charge caps on default funds in pension schemes, after so many scandals with excessive what we call “rip-off” charges for so many years, are again extremely welcome. I also welcome the increase in ISA allowances, but I shall come back later to express some concerns about the overall ISA framework.

On exempting savings interest from tax, every little bit helps when interest rates are so low. That is certainly to be commended. The Help to Save scheme, which a number of noble Lords have mentioned, will I hope be an excellent initiative. And then there is help with debt generally, in controlling excessive charges on high-cost credit. All these things are to be commended, but many areas still need improvement.

I shall focus on some of the ways in which issues such as saving and debt are causing problems in the economy, and some of the possible resolutions, before finishing with some of the longer-term issues for savings and investment. From the point of view of the Lords Select Committee on Financial Exclusion, it was clear that there are real problems across the country, with 31% of the population reporting signs of financial distress. Twenty per cent of 18 to 24 year-olds are having problems with credit scores, which will lead to a rise in debt levels and in the use of high-cost debt, which are a significant cause for concern. The Bank of England’s analysis responded to concerns about the extreme rise in debt levels across the country, suggesting that they were not of such concern because increases in borrowing rates had been matched by rises in the value of financial assets. That did nothing to assuage my concerns or those of many others because, of course, most people who have high debts do not own financial assets, and therefore are negatively affected.

We are seeing this in the workplace. I declare an interest; I am advising a social enterprise that is trying to help workers manage their high-cost debt in the workplace through salary deduction and consolidation at lower rates. We know that financial worries exacerbate stress and mental health issues. These are already the biggest causes of sickness absence from the workplace, with 17.5 million working hours lost as workers take time off due to financial stress. Barclays did a study in 2014 which suggested that 46% of employees worried about finances. In 2017, the CIPD suggested that 25% of employees said that financial problems affected their work performance. Indeed, in the public sector for some reason that was 30%. So clearly there are issues. If employers can see the clear self-interest in helping their staff reduce debt costs and manage their debts, using programmes such as salary finance, which enable employers to deduct debt repayment from their staff’s salaries so they do not have to keep worrying about juggling debts and about where and how to manage repayments, it could be a win-win by improving productivity, staff well-being and the financial resilience of our population, which is so important as we move forward. We have had some years of very reasonable economic performance, but we cannot expect that necessarily to continue, so if we are able to build up financial resilience, that can only be of benefit to society as a whole.

I cannot properly speak in this debate without mentioning the exciting and brilliant topic of pensions—at least, I think they are exciting and brilliant. As the noble Lord, Lord Palmer, said, this brings us to the important issue of the difference between savings for a rainy day and investment for the longer term. Too often I feel that the public—and indeed sometimes policy—confuse the two and think of it all as savings, whereas there is a fundamental difference in terms of long-term investment. Pension saving by its nature is long term. We have hundreds of billions of pounds built up in pensions in this country. I know that we keep reading headlines about the pensions crisis and that there is not enough in pensions, but there is a huge sum of money in pensions, and we perhaps have an opportunity to focus on using those assets productively.

There is an attempt, on which I commend the Government, to use more of the assets of local authority pension schemes to invest in infrastructure. Consolidating the schemes, we could use pension assets for social housing and environmentally and socially responsible investing. There is an opportunity in the workplace with auto-enrolment. Will the Minister comment on the opportunity to engage in particular young people but workers of any age with what their pensions are invested in and to educate them and enable them to understand investment? So many people fail to understand the first thing about pensions, despite the fact that, with the pension freedoms, they are the most brilliant product. They are user friendly and can be used in ways in which we did not use them before. As we spread auto-enrolment across the whole workforce, this is increasingly important.

I shall just mention some notes of caution and ask the Minister to comment on some of them. First, as has been mentioned, it is vital to help consumers. A proper ban on cold calling is long overdue. All the scandals I have seen in pensions have started from a cold call. We worked hard across the House on the Single Financial Guidance Body and on the Bill that has just gone through to try to introduce a proper ban on cold calling that would require the FCA, the regulator, to prevent and disallow providers using leads from unregulated lead generators that started with a cold call. That is work in progress and has not yet been achieved.

There is also an issue with the ombudsman. A report has been issued today, I believe—I do not know whether my noble friend has had time to see it—on some of the failings of the Financial Ombudsman Service. There is great merit in helping consumers by merging some of the activities of the various consumer services that are there to help the public. The Pensions Ombudsman does not deal with all pension complaints. The Financial Ombudsman Service deals with some of them, the Pensions Ombudsman with others. Would it not make sense to have every pension complaint dealt with by one ombudsman?

