Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2021
Baroness Sherlock Excerpts(3 years, 2 months ago)
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Baroness Sherlock (Lab) [V]
My Lords, I thank the Minister for her introduction and all noble Lords for a great debate. We do not oppose this order, of course; we all want auto-enrolment to flourish. It emerged from the work of the Pensions Commission, on which my noble friend Lady Drake served with such distinction. As my noble friend Lady Foulkes reminded us, that was legislated for by the last Labour Government—indeed, by my noble friend Lord McKenzie of Luton—and was then introduced by the coalition, so it is truly a cross-party baby. So far, it seems to have come through the threats posed by the pandemic reasonably well, as my noble friend Lady Drake said. People are still saving. Can the Minister confirm that there is no evidence of increasing opt-out rates?
I want to understand more about the effect of freezing the earnings trigger. The Government’s review says that a freeze reduces the value of the trigger as it assumes that there will still be wage growth, and its modelling estimates that the freeze will bring 8,000 more savers into scope. That last year’s review suggested a freeze would bring into scope another 80,000 savers shows what has happened to earnings growth. Can the Minister explain the projection a bit more? I have tried the methodology and failed. Does it mean only that, all other things being equal, freezing the trigger at £10,000 will draw another 8,000 people into auto-enrolment; that is, 8,000 more than would have come had it been uprated with earnings? In other words, is it just the pensions equivalent of fiscal drag? Crucially, were there any assumptions about employment levels? Is it possible that 8,000 extra people will be drawn in but that a million will lose their jobs and be kicked out, so we are 992,000 down? Was that factored into the decision by the Secretary of State?
As some people have lost hours rather than jobs, others have lost full-time jobs and will end up with one or more part-time jobs instead. If someone has one or more jobs, and none pays over the threshold, they are excluded from auto-enrolment altogether, so what assessment did the Secretary of State make of this in deciding about the earnings trigger? What are the Government doing to tackle our broken labour market and the rise in working poverty which it is driving— a point made strongly by the noble Baroness, Lady Wheatcroft?
I would be interested to hear the Government’s view on the age threshold—an issue raised by my noble friend Lady Drake, the noble Baroness, Lady Janke, and others—and what they intend to do about the gender imbalance, about the ethnic minority imbalance raised by my noble friend Lord McKenzie and the noble Baroness, Lady Janke, and about the self-employed, as mentioned by the noble Baroness, Lady Ritchie, and others. I am certainly interested to know, as are most noble Lords, what is happening to the 2017 review recommendations.
I also have some questions related to the impact of the pandemic. Are more people taking money out of their pensions early in response to short-term need in the pandemic? Are we seeing an increase in scams? With firms facing cashflow crises and then insolvency, are more employers failing to pass over auto-enrolment funds? If the furlough scheme is stopped and that leads to more insolvencies, which it probably will, what will be done to ensure that people get the money that the then-insolvent employer should have handed over? Is the DWP doing a full risk assessment for the pensions landscape in the light of the pandemic and, if so, will it publish it?
On the longer-term issues, my noble friend Lady Drake raised an important question about the shifting patterns of saving in the wake of the pension freedoms. Has the DWP looked at whether there is a shift to pension pots being viewed by people as simply another form of savings and not as a source specifically of long-term retirement income? If so, what does it intend to do about it?
A big challenge remains getting pensions saving up to the appropriate level to avoid, as my noble friend Lord Hain said, millions of people ending up in abject poverty in retirement. I would be interested to hear what the Minister has to say about that and about my noble friend’s question about when we will get the secondary legislation for the Pension Schemes Act. Noble Lords will remember quite how much pressure we were under to pass the Bill as quickly as possible, so I hope that we will not see implementation slowing down now the primary legislation is in place.
The Government are perhaps being cautious because of the pandemic, but, as my noble friend Lord Davies of Brixton said, auto-enrolment is a work in progress. Many noble Lords, including the noble Lord, Lord Bourne, the noble Baroness, Lady Bowles, and others, have pressed for the need for longer-term thinking. Can the Minister assure the House that the Government are developing a plan of action to ensure that, once the economic landscape stabilises and employers face less uncertainty, more people are automatically enrolled into pension schemes in the future? As many noble Lords have said, too many people simply are not saving enough money for retirement. We have seen during the pandemic more and more people falling into debt and potentially into poverty. People have lost so much already. We do not want those losses to be magnified further when they come to retire. I look forward to the Minister’s reply.
Universal Credit (Transitional Provisions) (Claimants previously entitled to a severe disability premium) Amendment Regulations 2021
Baroness Sherlock Excerpts(3 years, 3 months ago)
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Baroness Sherlock
That this House regrets that the Universal Credit (Transitional Provisions) (Claimants previously entitled to a severe disability premium) Amendment Regulations 2021 (SI 2021/4) will result in claimants in receipt of the Severe Disability Premium in legacy benefits moving on to Universal Credit without ensuring that all will be fully compensated for the loss of the Premium; and calls on Her Majesty’s Government to extend to legacy benefits the same uplift given to Universal Credit in response to the COVID-19 pandemic, and to ensure that claimants are advised before moving from legacy benefits to Universal Credit that they could suffer financially as a consequence.
Relevant document: 42nd Report from the Secondary Legislation Scrutiny Committee
Baroness Sherlock (Lab) [V]
My Lords, I am pleased to move this Motion standing in my name. These regulations are the latest twist in a long-running saga that concerns the severe disability premium, or SDP, which provides support for the extra costs of care incurred by severely disabled people living alone without a carer. It is worth about £67 a week and is paid on various means-tested benefits.
The latest government figures I could find suggest that over 500,000 working-age households get SDP. But when the Government created universal credit to replace legacy benefits, they chose not to include an equivalent of the SDP. As a result, although some disabled people are better off, many of the severely disabled people getting this premium will be much worse off on universal credit. That is a wider pattern: some people are better off on universal credit than legacy benefits and some much worse off.
