Covid-19: Low-income Families

Baroness Stedman-Scott Excerpts

Thursday 8th October 2020 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)]

A direct assessment of Covid-19’s impact on low-income families with children has not been made. However, we are monitoring several data sources, including Her Majesty’s Treasury’s recent distribution analysis of Covid-19’s impact on working households. The Treasury analysis has shown that the Government’s unprecedented support package, including job retention, self-employment protection schemes and an additional £9 billion to strengthen the welfare system, has supported the poorest working households the most, with those in the bottom 10% seeing no income reduction.

[Baroness Sherlock (Lab) [V]]

My Lords, the Government may not make an assessment but I am seriously worried by mounting evidence from Action for Children, CPAG and the Trussell Trust of parents struggling to pay the bills and to feed their kids in this pandemic. We could help by lifting the benefit cap and the two-child limit and topping up legacy benefits, but Ministers have said no and now the Chancellor is threatening to scrap the £20 a week he put on universal credit. I have two simple questions. Does the Minister accept the evidence that a growing number of parents are struggling financially? If she does, what are the Government going to do about it?

[Baroness Stedman-Scott (Con)]

I take the noble Baroness’s point well. I assure her that we are considering all evaluations—the Trussell Trust, Joseph Rowntree and Action for Children, as well as Understanding Society, the Covid-19 survey and the opinions and lifestyle survey by the Office for National Statistics. I am sure this question will come up many times today, so I say that the £20 UC increase was put in for one year only. As my colleague the Secretary of State for Work and Pensions in the other place said, dialogue is continuing with HMT on this, and the Prime Minister confirmed yesterday that it is under constant review.

[Lord McNicol of West Kilbride (Lab)]

My Lords, in 2010 the UK poverty rate stood at 15%; it now stands at 26%—an increase of more than 1.1 percentage points a year. An additional 670,000 people are expected to be classed as destitute by the end of 2020. I want to press the Minister a bit more on the detail on the supplementary question from the noble Baroness, Lady Sherlock. The Minister talked about what has been done. It does not seem to be working. Can we have some explanation of what the Government will do in the future?

[Baroness Stedman-Scott (Con)]

I can again confirm to the noble Lord that all welfare issues are under constant review and, as sorry as I am, I cannot say more than that at this time.

[The Lord Bishop of Blackburn]

My Lords, a recent report by the Church of England and the Child Poverty Action Group highlighted the “disproportionate impact” of the pandemic on low-income families with children, saying that:

“Without a radical change in policy direction, the prospects for many families are likely to deteriorate further through the remainder of this year as unemployment rises”


and more families become reliant on the welfare system. Following Prime Minister’s Question Time in the other place yesterday, will the Government do more than consider? Will they commit to making the temporary uplift in universal credit permanent? Will they also commit to a commensurate increase in the level of support for children, to reflect the additional needs of families with children?

[Baroness Stedman-Scott (Con)]

As much as noble Lords press me today, I can only confirm that matters are under constant review. I am sorry, but I am not in any position to make any commitments.

[Baroness Fookes (Con)]

My Lords, I attach great importance to the work of work coaches in getting the unemployed into work and out of poverty. Is my noble friend satisfied with the numbers of these at her disposal, and with their quality?

[Baroness Stedman-Scott (Con)]

I know that my noble friend is a great champion of work coaches. They do a great job and we are proud of the work they are doing at the DWP. I am also proud of the fact that we are doubling the number, spending £895 million. We will have 13,500 more work coaches, 7,500 in the next three months. I am sure that they will do a great job.

[Lord German (LD)]

My Lords, in the first four months of this pandemic, 300,000 people applied for universal credit because they had lost their job, and failed to get it. Far too many people are falling through the trapdoor of unemployment and finding that universal credit is not available to them. The Minister has just said that we are going to have a review. Will this be a root-and-branch review? Will it look at bringing our tax and benefit systems closer? The evidence now is that, if we do that, we will have a much better system by unifying the two.

[Baroness Stedman-Scott (Con)]

We are all aware of the difficult time that people are having in these days. I will take the noble Lord’s request for a root-and-branch review back to the Minister for Welfare Delivery. I will write back to the noble Lord. If he has some very good ideas, would he please write and give them to me?

[Lord Moynihan (Con)]

Will my noble friend the Minister recognise the work of StreetGames and community organisations which encourage young, disadvantaged people from low-income families to adopt a healthy and active lifestyle through the work of locally trusted organisations, which are the first port of call for many families struggling to cope with the crisis?

[Baroness Stedman-Scott (Con)]

I acknowledge and pay tribute to the work of the organisation to which the noble Lord referred.

[Baroness Watkins of Tavistock (CB) [V]]

My Lords, children of school age have had their education severely disrupted, with those in the poorest households affected the most. We know that Covid-19 is passed on through droplet transmission, particularly in small, ill-ventilated spaces. Will the Minister assure the House that no families with school-age children will be evicted during this academic year, to prevent families being placed in bed and breakfasts, with the increased risk of transmission of Covid-19, to prevent mental health breakdown in children, and avoid further disruption to their education?

[Baroness Stedman-Scott (Con)]

I thank the noble Baroness for bringing that important point to the notice of the House. My best response is that I will go back to my colleagues at MHCLG to get their position on the issue of evictions and write back to the noble Baroness.

[Baroness Lister of Burtersett (Lab) [V]]

My Lords, welcome as what the Government have done is, there is growing evidence of hardship among low-income families with children, most recently from Save the Children today. Following on from the right reverend Prelate’s question, why have the Government not done anything to improve social security benefits for children?

[Baroness Stedman-Scott (Con)]

The Government have put £9 billion into the welfare system to help the poorest. As I said in my original Answer, the bottom 10% have not had their income lessened at all. I know how passionate the noble Baroness is about this, and I respect her tenacity in raising it on a regular basis. I have put my head above the parapet and organised an all-Peers briefing session on the benefit cap, with the Minister for Employment, next week. I am sure these issues will be talked about in greater detail then. I extend an invitation to all noble Lords to attend that briefing.

[Lord Roberts of Llandudno (LD) [V]]

In 1942, William Beveridge introduced his report which led to the welfare state and the NHS. We are still facing the same giants that he was tackling at that time: squalor, want, idleness, ignorance and disease. Is it not time that we had another commission like that, and found an outstanding person with Civil Service colleagues to produce a report that will really tackle the long-term issues facing us?

[Baroness Stedman-Scott (Con)]

I can only assure the noble Lord, and the whole House, that the excellent civil servants we have got, and the partners that we work with at DWP, are all the time trying to find better ways to deliver services to people so that they can realise their destiny.

[Baroness Boycott (CB) [V]]

I thank the Minister for her clear efforts in this area. I know that she is very sympathetic. My point is similar to that of other noble Lords. Save the Children said today that 27% of families are finding it harder to find food than they were in April. This is obviously going to get worse over the winter. I particularly want to ask about children: are the Government going to implement the three recommendations in the national food strategy, particularly about holiday hunger? The Christmas holidays will be upon us before we know it and we need a plan in place.

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[Baroness Stedman-Scott (Con)]

The noble Baroness, Lady Watkins, also raised with me, outside the Chamber, the issue of food, children and holiday cover. I pledged to talk to my noble friend Lady Berridge. I have been so busy that I have not been able to do that, but I give an undertaking to do so and to write to the noble Baroness.

[The Deputy Speaker (Baroness Garden of Frognal) (LD)]

My Lords, the time allowed for this Question has elapsed. I apologise to the noble Baroness, Lady Massey, that there was no time for her question. We now come to the second Oral Question, in the name of the noble Lord, Lord Polak.

Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) Regulations 2020

Baroness Stedman-Scott Excerpts

Wednesday 16th September 2020 Lords Chamber

Moved by

[Baroness Stedman-Scott]

That the Regulations laid before the House on 6 July be approved.

Relevant document: 23rd Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 14 September.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)]

My Lords, in moving this Motion I should clarify remarks I made during the debate on these regulations, which took place in Grand Committee on Monday, concerning their application to certain charitable incorporated organisations. Following the making and laying of these regulations, the Department for Digital, Culture, Media and Sport made the Charitable Incorporated Organisations (Insolvency and Dissolution) (Amendment) (No. 2) Regulations 2020, which disapplied Section A51 of the Insolvency Act 1986 in relation to charitable incorporated organisations. Section A51 was cited in the making of the SI before the House, which means that as a result of the DCMS regulations the provisions in this SI have not applied to charitable incorporated organisations since 13 August 2020. This does not affect the validity of the powers used to make these regulations; the powers applied to charitable incorporated organisations at the time this SI was made. Likewise, its application to charitable incorporated organisations until 13 August is not affected.

The legal effect of the DCMS SI is one of implied repeal of the provisions from that date onwards. So far as they apply to charitable incorporated organisations, a legal position, we think, is clear. The Department for Digital, Culture, Media and Sport has since indicated in a memorandum to the Joint Committee on Statutory Instruments its intention to bring forward legislation, at the next available opportunity, to correct the position to that reflected in the regulations before the House today.

[Baroness Smith of Basildon (Lab)]

My Lords, I am grateful to the Minister, but I cannot have been the only one in your Lordships’ House struggling to follow the information she gave to us. I was not 100% clear because she said that the “legal position, we think, is clear”. I do not know whether that means “We are not sure whether it is clear; we only think it is clear”, or whether those who debated this in Committee have been made aware of the information she has brought before your Lordships’ House today.

I have not fully understood the implications of everything she said—I do not know whether other noble Lords have. It may be that it has no material impact, but maybe it does. Before we agree this Motion today, I wonder whether she ought to consult those who were in that Committee so that everyone who debated the regulations is clear that there is no material difference, given the rather lengthy and complex explanation she has given today.

[Baroness Stedman-Scott (Con)]

I am happy to respond to the noble Baroness’s points; this is, indeed, a complex matter. I am confident that the legislation we intend to bring forward at the earliest opportunity will clarify matters, but I will consult with the Members of the Grand Committee to make sure that everybody is clear about the impact of this change.

[The Senior Deputy Speaker (Lord McFall of Alcluith)]

The Question is that the Motion in the name of the noble Baroness, Lady Stedman-Scott, be agreed to. As many—

[Baroness Smith of Basildon (Lab)]

My Lords, I think that the Minister has just said that, before agreeing it, she will take it back to Members to see if they are happy with it because there is some complication. That was the implication of what she said: she was not going to put it forward for a vote today until she had consulted people.

She is checking with the Clerk so I will keep talking for a second while she gets advice. However, I am still not clear. I thought she said she was agreeing to take it back and consult with Members who were on that Committee.

[Baroness Stedman-Scott (Con)]

I am advised that I am not able to withdraw the Motion, but I am quite happy to make sure that people understand exactly what is meant. I beg to move.

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[Baroness Smith of Basildon (Lab)]

My Lords, I will not necessarily push this to a vote at the moment, but I say to the Minister that the reason why she says it cannot be withdrawn is that it comes into force today. If she has not consulted Members of the Committee on something so complex before bringing a Motion to your Lordships’ House today, there is a serious issue here. Are these “made affirmative” regulations, which come into force whether we debate and agree them or not? I am not clear. I have to be honest that I am completely at a loss as to what is happening at the moment, but it seems that there is some question mark over the validity of this and whether it is correct. I may be wrong and everything may be in order. However, it was complex and I did not fully understand what she was putting forward today.

