Social Security Co-ordination (Revocation of Retained Direct EU Legislation and Related Amendments) (EU Exit) Regulations 2020

Baroness Stedman-Scott Excerpts

Tuesday 8th December 2020 Grand Committee

Moved by

[Baroness Stedman-Scott]

That the Grand Committee do consider the Social Security Co-ordination (Revocation of Retained Direct EU Legislation and Related Amendments) (EU Exit) Regulations 2020.

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

My Lords, these regulations, which concern policy areas of my department and Her Majesty’s Treasury, and apply UK-wide, were laid before both Houses on 16 November. They are required to clear the way for the legislation which will implement our new system of social security co-ordination with the EU, EEA states and Switzerland.

The current EU social security co-ordination regulations—I will refer to these as the SSC regulations—operate to facilitate the EU’s free movement rules. They ensure that individuals pay social security contributions in only one member state at a time; they set out which member state is responsible for the payment of social security benefits; they require the export of some benefits to claimants resident in the EU; and they provide for the aggregation of social security contributions when claiming certain benefits and the state pension. These rules require equal treatment for citizens across the EU, overriding any domestic legislation. They have continued to apply to the UK throughout the transition period.

As the Committee will be aware, the Immigration and Social Security Co-ordination (EU Withdrawal) Act came into force on 11 November 2020, Section 6 of which provides a power to modify these SSC regulations, which have been retained in UK law. Before I go into the detail of the draft regulations, I will provide the Committee further details on the context in which they are being made. I hope noble Lords will forgive the lack of originality in what I am about to say, which is very similar to the update provided by the Minister in the other place yesterday.

As I have stressed to your Lordships on a number of occasions, citizens covered by the withdrawal agreement and related agreements with the EEA and Switzerland will be unaffected by these regulations as long as they remain covered by those agreements. Arrangements in this area for UK and Irish nationals moving between the UK and Ireland will also continue unchanged under a recent reciprocal agreement with Ireland.

The Government are negotiating future arrangements with the EU, similar in kind to the social security relationships the UK has with nations outside the EU. This means that there will be changes in social security co-ordination policy with the EU from the end of the transition period, regardless of the outcome of negotiations. The Government have been clear about this, including as the ISSC Bill passed through Parliament and in public communications.

As the Committee will be aware, negotiations with the EU are at a very advanced stage. It is the Government’s position that new rules, whether or not there is a future agreement, should take effect from the end of the transition period. These regulations are a core part of our legislative preparation and will stand whatever the outcome. We are also in discussions on future social security co-ordination rules with a number of EEA states and Switzerland.

I will now summarise the regulations we are debating today. Part 1 sets out that the regulations come into force at the end of the transition period, with the exception of some amendments being remade in Part 4. These amendments will come into force on the day after the day on which the regulations are made.

Part 2 revokes the EU SSC regulations retained under Section 3 of the European Union (Withdrawal) Act 2018 and the unilateral fixing statutory instruments made under Section 8 of that Act. The fixing SIs were brought forward to prepare for a scenario in which the UK did not leave the EU with a withdrawal agreement and would have enabled the UK to operate some of the retained SSC regulations unilaterally, so far as possible. This revocation is in line with the approach the Government set out in the draft illustrative regulations shared with the House during the passage of the ISSC Bill.

This means that the rules for those individuals who are not covered by the withdrawal agreement and move between the UK and the EU, EEA states and Switzerland after the end of the transition period will be determined by any new international agreements in place or, in the absence of an international agreement, the respective domestic law in each country. For UK benefits this means, for example, that the UK will no longer export child benefit to children living in the EU, with the exception of Ireland, delivering on the manifesto commitment. For national insurance contributions this means that, where no reciprocal agreement applies, the rules on payment of national insurance contributions for individuals moving between the UK and the EU, the EEA and Switzerland will be the same as the rules for the rest of the world.

These regulations make four limited savings from the general revocation of the retained SSC regulations in Part 3. First, they save the retained SSC regulations on the co-ordination of benefits in kind; namely, health- care, which is a policy competence of the Department of Health and Social Care. DHSC has made separate secondary legislation in respect of the reciprocal healthcare aspects of the retained SSC regulations.

Secondly, they save the existing debt recovery provisions which will enable the UK to collect overpaid HMRC benefits and social security contributions on behalf of a foreign social security authority where the individual or employer is present in the UK, as part of a reciprocal agreement on social security. Full details of the specifics of these provisions have also been set out in public correspondence.

Thirdly, they save the retained SSC regulations to the extent necessary to provide for continued operation of the agreement on social security between the Governments of the UK and Gibraltar. I can confirm that it is the intention of the UK and Gibraltar Governments to agree a new relationship not based on the EU SSC regulations. Once that has been implemented, this saving will no longer be required and will later be revoked.

Fourthly, they save provisions relating to aggregation and uprating of the state pension in the absence of agreements being in place with the EU, EEA states and Switzerland by the end of the transition period. This saving will provide for continued state pension aggregation and uprating in those countries up to the end of the financial year 2021-22. In the absence of a future agreement with the EU, the UK would seek to put in place reciprocal agreements on social security with individual EU countries instead; even where such negotiations are progressing well, the saving may be needed for a short period beyond March 2022 to finalise and implement bilateral agreements. For this reason, the saving is not time limited. However, it is a strictly interim measure targeted at those who move to the EU, the EEA and Switzerland after the transition period, while future arrangements are put on a reciprocal footing.

Part 4 makes related amendments in other EU exit legislation. This includes bringing forward the day on which amendments will be made to Section 179 of the Social Security Administration Act 1992 and the equivalent Northern Ireland Act. These amendments were previously made by the Social Security (Amendment) (EU Exit) Regulations 2019 and the equivalent Northern Ireland regulations, which are not revoked by this instrument. These amendments were otherwise due to come into effect at the end of the transition period.

While the UK has left the EU, we are not leaving the European Convention on Human Rights; in my view the provisions of the Social Security Co-ordination (Revocation of Retained Direct EU Legislation and Related Amendments) (EU Exit) Regulations 2020 are compatible with the convention.

In summary, these regulations make changes to prepare the statute book for the end of the transition period, particularly in relation to preventing the unilateral export of benefits, delivering on the manifesto commitment to prevent people claiming child benefit for children living outside the UK. They also ensure that the Government have the option to make a future social security co-ordination agreement with the EU through an Order in Council before the end of the transition period, should this be needed. I beg to move.

[The Deputy Speaker (Lord Duncan of Springbank) (Con)]

My Lords, for the information of those on remote calls, the first 90 seconds of the Minister’s speech were lost, but I think the gist of the speech was contained. If there are any particular issues that noble Lords wish to tease out during the questioning, I am sure the Minister will be happy to respond in her summing up. I call the first speaker, the noble Baroness, Lady Ludford. I understand she is having technical difficulties, so we will come back to her. We move on to the noble Lord, Lord Bhatia.

--- Later in debate ---

[Baroness Stedman-Scott (Con)]

I thank the noble Baronesses, Lady Sherlock, Lady Ludford and Lady Janke, and the noble Lord, Lord Bhatia, for their contributions.

The noble Baroness, Lady Sherlock asked about process and timing. I recognise that it is late in the transition period, but that is the nature of EU negotiations. Good progress has been made in this area, and we hope to get the deal over the line. The Government are prepared for all outcomes and have been communicating to citizens the importance of being prepared for rules in this area to change, in all scenarios.

While I acknowledge the points on the timing of the process, I have set out the baseline provisions that will apply on the state pension and national insurance contributions. There will be no unilateral measures in relation to other benefits where long-standing domestic rules do not already provide for this. These affirmative resolution regulations offer an opportunity for the House to scrutinise and approve the baseline that would apply in the absence of future agreement. The Government’s position is that it would not be appropriate to continue unilaterally to operate EU rules after we have left the EU and the transition period ends, in doing so creating different dates of change, additional cohorts and complexity for staff and citizens.

The noble Baroness, Lady Janke, talked about plans for bilateral agreements. As I set out, the Government would seek to put in place reciprocal agreements with member states swiftly if no agreement can be reached with the EU. As the Minister in the other place set out, securing reciprocal provisions on the state pension and national insurance contributions are priority areas for the DWP and HMRC but cannot be effectively operated on a unilateral basis. We would prefer a single deal with the EU, of course.

The noble Baroness, Lady Sherlock, asked how the future agreement would be implemented. The mechanism by which any future agreement will be implemented in the various circumstances we could yet find ourselves in remains under review. These regulations ensure—this is a point that the noble Baroness, Lady Ludford, raised—that the Government can use existing powers for this purpose between now and the end of the year, should this be required.

We expect a number of social security benefits to no longer be exportable to the EU in future; this is in line with long-standing UK policy on certain benefits. Certain benefits, such as disability and unemployment benefits, are not exportable when an individual permanently leaves the UK even when there is a social security agreement in place, and in line with communications which the Government published on GOV.UK before the summer.

The noble Lord, Lord Bhatia, and the noble Baronesses, Lady Sherlock and Lady Janke, raised the subject of impacts. As the Minister said in the other place yesterday, the Government remain committed to publishing an updated impact assessment once the outcome of negotiations is known. I can confirm that those impact assessments will be brought forward. Those covered by the withdrawal agreement are not impacted by this instrument. The measure does not impose any costs on business and ensures that once the SSC rules cease to apply between the UK and the EU, businesses can apply the standard rest of the world rules for national insurance where there is no reciprocal agreement.

The noble Baroness, Lady Sherlock, raised the question of students. The Government have provided guidance to all UK universities via Universities UK to make them aware of the need to communicate to EU students who have moved to start their courses in person in the UK by the end of the transition period that they will need to apply under the points-based immigration system. They will not be covered by the withdrawal agreement’s provisions on social security co-ordination and will be subject to any new reciprocal agreement with the EU or any individual member states.

The noble Baroness, Lady Sherlock, also asked about Gibraltar. I can confirm that the Government will seek a bilateral agreement with Gibraltar similar in kind to that agreed with Ireland.

The noble Baronesses, Lady Sherlock and Lady Janke, raised the issue of healthcare. While that is a matter for the Department of Health and Social Care and not in scope of these regulations, the Government will assess their options for reciprocal healthcare if we do not achieve an EU-wide agreement. The Department of Health and Social Care is aware of the concerns of people with pre-existing health conditions and is carefully looking to the impact of any loss of necessary healthcare provisions.

On matters of governance, the UK’s proposed legal text, published in May, contains provisions on dispute resolution, data sharing and administrative co-operation between social security authorities. As is standard practice in international social security arrangements, we have been clear when it comes to future arrangements that there should be no CJEU oversight. We remain in close collaborative discussion with member states in this area through the administrative commission, which the UK continues to attend and will continue to attend in an observer capacity.

These regulations are an essential part of the legislative programme and have been laid in preparation for the end of the transition period, as we reset our relationship with the EU. Not proceeding with this legislation would result in the UK unilaterally operating EU rules after the end of the transition period, regardless of the negotiations. For the reasons I have set out, that would not be desirable.

The noble Baroness, Lady Sherlock, asked what would happen if there was no deal. If a British pensioner moves to the EU, the EEA or Switzerland in January 2021, their state pension will be uprated in April 2021. She also raised the issue of double contributions. On social security contributions, the standard rest of the world rules limit the possibility of UK-based employees working overseas and their employers being required to pay social security contributions in two countries at the same time to 52 weeks, while ensuring that they avoid creating gaps in their national insurance record in the UK for short periods of work overseas.

The noble Baroness, Lady Janke, raised the use of delegated powers. During the passage of the parent Act, I set out the exceptional circumstances under which we are operating, and shared draft illustrative regulations for scrutiny at that stage.

The noble Baroness, Lady Ludford, talked about the primary purpose of the amendments for the 1992 Act being to provide powers to conclude an agreement with the EU. She asked whether we would need the revoked provisions again. No, we are saving the only provisions that we may need to rely on.

The noble Baroness asked what a deal would contain. We have set out our approach to negotiations and have been negotiating in line with that. In particular, we are seeking arrangements on state pension and national insurance contributions.

On the issue of consultation, the UK has left the EU and the Government have acted in response to the manifesto commitment to end free movement. The SSC regulations facilitate free movement between member states of the EU on a reciprocal basis. The Government have repeatedly set out an approach to seeking a deal with the EU in this area to reflect the agreements that we have with countries outside the EU. There have been a number of publications to this effect, including our approach to negotiations published on 27 February. The UK has a long-standing policy in relation to the exportability of benefits, and negotiations with the EU have been consistent with that policy.

I thank again all noble Lords for their contributions to the debate on this SI. We will look at Hansard and make sure that we have answered all questions. If we have not, we will write to noble Lords—and, in that instance, I beg to move.

Motion agreed.

Arcadia Pension Fund

Baroness Stedman-Scott Excerpts

Tuesday 8th December 2020 Lords Chamber

[Baroness Drake]

To ask Her Majesty’s Government what steps they are taking to ensure that the Arcadia pension fund receives all of the contributions and assets agreed between its owners, any trustees and The Pension Regulator.

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

As Arcadia has now gone into administration, the Pension Protection Fund, working with the Pensions Regulator, will now act in place of the trustees and will negotiate on behalf of the scheme to ensure that it is treated fairly compared to other creditors and gets what it is due. If the regulator thinks there has been wrongdoing, it may also be able to use its anti-avoidance powers to get redress.

[Baroness Drake (Lab) [V]]

I thank the Minister for her reply, but it gives little assurance on the £210 million of security agreed with Arcadia getting to the actual schemes. Covid has a major impact, yet large pension deficits have not just built up over the past nine months but over years, and there will be other companies who took out dividends and assets to a value much greater than deficit recovery payments made, leaving their pension schemes more vulnerable than they should be. Will the Government consider urgent amendments to the Companies Act so that directors’ duties to shareholders are subject to a responsibility to repair deficits to pension schemes? We will otherwise have endless cases such as Arcadia recurring.