My noble friend Lord Lilley mentioned pensions tax relief. I have long believed that most people do not have the first clue how much they get from pensions tax relief or what it is worth, yet we spend more than £40 billion a year on it. If we could rebadge pensions incentives as a flat-rate top-up, a bonus that you get for saving in a pension that is contributed to by the taxpayer, people would start to understand it and value it.

One could get even more radical and suggest that auto-enrolment, once it is bedded in, becomes compulsory. That would mean that the Treasury might not need to spend any of the money it spends currently on tax relief on auto-enrolment pensions, saving the taxpayer a fortune. The value of the pensions tax relief is tiny compared to the value of the employer contribution, which is a major incentive. Going on from that, it would be possible to have more generous incentives, funded by the taxpayer, to encourage people to build on more than the minimum under auto-enrolment, which I think most of us would agree will not give you a huge pension. It will give you a bit extra, above what the state can give you.

There is a scandal in the pensions system at the moment which I am very concerned about. I have raised it in the House several times and I implore my noble friend to take this issue back and ask for urgent action. It concerns what are called net pay administration schemes. There are millions of low-paid workers—this applies only to workers earning below £11,850—who are auto-enrolled into a pension administered in such a way that they cannot get the 25% bonus of tax relief that they are due. Most people do not know about it. I do not want most people to need to know about it. I urge the Government to deal with it so that these people, who are surely those who need most help with pension saving, end up with the money they are owed. I do not want another big scandal on this.

The other issue that concerns me is the lifetime ISA. In my humble opinion, it is dangerous, confusing to the individual and a huge mis-selling risk. Most people who go into it will need financial advice—but not necessarily a financial adviser—because they will not understand the penalty of at least 6% that they will pay if they take the money back. If we want to incentivise house purchase, we should do so directly, rather than confusing people with something that masquerades as a pension but has completely the wrong behavioural incentives. With pension freedoms, pensions are brilliant, because there is now more reason to keep them into your 80s, and that is what pensions should be about: lasting for the rest of your life, not giving you a pot of money to spend at age 55 or 60.

That brings me to my final point, which is that we must address the issue of saving for social care. Nothing has been done on this. We spend £40 billion incentivising retirement saving in just one product—the pension—yet a pension is not enough to see people through 21st century retirement. I recently had a response from the Government to a Written Question which identified that the over-65s—just the over-65s—have on average almost £40,000 in ISAs. There are millions of people with this money; it is not earmarked for anything. We know that the baby boomers are criticised for having savings, pensions and houses, but we should be harnessing that and celebrating it. If we look forward 10 or 15 years and they start needing care, but they have spent all that money, we will have a problem. However, if we have encouraged them to keep some of the money they have saved for care, we will have the beginnings of some kind of resolution to the care crisis, which makes the pension crisis pale into insignificance.

There is not a penny set aside for the future funding of social care—not by individuals, or the Government, whether national or local—and this cost is coming. Perhaps we could have a care ISA allowance. People could rebadge the ISAs they have, and maybe we could incentivise that by making them inheritance tax-free. That would not cost the Government much at all right now, but it would mean that people could save for later life. We could maybe allow people to take money out of their pensions tax-free if it were used for care in later life. Anything we can do to help people—the baby boomers, in particular—keep their ISAs and pensions for later life would be commended. I would be most grateful if the Minister would comment on that. I congratulate my noble friend again on raising this important debate.

House of Lords Reform: Elected Second Chamber

Baroness Altmann Excerpts

Tuesday 3rd July 2018 Lords Chamber

[Lord Young of Cookham]

I agree that all those professions and interests should be represented in your Lordships’ House and that the Cross Benches have a good representation of those interests. I think there is a quota of Peers allocated each year to HOLAC in order to appoint more Cross-Bench Peers. All this is against a background of the Prime Minister exercising restraint on political appointments. The recent Dissolution Honours List was the smallest since 1979—and here I warmly welcome my noble friend Lord Haselhurst.

[Baroness Altmann (Con)]

My Lords, I think most noble Lords would accept the idea that the size of the Chamber needs to be reduced, and it will be in due course, but does my noble friend agree that in the recent passage of the European Union (Withdrawal) Bill the House of Lords proved its value, working across party, across the House, together to make significant improvements to the Bill?

[Lord Young of Cookham]

The House of Lords played its traditional role as a scrutinising Chamber, looking at legislation that came before it. Some amendments were made, and I am glad that, when it came to the second stage of ping-pong, the House recognised the primacy of the elected Chamber.

Intergenerational Fairness in Government Policy

Baroness Altmann Excerpts

Thursday 26th October 2017 Lords Chamber

[Baroness Altmann (Con)]

My Lords, I too congratulate the noble Baroness, Lady Smith of Newnham, on securing this important debate. The issue of intergenerational fairness has been rising up the political agenda, and I find this trend deeply troubling. By pitting one generation against another, instead of generations working together and supporting each other, society is damaged.

