Universal Credit

Baroness Sherlock Excerpts

Wednesday 10th December 2014 Lords Chamber

[Lord Freud]

One of the things that we need to do with universal credit is to make sure that everyone can take part in it. We are creating a system to do that through universal support, where we go into partnership with local authorities to help people, concentrating particularly on financial and digital inclusion. We then pull in all the other third sector companies, such as landlords, Citizens Advice and credit unions, to make sure that support is holistic.

[Baroness Sherlock (Lab)]

I do not doubt the Government’s intentions or the Minister’s commitment, but this has to be delivered to work. To go back to the original Question, the OBR said at the time of the Autumn Statement that, despite having already been delayed repeatedly and reset last year, it was assuming an extra six-month delay on top of the Government’s current plans because of what it called “optimism bias” in the DWP. Just right now, as the Public Accounts Committee is hearing from the Treasury, it was confirmed by the chair that the Treasury has not signed off the DWP’s business case for universal credit. What can the Minister say to the House? Universal credit is running almost four years late. It is costing money to taxpayers and vulnerable clients. It risks, frankly, making a laughing stock of the department. What can the Minister tell us to reassure us and how can we believe him?

[Lord Freud]

I re-emphasise that the Treasury has signed off the strategic outline business case. This plan is being done in a way that makes sure that we do it safely and securely—not the big bang method. As I said, it is being done more cheaply than originally envisaged. It is vital that we do not do the kind of thing that happened with tax credit when it was opened on one day and was a total shambles for millions of people.

Universal Credit

Baroness Sherlock Excerpts

Monday 24th November 2014 Lords Chamber

[Lord Freud]

The working allowances in universal credit are much greater than under the legacy system, so there is a freeze that will have a small effect. Nevertheless, the poverty impacts are to take 300,000 children out of poverty.

[Baroness Sherlock (Lab)]

My Lords, I would like to return to the question of arrears raised by my noble friend Lady Hollis. Not only are people paid universal credit once a month in arrears but that is compounded by the debts they are getting into by having to pay back some of their council tax and crucially by the bedroom tax. Has the Minister read the report of the fact that Iain Duncan Smith went to court to defend his department’s right to levy the bedroom tax on a council home whose spare room was in fact a panic room which a charity had paid to secure to protect a woman who had suffered rape, assault, stalking and death threats from her violent ex-partner? As the newspapers reported clearly, she could lose £11.65 a week or move to a home with no secure space. How can the Minister justify this?

[Lord Freud]

We have a system with the spare room subsidy where there is support at a local level through discretionary housing payment, and this is exactly the kind of case where you would expect to see that payment made.

Introduction: Baroness Smith of Newnham

Baroness Sherlock Excerpts

Tuesday 21st October 2014 Lords Chamber

[Lord Freud]

Matthew Oakley was very concerned about the communications aspects of talking to claimants about sanctions. We have taken that point very seriously. Indeed, we have accepted his recommendations on that and are going further; we are reviewing and improving all our claimant communications on sanctions across every benefit, and we aim to ensure that people understand that they have received a sanction and why they have received it. We have introduced a claimant communications unit that tries to get the language right—because, as many noble Lords know, some of the language that the DWP put out in the past was clunky at best.

[Baroness Sherlock (Lab)]

My Lords, I wonder whether the Minister has taken the opportunity to read the evidence that was given to Matthew Oakley when he did this report. I accept that sanctions are a necessary part of the system, but it is quite clear that many people have been sanctioned who have done literally nothing wrong. Look at the evidence from the CAB of the man sanctioned twice for missing appointments with his Work Programme provider; in fact, he had been to all the appointments with a company to which it had subcontracted him, but he was sanctioned. Then there was the man who was sanctioned after being told to be in two different places at once and the woman who was sanctioned for being in hospital having treatment for cervical cancer, despite having given advance notice of her hospital appointment to the system before she went in. I could go on. There is a very real risk of claimants starting to believe that the Government are more concerned with cutting their benefits than getting them into work. Will the Government sort this?

[Lord Freud]

My Lords, it is clearly utterly important that the sanctions regime is fair to people. We have put in layer on layer of protections and safety nets in the machine. People have, to start with, five days to respond to the letter saying that we are looking at a sanction. Then it goes to a decision-maker and then, if claimants do not like that, to a mandatory reconsideration, which is an extra layer. Then you can go into the tribunal process, and we have hardship. We are putting many measures in to make sure that we run this system as fairly as we possibly can.

Universal Credit

Baroness Sherlock Excerpts

Wednesday 30th July 2014 Lords Chamber

[Lord Freud]

One of the things that we are doing as we roll this out is to watch key factors very closely. That is the point of going at this pace, so that we can see small numbers to start with and see what is happening. I will watch this very closely. I talked to the Women’s Aid groups intensively on a number of things of great concern to them and to me, and I will keep watching this one very closely.

