Colombia: National Liberation Army

Lord Davies of Brixton Excerpts

Thursday 22nd June 2023 Lords Chamber

[Lord Goldsmith of Richmond Park (Con)]

The answer is yes. The UK has contributed over £26 million towards transitional justice mechanisms and for victims of the conflict in Colombia since 2016. That included supporting the Truth Commission’s work to gather testimony from Colombians, both in Colombia and abroad, as well as enhancing the investigatory capacity of the Special Jurisdiction for Peace, Colombia’s post-conflict special court. This issue was raised by the UK’s global ambassador for human rights, Rita French, who met the Special Jurisdiction for Peace recently to discuss our ongoing support.

[Lord Davies of Brixton (Lab)]

My Lords, we celebrate the progress being made in the peace talks but there is concern, not least in the United Nations, that the attorney-general, Francisco Barbosa, is obstructing those talks. He is also obstructing the release of young people unfairly detained following demonstrations in 2021. What more can the Government do to ensure that full due process and legal rights are respected in such cases?

[Lord Goldsmith of Richmond Park (Con)]

My Lords, Colombia is a human rights priority country for the UK. That means that we will continue to monitor any and all impacts that limit our ability to support civil society organisations. As penholder of the UN Security Council, we consistently raise the importance of participation of civil society and young people to realise the full benefits of the 2016 peace agreement in Colombia. We are fully utilising our position as penholder but maintaining Colombia as a high priority for human rights.

Occupational Pension Schemes (Governance and Registration) (Amendment) Regulations 2022

Lord Davies of Brixton Excerpts

Tuesday 12th July 2022 Grand Committee

[Baroness Drake (Lab)]

My Lords, I declare my interest as a pension scheme trustee, as set out in the register. I thank the Minister for her helpful and clear explanation of the intent of these regulations. I support them, because they integrate into pensions legislation an order produced by the Competition and Markets Authority to address the weaknesses it found in the investment consultancy and fiduciary management markets.

This instrument integrates two of the CMA’s seven proposed remedies for addressing the weaknesses in those markets by placing duties on the trustees of relevant occupational pension schemes: remedy 1 is the mandatory competitive tendering requirement for pension schemes to follow when it comes to fiduciary management services; and remedy 7 places a duty on trustees to set their investment consultants clear strategic objectives. These regulations also put the regulatory responsibility for the oversight of those trustee duties within the remit of the Pensions Regulator.

The case for the order being integrated into pensions regulation was set out very clearly by the CMA in its report on these markets:

“we find there are weaknesses in the demand side based on a low level of engagement by some pension scheme trustees. In addition to this, for those who engage with the market, the information that trustees need to assess the value for money (by which we mean both fee levels and quality) of these services is difficult to access. These two factors reduce the competitive pressure on investment consultants and fiduciary managers.”

Sadly, the CMA’s report and recommendations, which followed a referral from the FCA, which also identified problems, provide yet another example of a necessary intervention to address instances of poor competitiveness in the pension industry market. Poor practices on the supply side by providers and demand-side weaknesses driven by the well-known drivers of asymmetry of knowledge and understanding, customer inertia and low levels of active engagement lead to customer detriment.

In this instance, the demand-side weakness is the low level of engagement by some pension trustees, most likely in smaller and DC schemes. On a read-through of the detail in the CMA report, its very real concern about how these markets are operating becomes apparent. Lack of information and transparency on fees and performance, incumbency advantage and barriers to switching fiduciary manager rank high among those concerns. It is very depressing that we are still seeing examples of those behaviours in the pensions market.

Investment consultants and fiduciary managers have a very influential role through the advice they give and in the exercising of delegated authority to manage investments on behalf of the trustee—I say, as a trustee, that this is why this is so important. If their performance or value is poor, the result is detriment to the pension savers. The nature of the investment advice and fiduciary management markets means that any negative impact on scheme outcomes because of their performance or value is significant and will accumulate and compound because of the long time horizon over which pension assets are invested.

Addressing market weaknesses is not without its challenge. A very perceptive observation in the Secondary Legislation Scrutiny Committee’s 6th Report of Session 2022–23 in reference to these regulations provides me with an opportunity to articulate something that has been worrying me but which the committee has been very perceptive in identifying. It welcomes the additional protections, but adds:

“This is the thirteenth SI relating to the governance of occupational pensions that we have seen in the last 12 months and the Government need to be mindful of the cumulative impact of the costs and administrative burdens on both pension schemes and trustees.”


