Private Sector Pension Abuse
Baroness Buscombe Excerpts(6 years, 3 months ago)
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The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer given by my right honourable friend the Secretary of State for Work and Pensions to an Urgent Question in another place on private pension schemes. The Statement is as follows:
“The vast majority of employers do the right thing by their pension schemes and members can expect to receive the pension benefits they have paid for throughout their working lives. The Pensions Regulator and the Pension Protection Fund were set up in 2004 to provide pension scheme members with a safety net to ensure that their pension benefits received some protection when things go wrong—it is a fact that some businesses will fail. This PPF approach has been supported on a cross-party basis since 2004. To prevent irresponsible employers offloading pension liabilities to the PPF, the Pensions Regulator was given a wide range of powers, including the ability to recover significant assets where employers had failed to take account of the scheme. There are around 6,000 defined benefit schemes and cases like these are few and far between.
It is the responsibility of the Pensions Regulator to strike a balance between protecting members and PPF levy payers, and minimising any adverse impact on the sustainable growth of an employer when it comes to the regulation of defined benefit funding. The Pensions Regulator does not have the power to stop businesses paying out bonuses to executives or dividends to shareholders. However, if it sees a situation where it believes a scheme is not being treated fairly, the Pensions Regulator will investigate to see whether use of its powers is appropriate. However, this Government are clear that where sponsoring employers are able to meet their pension promises, they should, and must, do so, and that is why we have suggested ways that the current system could be strengthened to enable the Pensions Regulator to be more proactive.
In February 2017, we published our Green Paper, Security and Sustainability in Defined Benefit Pension Schemes, which included suggested measures that would strengthen the powers of the Pensions Regulator by introducing punitive fines for actions that harm a pension scheme. We also set out powers to enhance the regulator’s ability to demand information to ensure effective governance and spot issues before damage is done.
Our June 2017 manifesto reaffirmed this intent by proposing to give the regulator the power to impose a punitive fine alongside a contribution notice so that pension scheme members are fully protected. The details of the fine would be worked through with all relevant stakeholders but it would represent a significant strengthening of the deterrent.
Also we intend to make certain corporate transactions subject to mandatory clearance by the Pensions Regulator, but we must take care to ensure that these measures do not have an adverse effect on legitimate business activity and the wider economy.
I should also tell colleagues that we have received 800 responses to the Green Paper, and these are currently being reviewed by the department. The White Paper is in progress and will be published this spring.
Effective regulation is dependent on a prompt flow of information between parties concerned and compliance with rules and processes. Following the publication of the White Paper, we will introduce new legislation to ensure that the regulator gets the information it requires to conduct investigations and casework effectively and efficiently. It remains the case that this Government support free markets and capitalism but this has to be conducted responsibly”.
Lord McKenzie of Luton (Lab)
My Lords, I thank the Minister for repeating the UQ asked in the other place. Yesterday, the Prime Minister chose to announce via the media that, in part in response to the collapse of Carillion, the Government plan to introduce tough new rules to stop private sector pension abuse—so we are to play catch-up again, it seems, following the pensions freedoms debacle. Carillion had 13 defined benefit schemes in the UK, with some 27,500 members and a combined pensions deficit of some £600 million.
We know that, according to its chief executive, Carillion had been on the radar of the PPF “for some time”, and it was on the watch-list by autumn 2017. Carillion gave its first profit warning in July of that year and its second on 29 September. The Pensions Regulator reported the close monitoring of risks and that it had had “heightened engagement” with the company since July’s profit warning. It apparently had some discussions with Carillion on a regulated apportionment arrangement but these came to naught.
Given the level of engagement and knowledge, which particular tightening of the regulatory framework are the Government considering? Precisely what additional powers for the regulator are contemplated, and what difference does the Minister think these would have made in the Carillion circumstances now faced?
More generally—I think that the Minister has confirmed this—in accordance with the Work and Pensions Select Committee recommendations, there will be a number of recommendations concerning mandatory clearance powers for corporate activities that put pension schemes at risk and new powers to fine those who act in an irresponsible manner. If the Government support those recommendations, how quickly does the Minister consider they will reach the statute book?
Baroness Buscombe
I am grateful to the noble Lord for mentioning that the Prime Minister clearly takes this situation extremely seriously. He reiterated that we intend to strengthen the regulator’s powers. Importantly, we have done that with care, introducing a Green Paper last year, and we have committed to the publication of a White Paper in the spring. Although the Pensions Regulator and the Pension Protection Fund manage the process of company insolvencies, and while most pension schemes are managed successfully and very robustly, we accept that there are instances where it might be possible to improve and strengthen the powers. We have received more than 800 responses to the Green Paper. The department is analysing these and will bring forward proposals as quickly as possible.
It is important to emphasise—I sense that the noble Lord opposite appreciates this—that it is hypothetical to suggest that a different set of powers for the Pensions Regulator, such as the ability to clear corporate activities, would have necessarily made a material difference to the pension schemes. Having said that, there has been strong communication between the regulator and Carillion since the middle of last year, when a profit warning was announced. But of course, a profit warning is a warning as opposed to a transaction, so it was not necessarily a sign that the company overall was in such difficulty.
It is important to stress that we are very keen to strengthen the powers but, at the same time, we need to ensure that the new measures we introduce build on existing measures that to a large extent have worked extremely well since 2004, as I said before. However, we want to strengthen the Pensions Regulator’s anti-avoidance framework and information-gathering powers.
I am afraid that as yet, I cannot be certain about when legislation will be forthcoming. Obviously, we will look forward to and welcome the consultations and responses to the White Paper.
Lord Kirkwood of Kirkhope (LD)
My question is further to the important one raised by the noble Lord, Lord McKenzie, about timing. Whereas the Statement is correct to say that big insolvencies happen infrequently, when they do happen they strike at the confidence among employees about occupational pension savings altogether. I hope the Minister shares the House’s concern about the indirect impact this may have on auto-enrolment. As the Minister knows, some important steps are being introduced in the next phase of auto-enrolment in the near future but, if there is a White Paper in March, it may be 2020 or 2021 before the regulations are available to regulators, auditors and others. Will the Minister undertake to do everything in her power to push forward proper and sensible consideration of the regulations to be introduced, with as much dispatch as it is possible to muster?
Baroness Buscombe
I thank the noble Lord for his question. I share his concerns about the direct impact this might have on those who have pension plans and on those who are retired and in receipt of their pensions. Our drive on auto-enrolment has been extremely successful thus far. More than 9 million people have enrolled, via the auto-enrolment scheme, up to the end of last year. We will push this issue with as much dispatch as is sensible. Having said that, at the same time we do not want a knee-jerk reaction. We will publish our White Paper in the spring. We want to be sure that we make the right decisions and do not compromise the established, robust and, to a large extent, successful scheme that exists for the current powers of the Pensions Regulator. Yes, we must do all that we can. I am pleased to say that, as I speak, colleagues in another place are now debating the Second Reading of the single financial guidance body Bill, which I hope will support giving people advice and good counsel. The Pensions Advisory Service and others are already working on the Carillion issue. We are looking all the time to improve the system, to reassure people and to give them good advice and guidance on their pensions. We will legislate to do the right thing as soon as we can.
Lord Cotter (LD)
I am a non-expert in the field—a member of the public, if you like. The Statement talks about a,
“significant strengthening of the deterrent”,
and states that,
“employers have failed to take account of the scheme”.
As an outsider, I am concerned about those two important aspects of the Statement.
Baroness Buscombe
I agree with the noble Lord. It is important that we strengthen the deterrent to the best of our ability. That will be a signal to the behaviour of those who are charged with the responsibility of protecting the interests of their employees with regard to pension schemes. We must do all we can to reassure them. That said, it is important to emphasise that the system is—and must be—independent of government. There is a limit to what we can do to ensure that the right thing is done once the framework is in place. Indeed, I think that noble Lords opposite will agree that the introduction of the Pension Protection Fund in 2004 has gone a long way to reassuring people and has been incredibly effective in protecting people’s pensions, both current and into the future. But in response to the Carillion case, we take seriously the need to do what we can to improve or increase the deterrent. However, we must do that with care so as not to fetter the ability of business to be a successful, effective and important part of building our economy.
Poverty and Disadvantage
Baroness Buscombe Excerpts(6 years, 5 months ago)
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The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
My Lords, I thank the noble Lord, Lord Bird, for securing this debate and all noble Lords for contributing to this vital Question, just six months on from the appalling Grenfell Tower tragedy. I also thank the noble Baroness, Lady Sherlock, for her apology.
Tackling poverty, and the root causes of poverty, is a key priority for this Government. As the Prime Minister has said, we are committed to building a country that works for everyone, not just the privileged few. It is for this reason that we are pushing ahead with the most ambitious reform to the welfare system in decades, delivering real and lasting change to the lives of many of the most disadvantaged people in our society.
Previous Governments have varied in their approach to this vital task; ours is based on a clear understanding of what works. We know that for most people, work represents the best route out of poverty. For example, adults in workless families are four times more likely to be in poverty than those in working families, and children in workless households are five times more likely to be in poverty than those in households where all adults work. Our reforms have acted to ensure that this principle is reflected in the service that we provide.
Through the introduction of universal credit, we have acted to transform a benefit system hindered by bureaucracy and welfare dependency into one which places personalised assistance for individuals and their families—families, I stress—at its very heart. People entering universal credit have access to more tools than ever before to underpin their search for work and receive a tailored package of support to meet their needs. It is clear that this reform is working. UC claimants are able to find work faster and stay in work for longer than those under the system it replaces: 86% of people under UC are actively looking to increase the hours they work, compared with only 38% on jobseeker’s allowance.
Those changes are empowering people. They acknowledge that the benefits of work extend beyond the purely financial. The evidence is clear that good-quality work can serve as a basis for a healthier, happier society, with demonstrable links to better physical and mental health, and improvements in personal well-being. We are committed to doing all we can to ensure that as many people as possible are able to share in these advantages, with particular help announced last week for those with a disability or health condition. In response to the right reverend Prelate the Bishop of St Albans, I have to say that this is something on which we have very much been focusing, and as a Government we are proud of the progress that has already been made towards this objective. There are 600,000 more disabled people now in work, for instance, than there were four years ago.
I want to stress, however, that increasing the rate of employment alone has never been the limit of our vision for a wealthier, more affluent society. We also want to build a country where work changes lives. This is why we have radically reshaped the welfare rules we inherited to ensure that people are able to see their efforts reflected in rising levels of prosperity. For those already in work, our reforms mean that people are able to take on more hours and increase their income without fear of being penalised, and that those on lower incomes can take home more of their earnings. To this end, the Government have cut income tax for more than 30 million people and taken 4 million low earners out of income tax altogether. We plan to further increase the tax-free personal allowance to £12,500 by the end of this Parliament. The introduction of the national living wage has given the UK’s lowest earners their fastest pay rise in 20 years. Since 2010 the annual average income of the poorest fifth of households in this country has risen in real terms by more than £300, while the income of the richest fifth has fallen.
However, we are not complacent. We are reducing social rents until 2020, and lowering the cost of housing for tenants and their families. I respect the fact that a number of noble Lords have focused on housing as one of the key issues. The basic state pension is now at one of its highest rates relative to earnings for over two decades, reversing a trend of decline we saw between 1997 and 2010. The number of pensioners living in absolute poverty on a before-housing-costs basis has fallen by 100,000 since 2010. In contrast, severe poverty rose under Labour.
The results speak for themselves. Employment is now at near record levels, with 3 million more people in work than in 2010. The number of households where no one is working is down by 954,000 over the same period, with 608,000 fewer children living in a workless household than there were seven years ago. However, 14.5% of all UK households still remain workless. That is something that we have to tackle. The approach taken by previous Governments to tackling child poverty was to focus resources on increasing family incomes above a notional poverty line. This Government believe that making a lasting difference to the lives of disadvantaged children and families requires a different approach that goes beyond the safety net—referenced so eloquently by the noble Baroness, Lady Sherlock—of the welfare system to address the underlying reasons why people fall into poverty.
We want to focus on prevention, referenced so strongly and eloquently by the noble Lord, Lord Bird. Our approach is based on compelling evidence about the impact of worklessness and the problems associated with it on families and children. Analysis conducted by the Department for Work and Pensions shows that children who live in families where no adults work are significantly more disadvantaged, and achieve poorer educational and employment outcomes than others. Again, a number of noble Lords, quite rightly, referenced the importance of education. Despite employment being at near record levels, around one in eight children still lives in a workless household.
Improving Lives: Helping Workless Families, published in April, provided a framework for a continued focus on improving children’s outcomes, now and in the future. We set out nine statutory and non-statutory indicators to drive collective action in the areas that are important in tackling the disadvantages that can prevent families from moving on with their lives—for example, parental conflict. As my noble friend Lord Farmer stressed, parental conflict and family breakdown are so critical to all this, together with poor mental health, and drug and alcohol dependency.
If we are to deliver lasting change, we must continue to take action to support those who face the most complex employment barriers, whether or not they have children—people whose ability to work is, for example, frustrated by issues such as a disrupted education, a history of offending, addiction, insecure housing and serious problem debt. This is why our jobcentre work coaches offer individualised, tailored support to those with complex needs. This can include temporarily lifting work requirements where claimants are homeless, in treatment for drug or alcohol dependency, or are victims of domestic violence. It can also include early access to the new Work and Health programme, and referral to local services that can help claimants get their lives back on track. We also offer targeted support to claimants in particular circumstances. For example, we are trialling the individual placement and support approach to help back to work those dependent on drugs or alcohol, as recommended by Dame Carol Black.
People who are financially included are better able to find and remain in work, and are less likely to experience debt and financial difficulty. We therefore welcome the findings and recommendations of the Lords Select Committee Report, Tackling Financial Exclusion: A Country that Works for Everyone? In our response, we announced the creation of a financial inclusion policy forum to be jointly chaired by the Minister for Pensions and the Economic Secretary to the Treasury, and bringing together Ministers from other departments and representatives from financial service regulators, industry and consumer groups.
The noble Lord, Lord Bird, has asked a question of vital concern to all of us in your Lordships’ House, and I take this opportunity to commend him personally for all the work he has done to raise awareness of the issues involved through a lifetime spent campaigning on behalf of the homeless—and, of course, the creation of the Big Issue. In truth, entrenched disadvantage is not something that a single department or indeed, the Government alone can do. As the right reverend Prelate the Bishop of Carlisle said, causes of poverty are often hidden. We respond by saying that they require a cross-governmental approach, and one, as referenced by the right reverend Prelate the Bishop of St Albans, that must also be rural-proof.
The noble Baroness, Lady Tyler, referenced the need for a joined-up approach. The social mobility action plan issued by the Department for Education is something in which we, as a department, will be much involved. That is why the Department for Work and Pensions continues to work across government in order to support the most disadvantaged. In addition to the financial inclusion policy forum, DWP is represented at ministerial level on the Social Reform Committee, the inter-ministerial group on homelessness, gangs and violence against women and girls; and on the drug strategy group. For far too long, poverty and disadvantage have held back far too many people in our society. The Government are committed not only to changing this, but are already making tangible progress through the measures that I have outlined. I have no reservation in recommending our approach to building a society where everyone can realise their potential.
I just want to respond to the question asked by my noble friend Lord Farmer in relation to opportunity areas. We have a number of opportunity areas, and evidence is at the heart of the OA programme. I say to the noble Lord, Lord Bird, that in an ideal world we would not have reports or bother with the evidence, but we have to have the evidence to try to do the right thing. Sadly, some of us are weighed down by our reports, but they guide us. In addition to improving outcomes for young people in the opportunity areas, we are also looking to learn what works best in driving up social mobility, so we can spread effective practice to other areas.
In closing, I reference my noble friend Lady Bottomley who said that we can talk about the inevitability of the downward spiral, but I agree with her: let us concentrate on the ladders.
Pensions
Baroness Buscombe Excerpts(6 years, 5 months ago)
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The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
My Lords, I thank the noble Baroness, Lady Scott, for introducing and securing this debate, and thank all those who have contributed. I shall do my best to respond to the various issues raised.