[Baroness Sherlock (Lab)]

My Lords, although I welcome the Minister’s commitment to transparency, I was reading this week about the DWP’s battle to stop the publication of the risk register and other documentation relating to universal credit. The Information Commissioner said that the other papers should come out, and a tribunal added the risk register, but the department has appealed. One journalist has pointed out that the judge said that he could see,

“no support for the argument”,

and that the department had not, “provided any persuasive evidence”. The department now wants to appeal again. I have two questions for the Minister. First, what exactly are the Government trying to keep from us? Secondly, how much public money have they spent in the attempt?

[Lord Freud]

This is a government policy; it was equally a matter for the previous Government as it is for this one not to publish particular information about the business case, risk registers and so on. It is something that we are maintaining not just for this programme but generally. I will say, however, that there has been an enormous amount of information put out on this programme, more than for any of our other programmes. There have been reports from the SSAC, from the NAO, from the PAC; it was in the MPA; and it was in our annual report. We are talking to the Select Committee and going through the contents and information within those business plans without breaking the norms of what Governments do in terms of providing a specific document.

Youth Employment

Baroness Sherlock Excerpts

Wednesday 30th July 2014 Lords Chamber

Asked by

[Baroness Sherlock]

To ask Her Majesty’s Government what action they are taking to reduce levels of youth unemployment following the recent closure of the youth employment contract incentive scheme.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)]

Tackling youth unemployment remains a priority for this Government, and our successful Youth Contract will continue. The wage incentive will end as planned next March, just three and a half weeks earlier than anticipated. The youth claimant count has fallen by 134,000—the largest annual fall since 1997—taking it to its lowest level since 2008.

[Baroness Sherlock (Lab)]

My Lords, I have asked repeatedly about the Youth Contract wage incentive scheme in this House, and the Minister has repeatedly assured us that all is well. On 20 March, in relation to youth unemployment, he talked about,

“just about the most comprehensive response that has ever been seen”.—[Official Report, 20/3/14; col. 280.]

On 5 February, of the Youth Contract, he said: “Our approach is working”. On 7 April, he said:

“Our approach continues to work”.—[Official Report, 7/4/14; col. 1129.]

On 17 June, we were back to “the most comprehensive response”, et cetera. Now we learn that the wage incentive scheme is being scrapped. Can the Minister tell the House, first, how many of the target 160,000 wage incentive payments have been made? The last note that I saw had a figure of 10,000. Secondly, when did he realise the scheme was not going to reach its target and why did he not tell the House sooner?

[Lord Freud]

My Lords, I am keen to reaffirm that the Youth Contract is both comprehensive and working. One element, the wage incentive, has now helped more than 65,000 youngsters into jobs. The other elements of the programme are performing powerfully: 148,000 youngsters have started work experience on the programme, and 46,000 have gone into sector-based work academies.

Housing: Underoccupancy Charge

Baroness Sherlock Excerpts

Tuesday 22nd July 2014 Lords Chamber

[Lord Freud]

My Lords, the private sector had the LHA introduced, as my noble friend pointed out, by the previous Government. We had to take steps to constrain the spending on that. We have taken £2 billion out of that benefit for savings. The results of that also came out last week. The final report was dramatically less in its impact than the predictions that we had. Instead of landlords pulling out of the market, they have increased their supply by 7%. There has been very little evidence of displacement; a very marginal probability of moving home; and again we have had homelessness acceptances coming down. We are on the same trajectory with the spare room changes as with the LHA changes.

[Baroness Sherlock (Lab)]

I am starting to wonder whether the Minister and I have read the same report—

--- Later in debate ---

[Lord Freud]

My Lords, I have told the House on previous occasions that the difference here is that there is very little changeover or moving within this particular group, so there is no way in which one could introduce this kind of policy on that kind of basis. It therefore has to apply to stock. I remind noble Lords that the impact assessment for this measure envisaged moving or downsizing on the part of about 50,000 people. Nineteen thousand people have moved during the first eight months, which is on the trajectory of our expectations.

[Baroness Sherlock]

My Lords, the Minister has read the report. The House will be aware that he has previously reassured us not to worry about the hundreds of thousands of people affected because of all the things that they can do. This report shows that every one of those has failed: they are not taking in lodgers; they cannot move; they cannot find additional hours; and they cannot downsize because there are no properties out there. This week, Chambers put “bedroom tax” into its dictionary. Is it not time for the Government to accept that they have got it wrong and make that term archaic for ever?

[Lord Freud]

The report was an early look at the policy. As the research says, it provides a baseline. There is evidence of people looking for work—18% of those affected are looking to earn more in work and 50% of the unemployed are doing so. As I told the House last week, the number of people in workless households in social housing is dropping dramatically. People are moving, as I just said. Nineteen thousand people have moved in the early months of the policy, which is in line with our expectation of 50,000. It is clearly stated in the report that, over two years, one might expect to see 20%.