It is not only in the last 12 months. Over the last few years, there have been several pension scheme Bills and a plethora of regulations. I completely recognise that some of those regulations are very necessary to address weaknesses in the private pensions market, which are well documented in numerous FCA and CMA reports and other reputable sources of data. But in other instances, regulations are needed to correct the impact of public policy decisions and their implementation in the first instance. Suboptimal policy, or suboptimal implementation of policy, is itself now beginning to generate excessive regulations and is increasing that volume.

There are many more examples, but I will take just a few. The Government failed to anticipate the exponential growth in scammer activity that followed the introduction of pension freedoms. It was pretty obvious to most people in this field that, once you tell people that they can take all of their money very easily out of all their pension savings, scammer activity would grow exponentially. Even with the new regulations to address the scam problem, there is ambiguity between the intention of the primary legislation, the regulations and regulatory guidance.

The supposition of active engagement by savers and the requirement to take advice in certain circumstances has not provided the sufficiency of protection for pension savers. As the FCA reported, a significant amount of the advice given was not fit for purpose. It culminated in the steelworkers’ problems. The FCA confirms that consumers often take the line of least resistance in choosing draw-down products. Lack of transparency, complexity and consumer inertia all lead to poor decisions. We then have markets that did not respond with the degree of product innovation that was forecast. The introduction of value for member assessments, although conceptually the right thing to do, did not make for easy comparison between schemes.

All these issues and others have increased or will increase the volume of regulation. They add complexity and less efficiency in consumer and public policy outcomes. This is genuinely worrying me a great deal. Regulatory overloads that miss the primary target take us back to that very perceptive comment by the Secondary Legislation Scrutiny Committee. If the fundamental issue is not correctly analysed, the policy appropriate and the implementation right it will just lead to layer on layer of regulation to try to correct some of these problems in this market, which will never be a very efficient and functioning competitive market for all the reasons we know.

I wanted to take advantage of the comment in the Secondary Legislation Scrutiny Committee’s report, because I suddenly felt not alone. Here was a group of people who probably know nothing about pensions at all but asked, “How many of these things can you lay on people before you create a greater problem than the one you are trying to fix?”

To end on a more positive note—it is not that I do not think that there are positives—I recognise the work of the Minister and officials in increasing the number of eligible poor pensioners applying for pension credit. I understand that the results are very significant, so my compliments on that, having given a list of things that I am unhappy about. I look forward to seeing the figures.

[Lord Davies of Brixton (Lab)]

My Lords, I thank the Minister for her introduction to the regulations. I always prefer to speak after my noble friend Lady Drake and to say that I agree strongly. It can leave the impression that I might have made the same points as forcibly, so I get the credit without any of the hard work that has been put in.

However, on this occasion, I will reinforce this issue of regulations. Just read the regulations as presented to us: this is not a sensible way to tell people how to run their pension schemes. However, it is too late; we have adopted this pattern and we just have to pile regulations upon regulations. We have the report from the committee, and I hope its views will be borne in mind. There is so much to do, and to do it with regulations requires this continual production of additional regulations, but who really understands them? We require the guidance from the Pensions Regulator, so in fact we have two sets: you can look at the regulations and at the guidance. I wish we had not gone down this road of setting out how pension funds should run.

I can claim some experience here because I was a pensions regulator. I was a member of the Occupational Pensions Board, and we introduced contracting out—you can tell it was a long time ago. We made a much better job of telling people what they could, should and should not do. We introduced this extremely complicated process of contracting out over a relatively short period and we did it through issuing guidance. The guidance was what ruled. Clearly, we had very strong enforcement powers, because if people did not follow our guidance they did not get their certificate, so they had to follow our guidance—I suspect it is not quite the same here. In that sense it was a much simpler task. I really feel that some deep thought needs to be given as to how the requirements on schemes should be set out. Doing it by regulations is manifestly not the way to do it but it is the way we have adopted. We are there now, and it would be very difficult to pull back. However, this has some impact on how the regulations are drafted, presented and handled.

Of course, one problem is that the industry will always be one step ahead, so it is not as if we will ever reach a final steady state of regulations—there will be continued processes. All I am asking for, in support of my noble friend, is that an overall view is taken of the way regulations are introduced and incorporated in the structure of pensions law. There is a much better way of doing it. Thirteen SIs in one year strikes one as absurd.