Work and society have changed tremendously since the introduction of the contributory state pension in 1948, and this Government believe that state pension provision should reflect this. As the demographic balance in the UK shifts, and fewer people of working age are expected to support a growing number of pensioners, it has become clear that an increase in the state pension age is necessary for the welfare of all. Underpinning this belief is the basic fact that a welfare and pensions system is only as successful as it is sustainable. Those who are able to work should support those who are not, confident in the expectation of support when they reach their own retirement. Today’s workers provide for the support of today’s pensioners, fulfilling this essential tenet of the social security system, as it has existed ever since the creation of the welfare state over 70 years ago. For this to continue, however, we must take steps to ensure that our model is fit for the future. A policy that allows each generation to spend an increasing percentage of life over state pension age, financed by an increased level of public pension expenditure, would be unsustainable in the long run and unfair to subsequent generations of taxpayers.
Women retiring today can still expect to receive the state pension for 23.5 years on average, almost three years longer than men. Even after equalising women’s state pension age with men’s, women will spend on average around two years more in receipt of their state pension because of their longer life expectancy. In response to the concerns raised during debates in both Houses on the Pensions Act 2011, we introduced a significant concession worth £1.1 billion, which ensured that no one would wait more than 18 months for their pension, when compared to the previous timetable. Any further concession would cost significantly more, and ask people of working age—more specifically, today’s younger people—to pay even more for it. It is the firm opinion of this Government that such an outcome simply cannot be justified.
Policy changes to the state pension system have been implemented over the past 22 years and supported by all three major political parties. Indeed, the noble Baroness’s party was in government when the 2011 Act was introduced, so it is disappointing that it has now chosen to distance itself from these necessary reforms, and talk about mistakes. The former Liberal Democrat Member of Parliament for Thornbury and Yate, for instance, who was Minister for Pensions under the coalition, has suggested that not enough was done to ensure that women were aware of the changes being made. We do not accept that argument. Since 1995, successive Governments have gone to great lengths to communicate changes to the state pension age. As my honourable friend in another place, the Minister for Pensions, has been clear in debates in the House of Commons, the Department for Work and Pensions has diligently communicated the timetable of these changes since they were set in train 22 years ago. This included writing to those affected by the 2011 Act throughout 2012 and 2013 to inform them of changes to their state pension age
Over the past 17 years, the DWP has provided over 19 million personalised state pension estimates. I do not think it is fair, therefore, for noble Lords somehow to suggest that these changes have been brought in by stealth. Indeed, as the noble Baroness’s friend in another place, the honourable Member of Parliament for Eastbourne, said just two weeks ago, there seems to be an “element of amnesia” to this debate.
The current arrangements represent the culmination of several decades of policy-making, to which all the major parties in this House have contributed. The noble Baroness’s party has yet to offer a clear alternative to our position. The official Opposition have outlined their ideas for potential changes to the Government’s policy and, with your Lordships’ permission, I will now address these. Noble Lords on the Benches opposite have suggested that the Government should set the pension credit qualifying age so that it precedes the state pension age as a means of compensating women affected by the changes we have discussed. While we acknowledge the good intentions that lie behind this proposal, we are clear that the unintended consequences of such a shift would render it unworkable.
Introducing a measure designed to benefit a specific group in this way would risk creating a new inequality. Any movement of the pension credit qualifying age would presumably have to be extended to cover not only women who are not affected by the 2011 Act but also men, if the Government’s actions are not be considered discriminatory. As a general point, it would also need to include housing benefit and help with council tax. If not, the proposal would risk providing money through pension credit with one hand and taking it away through higher housing costs with the other. To move women away from the working-age benefits system and the support available to them through their local jobcentre, in any case, would cause them to lose their link with the labour market, with an inevitable, negative effect on their household income and eventual pension pot. These women need support in the labour market, not exclusion from it—support that pension credit does not provide, with only a very small earnings disregard of over £5 a week.
The noble Lord, Lord McKenzie, or rather his party, has costed the option at over £800 million. However, we must also remember that the Labour Party manifesto committed to providing the 2.5 million women affected by the Pensions Act 2011 more generally with,
“some kind of compensation for their losses”.
It is not correct to say that these women have suffered losses of state pension. The position has always been that they will receive their state pension and other contributory benefits if they meet the entitlement conditions. The state pension they receive is determined under the rules in force on the date on which they meet these criteria. Making pension contributions in 1993, for instance, does not entitle someone to receive state pension according to the rules that were in force then. Paying state pension based on the pre-1995 rules, furthermore, would mean that pensioners would not receive all the additional benefits that have been introduced in the intervening years, or be protected under the triple lock.
The noble Lord opposite also suggested that we allow WASPI women early access to their state pension from the age of 64 at a reduced rate. Evidence submitted by the Government Actuary to the Work and Pensions Select Committee in April 2016, however, showed that it would be extremely complex to accurately predict the costs involved in this initiative. Within a matter of hours of suggesting it, I might add, two different versions of the policy were proposed. WASPI groups have rejected both. The introduction of a partial early payment in either form would involve bringing forward significant expenditure, even if the measure was assessed as cost-neutral in the long term. The wider impact on the economy cannot be ignored: adding even one year to people’s working lives would result in a sustained increase to GDP of over 1%—and 1% of GDP today is almost £20 billion.
The pension reforms we have undertaken have already greatly improved state pension provision for all, particularly women. Future pensioners stand to benefit not only from the introduction of the new state pension but also from the expansion of auto-enrolment and our Fuller Working Lives strategy. For many women, the new state pension is much more generous than the old system. By 2030, over 3 million women stand to gain an average of £550 extra per year as a result.
With respect, we cannot avoid the reality of the UK’s ageing population. The number of people over state pension age in this country is expected to grow by 4 million over the next 25 years, a rise of almost one-third. That is why the Government’s position remains firm and why we will not make any further concessions on this issue. Accelerating the increase in state pension age for both women and men has proved necessary in the light of increasing life expectancy and the increasing pressure on public resources. By 2035, the number of people aged 100 or over will have more than doubled. Failing to act on this evidence would not only be irresponsible but place a wholly unsustainable burden on future generations.
Our focus is to deliver a modern welfare system fit for the needs of the 21st century, which rewards work and targets support towards those who most need it. As part of this, we must ensure that the costs of an ageing population are shared out fairly. In this context, and given the financial pressures we face as a nation, we cannot, with regret, unpick a policy that has been in place for 22 years. It is simply not affordable. The average woman reaching state pension age last year will get a higher state pension income over her lifetime than at any point before. Let us celebrate the fact that longer life, better health and continued activity in later decades are reshaping the profile and participation of older people in our society. However, let us also accept that part of preparing the welfare system, and society at large, for the changes brought about by these advances must be to encourage older workers to benefit from fuller and longer working lives.
Kinship Carers: Two-child Limit Policy
Baroness Buscombe Excerpts(6 years, 5 months ago)
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Baroness Sherlock
To ask Her Majesty's Government why kinship carers who subsequently have their own child are not exempt from the two child limit.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
My Lords, the Government acknowledge the immense value of care provided by kinship carers. We are working to ensure that they are supported by enabling them to access benefit entitlement in the same way as parents. We have introduced a number of exceptions to the policy providing support for a maximum of two children, to protect claimants who are unable to make choices about the size of their family. These already protected certain groups, including kindship carers. The department will keep, and is keeping, the impact of its policies on kinship carers under consideration.
Baroness Sherlock (Lab)
My Lords, the reason why kinship carers were exempted from the two-child policy is that this House voted that it should be so. The Minister will be aware of the case, raised by my honourable friend Melanie Onn, of Alyssa Vessey. When Alyssa was 18, her mother died suddenly so she gave up college to care for her three younger siblings. This year, four years later, she has had her own baby. She applied for tax credits and a Sure Start maternity grant but she was turned down under the two-child policy. The reason is that the Government chose to implement the exemption in such a way that if Alyssa already had her own child and then took on her siblings she could get benefits for them, but because she took her siblings on and then had her own baby she was denied that support. Can the Minister explain this? When will the Government put it right?
Baroness Buscombe
My Lords, I think the noble Baroness opposite is aware that we are very much cognisant of this particular case. Indeed, my honourable friend in the other place who is the Minister responsible for this area, Caroline Dinenage MP, has responded with considerable sympathy with regard to this particular case. However, the Government believe all children should be treated equally and encourage parents to take the decision to have more children based on whether they can afford to support additional children.
Baroness Pinnock (LD)
My Lords, do the Government understand and accept that the callous restriction of this policy penalises children by putting a further 300,000 of them into poverty by 2022? Is that government policy?
Baroness Buscombe
My Lords, the Government are looking at this policy at the moment, as I have already said. We do not believe we are being callous. The Government’s view is that providing support for a maximum of two children in universal credit and child tax credit will ensure fairness between claimants on the one hand and, on the other hand, those taxpayers who support themselves solely through work.
Lord Mackay of Clashfern (Con)
My Lords, I had understood when this matter was discussed that the theory underlying the proposal was that those who by their own choice landed themselves with more than two children had to support the extra children with whom they had landed themselves. However, the case that we have just been talking about is not that; there was at the very least a moral obligation for that lady to take her siblings. It would therefore be right to say that it is not in accordance with the principle underlying the proposal that this case should be treated as it apparently has been so far. I hope the Government will reconsider it.
Baroness Buscombe
I have to say that we have already said that we have responded with enormous sympathy to this. The policy is currently under review, but it should also be made clear that the Government have assessed the impact of the policy from an equality and human rights perspective throughout its development and in its implementation, thus meeting our obligations under the public sector equality duty and ensuring compliance with human rights and other international obligations.
The Lord Bishop of Carlisle
My Lords, the Government have chosen to pursue a deficit-reduction strategy by opting for a fiscally cautious welfare policy. However, has the Minister considered that some British families are larger for reasons of faith or principle? Speaking on behalf of people of all faiths in this country, my question is: what plans does the Minister have for ensuring that such families and children are not discriminated against by the policy?
Baroness Buscombe
My Lords, as I have already said, there is nothing to stop anyone having a large family. There is total freedom of choice to have a large family. However, the Government’s view is that we have to be fair between those claimants on the one hand and, on the other hand, those taxpayers who support their own children solely through work.
Baroness Hayman (CB)
My Lords, will the Minister take the temperature of the House on this issue and listen with great care to the words of the noble and learned Lord, Lord Mackay of Clashfern? Can she really defend the Government’s view that this policy, which is a technical misinterpretation of the will of the House and Parliament when it put these provisions in, can possibly be, as she says, fair and in the interests of equality for the children in this or any other family in these very unusual and, I suspect, not very expensive situations?
Baroness Buscombe
Given her long experience and expertise in this House, the noble Baroness will understand that, as a Lords Minister, my position is somewhat constrained. As I said, my honourable friend in another place is very aware of this case, and this policy is being considered as we speak.
Baroness Drake (Lab)
Will the Government honour their promise to this House on 27 January 2016 that children in kinship care should be exempt from the two-child limit on benefits and tax credits? The limit is intended to deter people from having more than two children where they cannot afford them, not to deter or punish kinship carers who take on the care of vulnerable children who might otherwise go into care. That distinction was accepted by the Government. Will they please now implement the commitment that they gave to this House on 27 January 2016, quite explicitly and without reservation?
Baroness Buscombe
My Lords, I ought to make it clear that, as the noble Baroness will be aware, there is no punishment. If a family has already had two children of their own, there is nothing to stop them taking on other children as kinship carers. In that case, those children will be exemptions to this rule.
Local Welfare Assistance
Baroness Buscombe Excerpts(6 years, 5 months ago)
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The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
My Lords, since 2013 we have given local authorities the flexibility to develop their own local emergency provision for people in their areas. Local authorities are best placed to design and target this discretionary support, alongside their own local services, ensuring it reaches those who need it most at the right time.
Baroness Lister of Burtersett (Lab)
Ah, my Lords, the Pontius Pilate response. When the Government devolved crisis and community care support from the Social Fund to local authorities, they placed no duties on the authorities and refused to ring-fence the money. According to the Centre for Responsible Credit, about one in six authorities has abolished its scheme altogether, and many more have cut them back drastically, leading to some people facing destitution for lengthy periods. Will the Government now therefore accept, in the words of the Work and Pensions Committee, that they maintain,
“an ongoing obligation to ensure provision of a safety net which prevents vulnerable people from falling into severe hardship”,
starting with an urgent evaluation of what is now the final safety net?
Baroness Buscombe
My Lords, it is important to say that the national welfare system provides robust safeguards. These include: short-term benefit advances or universal credit advances for people in urgent financial need; Social Fund budgeting loans or universal credit budgeting advances to help with one-off and unforeseen expenses; and hardship payments for people who are sanctioned. But by abolishing the Social Fund crisis loans, which themselves had huge problems, we have now empowered local authorities to develop and deliver new provision to meet the needs of the most vulnerable people in their local communities.
Lord Watts (Lab)
My Lords, does the Minister think that it is irresponsible to delegate powers to local authorities and at the same time savage their budgets so that they cannot meet those responsibilities?
Baroness Buscombe
No, my Lords. The Government believe that councils are best placed to decide how to support local welfare needs. Local authorities in England will receive more than £200 billion to deliver those and other community services between this year and 2019-20, and will have the certainty to plan ahead through our four-year funding settlement.
Lord Stoneham of Droxford (LD)
According to the report from the Centre for Responsible Credit, in one year, my own city of Portsmouth has reduced the amount it spends on welfare assistance from £700,000 to £30,000. Do the Government intend to review the impact of these sorts of changes? If not, why not?
Baroness Buscombe
It is important that I stress again that, under the national system, there are strong safeguards in place. We expect local authorities to concentrate the funding on those facing the greatest difficulty in managing their income and to enable a more flexible response to an unavoidable need, perhaps through a mix of cash or goods and aligning with the wider range of local support that local authorities’ devolved administrations already offer. In short, the funding is to allow them to give flexible help to those in genuine need.
Lord Howarth of Newport (Lab)
The noble Baroness says that local authorities are best placed and they have £200 billion. Will she confirm that the Government have cut funding for local authorities by some 40% since 2010?
Baroness Buscombe
My Lords, perhaps I could quote the Local Government Association’s own study:
“Councils have managed the available budget effectively; reduced the potential for abuse, and created schemes which better meet the underlying needs of applicants and reduce repeat demand. This has enabled them to provide vital, timely support to some of their most vulnerable and deprived residents”.
Baroness Lister of Burtersett
My Lords, I still have not heard how those authorities that have abolished their schemes are going to meet the needs that the noble Baroness referred to. As she herself said, these are some of the most vulnerable people. There are 26 local authorities where there is no scheme that can meet those needs.
Baroness Buscombe
My Lords, the noble Baroness had already referenced the issue of ring-fencing. Government policy is not to ring-fence amounts in the local government finance settlement, as local councils are the best judge of needs and priorities within their areas. As I have already said, local authorities are in receipt of £200 billion. Part of that is to fund these emergency services, in addition to the safety net that we provide at national level.
The Earl of Listowel (CB)
My Lords, although recognising the tremendous work of local authorities to rise to the challenge, I have concerns which I hope the Minister shares. I listened to a very experienced, long-time child and family social worker in one of the committee rooms here two months ago. He expressed concerns about all the ancillary services being cut back for families, as the statutory services just about hold out. As these are cut, more and more children come into care, and more and more families are at risk of breaking down, so it is a very difficult situation. Of course the Government are doing important work to address these things, but we cannot deny that this is a huge challenge and is harming many people in this country.
Baroness Buscombe
My Lords, what the noble Earl has said about family breakdown and what this leads to is quite right. Indeed, that is why we have a strong focus now on the family parental conflict programme, to which we will be contributing £30 million in the coming two years. We have also invested up to £200 million in universal support, which provides budgeting advice and digital support to claimants, delivered by local authorities. This support is tailored to local needs and our work coaches, who gauge claimants’ financial needs from their first interview. We are doing a variety of things to help people at a local level. The noble Lord, Lord Foulkes, shakes his head, but we are doing an awful lot more than his Government ever achieved. I am proud of what we are doing.