[Baroness Stedman-Scott (Con)]

I advise that they are “made affirmative” and to be dealt with today. I can only reaffirm what I have said: it is a complex matter but I am confident that the legislation we intend to bring forward at the earliest opportunity will clarify matters.

[The Senior Deputy Speaker (Lord McFall of Alcluith)]

If that is of sufficient clarity, I will ask the Question.

Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) Regulations 2020

Baroness Stedman-Scott Excerpts

Monday 14th September 2020 Grand Committee

Moved by

[Baroness Stedman-Scott]

That the Grand Committee do consider the Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) Regulations 2020.

Relevant document: 23rd Report from the Secondary Legislation Scrutiny Committee

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)]

My Lords, I am pleased to introduce a statutory instrument laid before the House on 6 July. These regulations form part of the corporate insolvency and restructuring regime introduced in the Corporate Insolvency and Governance Act. I am satisfied that the regulations are compatible with the European Convention on Human Rights.

The Corporate Insolvency and Governance Act introduced corporate restructuring tools which include a moratorium and a restructuring plan which offer breathing space and flexibility to keep companies going. These regulations provide the board of the Pension Protection Fund, the statutory compensation scheme, with creditors’ rights in certain specified circumstances when a company, a limited liability partnership or a certain charitable incorporated organisation obtains a moratorium from creditor action or proposes to restructure their business, as applicable, under the new processes available in the Corporate Insolvency and Governance Act.

I had expected also to introduce another set of related regulations for debate. However, we are working with the relevant government department to resolve a technical legal issue. We intend to re-make and lay those regulations with a debate scheduled for a later date.

The regulations we are debating provide the board of the Pension Protection Fund, the statutory compensation scheme, with creditors’ rights in certain specified circumstances. They include when a company, a limited liability partnership or a certain charitable incorporated organisation obtains a moratorium from creditor action or proposes to restructure its business, as applicable. The pension scheme is eligible for the Pension Protection Fund and is directly affected. A moratorium gives companies an opportunity to explore rescue and restructuring options free from creditor action. A restructuring plan will enable struggling companies to negotiate restructuring arrangements to give them the best possible chance of continuing as a going concern.

Under existing pensions legislation, similar corporate rescue processes are treated as insolvency events. This triggers a number of safeguards. When such an event occurs in relation to an employer of an eligible occupational pension scheme, the Pension Protection Fund assesses the scheme and, among other things, takes over the scheme trustees’ or managers’ role as a creditor of the sponsoring employer. Neither moratoriums nor restructuring plans are listed as insolvency events in the relevant pensions legislation as this would undermine the overarching intention to maximise the company’s chance of survival. Therefore, the normal safeguards within the legislation are not engaged.

During the passage of the Bill, there was significant stakeholder and parliamentary pressure to provide specific protections in the new moratorium and restructuring plan procedures in respect of the impact on pension schemes. The concern is that these procedures could result in the pension scheme, as an unsecured creditor of the company, being disadvantaged. The Pension Protection Fund could face a greater loss if the company subsequently fails and the scheme falls into the fund with a larger deficit than it originally had, so there is a need to build in some specific protections by ensuring that the Pension Protection Fund has a seat at the table in any relevant restructuring proposal.

These regulations ensure that the new moratorium and restructuring plans do not leave pension schemes and the Pension Protection Fund without appropriate protections in legislation. We have expedited the making and laying of these regulations to minimise gaps in the legislation after the moratorium and restructuring plan measures came into force. This ensures that the Pension Protection Fund is in a position to act quickly in a fast-moving situation to protect its interests and those of its levy payers. The regulations enable the Pension Protection Fund board to step into the shoes of the scheme trustees or managers in their role as a creditor in the context of the new moratorium and restructuring processes, in relevant specified circumstances, to ensure that the board’s interests and those of the scheme are properly represented. In relation to the moratorium, they provide for the Pension Protection Fund to act in place of the scheme trustees or managers as a creditor in decision-making that may be ordered by the court following a challenge to the directors’ actions and where creditor consent is sought on whether the moratorium should be extended.

Where a restructuring plan is proposed in respect of a relevant entity, and where in the relevant specified circumstances the scheme trustees or managers would otherwise exercise creditors’ voting rights, the board of the Pension Protection Fund will have the exclusive right to vote on the plan. By enabling the Pension Protection Fund to exercise creditor rights, the fund will be protected against the risk of an agreement being struck without it being involved. This will avoid a scheme continuing without adequate protection knowing that the fund will pick up the pieces. The Pension Protection Fund is funded mainly by a levy collected from pension schemes, so it would be levy payers who suffer the loss.

The scheme trustees or managers are not completely excluded, however; they too play an important role protecting members’ interests. To provide the appropriate balance, before the Pension Protection Fund exercises any voting rights or participates in a decision-making process to the exclusion of the scheme trustees or managers, it will be required to consult them. Also, certain rights will be exercisable concurrently, such as the right to participate in meetings ordered by the court and the right to make representations to the court, as applicable.

The moratorium and restructuring plan are important measures that will give companies the best prospect of survival in this period of economic uncertainty. We must also ensure that they do not undermine the protections for pensions schemes, the Pension Protection Fund and its levy payers. I commend these regulations to the Committee and I beg to move.

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[Baroness Stedman-Scott (Con)]

My Lords, I am grateful to all noble Lords for this helpful debate and their contributions. I hope that I have been able to establish why it was so important that we introduced these regulations.

The Pension Protection Fund creditors’ rights during a moratorium are intended to enable it to take part in certain decision-making processes as a creditor. For example, it enables the Pension Protection Fund to take part in a decision whether to grant consent to the extension of a moratorium in the relevant specified circumstances set out in the Act.

Where a restructuring plan is proposed, the rights given to the Pension Protection Fund are intended to enable it to influence the shape of any deal, and to seek additional security and guarantees to offset the risk that it takes on a scheme with an even larger deficit in the future.

The Covid-19 pandemic has meant that we have had to respond quickly to facilitate the survival of companies. That will offer employees the best chance of retaining their job. At the same time, we have strengthened the position of pension schemes to improve the chances of employees receiving their expected pension outcomes.

I turn to some of the questions asked by noble Lords. The noble Baronesses Lady Drake, Lady Altmann, Lady Ritchie, Lady Wheatcroft and Lady Sherlock all mentioned gaming. During the passage of the Corporate Insolvency and Governance Act through Parliament, the Government listened to concerns raised and amended the Bill to avoid lenders exercising their rights to accelerate their pre-moratorium debt, thereby potentially gaming the system through a moratorium. While the moratorium provisions do not prevent a financial services creditor exercising a termination or acceleration clause, nor do they remove the requirement that if the accelerated debt is not paid, the monitor must bring the moratorium to an end. But financial services’ pre-moratorium debts are excluded from super-priority where the debt has been accelerated during the moratorium period. The provisions are aimed at encouraging lending to companies in difficulty while also supporting the operation and stability of financial markets. The provisions disincentivise such creditors from seeking to accelerate their pre-moratorium debt solely to benefit from super-priority, should the company fail. There is also power to amend what does and does not receive super-priority, should market practice indicate that tightening the provision is necessary. It is too early to anticipate whether government action will be needed here. We think the provisions in place strike the right balance. The moratorium provisions will be reviewed within three years of enactment.

The noble Baroness, Lady Altmann, asked what powers the Pension Protection Fund will have in cases where a moratorium is in force. A company subject to a moratorium can sell charged property as if it were not subject to a charge only with the court’s permission. A court would not make such an order without the charge holder having had the opportunity to be heard on the application. It will be for the court to decide whether the Pension Protection Fund can intervene. A court will give permission for such a sale only if it will support the rescue of the company as a going concern, something that will be in all stakeholders’ interest, including the pension scheme. Additionally, the open market value of the property must be paid to the charge holder following the sale.

There are provisions to allow for the Pension Protection Fund and the Pensions Regulator to be provided with information concerning a moratorium or a restructuring proposal, in terms of powers to obtain information. In the case of a moratorium, the board of the Pension Protection Fund and the Pensions Regulator will be provided with certain notifications, including that a moratorium has come into force, in relevant specified circumstances. In the case of a restructuring, any notice or other document required to be sent to a creditor of the company must also be sent to the board of the Pension Protection Fund and the Pensions Regulator in relevant specified circumstances. The Pension Protection Fund is then able to review this information including, where necessary, engaging external experts to assess the impact and to reach a view as to how to vote in any transaction.

The noble Baroness, Lady Ritchie, asked if there was sufficient money in pension schemes. Unfortunately, not all pension schemes are well funded. Where a scheme is not well funded, it will go into the Pension Protection Fund. The Pension Protection Fund is confident that its long-term funding strategy and diverse investment approach positions it well to weather current market volatility and future challenges. The Pension Protection Fund’s latest modelling shows that it is well placed to achieve its self-sufficiency target, which is the ability to pay Pension Protection Fund compensation in full, with a 10% buffer. This means that Pension Protection Fund members and members of defined benefit schemes can be confident of the fund’s ability to continue to provide the compensation promised and to remain a robust safety net.

My noble friend Lord Bourne and the noble Baroness, Lady Janke, raised the point that the lag in the timing of bringing forward these regulations is problematic. We have expedited the making and laying of these regulations to minimise gaps in the legislation. After the moratorium restructuring plan, measures come into force. The “made affirmative” procedure enabled the regulations to come into force soon after they were laid. We are not currently aware of any moratorium in force or restructuring plan proposed in relation to an employer pension scheme eligible for the Pension Protection Fund.

My noble friend Lord Bourne and the noble Baroness, Lady Janke, raised the issue of the impact so far. As I said, we are not aware of any moratorium or restructuring plan in place, but we will monitor the situation closely.

My noble friend Lady Wheatcroft asked about reduction contributions: are deficit reduction contributions enforceable during a moratorium? As employees’ wages or salary must be paid, whether or not they fall due before or during the moratorium, the term “wages or salary” also includes a contribution to an occupational pension scheme. Payments made under deficit repair contributions are not enforceable. This is the debt for which the Pension Protection Fund is acting as a creditor.

My noble friend Lady Wheatcroft also raised the Bernard Matthews case. Pre-pack sales are a useful tool for rescuing businesses, saving jobs and maximising funds available to creditors. If I may, I shall write further to her on that issue.

My noble friend also raised the issue of the Pension Protection Fund’s resources to intervene in moratoriums. The Pension Protection Fund has an in-house restructuring and insolvency team but also the ability to call on third-party advisers to support its work. The Pension Protection Fund keeps its level of resourcing under review but at present it is confident that it can engage in moratoriums and restructuring plans as necessary.

A number of noble Lords raised questions about monitoring as things develop. We have regular governance meetings with the Pension Protection Fund and the Pensions Regulator as the sponsoring department. We will therefore be able to monitor developments in the light of operational experience.

Many noble Lords asked questions that I will not have time to respond to in summing up, but I confirm to all noble Lords that we will review Hansard and make a point of writing to noble Lords with the answers to their questions.