I conclude with a trivial point. I have always been fascinated by this—I have seen these things for many years, not only since becoming a Member of this noble House. What is the strict distinction between Explanatory Notes and Explanatory Memoranda? I told your Lordships that this is extremely trivial, but I note that “the Pensions Regulator” gets a small “t” in the Explanatory Note and a capital “T” in the Explanatory Memorandum.

[Baroness Sherlock (Lab)]

My Lords, for those watching at home, I have just managed to pour water all over my speech, so I hope that noble Lords will bear with me if at points it ceases to make any sense.

I thank the Minister for her introduction to these regulations and all noble Lords who have spoken. Like my noble friend Lord Davies, I am delighted to speak after my noble friend Lady Drake—we all are. We all learn something from every time she contributes, and I thank her for her expertise and hard work on this.

Gender Pensions Gap

Lord Davies of Brixton Excerpts

Monday 27th June 2022 Lords Chamber

Asked by

[Lord Davies of Brixton]

To ask Her Majesty’s Government what steps they are taking, if any, to address the gender pensions gap.

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

My Lords, this Government recognise the challenge of the gender pensions gap, primarily resulting from labour market participation differences. We are working with employers and partners on ways to address this, including by promoting women’s progression in workplaces and introducing shared parental leave and mandatory gender pay gap reporting. Automatic enrolment and the new state pension are enabling more women to build up pension provision in their own right, reducing historic inequalities in the pension system.

[Lord Davies of Brixton (Lab)]

My Lords, I thank the Minister for her reply and the Government’s recognition of the seriousness of the pensions gap. However, she must also know that her reply was insufficient in tackling this problem. The problem of the pensions gap is multifaceted: it is double the gap in pay—so, clearly, there are many issues involved here. Will the Minister agree that, to a significant extent, it is a carers’ pensions gap, and that any solution must involve better pensions for unpaid carers? The only solution to that will involve action by the Government directly to provide pensions for carers.

[Baroness Stedman-Scott (Con)]

I can respond to the noble Lord: where carers are working, they will be automatically enrolled, if eligible, into a workplace pension. If they earn below £6,240, they can still ask to be enrolled into the scheme, even though they are not automatically put into it. We have committed to remove the lower earnings limit; that benefits lower earners, including carers, working part-time. In addition to carer’s credit, there is a wide range of national insurance credits available to help people maximise their state pension.

Cost of Living: Pensioners

Lord Davies of Brixton Excerpts

Thursday 26th May 2022 Lords Chamber

[Baroness Stedman-Scott (Con)]

I confirm that the Department for Work and Pensions requires local authorities to provide management information returns detailing their spend and the volume of awards made for food, energy and water bills. MI returns for the scheme, running from 6 October 2021 to 31 March 2022, will also detail grant spend and the volume of awards made to families with and without children. This will be published in the coming months.

[Lord Davies of Brixton (Lab)]

My Lords, does the noble Baroness understand that pensioners’ incomes, this time, this year, are 5% lower in real terms than they were last year? Part of the reason for that is the excessive delay between the index and when increases are paid. Is it not time to fully computerise the state pension so that increases can meet the challenge of inflation?

[Baroness Stedman-Scott (Con)]

As I have said, the state pension uprating relies on legacy IT systems that must be coded well in advance of the uprating. The noble Lord makes a good point about the impact of good IT systems; I am not going to argue with that. Additionally, state pension rates need to be confirmed in advance of uprating because claimants can claim their state pension four months before they reach state pension age and they need certainty about the value of their entitlement.

Senior Citizens: Means-tested Benefits

Lord Davies of Brixton Excerpts

Monday 23rd May 2022 Lords Chamber

[Baroness Stedman-Scott (Con)]

I would like to think that all those people are being contacted, but let me go and check. I shall make sure that that gets fed into the system.

[Lord Davies of Brixton (Lab)]

My Lords, the Minister mentioned that this was an urgent priority for the Government. It is an unfortunate fact that it has been an urgent priority for all Governments for at least 70 years. Will she agree that the only ultimate answer is to make sure that more people retire with an adequate pension, without the need for means-tested benefits?

[Baroness Stedman-Scott (Con)]

The noble Lord has made that point on many occasions and I admire his tenacity. We are doing what we can to make sure that the state benefit is there and that there is a benefit system to support people, but I cannot commit to the challenge that the noble Lord has given me.