Baroness McIntosh of Hudnall (Lab)
My Lords, will the noble Baroness please have another go at answering the question put to her by my noble friend Lord Howarth? Can she confirm that local authority budgets have been cut by 40%, and if she cannot, what figure does she think is the right one? Can she further say whether she thinks that—if that figure or anything like it is correct—it is at all likely that there has been no major impact on services that were previously provided?
Baroness Buscombe
My Lords, it is a great shame that under the Labour Government so much taxpayers’ money was wasted, leaving our local councils bereft of funds. We have worked hard to ensure that there are emergency provisions in place. Although there may be cuts to local authorities, we are ensuring that there is proper provision, but we are leaving it to local authorities to decide the best way to provide for the needs that people have at local level.
Pension Schemes Act 2015 (Transitional Provisions and Appropriate Independent Advice) (Amendment No. 2) Regulations 2017
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Baroness Buscombe
That the draft Regulations laid before the House on 10 July be approved.
Considered in Grand Committee on 29 November
Improving Lives: The Future of Work, Health and Disability
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The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
My Lords, with the leave of the House, I shall repeat a Statement made by my right honourable friend the Secretary of State for Work and Pensions in the House in Commons regarding work and health. The Statement is as follows:
“With permission, Mr Speaker, I would like to make a Statement on the Command Paper being published today by my department and the Department of Health.
Good work promotes good health. It enables people to be economically independent, and gives them more choices and opportunities to fulfil other ambitions in life. A country that works for everyone needs to ensure that all who can work or undertake meaningful activity have the chance to do so, and that the right care and support are in place to enable all to thrive in work throughout their lives.
Our labour market is in its strongest position for years, with the United Kingdom employment rate at a near-historic high of 75%, and over 530,000 more disabled people in work than four years ago. Despite this, only around half of disabled people are in work, but many disabled people and people with health conditions can and want to work. This means that too many people are missing the opportunity to develop their talents, and to connect with the world of work and the range of positive impacts that come with doing so—including good health and social outcomes. That is why it is important that we act now.
With around one in six working-age adults reporting a disability, it is clear that health and disability issues affect the working lives of millions of people. The majority of long-term health conditions are acquired in adulthood, and in an ageing population, inclusive work places are imperative. That is why, in our manifesto, this Government pledged to see 1 million more disabled people in work over the next 10 years. This is as much about preventing people from falling out of work as it is about supporting them into work. This requires a comprehensive and wide-ranging programme of action.
Last year, we published Improving Lives: The Work, Health and Disability Green Paper, setting out the Government’s new and ambitious approach to this issue; it marked the start of a new era in joint working between the welfare and health systems. Our 15-week consultation on the next 10 years of reform sought input from disabled people and those with health conditions, their families, employers and a range of stakeholders. The consultation was supported by 166 accessible events, and received around 6,000 responses.
Today, we are publishing Improving Lives: the Future of Work, Health and Disability, setting out our response to the Green Paper consultation and the next steps we will take to deliver our vision. Changes in the nature of work and more flexible working models benefit a wider range of people, and new advances in technology offer more opportunities than ever before. For example, accessible hardware and software, and developments in apps and wearable technology, make it easier for employers to offer flexibility and adaptations to their staff. Small businesses and large employers alike are already implementing these solutions for their employees, and it is for government to help to set the direction and stimulate good ideas.
We know that the barriers to moving into work and staying in work are different for each person, depending on the nature of their health condition or disability, their aspirations and individual circumstances. We need to work directly with people who experience these barriers to identify solutions that will work. We want to build an approach that is responsive and caters for every scenario, with the individual at its heart.
The change needed is not one that government can deliver on its own. Across the country, there are striking examples of what can be achieved when employers, charities and healthcare professionals work together locally, but government can help to create the conditions for success. In the workplace, employers should have the confidence to recruit and retain disabled people and those with health conditions, and to create healthy and inclusive workplaces where all employees can thrive and progress. The best employers have already realised the business benefits of hiring disabled people, and while there are many examples of good practice, we want to go further.
This Command Paper responds to what we heard in the consultation, and to the findings of Thriving at Work: The Stevenson/Farmer Review of Mental Health and Employers. We will improve advice and support for employers of all sizes, working in partnership with them—together with disabled people and other stakeholders—to bring together information and advice that meets businesses’ needs. We will also make significant enhancements to the Access to Work scheme, including increasing the capacity of its mental health support service.
To support a key recommendation of the Stevenson/Farmer review, we will establish a voluntary framework approach for large employers to report on mental health and disability within their workforce. We are also preparing a consultation on changes to statutory sick pay, and will run a cross-government programme of analysis and research to examine the incentives and expectations that influence employers’ decisions in this area. We will report back on this preliminary work next year.
We will build on the key role that the welfare system plays in supporting disabled people and those with health conditions to enter work where possible by developing a more personalised and tailored approach to employment support. We will continue to learn; for example, through voluntary trials to help us to build an effective offer of support that meets the needs of those in the support group. We will continue to improve the assessment process while building our evidence base, including working with external stakeholders, to take forward reform of the work capability assessment.
Health and care professionals are vital in supporting disabled people and those with health conditions to achieve their employment potential. We will work with and support health professionals with the tools and techniques they need to have supportive conversations with patients about work and health. We are doubling the number of work and health champions and investing around £39 million to more than double the number of employment advisers in Improving Access to Psychological Therapies services. We will also conduct large-scale randomised controlled trials delivering employment support in a health setting in the West Midlands and Sheffield City Region, beginning by March 2018.
Alongside this Command Paper, I am announcing the next steps for the Fit for Work service. Established in December 2014, it offers general health and work advice to employees, employers and GPs, through a phone line, webchat service and website. Since 2015, it has also provided occupational health assessments for employees at risk of long-term sickness absence, with advice on how they can be supported to return to work and remain in employment. However, referrals of cases to the service by employers and GPs have been much lower than expected. For instance, there have been only around 650 referrals per month in England and Wales, compared to the 34,000 forecast, and 100 a month in Scotland, compared with the estimated 4,200. By contrast, use of the advice line, webchats and Fit for Work website has exceeded expectations. I am therefore ending the contracts for the provision of the assessments service both in England and Wales and in Scotland while ensuring continued access to the Fit for Work online and phone services. These will continue to offer general health and work advice as well as support on sickness absence.
The Government are also announcing the appointment of an expert working group on occupational health to champion and drive a programme of work, taking an in-depth look at the sector. To inform policy development, we have commissioned research to better understand current market supply and delivery of occupational health provision. This research will look at local partnership models to integrate health and wider support, and will report in 2019. We will also take account of the lessons from the Fit for Work service as we move forward.
The Government are laying the foundations for a 10-year programme of change. Everyone has their own part to play to achieve this ambitious vision for a society in which all disabled people and people with long-term health conditions are able to go as far as their talents will take them. I commend this Statement to the House”.
My Lords, that concludes the Statement.
Lord Addington (LD)
My Lords, I thank the Minister for repeating the Statement. It is also time that I declared a few interests that are relevant here: I am president of the British Dyslexia Association and chairman of a company called Microlink PC. That is important because Microlink provides assistive technology and designs support for those who are disabled and in work or education, starting with education.
As I went through this document and scanned the original one it became clear that we have hit the buffers, the point at which a great idea hits the practicalities and starts to fracture in terms of what can be done. My own disability—and the one that the group that I work for is concerned with—is regarded as an education disability. In fact, we are the biggest disability group, as those in the neurodiverse group make up 15% of the population. Very little in this document refers to this group. Our problems relate not to accessing buildings but to accessing systems involving, for example, computers or paperwork. This document does not really seem to have got hold of that. It has missed a group. It has also missed a group when it comes to access problems when dealing with, for example, form-filling and work and pensions support. Therefore, when the noble Baroness talks about assistive technology, will she make sure that every single government website is accessible through the assistive technology of voice recognition? If she cannot answer that, she has effectively already broken the terms of the Equality Act for this group.
To carry on in that vein, we all know that each group considers the problems they have to be the most serious, but other groups will emphasise the importance of other activities. However, one important question is: are people being maintained in work? Access to work—it is one thing that I can give a rousing cheer to—is probably the best kept secret. It is the most underused thing in the Government’s arsenal. Expanding that to support for maintaining people in work and allowing them to expand or change their roles will encourage people to stay on.
We have also been talking about mental health. A person with a disability generally suffers more stress, and stress can trigger or create mental health problems. Are we making sure that people are maintained and supported in jobs and allowed to expand their roles? Once again, I am not absolutely sure about that. There is a great deal of emphasis on getting people into work but not on maintaining them in work and giving them a career into the future. I would like to know where the emphasis is there.
So we seem to be missing a large group—dyslexics, dyspraxics and dyscalculics—and, to a lesser extent, those with high-functioning autism. They do not seem to have been referenced here, probably because, to be perfectly honest, they are a lower priority in the Department of Health. How will we access these groups? How will we make sure that individual support is available and that people can get the right support? Nearly 20 years ago when the noble Baroness, Lady Hollis, was the Minister in charge in this area, I had a ritual dance with her when we talked about the interview. Are the Government going to allow the person who conducts the interview to call in an expert? The interviewer will be awfully well trained but will an expert be brought in? If not, things will go wrong. Unless the noble Baroness can give me an assurance that some expertise will be structured in, the problems will continue. Expertise is needed to deal with the individual cocktail of needs in individual cases. Unless we can start to address these questions, we will continue to fail in this area.
Baroness Buscombe
I thank the noble Baroness opposite for her support thus far in terms of the overall response to the Command Paper, and I will do my best to reply to the many questions that she and the noble Lord, Lord Addington, have raised.
I want to make it clear that I welcome the noble Baroness’s constructive contribution. It is important to say that this is a programme aimed at helping people into work and to stay in work. I say immediately to the noble Lord, Lord Addington, that we will not ignore any group of people or any individuals. That is the purpose of bringing together, to the best of our ability, work, welfare and social interaction. This is a holistic approach which, I think all noble Lords will agree, we have been looking for and waiting for for years. We are very proud that we will be able to focus on work, health and disability as one. We say that work enables every person to be economically independent. It boosts their confidence and gives them more choices and opportunities to fulfil other ambitions in life.
The noble Baroness was very clear in her question about the finances. This is about more than just the over £50 billion that we are spending on those with disabilities or health conditions. As announced in SR15, we are increasing investment in employment support for people with disabilities or health conditions in real terms over this spending review period. This includes building the evidence base for what does and does not work, investing in Access to Work and rolling out a personal support package of tailored employment support initiatives. We have committed to invest £330 million of funding over four years in support for people with limited capability for work as part of the personal support package. Last year, we spent £104 million on the demand-led Access to Work scheme, up from £97 million in 2015-16. The number of people who had Access to Work support last year rose 8% to over 25,000. In addition, further customers received payments for support agreed in previous years.
We are investing up to £115 million of funding to develop new models of support to help people into work when they are managing a long-term health condition or disability. We will be providing an extra £15 million a year in 2017-18 and 2018-19 for our flexible support fund so that local managers can buy services, including mentoring, and better engage the third sector—which is a very important part of this holistic approach—in their community to help disabled people and those with health conditions.
With regard to the work capability assessment, it is important to say that in our manifesto we committed to legislate to give unemployed disabled people and people with health conditions personalised and tailored employment support. We heard broad support for WCA reform proposed in the Green Paper but there was no consensus on what the right model of WCA reform would look like. We know that we need to get reform right and will therefore focus on working with external stakeholders in testing new approaches to build on our evidence base for longer-term legislative change. This will require primary legislation, but noble Lords are all too aware of the constraints that there will be in that regard in the near future. In the meantime, we are delivering on our commitment to personalised and tailored employment support with the introduction of our new personal support package. We are also committed to continuing to improve the WCA. Recent reform included stopping reassessments for people on ESA and UC with the most severe lifelong conditions.
We want to reform statutory sick pay so that it supports more flexible working, which can help people remain in or return to work if they are unwell. With regard to disability employment, we have added 300 additional disability employment advisers and have begun introducing 200 new community partners. We absolutely accept what the noble Lord, Lord Addington, said about the importance of having work coaches with the right expertise and skills, and that is something on which we are very much focusing.
In terms of UC, we are also focusing our efforts and thoughts on in-work progression, which is very important. This is not about helping people into work and then leaving them there; it is about prevention, getting people into work and helping them to remain in work. That is one reason why it is very important that we have this very strong, joined-up approach with our colleagues in the NHS, asking how we can manage mental health, for example, in the short to medium term as well as in the long term. Of course, the Farmer/Stevenson review is an enormous encouragement to us. As noble Lords will know, we have already accepted all its recommendations.
The noble Lord, Lord Addington, asked about assistive technology, and he was absolutely right to do so. One individual who has particular difficulties said, “Without assistive technology such as voice recognition and the help of Access to Work in providing me with a support worker, I would not be able to compete in the job market and therefore would not be in employment”. His name is Tom and he sustained a serious neck injury in 2007. He is now using this brilliant technology and is thriving in work. We want all employers to reach the standards of the best and that is why we will work with them.
I hope that I have begun to answer some of the many questions noble Lords have asked. I reiterate that there are now around 600,000 more disabled people in work since 2014. We are making progress and this Command Paper will contribute to that.
Lord Low of Dalston (CB)
My Lords, I welcome the Government’s objective to get 1 million more disabled people into employment over the next 10 years. The Minister will recall the review, Halving the Gap, which I led with the noble Baronesses, Lady Grey-Thompson and Lady Meacher, with support from disability charities. That review looked specifically at the £30 a week cut to employment and support allowance and the corresponding limited capability for work component of universal credit. Over half of the disabled people who responded to our call for evidence said that the cut would push them further from the workplace rather than closer to it. Does the Minister agree that, in the light of that, it is time to reconsider this damaging cut, which can only have the effect of making it more difficult for the Government to achieve their objective?
Baroness Buscombe
As the noble Lord, Lord Low, will know, employment and support allowance was introduced in 2008 to replace incapacity benefit and income support. Since the ESA, as we call it, was introduced, we have conducted five independent reviews of the work capability assessment and have accepted and implemented the majority of recommendations. As to cuts, we spend more than £50 billion a year on benefits to support disabled people and people with health conditions, an increase of more than £7 billion since 2010. This is 2.5% of GDP and over 6% of government spending. This demonstrates that we are doing all we can to support the very people the noble Lord references.
Lord Sterling of Plaistow (Con)
My Lords, I come at this subject from two directions: I am chairman of Motability, which has been involved in this for 40-odd years; and I welcome this initiative for the simple reason that it is an all-party one that has nothing whatever to do with party politics. Everyone, in both Houses, has empathy with finding answers to these problems and difficulties.
From the Motability point of view, sadly, only 16% of our customers between the age of 16 and 64 have jobs. That happens to be identical with the figure for those with autism. I have a young grandson who is autistic and I have spent a great deal of time looking into some of these difficulties and problems.
One interesting factor is nervousness among the workforce. People do not know and feel nervous about having disabled people working with them. The more that you go round explaining the pros and cons, the better. People are worried about simple things such as, “Suppose he wants to go to the toilet. Who is going to take him?”, or “Where do we do this?”, or “How do we handle that?”. Once the workforce feels comfortable, it can change dramatically.
On the wider front, in the educational field—in the long term as against the short term—it should become law that everyone who teaches, no matter at what level, should know something about how to handle disabled people. A key factor is the huge amount of bullying in schools. If every single headmaster and headmistress of every single school was trained in how to handle disability, it would make all the difference. It should be a rule that they should have this training, otherwise they cannot be a headmaster or headmistress.
I raise that issue because there is a great shortage of educational psychologists. As a society, we try to get everyone else to be what we think is normal, but we do not adapt. If we adapted more closely, it would make all the difference. I cannot support more fully the fact that the Government—and, hopefully, everyone in this House—want to find the right answers.
Baroness Buscombe
My Lords, I thank my noble friend Lord Sterling for his contribution. I commend him and pay tribute to the work that he has done with Motability. The Government recognise the valuable service that Motability provides to those with disabilities and health conditions, and we look forward to continuing to work closely with it.
My noble friend recognises that not enough disabled people are in employment. We feel that we have come a long way, but we have a lot further to go. That is why we have set out this ambitious wish to have 1 million more people with disabilities employed over the next 10 years. That is why it is important that we work with groups such as Motability and others to make this happen.