To conclude, we will keep these measures under review. My department and the Pension Protection Fund have regular meetings to review its performance. I commend the regulations to the Committee.

Motion agreed.

Jobseekers (Back to Work Schemes) Act 2013 (Remedial) Order 2020

Baroness Stedman-Scott Excerpts

Wednesday 9th September 2020 Lords Chamber

Moved by

[Baroness Stedman-Scott]

That the draft Order laid before the House on 5 September 2019 be approved.

Relevant document: 1st Report from the Joint Committee on Human Rights. Considered in Grand Committee on 3 September.

Motion agreed.

Kickstart Scheme

Baroness Stedman-Scott Excerpts

Monday 7th September 2020 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)]

I thank the noble Baroness for her question. She has started us on a very important issue to do with the Kickstart Scheme. The jobs secured through the Kickstart Scheme will go through a very rigorous process. One of the major benefits of the new Kickstart Scheme is the involvement of the private sector. We will ensure that the jobs provided under Kickstart will be good quality. We believe the best chance for a sustained job will come from taking part in the scheme. The employers will have a chance to see if they can place participants permanently in their establishments.

[Lord Taylor of Goss Moor (LD) [V]]

While it is incredibly important to get young people into work, small businesses are struggling to make sense of how they can access this scheme—yet the poster child is Tesco, which is taking on people, growing and benefiting from coronavirus and will now get free members of staff. How can the Minister ensure that those people taken on at government cost would not have been taken on in any case by Tesco and that they will get some kind of qualification or hope of a job at the end of this?

[Baroness Stedman-Scott (Con)]

I am pleased to say that the latest briefing I have had today is that a range of companies wish to take part in Kickstart—large companies, as the noble Lord suggested, and small companies, as well as charities. There will be a rigorous process to follow to ensure that those jobs are additional and not previously advertised. I am sure the process we go through will result in good-quality opportunities for our young people.

[Lord Bates (Con)]

Prior to my noble friend becoming a Minister, she had devoted much of her life to helping some of the hardest-to-reach and troubled young people in the country find their way into the dignity of work. How will she ensure that the Kickstart programme supports our most vulnerable young people, who already face the greatest barriers to employment, and does not leave them to fall further behind?

[Baroness Stedman-Scott (Con)]

The Kickstart Scheme really is very exciting for young people. First, they will have a work coach who will be with them throughout their journey. They will have full support from Jobcentre Plus and employer support; the HR teams will hopefully work with them. They will be able to put together a CV, understand the world of work and undertake training opportunities that enhance their employment prospects. The flexible support fund of £150 million will be deployed and, most importantly, when somebody is in a Kickstart placement, there will be regular reviews of their progress to ensure that we do not miss any opportunity to keep them in that placement, rather than them falling out. Without blowing my own trumpet, there are all the key components we deployed at Tomorrow’s People that made the outcomes so successful.

[Lord Harries of Pentregarth (CB) [V]]

My Lords, I congratulate the Government on this initiative, but I would like to ask the Minister what plans they have for when it ends. The danger, of course, is that too many people will simply drop back into unemployment, as happens too often in France. I wonder whether it is possible to have continuing support at a lower level, so that there is a tapering off, as with the present furlough system? Would the Government give further thought to this?

[Baroness Stedman-Scott (Con)]

My Lords, I am pleased to say—and I reiterate the points I made before—that all through the Kickstart Scheme journey, young people will have the support services of their work coach and the full support of the Jobcentre Plus system, along with their intermediaries and employers. Work coaches will continue to support claimants into work after their placements have been completed. They will not be left to drift. We want as many young people as possible to gain support from this service. On the noble Lord’s point about changing the mechanism of the programme, I am not aware of any plans to do that at present.

[Lord McKenzie of Luton (Lab) [V]]

My Lords, for those employers whose individual job needs do not amount to 30, arrangements can be put in place, as we have heard, by intermediaries. What is the process for this? Is it just a DWP recommendation? Is there a quality assurance process for recognition of intermediaries? Who has responsibility for delivering the various programmes—individual employers or the intermediary entity?

[Baroness Stedman-Scott (Con)]

My Lords, I must apologise to the noble Lord, as the sound was not great, but I think I got the gist of his question. Where employers have robust HR teams and can manage the process, they will obviously be able to bid. Where employers have only one or two opportunities, the role of the intermediary steps in. There will be a quality assurance process for their procurement. I understand that yesterday Movement to Work and the Prince’s Trust were gearing up to fulfil this role. We will make sure that the best possible people are taking part as intermediaries.

[Lord Forsyth of Drumlean (Con) [V]]

My Lords, I congratulate my noble friend on this excellent scheme and the speed with which she has put it in place. I understand why it has been necessary to focus on people who will give an opportunity to a batch of youngsters, but the real hope will be small businesses that can help one or two. Once the scheme is up and running, will she consider the ways in which small employers can engage directly? Will she also recognise that the sooner Britain gets back to work the better, because many of these young people will need support and guidance in the workplace. Does she think there are enough work coaches in place to maintain the scheme?

[Baroness Stedman-Scott (Con)]

I can assure all noble Lords that as the Kickstart Scheme is implemented and progresses, it will be kept under constant review. If the noble Lord, or any Member of your Lordships’ House, has some idea about how it could be amended for the better, my door is always open to receive those. We are doubling the number of our work coaches. We will make sure that there are ample people to offer support on the journey. I could not agree more: the sooner we are back to work the better. Young people will receive the support they need to ensure that they make a good transition from Kickstart to work.

[Baroness Uddin (Non-Afl)]

My Lords, I welcome the proposed Kickstart programme, although I would have liked to see apprenticeships and some graduate programmes extended; this remains a glaring gap. I steered the Labour Government’s first mentoring project, the People into Management Network, for three years. It primarily targeted young Asian women, undergraduates and graduates, supporting over 500 young people with 100 leading organisations, including Microsoft, the Foreign Office, the police and others. 10 Downing Street itself provided placements, mentoring and ongoing support for three months, for a comprehensive and impactful placement experience. I am glad to hear that prolonged coaching and support will be available. Will the Minister take the opportunity to meet me and other noble Lords interested in discussing how to improve the programme?

[Baroness Stedman-Scott (Con)]

My Lords, my door is open and I would be very happy to meet noble Lords to discuss this if it helps them. If I may, I will build on a point that the noble Baroness made. With our plans for jobs, we are doubling the work coaches and putting £2 billion into Kickstart, and there will be no cap on places. We have expanded the youth offer, we are expanding the work and health programme, we are expanding the sector-based academies, and we have put an extra £40 million in for additional capacity for an online job-finding support scheme. I am very proud of what my Government are doing to make sure we help as many people as possible.

[The Deputy Speaker (Lord Brougham and Vaux) (Con)]

My Lords, the time allowed for this Question has now elapsed.

Jobseekers (Back to Work Schemes) Act 2013 (Remedial) Order 2019

Baroness Stedman-Scott Excerpts

Thursday 3rd September 2020 Grand Committee

Moved by

[Baroness Stedman-Scott]

That the Grand Committee do consider the Jobseekers (Back to Work Schemes) Act 2013 (Remedial) Order 2019.

Relevant document: 1st Report from the Joint Committee on Human Rights

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)]

My Lords, this instrument was laid before Parliament on 5 September 2019 and has been discussed and approved in the other place. Today, I am grateful to move this forward through your Lordships’ House.

In 2013, my department passed the Jobseekers (Back to Work Schemes) Act. The Act validated sanctions and notifications issued to claimants who failed to take part in employment programmes designed to help them into work. The Court of Appeal found the Act to be an effective and valid way of achieving this but also recognised that, in a small number of very specific circumstances, some individuals had lost their right to a fair hearing under the Act.

This draft remedial order amends the Jobseekers (Back to Work schemes) Act 2013 to resolve this issue and allows the tribunals to find in favour of the claimants whose appeals were affected, where it is right to do so. It also gives my department the ability to reconsider relevant sanction decisions in these cases and to pay any affected individuals anything that they are then due. It is of fundamental importance to me that those who had appealed a sanction decision but were prevented from having a fair hearing because of the Act should have this right restored. Only a specific group of people—some 5,000 individuals—have been affected by the Act in this way. As the remedial order applies only in very particular circumstances, not all cases will lead to a payment.

My department aims to resolve these cases and make any necessary payments to these individuals as soon as it can. We anticipate that the whole process may take up to 12 months, for us to identify and pay any affected individuals. We aim to commence work on these claims in the autumn and begin reconsidering the decisions and payments. This is not just resolving this matter for the small number of claimants affected; we must also ensure that we learn the important lessons around communicating with claimants and do not create similar instances in future.

Noble Lords may be acutely aware that, in the summer, the Chancellor announced an unprecedented package of measures not only to protect jobs but to ensure that we get individuals who may have lost jobs as a result of the Covid-19 emergency back into work. I have real confidence that the digital nature of UC and its improved means of communication with our claimants via the online journal means a future Government will not find themselves in a similar situation.

The draft remedial order was laid for 60 sitting days on 28 June 2018 and then again for another 60 days last year. This was done to enable representations from Members of both Houses and the Joint Committee on Human Rights. By using a non-urgent remedial order, Parliament has been given time and the opportunity to scrutinise and consult on the order’s contents. I have considered the views of the tribunals, and this draft of the remedial order has been amended accordingly. The Joint Committee on Human Rights approved the draft remedial order earlier this year, in March, and recommended it to Parliament.

Currently, no other Bills are planned that could accommodate this specific legal objective and resolve the incompatibility. This is a way of achieving that end without repealing the Act itself, which still holds for the majority of claimants.

Although it has been a long and complex process, we have comprehensively assessed the issue and carefully considered any representations that we have received. I am keen to resolve the appeal cases for these individuals as soon as we can and to take the learnings forward as we look to support people back into work. I hope that noble Lords will support this order during its final passage through Parliament.

I am satisfied that the draft remedial order is compatible with the European Convention on Human Rights and I commend it to the House.

--- Later in debate ---

[Baroness Stedman-Scott (Con)]

I thank noble Lords for their contributions today. Getting people back into work and giving them the support that they need is of the utmost importance, especially at this time. My department is dedicated to doing all that we can for these individuals.

My department is constantly learning and evolving. As the Secretary of State told the House of Commons on 29 June, claimant commitments must now reflect our “new normal”, acknowledging the reality of a person’s local jobs market and personal circumstances to prepare them for getting back into work. We are managing this with a phased approach to ensure that our work coaches can deliver an effective service in a reasonable, measured and safe way, taking into account any Covid-19 restrictions.

I will move on to the many observations made about sanctions—an issue which all noble Lords have raised. We use sanctions as a consequence of people not meeting the agreed commitments that a claimant accepts to be entitled to benefits. We always apply reasonable judgment before any actions, and take into account the current circumstances of the individual. My department’s work coaches use their judgment of what are reasonable steps. Claimant commitments must be reasonable, and in this unprecedented time they will be. Sanctions are used only if a claimant does not do what they have committed to do without good reason.