First, like my noble friend Lord Willetts, I understand the concerns that young people express, particularly when it comes to housing, student debt and irresponsible credit card and loan practices. But those are issues related specifically to the housing market, the financial system and higher education. They are not really generational fairness factors.

The enormous rise in house prices across the UK has also driven up rents, which means that tenants of all ages have less disposable income for other expenditure. But that relates to the shortage of new homes and, to some extent at least, the Bank of England’s policy of quantitative easing, which was deliberately designed to inflate asset prices as an indirect means of stimulating the economy. Problems of housing affordability for younger people will not be most effectively solved just by giving young people more money to buy a home. In fact, such policies may further increase upward pressure on house prices. Increasing supply would be more beneficial. We are probably at the top of the housing price cycle. The ratio of house prices to earnings is clearly unsustainable, but it may not last. We have seen house price cycles before. Indeed, just because house prices have risen and many older people own their own homes does not actually improve living standards for older generations. They live in their homes and their income is not normally improved when house prices rise. The noble Lord, Lord Best, however, is right to focus on the need to encourage older people to downsize and free up family homes for younger people.

Another significant problem for younger generations is the sharp increase in the cost of funding higher education. Once more, that is not the fault of older generations, most of whom never had a chance to go to university—less than 10% of today’s retirees actually went to university. Older people are too often portrayed as undeservedly wealthy, having been lucky throughout their lives in ways that young people cannot hope for. But, quite frankly, I feel that such stereotypes are dangerous simplifications. There is an enormous range of income and wealth among pensioners. Lumping all those over pension age together and looking at their average wealth or income per person gives a misleading picture. Also, lumping the entire age group together is highly misleading. Most over-75s and certainly over-80s are not well-off at all. They live on low incomes with half or so needing means-tested assistance.

UK state pensions are among the lowest in the developed world. Pensioners overall are no more likely than other groups to be in poverty, but that is success and marks real social progress. It is not a signal that somehow we have done something wrong. In fact, pensioner poverty is most pernicious, because once a pensioner is poor they cannot normally hope to improve their future financial position. Younger people have their future career and earnings to look forward to, whereas pensioner poverty is most often permanent. However, the triple lock has been another example of a political construct that has become totemic and has proved damaging. I agree with my noble friend Lord Tugendhat that it may have outlived its usefulness, but it is also important to remember that the triple lock is rather misleading because the poorest pensioners are not actually protected and the triple lock gives much more protection to the younger, better-off pensioners than to the oldest and poorest, which is clearly the wrong way round.

Another factor that is too often overlooked is that young people are starting their careers and their earning years much later than previous generations did. Comparing today’s twentysomethings with those of prior cohorts is not quite comparing like with like. If young people today are starting work, say, five years later than was previously the norm, their income position should be compared with people five years older than them rather than of the same age. If the young also ultimately benefit from the extra qualifications, they should increase their earnings more as they progress through their careers and should not therefore stay behind previous generations. The best route out of poverty is employment, and we should congratulate the Government that employment rates for young people are around record levels with very low unemployment. Meanwhile, older generations are staying in work much longer than ever before. The numbers of older people in work are at record levels, as older generations keep contributing more to the economy.

I find it strange that there is so much concern about the so-called baby boomers having good pensions and owning more assets. Surely, in a societal sense, that is to be welcomed, partly because they are at the end of their careers rather than at the beginning or halfway through, but also because as more older people live longer, increasing numbers will need more money to support them through their expected extended later life. Extreme old age will increasingly become the norm rather than exception. More will need money to pay for social care, and if they have no money they will have to be supported by younger taxpayers.

We should perhaps be celebrating that today’s older people are better off than previous generations, while also encouraging those who can to earmark some of their money in case they need later-life care. I urge my noble friend the Chancellor to introduce measures that will address that, such as incentives to keep some of their pensions or ISAs or allocate a share of the value of their home to a fund that would be set aside for later-life care in case they need it. That would at last begin to bring in much-needed funding before the care crisis brings down the NHS and places ever more burdens on young taxpayers. It is also true that there is an intergenerational imbalance in pension coverage, but that is partly a function of the unrealistically expensive pension promises that were made by past employers, who did not anticipate the range of changes that have increased the costs of providing a final salary-type pension to around 50% of salary.

I caution strongly against pitting one generation against another. Older generations already do much to support the young. Society is a nation of generations, each of which needs to live together in harmony. The bank of mum and dad—and often the bank of grandma and grandad—is helping younger generations. Relationships between old and young people are so important, both in our communities and in the workplace. I urge noble Lords to be mindful of the need for intergenerational cohesion.