My noble friend is absolutely right that this is not about party politics. Indeed, in welcoming this report, the Mayor for London said this morning that it is time to put party politics aside on this issue. It is, frankly, too important.
My noble friend referred to making employers less nervous. I agree. That is why we are working hard in that area to encourage more employers to come on board. We have launched the Disability Confident business leaders group and started roll-out of the Small Employer Offer and Community Partners. We know some employers want more help to be able confidently to support disabled people in work, and that is why we will do more to improve advice and support: researching and identifying solutions with employers to bring together advice that is easy to find and use; improving access to work by increasing the capacity of the mental health support service; trialling personal budgets; creating an expectation that equipment will move with individuals when they move jobs—which is very important and we have to be practical about it; warm words are not enough—and increasing the reach and effectiveness of Disability Confident.
I take on board my noble friend’s reference to not making it law but encouraging everyone to understand and work with those with disability from an early age. That would make all the difference in the world.
Lord McKenzie of Luton (Lab)
My Lords, in introducing the Statement, the Minister promulgated the importance of work being good for people’s health and well-being. We agree with that—it is Waddell and Burton going back over a decade. The Minister referred to “good work” when she focused on this issue. Can she say how “good work” is characterised for these purposes, as opposed to the opposite, particularly in the context of limited and variable-hours contracts?
Baroness Buscombe
My Lords, good work is about supporting people to stay in work as well as supporting them to move into employment; making them feel comfortable in healthier workplaces, while offering the right support for staff to help keep them productive and engaged in work; utilising the broad spectrum of the health system to promote good health; and helping individuals to better manage their conditions. We genuinely believe that people who are in work need proper support; otherwise, their roles will not be sustainable. Too many people are not staying in work once they are in there. Our true definition of good work is where people feel able to cope, continue to feel able to cope and can progress within the workplace. Good work for individuals is not being seen as having been given a job—that is good enough. That is not good enough for us, and that is what we must focus on.
On the issue of employment contracts and so on, we want to ensure that people are able to work in a way that is sustainable. Many people working on zero-hours contracts, for example, find that they are better able to cope with their work/life balance and so on in that environment.
Baroness Manzoor (Con)
My Lords, I, too, welcome the Command Paper. As the Minister has already said, it is a really important initiative and it is a holistic approach to tackling a very important issue. People with disabilities have a right to be able to access employment and to be supported in work. Therefore, I welcome the £115 million that the Minister has announced today for new models of working. I also liked, by the way, the aim of halving the disability gap by 2020, so I am keen that we continue to keep that focus in mind. What I am concerned about is that perhaps some employers may choose the less severe end of disabilities in focusing their efforts, rather than looking at the whole range of disabilities across the full spectrum.
Baroness Buscombe
I thank my noble friend for her question. The reality is that is why we are very pleased with the recommendations of the Stevenson/Farmer review. My noble friend is absolutely right that we have to encourage employers, large and small, to understand that what might superficially appear to be a lesser disability—or a more severe disability—should not enter the decision in terms of taking somebody on board. The reality is that we need to do more to work with people in occupational health and to find different ways to encourage employers to support those with disabilities. Also, one of the things we are very keen on is working with the third sector and charities—for example, the Samaritans, which is particularly close to my heart—to act as a backstop and support to employers so that employers can feel more confident about taking people with disabilities on board.
Baroness Donaghy (Lab)
My Lords, I support everything that my noble friend Lady Sherlock said. She mentioned that the Government have not done a cumulative impact assessment on the social security cuts, but the Equality and Human Rights Commission has. It says that, since 2010, households with a disabled adult and disabled child have lost over £5,500 pounds per year on average. How does the Government’s new strategy address these losses?
Baroness Buscombe
My Lords, I have to say that we do not recognise the findings of the EHRC, because the analysis does not provide a full picture; it looks only at a particular subset of disabled people and does not include analysis on changes beyond tax and welfare. It will, therefore, present a skewed picture.
Lord Beecham (Lab)
My Lords, can the noble Baroness indicate the extent to which the interesting proposals in the Statement would apply to people who are not technically employed—that is to say the people in the so-called gig economy?
Baroness Buscombe
My Lords, I think it is right to say that in the first instance, or at the moment, our focus is about getting as many people as possible into employment. The issue with the gig economy is that we then cannot ensure that all the support systems that need to be provided will be there, but that is certainly something I am sure will be at the forefront of the minds of those who are taking the Stevenson/Farmer review forward—and also working with the Matthew Taylor review—in terms of finding every way to ensure that whoever is doing whatever form of work in the United Kingdom is properly supported.
Pension Schemes Act 2015 (Transitional Provisions and Appropriate Independent Advice) (Amendment No. 2) Regulations 2017
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Baroness Buscombe
That the Grand Committee do consider the Pension Schemes Act 2015 (Transitional Provisions and Appropriate Independent Advice) (Amendment No. 2) Regulations 2017.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
My Lords, these regulations were laid before the House on 10 July 2017. They will reduce confusion for pension scheme members and burdens for industry. They enact the conclusions of a call for evidence in 2015 concerning how a scheme determines whether or not a member is required to take financial advice prior to transferring their pension savings. Plainly put, the regulations simplify how trustees and scheme managers value members’ pensions in order to determine whether the requirement to take advice applies. There is no change in the actual value of the pensions themselves.
To better understand the provisions, it is helpful to first detail the wider context in which they operate. The provisions form part of a wider package of changes that as a whole simplify, but also expand, the protections available for members with potentially valuable guarantees attached to their pensions. Since they were introduced in April 2015, the pension freedoms have given individuals aged 55 and over greater choice in how and when they access their pension savings. Members who save into pension arrangements that provide potentially valuable guarantees can generally also exercise these new freedoms, where necessary by first transferring to a defined contribution scheme or converting to defined contribution savings.
The regulations debated here apply to these pension arrangements—“safeguarded benefits”, as they are known—which include typical defined benefit schemes, but more importantly for the purpose of this debate, safeguarded flexible benefits. I should explain these terms. Safeguarded flexible benefits are flexible in that there is a pot, which is cash-based, meaning that the pension freedoms apply, but they are also safeguarded because they include a promise in relation to the secure income they may provide in retirement. Normally, but not exclusively, safeguarded flexible benefits are personal pension contracts that include the option to take an annuity at a guaranteed rate. These are commonly referred to as a guaranteed annuity rate—GAR.
Because of the valuable guarantees offered by safeguarded benefits, legislation introduced an advice requirement alongside the pension freedoms. This requires trustees and scheme managers to check that members with safeguarded benefits valued as greater than £30,000 have taken financial advice before transferring or otherwise flexibly accessing those benefits. It is this legislative requirement—specifically, how pensions are valued for the purpose of determining whether or not it applies —that I am proposing to amend today.
The Government have become aware that the methodology prescribed in regulations for valuing members’ benefits against the £30,000 threshold has resulted in firms offering GARs having to provide two values for the member’s pension: the transfer value, which an individual will actually receive, and the actuarially calculated, but ultimately notional, value against which the £30,000 advice threshold is tested. Providers and consumer groups reported members with safeguarded flexible benefits experiencing confusion over why they were receiving two valuations. This means that there is always a potential risk that members may choose to take advice and access their pension, having wrongly believed that they would be entitled to the higher actuarially calculated value, when they would receive only the lower transfer value. The regulations debated here will, if approved, amend existing provisions so that trustees and scheme managers are required to treat the value of safeguarded benefits as equal to the transfer value of those benefits when determining whether or not the £30,000 threshold is met.
Trustees of typical defined benefit schemes will continue to use the same methodology, subject to limited exceptions to which I will come later. Meanwhile, those offering safeguarded flexible benefits, such as guaranteed annuity rates, produce only one valuation: the transfer value of the member’s benefits. For most schemes, this will be the cash value of the member’s pot. This single figure is easily explained and avoids confusion for members. It is also widely used within other communications and is already produced by firms. The instrument also contains transitional provisions to accommodate the changeover from one valuation methodology to another so that members are not disadvantaged.
Finally, the regulations make an amendment to the valuation methodology that removes an inconsistency in the treatment of defined benefit pension scheme savers. Specifically, it is for members of those defined benefit schemes which use higher cash equivalents than those required by legislation. We are working with actuaries to understand and manage the impacts of this measure, in order to understand and monitor its effects. We will be able to amend this requirement should it not function as intended.
Although the purpose and focus of this debate is, of course, the affirmative instrument to which I have just referred, it is worth explaining that the measures set out in these regulations form part of a package of regulatory changes. The Pension Schemes Act 2015 (Transitional Provisions and Appropriate Independent Advice) (Amendment) Regulations 2017 introduce a new requirement for trustees and scheme managers to send tailored communications informing all members with safeguarded flexible benefits of the availability of potentially valuable guarantees at precisely the point they are most engaged—that is, when they are considering whether to flexibly access and, therefore, potentially surrender those benefits. Although not within the scope of today’s debate, because they have already been made and laid by the negative procedure, on 6 July 2017, these requirements form an important partner to the regulations debated here by improving member protection through targeted and simplified communications.
I will explain the combined effect of these measures on members with a range of values of safeguarded flexible benefits such as GARs. First, there are those members who have pension pots with a transfer value of over £30,000, for whom the advice requirement still applies, only now they will also receive an indication of the guarantee’s value before they commit to incurring the expense of seeking and taking financial advice. Members who decide not to proceed with their original request to transfer, convert or take a lump sum payment will have therefore saved themselves, on average, £900. For those who still wish to proceed and access their savings, that option is of course still available. Members will receive a more detailed analysis of the implications of doing this, as they will have to pay for financial advice.
Secondly, there is a group of members who were previously required to look for financial advice but, under the new valuation methodology, would now not be required to attempt to find advice. These are typically members with pots in the range of £15,000 to £30,000. I have used the terms “look for” and “attempt to find” advisedly, because I contend that these members are better served by a combination of the new valuation method and risk warnings this package of regulations introduces. Under the current regime, many of these members are both deprived of any opportunity to appreciate their benefits and denied the ability to exercise an informed choice, because they cannot find a willing financial adviser to perform a transfer analysis for a pension pot with a transfer value of £15,000.
Replacing the requirement for members to take financial advice with a personalised risk warning therefore maintains protection while simplifying the process. It does this by removing an additional layer of cost for members, confusion about the money they stand to access from their pension savings through the use of two valuations, and consequent frustration. The combined package of regulations ensures that even members with small pots—typically below £15,000—are notified of the presence of potentially valuable guarantees in their pension scheme. These members would not have been required to take financial advice under the current regime, but they will now be sent a personalised risk warning before they transfer, convert or otherwise flexibly access their pension pot.
In conclusion, the Government are committed to the principle that those pension savers wishing to exercise choice over when and how they access their pension savings should be able and supported to do so. However, it is equally important to protect members through simplifying how they are told about their pension, while at the same time avoiding unnecessary burdens by removing needless complexity for members and industry alike.
These regulations form part of a package of changes which ensure both that more members receive timely and suitable information about their safeguarded flexible pension benefits and that industry can use a simpler method for valuing benefits for the purpose of the advice requirement. Taken together, these changes demonstrate that the Government have listened carefully to both stakeholders and consumer groups. They show that we are now meeting our commitment, made as part of our consultation exercises, not only to monitor the pension freedoms but to reform existing measures where needed. I therefore commend these regulations to the Committee.
Lord McKenzie of Luton (Lab)
My Lords, I thank the Minister for the introduction and explanation of the regulations. As ever, I am delighted to have the expertise of my noble friend Lady Drake alongside me on these occasions.
The regulations derive, as we have heard, from Section 48 of Pension Schemes Act 2015 and are an integral part of the pension freedoms introduced with effect from April 2015. They focus on the requirements on trustees or managers of a pension scheme in Great Britain to ensure that appropriate independent advice has been received before safeguarded benefits can be converted, one way or another, to flexible benefits.
These regulations, as we have heard, sit alongside other regulations, of the negative variety, which concern requirements for schemes to provide risk warnings where members have the benefit of a GAR—guaranteed annuity rate—which they might otherwise be in danger of relinquishing. Together with the transitional provisions for the advice requirements, these are described in the Explanatory Memorandum as a package and we comment on them on that basis.
The requirement to get regulated advice currently operates when an individual’s safeguarded benefits are valued at more than £30,000. It is suggested that the detail of this requires amendment because the basis of calculation is unduly complicated in some circumstances and can lead to situations where the calculation of the advice threshold exceeds £30,000 but the pension pot size is different. Having two different valuations is said to be confusing, and we understand that point.
The impact assessment explains that these complications exist because the valuation regulations currently applied were previously used only by occupational DB schemes and that the circumstances in which they now have to be applied do not generally have standardised processes in place to value GAR benefits in terms of the current value of the future income they offer. As we have heard, the solution offered by these regulations is to adopt the transfer value of the pot in the calculations determining whether the £30,000 threshold for getting regulated advice is reached.
On an ongoing basis, this will save individuals with safeguarded flexible benefits some £11 million per year in advice fees. As we have heard, it will remove some 12,000 people per year from the need to get advice before they access pension pots, although they will be brought within the risk warning arrangements. This seems to be taking matters in the wrong direction. Changing the basis of calculation might be administratively or arithmetically convenient, but what assessment have the Government undertaken of the appropriateness of removing so many people from the benefit of advice?
It is accepted that individuals will no longer have to meet the cost of advice, but they will not be getting the benefit of that advice either. Of course, fewer requirements for regulated advice means fewer fees paid by individuals, but will the Minister remind us about the circumstances in which individuals can access their pension pot to pay for advice, the limits and the tax treatment? Do the Government have any information about the extent to which this is used?
The Explanatory Memorandum makes reference to the potential for inconsistent treatment of members regarding when advice is required when schemes can exercise more generous transfers. Will the Minister tell us how this issue is to be dealt with? We support the concept of risk warnings and the principle of informing members of their safeguarded flexible benefits. This should be the responsibility of ceding schemes and should happen before proceeding to transfer, convert or flexibly access scheme benefits. It should apply to survivors with safeguarded benefits.
We agree that those already required to take advice should be included in the risk warnings. We support there being no de minimis exemption on the basis of pot size. On timing, which my noble friend raised, it is proposed that the risk warning should be sent at least 14 days before any live request completes. Why can the warning not be sent, as my noble friend asked, as soon as a member request to transfer or access the flexible benefits is received?
The Government’s response to the consultation on these matters has confirmed the approach to the content of the risk warning and the inclusion of two comparable pension illustrations tailored to the member’s age, pot size and contribution rate and with details of guarantees available.
Paragraph 44 states that the Government are not convinced of the need to explain the difference between personalised tax warnings and the statutory money purchase illustrations. Will the Minister expand on the rationale for this position?
Can the Minister also confirm that she is confident that there should be no confusion arising from obligations in respect of retirement wake-up packs and personalised risk warnings? The written element of the risk warning is, according to the impact assessment, to include the signposting to free and impartial guidance—Pension Wise currently or SFGB, or whatever it is going to be called, in due course. As my noble friend has said, this is about the weakest indication of support, bearing in mind that many would previously have had to take advice. As my noble friend proposes, is this not the type of situation now potentially covered by amendments to the Financial Guidance and Claims Bill where individuals can be defaulted to the guidance service with an obligation to demonstrate that they have received guidance before proceeding?
We will not oppose these regulations, although in some respects we consider them a missed opportunity. However, they illustrate the complexity of aspects of our pensions system and the importance of ensuring that individuals are fully supported to understand the value of their pension entitlements.
Baroness Buscombe
I thank all noble Lords and the noble Baroness, Lady Drake, for taking part in the debate. I will do my level best to respond to the questions as fully as I am able. The noble Lord, Lord Jones, first asked about the legal term “survivor”. “Survivor” in the regulations means a person who has survived the member and has a right to future benefits or is entitled to benefits under the scheme in respect of that member. The noble Baroness, Lady Drake, and the noble Lord, Lord Jones, referred to survivors. I want to make clear that these regulations apply to both members and survivors. Where an individual inherits a member’s subsisting rights in respect of safeguarded benefits and those benefits exceed the advice threshold of £30,000 the survivor is also required to take financial advice. Survivors who inherit a member’s safeguarded flexible benefits will also receive a personalised risk warning should they decide to transfer, convert or flexibly access their inherited pension rights. The risk warning is sent to whoever is making a decision about their pension saving at the point they are most engaged in that decision.