To deal with that, the Government pledged a system of transitional protection, so that, at the point of transfer, no one would lose out in cash terms. But they will apply this only during what they call mass migration, the point when the DWP closes down legacy benefit claims en masse and tells people they have to claim universal credit instead. If someone moves on to UC before that point, which is called natural migration, they get no transitional protection.
Unfortunately, many people have no choice. You cannot make new claims for legacy benefits, and if you are already getting them but your circumstances change—say you lose your job, have a baby or move house—you are forced on to universal credit. Two people getting the SDP found themselves in this position when they moved home. They were forced on to UC and were much worse off. They went to court and in 2018 the High Court ruled that this was unlawful discrimination. So the DWP created something called the SDP gateway to stop those getting the premium naturally migrating to universal credit and losing out. Those who had already crossed over were given compensation for the lost premium, although that was originally set arbitrarily low, so that was challenged in court again, and it is now based on the lost SDP.
These regulations remove that gateway and give some compensation to those who will then be moving over to universal credit. But it is not full compensation; it does not compensate for the loss of the enhanced disability premium, only the severe disability premium. Nothing is paid where the SDP is attached only to housing benefit. And it is a fixed sum, which is reduced when any part of your universal credit rises, even if that is only because your rent has gone up. So claimants will see the support they receive fall in real terms, year on year.
If someone moved on to universal credit during a managed migration, they would have transitional protection based on all their legacy benefits, not just the SDP. That managed migration process has been paused. Can the Minister tell us what the new target date is for completing it? Zacchaeus 2000 points out that Covid-19 has increased rates of redundancy and caused changes in working hours, increasing the number of people on legacy benefits experiencing a change in circumstances. More claims will therefore end up moving on to universal credit with no transitional protection or with just the transitional SDP element.
Some vulnerable people risk losing a lot of money. Marie Curie, in its excellent briefing, points out the impact on people with terminal illnesses or life-limiting conditions. It says that the loss of the two disability premiums could leave new claimants up to £84 a week worse off. Then there is the related issue of the £20 uplift to universal credit. That was not applied to legacy benefits, many recipients of which are disabled people or carers. This is incomprehensible, as well as unfair. Since there is meant to be a pandemic measure, many sick or disabled people have spent the last year shielding at home, with spiralling energy costs and lots of additional costs such as home deliveries, PPE and much more.
Astonishingly, the Secretary of State for Work and Pensions, Thérèse Coffey, suggests that claimants should simply claim universal credit if they want the £20. This is terrible advice. Some people will be worse off on universal credit than they were on legacy benefits, even with that extra £20. Others, who would be better off on universal credit because of the £20 uplift, will be worse off if it is taken away. How will they know? It is really complicated. The DWP says that it cannot advise individual claimants, so why on earth is the Secretary of State for Work and Pensions telling people to switch?
If someone applies for universal credit, there is no going back. Noble Lords may have seen cases of people in the news of people getting tax credits who then applied for universal credit and were rejected because they had savings; UC has a savings threshold, unlike tax credits. But then they were not allowed to go back to tax credits, so they got nothing. We surely cannot have that apply across all kinds of other categories of claimant.
What should be done? First, the Government should urgently address the flaws in their strategy for dealing with people in receipt of severe disability premium who are going to be forced on to universal credit. The House of Lords Economic Affairs Committee said:
“The DWP should introduce an equivalent to the Severe Disability Premium. This should be a self-care element for any disabled person who does not have someone assisting them and claiming the carer element of Universal Credit.”
Many charities agree. What is the Government’s response to this?
Secondly, the DWP should address the process of claimants moving from legacy benefits on to universal credit. We need an urgent update on managed migration. We need mass communication, and we need personalised advice for anyone thinking of moving so that they know the consequences before they make that jump.
Thirdly, the Government should extend the £20 uplift to legacy benefits. They should do the right thing and make that uplift permanent. The Economic Affairs Committee put the case simply:
“We believe that the increase shows the original rate was not adequate … The Government should commit to making the increase in the standard allowance permanent.”
That original rate is not adequate as a result of years of benefit cuts and freezes. The House of Commons Library figures show that, excluding Covid-related increases, most working-age benefits were between 9% and 17% lower last year than they would have been if the Government had simply uprated them by inflation since 2010. The OBR estimated that the 2015 Budget would cut over £9 billion from social security spending by the end of this financial year. No wonder that before that £20 uplift, unemployment support was at its lowest level in real terms since 1992.
We need action. Temporarily extending the uplift will simply temporarily extend the confusion and uncertainty. The Government should do the right thing, address the problem with SDP, extend the uplift to legacy benefits, make it permanent and announce it as soon as possible, so that people have certainty and can judge for themselves whether they will be better off on universal credit or legacy benefits. The case for taking action on this matter could not be clearer. I hope I do not have to press the Motion to a vote, because I hope the Government will realise what is at stake and do the right thing.
The Deputy Speaker (Baroness Watkins of Tavistock) (CB)
As the noble Baroness, Lady Bowles, has withdrawn, I call the next speaker: the noble Baroness, Lady Altmann.
Baroness Sherlock (Lab) [V]
My Lords, I am grateful to all noble Lords who have spoken and I thank the noble Baroness, Lady Janke, for her support in helping to make the case for this Motion. Likewise, I thank the noble Baroness, Lady Bennett, for supporting the Motion and for reminding us of the human face of suffering in that terrible picture of people queuing in the snow to access a food bank.
My noble friend Lady Drake described compellingly the damage these changes can do and why they sit poorly alongside the Government’s moves to support people in the pandemic. I know that the sums may not sound life-changing to some, but they really are. My noble friend Lady Primarolo reminded us of the poverty facing so many severely disabled people, which is being aggravated by the pandemic. She pointed out the severe losses that many will now face. As the noble Baroness, Lady Thomas, said, being disabled is extremely expensive. It is wonderful to see her taking part in this debate and I am grateful for her support and for sharing her experiences and expertise.