--- Later in debate ---

[Baroness Stedman-Scott (Con)]

I will need to take the issue relating to the Companies Act back to colleagues at BEIS, but we have the Pension Schemes Bill going through the House at the moment. There will be powers to ensure that we hold pension trustees to account, and I am sure that that will make a huge difference.

[Lord Young of Cookham (Con)]

My Lords, further to the point made by the noble Baroness, Lady Drake, about the deficits facing more and more pension funds, should we ask why they are being forced by regulation to invest more and more into government gilt-edged securities, which now have negative returns and are therefore guaranteed to lose pensioners money? Should we not instead be encouraging pension funds to invest in infrastructure, social housing and green projects to generate jobs, prosperity and growth?

[Noble Lords]

Hear, hear.

[Baroness Stedman-Scott (Con)]

My noble friend is not alone, as witnessed by the endorsement of his points on how pension schemes should invest their money. However, the accounting standards ensure that a standard, objective measure applies to pension liabilities on company balance sheets. This is very different to the role of trustees when deciding on an investment strategy. It is up to trustees to have an investment strategy that suits the specific nature of their schemes. While gilts and bonds have lower returns, they are much less volatile than equity and can be useful as part of a diverse investment portfolio.

[Lord Empey (UUP) [V]]

My noble friend will be aware that the high street has been under pressure for a long time. We also know that Philip Green has form when it comes to pensions. There will be great disquiet at the fact that this deficit has been allowed to build up. Can my noble friend give me a sense of the Government’s liabilities in this regard? What steps we are going to take to ensure that these funds are not again left in a vulnerable position, when we know well in advance that sectors are in severe difficulty?

[Baroness Stedman-Scott (Con)]

There is no government liability, as the Pension Protection Fund is funded by the assets taken into it from schemes, topped up by a levy on eligible schemes. The PPF plans for the long term and, as at 31 March 2020, it had a healthy reserve of more than £6 billion.

[Lord Davies of Brixton (Lab)]

The Minister correctly highlights the role of the Pension Protection Fund, and the employees of Arcadia can take some comfort from that. The problem is that the protection afforded by the fund is incomplete. To lose your job is bad enough; to lose part of your pension as well piles injury on injury. Can the Minister tell us what consideration is being given to improving the level of protection provided by the PPF?

[Baroness Stedman-Scott (Con)]

First, the noble Lord makes a good point about people losing their jobs, and I want to give absolute comfort to the whole House that the Department for Work and Pensions, through the rapid response team, stands ready to do all it can to help people in this very difficult time. On the second part of his question, we are doing as much as we can at the moment to help companies—through the Pensions Regulator and the Pension Protection Fund—to protect their assets and ensure that trustees act honourably in their duties.

[Lord Fox (LD)]

In answer to a similar question from me last week, the noble Baroness, Lady Bloomfield of Hinton Waldrist, said:

“Where there is evidence of bad practice, it is taken up through the relevant authorities.”—Official Report, 3/12/20; col. 835.]


Does the Minister agree that the Green family paying itself more than £1 billion while the pension fund is depleted of the money it needs is bad behaviour? If so, are the Government really satisfied that the Pensions Regulator has enough power to deal with those sorts of owners of those sorts of companies?

[Baroness Stedman-Scott (Con)]

I understand the noble Lord’s point and the spirit in which he makes it, but it would be inappropriate for Ministers to comment at this stage on this individual case. It is too early to know the position of the pension scheme—whether there is a deficit or how big it is—and, indeed, whether anybody has behaved inappropriately. We need to let the Pension Protection Fund and the Pensions Regulator do their job. If there is any cause for concern, they have a range of powers which they will use.

[Baroness Sherlock (Lab) [V]]

My Lords, many Arcadia pension scheme members are facing possible job loss and uncertainty, which are the perfect conditions for scammers to exploit anxious people who are looking to access their pension savings. The experience of too many British Steel workers stands as a warning. Once savings are transferred out of the pension scheme, there is no way back and access to the PPF is gone. What active steps will the Government take to apply the lessons of the Rookes review to ensure that Arcadia scheme members are not exposed to financial advisers who may provide poor advice, nor persuaded to put their savings in the hands of fraudsters?

[Baroness Stedman-Scott (Con)]

As always, the noble Baroness raises an important point for people who are in difficult positions. Since January 2018, following its work on the British Steel pension scheme, the Financial Conduct Authority has been working closely with the Pensions Regulator and the Money and Pensions Service to ensure that they monitor pension transfer activity in defined benefit pension schemes that may be subject to increased transfer activity. The three organisations have increased the frequency of their meetings during Covid-19 to consider schemes at risk of higher transfer activity.

[Lord Blencathra (Con)]

My Lords, let us be blunt. Debenhams collapsed after three ruthless vulture funds loaded it with debt and then cleaned it out to the tune of £1.2 billion in dividends. Arcadia was legally robbed by the Greens to the tune of another £1.2 billion in dividends. In the United States, the regulator would have gotten back every cent and they would all be serving life without parole. When are we in this country going to get some proper regulation and legislation to tackle people whose behaviour is de facto criminal, but at the moment technically legally okay?

[Baroness Stedman-Scott (Con)]

I and the whole House absolutely agree that we need to ensure our legislation can deal with those who would plunder pension schemes. That is why we currently have a Pension Schemes Bill going through Parliament. Let me be clear. Where there is mishandling of a pension scheme, the Bill extends the Pensions Regulator’s sanction regime, introducing the power to issue civil penalties of up to £1 million and three new criminal offences, including a new sentence of up to seven years in prison for bosses who run pension schemes into the ground or plunder them to line their own pockets.

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

My Lords, we have just heard about the Pension Schemes Bill and its provisions. When will the new routes to contribution notices, new criminal offences and new information-gathering powers that the Bill makes available to the regulator be available? When the Bill comes into effect, will they be retrospective?

[Baroness Stedman-Scott (Con)]

To give the noble Lord a correct answer, I will need to go back to the department, especially on retrospective issues, and write to him. I will make the answer available to all noble Lords.

[Lord Goddard of Stockport (LD) [V]]

I noticed that the Minister said that the Government had no liability, and she mentioned the word “honourable” in almost the same sentence. Does she agree that that is cold comfort for the 12,000 people who will have a terrible Christmas? She should perhaps contact the Prime Minister and try to get Philip Green’s knighthood revoked because he is clearly less than an honourable man.

[Baroness Stedman-Scott (Con)]

It would not be right for me to comment on individual cases, as I have already said. However, I should point out that a clear, independent process is in place for the forfeiture of an honour, and the final decision on whether to revoke one is made by an independent committee.

[The Lord Speaker (Lord Fowler)]

My Lords, the time allowed for this Question has elapsed, which brings an end to Question Time.

Universal Credit

Baroness Stedman-Scott Excerpts

Tuesday 1st December 2020 Lords Chamber

[Baroness Donaghy]

To ask Her Majesty’s Government what assessment they have made of the impact on families of not maintaining the £1,000 uplift of Universal Credit.

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

My Lords, the Government have introduced a raft of temporary measures to support those hardest hit, including the furlough scheme, the Self-employment Income Support Scheme and the £20 UC uplift. With the uplift confirmed until the end of March 2021, my right honourable friend the Chancellor of the Exchequer set out last week why it is right that we wait for more clarity on the national economic and social picture before he decides on the best way to support low- income families from 1 April. I stress to the House that discussions are very much ongoing with Her Majesty’s Treasury.

[Baroness Donaghy (Lab) [V]]

If those who lost their jobs last April could not be expected to live on £73 a week, will the Minister explain why it is enough for people losing their jobs next April? There is overwhelming support for the £20 uplift for the poorest families in the country. Why are the Government changing the rules in the middle of a pandemic and a recession? How will they address children going hungry?

[Baroness Stedman-Scott (Con)]

I understand the noble Baroness’s concern over those hardest hit by the pandemic, especially their income, but it is not right to say that we are changing course. All we are confirming at the moment, as the Chancellor of the Exchequer set out last week, is that we wait for more clarity on the national economic and social picture before making the decision on the best way to support low-income families.

[The Lord Speaker (Lord Fowler)]

I call the noble Lord, Lord Monks. No? Then I call the noble Lord, Lord Taylor of Goss Moor.

--- Later in debate ---

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

I welcome the fact that the Minister has stressed that this is under current review, because if these payments are not maintained at a time when we can see what is happening in many low-paid jobs—even today in retail in particular —the evidence is that half a million more people will go into deep poverty and more than that will be brought into poverty. There is some urgency though, because people need to know where they stand as they see debts building up and struggle to take themselves through Christmas, so I hope that Ministers will take an early decision on this and not wait till the last minute.

[Baroness Stedman-Scott (Con)]

I note the point about the timing of any decision, but that is with my friend in the other place, the Chancellor of the Exchequer. The Government are redoubling and trebling our efforts for those people who have found themselves in difficulty, including the people from Debenhams and Arcadia who are concerned for their futures, to get people back to work. We are completely focused on it. We have doubled the number of work coaches; we have Kickstart; we have the youth offer; we have sector-based work academies; and the Jobcentre Plus staff, the work coaches and the employment teams are engaging with employers to make sure that we have every vacancy we can get and we get people back to work as quickly as we can.

[Lord Farmer (Con) [V]]

My Lords, we should keep at the forefront of our thinking that universal credit was designed not to trap people in benefits dependency but to give them every help and incentive to get back into work. This has perhaps never been more important, both for individual morale and to enable economic recovery. What is the DWP doing to support people to get back into employment and enable the economy to recover from the financial impact of Covid?

[Baroness Stedman-Scott (Con)]

I thank my noble friend for reminding us about the principles of universal credit and, at the same time, of the difficult circumstances that people find themselves in. I stress again that we are providing help through dedicated work coaches and engagement with employers. We are supporting people back into work in a whole host of ways, not least the 250,000 green jobs that we want to create. We do not want to trap people on benefits; we want to help them.

[Baroness Boycott (CB)]

My Lords, I declare my interest as the chair of Feeding Britain. We estimate that if this £20-a-week lifeline is pulled, up to 700,000 people will be pushed into poverty, including 300,000 kids. The NHS is creaking at the seams, but so is the food bank system that has become so endemic in our country. If the Government are taking this money away, what plan do they have to ensure that hungry kids get enough to eat?

[Baroness Stedman-Scott (Con)]

At the risk of repeating myself, I say that we are waiting for the Chancellor to assess the situation before making a decision about how best to support low-income families. As for what we are doing for children, there are free school meal vouchers and we are providing £16 million for food charities to get food to those who are struggling and 4.5 million food boxes for vulnerable people. We are expanding free school meals, establishing a new £1 billion fund to create more high-quality, affordable childcare and putting £35 million into the national school breakfast programme. We are not taking our foot off the accelerator on any support we give.

[Baroness Sherlock (Lab) [V]]

My Lords, I watched the BBC news report from Burnley last night and I am not ashamed to say that I cried through it. It showed children so hungry that they were ripping open bags of donated food before they hit the floor. There was a vicar sobbing at the level of need around him. People are desperate, so I ask the Minister: has the DWP modelled the impact of cutting £1,000 from the incomes of 6 million families in the middle of a pandemic and a recession, when unemployment is still rising? Will she join me in meeting people who are providing food on the front line to poor communities, so that we can both hear what they really need from their Government?

[Baroness Stedman-Scott (Con)]

First, I affirm that, as always, I am very happy to meet people, as the noble Baroness suggested. The Chancellor has said that, once we have a better understanding of the impact of the £20 uplift on the social and economic situation, he will make his assessment and decide what to do.

[Baroness Fookes (Con)]

My Lords, given that people with disabilities have had a particularly tough time during the pandemic, can my noble friend say whether any additional support is given to that group?

[Baroness Stedman-Scott (Con)]

I can confirm that the DWP continues to support vulnerable groups, such as people with disabilities, through a series of safeguards and easements aimed at simplifying and improving their interaction with the benefits system. For ESA claimants, we have launched the New Style ESA online portal, which allows the majority of people who need to claim to do so online. Everyone infected with Covid-19 or required to self-isolate in line with government guidelines will be treated as having limited capability for work in ESA, without the requirement for fit notes or a work capability assessment.

[Baroness Meacher (CB) [V]]

My Lords, will the Minister consider the plight of families thrown into unemployment because of the pandemic who are subject to the cap? My understanding is that these families have not benefited from the £20 uplift to universal credit. They have very little—perhaps a few pounds a week—once they have paid their rent. Would it not be fair to raise the level of the cap by £20 a week to try to help these desperately needy families?

[Baroness Stedman-Scott (Con)]

The Government believe that the benefit cap restores fairness between those receiving out-of-work benefits and taxpayers in employment. The noble Baroness raises an important issue that we should continue to consider, but we ought also to consider that the benefit cap statistics that have come out and show an increase in the number of people impacted are unacceptable, but also not surprising when we have a 600% increase in the number of those who have gone on to universal credit. We have also increased the local housing allowance rates.

Social Security (Up-rating of Benefits) Bill

Baroness Stedman-Scott Excerpts

3rd reading & Report stage & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords & Report stage (Hansard) & Report stage (Hansard): House of Lords
Tuesday 17th November 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, in moving this Motion, I would like to confirm how pleased I am to have introduced the Social Security (Up-rating of Benefits) Bill into this House. I thank all noble Lords for their positive engagement and the feedback that they have provided thus far. I thank in particular the noble Lords, Lord Addington, Lord Randall and Lord Shipley¸ and the noble Baronesses, Lady Sherlock and Lady Janke, for their constructive contributions. I also thank the officials on the Bill team for their tireless work in helping all of us see the Bill proceed in a proper manner and to have the information needed.