In response to the question from the noble Baroness, Lady Drake, about what is included in the definition of safeguarded flexible benefits, the simplest description of a safeguarded flexible benefit is a cash pot with some form of promise or guarantee that the member can convert their pot into a pension income at a predetermined rate. We have framed the definition in fairly general terms, rather than specifically to the types of pension arrangements it covers, such as guaranteed annuity rates, in order to limit the scope for omissions or avoidance. Those uncertain whether the regulations apply should seek appropriate legal expertise and advice.
I turn to the question of what GARs in occupational schemes are not money purchase. GARs that are included in the rules of the pension scheme irrespective of whether this was reflected in the terms of a contract between the trustee and a third party, such as an insurer, are not money purchase. In this situation, the scheme would be liable to fund benefits over and above what the scheme assets—including the contract—can provide. So the benefits are technically non-money purchase and are, therefore, safeguarded benefits.
The noble Baroness also asked about members who are told about their guarantees too late. The question was, why not require schemes to tell members about their guarantees earlier on? The regulations laid alongside these regulations will require trustees and scheme managers to send members information about their valuable guarantees at precisely the point that the member is most engaged in considering what to do with their pension savings. This, we believe, makes them more effective at increasing awareness of guarantees among members than forcing schemes to send regular information long before members’ retirement, when they may not be actively considering a decision.
Lord McKenzie of Luton
Just on that point, is it the Government’s position that they would support those amendments as currently carried and included in the Bill?
Baroness Buscombe
I thank the noble Lord for the question. Yes, the Government will accept the amendment in the other place but of course we cannot speak for other Members in the other place, who may think differently. Certainly, the expectation is that the amendment will see Royal Assent.
There was a suggestion that our legislation is reducing protection for members of defined benefit schemes, but these regulations have no impact on the vast majority of such schemes or their members. They will still be subject to the same requirement for regulated financial advice where their benefits exceed the same threshold, and the same valuations will continue to apply. In the small proportion of schemes that choose to offer more generous transfer values than are required by law, members whose defined benefit pensions are worth in the region of £20,000 to £30,000 are being treated more fairly. They will not be forced to take advice when members with the same rights in other defined benefit schemes are not. These members can of course opt to take advice and will be able to seek guidance, which can signal the option of advice before transferring.
There was a question about whether we were reducing member protection and making it easier for savers to surrender their guarantees. We remain committed to the principle of the advice safeguard. That is why the threshold to whom it is applied remains the same—those with safeguarded benefits with a value of over £30,000—and with the introduction of these regulations, for the majority of members with safeguarded benefits there will be no change in how their pension is valued and calculated for the purpose of the advice requirement.
However, where a pot is cash-based but has a safeguarded element, such as the option of a guaranteed annuity rate, these regulations deliver simplification and clarity. Trustees and scheme managers now have to produce only one valuation of the member’s pot. A single figure is easily explained and avoids confusing members because it makes it clearer what the members may receive if they proceed to transfer, convert or otherwise flexibly access their savings. At the same time, parallel regulations introduce new protections that are timely—sent at the point members are making a decision—and increase the total number of members informed that their pots contain guarantees.
The noble Lord, Lord McKenzie, asked about the work that has been done on assessing the impact of the regulations. The Department for Work and Pensions estimates that there will be approximately 12,400 individuals per year who no longer need to try to find advice. The noble Lord said that he felt that these regulations were a missed opportunity. I reconfirm, as I said at the outset of this brief debate, that it is very important to take on board the fact that the Department for Work and Pensions is continually reviewing and assessing the impact of regulations, following the protection freedoms. If it is found that more needs to be done, changed or amended, we will certainly do that through secondary legislation.
The regulations debated here today simplify how trustees and scheme managers value members’ pensions when determining whether the requirement to take advice applies. Pension schemes with members who hold safeguarded flexible benefits—mainly but not exclusively personal pension contracts that include the option of an annuity at a guaranteed rate—can use the transfer value of the member’s pot, instead of undertaking a complex actuarial calculation.
Representatives of consumers and industry have both sought and supported the simplification of the current valuation method that these regulations deliver, and both groups will benefit from its implementation. Consumers with safeguarded flexible benefits will be less confused when they inquire about transferring or accessing their pot because they will receive only one valuation, and the difficulties for industry when valuing these guarantees will be removed.
Finally, these regulations form part of a package of measures. If approved, they will come into force alongside a new requirement to send all members tailored communications, ensuring that all members are told about their valuable benefits in a more timely and accessible manner. There will also no longer be a cohort of individuals who are required to seek financial advice, but are often unable to locate an adviser willing to advise on their pension savings. I hope I have set out for the Committee the need for these regulations and have responded to the matters raised. I commend these draft regulations to the Committee.
Universal Credit
Baroness Buscombe Excerpts(6 years, 5 months ago)
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The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
My Lords, by leave of the House, I shall repeat a Statement made by my right honourable friend the Secretary of State for Work and Pensions in the House of Commons regarding universal credit.
“With permission, Mr Speaker, following the announcement made by the Chancellor in his Budget speech yesterday, I would like to make a Statement on universal credit.
Universal credit is the biggest modernisation of the welfare system in a generation. It supports those who can work and cares for those who cannot. Under universal credit, people are moving into work faster and staying in work longer than under the previous system. Once fully rolled out, universal credit will boost employment by around 250,000—equivalent to around 400 extra jobs for every constituency. Universal credit was introduced to replace the complex and failed benefit system of the previous Government, which created cliff edges discouraging people from working more than 16 hours a week and trapping 1.5 million people on out-of-work benefits for nearly a decade. Colleagues from across the House have all voiced their support for the principles underpinning universal credit. It is a modern welfare system which, through one simple monthly payment, ensures that work always pays, mirrors the world of work and supports people to earn their way out of financial insecurity and welfare dependency.
As we introduce universal credit, we are constantly improving how the system works. We recently introduced changes to ensure that everyone who needs them has access to advance payments and we are making our telephone lines freephone numbers. I have consistently made clear that we would continue to introduce universal credit gradually. Of the total number of households that will eventually move on to universal credit, 9% are currently receiving it, and this will increase to 12% by February. This enables us to make improvements over time.
Colleagues have had concerns about the waiting time for the first payment. I am grateful to my parliamentary colleagues for their constructive engagement on this issue. There have been several debates here and in the other place. This Statement responds to these and fulfils the commitment made on behalf of the Government in relation to the resolution of the House on 18 October 2017. We are now offering a balanced package of improvements that puts more money into claimants’ hands earlier, ensuring extra support for those who most need it. Next month, new guidance will be issued to staff to ensure that claimants in the private rented sector who have their housing benefit paid directly to landlords are offered this option when they join universal credit.
In January, we are making two changes to advances. First, the period of time over which an advance is recovered will increase from six months to 12, making it easier for claimants to manage their finances. This will apply regardless of the level of advance claimed. Secondly, we are increasing the amount of support that a claimant can receive from up to 50% of their estimated entitlement to up to 100%, interest-free. In practice, this means that new claimants in December can already receive an advance of up to 50% of their overall entitlement, and may receive a second advance to take it up to 100% in the new year. Taken with the first payment, this means that claimants in need could receive nearly double the money they would usually get. In addition, from spring next year, we will be making it possible to apply for an advance online, further increasing accessibility for those who need it.
From February we are removing the seven-day waiting period, reducing the length of time claimants might wait to receive their first full payment. From April, for new claimants already receiving support towards their housing costs we are providing an additional payment of two weeks of their housing benefit to support them as they transition on to universal credit, helping to address the issue of rent arrears for those who most need it. This is a well-targeted measure that will support 2.3 million people, including the most vulnerable, with an unrecoverable, automatic payment worth an average of £233 each. This is a one-off investment of £550 million to ensure that universal credit supports those who need it. In April, as a short-term measure, we will change how claimants in temporary accommodation receive support for their housing costs to ensure that local authorities can recover more of their costs and can therefore continue to offer this valuable support to those who need it most. We will also consider longer-term solutions to this issue.
The majority of claimants are comfortable managing their finances. However, personal budgeting support and digital skills training is provided to claimants through universal support, delivered through local authorities. Building on this, we are exploring with Citizen’s Advice the scope for greater collaborative working to help claimants locally as they move to universal credit.
We must remember that universal credit is aimed at supporting those out of work to move into work and, once they are in work, to progress and increase their earnings. That is why, in addition to these measures, the Government have allocated £8 million over four years to conduct a number of tests and trials to support development of the evidence about what works to help people to progress in work. This is a comprehensive and wide-ranging package worth £1.5 billion, offering significantly more support than a simple reduction of the wait for the first payment to one month. To deliver the package, we have carefully revised the UC rollout plan to ensure that we continue to safely and gradually roll out this important welfare reform. I will place the updated rollout plan in the House of Commons Library. This does not change the final point at which the rollout of universal credit will be completed.
To help to ensure a smooth transition to full service, we have also decided to close new claims to our prototype universal credit live service. This will not affect any existing claims. In addition, currently any new UC claim from a family with three or more children will be routed back to tax credits until November 2018. With the extension to the rollout plan, that will now shift to the end of January 2019.
This is a comprehensive package that responds to concerns raised inside and outside the House. We have a clear objective: to ensure that as many people as possible get the opportunity to work and to maximise their potential to better their circumstances. We will continue to roll out universal credit in a steady and considered manner and, in doing so, deliver a welfare reform that will positively transform lives. I commend this Statement to the House”.
Lord Kirkwood of Kirkhope (LD)
My Lords, I am happy to follow the noble Baroness, Lady Sherlock, and I agree that the statement that we had in the Budget deals only with the journey on to—the gateway into—universal credit. I welcome the Statement. To be realistic, if the Government had not said something, it would have been impossible to resist the pressure to delay the further rollout of universal credit, and I do not agree that that would be sensible—I never have.
I have two questions for the Minister. For the reasons that the noble Baroness, Lady Sherlock, set out at length, the delivery of these changes will be difficult. Can she assure us that they will land, be locked in and operate to the benefit of claimants in future, without fear of further disruption, letdown and distress? It is a very tall order. Some of these changes start next month. Given the background to the operational implementation of universal credit, it is not unreasonable to be suspicious about the implementation of the immediate changes that have been announced, welcome as they are. Can the Minister assure us that she personally will ensure that they all work and will make claimants’ lives easier, and that she will report to the House regularly on the success or otherwise of the rollout?
But these are only gateway measures; they are only easing the transition to universal credit. The noble Baroness, Lady Sherlock, is quite right: the rising costs and fixed benefits that low-income households are facing will condemn some of these families to a very bleak future. That necessitates my second question: will the Government start planning to use some of the £3 billion annual savings within UC alone—never mind the other ongoing cuts and freezes—to ease people’s road into work by increasing work allowances and tapers? If we do not do something of that kind, it will be very difficult successfully to promote the programme of progression through work into sustainable longer-term jobs and careers.
Once the difficulties of getting people on to universal credit are overcome, and people are in a steady state of receiving their universal credit payments monthly, the next big political battle will be trying to get the Government to be more realistic about the money available to support people when they are on universal credit.
Baroness Buscombe
My Lords, I will do my best to reply to the multitude of questions. I will begin by saying that they seem to be in contrast with the response made in another place by, for example, the right honourable member for Birkenhead, who was very congratulatory about what we have achieved in this package.
Let me be clear: today’s package is worth £1.5 billion over the scorecard period, and will ensure that claimants get money, and get it sooner. We should remember that we are already spending more than £95 billion on benefits for people of working age. So all that I am hearing about cuts and how terrible it all is—all it is doing is frightening people. That has to stop.
Noble Lords
Baroness Buscombe
No, I am sorry—it is frightening people. The leader of the Opposition in another place said that 200-plus people in one area of the country—one in eight—had been evicted from their houses, but in fact it turned out to be only eight, and one of them had left his house 18 months earlier.
We have to stick with the facts. Our measure on advances means that where there is underlying entitlement, a household can have access to a month’s support within five days. I have seen it in operation in a jobcentre, where somebody who was very much in need was able to have it in a matter of hours. Housing benefit transition payment measures support housing benefit claimants’ transition on to universal credit by an average of £233. Yes, that £233 average will be two weeks’ rent, which is unrecoverable and automatic. It will be equivalent to what that person is paying in rent, and does not have to be paid back.
From January, claimants who started their UC claim in December and had up to 50% of their payment advanced will be able to claim an additional advance to bring their total advance payment up to 100% of their estimated monthly entitlement. Their repayment period may also move from six to 12 months accordingly. They do not have to take that. They may want help only with the first few months; it is up to the claimant to decide. The noble Baroness talked about going into her bank. Her bank will charge her interest. This is interest free—that must be made extremely clear.
Waiting days will be abolished from February. When we had our debate last week, the focus appeared to be on the whole operation of moving on to universal credit. In this Budget, we have dealt fairly and squarely with this issue by the measures that we are bringing forward. Waiting days will be abolished. However, the most vulnerable are already exempt from those waiting days, including care leavers, victims of domestic violence and those with serious illnesses. I also say to the noble Baroness that waiting days are not something that the Conservative Party or this Government introduced. They have existed for many years, with the exception of two years about three years ago.
We will continue to roll out our universal credit to ensure that the real improvements that it is delivering are extended to more people. Reprofiling our plans enables us to deliver significant improvements while continuing rollout.
Reference was made to debt. We are making sure that the claimant is able to access all the money they need to manage until their first payment by increasing the maximum amount of advance available. Extending the period of repayment to 12 months will enable claimants to be able to repay the advance without incurring higher monthly repayments. However, of course, in addition we already have budgeting loans—which, again, are interest free and which we have had for some considerable time to help claimants who are in need.
I would like to make a response on the housing benefit transitional payment. We can confirm that natural migration and managed migration claimants with housing benefit will get the transitional payment. We will have a short-term solution through local authorities initially before incorporating this payment into the automated system from DWP. But we do not want to wait for that—we want to get on and introduce this very substantial support.
Everyone who needs an advance can get an advance—and get one quickly. Almost 70% of people are paid monthly or four-weekly, which is why we have a monthly payment. We want to reflect the world of work in that sense, which is why we are moving people on to monthly payments in arrears.
In response to the noble Lord, Lord Kirkwood, yes, there is no question about this—not just myself but the whole team at the Department for Work and Pensions, the team running universal credit and the ministerial team are looking at this constantly. And we are not only looking at it but talking constantly to people actually on the ground, which is the most important thing. We are actually communicating twice a month. Every jobcentre is looking at how it is working and relaying its thoughts, concerns and ideas for improvement through to the Department for Work and Pensions. That is very important. That is why also we are rolling this out slowly and gradually—because we want to make sure that we get the system to be as good as possible. Noble Lords should remember that, when it is fully rolled out, about 7 million people will be on universal credit, including families, which means that we have to get the system right. This is not easy. I commend and praise those who work within the Department for Work and Pension team who are thinking through all these issues on a daily basis.
I fear, listening to members of the party opposite, that they seem to prefer the legacy system that has trapped people on benefits. By the way, if someone went on to the legacy system in the middle of December, they would get nothing before Christmas. And if we were to pause, we would have chaos—which would make people’s lives so much worse. With universal credit, people are entitled now to an immediate advance and immediate help for that which they need through the Christmas period into the new year—and then they can get another 50% advance on that first month’s payment, if they so wish.
We have been thinking this through and want to do everything that we can to support people in need. We are working to transform lives. Universal credit is a much better system than the legacy benefits that have been so discredited. With this package of measures, it will become even better in the months to come.
Lord Elton (Con)
My Lords, it is the function of Oppositions to pour cold water on the efforts of the Government, even when there are elements to please them. I think that my noble friend the Minister will agree that the noble Baroness, Lady Sherlock, made a very responsible response in an extraordinary context in which there are attacks on this policy, inside and outside Parliament, that are entirely unjustified. I wonder whether my noble friend heard on Saturday, on the “Today” programme, the assertion, widely repeated thereafter in the media, that on Christmas day 100,000 people would lose their universal credit. Can she put that straight? Since I am allowed on my feet only once, can she also tell us what is being done to steer people taking on advance payments in the direction of debt management counselling? I take the point about the dangers of increasing debt.