I am grateful too to the noble Baroness, Lady Browning, who has long been a champion for disabled people. I thank her for her support and for reminding us of the additional challenges facing so many people with complex disabilities as they contemplate a move to universal credit. I do not think that just going to GOV.UK and testing it out for themselves is the answer. I also note her celebration of the wisdom of women in this regard. That makes me thank in particular our sole male speaker, my noble friend Lord Chandos, for his well-informed reflections and for the work that he and his colleagues on the Economic Affairs Committee have done so well to take apart many issues around universal credit and to flag up the challenges that need to be addressed. The noble Baroness, Lady Ritchie, has once again given her strong support for the Motion and analysed the real problems that this move will pose to severely disabled people and those with life-limiting conditions. I am grateful to her for that.
The noble Baroness, Lady Fookes, spoke up for universal credit, but highlighted the problems caused by underfunding it. I am grateful to her for speaking out so strongly for the £20 uplift. The noble Baroness, Lady Altmann, does not want the £20 uplift to be extended to legacy benefits or made permanent and has argued that getting people into work is the answer. But, as I am sure she knows, universal credit is paid to people who are both in and out of work. Moving someone into work does not solve the problem at all; it simply relocates it.
This debate has highlighted the vital role played by the severe disability premium in enabling sick and disabled people to get critical care. As my noble friend Lady Donaghy pointed out, disability premiums are not a luxury; rather, they help cover the extra costs that disabled people face. The Minister said that if claimants can hold out until managed migration, they will get full transitional protection—but she could offer no information on when even the pilot would restart, never mind when the managed migration programme would be finished. She also said that some people will be better off. I acknowledge that, but the fact that some people will gain is not much help to those who will be much worse off.
I had hoped that the many powerful speeches today would have persuaded the Minister of the case for the changes set out in my Motion. Perhaps they did, really, but she is not in a position to concede them. I hope that, if the House were to endorse this Motion, it might add strength to her arm when she goes back to the Secretary of State and tries to persuade the Government to do the right thing. Again, I am grateful to everyone who has spoken but, to that end, I wish to test the opinion of the House.
Social Security Benefits Up-rating Order 2021
Baroness Sherlock Excerpts(3 years, 3 months ago)
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Baroness Sherlock (Lab) [V]
My Lords, I thank the Minister for introducing these orders and all noble Lords who have spoken today. The guaranteed minimum pensions order is a routine uprating, but I have one question about it. When the House debated the GMP increase order on 3 March last year, I asked the Minister what guidance the DWP would give to pension schemes in the wake of the High Court decision on the Lloyds pension scheme. At that point, some matters had still not been clarified by the court, particularly in relation to past transfers out. However, on 20 November 2020 the High Court ruled that pension schemes have to proactively revisit individual transfer payments made since 17 May 1990, to check if any additional value is due as a result of GMP equalisation. Members who exercised their statutory right to transfer their benefits will be able to have a top-up payment if there is a shortfall between the original transfer payment and what would have been paid if benefits had been equalised at the time, with interest at 1% per annum.
The judgment clarified trustees’ obligations to revisit past individual transfers out when it comes to equalisation, but it also begged the question of how easy it would be for trustees to trace transfers back to 1990. Some schemes may face difficulties in complying. The data may no longer exist or the cost of checking and contacting members may exceed the benefit to them. There are no time limits on claims. Although the court judgment confirmed that past individual transfers must be equalised, details of implementation were left to schemes to decide. Will the Minister update the Committee and say whether the DWP plans to issue any further guidance and support to pension schemes?
On the social security uprating, Labour supports the Government’s decision to honour the triple-lock commitment that will see the basic and new state pensions rise by 2.5% this year. I am glad that the increase has been passed through to the standard minimum guarantee and pension credit. I will be listening carefully to hear the Minister’s answers to the crucial questions raised by my noble friends Lord Foulkes and Lady Drake and to the information relating to pensions sought by my noble friend Lord Davies of Brixton and other noble Lords.
Can the Minister explain the rationale for uprating the savings credit threshold in pension credit only by CPI? The other main working-age benefits and allowances go up in line with September CPI at 0.5%. I am glad that there is an uprating, but people are still suffering the effects of the Government having frozen benefits between 2016 and 2020. Excluding the Covid-related increases, most working-age benefits were between 9% and 17% lower last year than they would have been if benefits had been uprated by CPI since 2010. Those figures are from the House of Commons Library.
When the Minister mentions £7 billion in pandemic support, has she remembered that the OBR estimated that the 2015 Budget would cut more than £9 billion from social security spending by the end of this financial year? No wonder that, prior to the £20 uplift, unemployment support was at its lowest level in real terms since 1992.
I have four questions for the Minister. First, what is happening to the £20 a week uplift to universal credit, an issue raised by many noble Lords? Is it still being taken away in April? Parliament and, more importantly, those who depend on universal credit need to know. Increasing UC by 0.5% is neither here nor there if the Government are going to take £20 a week off it in April. People need that money. Has the Minister read the latest report from the Resolution Foundation, mentioned by the noble Baroness, Lady Janke? Has she heard Citizens Advice say that of the people it is helping, three-quarters of those on uplifted benefits would have a negative budget if the £20 was cut? Has she read the Trussell Trust research showing that one in five UK claimants reported it very likely that they would be forced to turn to a food bank? Has she heard CPAG warn that we are going to see another 200,000 children pushed into poverty? I concur with the concerns raised by the noble Lord, Lord Empey, about food poverty, but I add that a growing number of poor children are in working families.
What about the number of older workers, which is growing during this pandemic? They are at particular risk of long-term unemployment. They do not need their income cut by £20 a week. What of the impact on economic recovery? Money given to poor families is not saved: that £20 a week is spent in shops and businesses, stimulating the economy. We all want to know, what are the Government going to do?