Before the start of the pandemic, sanctions were used in only a small percentage of cases, and the rate of sanctions has fallen over the last year. However, we are never complacent in our ongoing commitment to ensure that our policies are fit for purpose. That is why, in November 2019, we reduced the maximum length of high-level sanction from three years to six months, as my noble friend Lord Forsyth referred to. Data from March 2020, before suspending conditionality, shows that 2.12% of UC claimants subject to conditionality at the point where the sanctions applied had a reduction taken from their UC award. This is near the lowest on record. The latest data available following the suspension of conditionality shows that 0.73% of UC claimants subject to conditionality at the point where the sanction was applied had a reduction taken from their award.

As many noble Lords have said, the department has committed to doing an evaluation of the effectiveness of universal credit sanctions in supporting claimants to search for work in response to the Work and Pensions Select Committee report on benefits sanctions. The department will look to publish in autumn.

Noble Lords asked what “as soon as we can” means. I appreciate that we want this as quickly as possible, but the department has faced unprecedented demand on services. With an increase in claimant count of nearly 600%, we are doubling our work coaches and recruiting more and more so that we can support more people. We are having to increase the DWP estate so that we can look after people safely, with social distancing, and we have turned over every stone to increase the relationships that we are making with employers to ensure that, where vacancies exist, we can get them and put people forward for them. These are tough times and we are working very hard to support the people we are in business to support.

The noble Baroness, Lady Bennett, asked about progress reports. I need to take this question back to the department; I will get an answer to her and make sure that all noble Lords are apprised of it. She also talked about a person in Ashton-under-Lyne and gave some very alarming details about the case. If she could please let me have the details, I will ensure that that case is investigated. If other noble Lords have details of where things have apparently not worked out for people, I ask them to let me know; I give my word that it will be looked into.

Another point raised was about the unfairness of mandating people to go on employment programmes. We aim to provide individuals with the help they need to find work, stay in work and get better work, so I strongly refute that requiring people to attend programmes to help them into work is unfair. The Court of Appeal ruled in our favour on this point: attendance on these work programmes is not a breach of human rights.

I acknowledge that all noble Lords have raised points about sanctions and their impacts on people, and the noble Baroness, Lady Bennett, and my noble friend Lord Forsyth raised the point about sanctions leading to poverty and destitution and the use of food banks. We do not sanction people lightly. It is applied only where there is good reason. If people find themselves in hardship, hardship payments are available to eligible claimants to help them meet their essential needs.

The noble Baroness, Lady Bennett, raised a point about the commitment of the department and the Government to helping people back into work. I have never known a time in my working environment when I have seen such commitment in action through our Jobcentre Plus network, our partners and, in particular, our work coaches. I must say that I take the point about forcing someone into any job, but over my life I have learned that when you have a job, it is easier to get the next one. With the work we are doing on in-work progression, I can honestly say that this is the best course of action.

The noble Baroness, Lady Janke, raised a point about sanctions for not attending unpaid work placements. We do not sanction people for not attending work experience placements. If we can have more details, I will investigate that.

On who falls in the scope of the remedial order, we estimate there to be under 5,000 individuals who may be affected by this. The remedial order affects a very specific group, and we will use the appeal records to identify those people.

The 2013 Act was introduced because of the department’s defective notifications. I was asked whether we have reviewed the notifications and letters since. We have, and we are constantly revising and improving processes on sanctions.

Another question was whether the 2013 Act was unconstitutional. The Act was not only constitutional but it was necessary. It was introduced in people’s best interest and was an effective means of achieving its policy effect.

As to when people will be paid, as I have said, during this difficult time resources have had to be elsewhere, but we will begin resolving the cases impacted by the order and paying people any amounts that they are due this year.

I am sorry, but in the time available I am never going to be able to answer all the questions. After this order is dealt with, I will go back to the department with my officials and make sure that people get answers to the questions they have raised.

I recognise the importance of resolving this incompatibility as quickly as possible. It has taken time to consider and develop the best course of action. I believe that the proposed remedial order is a reasonable and lawful approach to resolving an otherwise complex issue, and I am grateful to the Joint Committee on Human Rights for its scrutiny of the matter. The remedial order process is very rarely used, but it is an effective way of correcting incompatibilities.

Finally, the Economic Affairs Committee’s report on universal credit has been published. We thank the committee for its work. We are considering the content and recommendations, and we will report back in due course. If any noble Lord wishes to discuss that report with me, they should feel free; I am very happy to meet them.

There are no arguments now to justify delaying the process. It has already been approved in the other place. I hope that the Committee will support the remedial order during its final passage through Parliament. I commend the order to the Committee.

Motion agreed.

Children Living in Poverty

Baroness Stedman-Scott Excerpts

Wednesday 15th July 2020 Lords Chamber

[Lord McConnell of Glenscorrodale (Lab)]

My Lords, on behalf of my noble friend Lord McNicol of West Kilbride and with his permission, I beg leave to ask the Question standing in his name on the Order Paper.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)]

My Lords, our current focus is on supporting people financially through this crisis. Our long-term ambition, based on clear evidence about the importance of work in tackling poverty, remains to build an economy that gives everyone the opportunity to enter and progress in work. In 2018-19, only 3% of children in households where both parents worked full time were in absolute poverty before housing costs compared to 47% in households where one or more of the parents worked part time.

[Lord McConnell of Glenscorrodale]

My Lords, the mass unemployment of the 1980s did not leave just a generation of children—far too many children—living in poverty. It affected them, their children and their grandchildren for decades. Will the Government agree that in what is likely to be a very tough economic climate following this pandemic there is a need for targeted action to ensure that children not only escape the trap of poverty but have the educational opportunities to come out of poverty and have a better life thereafter?

--- Later in debate ---

[Baroness Stedman-Scott]

The noble Lord raises a really important point. It is not just about fiscal poverty; if youngsters do not get a good education or their education is interrupted, it can have a real impact on their ability to secure the skills and knowledge they need to make their way in the world. This is—I am not trying to duck the issue—a matter for my colleagues at the Department for Education, so I will ask my noble friend Lady Berridge to provide an update to the noble Lord on those matters.

[Baroness Lister of Burtersett (Lab) [V]]

My Lords, the Government like to talk about tackling the causes of poverty. One cause of today’s shameful level of child poverty in working households is the long list of cuts in social security support for children since 2010, which was a policy choice. In this new context, why are the Government refusing to take the simple step of reversing that policy choice in order to reduce child poverty?

[Baroness Stedman-Scott]

The Government continue to review all the matters at their disposal to help children not be in poverty. These matters are reviewed continually. As I have said to the whole House before, the Government will continue to look at the issues and the things they have got to deal with poverty and will review them on a regular basis.

[The Lord Bishop of Durham [V]]

My Lords, in the light of the Minister’s last answer about continual review, in April 2019 59% of families affected by the two-child limit were working, with many struggling to afford essentials. When the new statistics on the policy are released tomorrow, will Her Majesty’s Government finally agree to review and assess the evidence that the two-child limit negatively impacts children in working families and that lifting it is the most effective way to reduce the number of children living in poverty?

[Baroness Stedman-Scott]

As the right reverend Prelate said, we will be publishing the latest annual statistics related to the operation of the policy to provide support for a maximum of two children tomorrow. I cannot speak about what the statistics might show until they are released at 9.30 am tomorrow. However, I can promise that if there is anything about the statistics or trends which goes beyond what we would expect to see, the department will look into them.

[Baroness Couttie (Con) [V]]

My Lords, I would be grateful if the Minister could tell us what support the Government are providing to help people who have found themselves in financial difficulties because of coronavirus access food.

[Baroness Stedman-Scott]

On 8 May, the Government announced up to £16 million to provide food for those who were struggling financially as a result of the coronavirus. As part of this Defra has opened a £3.5 million food charities grant fund and on 10 June the Prime Minister announced £63 million in support for local authorities.

[Baroness Janke (LD) [V]]

My Lords, in her first reply the noble Baroness referred to children in two-parent families. I point out that many of the working poor are single parents and that half the children in one-parent families are in poverty. They are doubly disadvantaged. What are the Government doing to ensure that these children’s futures are not blighted by the scourge of poverty in their early years?

[Baroness Stedman-Scott]

In my original Answer, I said it was very clear that people in work have a much better opportunity not to be in poverty. The noble Baroness raises the issue of lone parents, who have enormous issues to overcome. The Government are doing everything they can to make sure that people are supported, and the best route out of poverty for this group is to be in work.

[Lord Eames (CB) [V]]

My Lords, as we emerge from lockdown, certain issues are being identified that require urgent and immediate attention. However, what is being uncovered in the case of child poverty needs both immediate and long-term action. Can the Minister say something more specific about the long-term issue of child poverty, which will continue to challenge our society long after lockdown?

[Baroness Stedman-Scott]

There is clear evidence of the important role of work in reducing child poverty. I acknowledge that we are in very difficult circumstances, but the Government are doing everything they can to ensure that people can be supported through this difficult time. Huge amounts of support are available. We have a £30 billion plan to support, protect and create jobs, and a £2 billion Kickstart scheme; we are doubling the number of work coaches; there is an expanded youth offer; the work and health programme is being expanded; and we are increasing participation in our sector-based work academies. In addition, there is £150 million to boost the Flexible Support Fund to make sure that people can be given support—and this money will filter into the lives of children.

[Baroness Sherlock (Lab) [V]]

My Lords, the Minister keeps mentioning work, but TUC research found that the number of poor children in working households rose by 38% between 2010 and 2018—and that was before Covid. Yet poverty was mentioned just twice in last week’s summer statement document: in the title of an IMF body and in the list of abbreviations at the end. We keep making suggestions, such as sorting out universal credit, increasing legacy benefits and ending the two-child limit, but they are all rejected. Can the Minister assure the House that the Government are taking working poverty seriously and tell us what their plans are to stop more of our kids growing up scarred by poverty?

[Baroness Stedman-Scott]

I assure the whole House that the Government take in-work poverty really seriously. Our plan is to build an economy that will support work, as we have said many times. Universal credit is designed to help people to move into work faster, although that can be challenging in the current circumstances. We have also set up the In-Work Progression Commission. As I have said before, people put forward ideas all the time and they are taken to the department. I assure the noble Baroness that we are taking this seriously. We might not be answering at the speed that she would like, but we are very genuine and sincere.

[Baroness Tyler of Enfield (LD) [V]]

My Lords, the Social Mobility Commission recently published figures suggesting that 72% of children in poverty were in families where at least one adult was in work—a figure that has increased steadily from 44% in 1996-97. It cited mounting evidence that benefit reforms were pushing children into poverty and concluded that the intention of universal credit was to lift more families out of poverty but the DWP appeared to have done little work to ensure that it was not making child poverty worse. What precise work has the department done to assess the impact of universal credit on child poverty, and will it publish its findings?

[Baroness Stedman-Scott]

I come back to what I said before: as a Government, we are always looking at the points that people raise and the issues related to in-work poverty. I think that the Social Metrics Commission said that poverty had been rising but had plateaued. Virtually all the increase in poverty occurred during 2001 to 2008; since then, it has plateaued. Going back to my response to a previous question, we are well aware of the situation of lone parents and are working hard and at pace to help them.

[The Deputy Speaker (Lord Lexden) (Con)]

My Lords, the time allowed for this Question has now elapsed. We now come to the second Oral Question, in the name of the noble Lord, Lord Ramsbotham.