Baroness Buscombe
My Lords, I thank my noble friend for his support. He is quite right about the noble Baroness opposite, who, of course, knows so much about this system and the whole system of social security—and I pay tribute to her for that. But the reality is, I genuinely feel, that these attacks are unjustified, as my noble friend said. Indeed, I think that he referred to the “Money Box” programme with Paul Lewis, which stated that 100,000 people would not receive something over Christmas. That is so wrong. We are looking to “Money Box” at the moment to correct that and apologise. I have always put a lot of trust in that programme, but now I say loudly and clearly to Paul Lewis that the jury is out. I look forward to him responding in a far more positive way, because it is simply not true and is continually adding to the scaremongering.
We are hearing about people who are afraid to go on universal credit now, and that is appalling. We need to get behind the system, and we are doing everything that we can to make it work. We are trying to transform people’s lives and get them out of that system of being trapped in appalling welfare dependency, with no confidence and isolation in their lives. We want to transform their lives and we are doing everything that we can to do that.
Lord Cashman (Lab)
My Lords, I thank the Minister for repeating the Statement. After our last exchanges I dropped her a note because I think that I was rather unfair on her in my intervention. Would she accept with all sincerity that we welcome the changes? As I said in my contribution in our debate, I urge the Government to go further—because the negative cases that you see us representing are not imagined. As I said, again in my contribution, they have been brought to our attention by NGOs such as Scope, Shelter, Crisis, St Mungo’s, the Residential Landlords Association and London Councils. While it is wonderful that she visited the London Bridge centre, I encourage her to visit others. Does she agree with me that we are truly representing those cases that are brought to our attention—which, as I said in my contribution, were brought to me by the MP Jim Fitzpatrick?
Baroness Buscombe
I very much welcome the letter from the noble Lord, Lord Cashman, although, unfortunately, it has not arrived. However, I look forward to reading it when it does. I am very grateful to him. I was not feeling terribly well last week, and probably looked pained because I was worrying more about responding to an important debate than about what the noble Lord had to say—although I took very much on board what he was saying.
This is serious, of course, and we want to be clear that every single case that any noble Lord may hear about they should please send in to us. We will do our best to try to sort it, because we want the system to work. We are looking at a number of things; this is not the end of the road for our thinking through the system, as I have already said. For example, as my right honourable friend the Secretary of State in the other place made clear earlier today, we are looking at the taper rate. I know that is something that has exercised noble Lords. The Government are committed to ensuring that universal credit supports people into work but, as the Chancellor set out in his Budget, the taper rate will be kept under review and the Government will continue to consider the case for further changes. That is one example. In every other way, where we can, we will certainly look at how we can improve.
The noble Lord made reference to St Mungo’s, from which we had a response saying:
“We have been calling for a new strategy to tackle homelessness. I welcome the opportunity to work with the taskforce to end the national scandal of rough sleeping altogether. We are also pleased to see a number of changes to Universal Credit that St Mungo’s had been calling for, particularly the removal of the 7 day waiting period and extension of the repayment period for advances to 12 months”.
We have had terrific support, including from Citizens Advice, with which we are working very closely.
The Lord Bishop of Coventry
My Lords, I share with the Minister and the House a bit of local information. We find ourselves in an interesting situation in Coventry, with rising employment and yet a 30% increase in usage among those in the city—mostly single males—among whom universal credit has been rolled out. Like others, I very much welcome the changes and I am sure they will help enormously but, at the same time, I still have reservations about whether they have gone far enough and address other issues that some of us on the ground have identified.
I was glad to hear in the Statement the reference to universal support, although there were not many details about its rollout. I was also glad to hear about the partnership with CAB and other bodies; I am conscious, though, of the long queues each morning outside the citizens advice bureau in Coventry. Can the Minister say what sort of funding will be provided for universal support? In particular, on the issue of debt, which is important, will dedicated funding be made available for impartial debt advice for those who are running into difficulties?
Baroness Buscombe
I thank the right reverend Prelate for his intervention. While we are very proud of the fact that we are getting more people into work, one issue that we really must tackle and which we have been thinking about—hence our response—is the need now to focus our efforts on in-work progression. That is why the Government have allocated additional funding of more than £8 million over four years to run a suite of tests and trials inside and outside government to support the development of evidence about what works to help people progress in work—we have already had ministerial meetings to discuss this—including those who are insecure at work and women returning to the labour market. The Social Security Advisory Committee at the Department for Work and Pensions—which is entirely independent of us—has just published a report on this which is extremely helpful in terms of our thinking. We need to complement record-high employment and record-low inactivity with a labour market that increases living standards, with economic security for everyone across the country. That is why the right reverend Prelate is completely right; we have to focus on that.
With regard to debt, when someone goes on to universal credit, they will have a work coach, with personalised support and assistance. There are noble Lords across the House who have been very involved, as I have, with the passage of the single financial guidance body Bill which, at its heart, is all about financial capability. This is extremely important in complementing our work and progression of universal credit. It is about education from an early age, helping people to manage, signposting people who are in difficulty to really good support. At the moment, support comes from three different bodies, but one purpose of the Bill is to bring them into one single financial guidance body that everyone can have access to for free advice, debt support, guidance and further signposting of what might help them. I am rather proud that we have seen that through your Lordships’ House. Through its passage—I am looking at the noble Lord, Lord Stevenson—we have also sought to clarify our commitment to introducing a debt respite scheme with breathing space, which I am confident will help thousands of people who are in debt and in difficulty. Again, this Government are very proud of that and we wish the passage of that Bill well in another place.
I know that I am taking up time but, briefly with regard to universal support, we have invested £200 million in universal support and all claimants can access help with managing their finances when they come on to UC through those different channels.
Baroness Thomas of Winchester (LD)
My Lords, why are people being sanctioned so unfairly, as reported in the debates last week in both Houses, or does the Minister think those reports are being exaggerated? Is it because the people did not let the Jobcentre Plus office know that they were, say, in hospital, or that a bus had broken down? Supposing they do not have a mobile phone—are all UC claimants given a phone number to ring if they are unavoidably stopped from getting to an appointment at the jobcentre?
Baroness Buscombe
My Lords, in response to the noble Baroness, I have to say that, on sanctions, we believe it is right that there is a system in place to reinforce conditionality and to support and encourage claimants to do everything they can to move into or towards work or to improve their earnings. Imposing a sanction is not something that we do lightly. Claimants are given every opportunity to explain why they failed to meet their agreed conditionality requirements before a decision is made.
Based on last year’s data, each month, on average, fewer than 1% of ESA claimants in the work-related activity group had a sanction in place and fewer than 4% of UC claimants had a sanction in place. We are still quality-assuring the data for JSA but, in August, the DWP published a new sanctions statistics release with a revised methodology showing how many people were undergoing a sanction. This development is part of DWP’s commitment to the PAC to improve its published statistics and to be absolutely clear about what we are doing. The important thing is that we do not impose sanctions lightly; there has to be a tangible issue at hand.
Baroness O’Cathain (Con)
My Lords, I wish some people had realised how much work my noble friend Lady Buscombe has done since we were last here debating this problem—and it was a problem. It is incredible to think that nobody has said, “Well done” to her and the Chancellor and that, instead of saying that we are touchingly loyal, saying that actually we have worked at it.
Baroness Buscombe
I am extremely grateful to my noble friend for her support for what we are doing and I very much appreciate that.
Lord Touhig (Lab)
My Lords, the Minister will remember the comments made last week by my noble friend Lord Low of Dalston and myself about the impact of universal credit on people with disabilities and autism. I am sure she will be familiar with it because I have also tabled some Questions. Can we live in hope that there will now be something positive to benefit people with disabilities and autism, because we certainly have not heard anything in the Statement today?
Baroness Buscombe
My Lords, I want to make sure that I say the right thing. All I can say is that we are spending over £50 billion on disability, which is a record, and expenditure is going up. We spend over £50 billion a year on benefits to support disabled people and we are proud of that. Spending on people with health conditions is up by more than £7 billion since 2010. As a share of GDP, this is the second highest in the G7.
Almost 3.5 million disabled people are now in employment, which is really fantastic. We want to help as many disabled people as possible into work. They want to work and to be part of the world that they inhabit—that has to be our ultimate goal. But the noble Lord is right: we closed our debate last week with the noble Baroness, Lady Sherlock, saying that this is a work in progress. I entirely agree with her. It is a work in progress and it will continue to be until rollout in 2022.
Lord Cormack (Con)
My Lords, I am sure that we are grateful to my noble friend and also glad that she is feeling rather better than she was last week as, clearly, she was labouring under difficulties. We are grateful, too, to the Chancellor for responding, but can my noble friend consider very carefully some of the points that came up last week? I quoted a parish priest, who happens to be a godson of mine, who had written about sanctions and the way they were being administered, to his certain knowledge, in a very deprived urban area of Lancashire. Can we please take very careful note of what people like that say as they have no personal axe to grind but are merely concerned about some of the most deprived people in our communities? Can we listen and try to be continually responsive? This is a good beginning but we still have far to go.
Baroness Buscombe
My Lords, I thank my noble friend. In our debate last week, I remember that he referenced another contact, who said that our work coaches had targets. That is entirely wrong. Let me be clear: we have sanctions. A Work and Pensions Select Committee report in 2015 stated that sanctions are,
“a key element of the mutual obligation that underpins the effectiveness and fairness of the social security system”.
Evidence shows that sanctions have a positive impact on behaviour. This has to be seen in the context of people whose families have for generations not had work in their lives. The Select Committee is right about this issue as over 70% of JSA claimants and over 60% of ESA recipients say that sanctions make it more likely that they will comply with reasonable and agreed requirements.
That is not to say that we ignore those desperately in need. We have a well-established system of hardship payments available as a safeguard if a claimant demonstrates they cannot meet their immediate and most essential needs, including accommodation, heating, food and hygiene, as a result of their sanction. A legislative change came into force on 23 October 2017 to extend the list of JSA vulnerable groups to include homeless people and those with mental health conditions so that they can, if they qualify, receive hardship payments from the first day a sanction is imposed.
Lord Cotter (LD)
My Lords, I wish to ask the Minister two questions. As regards online training for those in difficulty, what will be done to ensure that they are capable of gaining online access? Secondly, I may have missed this but when will the costly phone line be replaced with a free line? Has that happened already? If not, it is very urgent indeed.
Baroness Buscombe
On the second point, that is happening as we speak. It has not happened in every situation but it is happening very quickly. It was wrong for anyone ever to say that it was a premium payment; it was not. There was no question of the DWP making any profit out of it. However, we are very pleased to say that we are moving to a free phone line as quickly as possible, and I know the work coaches are supportive of that. It is literally happening now, as fast as we can get our telephone lines shifted in each area.
One of the huge advantages of having work coaches—again, I have seen this in action—is they can help somebody who is in difficulty and teach them how to access the system online. Indeed, a couple of hours ago, my right honourable friend the Secretary of State said in another place that one of his constituents was very proud that, having gone online to access UC, they will now order their groceries online. That may seem a small thing for us, but for that person it was a huge step forward in feeling they were becoming part of the world we all inhabit, which is constantly changing and developing and can be quite frightening for some. We want to give people confidence through the work coach system.
Financial Guidance and Claims Bill [HL]
Baroness Buscombe ExcerptsTuesday 21st November 2017
(6 years, 5 months ago)
Lords ChamberRead Full debate Financial Guidance and Claims Act 2018 View all Financial Guidance and Claims Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 70-I Marshalled list for Third Reading (PDF, 106KB) - (20 Nov 2017)
Baroness Buscombe
“Objectives
(1) The objectives of the single financial guidance body are—
(a) to improve the ability of members of the public to make informed financial decisions,
(b) to support the provision of information, guidance and advice in areas where it is lacking,
(c) to secure that information, guidance and advice is provided to members of the public in the clearest and most cost-effective way (including having regard to information provided by other organisations),
(d) to ensure that information, guidance and advice is available to those most in need of it (and to allocate its resources accordingly), bearing in mind in particular the needs of people in vulnerable circumstances, and
(e) to work closely with the devolved authorities as regards the provision of information, guidance and advice to members of the public in Scotland, Wales and Northern Ireland.
(2) The single financial guidance body must have regard to its objectives when it exercises its functions.
(3) In this section “information, guidance and advice” means—
(a) information and guidance on matters relating to occupational and personal pensions,
(b) information and advice on debt, and
(c) information and guidance designed to enhance people’s understanding and knowledge of financial matters and their ability to manage their own financial affairs.”
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
My Lords, on Report I agreed to consider a range of matters concerning Clause 2, and I now make reference to government Amendments 1, 3 to 9, 12 to 13 and 32. During our debates on the Bill I think that we have all been in agreement that the provisions articulated in Clause 2 were important in setting the tone and ethos for how the single financial guidance body should operate. In the debates on Report, we discussed the need for these provisions to be well structured and clear. I believe that this group of amendments provides that clarity and structure. They tidy up the framework on which the body will progress towards achieving its objectives and assist it and all those with whom it will work closely in understanding our expectations in relation to its activities. I am extremely grateful for the enormous contribution that noble Lords have made to the Bill. Indeed, so significant has been that contribution that we have ended up with a rather long and unwieldy Clause 2, so for this reason we propose to split it into three separate clauses.
Government Amendments 1 and 6 remove the objectives from the end of Clause 2 and insert them as a separate clause immediately before the clause. This reordering picks up on the points made by the noble Lord, Lord Stevenson, that starting with functions and moving on to objectives was perhaps the wrong way around. I agree with him. Placing the body’s objectives upfront will emphasise and aid a wider public understanding of the overarching objectives of the body and how it carries out its functions. Government Amendment 8 divides the remaining provisions in Clause 2 into two. The first sets out the broad functions of the body and the second contains the specific cold- calling provisions pertaining to the broad consumer protection function. It does not change the content of the cold-calling provisions.
Setting out the detail of the body’s new consumer protection function in a separate clause is consistent with the approach we have taken in the Bill. For example, this is how we have, from the introduction of the Bill at Second Reading, treated the specific detail about pensions guidance, which is articulated in a separate clause after Clause 2. Alongside relocating the body’s objectives, this amendment simplifies what had become a very long and complex clause. The Government want the legislation for the single financial guidance body to be clear and to flow in a way that the people who will use it, including the body itself, are able to read and understand. On the whole, people will not have had the benefit of our debates in Parliament, at least not without considerable reference to Hansard. The easier the Bill is to read when coming to it for the first time, the better.
In addition, I have considered the case that was made well by the noble Baronesses, Lady Finlay, Lady Coussins and Lady Hollins, and the noble Lord, Lord McKenzie, about the need for clarity around access to financial guidance and awareness of financial services for people who find themselves in vulnerable circumstances. Again, I agree that we should be clear about the body supporting vulnerable people in exercising its functions. Government Amendment 1 therefore strengthens the body’s objective to ensure that its information, guidance and advice is available to those most in need of it, bearing in mind in particular the needs of people in vulnerable circumstances.
Moving on to government Amendment 3, as I indicated on Report, facilitating the bringing together of expertise to address the difficult and sometimes interrelated financial issues that people experience in terms of budgeting, savings, retirement planning and problem debt is a cornerstone of the policy for the single financial guidance body. We want to make it easier for people to access the help they need to make effective financial decisions. This amendment speaks to the concerns raised by the noble Lords, Lord McKenzie and Lord Stevenson, and places an obligation on the body and its delivery partners to consider all the financial guidance and debt advice needs of people accessing its services, and whether they would benefit from receiving other services that the body provides.
Government Amendments 4 and 5 make small changes to the strategic function of the body. They address points raised by several noble Lords during our debates in Committee about the lack of clarity around the body’s role in developing a national strategy to improve people’s financial capability and ability to manage debt. The strategic function currently requires the body to work with the financial services industry, the devolved authorities, and the public and voluntary sectors to support the development of a national strategy.