Secondly, why has the £20 not been extended to those on legacy benefits, as mentioned by many noble Lords? Many of them are disabled people or carers. The Disability Benefits Consortium surveyed disabled people claiming legacy benefits and found that almost half—44%—report being unable to pay rent and household bills. I have never had a satisfactory answer to this question, so let me try again: how do the Government justify this blatant unfairness?
Thirdly, why has the benefits cap not been uprated? It has been at the same cash level since November 2016, and the growing number of families hit by the cap see no benefit from any increase, but their living costs are going up too. December’s figures show that 170,000 families are seeing their benefits reduced by £246 a month, on average; 85% of them are families with kids. As the nine-month grace period comes to an end, more and more people who fell out of work in this pandemic are going to bang their heads on that cap and will be hit badly.
Finally, why has bereavement support payment once again not been uprated at all? Can the Minister tell us by how much bereavement support payment has fallen in value since the Minister introduced it by abolishing the previous benefits? Why is it not being uprated?
People out there are desperate: they need help, and they, and we, look forward to the Minister’s reply.
Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2021
Baroness Sherlock Excerpts(3 years, 3 months ago)
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Baroness Sherlock (Lab) [V]
My Lords, I thank the Minister for introducing these regulations and the noble Lords who have spoken.
It is great to see some of the faithful stalwarts of previous debates back again this year, albeit on Zoom rather than in the Room this time. My noble friend Lord McKenzie has a long commitment in this area. Once again, the noble Lord, Lord Wigley, rightly raised the incidence of silicosis and pneumoconiosis among slate quarrymen—something raised in previous years by my noble friend Lord Jones. It is strange to be debating this without the noble Lord, Lord Alton; I am not sure that it is strictly legal. Most years, we have him here, speaking up for the victims of these awful diseases and advocating powerfully for the work of the British Lung Foundation. However, the medium has in no way diminished the passion and power of noble Lords’ speeches, even if it has curtailed their length a little.
I am grateful to my noble friend Lord Blunkett for talking about the impact on miners; to the noble Lord, Lord Bradshaw, for talking about those who made railway boilers; and to the noble Lord, Lord McNally, for telling us about his sister, Betty. It is heartbreaking to think of her working away for ICI, making fireproof clothing and having no idea that those awful seeds being planted would lie dormant for decades, only to bloom so awfully. I hope that we will never reach a point where we talk about these matters without pausing to think of those whose lives were cut short by these awful diseases and those who lost spouses, parents or friends. I pay tribute to the trade unions, charities and all those who have campaigned for this compensation.
Obviously, we support these regulations and are glad to see that, once again, the compensation in both schemes is being raised in line with the CPI, by 0.5%. Is it definitely the intention that this will happen every year from now on?
One of the issues raised by my noble friends Lord McKenzie and Lady Whitaker is the lack of parity between the levels of compensation being offered to sufferers and their dependants. It would be helpful if the Minister could remind us of the Government’s rationale for this distinction. Also, as has been mentioned previously, what assessment have the Government made of the impact of that disparity on women, who are more often the dependants? What is the latest estimate of the cost of providing equal payments?
Last year, the issue of medical research and investment in it was raised much more than this. I wonder what is happening, given the pressure on charity funding in the pandemic. Does the Minister know what is happening to charitable funding that goes into research? In the past, contributions have been made by some insurers. Can the Minister tell us what she knows of how that funding may be going?
In last year’s debate on the uprating regulations, a number of noble Lords asked for information about funding and the data held on the prevalence of mesothelioma, and my noble friend Lord McKenzie asked about progress on employer liability tracing. The Minister agreed to write once she had gathered that information, but I have not been able to find such a letter among the deposited papers, and the House of Lords Library was not able to trace it either. Can the Minister confirm that she did write? If so, will she place a copy in the Library, and would she confirm that all such future letters will be deposited for the record?
Finally, as my noble friend Lord McKenzie said so clearly, these dust-related diseases are a reflection of our industrial past and the carelessness with which too many employers approached health and safety. If we are to avoid future scandals, we need a strong Health and Safety Executive—a point raised by the noble Baroness, Lady Janke. But the HSE’s funding has been cut significantly since this Government came to power, and recent increases to fund the extra work caused by Brexit have not begun to make up for that. Can the Minister tell us how confident she is that the HSE is sufficiently well resourced both to manage the risks to employees in the current pandemic and to be alert to the health risks of the future, so that nobody else will be put through the next generation’s equivalent of the horrors we have been talking about today? I look forward to her reply.
Covid-19: Youth Unemployment
Baroness Sherlock Excerpts(3 years, 3 months ago)
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Baroness Stedman-Scott (Con)
My noble friend raises a number of relevant points. As I have said, we are working with local authorities and businesses. There is absolute mileage in all my noble friend says about things being done locally, because people know one another best in their local community. My strapline for all that we are doing is “To be known nationally but felt locally”.
Baroness Sherlock (Lab) [V]
[Inaudible]—about the scale of the crisis. The Government want 250,000 placements but, as the right reverend Prelate pointed out, not even 2,000 young people are in place and, by November, nearly 600,000 young people were claiming unemployment benefits. So when will 250,000 young people actually be in jobs and what are the Government doing to help the other 350,000 young people who cannot access Kickstart?
Baroness Stedman-Scott (Con)
Let me be clear again that we are working at pace with employers to get the vacancies we need in Kickstart. We have started people, and that take-up will accelerate in the coming days. There is no lessening of effort on that. In terms of our offer, we have the youth unemployment programme; we have youth hubs—which are helping people; and we have our youth employability coaches as well as work coaches in jobcentres. With all those efforts combined we will do as much as we can to get as many as possible of the young people referred to by the noble Baroness back into work.
Pension Schemes Bill [HL]
Baroness Sherlock ExcerptsTuesday 19th January 2021
(3 years, 3 months ago)
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Baroness Sherlock (Lab) [V]
My Lords, I, too, am grateful to the Minister for explaining why the Government asked the Commons to reject the amendments passed in this House. We have come a long way since the Bill had its First Reading in this House on 7 January—more than a year ago, although it seems more like a lifetime. The Bill now makes some important changes, creates CDC schemes, legislates for the pensions dashboard and strengthens the regulatory environment on pensions.