Pension Schemes Bill [HL]

Baroness Stedman-Scott Excerpts

3rd reading & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords
Wednesday 15th July 2020 Lords Chamber

Moved by

[Baroness Stedman-Scott]

That the Bill do now pass.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)]

My Lords, before we move to the technicalities of closing our debates on the Bill in this House and it moves for consideration in the other place, I want 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 will help people plan for their future. As I said at Second Reading, the Bill will have a far-reaching impact for people saving into pensions for their retirement. It ensures that reckless bosses cannot gamble with people’s savings; it transforms the way people get information about their retirement savings; and it introduces a whole new type of pension to the market.

It is clear from the excellent contributions and speeches made as the Bill progressed through this House that many of your Lordships agreed with its principles. Contributions and questions from all sides have been thorough and searching. I would not have expected anything different.

The Government listened to your Lordships’ arguments and concerns as the Bill progressed and made a number of amendments both in Committee and on Report— 73 in total, which I think you will agree have strengthened the Bill. We recognised the concerns of the DPRRC and this House in respect of delegated powers; we listened to your thoughts about a public dashboard; we introduced measures in respect of climate reporting and the Paris Agreement; and we have responded to the threat of scams by tightening the rules on transfers.

Your Lordships made further amendments to the Bill on Report concerning intergenerational fairness, consumer protection and scheme funding. We will look at these carefully along with the strong arguments made in support of them as the Bill progresses in the other place.

I thank all those who have engaged on the Floor of the House and in the many meetings that we have had outside, which I hope you found helpful. I thank my noble friends Lord Howe and Lady Scott for all the help and support they have given me throughout this process. This was my first Bill, and they have helped enormously to keep me on the straight and narrow. I thank the Whips office, the House staff, my private office, led by Vanessa Drury, and all those involved in helping us through the hybrid proceedings. These have been very testing times for everyone, and the fact that we are here at all bears testimony to the work they have put in.

Finally, I want to thank the Bill team and all the officials across DWP. I thank them for the extensive engagement programme that they helped me with. I thank Jo Gibson, Jane Woolley, Mike Jewell and Debbie Bullen—to name but four—but there are many support people behind them, and I would not want to miss anybody out in trying to name them all. They have put in incredibly long hours to support my noble friends and me during debates, to facilitate briefing meetings, and to provide the updates, letters and briefings that noble Lords have received. They have done this at a time of great uncertainty, with many teams reduced to help support front-line services. I hope that they will manage to get some well-deserved time away over the summer.

On that note, I thank you all again for your patience and support. I beg to move that the Bill do now pass.

[Baroness Sherlock (Lab) [V]]

My Lords, I thank the Minister for those remarks and concur with them. We have agreed on so much about this Bill: we support the new CDC pension schemes; we all want to see financial technology harnessed to benefit consumers and to make the financial markets work more efficiently; and we are keen to work constructively with the Government to bring innovations such as the dashboard to fruition.

Where we have differed is on the extent of the protections needed to mitigate the risk of consumer detriment and poor outcomes. We still believe that the weight of evidence is with our arguments, as are reports from various regulators. I hope that by the time the Bill is debated in another place, the reasoning behind our Report amendments on the head start for the public dashboard, on the risks of dashboard transactions and on questions of fairness will find favour.

The pandemic has pushed many consumers into digital engagement far faster than they may naturally have adapted to it. While that has kept our economy and society functioning, it has also exposed some consumers to greater risk of detriment. We might not see any consequential increase in the number scams until later in the year, but that means that the provisions in this Bill will be timely and welcome. More risks will emerge, including new ones as a result of Covid, so I urge Ministers to keep the House informed as regulators scan the landscape and the Financial Ombudsman monitors new kinds of complaint. Although they are not covered in this Bill, we wait with interest to see how the Government will regulate the newly emerging superfunds, given the economic impact of Covid.

Pensions are very long term, and it will take decades for the full effects of public policy decisions by any Government to be seen. That is why it is so desirable that pensions policy be built on the foundations of political consensus, and it is why I am grateful for the significant concessions that have been given during the passage of this Bill.

I pay tribute to my noble friend Lady Drake, whose expertise and determination underpinned our campaign for the Government to commit to a public dashboard and have it operating from the start. I am grateful for support from across the House for that and for all the shared support for moves to secure commitments on governance, including ensuring that dashboard services will be regulated by the FCA. It was great to see cross-party working on climate issues, led by my noble friend Lady Jones of Whitchurch and the noble Baroness, Lady Hayman, result in an agreed position with government and the first ever reference to climate change in domestic pensions legislation. I am grateful to the Minister for yielding to pressure from many quarters for amendments on transfers and on delegated legislation.

This is a better Bill than the one which entered the House, and I give thanks to all who made that possible. I thank my noble friend Lord McKenzie of Luton, but I am sad that it will be my last time sharing the Front Bench with him. He has given so much to this House and to our country in his decades of public service. I look forward to his continued contributions from the Back Benches.

I am a grateful to Dan Harris of our staff team, who has done sterling work on this Bill and is a joy to work with, as are all my colleagues who joined in during our proceedings. I am grateful to House officials and the broadcast teams. I am very grateful to the Bill team and all the officials who have met us repeatedly and patiently answered our many questions. I am grateful, too, to colleagues across the House for intelligent and thoughtful debates. I am grateful also to the Ministers: to the noble Earl, Lord Howe, for his gentle engagement and to the noble Baroness, Lady Stedman-Scott, for her co-operative spirit and her willingness to engage and to concede. This may have been her first Bill; I am sure that it will not be the last. I look forward to joining in and occasionally doing battle yet again.

We did the Committee stage of this Bill before Covid, crammed into the Moses Room with not a hint of social distancing. We did the Report stage in hybrid mode. To be honest, I will never get to love voting on my phone or get used to making passionate speeches to my iPad, but it has shown that this process can work. We have thoroughly scrutinised a vital and highly technical Bill, and we have made it better than it was. That is the job of the House of Lords in a nutshell. I am so glad we can still do it.

--- Later in debate ---

[Lord Flight (Con)]

My Lords, I add my congratulations to my noble friend, who has managed a complex and important territory most constructively. I also thank the Opposition for collaborating in a constructive way. I could not help thinking, as we come to the end of this bit of legislation, that if we look forward 30 years, we will then be in a very different age where people will live much longer and will retire later. There will have to be an adaption of their pension saving between now and then but, for the present, this Bill has done a very good job of addressing a difficult territory.

[Baroness Stedman-Scott]

I thank everybody for their comments and supportive remarks. What has really come out of this is that we collaborated, we talked, we listened and we made the Bill better. For that, I thank everybody.

Bill passed and sent to the Commons.

Pension Schemes Bill [HL]

Baroness Stedman-Scott Excerpts

Report stage & Report stage (Hansard) & Report stage (Hansard): House of Lords
Tuesday 30th June 2020 Lords Chamber

Moved by

[Baroness Stedman-Scott]

1: Clause 11, page 7, line 16, leave out “The first”
Member’s explanatory statement
This amendment and the Minister’s amendment at page 7, line 18, make all regulations under Clause 11(3)(a) subject to affirmative resolution procedure (see Clause 51(5)).

--- Later in debate ---

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)]

My Lords, perhaps I may start by addressing the government amendments. I recognise that in Committee and in subsequent meetings, some noble Lords expressed concern over the regulation-making powers in Part 1 and how they might be used. I have considered those arguments carefully and am persuaded that your Lordships are, in many instances, right. Following your Lordships’ helpful comments, I am now persuaded that it would be more appropriate to make certain regulation-making powers subject to the affirmative procedure on all usages. I recognise that CDC schemes are a totally new form of pension provision in the UK and it is right that Parliament is, as a matter of course, able to debate changes to key parts of the regulatory framework surrounding them.

Your Lordships will recall that Clauses 11 to 17 set out the authorisation framework that all CDC schemes must meet. I know that the House was concerned by the delegated powers in respect of these clauses, as they provide for the core foundations of the authorisation regime. I am pleased, therefore, to announce that those delegated powers which were subject to the affirmative procedure only on first use will now be subject to the affirmative procedure on each use. In addition, the transfer-related regulations for CDC schemes, introduced by Clause 25, will now always be subject to the affirmative procedure rather than the negative procedure.

The relevant provisions contain two powers to amend the timeframes set out in primary legislation which govern when action must be taken by trustees once a transfer out of the scheme has been requested. First, there is a power to extend the time in which trustees must facilitate a request to transfer out of a CDC scheme to a period longer than the specified six months. Secondly, there is a power to amend the three-week “cooling-off” period, during which trustees may not facilitate the requested transfer unless they receive written instruction from the member to do so. Given the importance a decision to transfer out of a CDC scheme may have for a member, it is right that regulations in respect of the timeframes for related action are debated in Parliament under the affirmative procedure as a matter of course.

Amendments 35 to 38 make changes to Clause 47 to make it clearer that this power is not as wide as it may have appeared on first reading. I understand noble Lords’ concern about this clause: it contains a Henry VIII power and as such it should be as clear as possible when and for what purpose it can be used.

Our amendments make it very clear that the power can be used only to provide for non-employer established schemes, such as master trusts, and other non-connected multi-employer CDC schemes as and when concrete scheme designs come to light over the next few years. Noble Lords may recall that the Work and Pensions Select Committee in its report on CDC schemes called for our legislation to be extended to provide for CDC master trusts at the earliest opportunity, and organisations from commercial pension providers to trade unions and even the Church of England have made similar requests.

However, there are clear administrative differences between a scheme with one closely involved employer and a master trust with many more distant employers. The authorisation and supervision legislation will therefore need to be tailored to reflect the risks posed by such schemes and providers so that members and participating employers are to be adequately protected.

This is what Clause 47 seeks to do. It is intended to allow us to make the necessary changes via regulations in a timely fashion so that master trusts and other non-connected multi-employer CDC schemes can be up and running as soon as possible, and employers and employees can benefit at the earliest opportunity. Without this clause, it is likely that the extension of CDC provision to master trusts and other non-connected multi-employer models would be delayed.

However, I assure noble Lords that any such changes required would be considered carefully and consulted on thoroughly before being brought before the House to ensure that they covered the right ground. Such changes would also be subject to the affirmative procedure, which would give the House opportunity to scrutinise the regulations.

The amendments before the House are intended to address concerns in key areas— authorisation, transfers and the provisions relating to the future expansion of CDC—and I am grateful for the informed and thoughtful comments that have led us to this point. The points that I have made also apply to the corresponding Northern Ireland provisions in Part 2 of the Bill. I hope that noble Lords are reassured by the amendments. I beg to move.

[Lord Sharkey (LD) [V]]

My Lords, I shall speak briefly to government Amendments 1, 3 to 7, 9 to 12 and 14 to 31, as well as to my related Amendment 2. First, I thank the Minister and her team for their close engagement with us on the Bill and their time, patience and occasional willingness to change their minds.

The government amendments are a good example of mind-changing. As the Minister said, they remove the instances in Part 1 of first-use-only affirmative procedures; that is a very good thing. The DPRRC’s report on the Bill in February this year was concerned about the use of these procedures. It pointed out that the powers in the regulations remain exactly the same on subsequent use. In Committee, I strongly urged the Government to remove this type of procedure; I very much welcome the fact that they have now done this. All the subsequent uses of the negative procedure have been withdrawn by these amendments.