Pension Schemes (Conversion of Guaranteed Minimum Pensions) Bill

Lord Davies of Brixton Excerpts

2nd reading
Friday 25th March 2022 Lords Chamber

[Lord Davies of Brixton (Lab)]

My Lords, I thank the noble Baroness, Lady Redfern, for her detailed and clarifying introduction to the Bill. It is a complicated subject but she made an excellent job of providing the necessary clarification for your Lordships. I do not want to get into the detail of these proposals except in one respect, but I do want to put them in the context of pensions policy as a whole.

If I was asked whether I welcomed the Bill, I would be equivocal, because it is a recognition of the failure of a policy which is dear to my heart. The policy of better pensions, introduced in 1978, with all employees receiving an earnings-related pension from the state or a substitute scheme from the employer, was good and in advance of its time. We should not forget that. To a large extent, the introduction of the new state pension was only possible because of the success of the state earnings-related pension scheme.

I will resist the temptation to wander down memory lane, but I was in at the birth of contracting out. I was a member of the occupational pension board. We set out the rules by which contracting out should operate. We spent a great deal of time assessing how guaranteed minimum pensions should work. It is always worth making the point that they became extremely complex largely because of the industry demanding particular provisions. The idea was simple, but it became more and more complex as further demands were placed on it by the pensions industry, and there is a certain ruefulness when the pensions industry then complains about how complex it is. The complexity was largely brought about by the industry itself.

Contracting out was an essential element of the state earnings-related pension scheme, but that is history now. I accept that, but we have these leftovers, the GMPs, which potentially will be with us for many years. With the possibility of survivor benefits being paid in respect of GMPs, it could be decades into the future.

This Bill is essentially about a process. It is not about the principle of conversion, which is already being built into the legislation. Instead, it facilitates the process of conversion. Conversion has come to the fore because of the need to equalise benefits in respect of GMPs. It is not the GMPs that must be equalised but the benefits in excess of GMPs, adding complexity on to complexity. The principle of conversion was seen as a particular method of achieving equalisation, but they are separate.

There is the possibly, rarely taken, I am told, of the dual records approach, whereby each scheme keeps a record for each member, whether they are a man or a woman, and each year it pays the higher pension. Schemes were not keen on using that approach because it meant that members ended up with more pension. From their perspective, the members might have thought it was a good idea to have dual records and best-of year-by-by-year schemes against that approach, and if pushed, I see their point. However, it is important to understand that this arrangement is for the benefit of schemes and their administration. It is difficult to argue that there is much in here which is of benefit to members, which is my major concern.

As I said, the ship has sailed. The problem with the Bill for me is that how it operates in practice depends on material outside its scope. It depends principally on the detailed guidance which has been issued by the DWP, as well as professional practice, because at the heart of conversion is this concept of actuarial equivalence. The legislation and the DWP guidance say nothing about what is meant by actuarial equivalence, and it is in effect left to the actuarial profession, but it is a key issue. We are legislating for something which is effectively outside the control of the law. It is down to the actuaries to assess how that works in practice.

I do not want to be difficult on this Bill, and I will certainly not oppose it. Given the problems we have with the legislative timetable, if we were to make an amendment to it in Committee, it would crush its opportunity of getting through. But we must look in detail at how the Bill works with the underlying guidance and actuarial practice in Committee, when we can press the Government to ensure that members do not lose out.

In that context, my concern, which I am not sure can be handled in this Bill, is that the proposal for conversion is made by the trustees. They must consult the employers but there is no requirement for any consultation with the members. In the pensions legislation, there is a requirement that if you make a major change to a pension scheme, there must be a process of consultation, but on this change, there is no requirement for that level of consultation. That concerns me. It might be argued that the members are not losing out, since they are getting benefits the actuarial equivalent of which is worth the same to the member before and after. However, there is a change in the structure of the benefits being provided, and that potentially is of value to members, even if the monetary value is the same.

Therefore, there is a key issue here. I do not want to delay the Bill, since so much work has gone into preparing it, but I am concerned that the people who appear to be left out of considering these issues are the members being affected. It is not enough to say, “Well, they’re getting something which is actuarially equivalent.” We must think about that in a way which has not so far been reflected in the discussions on the Bill.