During the Bill’s passage through this House, the Government have made some welcome concessions. For example, we ran an amendment to require a public dashboard from the outset. The Government brought forward amendments requiring that, and I am grateful for the confirmation that the Minister has given today. We ran amendments saying that the FCA should regulate the provision of dashboard services, and the Minister has confirmed that that will happen. We ran an amendment to say that using the dashboard to see your own data must be free, and the Minister has confirmed that it will remain free.
The Bill initially made no reference to climate change, but my noble friend Lady Jones of Whitchurch, the noble Baroness, Lady Hayman, and Members from across the House worked together to persuade the Government to amend the Bill to require trustees and managers to take the Paris Agreement and domestic climate change targets into account in their overall governance and their disclosure of climate change risks and opportunities. This is the first time that the words “climate change” have featured in domestic pensions legislation.
This is a better Bill than it was when it started, and I am grateful to all noble Lords who have worked so hard on it, especially my noble friend Lady Drake and Dan Harris in our Opposition Whips team. I am also grateful to the Minister for engaging with our concerns and to the Bill team and all the officials who have engaged with us.
That said, the Government have rejected the amendments which this House voted for. On CDC schemes, I hope they will review the intergenerational impact of any schemes as they are developed and will keep an eye on that. I am particularly disappointed that our amendments on the pensions dashboard system were rejected. They would have put in place two essential safeguards: that the MaPS public dashboard should be in operation for a year and that the Secretary of State should lay a report before Parliament on its operation and effectiveness before commercial dashboards enter the market, and that the delegated powers in the Bill could not be used to authorise commercial dashboards to engage in transactions.
Like the noble Lord, Lord Vaux, I remain deeply concerned about the risks to consumers. Those amendments were especially important given the sheer breadth of the delegated powers the Bill grants and how little we know at the moment about how the dashboards will work. We still do not know how many dashboards there will be, who will run them, what information they will have, how it will be displayed or how consumers will respond. We do not know where liability will lie for each link in the chain or how consumers will be compensated if they lose out. We do not know what the charging model will be or how data security, identity verification or third-party access will be managed.
Given all those things that we do not know, I have sought to persuade the Government to come to Parliament to allow us to debate the proposals they make before the regulations are published. I regret that I have not succeeded in that. Given that this remains a very high-risk programme and that parliamentary scrutiny would surely be an advantage not an impediment, I hope that in her reply the Minister can give us some assurance of our continued involvement in debate on this process. I look forward to hearing her reply.
Baroness Stedman-Scott (Con)
First, I thank the noble Lord, Lord Vaux, and the noble Baronesses, Lady Janke and Lady Sherlock, for their contributions. I think it is right to say that we have listened, we have engaged and we have valued and appreciated all noble Lords’ contributions, and I assure noble Lords that that will continue.
I reassure the House that the Government are fully committed to continue transparency and engagement through the development, delivery and operation of pensions dashboards. We greatly value the insight and input from colleagues from across the House in shaping, testing and ensuring the proposals and want that to continue throughout the more detailed stages of development. The pension dashboards programme is committed to publishing six-monthly progress updates, the most recent of which, in October 2020, outlined the work undertaken to define the data standards and the work towards finalising the requirements for the digital architecture and the identity service. It also set out an indicative plan for delivery.
Future updates, in advance of the launch of dashboards, will provide greater detail, engagement opportunity and assurance on key areas of specific interest. These will include the digital architecture and identity service; user consents and permissions, including delegated or third-party access; the consumer protection regime, including the liability model; and further work on how data will be presented to consumers, based on a growing body of user research and a greater understanding of user needs.
I facilitated a meeting between noble Lords and the pensions dashboards programme team just before Christmas. As promised at that meeting, I will ensure that these regular meetings continue. They will provide your Lordships with the opportunity to have meaningful discussions directly with the programme team at the publication of each progress update report and a chance to scrutinise this work at an early stage of development. I will ensure that copies of these reports are placed in the House Library on their publication.
I recognise the concerns that many have expressed about the broad nature of the delegated powers within this area of the Bill. There is a statutory duty on the Secretary of State to consult before making regulations for pensions dashboards. Consultation will cover proposals across the range of areas which are critical to the safe, secure and effective delivery of dashboards, and give all those interested the opportunity to influence the detail before the regulations are laid in draft in this House under the affirmative procedure.
I know that some of your Lordships have asked whether we can go even further, requiring the Government to lay a report before Parliament for debate in advance of draft regulations being laid. I do not believe this to be the right way forward, as the consultation on the Government’s proposals for regulations will already have taken place.
I have listened further to the noble Baroness, Lady Sherlock, and, although we have not always been in agreement, we are together on Peers having ongoing future involvement, and we are prepared to engage, engage and engage. Therefore, in addition to updating the House in the usual manner, I am prepared to commit to the Government tabling Written Ministerial Statements during the consultation phases, prior to the debate on the proposed dashboard regulations.
I reassure the noble Baroness that I will continue to work with her collaboratively in the way we have done throughout the Bill’s progress. On the matter of facilitating further debate on the issue, I am sure that the Chief Whip has heard our debate today, and, when the Written Ministerial Statements are laid, I will draw them to his attention for him to consider further discussion in the usual channels.
Some concerns have been expressed about governance of the dashboard service going forward. The Money and Pensions Service has responsibility for delivery of the dashboard architecture and ongoing oversight and control, and it is clear that our focus for the foreseeable future must be on the development and implementation of the service. Meeting the demands of the scale and complexity of this challenge comes first. Reaching a live and steady state of operation will take a number of years, as set out in the pensions dashboards programme activity plan. As such, I confirm that the Government have no plan to move ownership of dashboards architecture away from the Money and Pensions Service.