However, one negative procedure remains: what is left of Clause 11(8) in line 18 on page 7. This is the subject of my probing Amendment 2. Subsection (8), as amended by government Amendment 3, prescribes the negative resolution procedure for regulations under Clause 11(2)(e). Subsection (2)(e) seems a little opaque. It seems to allow the Secretary of State to add persons or categories to those whose fitness and propriety TPR must assess. On 22 June, the Government confirmed to me in writing that this was the case. They believed that this was largely an operational matter and that the negative procedure provided

“appropriate scrutiny as well as opportunity for debate if desired”.

This is a mischaracterisation of the negative procedure, which in practice barely merits the label “scrutiny” at all. Possibly because I did not ask them to, the Government did not address why subsection (2)(e) was necessary at all or give examples of what kind of persons or categories of persons are envisaged in subsection (2)(e) and what role they may play in the schemes themselves. Any additional involvement of these persons or categories of persons may give them significant influence over the conduct of the schemes.

It is obviously desirable to have these new entrants assessed for fitness and propriety. The issue here is the Secretary of State’s decision to add persons or categories to the list without constraint, restriction or proper scrutiny. I would be grateful if the Minister could address these points when she replies.

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There is also an issue with gender. I have never quite recovered from the PLSA finding that in 2016, a quarter of trustee boards had only men on them and that, on average, 83% of trustees were male. That is extraordinary. The regulator decided not to go ahead with a requirement similar to what is in this amendment because there was no consensus. Instead, TPR’s equality objectives for this year are: to establish a diversity and inclusion committee and to develop a four-year diversity and inclusion strategy and action plan. It is good to see action, but is the Minister confident that there is enough urgency in this approach to tackling the serious lack of diversity on pension scheme boards? I look forward to her reply.

[Baroness Stedman-Scott]

I start by responding to some of the points that noble Lords have made, for which I thank them. On the point raised by my noble friend Lady Altmann, who questioned whether it should be for Ministers to decide who is running a scheme under negative procedures, let me clarify that the power in Clause 11(2)(e) does not determine who is running a scheme. It simply means that such people as prescribed are subject to regulatory scrutiny.

My noble friend Lady Fookes is obviously highly regarded on the issue of delegated powers. The “made affirmative” procedure is for use where there is a need to legislate in an emergency; here, we are talking about acting urgently, so the negative procedure is appropriate. I also thank her for the bouquet.

I agree with the noble Lord, Lord Hain, about getting regulations right, especially on authorisation. On the points made about the recent market changes and the impact on pension schemes, we will have to keep that under constant review but his support for CDC schemes is much appreciated. He also raised how pension members’ benefits would be impacted by the recent downturn—I have already referred to this—in asset values during the coronavirus pandemic under Royal Mail’s proposed CDC scheme. Like the noble Lord, I welcome the fact that the latest modelling conducted by Royal Mail’s actuaries, based on market performance during the first quarter of 2020, indicates that the downturn in the value of its anticipated asset portfolio would not have resulted in cuts to pension benefits and had only a small impact on next year’s inflation increase.

My noble friend Lord Naseby is not in favour of the negative procedure. This point was made by many noble Lords across the House and I can say only that we have listened. This brings me to the contribution of my noble friend Lord Holmes. The Bill team has been outstanding—they have been very patient with me—and I liked his reference to two ears and one mouth. We have definitely used our ears on this. On the comments of my noble friend Lady McIntosh of Pickering, we would of course urge everybody to take advice before committing to a pension scheme.

I am really pleased that my noble friend Lord Blencathra is pleased, and I am grateful for the increased mark of nine out of 10. I am sorry that I have not pleased the noble Lord, Lord Foulkes, this week but I promise to try harder.

My noble friend Lord Blencathra and other noble Lords raised the point about Clause 47 still being a Henry VIII power and asked why we have not changed it. A Henry VIII power to amend the CDC framework through regulations is necessary if we wish to see CDC provision opened up to master trusts and other non-connected multiple employer schemes sooner rather than later. I can confirm to the House that all regulations made under this power will be subject to the affirmative procedure. We would not want to make any regulations under this clause without proper debate.

My noble friend Lord Blencathra referred to Clause 124. As the supplementary delegated powers memorandum explains, the Government need to be able to respond to the constant development of industry best practice. It is expected that the Government will periodically amend requirements to ensure that they reflect those developments. These updates will focus not on a fundamental redesign of the policy, but evolution in light of emerging methodologies. We therefore believe that the negative procedure is appropriate.

The noble Baroness, Lady Bowles, mentioned Clause 11(2)(e) and queried the power for people to be excluded from regulatory scrutiny. No—the power can be used to include people but not to exclude them from scrutiny.

The noble Baroness, Lady Sherlock, asked whether there is enough urgency about increasing the diversity of boards. I will talk in my concluding remarks about the work that we want to do on diversity. We must inject as much energy as we can.

The amendment tabled by the noble Lord, Lord Sharkey, to Clause 11 is intended to enable discussion of the Government’s retention of the negative procedure in relation to regulations made under its subsection (2)(e). I have already demonstrated our willingness to listen to and address the concerns expressed about delegated powers in Part 1 of the Bill. We are confident that the list of persons, as set out in Clause 11(2), will capture necessary persons who should be subject to this test. However, should it become evident during live running that a person who has a significant role in the scheme is not captured, we would want to address this omission promptly so that members and their pensions are not put at risk. The power in subsection (2)(e) allows regulations to extend the reach of the “fit and proper persons” requirement to other people acting in a specified capacity in relation to a CDC scheme. It is in the interests of members for the regulator to have the power to assess the fitness and propriety of such persons without unnecessary delay. Time may be critical, and it is right that the fit and proper requirements apply effectively. We therefore consider that the negative procedure is appropriate in this instance.

My noble friend Lord Balfe raised the issue of the quality of trustees. The Government’s primary focus is on ensuring that trustees in all occupational pension schemes meet the standards of honesty, integrity and knowledge appropriate to their role. However, the Government are aware that the regulator plans to establish a working group aimed at developing additional guidance and supporting material to help the diversity of trustees. We welcome this development and look forward to seeing the outcome of this work.

Amendment 33, tabled by the noble Baroness, Lady Bennett, and supported by the noble Lord, Lord Foulkes, and my noble friend Lord Balfe, is intended to promote diversity in trustee recruitment. As I mentioned in Committee, the Pensions Regulator will look at trustee board diversity across all schemes and, as I have said, is planning to set up an industry working group to help pension schemes and employers improve the diversity of scheme boards. Unfortunately, the launch of this working group has been interrupted by Covid-19, as the regulator’s resource has had to be diverted quickly to deal with emerging issues from the pandemic.

I believe it was my noble friend Lord Balfe who talked about a study to see how trustees were performing and how they were doing. I will certainly take that back to the department and I endorse the point raised by the noble Baroness, Lady Bowles, about independent and objective trustees. I hope noble Lords will understand this delay to the working group, given the unprecedented situation we find ourselves in. However, I have been assured by the regulator that it intends to move forward with the working group as soon as is practical. I recognise the importance of diversity; however, it would be premature to pre-empt the outcome of the regulator’s work in this area. We will of course consider any outcomes from the working group as the CDC regulations are developed.

Finally, I turn to Amendment 45, tabled by the noble Baronesses, Lady Bowles and Lady Janke. This amendment seeks to ensure that regulations in Part 1 of the Bill cannot be used to set up a new regulator. I recall that the noble Baroness, Lady Bowles, was concerned that the powers in Clauses 47 and 41 in particular could be used for this purpose. I hope that the amendment to Clause 47 that I have just discussed has reassured both the noble Baronesses, Lady Bowles and Lady Janke, on this point. Clause 47 cannot be used to establish a new regulator. Clause 51 cannot be used to create a new regulator. The power it gives to confer a discretion on a person cannot be used for the purposes of setting up a regulator. The powers in Clause 51 are intrinsically linked to the specific powers in the Bill under which the regulations are made, and they do not permit an unrestricted power of delegation. This power is commonly found across pensions and other legislation; it is not wider than normal. More widely, I repeat the assurance I gave the noble Baroness in Committee: there is no need to rule out the creation of a regulator through regulations, as there are no powers in this Bill to create a regulator.

I apologise for the length of my response and hope that the explanations I have provided will help noble Lords not to press their amendments.

Amendment 1 agreed.

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Moved by

[Baroness Stedman-Scott]

3: Clause 11, page 7, line 18, leave out “Subsequent regulations under subsection (3)(a), and”
Member’s explanatory statement
See the explanatory statement for the Minister’s amendment at page 7, line 16.

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Moved by

[Baroness Stedman-Scott]

4: Clause 12, page 7, line 30, leave out “The first”
Member’s explanatory statement
This amendment and the Minister’s amendment at page 7, line 32, make all regulations under Clause 12(2)(b) subject to affirmative resolution procedure (see Clause 51(5)).

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Moved by

[Baroness Stedman-Scott]

6: Clause 13, page 8, line 28, leave out “The first”
Member’s explanatory statement
This amendment and the Minister’s amendment at page 8, line 30, make all regulations under Clause 13(3) subject to affirmative resolution procedure (see Clause 51(5)).

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This is not a prescriptive amendment at all. All it does is to make it clear that the regulator can seek a contribution from an employer to provide for the costs of resolving a triggering event. Whether that power is used would be a matter for the regulator in the authorisation and supervision of each scheme. That is our issue. Unless the Minister can demonstrate that my noble friend Lady Drake’s compelling case is wrong and there is some other way that those costs can be covered, there are only two ways the Minister can respond to this. The first is to say the regulator already has such a power, so the amendment is not needed; and the second is to say the regulator does not have the power and the Government do not want it to have it. I very much hope that the answer is the former, but I look forward to the Minister telling us which it is.

[Baroness Stedman-Scott]

My Lords, I begin by addressing the amendment to Clause 14 tabled by the noble Baronesses, Lady Sherlock, Lady Bowles and Lady Drake. In doing so, I want to stress that ensuring members are treated fairly has been a central part of our work on CDC schemes since we began. As I explained in Committee, and in more detail in the letter sent to your Lordships on 5 March, the financial sustainability requirement will mean that CDC schemes are established on a sound financial basis and members are adequately protected from unfair and excessive administration charges.

I understand the intention behind this amendment but I do not consider it to be a necessary addition. For the financial sustainability requirement at Clause 14 to be met, the trustees must provide evidence that they can access sufficient financial resources to cover the costs associated with setting up and running the scheme, as well as those associated with dealing with triggering events. If the regulator is not satisfied about the security of these resources and that they can be accessed as needed, the requirement will not be met and the scheme will not be authorised. It may well be that, in the early days of a CDC scheme, initial funding comes from the employer, but our approach does not just rely on employer-provided financial support; it enables trustees to draw on other options, including funds held in escrow, insurance policies or contingent assets. These should be available to cover any costs arising from a triggering event.