The Bill reflects the Government’s commitment to maintaining the income of pensioners in these difficult times. It allows for the uprating of the safety net in pension credit and of widows’ and widowers’ benefits in industrial death benefit. I am grateful, too, to noble Lords for ensuring that the Bill will be passed in time to receive Royal Assent before the Work and Pensions Secretary must conclude her uprating review of benefits and pensions. In doing so, the state pension and pension credit standard minimum guarantee can and will be uprated next year. I beg to move.

[Baroness Sherlock (Lab) [V]]

My Lords, I thank the Minister for her remarks. As I made clear at the outset, we support the Bill, while deeply regretting the economic circumstances that have made it necessary. During its brief passage, some important issues have been raised. I hope the Government have taken note of those issues and will apply themselves to them in the near future. During our consideration of the Bill many noble Lords raised the question of support for those of working age. I keep hoping that we will hear some good news on that—especially on universal credit and other working-age benefits—soon.

We have had some really interesting discussions about the difficult and growing issue of pensioner poverty. We now have 1.9 million pensioners living in relative poverty and the Government need to develop and implement a strategy for tackling pensioner poverty. That will require a proactive plan to boost take-up of pension credit. I regret that I was unable to attend the rearranged meeting with the Pensions Minister on this matter but I look forward to hearing what went on there. At the moment, four out of 10 eligible pensioners do not claim it, so they are missing out on that and on other benefits, including, increasingly, free TV licences for the over-75s.

Then there is the fact that the triple lock does not apply to pension credit. The Minister said in her opening remarks that there will be an uprating to the standard minimum guarantee in pension credit but I did not catch whether she said by how much. In Committee she told my noble friend Lady Drake that she would write to her to tell her whether the Government intend to pass through the triple-lock payment to pensioners on pension credit—which is of course crucial, because if they do not, the richest pensioners will get the full benefit of the triple lock but the poorest will not because it will be clawed back from pension credit. Can she clarify the position on that? If she has written to my noble friend Lady Drake, I apologise; I have missed the letter.

I am very glad that we were able to get the Bill through the House in good time. It was a pleasure to welcome two maiden speakers in Committee: the noble Lord, Lord Field of Birkenhead, and the noble Baroness, Lady Stuart of Edgbaston. I would like to express my thanks to the Minister and her officials who have met us and answered questions; it is a very co-operative department and I am very grateful. I thank colleagues across the House for their thoughtful contributions; Dan Stevens of our staff team for his support with the Bill; and the House officials and the broadcast team.

Pensioners deserve to spend their retirement in financial security. This Bill will enable the Government to fulfil their manifesto commitment to apply the triple lock to the state pension and we have been pleased to support it.

[Baroness Meacher (CB)]

My Lords, it is a privilege to have been asked to make the Cross-Bench concluding contribution at the end of our consideration of the Social Security (Up-rating of Benefits) Bill.

In Committee a number of noble Lords raised concerns about the level of pensioner poverty, most notably the noble Baroness, Lady Sherlock, and I very much support their comments; but others of us wanted some reassurance that while working people are experiencing job losses on a massive scale and abject poverty—often facing homelessness—many pensioners, including me I suppose, are in a much more secure position and should not be given disproportionate support. Those sentiments certainly do not apply at all to people on pension credit. I was delighted to hear—the Minister might be able to give us some figures—about the increase in the take-up of pension credit. That is at least a start. Like the noble Baroness, Lady Sherlock, I would certainly like to hear an assurance that pension credit will in fact be protected by the triple lock. I think that these pensioners and other subgroups mentioned by the Minister are in a very particular position and that any support that can be given should be given.

The other issue referred to by a number of noble Lords is the number of pensioners living in what I shall call unprotected countries abroad who have had their pensions frozen, often for many years, and find themselves in 2020 still living off something like £5 a week—serious, abject poverty. I hope the Government will give attention to that issue and also the other issues that noble Lords raised in Committee.

The noble Baroness, Lady Sherlock, as always, made a number of very powerful points. Importantly, she sought reports on current levels of pensioner poverty. I hope we will perhaps have a report on pensioner poverty shortly. She was also looking for an impact assessment of the Government’s policy options. I am not sure whether we have had a commitment on that or not.

In conclusion, there was general acceptance of the thrust of this Bill, and no amendments were pressed to a vote. I want to thank the noble Baroness, Lady Stedman-Scott, for her cheerful and always courteous responses to our pleas and questions, which she always gives with a smile, which is quite disarming at times. Also, a big thank you to the Bill team, which, as always, makes sure our deliberations and debates are meaningful.

[Baroness Stedman-Scott (Con)]

First, I thank all noble Lords for their contributions, which were valid and important. On the working-age benefits, as raised by all contributors, as soon as the Secretary of State has completed the review, Parliament will be advised of the outcome. I am glad the noble Baroness, Lady Janke, was with us yesterday for our pension credit meeting and our robust and creative discussion about increasing take-up. It was probably one of the best meetings I have been in since becoming a Minister. I am sorry the noble Baroness, Lady Sherlock, could not be with us, but my office did advise me prior to coming to the Chamber that it is finalising the read-out; I think she will be pleased with the actions we have agreed.

In respect of the letter to the noble Baroness, Lady Drake, I was sure that had been sent, but let me go back to my department, double-check and confirm that to the noble Baroness.

Regarding the potential for uprating the standard minimum guarantee, it is right that we protect the incomes of the poorest pensioner households in receipt of it. A decision on how to uprate it next April will be made in the review the Secretary of State is carrying out. It will be announced this month, and we will wait to see what the outcome is and report it to Parliament, as I have already said.

The Government are committed to action to alleviate levels of pensioner poverty. For current pensioners, this includes the contributions of the triple lock, the new state pension and pension credit.

As I have already said, the Bill reflects the Government’s commitment to maintaining the income of pensioners in these difficult times. I am grateful to noble Lords for ensuring that it will be passed in time to receive Royal Assent before the Work and Pensions Secretary must conclude her uprating review of benefits and pensions. In doing so, the state pension and pension credit standard minimum guarantee can and will be uprated next year.

I commend the Bill to the House.

Bill passed.

Supporting Disadvantaged Families

Baroness Stedman-Scott Excerpts

Thursday 12th November 2020 Lords Chamber

[Baroness Janke (LD) [V]]

Local authorities are to receive £160 million, to be added to the previous sum of £63 million which was distributed earlier in the year. This is to be paid as a one-off government grant. I would like to understand more about the basis of these measures. What consultations have taken place with local government and what were their outcomes?

The issue of conditionality was raised. How is that to be achieved and demonstrated? Are there to be target numbers of families or children? Are levels of participation to be measured, or perhaps there are measures of improved well-being that are to be reported upon?

What exactly is the basis of these sums of money? We are told that funding will be dispersed according to an authority’s population, weighted by a function of the English indices of multiple deprivation, so presumably we are looking at a sum per head. Can the noble Baroness say how much per head and for how many people?

Does the noble Baroness feel confident about the number of families that are to be helped, given that local authorities have had financial cuts of £16 million over the last 10 years and that their capacity is significantly reduced? Many important services for disadvantaged families no longer exist in many areas, such as family support schemes and community facilities such as libraries, sports and recreation, and local health promotion, and many of those may be required to implement the scheme. Does the noble Baroness feel that the sums of money here will be enough to achieve the objectives she describes in the Statement?

The noble Baroness talked about the importance of nutritious food. Has any financial assessment been made of the cost of providing this to the numbers involved? If so, it would be good to see it. The Food Foundation has established that, to pay for the Government-recommended “eatwell plates”, people on universal credit would need to spend around two-thirds of their non-housing income on food. It would help to understand the analysis that underpins these measures.

We all welcome the expansion of holiday activities for disadvantaged children. Can the Minister clarify how these children are to be identified? Who is eligible for these provisions? Existing criteria exclude many children, particularly in low-paid working families. We have welcomed the temporary measures that have been introduced during the current crisis. Can the Minister assure the House that these will remain in place?

We welcome the £16 million for charities to help those struggling to afford food, but surely this is no more than a sticking plaster. We must ensure that families’ income is sufficient so that they can afford to provide nutritious food for themselves and their children. Removing the benefit cap and the three-child limit would help. If the Government do not intend to do that, what longer-term policies are being considered to ensure that families and children will no longer have to depend on short-term fixes and will have enough income to provide their own food and care for their families without depending on charities?

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

My Lords, I will respond first to the points raised by the noble Baronesses, Lady Sherlock, and then cover the points from the noble Baroness, Lady Janke. I am sorry that the audio of the noble Baroness, Lady Janke, was not at all good. If I do not answer all her questions, I will go through Hansard tomorrow and make sure that she receives a written answer.

I am grateful that both noble Baronesses welcomed the Statement. Let me say right at the start that the Government much admire Marcus Rashford’s passion and commitment and are proud to have provided this invaluable support. I note the hopes of the noble Baroness, Lady Sherlock, for Marcus Rashford’s next campaign.

She also mentioned the comments about parents who use their benefits for purposes other than we would wish. We do not associate ourselves with those remarks. We are only too aware and appreciative of the difficult circumstances in which some parents find themselves at the moment. We are delighted that the hospitality industry came into its own and are glad that it was in a position to give extra help.

I am well aware that earlier at Questions, the noble Baroness was underwhelmed by my response about legacy benefits. I will try to be a little more helpful. Back in March, when there were no arrangements such as the furlough in place, UC had to take the strain until those schemes came online. The Government were trying to cushion those who had had a fall in income because they were made unemployed, or their earnings dropped, due to Covid-19. They were not trying to provide a general uplift in benefits. Those who were newly signed on to universal credit did so because they had seen a significant drop in their income, whereas those on legacy benefits had not seen the same fall.

Moving on to what we have done, we have announced a £170 million Covid winter grant scheme, to make sure that families get the help they need. We are giving this to councils because they are best placed to understand their communities. They know the most vulnerable children and families who need this money. As the noble Baroness, Lady Janke, said, this is being done on a per-head-of-population basis, according to the deprivation indices.

We are also investing £220 million more than existing funding allocated to the programme. This will mean that children eligible for free school meals will have the option to join a holiday time programme that provides healthy food and funds activities during the summer, Christmas and Easter holidays. I am afraid I am not able to comment on more than that timeframe. I will write to the noble Baroness about why the Healthy Start payments will not start until April 2021.

On the holiday activities and food programme, much has been said about the speed at which it has been introduced and whether it was a reaction, but I will say that we have been piloting this initiative and trying to work out how best to deliver it. This was not a knee-jerk response or something we thought we had better get on and do; it was something we piloted and tested. We made sure that, when we announced it, we knew that it would work. Since the summer, 50,000 children have benefited from the holiday activities and food fund, and a further 2,500 additional breakfast clubs have been started.

Will all children in England be eligible for a place on a HAFF programme? The programme will make free places available to children eligible for free school meals in their local authority for a minimum of four hours a day, four days a week, six weeks a year. This will cover four weeks in the summer and a week’s worth of provision in each of the Easter and Christmas holidays. As I have said before, local authorities have the flexibility to decide how to do this and how to use the money.

As I expected and I understand, there has been a call for the £20 uplift to be extended to legacy benefits, and I have been very clear about the Government’ position on this. The noble Baroness, Lady Sherlock, raised the issues of the savings threshold, the two-child limit, the benefit cap and advances into grants. I have made clear that the Government do not have any plans at the moment to change those things, and, as my Secretary of State said in the other place,

“advances are actual grants to people—they are just the phasing of universal credit payments over the year”—

and they are repayable within a year—

“and soon to be over two years if that is what claimants want.”—[Official Report, Commons, 9/11/20; col. 642.]

We are listening and extending the time.

Where we have been doing the local pilots, there has been extensive discussion on interfacing with local authorities. I understand that the Government have written to all the chief executives of the local authorities, and, at this stage in the proceedings, the announcement and commitment have gone down very well. I am afraid I cannot tell the noble Baroness, Lady Janke, how much it is per head because it will be up to local authorities to say where the money goes and spend it most effectively.

Understandably, the noble Baroness, Lady Janke, raised the point about local authorities and underfunding. We are giving councils unprecedented support during the pandemic: a package of £6.4 billion so far. We recognise that there will be individual councils with unique circumstances, and we encourage them to approach MHCLG to discuss their future financial position.

Before I close this part of the questioning, I will make the point that Covid has certainly made life very difficult for people—nobody is trying to ignore that—but, underlying this, we believe that parents are responsible for their children. It is not the state’s job to take that responsibility, other than in these very difficult times, where we are trying to do everything we can. One of the areas I have responsibility for is the Child Maintenance Service. You would not believe the extent to which people try to get out of their responsibilities to pay for their children. We are working very hard to get this money back. As it stands, there are 130,000 children who are owed £381.3 million, and I am doing everything I can to get that money to children because it would make a huge difference to their lives.

[The Deputy Speaker (Lord Russell of Liverpool) (CB)]

We now come to the 30 minutes allocated for Back-Bench questions. I ask that questions and answers be brief so that I can call the maximum number of speakers.

[Lord Berkeley of Knighton (CB) [V]]

My Lords, naturally, I am extremely pleased the Government are responding to this very real need, even if as something of a reaction to public disquiet. Marcus Rashford is clearly an artist on and off the field.

This money will obviously make a real impact in areas of disadvantage and poverty. However, I am sad to say I must add to them the current plight of freelancers and their families. Despite the Chancellor’s generous support for the arts, it is a fact that this section of society is falling through the support network provided by the Government. I know of people who are seriously worried about how they will feed their families this winter and this Christmas.