My department has clear governance arrangements in place to ensure the delivery of dashboards. As well as the regular published updates that I mentioned earlier, there is an existing legislative requirement, in the Financial Guidance and Claims Act 2018, for MaPS to report to the Secretary of State annually on the exercise of its functions, which includes its responsibilities for pensions dashboards. This report is laid before Parliament.
Chris Curry, the senior responsible officer for the pensions dashboard programme, and Sir Hector Sants, chair of the Money and Pensions Service, regularly report progress to Ministers. The department also undertakes formal quarterly accountability reviews with the Money and Pensions Service. We recognise the importance of effective evaluation, including monitoring of consumer behaviours and outcomes. My department is responsible for overall evaluation of the policy and is working with the pensions dashboards programme and regulators to develop a comprehensive evaluation plan.
Research will also be undertaken with providers and users alike throughout the project life cycle. This will include user testing to understand likely reactions and behaviours, and research to understand the impact that dashboards will have on the market. My department is developing a joint set of critical success factors to complement delivery and measure the success of policy objectives. These are relevant to all stages of the programme and will give insights on, among other things, usage of the service, delivery and compliance. Review of the critical success factors will also play a part in evaluation and service developments.
I finish by repeating the commitment that I made in my opening remarks. We will not allow any dashboard to which schemes are required to supply data to be launched before that of the Money and Pensions Service. On the point raised by the noble Baroness, Lady Sherlock, about a review of intergenerational impact and fairness, we will of course review how CD schemes operate and will monitor how different groups are treated.
I hope that my comments reassure noble Lords that the Government are acting diligently and responsibly in the delivery of dashboards.
Baroness Sherlock (Lab) [V]
My Lords, I thank the Minister for her introduction and the noble Baroness, Lady Bowles, for her contribution. I hope that the debates in both Houses have caused the Government to reflect further on whether their DB funding requirements are fit for purpose. I acknowledge the work done by the noble Baroness, Lady Bowles, and other Members in this regard.
I wish that the Government had supported the Labour amendment to the Bill in the other place. The essence of it is captured in my Amendment 4D here. It is regrettable that so many DB pension schemes outside the public sector are closed to new members and to future accrual of benefits for existing members. It is also important to recognise that there are DB schemes which remain meaningfully open to new members, which are sustainable, and which have strong employer covenants.
I support the Pensions Regulator in wanting to ensure that DB schemes are well run and properly funded, thereby increasing the likelihood that members will receive their accrued benefits in full when they become due. We have seen enough examples of poor corporate behaviour and the decline or collapse of companies providing the covenant to DB schemes to know the consequences of having a weak funding regime.
Today’s debate does not challenge this principle. It is concerned with how the principle is applied and specifically whether the approach to scheme funding by the Government and the regulator sufficiently recognises the difference between the funding regime for a sustainable, meaningfully open DB scheme and that for an increasingly mature and closed DB scheme. There is real concern that, unless the difference is recognised, the Pensions Regulator and any regulations from the Secretary of State could perversely pose a threat to the continuation of open, relatively immature, sustainable schemes. This would thereby deny the opportunity for millions of workers to benefit from a DB pension. Many sections of the Railway Pensions Scheme are an example of such an open DB scheme.
A closed DB scheme will, of course, see contributions decline and the remaining scheme members progressively age. As more and more of the assets will be needed to pay the pensions, they will need to be lower risk and provide liquidity to ensure that members receive their benefits when they become due. A sustainable, meaningfully open scheme has an ongoing flow of new contributions, including from future members. These can be invested for the long term, providing higher returns. Their investment profile does not need to be as risk-averse as that required for a declining DB scheme. If sustainable, open DB schemes are unnecessarily pushed into the same investment and derisking strategies required for declining closed schemes, there is the risk that the regulator will push up the ongoing contributions of members and employers to such a level that, perversely, they encourage open, sustainable DB schemes to close. This cannot be right. It does not benefit employees, employers or the economy.
My amendment aims to ensure that regulations on DB scheme funding recognise the characteristics of sustainable open schemes, rather than setting a one size fits all policy for both closed and open DB schemes. It specifies that
“the objectives of the Secretary of State must include supporting the ability of the trustees of a relevant scheme to decide the funding and investment strategy for the scheme taking into account the current and future maturity and liquidity of the relevant scheme consistent with the trustees’ duty to invest assets in the best interests of members and beneficiaries.”
I know that the Pensions Regulator has issued an interim response to its first DB funding code consultation. It is apparent from some of the comments, including those of the PLSA, that there are misunderstandings or lack of clarity about the position of open schemes. Assurances are being sought from some in the pensions industry and elsewhere that the DB funding regime will remain scheme-specific. The noble Baroness, Lady Bowles, referred to this. Any bespoke approach under the new funding proposals should build on that foundation. The DB funding regime should continue to apply flexibly to take account of individual scheme circumstances.
I will listen carefully to the Minister’s answers to my questions and to those detailed by the noble Baroness, Lady Bowles. Given the concerns expressed in both Houses, it will be important to hear some answers to these questions and I do hope to hear the Minister tell us whether the Government plan to consult with open and immature schemes before publishing the draft regulations, including reflecting on the impact on members and sponsors of schemes that are meaningfully open. I hope the Minister can respond today in a way that addresses the concerns raised and indicates a way forward. I too have valued the conversations of which I have been a part. I have no wish to press my amendment to a Division, although I will listen carefully to what she has to say before making a final decision. I look forward to her reply.
Baroness Sherlock
At end insert “, and do propose Amendment 4D in lieu of the words so left out of the Bill—
“221C Guiding objectives
(1) In exercising any powers to make regulations or otherwise to prescribe any matter of principle under this Part, the objectives of the Secretary of State must include supporting the ability of the trustees of a relevant scheme to decide the funding and investment strategy for the scheme taking into account the current and future maturity and liquidity of the relevant scheme consistent with the trustees’ duty to invest assets in the best interests of members and beneficiaries.