[Baroness Goldie (Con)]

My Lords, we are tight for time, so I ask your Lordships to pay attention to the seven-minute timetable, please.

Financial Guidance and Claims Bill [HL]

Baroness Altmann Excerpts

Tuesday 24th October 2017 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I am grateful to the noble Viscount, Lord Brookeborough, for his contribution to this debate. It is a pity that there were not more people in the Chamber to hear the powerful case that he made.

Actually, I do not think that the Minister has responded yet—my apologies.

[Baroness Altmann (Con)]

My Lords, I echo the wise words of the noble Viscount. It is absolutely clear that the level of financial education across the country is woefully low, and that stems from the absence of any financial education at the schooling stage. When I was looking at introducing some pension issues into the national curriculum, the main message that I received as to why it could not happen was that teachers themselves did not know enough about those issues to be able to teach even primary or secondary schoolchildren.

There is clearly a role for the single financial guidance body, which is set up to provide information and education for the public, to devise modules that schools could use—but not only schools. I would hope that, given that most people in the workplace did not get financial education in school, such modules would also be useful within the workplace. This is a big gap in our education system. Education needs to provide our students and young people with the tools that they need to manage their lives. If they cannot manage their finances, they will often get into difficulties that they do not need to be in.

I certainly echo the sentiments of the amendment, which would require the single financial guidance body, as the obvious body to do this, to provide education materials that could be used within schools, but even importing that into the workplace alongside auto-enrolment, because all workers will automatically be put into pensions and need to have some understanding of how finance works in order to make the best of that. I support the sentiments expressed.

[Lord Young of Cookham (Con)]

My Lords, I was hoping for a moment that the noble Lord, Lord McKenzie, was going to wind up the debate and give some cogent reasons why his amendment should be resisted, but that falls to me.

Amendment 13, tabled by the noble Lord, Lord McKenzie, would alter the strategic function on matters relating to financial education. I am grateful to the noble Viscount, Lord Brookeborough, the noble Baroness, Lady Kramer, and my noble friend Lady Altmann for their contributions because, once again, we have highlighted the important issue of financial education, which has been one of the themes running through our debate today. We had a good debate on it in Committee, and there is no disagreement that financial education is extremely important at all stages of life.

In fact, a key role of the new body as a whole will be to improve people’s financial capability and help them to make better financial decisions. Clause 2(7) states:

“The strategic function is to support and co-ordinate the development of a national strategy to improve … the financial capability of members of public”.


Then there is the paragraph quoted by the noble Viscount, Lord Brookeborough:

“the provision of financial education to children and young people”.

The noble Viscount outlined areas where the public need to be better informed, and I agree with all that he said.

The financial education element of the strategic function is targeting a specific area of need, which is to ensure that children and young people are supported at an early age on how to manage their finances—for example, by learning the benefits of budgeting and saving. As I think I said in response to an earlier debate, the new body will have a co-ordinating role to match funders with providers of financial education projects and initiatives aimed at children—those could well be in schools—and will ensure that they are targeted where evidence has shown them to be more effective. This falls four-square within the wider strategic financial capability work of the body, and should form part of the national strategy that we expect the body to deliver.

As has been mentioned, the Money Advice Service has been undertaking that role, and it is one aspect that respondents to the government consultation overwhelmingly agreed is important for the new body to continue to work on, build on, and continue the initiatives already under way.

The amendment makes provision for the new body to advise the Secretary of State on the role of Ofsted and the primary school curriculum. As the noble Viscount, Lord Brookeborough, said, the Select Committee on Financial Exclusion made similar recommendations on the role of Ofsted and the primary school curriculum in its recent report. We will publish a direct response to the House of Lords ad hoc Select Committee report before Third Reading. The Department for Education, which has prime responsibility for this, will be a major contributor to that section of the response.

Again, as I said in Committee, the Government believe that the remit of the new body may cause confusion with regards to the school curriculum. Of course, it can work with schools to help children understand financial education and it can help fund lessons and explore further the barriers to school involvement. The Government are clear, however, that the school curriculum and monitoring of school performance are matters for the departments for education in England and in the devolved nations. Nevertheless, Clause 2(3) states:

“The single financial guidance body may do anything that is incidental or conducive to the exercise of its functions”.


It seems to me that there is nothing to stop the SFGB informally making suggestions to Ministers without the need for the amendment, as long as they relate to its functions. So I do not think that we need the amendment for there to be a dialogue between the SFGB and education providers. In practice, the body will be able to undertake activities to help schools provide financial education but we do not believe the amendment is an appropriate addition to the strategic function. For that reason, I urge the noble Lord to withdraw the amendment.