Poverty and Social Exclusion

Baroness Sherlock Excerpts

Thursday 17th July 2014 Lords Chamber

[Lord Freud]

It is clearly vital, as my noble friend says, to close the gap. There are lots of interesting statistics, particularly about what is happening in the London schools that are outperforming—although we do not know exactly how that has happened, and it is vital that we find out. It is the London Challenge, and there are quite a lot of analyses of exactly why that has come about.

[Baroness Sherlock (Lab)]

My Lords, the long-awaited interim report on the bedroom tax emerged this week. It slipped out at the height of the reshuffle without so much as a ministerial Statement, and it confirms what we knew—that only 4.5% of claimants have downsized, arrears have gone up, half of claimants have cut back on essentials such as food, and a quarter have gone into debt to avoid losing their home. I ask the Minister two questions. First, what assessment have the Government made of the effect of the bedroom tax on child poverty levels? Secondly, given the rather extensive briefing in today’s media that the Liberal Democrats are doing a U-turn on the bedroom tax, is it still government policy?

[Lord Freud]

Maybe I am not the best person to comment on Liberal Democrat manifesto planning. I can, however, assure the House that the removal of the spare room subsidy remains government policy—and I remind the House that this was coalition policy, which was decided in 2010 at the highest levels of government.

Universal Credit

Baroness Sherlock Excerpts

Wednesday 9th July 2014 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for repeating that Answer. It was an interesting history lesson, but it did not shed as much light as I would have liked on the Question that was asked. We have been very supportive of the principle of universal credit, but the enormous problems that his department has been having in implementing it are sorely testing our support. If the Minister is to maintain cross-party backing for universal credit, a project to which I know he is personally committed, then we need rather more transparency than the Government have been able to offer during the process hitherto.

On 30 June, the Employment Minister, Esther McVey, said that the Chief Secretary had approved the strategic outline business case for universal credit. On Monday, the head of the Civil Service, Sir Bob Kerslake, said to the Public Accounts Committee:

“We shouldn’t beat about the bush. It hasn’t been signed off”.

I ask the Minister two simple questions. First, Esther McVey and Sir Bob Kerslake cannot both be right: which of them is? Secondly, can he assure the House that universal credit is, and always has been, on time and on budget?

Pensions Act 2011 (Consequential and Supplementary Provisions) Regulations 2014

Baroness Sherlock Excerpts

Wednesday 9th July 2014 Grand Committee

[Baroness Turner of Camden (Lab)]

My Lords, my noble friend Lady Drake has made an exhaustive study of this complicated matter. I certainly do not have her kind of in-depth understanding. I came this afternoon because I am interested in what happens to members of DB schemes who have been concerned that the various changes would threaten the safety of their benefits.

As we have heard this afternoon, there have been quite heavy assurances from the Government that the protection of members is paramount to them; that is of course important. We have already heard that there have been assurances on retrospection. The changeover in some schemes from non-money purchase into money purchase can give rise to uncertainty and a lack of assurance among the people receiving it. I am therefore interested to hear what the Minister has to say in response to my noble friend, who has raised these points sharply and with great clarity. It is necessary when you are making adjustments in pension benefits in whatever area to make sure that people who are on the receiving end are confident that what they have been paying for and supporting all their lives will be safe. That is terribly important.

We understand that the Government have given assurance both in relation to protection under the ECHR, which is important, and to general protection as well as protection of some means of challenging if people feel concerned and are not happy about what is happening. I await with interest what the Minister has to say in response to the issues which have been raised, which are very pertinent in the circumstances.

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for his introduction to these regulations and for explaining how we got to this place, the noble Lord, Lord Kirkwood, for some very good questions, and my noble friends Lady Drake and Lady Turner for raising some significant concerns.

There has rightly been a long consultation on this issue, and it is right that the Government have taken the time to listen to a wide range of voices, particularly regarding the retrospective nature of the changes, the significance of which has been highlighted by the noble Lord, Lord Kirkwood, and others. While on one level these are very technical changes—I say to my noble friend Lady Drake that, being a relatively normal person as far as pensions are concerned, if in no other respect, I found that “complex” did not begin to describe my emotions—sadly, I felt the same way as Brazil when I was reading these. None the less I confess that the questions I am asking the Minister are quite genuine and I will find the answers fascinating, because I certainly do not pretend to understand the exact implications of what is happening here.

As my noble friend Lady Drake explained, the original draft SI was withdrawn after being challenged by the Joint Committee on Statutory Instruments. It has been replaced by two orders: this affirmative draft instrument and a negative instrument, the Pensions Act 2011 (Transitional, Consequential and Supplementary Provisions) Regulations 2014, to which I shall refer from now on as the negative instrument, if noble Lords will bear with me. Those two orders are completely intertwined. Indeed, the Government issued a single impact assessment covering both. Therefore I hope that the Minister will forgive me if some of my questions end up straying into that territory. I simply want to understand the settlement that the Government reached, and inevitably the ground is split in practice between the two instruments.