(2) In subsection (1), “relevant scheme” means an occupational pension scheme that is not near significant maturity and is open to new members and is reasonably expected to remain so, either indefinitely or for a significant period of time.””
Extreme Poverty
Baroness Sherlock Excerpts(3 years, 5 months ago)
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Baroness Sherlock (Lab) [V]
My Lords, we all want to help people into work, but this report shows people are destitute now. It highlights the fragility of our social security system, pointing out that half of destitute households were getting universal credit or had applied for it. It says that needing to repay advances was leaving them with little to live on, and it warns that Britain is increasingly reliant on food banks as a core welfare response to destitution. This is scandalous—does the Minister agree with me? If so, what are the Government going to do about it now?
Baroness Stedman-Scott (Con)
I certainly acknowledge the issues that people are facing; I do not shy away from that at all. But, at the risk of repeating myself, the Government are right now putting over £100 million extra into working-age welfare, we have the Covid winter support fund, we have the plan for jobs and the pandemic policies are under continual review. There are free school meals and money for food charities. I am not sure I agree with the noble Baroness’s implication that we are not doing enough.
Chemicals (Health and Safety) and Genetically Modified Organisms (Contained Use) (Amendment etc.) (EU Exit) Regulations 2020
Baroness Sherlock Excerpts(3 years, 5 months ago)
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Baroness Sherlock (Lab) [V]
My Lords, I thank the Minister for her explanation of these regulations and all noble Lords who have spoken for their contributions. I too am grateful for the briefing that we received from the officials, which transformed these rather complicated regulations into something that I could at least wrestle with in a fairly basic manner.
If I have understood them correctly, I think the Government’s intention is that, from the end of the transition period, the existing EU regimes at that point in time will be saved into national law through the provisions of the withdrawal Act, and that the primary point of these regulations is to correct deficiencies arising from Brexit beyond what was provided for in the 2019 regulations. Then, of course, there is the issue of Northern Ireland, where the protocol means that some areas of law in Northern Ireland will remain aligned with the EU.
I have questions about two areas on which I would like to get more information. First, on the question of Northern Ireland, the Minister mentioned unfettered access. Paragraph 17(1) of the Command Paper The UK’s Approach to the Northern Ireland Protocol says, about trade going from Northern Ireland to the rest of the UK, that
“this should take place as it does now. There should be no additional process or paperwork and there will be no restrictions on Northern Ireland goods arriving in the rest of the UK—that is, there will be unfettered access, as provided for by the Protocol.”
The thing is that, on the face of it, these regulations stop totally unfettered access for some goods, or at least they place a barrier to be overcome before a product can be marketed from Northern Ireland into GB. I am not saying that is a bad thing, just that it is different.
For instance, the regulations provide that for the BPR, where a Northern Ireland-based business has obtained an authorisation or permit for a biocidal product and wants to market that product in GB, the HSE will treat the product as authorised in the whole of the UK but only as long as certain conditions are met, including that the active substance is on the GB approved list and that the business notifies the HSE by submitting the same information that was submitted in support of the original authorisation. Once that authorisation has been submitted, the product can be sold in GB after 90 days, provided that the HSE does not raise any objections. If the HSE has any concerns about its safety or efficacy, it can request further information—another 90-day delay.
The HSE also has a safety valve. A product can be prohibited, or its sale or use restricted, if that can be justified on certain grounds, including environmental, the protection of health or life, the protection of vulnerable groups or animals or plants, and various other things, including artistic, historic or archaeological values.
I want to understand what is happening here. Is the HSE conducting an independent assessment of the safety and efficacy of a product, or is it simply checking that the product has met the regulatory requirements of the EU and then noting the information? If it is the former, then it is obviously possible that the HSE will reach a different view from that of the EU regulators. Indeed, because there is no dynamic alignment with EU standards after transition, it is entirely possible that our regimes will diverge over time. If so, how does that sit with the statement in the Command Paper that there will be no restrictions on Northern Ireland goods being marketed into the rest of the UK?
The second area I want to explore, as did most other noble Lords, is the role of the HSE in relation to these provisions and indeed Brexit. That was raised by the noble Baronesses, Lady Altmann and Lady Bennett, and other noble Lords. Essentially, the organisation is having to establish a new, independent regulatory regime for GB and have a regime aligned with the EU for Northern Ireland, all the while dealing with the huge challenge of helping to make workplaces Covid-secure during the pandemic, and in the context of having had its budget pretty much halved over the last decade.
I will ask the Minister some questions. First, on staffing, the noble Baroness, Lady McIntosh of Pickering, mentioned a commitment to recruit 300 staff, I think to cover the REACH business, of which only 50 had been hired. We were told in briefing that the HSE had plans to recruit 100 more staff by the end of January and up to 130 by the end of the financial year. Can the Minister clarify whether these are two separate figures? Is the figure I mentioned of 100 and 130 just for the DWP-funded activity? If so, can she tell us how many of those staff have been recruited?
Secondly, how much additional money has the HSE been given specifically to cope with its new role in a post-Brexit world, separate from extra Covid funding, and what is that as a percentage of its budget? It is quite clear that the Committee wants to hear a categorical assurance from the Minister that Ministers have satisfied themselves that the resources available to the HSE are adequate to enable it to deal not just with Covid, but with its new regulatory and inspection regime. On a related point to that made by the noble Baroness, Lady Altmann, I would like to know specifically on the BPR authorisations what assessment has been made as to the capacity of the HSE to make all the necessary evaluations within 90 days of receiving the submissions specified in the regulations.
I have asked enough questions and other noble Lords have asked good ones too. I look forward to the Minister’s reply.
Arcadia Pension Fund
Baroness Sherlock Excerpts(3 years, 5 months ago)
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Baroness Stedman-Scott (Con)
I understand the noble Lord’s point and the spirit in which he makes it, but it would be inappropriate for Ministers to comment at this stage on this individual case. It is too early to know the position of the pension scheme—whether there is a deficit or how big it is—and, indeed, whether anybody has behaved inappropriately. We need to let the Pension Protection Fund and the Pensions Regulator do their job. If there is any cause for concern, they have a range of powers which they will use.