In anticipation of the Minister’s response, I put it to her that not only are a huge proportion of freelancers unable to access SEISS according to the Government’s own figures but they are unable to claim universal credit for the following reason. If they have been saving to pay tax on earnings made prior to Covid-19, they could easily have the savings as a couple that exceed the £16,000 threshold—money that is ultimately destined for the Chancellor.

Although I find myself incredulous at my own words that, for example, a highly skilled violinist of many years’ standing in the profession might not be able to feed his family this winter, that is in fact the case. When Keir Starmer in the other place gave the example of Chris, the photographer, to the Prime Minister at PMQs yesterday, Mr Johnson completely dodged the question, saying Chris would be better off once we had dealt with the virus. That is obvious, but I doubt Chris felt this solved his immediate and imminent financial crisis. Can the Minister say whether her department and the Chancellor will look at the predicament of freelancers in our society? Secondly, will they be able to access the support announced in the Statement?

[Baroness Stedman-Scott (Con)]

I thank the noble Lord for that poignant comment. I understand his concern and distress about this situation. The issue of the support—or otherwise, as he would say—for freelancers rests with the Treasury, but I will go back to the Treasury and get answers to those questions, especially about the savings, where they put money aside to pay their bill. I will talk to those in the department to see if, in those circumstances, people can access universal credit and the help we are announcing today. I hope he will give me time to do that.

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

My Lords, at a time when it is claimed we have more food banks than McDonald’s restaurants in our country, and following the rather disappointing response to the Economic Affairs Committee’s report Universal Credit Isn’t Working, when will the Government end the anguish and uncertainty facing families who stand to lose £1,000 a year unless the standard allowance is made permanent after April? How can it be right to deduct up to a quarter of universal credit payments from families due to historic debt arising from faults in legacy systems, much of which they are completely unaware of? Finally, when will the department make a decision on the benefit cap, which affects 7% of families with children?

[Baroness Stedman-Scott (Con)]

I will answer again on the £20 uplift. We are in discussion with officials at the Treasury: when a decision has been made, Parliament will be advised. The issue of historic debt is well documented and well discussed. Nothing I can say now will make that situation any different. However, where people are struggling, even when the level has been reduced to the maximum of 25% being taken off, please will they talk to their work coaches, who will turn themselves inside out to help? That is probably not the answer the noble Lord wants—but that is what they are there to do. As things stand, there are no plans to change the benefit cap.

[The Lord Bishop of Durham [V]]

I warmly welcome so much in the Statement and in the decisions made; I also associate myself with those who ask why it did not all happen a bit more quickly. None the less, this has exposed the underlying fundamental structural issues which mean that we are not tackling child poverty in the round and as a whole. What consideration have Her Majesty’s Government given to creating really long-term solutions by forming a child poverty commission, as proposed by faith leaders in their recent letter to the Prime Minister?

[Baroness Stedman-Scott (Con)]

The right reverend Prelate is consistent in the issues that he raises, and I understand that. As for this happening more quickly, as I said, we were piloting and we were in dialogue. We were not sitting around waiting to be kicked into touch. As I have also said before, we have tested to make sure that these things can work. As for the long-term issue of a child poverty commission, I am not aware of any plans, but I will go away and double-check for him. I take this opportunity to thank the Church and all the faith groups who are supporting their communities in such an outstanding way.

[Baroness Drake (Lab) [V]]

My Lords, for the Government, protecting children is a moral imperative, because children cannot protect themselves. He may not have used those actual words, but they underpin the simple and compelling request from Marcus Rashford; that is why it was so clearly understood by the public and local businesses in their communities. I welcome the Statement as a contribution to preventing children going hungry, but this is a problem growing in prevalence and urgency. The role of local government is important, but may I push the Minister further on the question put by my noble friend Lady Sherlock about how “vulnerable” will be defined? That will be key in capturing the population to be helped and ensuring that some vulnerable families and children are not missed. For example, food aid charities have identified the emergence of the newly hungry—a growing cohort of people previously in jobs, who have been forced to use food banks and claim benefits for the first time during the pandemic. Will the Minister write, giving more detail on how the DWP will define vulnerable families in the Covid winter grant scheme, to ensure and give confidence that that category will include all those who need help?

There is a second example. On 9 November in the other place, the Secretary of State, Dr Coffey, said that

“every child has no need to go hungry in this country”,—[Official Report, Commons, 9/11/20; col. 649.]

and that there would be

“funding available for every child in the UK”.—[Official Report, Commons, 9/11/20; col. 637.]

But she did not expressly answer a question posed by Stephen Timms, so I ask the Minister that question again now. Will she confirm that this package of support extends to families who have no recourse to public funds?

[Baroness Stedman-Scott (Con)]

Of course we agree completely that children cannot protect themselves, and we must all do our part to protect them. Local government’s role is important, and we urge all partners in the communities that work with their local authorities, and the community groups with which they have relationships, to work together to identify those they know who really need this support. I undertake to write to the noble Baroness, as she requests, about the term “vulnerable”. As for those with no recourse to public funds, local authorities can, and already do, use their judgment to assess what support they may lawfully give to each person on an individual basis, taking into account their needs and circumstances. That includes providing a basic safety net option to individuals regardless of their immigration status, if there is a genuine care need that does not arise solely from destitution—for example, if there are community care needs or serious health problems—and there is a risk to a child’s well-being.

[Lord Addington (LD)]

My Lords, it is odd when we talk about child poverty as though it has happened with the pandemic. Food poverty during the holidays has been with us for a long time. In that context, it is only fair to ask what the Government’s long-terms plans are. They must have seen this coming for a long time. What are they going to do to make sure that the whole of the school holidays—not just six weeks—are covered? Will they make sure that in future they have a coherent plan to ensure that children get through the whole period with enough nourishment, so that they are not in a state of low nutrition, meaning that they cannot learn for a few weeks when they get back to school? Marcus Rashford did a wonderful job. It is appalling that the Government had to be told by him what to do and that they did not listen to their own Back-Benchers.

[Baroness Stedman-Scott (Con)]

On a long-term plan, the only commitment that I can make today on behalf of the Government is the one in the announcement. That is the straight answer on that point. I note the noble Lord’s observations in the latter part of his contribution and just say that we have listened to Marcus Rashford and others, piloted the initiative, and responded accordingly.

[Baroness Eaton (Con) [V]]

My Lords, can my noble friend the Minister confirm that support with food costs will not be confined to families with school-age children but will extend to those with pre-school children as well?

[Baroness Stedman-Scott (Con)]

The £170 million scheme recognises that more people might feel under pressure this winter and will allow local authorities to support a wider group of vulnerable people, including those with children of pre-school age. Precise eligibility for the Covid winter grant scheme will be decided by each local authority. This is not about numbers; it is for local authorities to decide how they can best support those in need. The Healthy Start scheme payments are also set to increase from £3.10 to £4.25 a week from next April.

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

The Statement said that the Government want to give disadvantaged families peace of mind. Welcome as this week’s package is, why do the Government continue to refuse to act on calls from children’s and anti-poverty organisations? Their work shows that improvements to social security support for children is essential for their parents’ peace of mind and for tackling child poverty and hunger in both the short and longer term, as called for by the right reverend Prelate.

[Baroness Stedman-Scott (Con)]

The noble Baroness is correct in that we want to give people peace of mind, as reflected in the announcement that we have made. The right reverend Prelate made his statement, and all I can say is that our Secretary of State, the department and the Government are working tirelessly around the clock to make sure that there is a package in place that does what it can to support people in these difficult times.

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

My Lords, I would like to associate myself with the comments of others in congratulating Marcus Rashford on persuading the Government to take these rightful actions. As a single father, I am not disadvantaged financially, but I have direct experience with three young boys—two of whom, at different times in the last month, have had to self-isolate at home because of potential contact with coronavirus cases at school—of just how difficult it can be for families in these circumstances.

First, can the Minister assure us that no one will now have to choose between looking after their children when they need looking after and earning an income—that the financial support will always be there for everyone who needs it? Secondly, can the Minister comment on the rollout of computers to schools to make sure that every child at home gets the opportunity for education? It is absolutely clear, from all the evidence presented to the Government, that the coronavirus period has been a catastrophe for many children, particularly those who were already disadvantaged.

--- Later in debate ---

[Baroness Stedman-Scott (Con)]

I can appreciate the noble Lord’s commitment to his three boys and the difficulties with their care caused by Covid. We have done as much as we possibly can to make sure that childcare stays in place, even paying for places when nurseries have been closed. As for enabling parents to look after their children, and not having to choose between earning money and not going to work, I think most employers have been very considerate about these circumstances and have been as flexible as they can. In relation to computers for schools and the disruption to education, the noble Lord’s point is very well made. I will ask my colleague in the DfE to write to him specifically about computers.

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

My Lords, while welcoming the contents of the Statement, I have to say that I agree with the right reverend Prelate the Bishop of Durham that there needs to be a child poverty commission. The Statement clearly highlights that there has been such a deficit in welfare and child welfare policy. Will the Minister talk to her Secretary of State to ensure that discussions get under way about an immediate review of welfare policy in light of the pandemic?

Secondly, could she provide an estimate of what amount of money under the Barnett consequentials or Covid winter grant scheme—£16 billion has been allocated to the devolved Administrations—has actually been allocated to Northern Ireland? Will she further ensure that that money is dedicated to disadvantaged families and does not go into the central pot of the Department of Finance?

[Baroness Stedman-Scott (Con)]

I will go back and speak to my Secretary of State about the points the noble Baroness raises. I cannot make any commitment further than that. As the noble Baroness says, £16 billion is given to the devolved Administrations to allow them to plan. Last week, in the Chancellor’s Statement, there was a recognition that, through the Barnett formula, every time we do certain different policies, the devolved Administrations want to do additional things. We have a mature relationship with the devolved Administrations. They have been set a guaranteed amount of funding, and I assure the noble Baroness that there is still more room in terms of Barnett consequentials. The Chancellor was right to make the decision he did, and I am glad she welcomes it.

[Baroness Altmann (Con) [V]]

My Lords, I too welcome this Statement and this decision, and congratulate the Government. I urge my noble friend, in line with her responses, including to my noble friend Lord Forsyth, to continue urgently talking to the Treasury about the extra £20 uplift in universal credit being extended, given that the opportunity of work is much more difficult in the current environment. I also encourage the Government to look at the position of children in particular, as the noble Baronesses, Lady Lister and Lady Ritchie, have said.

Could my noble friend the Minister please join me in praising the work of others, not just Marcus Rashford—the local organisations and religious groups across the country involved in providing these activities and food for children, who have helped make the pilot scheme such a success?

--- Later in debate ---

[Baroness Stedman-Scott (Con)]

At the risk of repeating myself, the issue that the noble Baroness raises about the £20 uplift has been raised many times, and we undertake to come back to Parliament to advise on the outcome of discussions with the Treasury. On praising the work of local organisations, I have already given an absolute endorsement to faith groups—the Church of England, Jewish communities, the Salvation Army—and many other charities that I wish I could mention by name. We have seen some fantastic provision in the last three years and we want to take that learning experience into the future delivery of holiday activities and food programmes.

[Baroness Massey of Darwen (Lab) [V]]

My Lords, I of course welcome the positive aspect of the Statement, but it feels to me that the Government have reacted to crisis under pressure from local government, the voluntary sector and dynamic individuals. A new report from the Local Government Association, A Child-centred Recovery, points out that children have been disproportionately impacted by the Covid crisis. The report calls for a

“cross-Whitehall strategy that puts children and young people at the heart of recovery”.

It seems blindingly clear that a cross-departmental strategy for children should be an urgent priority. Will the Minister take this forward?

[Baroness Stedman-Scott (Con)]

I am pleased to tell the noble Baroness that there is already a forward-looking approach that is long-term and cross-departmental, with DWP working closely with the DfE and Defra to target support to those in need. The Secretary of State set out in the other place her desire to ensure that every child has the chance to realise their full potential, and the long-term thinking in this support package will help to achieve this far more than piecemeal reform. I ask the noble Baroness to write to me if there are particular things that she would like included; I am quite prepared to make those available to the department.

[Baroness Smith of Newnham (LD)]

My Lords, clearly the additional funding is welcome, but I note that the Statement suggests that there will be additional reporting requirements and conditions for local authorities. What work have the Government done in talking to local authorities to ensure that such requirements are not overly onerous? It would be something of an own goal to have money being spent that local authorities do not have the time to disburse. In the longer term, what are Her Majesty’s Government doing to make child poverty history?

[Baroness Stedman-Scott (Con)]

The noble Baroness raises a really important point about reporting. We will need some information back for the sums of money that we will be spending. I sincerely hope that the reporting requirements will not be onerous, but that they will enable us to understand the impact of the spending and the difference it makes, and help us understand what needs to be done next. I really hope that will be case. I can only reiterate that we are working hard as a Government to make sure that children and families have the support they need in these even more difficult times.

--- Later in debate ---

[Lord Rooker (Lab) [V]]

My Lords, what is happening about the decline in the number of health visitors in respect of the youngest children in disadvantaged families? If the Government, as was said in the Statement, are taking a long-term holistic approach, why has there been no national health inequality strategy since 2010? Is this why life expectancy in England has stalled since 2010—something that has not happened since 1900, according to The Marmot Review 10 Years On?

[Baroness Stedman-Scott (Con)]

There is an exam question to finish this session. I will need to ask my colleagues in the Department of Health and Social Care to provide the noble Lord, Lord Rooker, with the information about health visitors and the other valid points that he raises.

[The Deputy Speaker (Baroness McIntosh of Hudnall) (Lab)]

My Lords, all speakers who wished to ask questions on the Statement have done so. We will move straight on to the next Statement, but I recommend that we just take a few moments to allow Front-Bench Members and others to find their right places.