The noble Baroness, Lady Drake, asked who can be required to meet the cost of triggering event. The regulator will work with the trustees, employees and others connected to the scheme to ensure that the scheme always has secure access to sufficient assets so that members’ funds are not affected. My noble friend Lady Altmann made the point that transfer values should be adjusted for future risk. Our legislation will require benefits and transfer values to be calculated based on long-term factors such as longevity, inflation and investment returns. This has the effect of smoothing outcomes and will mean that transfer values will not suddenly rise and fall, making cashing-in not as attractive as my noble friend suggests.

Once authorised, the scheme will need to continue to have access to sufficient financial resources so that it continues to meet the financial sustainability requirement. The regulator will monitor this through ongoing dialogue between the trustees, intelligence work and the significant events framework in Clause 28. This will ensure that it can intervene if it is concerned about a scheme’s financial sustainability and that, where necessary, a scheme could be de-authorised and wound up using the financial reserves. Our approach means that a CDC scheme must remain financially sustainable and able to deal with situations such as an employer withdrawing from the scheme or becoming insolvent.

As we set out in the letter that we sent to noble Lords, we are also taking additional steps to protect members. The CDC charge cap will help to protect members from excessive administration charges if the usual running costs of a scheme increase significantly for any reason. In addition, the continuity strategy at Clause 17, the implementation clause at Clause 39, and the prohibition on increasing charges during a triggering event at Clause 45 are all designed to protect members’ interests when things go wrong.

I now move on to address Amendment 32, tabled by the noble Lords, Lord Sharkey and Lord Vaux, and the noble Baroness, Lady Bowles, which is about intergenerational fairness—a matter raised by many noble Lords and the subject of extensive discussions. We have been mindful of the problems that other countries have experienced, for example in their approach to adjusting benefits. We have learned from these. That is why envisaged regulations under Clause 18 will mean that the CDC’s scheme rules must require that there is no difference in treatment between different cohorts or age groups of scheme members when calculating benefits and applying benefits adjustments.

The noble Baroness, Lady Janke, raised a point about issues experienced by CDC schemes in the Netherlands. We have been mindful of the problems that other countries have experienced. UK CDC schemes will not be required to have a buffer to smooth out fluctuations in the value of the benefits. Members’ benefits will be adjusted each year in light of the most recent actuarial valuation. This protects members from the need to fund a surplus and means that adjustments to benefits are provided for each year rather than hidden and stored up.

I welcome the sentiment behind the proposed amendment; it is something to which we want to give further consideration. We need to give careful thought to how such reporting might work in practice and would want to work with trustees, administrators and the regulator to ensure that any such requirement is proportionate, appropriate and clear. We would also want to consult on any such approach to make sure that it is effective. I reassure all noble Lords that we will give this matter careful consideration. Should we need to bring forward such a requirement in regulations, we already have sufficient powers in existing legislation to require schemes to report on fairness in CDC schemes if warranted. This includes powers under Section 113 of the Pension Schemes Act 1993 and Clause 46 in Part 1 of the Bill. There are also equivalent Northern Ireland provisions. For the reasons that I have set out, I ask the noble Baroness to withdraw the amendment.

[Baroness Drake [V]]

My Lords, I support Amendment 32, but I shall direct my comments to the Minister’s response to Amendment 8. The Minister has been very courteous in the face of my persistence on this issue and I have listened carefully to what she has said. In listening, I noted four things: first, that the powers in the Bill mean that the regulator can require initial funding from employers in the setting up of a CMP scheme; secondly, that those funds can be used to buy an insurance policy or be put into an escrow account; thirdly, that they can be available to fund triggering-event costs; and fourthly, should a triggering event occur, the regulator will work with both the employer and the trustees to ensure that sufficient financial resources are available to meet the costs of a triggering event. That is my understanding of what the Minister has said; I would, of course, expect the final regulations presented to Parliament to reflect that. On that understanding, I shall not push Amendment 8 to a vote. I beg leave to withdraw it.

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Moved by

[Baroness Stedman-Scott]

9: Clause 14, page 9, line 10, leave out “The first”
Member’s explanatory statement
This amendment and the Minister’s amendment at page 9, line 12, make all regulations under Clause 14(3) subject to affirmative resolution procedure (see Clause 51(5)).

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Moved by

[Baroness Stedman-Scott]

11: Clause 15, page 9, line 41, leave out “The first”
Member’s explanatory statement
This amendment and the Minister’s amendment at page 9, line 43, make all regulations under Clause 15(4)(a) subject to affirmative resolution procedure (see Clause 51(5)).

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Moved by

[Baroness Stedman-Scott]

14: Clause 16, page 10, line 29, leave out “The first”
Member’s explanatory statement
This amendment and the Minister’s amendment at page 10, line 31, make all regulations under Clause 16(2) subject to affirmative resolution procedure (see Clause 51(5)).

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Moved by

[Baroness Stedman-Scott]

16: Clause 17, page 11, line 18, leave out “The first”
Member’s explanatory statement
This amendment and the Minister’s amendment at page 11, line 20 make all regulations under Clause 17 subject to affirmative resolution procedure (see Clause 51(5)).

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Moved by

[Baroness Stedman-Scott]

18: Clause 62, page 47, line 6, leave out “The first”
Member’s explanatory statement
This amendment and the Minister’s amendment at page 47, line 8, make all regulations under Clause 62(3)(a) subject to confirmatory procedure (see Clause 102(5)).

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Moved by

[Baroness Stedman-Scott]

20: Clause 63, page 47, line 20, leave out “The first”
Member’s explanatory statement
This amendment and the Minister’s amendment at page 47, line 22, make all regulations under Clause 63(2)(b) subject to confirmatory procedure (see Clause 102(5)).

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Moved by

[Baroness Stedman-Scott]

22: Clause 64, page 48, line 19, leave out “The first”
Member’s explanatory statement
This amendment and the Minister’s amendment at page 48, line 21, make all regulations under Clause 64(3) subject to confirmatory procedure (see Clause 102(5)).

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Moved by

[Baroness Stedman-Scott]

24: Clause 65, page 49, line 1, leave out “The first”
Member’s explanatory statement
This amendment and the Minister’s amendment at page 49, line 3, make all regulations under Clause 65(3) subject to confirmatory procedure (see Clause 102(5)).

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Moved by

[Baroness Stedman-Scott]

26: Clause 66, page 49, line 31, leave out “The first”
Member’s explanatory statement
This amendment and the Minister’s amendment at page 49, line 33, make all regulations under Clause 66(4)(a) subject to confirmatory procedure (see Clause 102(5)).

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Moved by

[Baroness Stedman-Scott]

28: Clause 67, page 50, line 20, leave out “The first”
Member’s explanatory statement
This amendment and the Minister’s amendment at page 50, line 22, make all regulations under Clause 67(2) subject to confirmatory procedure (see Clause 102(5)).

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Moved by

[Baroness Stedman-Scott]

30: Clause 68, page 51, line 7, leave out “The first”
Member’s explanatory statement
This amendment and the Minister’s amendment at page 51, line 8, make all regulations under Clause 68 subject to confirmatory procedure (see Clause 102(5)).

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[Baroness Stedman-Scott]

My Lords, government Amendments 75, 76, 77 and 78 seek to amend new Sections 41A and 41B of the Pensions Act 1995, which are to be inserted by Clause 124, introduced by the Government in Committee. The amendments would allow regulations to require that the trustees and managers of occupational pension schemes explicitly consider climate change goals, including the Paris Agreement temperature goal, for the purpose of ensuring the effective governance of their schemes with respect to the effects of climate change. The UK Government and others are committed to the Paris Agreement’s goal of holding the increase in the average global temperature to well below 2 degrees above pre-industrial levels. In fact, the UK is leading the way globally and has committed in law to the target of net-zero greenhouse gas emissions by 2050. We are completely committed to that.

The Covid-19 emergency has triggered the devaluation of many assets across the globe, affecting many investors. Climate change has the potential to bring about a greater, more permanent devaluation that pension schemes need to be prepared for. The Government intend to deliver a recovery from the current Covid-19 emergency that results in an economy that is more sustainable and resilient. Tackling climate change will be a win-win, as many of the actions we need to take to reach our UK climate targets, net zero included, will also support our economy as we emerge from the Covid-19 emergency. The ultimate achievement of the Paris Agreement goal and other climate goals, along with the steps taken by the Government and others to achieve them, are now of greater importance for pension schemes to consider in their overall governance of risk. These amendments would enable regulations to require that scheme trustees and managers take climate change goals and the steps taken to meet them into account.

Amendment 75 makes a minor change to subsection (4) of new Section 41A to make explicit provision for two types of assessments that may be required under subsection (3)(b). Amendment 76 inserts new subsections (4)(a) and (4)(b) into Section 41A. Subsection (4)(a) makes explicit that regulations may require scheme trustees and managers to take into account the different ways in which the climate might change and the steps that might be taken because of those changes. This allows for the assessment of physical and transitional risks respectively—the typical description of risk used by industry. Subsection (4)(b) provides that regulations made under subsection (4)(a) may require trustees and managers to adopt prescribed assumptions about achievement of the Paris Agreement goal and other climate change goals, or the steps that may be taken to achieve them.

The third amendment, Amendment 77, defines the meaning of “the Paris Agreement goal” by specific reference to Article 2.1a of the Paris Agreement. I would like to assure the noble Baroness, Lady Hayman, that Amendment 78 does not limit publication to the effects of climate but includes the effects of assets that contribute to climate change. Pension schemes already have a fiduciary duty to steward their assets, and all schemes have a duty to report on their stewardship policy, including engagement and voting, while from October of this year they will be required to report on how they have implemented their policies.

Finally, Amendment 78 to Section 41B would ensure that trustees and managers may be required to publish information relating to the assessments they make by reference to the Paris Agreement goal or other climate change goals under Section 41A. This includes publication of the contribution of schemes’ assets to climate change referred to in Section 41A(4)(b) as a way of measuring the extent of Paris alignment. Amendments 85 to 88 make corresponding changes to paragraph 12 of Schedule 11 for Northern Ireland.

I turn to Amendment 80. We believe that it is inappropriate to limit the scope of the legislation in this way. I should like to talk about the points made by my noble friend Lord Balfe about smaller schemes. I have been given assurances about such schemes and I can also reassure my noble friend that none of these measures would prevent pension scheme trustees investing in index trackers or seeking to drive schemes towards higher-cost active management. Innovation in the market has led to a blossoming of index-tracking products that take account of climate change risk in different ways. If the trustees of schemes of any size wish to take advantage of these, they can. Members of occupational schemes rarely have a choice of where they save, and they have a right to benefit from the effective governance and reporting of climate change risk, regardless of their employer’s chosen scheme. However, I can reassure my noble friend that these measures are intended to protect benefits through better consideration and management of climate risk.

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Moved by

[Baroness Stedman-Scott]

35: Clause 47, page 37, line 31, leave out subsection (2)
Member’s explanatory statement
This amendment and the Minister’s other amendments to Clause 47 are intended to make clear that regulations under the Clause may only be made in connection with collective money purchase schemes established by non-employers, or used by multiple employers not all of whom are connected with one another.

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Moved by

[Baroness Stedman-Scott]

39: Clause 98, page 77, line 25, leave out subsection (2)
Member’s explanatory statement
This amendment and the Minister’s other amendments to Clause 98 are intended to make clear that regulations under the Clause may only be made in connection with collective money purchase schemes established by non-employers, or used by multiple employers not all of whom are connected with one another.