Baroness Sherlock (Lab) [V]
My Lords, many Arcadia pension scheme members are facing possible job loss and uncertainty, which are the perfect conditions for scammers to exploit anxious people who are looking to access their pension savings. The experience of too many British Steel workers stands as a warning. Once savings are transferred out of the pension scheme, there is no way back and access to the PPF is gone. What active steps will the Government take to apply the lessons of the Rookes review to ensure that Arcadia scheme members are not exposed to financial advisers who may provide poor advice, nor persuaded to put their savings in the hands of fraudsters?
Baroness Stedman-Scott (Con)
As always, the noble Baroness raises an important point for people who are in difficult positions. Since January 2018, following its work on the British Steel pension scheme, the Financial Conduct Authority has been working closely with the Pensions Regulator and the Money and Pensions Service to ensure that they monitor pension transfer activity in defined benefit pension schemes that may be subject to increased transfer activity. The three organisations have increased the frequency of their meetings during Covid-19 to consider schemes at risk of higher transfer activity.
Social Security Co-ordination (Revocation of Retained Direct EU Legislation and Related Amendments) (EU Exit) Regulations 2020
Baroness Sherlock Excerpts(3 years, 5 months ago)
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Baroness Sherlock (Lab) [V]
My Lords, I thank the Minister for her explanation of these regulations. I am also grateful to her for giving me access to her officials, who have been a source of very helpful briefing throughout this process.
Ministers have explained previously that their intention was to revoke the provisions of the social security co-ordination regulations at the end of the transition period, the idea being to clear the decks for the implementation of the contents of a deal with the EU and/or with the EEA and Switzerland. I have repeatedly asked the Minister over the year to spell out what will happen to social security co-ordination after the transition period for those outside the scope of the withdrawal agreement.
Ministers have consistently declined to answer questions on the grounds that the Government aim to get a deal, and that if we can wait until then we will be told everything. We are now here, three weeks before the end of the transition period, debating regulations that terminate the current co-ordination provisions, and we still do not know what is to replace them because we still do not know if there will be a deal.
Can the Minister tell the Committee how, if there is a deal, its provisions will be enacted in law? Specifically, how will Parliament get to examine the content and implications of the deal? If there is no deal, anyone moving between the UK and the EU, including the EEA and Switzerland, will be in the same position as somebody currently moving between here any other country in the world, except of course that we have agreements with many other countries, and far more people move between the UK and the EU and the EEA than anywhere else. According to the House of Commons Library, last year there were some 3.7 million EU nationals living in the UK and the best part of a million UK nationals living elsewhere in the EU, excluding Ireland.
If we end up without a deal, what will the position be? It is good to have it clarified that the regulations save provisions relating to the aggregation and uprating of the state pension. So if there is no deal in place by the end of the transition period, there will at least be continued state pension aggregation and uprating in the EU and EEA states and Switzerland up to the end of the next financial year and potentially for a wee bit longer, if necessary, for ongoing negotiations.
The intention is presumably that, in the absence of an EU-wide agreement, the UK would seek to put in place reciprocal arrangements with individual European states instead. Just for the record, can the Minister confirm that in the absence of a deal with the EU, this means that if a British pensioner moves to France in January she will find that her state pension is uprated in April as though she had never left the UK? Will there be any reimbursement of healthcare charges for her, or indeed for anybody getting long-term exportable benefits? Will there be any healthcare coverage for someone making a short stay in an EU state from the UK after the transition period? What will happen to those affected by Covid, such as students who started their courses virtually, intending to move physically next term? What will be the impact on their entitlements?
The fact that nothing else is safe will leave people moving between the UK and the EU very exposed. The obvious exception is Ireland, with which we now have an agreement, and we are told that there is an intention to have a deal with Gibraltar. These regulations save the intended SSC regulations on social security between the Governments of the UK and Gibraltar. Can the Minister confirm—I apologise if she did this in her opening remarks—whether the extent of those savings is just on uprating and aggregation, like a state pension, as it is with the EU as whole, or whether it is broader for Gibraltar?
The other outstanding areas relate to things such as double payment or aggregation of national insurance contributions. I understand that, at the moment, if there is no deal, the rules that apply to any other country in the world that does not have a reciprocal agreement with the UK will also apply to those moving for work between the UK and the EU or EFTA or Switzerland. I presume they will pay NICs for 52 weeks and then be subject to the local regimes. Could the Minister confirm for the record that someone in that position would therefore end up being potentially liable to paying contributions in both countries, while being insured in the UK only?
Finally, the Explanatory Memorandum says that no impact assessment has been prepared for this instrument, but that, when negotiations are concluded,
“DWP intend to publish … an update to the social security co-ordination impact assessment published during the passage of the … Act.”
Can I ask the Minister why no impact assessment was prepared? How soon after negotiations are concluded will DWP update the impact assessment published during the passage of the Act? If there is a deal, can the Minister assure the Committee that we will see an impact assessment for any measures brought forward to implement the deal and an updated impact assessment for these measures before the provisions of any deal are implemented?
This entire process is highly unsatisfactory. We are three weeks from the end of the transition period and Parliament is being asked to approve regulations that remove the transitional provisions without any clarity as to what will replace them. That leaves uncertainty for anyone moving between the EU and the UK who is outside the scope of the withdrawal agreement. It leaves us, as parliamentarians, with no knowledge as to when, how or even if Parliament will get to scrutinise and debate what is coming next. I deeply regret that Parliament has been put in this position, but I look forward to hearing any further clarification the Minister is able to give.
The Deputy Speaker (Lord Duncan of Springbank) (Con)
My Lords, I apologise to the noble Baroness, Lady Ludford. We have been unable to connect with her because of various technical reasons, for which I apologise. I return to the noble Baroness, Lady Janke. I hope we can now speak with her.