Universal Credit

Baroness Stedman-Scott Excerpts

Thursday 12th November 2020 Lords Chamber

[Lord Woolley of Woodford]

To ask Her Majesty’s Government what plans they have to maintain the £20 a week increase in Universal Credit (1) for the duration of, and (2) after, the COVID-19 pandemic.

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

We are having ongoing discussions with the Treasury on the best ways to support people through Covid-19 and beyond. We will of course update Parliament on any future decisions on benefit spending when they are made. Claimants can be assured, though, that the Government are fully committed to supporting those who rely on the welfare system and to ensuring it continues to provide a safety net to those who need it.

[Lord Woolley of Woodford (CB) [V]]

My Lords, I thank the Government for extending the £20 universal credit increase and getting behind—even turbocharging —Marcus Rashford’s initiative to feed poorer children, many of whom will be black, Asian or minority ethnic. Does the Minister agree with me and the organisation Action for Children about the urgent need to develop and implement a UK-wide child poverty strategy that sets targets for its reduction and eradication?

[Baroness Stedman-Scott (Con)]

The noble Lord’s acknowledgement of the Government’s activities in this field is appreciated. We are very pleased that we have been able to implement our latest package and we acknowledge Marcus Rashford’s passion and commitment, which the Government share. I will need to take the strategy the noble Lord raised back to the department. That is not me trying to avoid the issue; I will do that, and I will come back to the noble Lord in writing.

[The Lord Bishop of Durham [V]]

Families in receipt of legacy benefits, such as employment and support allowance, did not benefit from the very welcome £20 a week uplift in benefits. These people are just as likely to be affected by the financial impact of the Covid-19 pandemic and include many disabled people. Will the Government extend the increase in benefits to include those in receipt of legacy benefits, as recommended by the Joseph Rowntree Foundation’s Keep the Lifeline campaign?

[Baroness Stedman-Scott (Con)]

The right revered Prelate raises an issue that many people are raising. The answer I have, in the politest terms, is that we have no plans to increase legacy benefits further. They were increased by 1.7% in April 2020 as part of the annual uprating exercise.

[Baroness Fookes (Con)]

My Lords, in addition to those receiving universal credit, many more are in work but on very low earnings—all credit to them. Are the Government able to give any help to them?

[Baroness Stedman-Scott (Con)]

The Government recently increased the national living wage to £8.72 per hour, which means the annual earnings of a full-time worker on the national living wage have increased by nearly £3,700 since 2016. The Spring Budget confirmed a tax cut for 31 million working people, and other tax changes make basic rate taxpayers over £1,200 better off. We have been able to extend the holiday activities and food programme with £220 million, and the Covid winter grant scheme has £170 million, so be in no doubt: the Government do care and do take action.

[The Earl of Clancarty (CB)]

My Lords, every citizen, whether in paid work or not, deserves an income that allows a decent standard of living. We should not be permitting a system where discomfort and, indeed, poverty are built in. You cannot live on the standard allowance—no one can—and that is apart from delays in payment. How can the Minister possibly defend universal credit, even as a viable safety net, when demand for food banks is at a record high and homelessness is rapidly rising, even with the extra £20 a week?

[Baroness Stedman-Scott (Con)]

I understand the noble Earl’s point, but as I said, we have put out a raft of additional support. I could read it out, but it would take the whole 10 minutes, if not longer. I understand his point, but the Government are taking action to make life better for people.

[Lord Young of Norwood Green (Lab) [V]]

My Lords, I thank the Minister for recognising the important contribution of the £20 a week increase. Does she also recognise that the increase in housing benefit rates has made a significant contribution to reducing poverty? Does she agree that we should recognise the contribution made by the key workers in the DWP? The case managers, job coaches and all the staff have coped with a 600% increase in universal credit claimants since March, of which there are now 8.2 million. We should also recognise the contribution of its chief executive, Neil Couling, who has given dedicated and inspirational leadership to ensure a successful digitalisation programme which enabled the DWP to cope with the massive increase in claimants.

[Baroness Stedman-Scott (Con)]

The noble Lord acknowledges the significant increase in universal credit claimants, and I understand the importance of the issues he raises. He also acknowledged the key people at the DWP, not least Neil Couling and the whole executive team that works with him, who have done a sterling job and will continue to do so.

[Baroness Janke (LD) [V]]

I, like other noble Lords, welcome the retention of the £20 a week increase, which will indeed help many people. However, is the Minister aware of the report by the charity Scope on disability and the coronavirus, which found that many disabled people are feeling forgotten and experiencing isolation, a lack of access to basic essentials, delays in receiving benefits and medical care, and poor access to care and support? Will she assure us that the Government will meet with disability charities to ensure that all people with disabilities, and their families, receive the care and support they need during the coronavirus? Will she report back to Parliament on this?

[Baroness Stedman-Scott (Con)]

The noble Baroness is absolutely right to raise the issue of disabled people and the challenges they face. The noble Baroness will also know that my natural way of working is to agree to these things and to report back. The only thing I can offer her today is that I will talk to the Minister for Disabled People and let him know what it is she would like to do. I will report back to her.

[Baroness Wyld (Con) [V]]

My Lords, I too welcome and acknowledge all the support measures the Government have put in place, but can my noble friend say a little more about the evidence base? How are the Government assessing whether the measures they have taken are having the desired impact among families on the lowest incomes?

[Baroness Stedman-Scott (Con)]

The noble Baroness raises the important issue of evidence. Analysis shows that the Government’s interventions have supported the poorest working households, as a proportion of February income, the most, with those in the bottom 10% of the income distribution seeing no reduction in their income.

[Baroness Sherlock (Lab) [V]]

My Lords, because the £20 uplift was not extended to legacy benefits, an adult on universal credit is given £94 a week to live on but her neighbour on JSA or ESA gets just £74 a week. The Minister told the right reverend Prelate the Bishop of Durham that there were no plans to change this, but she did not tell him why. Could she please explain to the House and the 2 million people on JSA and ESA why they do not deserve the same help when their food and bills cost every bit as much as those for people on universal credit?

[Baroness Stedman-Scott (Con)]

I note the point that the noble Baroness makes and it is well made, but as I said, the Government’s position is that we have no plans to increase legacy benefits further. People on legacy benefits can transfer to universal credit and they can do a calculation before they transfer to make sure they will be better off.

[Baroness Boycott (CB)]

Like other noble Lords, I congratulate the Government on coming some of the way towards Marcus Rashford’s and other food campaigners’ demands. This weekly increase of £20 does pay for the bulk of a single person’s grocery budget and is one of the things keeping a lot of people out of food banks, although, as my noble friend Lord Clancarty pointed out, these figures continue to rise. It seems extremely ironic that the Government have decided to support food banks and declare that they are an essential part of our system when we should be working to abolish them, yet they are contemplating taking away this small increase of £20 and, as was just mentioned, not affording it to people on JSA or ESA. I come back to my noble friend Lord Woolley of Woodford’s original Question and ask the Minister: what plans do the Government have to keep this increase for the duration of the Covid-19 pandemic and after it? It does make a difference.

[Baroness Stedman-Scott (Con)]

As I already said to the noble Lord, Lord Woolley, we are having discussions with the Treasury on the best way to support people both through Covid-19 and beyond. As soon as those decisions are made, Parliament will be advised.

[The Deputy Speaker (The Earl of Kinnoull) (Non-Afl)]

My Lords, the time allowed for this Question has now elapsed and we therefore move to the fourth Question.

Social Security (Up-rating of Benefits) Bill

Baroness Stedman-Scott Excerpts

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Tuesday 27th October 2020 Lords Chamber

[Baroness Sherlock (Lab) [V]]

My Lords, I am grateful to the noble Lord, Lord Addington, for explaining what his amendment would do, and to other noble Lords who have spoken in pursuit of clarity. The noble Baroness, Lady Altmann, raised the issue of the uprating of pension credit and the standard minimum guarantee in particular. I will return to that in more detail when I move my Amendment 3 shortly.

The Bill is permissive rather than prescriptive. The Explanatory Notes say that it will

“allow the Government to meet its commitment to the Triple Lock.”

At Second Reading, the Minister was invited by many noble Lords to tell the House if it was indeed the Government’s intention to increase the state pension in line with the triple lock, but she simply repeated the formula that the Bill

“will allow the Government to maintain their manifesto commitment to the triple lock.”—[Official Report, 13/10/20; col. GC 309.]

Had she been able to go further, she might have obviated the need for much of the debate we are having at the moment.

The Minister was also asked at Second Reading whether the Government intended to stand by the manifesto commitment to the triple lock for the rest of this Parliament. As the noble Baroness, Lady Janke, pointed out, there have been various rumours and briefings swirling around that have cast some doubt on the future of the triple lock. But answer came there none.

I realise that the Minister is in a difficult position. She probably thinks it unreasonable of us to ask her to answer these questions because the decisions are not hers, but she speaks for the Government in this House. We are being asked to fast-track this Bill to enable the governing party to fulfil a manifesto commitment, although the Government will not tell us whether they are going to fulfil it. It does not seem unreasonable to ask for a bit more clarity. I look forward to her reply.

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

My Lords, I thank the noble Lord, Lord Addington, for the first amendment and for clarifying the date to which he referred. His charm clearly works better than mine.

The purpose of the Bill is to allow the Secretary of State to increase the specified pensions and benefits for 2021-22. This then allows the Government to deliver their triple lock commitment. However, the actual rates of increase for each of these pensions and benefits are subject to the Secretary of State’s annual statutory uprating review. In presenting this urgent Bill, the Government have sought to replicate the powers given to the Secretary of State in the founding legislation, as was also the case in 2009.

This amendment would also apply the triple-lock formula to the pension credit standard minimum guarantee and to widows’ and widowers’ industrial death benefit for 2021-22. The triple-lock commitment does not apply to those benefits. By convention, the relevant widows’ and widowers’ benefits keep pace with the basic state pension.

In previous years the Government have sought to match the basic state pension cash increase in the pension credit standard minimum guarantee, where this increase has been higher than an amount generated by the increase in average earnings; that is the statutory minimum for uprating the standard minimum guarantee. As a result, the standard minimum guarantee for a single person is now nearly £10 a week higher than it would otherwise have been. For a couple, it is nearly £15 a week higher. The decision on how to uprate the standard minimum guarantee next April will be made during the Secretary of State’s uprating review and will be announced in November. These rates too will be subject to the Secretary of State’s statutory review in November.

The noble Baronesses, Lady Altmann and Lady Janke, asked whether the Government are going to honour their commitment to the triple lock and introduce the 2.5% element. As I have said, the Bill makes technical changes for 2020-21 which will ensure that state pensions can be uprated even though there has been no growth in earnings. This will allow the Government to maintain their manifesto commitment to the triple lock, including the 2.5% element.

The noble Baroness, Lady Janke, asked by how much the state pension will be increased this year. The Bill enables the Secretary of State to uprate state pensions in 2021-22. Every autumn, the rate of state pension increase is subject to the Secretary of State’s uprating review to which I have already referred. It would not be right to pre-empt the outcome of this review. The triple lock is a manifesto commitment under which the rate of the state pension will increase by the highest of the growth in earnings and prices, or 2.5%.

The noble Baronesses, Lady Altmann and Lady Sherlock, raised the uprating of pension credit. Without this Bill, the core component of pension credit—the standard minimum guarantee—will be frozen in 2021-22. The decision on how to uprate the standard minimum guarantee will be made during the Secretary of State’s uprating review. Your Lordships will have the opportunity to debate the uprating of the state pension, pension credit and other benefits when the draft order implementing the Secretary of State’s decision is brought before Parliament for approval in the normal way. I therefore ask the noble Lord to withdraw the amendment.

--- Later in debate ---

[Baroness Sherlock (Lab) [V]]

My Lords, I thank the noble Lord, Lord Randall of Uxbridge, for explaining his amendment to us. He is a strong advocate for this cause and I am very sympathetic to the position in which many pensioners find themselves. However, it is a difficult issue, which successive Governments have struggled to resolve.

Perhaps I may ask the Minister some specific questions. First, we have heard that 500,000 people living in other countries are affected in this way. Can the Minister confirm that figure? How much does she believe that it would now cost to change the rules?

Secondly, the noble Lord, Lord Randall, both today and at Second Reading, highlighted two particularly difficult sets of cases. The first was the position of veterans. Today, he mentioned Harry Penny, Roger Edwards, Patricia Coulthard and others, and I am still thinking about Anne Puckridge, whom he mentioned at Second Reading—the 95 year-old World War II veteran whose pension was frozen when she moved to Canada at the age of 76 to be near her family. It is hard to see the justice in those who fought for this country being denied the pensions that they earned simply because they moved abroad to be with their families in their later years and did not realise what would happen. Do the Government know how many veterans are in this position?

The noble Lord also mentioned at Second Reading the case of Monica Phillips, who emigrated to the UK in 1959 as part of the Windrush generation. After 37 years working here, she returned to Antigua to look after her mum and her pension was then frozen. Again, do the Government know how many of the Windrush generation are affected by this measure? Have they looked into it?

Thirdly, the noble Lord, Lord Randall, also raised today the issue of reciprocal agreements in the wake of Brexit. I have to say to him that I have pursued that issue for some time but have got precisely nowhere. All that Ministers will ever say is that they hope to get a deal, so the position will be as set out in the negotiating documents. However, I will be very interested to see whether he gets any more information than I have been able to obtain.

This issue is so difficult because so many people assume that their pension is determined by what they pay in national insurance contributions rather than where they live when they retire. Therefore, can the Minister assure the Committee that the position is now made abundantly clear to all pensioners, especially as they approach pension age? I look forward to her reply.