These amendments make it more evident that the single financial guidance body will lead on developing the strategy and that it will have some responsibility for overseeing the delivery of activities stemming from the strategy. I believe these amendments address the concerns about accountability that a number of noble Lords expressed.
Finally, Amendments 7, 9, 12, 13 and 32 are minor and technical in nature. Amendments 7, 12 and 13 are together a tidying-up measure. They remove the definition of devolved Administrations from Clauses 2 and 14 and insert the definition into Clause 19, “Interpretation of Part 1”. Amendment 9 corrects a technical defect in Clause 3(2), replacing the reference to the Pension Schemes Act 2015 with one to the relevant section of the Financial Services and Markets Act 2000. Amendment 32 allows for differential commencement by area. This is so that, in accordance with Cabinet Office guidelines, if it is necessary to commence at a later date for Northern Ireland there is a power to do so.
I trust and hope noble Lords will agree that these amendments provide sensible and pragmatic adjustments to the Bill, improving its structure and providing clarity. I beg to move.
Baroness Coussins (CB)
My Lords, I welcome Amendment 1 and remind noble Lords of my interest as president of the Money Advice Trust. The amendment, in clarifying the single financial guidance body’s objectives, will ensure that its services are available to those most in need of them, specifically with the inclusion of the words in proposed new subsection (1)(d), “bearing in mind”, the particular,
“needs of people in vulnerable circumstances”.
As noble Lords heard during our debate on this on Report, there has been a great deal of progress in this area in the financial services industry in recent years, including through the work of the Financial Services Vulnerability Taskforce. It is very good to see that the SFGB should give similar prominence to vulnerability in its work. The explicit inclusion of “vulnerable circumstances” in Amendment 1 is an excellent example of this approach.
I offer my sincere thanks to the Minister for listening so carefully to what I and my noble friends Lady Finlay and Lady Hollins said on this matter at an earlier stage, and for agreeing to reflect this in the Bill. I am very pleased to support Amendment 1.
The Earl of Listowel (CB)
I, too, thank the Minister and noble Lords for making significant progress. Perhaps I may ask for clarification: will care leavers be included in the “vulnerable” group? I apologise to your Lordships for being absent from Report—I was not able to be present—so I ask this question now.
Lord Stevenson of Balmacara (Lab)
My Lords, I declare an interest as a member of the Financial Inclusion Commission and a former chair of StepChange, the debt charity. Before I get on to the nature of the amendments, which we support, I want to pick up on the tone that has already established itself around the House of a group of people with expertise and knowledge, willing to put aside any political differences they might have at the start of such a Bill, and with a fierce commitment to work together to improve what we have before us. We have just heard a series of short comments which are redolent of a much greater and more important truth: namely, that when the House does this, it really does it well. I am very grateful to all concerned who have been part of this. We are seeing today a Bill that has been transformed, not because of any particular line or argument in a political or wider sense but because people genuinely believed that there were things here that could be made better and that, as a result, the lives of people right around this country would be improved. I think it is very important that we hold on to that.
I thank the Minister, as everyone else has, for introducing this group of amendments which reorganise and expand the objectives and functions of the new single financial guidance body and set the tone for its future activities. We are pleased to support the group of amendments, as I said. It is important to get a sense of the journey we have been on: we made it clear at Second Reading that, although we agreed with the Bill, we thought it was a framework Bill and not a Bill that had the substantial and important powers that we thought were needed. We wanted to make sure that by the time it left your Lordships’ House it had been changed a lot—and of course it has.
As originally drafted, it was too narrowly focused on the near-term task of bolting together the three separate functions that were being brought together—debt advice, pensions guidance and financial capability—and on transferring the very important responsibility for claims management to the FCA. It was really short—a lot of people picked this up—on the vision that the body should have and what the sector was going to be in the medium term. It seemed to devalue the work on strategy that was so important and is now at the centre of the activities. The fact, as the noble Baroness said, that the original Clause 2 led on functions and only later referred to objectives meant that the Bill, I think unintentionally, gave the impression that the main purpose was the enactment of what would be simply a series of structural adjustments.
This, as we have been reminded, was at a time when the Government had decided to change the terms of trade in financial inclusion by creating a new Minister at the DWP, the department that is sponsoring the Bill, but had not set out clearly what they expected the Minister to do. We all agreed, I think, right around the House, that the Bill and the new functions of the SFGB would actually be about delivering a holistic financial inclusion policy. As we have already learned from its chair, the excellent Lords Select Committee that reported at about this time on a range of issues around financial inclusion made the case for extending the Bill to cover a number of specific proposals.
Towards the end of Report, when it was clear that the Bill had changed and was going to contain much more about the application of financial inclusion policies, as we will hear again later today, we suggested that Clause 2 should be revamped. What we wanted was a bit more of the longer-term vision that the SFGB should be aiming for, and we argued that putting the objectives first and then dealing with the functions at the new body’s disposal was a better way of doing that—and I think that splitting the original clause into separate groups is a concrete way of doing it. So we are very grateful to the Minister for seeing the merit of our arguments and we thank the Bill team for working very hard to get the new draft into shape. I have a reputation in your Lordships’ House for not being very good at drafting, so I was delighted when they agreed to take it away and bring it back in the form in which we now have it: it is so much better.
The noble Baronesses who spoke on the vulnerability issue did the House a great service by raising with great passion the need to make sure that the Bill, as well as generally describing the new body, focuses on vulnerable people. We are very grateful to see that amendment here today. With that, we support these amendments.
Baroness Buscombe
My Lords, I thank noble Lords for this short debate and for their support for this amendment. In reply to the question raised by the noble Lord, Lord Kirkwood, yes, we expect persons in vulnerable circumstances to be robustly signposted to UC and other benefits where appropriate.
Baroness Buscombe
(b) advice to the Secretary of State on the establishment of a debt respite scheme (see section (Debt respite scheme: advice to the Secretary of State)).”
Baroness Buscombe
My Lords, I turn to the protection of indebted consumers, in particular the idea of providing a breathing space scheme, referred to in the amendment as a debt respite scheme. I thank noble Lords for their insightful and constructive contributions to previous debates on the subject.
I promised on Report that the Government would do further work on the issue in time for Third Reading. My officials and I have worked hard to produce an amendment that enables breathing space to be delivered quickly and effectively, a case for which noble Lords—in particular, the noble Lord, Lord Stevenson—put forward eloquent and powerful arguments. Indeed, the wording of the amendment builds on the amendment tabled by the noble Lord, to which the noble Lord, Lord Sharkey, and the noble Baroness, Lady Altmann, added their names on Report.
The best of your Lordships’ House has been on show in the development of the amendment. The way in which the Government and the Opposition have worked together to achieve consensus on a workable amendment which will enable the successful delivery of a breathing space scheme has been impressive, and it is my pleasure to introduce the amendment to your Lordships’ House. I know that there is broad agreement across your Lordships’ House that a breathing space scheme is both necessary and important. It has the potential to help thousands of vulnerable families out of problem debt, and provide a better life for individuals and their families.
I reassure the House that the Government remain strongly committed to the implementation of a breathing space scheme that is well designed and delivered at the earliest opportunity. We have already set out a clear timetable for developing the policy; the amendment provides the legislation that will allow us to implement it. Beyond enabling the introduction of a breathing space, the amendment contains many similarities with the one tabled by noble Lords on Report. For instance, it provides for details of the scheme to be set out once more detailed policy design has taken place. This is crucial, given that the Government are committed to listening to expert views put forward in the call for evidence. It also requires the Government to receive advice on the design of the scheme from the single financial guidance body, which will be important given the body’s expertise and central role in supporting indebted consumers. However, noble Lords may also notice a few differences from the amendment tabled on Report.
The noble Lord, Lord Stevenson, and I are in agreement that the Government’s amendment enables breathing space to be designed in a more effective way, building on, rather than duplicating, the work already commenced through the call for evidence, while still allowing for its introduction to take place swiftly.
I will outline a couple of the specific changes. First, the amendment enables the single financial guidance body to be involved in the design of the policy in a more suitable way. The Government plan to complete an extensive policy development and consultation process over the next year. As set out previously, we published a call for evidence last month on this topic, and intend to consult on a specific policy proposal in the first half of 2018. Through this process we will have established a robust blueprint of a breathing space scheme, informed by the expert views of the sector. Given this, we have agreed that it would not be the best use of the new body’s time and resources to require it to redo this work in its entirety once it is set up. Instead, our amendment would require the single financial guidance body to provide advice on specific issues requested by the Government.
The body must provide this advice within 12 months of its being established, which we expect to be in late 2018. On receipt of this advice, we will make regulations to set up the scheme as soon as is practicable—and certainly within 12 months of receiving the advice. This process will enable the body to supplement, rather than duplicate, the policy work the Government will have done up to that point. It could also speed up the introduction of the scheme, given that the advice is likely to be more targeted.
Secondly, we are in agreement that the amendment provides for more flexibility in designing the eventual scheme, potentially allowing for a scheme with a wider scope. For instance, our amendment enables—but does not mandate—the scheme to extend to Wales and Northern Ireland. We will assess the preferred geographic scope of the policy through our consultation, and the amendment allows us to deliver on the outcome of this process.
These are important changes, which we have reached a clear consensus on. However, after long and exhaustive discussions with House officials we have been informed that, for these changes to remain within scope of the Bill, we must take a power to make these regulations rather than a duty. I must be clear: in our view, this wording change has no practical impact. We have been clear, here and elsewhere, that we will deliver a breathing space scheme. This was a manifesto commitment and we are already midway through an intensive policy consultation process. This is simply a necessary step to give us the power we need to establish the scheme through this Bill. The Government’s position is clear. This amendment reflects the strength of our commitment to implementing a successful breathing space scheme. It sees the scheme delivered quickly and effectively and it ensures the sound design, implementation and operation of the scheme.
I turn to Amendment 33, tabled in the name of the noble Lord, Lord Sharkey. I begin by making it clear that this amendment is, with respect, neither necessary nor meaningful; it is actually entirely meaningless. As the House will have seen, the Government have tabled their own amendment to ensure that the Long Title of the Bill reflects the content following the additions made on Report. I must stress that my view remains that it is standard practice to add wording such as that tabled by the Government to the Long Title, and that it is perfectly adequate as tabled.
I also take this opportunity to remind noble Lords that the content of the Bill informs the Long Title; it is not the other way around. Indeed, the Companion to Standing Orders says that,
“amendments to the long title are not in order unless they are to rectify a mistake in the original title, to restate the title more clearly or to reflect amendments to the bill which are relevant to the bill but not covered by the former long title”.
Clearly, it is the third of these purposes which is relevant to this instance. Any amendment to the Title must therefore reflect amendments made, or being made, to the Bill. It is for this reason that we tabled an amendment to the Long Title to accompany the amendments that we tabled in respect of debt respite. The purpose is not to enlarge the scope of a Bill by amending the Long Title.
I am afraid that I must also express my disappointment that the noble Lord, Lord Sharkey, did not feel that he could discuss his original amendment, which he has now withdrawn, with me. Had he done so, I would have pointed out to him that I did not consider that it accurately reflected the contents of the Bill. His current amendment accurately reflects the content of the Bill so—in the spirit of consensus and because, as I have described, the amendment does not affect the scope of the Bill—I am prepared to accept it. On that basis, I shall not move Amendment 34 standing in my name and shall accept Amendment 33, tabled in the name of the noble Lord, Lord Sharkey.
Lord Stevenson of Balmacara
My Lords, I thank the Minister for introducing the amendments in this group which, as she says, will primarily establish a much-needed statutory debt respite scheme. As she also said, it is necessary and important. We have signed some of the amendments in this group and are absolutely delighted to support their inclusion in the Bill.
The failure to include a breathing space in the Bill left a substantial gap in the services which the debt charities need, if they are to offer the best support to those struggling with unmanageable debt, so we have been pursuing it through the various stages of the Bill and challenging the Government to up their game and honour their manifesto commitment. Initially, I think it was clear to the whole House that the Minister was under strict instructions to agree to nothing. But it is to her considerable credit that, after listening to the arguments and consulting widely, she decided that the case had been made. She and her Bill team then went out to bat for the proposal and, from a standing start, secured support for the amendment from her government colleagues. Only those who have witnessed the turf wars that this sort of decision—to introduce a breathing space—must have precipitated can appreciate what has been going on in Whitehall over the last few weeks. I have seen that at close quarters and it is not a pretty sight. I therefore salute the hard work that the Minister and her team have put into this, and I am lost in admiration at their ability to persuade—at ridiculously short notice—her ministerial colleagues to back this amendment today.
Baroness Buscombe
My Lords, I shall be brief. I respond first to the noble Earl, Lord Listowel. I very much welcome the opportunity to write to him on his question about council tax for care leavers. On the scheme, I say to both the noble Earl and the noble Lord, Lord Kirkwood, that the Treasury has already issued a call for evidence. I attended a meeting at the Treasury with officials from Scotland, along with Treasury Ministers and officials to discuss how it works, what the processes have been and the path and history behind the debt respite scheme in Scotland. That is already under way.
Perhaps I should repeat one brief paragraph just to reassure the noble Lord. The single financial guidance body must provide advice within 12 months of being established, and on receipt of this advice, we will make regulations to set up the scheme as soon as is practicable, and certainly within 12 months of receiving the advice. It must be no later than 12 months, but we shall make every effort to do it as soon as we can.
I should also add that the scheme can apply to public debts, but we do not want to prejudge the consultation that we are progressing. A number of questions that the noble Lord raised rightly rest with the consultation process.
Baroness Altmann
I intervene briefly to ask my noble friend for some gentle reassurance about the issue of cold calling. I am enormously grateful that we have the debt respite scheme agreed, and the new wording, on which I congratulate the department, and the new wording for the Long Title, which explicitly includes cold calling. Can my noble friend reassure us that the ban on cold calling that the Government intend to introduce will be as effective as possible and that, rather than using the ICO, which has very broad powers, the direct regulator—in particular, on pensions, the FCA—will be responsible for enforcing the ban? Regulatory imposition and enforcement by existing regulators is surely more effective in achieving compliance than relying on enforcement of widely drawn regulation.
This weekend, a story in the Mail on Sunday exposed the problems of nuisance calls to vulnerable elderly people about funeral plans. It was absolutely clear how ineffective the ICO has actually been in enforcing a ban on cold calling. It merely tries to sweep up the mess afterwards. It is cited as saying,
“where we find the law has been breached we will … take … action”.
Baroness Buscombe
I am so sorry to interrupt my noble friend, but there is no amendment in respect of cold calling tabled at Third Reading, and therefore we cannot speak to it. I reassure her that we have already committed to introducing legislation to ban cold calling in the other place.
Baroness Buscombe
“( ) Where the single financial guidance body provides information, guidance or advice to a person in pursuance of one of the functions mentioned in subsection (1)(a) to (c), it must consider whether the person would benefit from receiving information, guidance or advice in pursuance of any other of those functions (and it must ensure that SFGB delivery partners are under a similar duty).”
Baroness Buscombe
Baroness Buscombe
“Debt respite scheme: advice to the Secretary of State
(1) The Secretary of State must, within three months of the establishment of the single financial guidance body, seek advice from the body on the establishment of a debt respite scheme.
(2) A debt respite scheme is a scheme designed to do one or more of the following—
(a) protect individuals in debt from the accrual of further interest or charges on their debts during the period specified by the scheme,
(b) protect individuals in debt from enforcement action from their creditors during that period, and
(c) help individuals in debt and their creditors to devise a realistic plan for the repayment of some or all of the debts.
(3) The matters on which the Secretary of State may seek advice include (but are not limited to)—
(a) the appropriate person to administer the scheme (and the single financial guidance body may recommend the creation of a new body for this purpose);
(b) whether the scheme should apply in England only, or whether it should also apply in Wales or Northern Ireland (or both);
(c) the scope and design of the scheme, for example—
(i) the types of debtors and the types of debts it should cover; (ii) the types of protections it should give;
(iii) the time period for which the protections should apply;
(iv) what the obligations on debtors and creditors should be during any period for which protections apply, including any period of a repayment plan;
(v) the consequences of a failure by a debtor or a creditor to comply with a repayment plan;
(d) how the scheme should work, for example—
(i) how an application should be made for the protections given by the scheme;
(ii) suitable arrangements to keep creditors informed;
(iii) whether there should be a central register of persons admitted to the scheme;
(e) how the scheme should be implemented.