On commencement, my noble friend Lady Drake explained that these regulations will apply primarily with prospective effect, with the exception of two limited circumstances relating to winding up and to employer debt where there is a risk to member benefits. However, there will be retrospective protection for the affected pension schemes, with earlier decisions effectively being validated. The key effects of that of course—as has been mentioned—are on schemes that switch from being money purchase to defined benefit, with all the significant regulatory, governance and funding implications that that switch carries. There is also the effect on wind-ups and administration and the impact on employer debt. The Government originally intended that the provisions should all be retrospectively applied, but changed their position on consultation. The Government response to the consultation on the definition of money purchase schemes says at paragraph 50:

“However the Department has been persuaded that, where there is negligible risk to member benefits, it would be unduly burdensome to require schemes to revisit past decisions. This would give rise to expensive administrative costs that could deplete scheme assets and therefore, the ability to fund members’ benefits”.

Paragraph 51 continues:

“Nevertheless, where there is a real risk to member benefits, it is right that the legislation provides that employers fund a scheme deficit if a scheme is underfunded on wind-up, or if the scheme is unable to put in place a recovery plan”.

The response goes on to explain that in practice the transitional regulations validate the actions of trustees or managers in respect of those non-money purchase benefits, except in limited circumstances.

If that is the basis of the transitional protection that is being offered by the Government, can the Minister tell the Grand Committee a bit more about the basis of their assessment? The impact assessment says that,

“there is insufficient information available to accurately estimate the number of schemes affected by these regulations”.

It goes on to say that there are approximately 40,000 private occupational pension schemes in the UK that include money purchase benefits, of which about 2% are hybrid schemes.

The impact assessment says that during the consultation the department held four stakeholder forum events, with more than 100 stakeholders in attendance. It had 95 responses to the consultation document. The department also made direct approaches to relevant organisations, including employer representative bodies. As my noble friend Lady Drake mentioned, it also went out and made direct attempts to get data, in order to better understand this. However, paragraph 25 of the impact assessment says:

“Despite these efforts the Department is unable to quantify the impact of the regulations on the schemes that are likely to be affected. There is no data available at an industry-wide level and the consultation did not elicit sufficient data at scheme level to allow us to produce reliable estimates of the impacts on schemes, employers or members”.

However, the Government were obviously given a pretty clear steer by the industry that the consequences of retrospection would be significant, because the impact assessment says at paragraph 30:

“The Department have taken into account the strongly expressed views of those in the industry. Having carefully considered these responses, the Department is persuaded that this change to the policy”—

as was quoted—

“will not appreciably increase risk to members’ entitlement or make any material difference to members’ pension outcomes, given the protections put in place through these regulations”.

My noble friend Lady Turner said that she was pleased the Government were able to give assurances that members would not find their benefits being affected. However, I have to ask—along with my noble friend Lady Drake—how the Government can be confident that the risk to members’ entitlements is negligible and will not increase appreciably, when they are unable to quantify even the number of schemes affected, never mind the number of members, and when they do not seem to have been able to gather any data about what the quantum of that effect might be. I understand that they are in a difficult position, but I wonder what degree of confidence the Government have, and therefore what degree of assurance the Minister can offer the House through this Grand Committee, that these regulations will have the effects that the Government believe they will.

Benefit Cap

Baroness Sherlock Excerpts

Wednesday 2nd July 2014 Lords Chamber

[Lord Freud]

One of the things that we are doing is reforming the whole of the welfare system in order to find out the barriers to going to work that people have and helping to address them. In the particular case of the introduction of the benefit cap, we had an enormous initiative to work with those individuals through Jobcentre Plus. We wrote to them, talked to them and provided intensive employment support. We worked with local authorities to help them with budgeting, housing and childcare. In this particular case we worked hard, and that seems to be an effective set of interventions.

[Baroness Sherlock (Lab)]

My Lords, how much has been spent on discretionary housing payments to those affected by the benefit cap and what impact has that had on the planned savings from the policy? So, for 2013-14, how much was spent on discretionary payments, to what extent has that reduced the savings for central government and what impact has it had on local government?

[Lord Freud]

The department pays out a lump sum of discretionary housing payments that local authorities apply to the various policies that they are tackling. There is a specific amount, £110 million, that goes to this particular policy although actually, when you look at the analysis of how local authorities attribute the spend, it is rather less than the amount attributed to the benefit cap. The total AME savings set against that are £225 million. As I said, the importance of this policy is that it sends out a message about the direction of travel, which is that the way to get people out of poverty so that they have proper support is to get them into work.