[Baroness Stedman-Scott (Con)]

My Lords, I turn to the amendment to Clause 1 tabled by my noble friend Lord Randall of Uxbridge. As he is aware, it would in practice have no effect because it simply commits the Government to uprating UK state pensions, as they do now.

However, my noble friend spoke passionately at Second Reading, and again with great passion and commitment today. He eloquently shared with us the case studies of people impacted by the lack of reciprocal arrangements and the freezing of pensions. The long-standing policy of successive Governments for over 70 years has been that UK state pensions are payable worldwide and are uprated in countries overseas where there is a legal requirement to do so—for example, in countries where the UK has a reciprocal agreement that requires uprating. I look forward to the debate on the issue but, first, I would like to make some points about our reciprocal agreements with other countries.

The UK has reciprocal agreements with several countries, and most of these require uprating. There are only two reciprocal agreements which do not allow for uprating: those with Canada and New Zealand. A similar agreement existed with Australia until early 2001, when the Australian Government withdrew from it. Unlike the UK, Canada and New Zealand have residence-based state pensions. The reciprocal agreements with them broadly allow for periods of residence, employment or contributions in one country to be considered as periods of residence, et cetera, in the other for the purposes of entitlement to a state pension.

The systems in New Zealand and Canada are also means-tested to some extent. For example, New Zealand takes overseas pensions fully into account in its superannuation schemes. New Zealand law also requires that notional income is calculated if a pensioner does not claim his or her state pension from an overseas country. This means that any future state pension increases would be taken into account and the moneys would go to the respective Treasuries, so pensioners on the lowest incomes are unlikely to benefit from increases in their UK state pension. It might also mean an increased tax bill for some overseas residents and the loss of their welfare benefits in their chosen country of residence. This Government believe that our responsibility is to pensioners living in this country, rather than effectively making payments to other Treasuries.

The agreements with Canada and New Zealand were negotiated and agreed some time ago. The pattern of the UK’s reciprocal agreements with other countries is historic. It is based in part on Commonwealth ties but also on the political context at the time of concluding the agreement. That gives rise to inconsistencies. For example, we have an agreement with some Caribbean countries, such as Jamaica, but not with others. The agreement with Jamaica requires uprating. It has been suggested by some that uprating could form part of discussions on future free trade agreements—for example, with Australia and Canada. However, state pensions are not in scope of free trade agreements.

There are no plans to change the policy on uprating UK state pensions overseas. The Government have not entered into a new reciprocal social security agreement since 1992, as my noble friend Lord Randall referred to, and have no plans to enter into new agreements.

The noble Baroness, Lady Sherlock, asked about the number of pensioners living in frozen-rate countries. It is approximately 500,000. I regret that I do not have any numbers for veterans.

My noble friend Lord Randall raised, as did other noble Lords, the question of a moral obligation to rectify this anomaly. The policy on this issue is long-standing, as I have already said, and one of successive Governments. It has been in place for some 70 years and, although I know this will disappoint noble Lords, there are no plans to change it.

My noble friend and the noble Baroness, Lady Sherlock, talked about the impacts on the Windrush generation. UK state pensions are payable worldwide to eligible people based on their NI record. I regret to tell the noble Baroness that we do not know the number of people affected among the Windrush community.

My noble friend Lord Randall asked about pensioners who are resident overseas who have paid their NI contributions, so pensions payable abroad should be fully indexed. The rate of contribution paid is never earned entitlement to the indexation of pensions payable abroad. This reflects the fact that the UK scheme is primarily designed for those living in the UK.

My noble friend Lord Randall raised the issue of consistency across countries, and a particular point about Canada. Canada has a bilateral agreement with the UK that does not cover uprating. The UK sought a reciprocal agreement with Canada that included uprating, but this was rejected as legislation prevented Canada paying its pensions overseas.

My noble friend Lord Randall and other noble Lords raised the issue of the Government’s moral duty to uprate state pensions overseas. The decision to move abroad is voluntary and remains a personal choice, dependent on the circumstances of the individual. For a number of years, advice has been provided to the public that the UK state pension is not uprated overseas except where there is a legal requirement to do so.

Given that the amendment states that any uprating order made under the Bill would uprate abroad in cases where there was already a legal requirement to do so, I urge my noble friend to withdraw it because it has no practical effect, given that the Government are already required to do that in law. However, I welcome the opportunity he has presented to debate the broader issue of uprating overseas.

[The Deputy Chairman of Committees (Lord McNicol of West Kilbride) (Lab)]

My Lords, I have had no requests to speak after the Minister.

--- Later in debate ---

[Baroness Stedman-Scott (Con)]

My Lords, I thank all noble Lords who have contributed to the discussion on these two amendments. I want the House to understand that I share noble Lords’ concerns about pensioner poverty, and assure the House today that we are committed to ensuring economic security at every stage of their life, including when they reach retirement.

The triple lock improves incomes for current and future pensioners. Auto-enrolment into workplace pensions and action on fuller working lives will also help people towards the income that they aspire to in later life. Pension credit provides an important safety net for pensioners on low incomes. As I mentioned in our earlier debate on the amendment from the noble Lord, Lord Addington, that safety net is currently nearly £10 per week higher for a single pensioner, and nearly £15 per week higher for a pensioner couple, than it would otherwise have been if we had just increased it in line with earnings since 2010. Material deprivation among pensioners is at a record low, and the absolute poverty rate is lower than in 2010.

In the long term, it is this Government’s reform to the state and private pension systems—including the introduction of the new state pension in 2016—that will improve outcomes for all, and particularly help to reduce gender inequality in retirement income. Over 3 million women stand to receive an average of £550 more per year by 2030 after recent reforms to the state pension alone.

Under the new state pension, outcomes are projected to equalise for men and women by the early 2040s, over a decade earlier than under the old system. For future pensioners, auto-enrolment into workplace pensions has transformed pension saving for millions of workers. Our employer-led strategy on fuller working lives aims to maximise the labour market opportunities for people to earn and save for longer.

Amendment 3 prevents a draft uprating order from being laid before Parliament unless the Secretary of State has laid before Parliament

“a report containing an assessment of the existing levels of pensioner poverty in each of the regions and nations of Great Britain”,

and made

“a statement outlining the expected impact of the draft order on pensioners with the lowest incomes.”

With respect to subsection (a) of her amendment, the noble Baroness, Lady Sherlock, will be aware that my department publishes annual estimates of pensioner poverty at a regional level in the Households Below Average Income series.

I turn to subsection (b) of Amendment 3, and will address Amendment 4 at the same time. Amendment 3(b) would require a statement outlining the expected impact of the draft order on pensioners with the lowest incomes. Amendment 4 would require the Secretary of State to report on the impact of the Bill and of the triple lock on pensioner poverty, with reference to women. The provisions in the Bill can only be used to increase the rates of state pension and certain other pensioner benefits, so its effects on pensioner incomes, and therefore pensioner poverty, can only be positive. However, I am sorry to inform noble Baronesses and noble Lords that we do not believe a report of the sort outlined in these amendments could be made with an acceptable degree of analytical robustness.

To make an assessment relating to how many pensioners might have their income lifted above the various low-income levels, assumptions would need to made about how each individual pensioner’s income will change in future. This would require making assumptions about, for example, how earnings for pensioners will change, or trends in the rate of return and drawdown of income from investments. These projected incomes would then need to be compared to projections of the various income thresholds.

The relative poverty low-income threshold in a particular year is determined by the increase or decrease in median income across all individuals in the UK. Forecasting a relative income threshold requires making assumptions about how the net income of every individual in society will change, not just of those above state pension age. Each individual’s total net income is influenced by how every different source of income, including their earnings, and their costs, such as housing costs, may change in future. Making assumptions about future changes in net income for individuals involves complex interactions between income and outgoings.

For absolute poverty, the threshold is increased each year by inflation during that year. As demonstrated in recent months, inflation is currently extremely volatile and there is a high level of uncertainty about what its level is likely to be over the next few years. In the current circumstances, with a higher level of uncertainty around the economy than usual, it is impossible to forecast individual pensioner incomes or the various low-income poverty thresholds with a reasonable degree of accuracy. Therefore, there is a very high risk that any analysis seeking to forecast the number of pensioners moving above these projected poverty thresholds is highly likely to be misleading.

I note, however, that my department collects and publishes a wide range of data in this policy area, such as national statistics on the number and percentage of pension-age women on low incomes. This is published annually in the report on households below average incomes. The last publication covered data for 2018-19, and trends over time can be identified from this source. These trends are an important element in policy-making in the department, such as that which led to the state and private pension reforms I mentioned earlier.

The noble Baroness, Lady Sherlock, raised pensioner poverty. I am assured that since 2009-10, material deprivation for pensioners has fallen from 10% to 6% and that there are 100,000 fewer pensioners in absolute poverty before and after housing costs. To be clear, in 2021 we are forecast to spend over £126 billion a year on pensioners, including £102 billion on the state pension.

The noble Baroness also raised the Independent Age report. The figures in Independent Age’s latest report are based on assumptions about the relationship between healthcare outcomes and income and rely on survey data. We know that pension credit is often underreported in survey data; unfortunately this makes it inherently difficult to categorise groups based on receipt of pension credit or to identify pensioners who may be entitled to pension credit but who, for whatever reason, are not claiming it.

The noble Lord, Lord Shipley, asked what the Government are doing about women and the gender gap. While the triple lock continues to improve incomes for current and future pensioners, in the long term it is reforms to the pension system that will improve outcomes for women and reduce the gap.

I move to the issue of pension credit, which all noble Lords raised very eloquently and clearly. In response to the question of the noble Lord, Lord Foulkes, yesterday, I agreed to go back to the department and relay the sentiments; while I cannot give your Lordships the information on a campaign you require today, I can give an utter assurance that I will go back to the department to relay the points that have been made.

The right reverend Prelate the Bishop of St Albans asked about an impact assessment. For pensioner incomes, assumptions would need to be made about how each individual pensioner’s income will change in the future, which would require making assumptions, as I have said, about many things, such as earnings for pensioners, change in the rate of return and drawdown of income. This is most difficult.

The noble Lord, Lord Addington, and the right reverend Prelate the Bishop of St Albans quite rightly raised a point about intergenerational fairness and questioned why we should keep the triple lock for pensioners when working-age people are only getting CPI increases. We have recently seen rises in the living standards of pensioners, but we must remember that not all pensioners are in the same position: over a million current pensioners rely solely on their state income. We must not forget that today’s working-age people are tomorrow’s pensioners, and future generations of pensioners will also benefit from the way the state pension is uprated today.

I was asked how we intend to uprate pension credit. Without this Bill, the core component of pension credit—the standard minimum guarantee—will be frozen in 2021. The decision on how to uprate the standard minimum guarantee will be made during the Secretary of State’s uprating review and announced in November. It would not be right to pre-empt the outcome of that review. Taking into account the points raised, I ask the noble Baroness to withdraw her amendment.

[The Deputy Chairman of Committees (Lord McNicol of West Kilbride) (Lab)]

My Lords, I have received no requests to speak after the Minister. I call the noble Baroness, Lady Sherlock.

[The Deputy Chairman of Committees (Lord McNicol of West Kilbride) (Lab)]

Even in the hybrid House, the Minister can respond to a final set of questions.

[Baroness Stedman-Scott (Con)]

I say to the noble Baroness, Lady Sherlock, and all noble Lords, that I have taken on board the ideas that have been put forward about pension credit: the campaign, and the importance of how it can lift people out of poverty and improve their lives. I will go back to the department, then return and answer the questions asked by the noble Baroness. I will always make that undertaking and will never shy away from answering questions, but I would rather get the right answers rather than give a wrong one and create another little tsunami on pension credit. If the noble Baroness can accept that, I will be grateful.

[Baroness Sherlock (Lab) [V]]

I am very grateful to the Minister for coming back on this. I will look out for those responses, and for the opportunity to discuss them on the Floor of this House. I thank her for her intervention, for addressing the questions and for her constant willingness to talk to us. These things make our debates much better.

Pension Credit

Baroness Stedman-Scott Excerpts

Monday 26th October 2020 Lords Chamber

[Lord Foulkes of Cumnock]

To ask Her Majesty’s Government what has been the increase, if any, in the uptake of Pension Credit in each of the past 12 months.

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

My Lords, it is too early to tell if claim numbers in the past 12 months have resulted in a net increase in the overall number of people eligible for, and in receipt of, pension credit, particularly with the scale of uncertainty surrounding the impact of Covid-19 and the changes to the over-75 free TV licence concession. The latest figures, however, show that more than 1.5 million people receive pension credit, of whom 900,000 are over 75.

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

My Lords, I am grateful to the Minister, but does she accept that the combined effect of the Government’s awareness campaign, online claims and the threat of losing their TV licences has resulted in fewer than 30,000 of the more than 1 million eligible non-claimants claiming? Will she and her colleagues therefore convene a meeting with the officers of the All-Party Parliamentary Group for Ageing and Older People, and most importantly of all, all the age charities, so that we can launch together a much more effective, powerful and imaginative campaign?

[Baroness Stedman-Scott (Con)]

That is a very good suggestion and, as always, I try to be responsive and helpful, so I am going to take that back to the department and I will personally come back to the noble Lord with an answer.

[Baroness Altmann (Con)]

My Lords, I congratulate my noble friend on the Government’s campaign in GP surgeries and post offices earlier this year to increase pension credit take-up. This is vital for the poorest pensioners to avoid poverty, and it makes them eligible for vital support such as housing benefits, cold-weather payments and free TV licenses. As the triple-lock does not apply to the pension credit, can the Minister say if there are further plans to improve take-up, such as using new channels, as suggested by the charity Independent Age?