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Moved by

[Baroness Stedman-Scott]

43: Schedule 3, page 130, line 4, at end insert—
“3A_ In section 186 (Parliamentary control of orders and regulations), in subsection (3) (statutory instruments subject to affirmative resolution procedure), after paragraph (f) insert “, or(g) regulations under section 99(2)(c), or(h) regulations under section 99A(2)(b),”.”Member’s explanatory statement
This amendment makes regulations under sections 99(2)(c) and 99A(2)(b) of the Pension Schemes Act 1993 (inserted by Clause 25(4)(c) and (5) of the Bill) subject to the affirmative resolution procedure described in subsection (3) of section 186 of that Act, subject to the exceptions in subsection (4) of that section.

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Moved by

[Baroness Stedman-Scott]

44: Schedule 6, page 138, line 30, at end insert—
“3A_ In section 181 (Assembly, etc. control of regulations and orders), in subsection (2) (regulations and orders subject to confirmatory procedure), after “20B(5)” insert “, 95(2)(c), 95A(2)(b)”.”Member’s explanatory statement
This amendment makes regulations under sections 95(2)(c) and 95A(2)(b) of the Pension Schemes (Northern Ireland) Act 1993 (inserted by Clause 76(4)(c) and (5) of the Bill) subject to the confirmatory procedure described in subsection (1) of section 181 of that Act, subject to the exceptions in subsection (3) of that section.

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Moved by

[Earl Howe]

64: Clause 122, page 117, leave out lines 7 to 25
Member’s explanatory statement
This amendment is consequential upon the Minister’s amendments at page 117, lines 6 and 25.

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Moved by

[Earl Howe]

66: Clause 122, page 117, line 25, at end insert—
“(1A) The single financial guidance body may carry out other functions relating to pensions dashboard services, including functions for which provision is made by—(a) regulations under section 238A of the Pensions Act 2004 or Article 215A of the Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1)) (qualifying pensions dashboard services),(b) regulations under section 238D of the Pensions Act 2004 or Article 215D of the Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1)) (information from occupational pension schemes), or(c) general rules under section 137FAA of the Financial Services and Markets Act 2000 (information from personal or stakeholder pension schemes).” Member’s explanatory statement
This amendment enables the Money and Pensions Service to carry out functions relating to pension dashboard services, including functions for which provision is made by the regulations or general rules, whether relating to pension scheme information or state pension information.

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Moved by

[Earl Howe]

69: Clause 122, page 117, line 26, leave out “Subsection (1) is” and insert “Subsections (A1) to (1B) are”
Member’s explanatory statement
This amendment is consequential upon the Minister’s amendments at page 117, lines 6 and 25.

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Moved by

[Baroness Stedman-Scott]

75: Clause 124, page 118, line 33, leave out from “require” to the end of line 36 and insert “—
(a) that assets are assessed by reference to their exposure to risks of a prescribed description, and(b) that an assessment includes determining the contribution of the assets of the scheme to climate change.”Member’s explanatory statement
This amendment makes separate provision about assessing pension scheme assets’ exposure to risk and their contribution to climate change.

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Moved by

[Baroness Stedman-Scott]

81: Clause 125, page 120, line 16, at end insert—
“(c) the member obtaining information or guidance about exercising the option conferred by subsection (1) from a prescribed person in a prescribed case;(d) providing the trustees or managers with evidence that—(i) the member has complied with a prescribed condition about obtaining such information or guidance from a prescribed person, or(ii) the member is not subject to such a prescribed condition.”Member’s explanatory statement
This amendment enables regulations under inserted section 95(6ZA) of the Pension Schemes Act 1993 to prescribe conditions about obtaining information or guidance from persons such as the Money and Pensions Service, before the trustees or managers may act on a member’s application under section 95.

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Moved by

[Baroness Stedman-Scott]

85: Schedule 11, page 190, line 1, leave out from “require” to the end of line 4 and insert “—
(a) that assets are assessed by reference to their exposure to risks of a prescribed description, and(b) that an assessment includes determining the contribution of the assets of the scheme to climate change.”Member’s explanatory statement
This amendment makes provision for Northern Ireland corresponding to the Minister’s amendment at page 118, line 33.

Universal Credit: Court of Appeal Judgment

Baroness Stedman-Scott Excerpts

Monday 29th June 2020 Lords Chamber

[Baroness Sherlock (Lab) [V]]

My Lords, universal credit works on fixed assessment periods. But if, like NHS workers, you get paid at the end of the month, you can find two pay days falling in one universal credit period. The system then assumes that you have had a 100% pay rise and slashes your benefit, or even stops it altogether, thinking that you are now too rich to need it. We have raised this with Ministers repeatedly, but to no avail. It should not take four single mums going all the way to the Court of Appeal to have this obviously daft policy declared irrational. How will the Government find and compensate all those who have lost out? When will the system be changed to stop this happening in future?

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con) [V]]

I can advise the noble Baroness that, during our consideration of the outcome of the court’s verdict, we will consider any necessary retrospective payments.

[Baroness Janke (LD) [V]]

Will the Minister confirm that as many as 85,000 claimants are affected by this judgment? Will she confirm that the Government will publish an action list, detailing when and how the claimants affected by this ruling will cease to be subject to these wild fluctuations in income? Will she also undertake to look into the support available to people in arrears with their rent, or suffering from other financial penalties, as a result of this “irrational and unlawful” action, to use the words of the judge who delivered the verdict, Lady Justice Rose?

[Baroness Stedman-Scott [V]]

I am pleased to say that the figure of 85,000 that the noble Baroness refers to is not one that resonates with us. We believe that the number of people impacted by this judgment is in the region of 1,000. We are assessing the situation. We got the judgment only on Monday, but we will keep the House fully up to date with decisions made in relation to it.

[Baroness Stroud (Con) [V]]

Will my noble friend the Minister outline what assessment has been made of the resilience and ability of the universal credit system to process such significant increases in applications in recent weeks? Has the digital design of universal credit enabled it to support an unprecedented number of people in recent months?

[Baroness Stedman-Scott [V]]

I can tell my noble friend Lady Stroud that we have been amazed and pleased that the universal credit digital system has shown enormous resilience. We have had a 600% increase in claims, and the vast majority of people have been paid in full and on time. Without wishing to be disrespectful in any way, this would never have happened under the legacy system.

[Baroness Lister of Burtersett (Lab) [V]]

My Lords, last week, the Minister promised MPs that

“everything is on the table”,—[Official Report, Commons, 25/6/20; col. 1462.]

except, it would seem, the monthly assessment itself, even though it does not align with the reality of the working lives of the many claimants paid more frequently, and bases a month’s entitlement on personal circumstances from a single day. This is another example of irrationality and inflexibility. As well as fixing the immediate problem urgently, will the Government undertake a longer-term review of the monthly assessment?

[Baroness Stedman-Scott [V]]

It may be helpful if I repeat for the House the Answer that my friend the Minister for Welfare Delivery gave in the other place last week. He said:

“I am absolutely determined to find a fix to this issue … a number of items are in the pipeline, ready to be changed on universal credit. Despite criticism from Opposition Members, we have made significant changes to universal credit, and much more is to come, such as the roll-on of legacy benefits next month, which will benefit people to the tune of £200. Those are all in the pipeline to be done, and this will be added to that. I will try to expedite it as much as I possibly can”.—[Official Report, Commons, 25/6/20; col. 1460.]

[Baroness Ritchie of Downpatrick (Non-Afl) [V]]

My Lords, will the Minister, along with her ministerial colleagues in the DWP, use this opportunity to have a root and branch review of social security policy, to ensure a refocus on the needs of people—many of whom have been reliant on food banks for a long time—a financial uplift of universal credit benefit and caution on the use of the digital system?

[Baroness Stedman-Scott [V]]

I assure the noble Baroness that the issues and successes coming out of universal credit are continually under review. However, I will take her specific question back to the department and will write to her with an answer.

[Baroness Neville-Rolfe (Con) [V]]

My Lords, it is clear that the department should put right the particular matter identified by the Court of Appeal. I note that the Minister thinks that some 1,000 cases are involved. However, does she agree that the universal credit system has stood up very well to the severe challenges posed by the consequences of coronavirus?

[Baroness Stedman-Scott [V]]

I assure my noble friend and the whole House that the universal credit system has stood up well to the increased demand of 600% additional cost. I have repeated the Answer that my ministerial colleague gave in the other House. We are determined to find a fix for this. We will keep the House updated, but we will need time to consider the judgment, which was issued only last Monday.

[Lord Foulkes of Cumnock (Lab Co-op) [V]]

My Lords, the Minister, who is usually very helpful on these kinds of questions, has not answered the questions put by my noble friend. If the computer system is as agile as she and her colleagues keep claiming it is, why can it not resolve this single issue quickly and give these people the justice they deserve? When will she answer the single, simple question: when will it be resolved?

[Baroness Stedman-Scott [V]]

I say again to the noble Lord that we are considering the judgment. We are working at pace to find a fix. The universal credit system, which has dealt with a massive increase in applicants, who have been paid, has been agile and flexible to do so. Some issues need to be overcome. They need a digital solution rather than a manual one. We have concentrated on paying people in these very difficult times, but I assure the noble Lord that a digital fix will be found as soon as it can.

[Lord Balfe (Con) [V]]

My Lords, people made severe criticism of the digital system of universal credit when it was introduced, but it seems that this design has enabled it to support an unprecedented number of people in recent months—the huge increase the Minister referred to. Would she agree that we could not possibly have done this without the digital changes made by this Government?

[Baroness Stedman-Scott [V]]

I completely agree with my noble friend. We would never have coped with the increase in demand in universal credit claimants had we not had the digital UC system.

[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, the problem has been evident for years, so the Government have yet to explain why they kept fighting to defend this “unlawful” and “unfair” system, in the words of the judge. Crucially, would the Minister accept that whenever you have a conditional payment scheme, some people will unfairly miss out? No system can be “agile and flexible”, in her words, to ensure that everyone has a fair, secure payment. Only a universal basic income would do that.

[Baroness Stedman-Scott [V]]

The noble Baroness makes a good point. We have never, ever suggested that the universal credit system is 100% perfect, but it has absolutely delivered in terms of paying the increased numbers we have. She has raised universal basic income on previous occasions. Our position has not changed: we have no plans to bring it in because it would disincentivise people to look for work and the cost would be astronomical.

[Baroness Altmann (Con) [V]]

I congratulate my noble friend on the tremendous work of her department in coping with the unprecedented number of new universal credit claims. Could she confirm that more than 1 million people have been able to receive an advanced first payment, giving them support in just a few days? Does she agree that this has been vital to prevent hardship during this crisis period?

[Baroness Stedman-Scott [V]]

The Government have worked at pace to ensure that money gets to people in a timely manner to avoid hardship and as many difficulties as we can. I can confirm that 1 million applications for advances have been made available to people who need them quickly. The advances are interest-free and repayable over 12 months at the moment, but as of next year this will go up to 24 months.

[The Deputy Speaker (Lord Bates) (Con)]

My Lords, that completes all the supplementary questions on the Urgent Question repeat.