(4) The single financial guidance body must provide the advice sought within 12 months of its establishment.
(5) The Secretary of State must publish the advice.”
Baroness Buscombe
Baroness Buscombe
“the “devolved authorities” means— (a) the Scottish Ministers,
(b) the Welsh Ministers, and
(c) the Department for Communities in Northern Ireland;”
Baroness Buscombe
Baroness Buscombe
My Lords, I announced on Report in response to amendments tabled by the noble Baroness, Lady Meacher, the Government would bring forward amendments to introduce an interim fee cap in respect of PPI claims management services. Amendments 25, 26, 27, 29 and 30 honour that commitment—and I am sorry to see that the noble Baroness is not in her place.
As noble Lords are aware, this Bill already puts a duty on the FCA to cap fees charged in respect of financial services claims. This will ensure fair and proportionate prices for consumers using these services. However, as we have previously discussed, the implementation of the new regulatory regime and an effective, robust cap will necessarily take some time. This is a particular concern, given that the FCA’s PPI claims deadline may have passed by the time the FCA’s fee cap is in place. That is why the Government are introducing an amendment to set a fee cap at 20%, excluding VAT, of the claim value. The interim fee cap will apply to both CMCs and legal services providers that carry out claims management services in relation to PPI claims, to be enforced by the relevant regulators. It will be enforced by relevant regulators from two months after the Bill receives Royal Assent, until the FCA is in a position to implement its own cap. This cap will complement the range of measures in relation to PPI and other financial claims that the claims management regulation unit has announced. These include banning upfront fees and banning charges, where it is identified that the consumer does not have a relationship or relevant policy with the lender, as well as ensuring that all cancellation charges are reasonable and that consumers are provided with an itemised bill setting out details of what they relate to. This package of measures will support the Government’s aim to ensure that the claims management sector works in the interests of consumers by protecting them from excessive fees.
On Report, I also committed to tabling a government amendment to extend the FCA regulation of claims management to Scotland, should the UK and Scottish Governments agree that position. I am pleased to be able to confirm that the Scottish Government have now written to the UK Government to confirm agreement to extending regulation there. It highlighted that the situation in Scotland has changed since this issue was first discussed earlier this year. Legislation is currently progressing through the Scottish Parliament that will allow Scottish solicitors to offer increased funding options to clients on a no-win no-fee basis. As a result of these changes, Scottish solicitors will no longer need to set up CMCs to offer damages-based agreements to clients, and the CMC landscape is expected to change significantly.
To ensure that CMCs are not able to take advantage of this potential gap in regulation by targeting Scottish consumers, the UK and Scottish Governments have now agreed that FCA claims management regulation should extend to Scotland. This will ensure that there are appropriate regulatory standards in place to deal with CMC practices across Great Britain. These amendments follow up on my commitment on Report and do just that, extending FCA regulation of CMCs to Scotland, which will ensure that Scottish consumers are protected in the same way as those in England and Wales.
I note that the constitutional position of this issue has not been entirely straightforward as CMC regulation clearly concerns a mix of reserved and devolved matters. The regulation of the legal profession in Scotland is of course devolved, whereas matters of competition and aspects of consumer protection are reserved. It is the UK Government’s view that CMC regulation concerns reserved matters of competition and consumer protection. The Scottish Government have confirmed that they will seek the legislative consent of the Scottish Parliament for the CMC provisions as part of the wider legislative consent Motion for this Bill.
For the purposes of record, I should note that the UK Government’s view is that only Clause 20(4) relating to consumer advocacy is relevant to the legislative consent process, although I am aware that the Scottish Government might take a broader interpretation of how much of this is covered by the LCM. Nevertheless, the crucial issue here is that we have agreement that FCA regulation of CMCs should cover Scotland. I believe that this represents a sensible outcome which will benefit and protect consumers across Great Britain.
I am sure your Lordships will agree that the introduction of an interim restriction on charges in respect of CMCs is a positive step forward in ensuring that the claims management sector works in the interests of consumers. I am sure you will also agree that it is desirable to extend FCA regulation of CMCs to Scotland, given the change in circumstances there. I beg to move.
Baroness Kramer
My Lords, I apologise, as when I last spoke, I attributed to the noble Viscount, Lord Trenchard, a very eloquent speech that was made on cold calling and the way it targets vulnerable people, when it was the noble Viscount, Lord Brookeborough, who made that speech. I apologise to both parties. If I have any excuse, it is that I confuse my own children, and one of them is male and the other is female, so it is even more embarrassing.
As regards this group of amendments, my only regret is that the cap on fees is set at 20%. It would have been better to have a lower cap. However, we congratulate the Government on the underlying principle of taking temporary action because it is very likely that by the time the FCA gets its grip on this issue we will be beyond the reach of future PPI claims. However, other than that, I once again thank the Minister for being responsive to the issues that have been raised all around the House, including this one and those of cold calling, debt respite and financial inclusion. This is a very important move by the Minister and her name will be attached to these issues well into the future.
Lord Hunt of Wirral (Con)
My Lords, I declare my interests as set out in the register, as I have just entered the 50th year of my partnership in the global legal firm DAC Beachcroft. I also chair the British Insurance Brokers’ Association. Colleagues will recall that I have made a number of speeches about the need to regulate the claims management sector. Further reform is urgently needed, but these amendments are a step in the right direction and I welcome them.
One of the biggest problems posed by CMCs is the potential for consumers to lose a large proportion of their damages in fees, despite the fact that the level of expertise required for a CMC to manage claims is remarkably low. The regulation of these firms should therefore be consistent across the whole sector. I will just mention two significant benefits that come from what the Government are now doing. First, we will have a robust authorisation regime based on understanding the business models of individual CMCs, which will prevent those firms that do not offer good value for consumers operating. Secondly, we will have personal accountability for senior managers of CMCs to ensure that when a firm is struck off, its directors cannot simply resurface as a new CMC.
The FCA now has the power to cap under these amendments, but it should urgently consider extending the cap to other claims to address the drastic spike in claims related, for instance, to gastric sickness while on holiday, to which the noble Earl, Lord Kinnoull, drew attention in earlier debates. It is no coincidence that there has been this massive surge in claims, just as CMCs prepare for the deadline for bringing PPI claims and the introduction of measures to tackle the high number of whiplash claims. We are therefore dealing with quite a range of possible actions that the Government need to take.
I was disappointed, not by anything my noble friend Lady Buscombe has ever said or done, but because the Government published a consultation response last week entitled Cutting Costs for Consumers in Financial Claims which was completely silent on any plans for action in the sector. By need for action I mean the need to control charges in the personal injury sector, especially as the Government move forward with long overdue plans for whiplash reform. Question 20 in the original consultation paper was:
“Is there a need to consider further fee controls in other regulated claims sectors such as Personal Injury or Employment in future?”.
I do not know what the replies to that question were but, sadly, there was complete silence in response. I just hope that, as the FCA prepares to regulate this sector, it will bear in mind at the height of its agenda the customer/consumer detriment from the actions of CMCs, which we have debated many times in this House. At last, it appears that action is being taken, but it will have to go much wider than these amendments, although they are a very good start.
Baroness Buscombe
Perhaps I may respond quickly to my noble friend Lord Hunt. Both we and the Financial Conduct Authority are aware that our plans for whiplash reform could have an impact on this market. I reassure him that the FCA will certainly keep this sector under review and will monitor developments closely during the implementation phase.
Lord McKenzie of Luton (Lab)
My Lords, given the strong consensus that has emerged from the noble Lords who have spoken on these amendments—the noble Baronesses, Lady Kramer and Lady Altmann, the noble Earl, Lord Kinnoull, and the noble Lord, Lord Hunt—I can be brief. We support these amendments and we also support the provisions in the Bill, particularly in relation to a senior manager regime. That is very important.
Amendments 14 to 24 respond to the Scottish Government’s request for the regulation of CMCs to be extended to Scotland, and they will also help to negate the concerns that have been expressed about cross-border planning.
With regard to Amendment 25, although she is not here today, we should place on record our thanks to the noble Baroness, Lady Meacher, for leading the charge on this issue. As others have noted, the cap has been set at 20% exclusive of VAT, which is at the upper end of the range on which the Government consulted. However, we should see that in context. Currently it is suggested that the average fee rate for CMCs is some 37% of gross revenue, which is almost double the level at which the cap has been set.
It may be appropriate to remind ourselves of the scale of PPI, which I know will be coming to an end in August. I think that banks’ finance companies have paid out more than £26 billion in compensation over recent years. That is an extraordinary amount of money, and I wonder what that injection of funding to the consumer has done to the economy. It is important that the cap bites as soon as possible. Can the Minister confirm that the cap will apply to charges arising after the entering into force of Clause 21—just two months after this legislation comes into force—notwithstanding that the claims to which they relate may have preceded that? Can she confirm that it is not the date of the claim that is relevant for these purposes but the date when the compensation is paid?
Amendment 29 would appear to limit the application of the cap so that it does not apply to Scotland in respect of charges relating to claims prior to the transfer of regulation to the FCA. Perhaps the Minister could confirm that my understanding is correct. It would also seem to deny the application of Schedule 4 to Scotland. This schedule is concerned in part with transfer schemes in relation to the FCA. Perhaps the Minister could say what, if any, restructuring in Scotland might be affected by this change and how it would be affected if Schedule 4 were not applied to it.
Overall, we support these important amendments and look forward to the Minister’s reply.
Baroness Buscombe
I thank the noble Lord, Lord McKenzie. I am so afraid of making a mistake at this late stage that I would prefer to write to him in reply.
Baroness Buscombe
Baroness Buscombe
“PPI claims and charges for claims management services: general
(1) This section and sections (PPI claims: interim restriction on charges before transfer of regulation to FCA) and (PPI claims: interim restriction on charges after transfer of regulation to FCA) make provision for a fee cap to apply in certain circumstances to charges for regulated services provided in connection with a PPI claim.
(2) The following provisions explain terms used in those sections.
(3) The fee cap applicable to the amount charged for regulated services provided in connection with a PPI claim is 20% of the amount recovered for the claimant in satisfaction of the claim.
Accordingly, where nothing is recovered (whether or not a claim has been made or concluded) the fee cap is zero.
(4) But the charging of a reasonable amount for work done for the claimant is not to be regarded as exceeding the fee cap for a PPI claim if—
(a) the amount is charged for regulated services provided in connection with the claim,
(b) no other amount is charged for those services,
(c) the claimant has terminated the agreement governing the provision of such services (whether before or after the making of a claim), and
(d) the termination was not achieved by the cancellation of the agreement during a cooling off period available to the claimant by right (whether conferred by the agreement or otherwise).
(5) References to a claim are to a claim (however described) seeking compensation, restitution, repayment or any other financial remedy or relief, whether or not the claim is made or could be made by way of legal proceedings.
(6) References to the amount charged for regulated services provided in connection with a PPI claim are references to a sum comprising all amounts charged for such services in connection with the claim (whether or not charged under a single agreement), exclusive of VAT.
(7) References to the amount recovered for the claimant, in relation to a PPI claim, include a reference to any amount which (instead of being paid to or to the order of the claimant)—
(a) is set off against a debt due from the claimant to the person against whom the claim is made, or
(b) is paid to any person other than the claimant (whether a person providing regulated services in connection with the claim or any other person) with a view to discharging the whole or part of a debt due from the claimant.
(8) In this section references to regulated services are—
(a) so far as relevant for the purposes of section (PPI claims: interim restriction on charges before transfer of regulation to FCA), to be read as referring to regulated claims management services, and
(b) so far as relevant for the purposes of section (PPI claims: interim restriction on charges after transfer of regulation to FCA), to be read as referring to any service which is a regulated claims management activity.
(9) “PPI claim” means a claim relating to the selling of payment protection insurance (whether it concerns amounts paid by the policyholder or otherwise).
(10) “Regulated claims management services”—
(a) does not include any reserved legal activities of the kind mentioned in section 12(1)(a) or (b) of the Legal Services Act 2007 (exercise of a right of audience or the conduct of litigation), but
(b) otherwise, has the same meaning as in the Compensation Act 2006 (see section 14 of that Act).
(11) “Regulated claims management activity” has the same meaning as in the Financial Services and Markets Act 2000 (see the definition inserted by this Act in section 417(1) of that Act).
(12) “Section 22(1B) specified activity provisions” means provisions of an order made under section 22(1B) of the Financial Services and Markets Act 2000 (as inserted by this Act) which specify a kind of activity as a regulated activity within the meaning of that Act.
(13) “The FCA” means the Financial Conduct Authority.”
Baroness Buscombe
“( ) Sections (Debt respite scheme: advice to the Secretary of State) and (Debt respite scheme: regulations) extend to England and Wales and Northern Ireland.”
Baroness Buscombe
“( ) Sections (PPI claims and charges for claims management services: general) to (PPI claims: interim restriction on charges after transfer of regulation to FCA) come into force at the end of the period of two months beginning with the day on which this Act is passed.”
Baroness Buscombe
My Lords, I would like to take a moment to reflect on the Bill and its passage through your Lordships’ House. This is important legislation that will benefit members of the public and provide a sustainable legislative framework for public financial guidance and the regulation of claims management companies in the future. It has improving financial capability at its heart and I am proud to be associated with it.
At Second Reading I said that I hoped we would have constructive engagement as the Bill progressed through this House. Your Lordships have not disappointed. The Bill has rightly been accorded due and diligent attention from noble Lords across the House, and I would like to thank all those who have engaged on the Floor of the House and also in the many meetings we have had outside.
I would like also to thank my noble friend Lord Young of Cookham for all his help and assistance as the Bill has progressed. He has been a tower of strength and a more than able co-pilot throughout.
Finally, but importantly, I would like to thank the Bill team and officials across the Department for Work and Pensions, Her Majesty’s Treasury, the Department for Digital, Culture, Media and Sport, and the Ministry of Justice. Many of them have put in incredibly long hours to support my noble friend and me during debates, facilitate briefing meetings and provide the updates, letters and briefings that many noble Lords have received. I may add that other noble Lords, in particular the noble Lord, Lord Stevenson, referenced the cross-departmental support we have had. It has been amazing and has made an enormous difference to the outcome of the Bill.
Throughout the passage of the Bill we have listened to the arguments and suggestions made by noble Lords, and, in many cases, have agreed and brought forward amendments that strengthen it. I think we can all agree that this Bill leaves here in good shape, and I believe that this is in no small part due to the helpful and constructive manner in which all sides of the House have engaged with it.
Lord McKenzie of Luton
My Lords, I will say just a few words. I start by thanking the noble Baroness, Lady Buscombe, for her kind words. We are grateful again for the open-minded manner in which she and her co-pilot, the noble Lord, Lord Young, have approached the Bill. I never had the opportunity to ask him whether Luton Airport was on the flight path, but I will try to on a future occasion.
Invariably it is said at the end of a Bill process that the House of Lords has improved the Bill from its starting point. While tenuous in some instances, it is definitely true with this Bill. Support across the Chamber has enabled the framework for a debt respite scheme; consumer protection on cold calling; strengthening access to information and guidance on accessing pensions; a duty of care on setting standards; requiring that pensions guidance functions are provided freely and impartially; strengthening offences of mimicking; as well as securing the dashboard. These changes have come about because, broadly, we have had a shared analysis of what the Bill could achieve; a shared analysis with the Lib Dems and Cross-Benchers as well as with the Government, including the noble Baroness, Lady Altmann.
We are very grateful for the proactive approach of the Bill team, which went above and beyond in trying to fit our amendments into the confines of the scope of the Bill. I do not know how many variations of the debt respite provisions the team had to cope with, but there were many. I offer my thanks to the Lib Dems for their joint working on some key areas, among them the noble Lords, Lord Sharkey and Lord Kirkwood, and the noble Baroness, Lady Kramer.
Finally, I thank my colleagues, my noble friend Lady Drake, our pensions supremo who unfortunately is not in her place today, and of course my noble friend Lord Stevenson for his experience and passion on matters of the debt space. It has made my role a good deal easier.