[Baroness Stedman-Scott (Con)]

My Lords, as my noble friend says, the triple lock is a manifesto commitment. In February this year we launched a nationwide campaign to raise awareness of pension credit and to help dispel some of the misconceptions that people might have about their eligibility. We engage with stakeholders including Age UK, Age Scotland, Age Cymru, CAB and Independent Age, among others, to help spread the word. The point that my noble friend makes is a very good one, and we would welcome ideas from stakeholders and any noble Lords about how to best improve the understanding of what pension credit is.

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

My Lords, in the evidence given to the Scottish Social Security Committee inquiry into benefit take-up in January this year, it was confirmed that the DWP has no written strategy to increase the uptake of pension credit. Without an action plan that sets out a programme of activity and overall objectives, any future awareness-raising activity risks taking place in isolation divorced of a wider strategy. Does the Minister agree with the charity Independent Age that an action plan is needed, possibly to include auto-enrolment? Will she commit to returning to her department to recommend producing one?

--- Later in debate ---

[Baroness Stedman-Scott (Con)]

I would like to make it clear to all noble Lords that the Government are absolutely committed to as many people getting pension credit as are eligible. We have no plans, at the moment, to introduce targets on take-up. However, the noble Baroness makes a very good point, which can be joined up with the point that the noble Lord, Lord Foulkes, made. As I have said, I will go back to the department, and I will personally come back with a response.

[Baroness Drake (Lab) [V]]

My Lords, given excess death rates, the Government must be increasingly concerned about vulnerable, low-income pensioners. Pension credit is targeted on the poorest. Some 1.5 million pensioners claim it but, worryingly, four out of 10 eligible pensioners do not, and they are missing out on other benefits, too. Will the Government increase the guaranteed pension credit by at least the cash value of a triple-lock increase to the new state pension? Those eligible for, but not claiming, pension credit will get a TV licence demand for £157.50. How will the Government protect them, given that their campaigns are not enough?

[Baroness Stedman-Scott (Con)]

The noble Baroness makes the point that there are, I think, 1.1 million people who could have pension credit if they made a claim and were eligible. I know of no plans at the moment to uprate the other benefit to which the noble Baroness referred, but I will go away and find out and respond to her in writing.

[Baroness Janke (LD) [V]]

Does the noble Baroness agree that many pensioners who do not claim pension credit feel stigma and shame in submitting to means testing? If so, will the Government consider revisiting auto-enrolment, to ensure that the poorest pensioners receive their full entitlement to financial support?

[Baroness Stedman-Scott (Con)]

The noble Baroness raises a very important point about the reasons why people do not claim pension credit. Some believe that they are not eligible; others think that they have too many savings; others think that there is a stigma to it; and others think that they might get only a small amount, so it is just not worth the effort. The noble Baroness raises valid points about the vulnerable; we must do all we can to make sure that those people are aware of pension credit and that they make a claim where appropriate.

[Baroness Sherlock (Lab) [V]]

My Lords, the take-up campaign launched in February, which has been mentioned, does not seem to have had much of an effect. The government website said that its main feature was a video to be shown in 800 GP surgeries and some post offices. However, once the pandemic hit, the chance of its target audience being in GPs’ surgeries and post offices went through the floor. So did the DWP refocus its work in the light of the pandemic, or is it planning a fresh campaign—and how much money is it putting behind it?

[Baroness Stedman-Scott (Con)]

The noble Baroness raises a valid point about the impact of Covid on GPs’ surgeries and post offices, and that people were not able to access the information. At the moment there are no plans for a new campaign. We are working with stakeholders, who again are absolutely swamped by the impact of Covid, to ensure that the message gets out. Once I have gone back and spoken to the department, I will come back to the noble Baroness with a written response, as I will to the noble Lord, Lord Foulkes, and the noble Baroness, Lady Watkins.

[Baroness Eaton (Con) [V]]

My Lords, will my noble friend explain how vulnerable pensioners can be supported to make a claim for pension credit during the pandemic?

[Baroness Stedman-Scott (Con)]

On 6 May, we launched the online Apply for Pension Credit service. Around 50% of claims are made through this medium. In addition, people can claim by calling a freephone number, and I am sure that our stakeholders will help in those instances.

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

My Lords, it is nearly a decade since the DWP conducted research into non-take-up of pension credit. Will it therefore now instigate new research into who non-claimants are, their reasons for not claiming, and where they are concentrated, as a crucial element of any effective action plan to increase take-up, which I agree with colleagues is essential.

[Baroness Stedman-Scott (Con)]

As I have said before, there is no plan at the moment for a campaign and I am not aware of any research being commissioned of the kind that the noble Baroness requested.

[Lord Shipley (LD) [V]]

My Lords, Citizens Advice in my home city of Newcastle upon Tyne reports that, during the Covid pandemic, there has been a rise in the number of young people seeking advice, but a proportionate decline among people over 55. This may relate to the lack of availability of face-to-face advice. But does the Minister agree that there should now be a new campaign to promote pension credit and that, without that, a lot of pensioners who would qualify are not going to have as much money as they otherwise might?

[Baroness Stedman-Scott (Con)]

I can only agree with the noble Lord that many people over 50 prefer to do business face to face, and I appreciate that that opportunity has been curtailed. I have no desire to be dismissive, but I think I have already answered questions about a new campaign, and I will come back to the House with an answer.

[The Lord Speaker (Lord Fowler)]

My Lords, the time allocated for that Question has now elapsed, and it is also the end of Question Time.

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

Baroness Stedman-Scott Excerpts

Wednesday 21st October 2020 Lords Chamber

Moved by

[Baroness Stedman-Scott]

That the Regulations laid before the House on 15 September be approved.

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

My Lords, I am pleased to introduce the Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) (Amendment and Revocation) Regulations 2020 that were laid before the House on 15 September. I am satisfied that the provisions in the regulations are compatible with the European Convention on Human Rights and therefore ask the House to consider these regulations.

The Corporate Insolvency and Governance Act 2020 introduces some important measures, such as a moratorium on creditor action and restructuring tools to give specified corporate entities in financial difficulty the best chance of survival. This is part of a suite of measures to help business weather periods of economic uncertainty. The regulations debated on 14 September ensured that when certain corporate entities obtain a moratorium on creditor action, and the pension scheme trustees or managers are a creditor, the board of the Pension Protection Fund can exercise those creditors’ rights in relation to the moratorium as set out in the regulations, in specified circumstances. The regulations also ensure that when a restructuring is proposed under new measures, in respect of certain corporate entities, and the trustees or managers are a creditor to whom the restructuring is proposed, the board of the Pension Protection Fund can exercise the trustees’ creditors’ rights under the new restructuring measures, that way ensuring that pension schemes are not left without the appropriate protections in the legislation.

The regulations being debated today simply extend the Pension Protection Fund’s creditors’ rights to certain other corporate entities: relevant co-operative and community benefit schemes in the case of the moratorium, and relevant societies in the case of the restructuring provisions. The regulations also revoke a previous set of regulations because of a legal defect caused by an omission in a related statutory instrument. We have expedited the making and laying of these regulations in order to rectify the situation. The “made affirmative” procedure has enabled these regulations to come into force soon after they were laid.

These regulations form part of the corporate insolvency and governance legislative regime. If a relevant co-operative and community benefit society obtains a moratorium from its creditors, or a restructuring is proposed in respect of a relevant society as applicable, the Pension Protection Fund is able to intervene as a creditor to protect its interest in the relevant specified circumstances.

Moratoriums give companies and other relevant corporate entities respite from action that could otherwise cause them to close. During a moratorium, businesses will be more able to plan a beneficial restructure; this will reduce unnecessary business failures, thereby preserving jobs and value in the economy. Restructuring plans enable companies with viable businesses but significant debts to restructure with limited disruption. This will facilitate corporate rescue and reduce formal, value-destructive insolvencies, thereby preserving businesses and saving jobs.

Given the importance of the Pension Protection Fund as the statutory compensation scheme, it is crucial for the Pension Protection Fund to have access to and influence over certain decisions relating to moratoriums and recovery plans in the relevant circumstances. Should a rescue attempt fail, it is the Pension Protection Fund that steps in to pay compensation to eligible pension scheme members. Protecting the fund’s interest should help maintain confidence that the Pension Protection Fund will be able to continue to make compensation payments for as long as they are needed.

I would like to put on record something about the previous PPF regulations that we debated on 14 September: they have no impact, or no effect, on the regulations we are debating today. I am aware that there has been some concern about the legal status of the Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) Regulations 2020, which were debated on 14 September, in so far as they relate to charitable incorporated organisations. The current legal position in respect of charitable incorporated organisations has been complicated by the making of a separate statutory instrument, the Charitable Incorporated Organisations (Insolvency and Dissolution) (Amendment) (No. 2) Regulations 2020, by the Department for Digital, Culture, Media and Sport. Those regulations disapplied some of the new provisions of the Insolvency Act 1986 in relation to charitable incorporated organisations. One of these provisions, Section A51 of the Corporate Insolvency and Governance Act 2020, was used to make my department’s regulations, the Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) Regulations 2020, in so far as they applied to charitable incorporated organisations. As a result, the provisions in my department’s regulations have not applied to charitable incorporated organisations since 13 August 2020, that being the date the Department for Digital, Culture, Media and Sport regulations came into force.

The legal position, which is clear from reading both sets of regulations together, is that the Department for Digital, Culture, Media and Sport regulations repeal impliedly those aspects of my department’s regulations, in so far as they apply to charitable incorporated organisations. The Department for Digital, Culture, Media and Sport will restore the position as set out in my department’s regulations at the next available opportunity. The Department for Digital, Culture, Media and Sport regulations do not otherwise affect the validity of my department’s regulations, or the powers that we use to make those regulations. I commend these regulations to the House.

--- Later in debate ---

[Baroness Stedman-Scott (Con)]

My Lords, I am grateful to noble Lords for this helpful debate and their interventions. I hope that I have been able to establish why these amending regulations are required. Extending the Pension Protection Fund rights as creditor to relevant co-operative and community benefit societies and relevant societies, as applicable, will help to ensure, if those entities are also sponsoring employers of a Pension Protection Fund eligible pension scheme, that the interests of the scheme and the Pension Protection Fund are protected during a moratorium, or where a restructure of the business is proposed under the new corporate insolvency and governance legislation, as applicable.

I will do my very best to answer all questions; where that is not possible, I will write to the noble Lords concerned and place a copy of the letter in the Library. The noble Baroness, Lady Drake, asked whether trustees agreeing to a corporate rescue will be within the scope of the new criminal sanctions in the Pension Schemes Bill, and which has precedence. We do not think that there is a conflict between the provisions in the Corporate Insolvency and Governance Act 2020 and measures in the Pension Schemes Bill. The new criminal offences proposed in the Bill make it clear that an offence is committed only if the person did not have a reasonable excuse for committing the act or engaging in a course of action. The aim of the powers in the Pension Schemes Bill is to target individuals who intentionally or knowingly mishandle pension schemes or put workers’ pensions at risk by behaviour such as chronic mismanagement of a business or avoiding pension liabilities. There is no intention to frustrate the legitimate business activities where they are conducted in good faith.

The noble Baroness, Lady Drake, also asked whether the Pension Protection Fund has the power to demand detailed information or conduct its own investigation into the financial position of the company. There are requirements in the Corporate Insolvency and Governance Act to provide information to the board of the PPF in relevant specified circumstances in respect of the moratorium and the restructuring measure. The Pension Protection Fund may also be able to use existing powers to request information from the company when it is relevant to the exercise of its functions in relation to an occupational pension scheme—in this case, the exercise of creditor rights. If the company refuses or neglects to provide the information without reasonable excuse, the company would then be guilty of an offence. However, a company could argue that the standard information provided to all creditors is enough to enable the board of the Pension Protection Fund to exercise its creditor rights, so it does not require any further information to exercise those rights above and beyond what other creditors get.

My noble friend Lady Altmann asked why these regulations revoke a previous set of regulations, and which parts were revoked. An omission in HMT’s order meant that there was no power to make provision for the Pension Protection Fund to exercise creditor rights in relation to relevant societies in my department’s regulations. As a result, certain provisions of those regulations were ultra vires. The entirety of our further set of regulations has been revoked and replaced with the regulations being debated today.

My noble friends Lord Trenchard, Lady Altmann and Lord Bourne, asked how many entities have gone into a moratorium since the legislation was passed. The Insolvency Act publishes insolvency statistics monthly, and the 14 October publication included the new moratorium for the first time. Two moratoriums have been entered into since the Act came into force on 30 September.

The noble Lord, Lord Loomba, the noble Baronesses, Lady Wheatcroft and Lady Janke, and my noble friend Lord Bourne, raised the issue of the sustainability of the PPF’s funds as a result of Covid-19. The Pension Protection Fund is confident that its long-term funding strategy and diverse investment approach position it well to weather the current market volatility and future challenges. The Pension Protection Fund’s latest modelling shows that the fund is well placed to achieve its self-sufficiency target: the ability to pay Pension Protection Fund compensation in full, with a 10% buffer.

The noble Baroness, Lady Janke, and my noble friends Lord Naseby and Lord Bourne, raised the issue of why our co-operative and community benefit societies need to be included. Mutuals are organisations owned and controlled by their members rather than by shareholders. They operate on a “one member one vote” structure, and include co-operatives, community benefit societies and financial services providers, such as building societies, credit unions and friendly societies.

The noble Baronesses, Lady Wheatcroft and Lady Ritchie, asked about the Pension Protection Fund’s resources to intervene in moratoriums and restructuring in the current economic climate. The Pension Protection Fund has an in-house restructuring and insolvency team, and the ability to call on third-party advisers to support its work. The PPF keeps its level of resourcing under review, but at present is confident that it can engage in moratoriums and restructuring plans as necessary. The noble Baroness, Lady Wheatcroft, asked what we were doing to enhance the ability of trustees. The Pensions Regulator has guidance on its website for trustees.

My noble friend Lord Flight, the noble Baroness, Lady Wheatcroft, and other noble Lords, raised the question of the skills of PPF in restructuring arrangements. The PPF has a dedicated in-house insolvency and restructuring team, and, as I have said, can also draw on a large range of third-party advisers. It is important to recognise that the PPF has been involved in restructuring arrangements since its launch in 2005. My noble friend Lord Flight also asked about the value of PPF pension schemes assets. The total assets in the October 2020 PPF 7800 Index were £1771.4 billion.

The noble Baroness, Lady Ritchie, quite rightly and understandably, asked what engagement there has been with the devolved Administrations. We have worked with Northern Ireland on some of the detail of the policy and helped Northern Ireland in the preparation of its regulations, which have now been published. There was engagement with the devolved Administrations during the development of the measures included in the Corporate Insolvency and Governance Act. Northern Ireland has introduced its own regulations to ensure parity, as relevant. The noble Baroness also raised the issue of the credit union in Northern Ireland. I will write to her about that, as I will on the question about meetings between the DWP and the PPF regarding their performance.

My noble friend Lord Naseby asked what we are doing now that the courts have declared the PPF compensation cap as unlawful. The PPF compensation cap is still a live issue before the courts, and therefore I cannot comment further on it.

My noble friend Lady McIntosh raised the issue of an impact assessment. One has not been prepared for these regulations because the measures do not impose any regulations on business or lift any regulations from it so there is no direct regulatory impact.

My noble friend also asked whether we can seek to reduce reliance on the big four accountancy firms. The Competition and Markets Authority market study on the statutory audit market was published on 18 April 2019. The report made a series of wide-reaching and ambitious recommendations, including proposals for the joint audit and an operational split between audit and non-audit services.

The noble Lord, Lord Hain, rightly mentioned workers, how they are looked after and their rights in relation to both these regulations and pension schemes. I am interested in the book that he referred to; if it is acceptable to the noble Lord, I will write to him with a more specific response to his questions.

The noble Baroness, Lady Janke, asked what happens if scheme trustees or managers and the Pension Protection Fund do not agree on a course of action. We expect PPF and scheme trustees or managers to work together in the common interest of the pension scheme. For example, when a restructuring plan is proposed, in the circumstances specified in the regulations, both the scheme trustees and managers will be able to make an application to the court and participate in meetings ordered by the court.

My noble friend Lord Naseby asked in what circumstances the Pension Protection Fund would increase its levy. The PPF entered the pandemic in a strong financial position, as I said. Its latest annual report showed that it has significant reserves and it was clear that it monitors the position regularly.

My noble friend Lady McIntosh asked who will advise community and mutual organisations. Again, I will need to write to her on that.

The noble Baroness, Lady Sherlock, asked why DCMS still brought forward its regulations when they affected ours. I will write to consult my DCMS colleagues on her questions. I can confirm that CIOs are currently not covered by our regulations; DCMS will resolve this at the next possible opportunity.

I hope that I have answered the majority of noble Lords’ questions. As I have committed before, if I have not done so, I will write to noble Lords and place a copy in the Library. I commend the regulations to the House.

Motion agreed.

Youth Unemployment

Baroness Stedman-Scott Excerpts

Thursday 15th October 2020 Lords Chamber

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

My Lords, the Government are taking unprecedented action to protect young people’s jobs, with more than 9 million of them supported via the furlough scheme. Earlier this year, we announced our £30 billion Plan for Jobs, which provides an unlimited number of Kickstart placements, recruits new youth employability coaches and establishes youth hubs across the country. We are also expanding our excellent sector-based work academy programme to offer bespoke opportunities to support claimants to fill job vacancies and pivot into new careers.

[Lord Baker of Dorking (Con) [V]]

In July, about a quarter of a million 18 year-olds left schools, sixth-forms and other colleges. Most of them are now on the unemployment register. I accept that Kickstart will help trainees to some extent, but much more is needed. An unemployed 18 year-old should be able to take a one-year course, such as an HND or an HNC, to acquire better skills. If they do this, however, they must pay £6,000 or more for the course; often, they have to take out a loan. It is morally and politically unacceptable that we expect 18 year-olds to take out a loan to receive a training course. These courses must be free. I ask the Minister to convey my views to other Ministers because, rest assured, we will need more measures to reduce youth unemployment.

[Baroness Stedman-Scott (Con)]

I am happy to relay to Ministers the noble Lord’s concerns about loans and the fact that 18 year-olds are asked to take them out. I will certainly pass his concerns on to the Department for Education as well. However, we have launched a wide-ranging youth employment programme. We have the National Careers Service and the new enterprise allowance. We are doubling the number of work coaches; please do not underestimate the work of these great people and the difference that they are making in getting young people into jobs, which is what we all want.

[Baroness Clark of Kilwinning (Lab) [V]]

In the 1980s, when I was growing up in the west of Scotland, there were very high levels of youth unemployment. In Glasgow, it stood at 80%. There were few opportunities and little hope. Now, we are walking into something similar. Will the Government agree to hold a job summit to meet trade unions, local authorities, metro mayors and representatives from Scotland and Wales and talk about all the different things that can be done to prevent such a catastrophe? It is the job of the UK Government to lead. Will they take the initiative here?

[Baroness Stedman-Scott (Con)]

I thank the noble Baroness for that constructive idea; I will certainly take it back to the department. However, we are holding what are almost local job summits around the country and people are working closely in geographical areas to achieve exactly what she challenges us to achieve.

[Baroness Janke (LD) [V]]

Sixteen to 24 year-olds suffer discrimination through universal credit in that they do not receive the full amount. What steps will the Minister take to ensure that these young people receive a fair, realistic and just entitlement under universal credit so that they can meet their essential living costs and support themselves in seeking new work?

[Baroness Stedman-Scott (Con)]

On young people on universal credit receiving help to get work, I say that we do not compartmentalise any age groups. We are doubling the number of work coaches and we have the job finding support service. We have a £150 million support fund that can be used flexibly to meet the needs of people going into work. The support that young people will get will be second to none and we will turn every stone to get them into work. The noble Baroness will know that lots is being said about universal credit at the moment. I will not add to that but it is being looked at all the time to see how we can make life better for people.

[Lord Laming (CB) [V]]

My Lords, does the Minister recall a saying that I often heard in my youth: “Idle hands make light work for the devil”? We all know that the years between the ages of 16 and 24 are a period of a transition—but, for many, a transition to what? Services for this age group have been severely cut. We worry about their mental health, drug abuse, county lines and knife crime but, if we do not put in place a robust and effective range of services, these young people are in danger of being left behind. Do the Government have in place an action plan for these young people?

[Baroness Stedman-Scott (Con)]

The Government have an action plan that we are putting into action. It is our Plan for Jobs, which is grossed up into a £30 billion fund. I have already mentioned some of things that we are doing with that money; I do not want to repeat them. I take the point about the devil making work for idle hands, I really do, but what is different here is that young people will get a work coach—a personal coach—who will stick with them. We will do everything we can to make sure that young people transfer into work, achieve their destiny and do not fall into activity that we do not want to see them involved in.

[Lord Farmer (Con)]

My Lords, blunt-instrument measures that force the shielding of the old and vulnerable, instead of allowing them to choose to shield themselves, are devastating areas of the economy in which young workers’ careers flourish. This is widening the divide between young and the old. The Government are balancing many considerations, but are they including the impact of tighter restrictions on intergenerational harmony? And, crucially, what are the Government doing to support young people who are not receiving universal credit?

[Baroness Stedman-Scott (Con)]

The department is committed to providing targeted support for young people, including those who are still claiming jobseeker’s allowance. This support offers basic skills training, traineeships, work experience, sector-based work academies and support that is funded through other organisations. I would say to the noble Lord that immense work is going on with different businesses. I know that my Secretary of State and the Minister responsible for employment will be going to Pinewood Studios to launch “from aviation to the creative industries”. The Buckinghamshire LEP has done a great job and we hope that there will be opportunities similar to that all over the country.

[The Lord Bishop of Oxford]

My Lords, I thank the Minister for the compassion and passion in her answers but, as we must acknowledge, this is a very serious situation. The Resolution Foundation now forecasts that unemployment among the 18 to 29 year-olds could triple to 17% by late 2020—a level not seen since 1984. Given the well-established link between unemployment and mental health, and the risks of a mental health epidemic, will the Government undertake to fund support for additional mental health provision, in addition to the education and employment initiatives which she has unpacked, to support this very hard-pressed and vulnerable Covid generation?

[Baroness Stedman-Scott (Con)]

I will say to the right reverend Prelate that we do not underestimate the seriousness of this situation. I think that we are all mindful of the impact that it can have on the lives of all those who are affected by unemployment. On the question I have been asked about mental health, I am not sure what support, fiscally or otherwise, is available, but I shall talk to my colleagues in the Department of Health and Social Care and write to the right reverend Prelate to confirm it.

[Lord Brooke of Alverthorpe (Lab) [V]]

My Lords, does the Minister recall the complaints that I have been making to her department about the increasingly poor performance of call centres? In conversations I have had with people working in call centres, they have said that they are very short of staff. When will the Government engage with all these call centres? They already have people there to do the training. They should get them to create the jobs that are needed so that proper performance standards are met by these companies—and if they are abroad, the work should be brought back home, which in turn will create many jobs for the young unemployed.

[Baroness Stedman-Scott (Con)]

I can confirm to the noble Lord that I will go back to the department with this and speak to the Director General for Service Excellence. I also offer to meet with the noble Lord so that he can share his concerns verbally and get some answers.

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

My Lords, I am afraid that the time allowed for this Private Notice Question has now elapsed, so we will move on to the next business.

In fact, the time allowed for this Private Notice Question has not elapsed. We have an extra five minutes, which is wonderful. I therefore call the noble Baroness, Lady Benjamin.

[Baroness Benjamin (LD)]

My Lords, thank goodness for that. Black, Asian and culturally diverse people are more likely to be unemployed, and the 16 to 24 year-olds in this group are no exception. They are finding themselves at the very bottom of the pile during this pandemic and are hardest hit, with little hope of finding a job. So what pathways and policies are being put in place beyond the six-month Kickstart Scheme to reassure these vulnerable young people, many of whom are suffering from anxiety and depression?

[Baroness Stedman-Scott (Con)]

The point I would like to make to the noble Baroness is that the ethnic minority employment rate reached a record high of 67.5%, which is an increase on the previous quarter. It is not good enough, but it was an upward trend. The point that the noble Baroness makes is completely justified; this is of great concern. I should say that the Government have unlocked an additional £150 million from dormant bank accounts to support charities and social enterprises help vulnerable individuals into work.

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

I now call the next speaker, the noble and learned Lord, Lord Woolf.

--- Later in debate ---

[Lord Woolf (CB) [V]]

I am grateful to your Lordships for dealing with the local difficulties. The point I emphasise is that, while everything I have heard about the immediate action that the Government are taking is encouraging, I am concerned about when things go wrong, as they will, and youngsters land up in the court system. What action do the Government propose to ensure that the harm already done is not aggravated by that experience?

[Baroness Stedman-Scott (Con)]

It is important that, when young people fall into the court system, they have good role models and mentors to keep them on the straight and narrow. As far as the DWP is concerned, our work coaches will be providing that support. I am not aware of what the Home Office is doing, but I am happy to find out and write to the noble and learned Lord.

[Baroness Stroud (Con) [V]]

My Lords, it is now clear that the impacts of the Covid-19 pandemic have not been equally distributed across society. Official statistics show that the number of under-25s on universal credit nearly doubled during lockdown, rising by 250,000 to 538,000. What assessment has the DWP made of an age-stratified approach to Covid, which could allow resources to be focused on older people and high-risk patients, while allowing younger and healthier people to keep working and businesses to stay open? Given that the DWP exists to get and keep people in work, what forecasts and representation are the department making to the Prime Minister?

[Baroness Stedman-Scott (Con)]

The impacts of Covid-19 are felt differently by different groups, which is why the Plan for Jobs supports people of all ages. We are supporting the most vulnerable through our wider offer and specific programmes, such as job entry targeted support. People need hope in this very difficult time, and I assure the whole House that we will make sure that there is no poverty of hope, aspiration, determination and inspiration for our young people.

[Lord McNicol of West Kilbride (Lab) [V]]

My Lords, I declare my non-financial interest, as in the Members’ register. With the comprehensive spending review a matter of weeks away, does the Minister agree that organisations such as the National Citizen Service, with a proven track record of equipping young people with life skills and facilitating volunteering activity—both of which contribute to employability—should have their income streams protected?

[Baroness Stedman-Scott (Con)]

I pay tribute to the work of the National Citizen Service. Not wanting to disappoint the noble Lord, I cannot comment on what the Treasury may or may not do, but I am sure that the National Citizen Service has made its representations well known.

[Lord Aberdare (CB) [V]]

My Lords, there used to be many more opportunities for young people in small businesses in sectors such as hospitality, travel and retail. Which sectors does the Minister believe are likely to offer young people the best opportunities for jobs with small employers in the current environment? What are the Government doing both to encourage young people into those sectors and to make small businesses more aware of the benefits of employing young people with the skills that they desperately need, notably in the digital and STEM areas?

[Baroness Stedman-Scott (Con)]

The three sectors to which I would refer all noble Lords, which are recruiting young people, are health and social work, education and manufacturing. Through our sector-based work academies, we are trying to ensure that young people are equipped with the skills that they will need in the difficult days coming. We are working hard to ensure that.

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

My Lords, I am afraid that the time allowed for this Private Notice Question has now elapsed.