Social Security Benefits Up-rating Order 2022

Lord Davies of Brixton Excerpts

Wednesday 23rd March 2022 Lords Chamber

Moved by

[Lord Davies of Brixton]

That this House regrets that the Social Security Benefits Up-rating Order 2022, and the decision by Her Majesty’s Government to suspend the triple lock on pensions, will result in benefit increases of 3.1 per cent in April 2022, compared to the Bank of England forecast of a 7¼ per cent increase in the Consumer Price Index for that month, and that this will result in a basic state pension for a single pensioner that will be worth £296 less in real terms compared to 2021/22, and £475 less for a couple.

[Lord Davies of Brixton (Lab)]

My Lords, this debate has been a little time coming but I make no apology for making sure it takes place. Unfortunately, I was unable to take part when the order came before Grand Committee as I was active in the Chamber at the same time. However, I was happy to adopt the Government Whips’ idea of this separate debate on the regret Motion.

In the event, this has the advantage that we now know a lot more about where we are with the increase in social security benefits that will take place in two weeks’ time. The new information is not good. Inflation in February was higher than expected, at 6.2%, and is certain to be even higher at the beginning of April when the benefit increase comes into effect. The effect is spelled out—this is why it is good to have the debate today—in today’s economic and fiscal outlook from the OBR. This states that, because of lags in the CPI uprating of welfare benefits, benefits will fall by almost 5% in real terms. To be clear, the poorest in our society are facing a 5% reduction in their income when they are already in poverty.

Further, the OBR report states that £12 billion is being taken away from poor people and that it will take up to 18 months fully to catch up with that reduction. I could speak at length about what this means for individuals in human terms, but I will simply refer the Minister to the heartfelt contributions made in the Opposition day debate in the Commons yesterday. I urge her to take the time to read that debate if she has not already done so. That is the human cost.

I want to make three additional points, to which I invite the Minister to respond. I shall not dwell too much on the Labour Party’s position on the uprating—I look forward to my noble friend’s contribution from the Front Bench.

First, does the Minister recognise that it is no consolation to people who are already in poverty and suffering a further cut in their real income to be told that it all averages out over time? We are told, in effect, that the loss of income they are facing, and from which they will suffer in the coming year, is not that important because at some point in the future—the OBR estimates it to be in 18 months’ time—they will receive an increase that will make good the shortfall. They are already in poverty, and they will have to endure 18 months of even greater poverty because of a defect in our benefits system. For people in poverty that is simply not good enough. Eighteen months is too late, as even in the subsequent better year they will remain in poverty. They have already suffered the effect of poverty on their lives and they simply lack the resources to even out their income over the years.

The question is what can be done about it. The Minister told the Grand Committee that

“It is not possible to undertake the uprating exercise any later than currently timetabled.”


But she also told the Committee that

“All benefit uprating since April 1987 has been based on the increase in the relevant price inflation index in the 12 months to the previous September.”—[Official Report, 9/3/22; col. GC 484.]


In truth, the seven-month delay goes back even longer. I recall discussing this with the relevant department back in the 1970s. I find this less than impressive. Seven months is too long when inflation can change so rapidly. Despite all the advances there have been in handling and processing data in the past 35 years, it appears that we still cannot do any better.

I quite understand the department’s resistance to making any change, but faced with the suffering caused for the poorest in our society, we must find some way to achieve a closer alignment of increases in prices and benefits. For sure the index we use could be more up to date, and I refuse to believe that this cannot be done through greater use of modern technology. The department simply needs to invest more in computerising its records. I also suggest, more radically, that where an increase falls short, an adjustment should be made during the course of the year when it becomes apparent, plus provision for back pay to cover the gap that has arisen because of the shortfall increase.

My second point is that the resources are there in the National Insurance Fund to pay higher pension increases. We have the advantage on this occasion of the welcome report by the Government Actuary that is attached to the draft order. This tells us that, for the next five fiscal years, the balance in the National Insurance Fund will increase from £53 billion at present to £76 billion in 2027. In percentage terms, that is an increase when expressed as a percentage of benefit outgo from 48% to 55%. It is worth comparing those figures with the 16.7% that the Government Actuary recommends as the minimum fund balance. It is also worth emphasising that that is without allowing for the possible Treasury grant, which is an integral part of national insurance as originally conceived. This can amount to 17% of benefit payments. It is simply untrue to say that the money is not available. It is not that the money is not there; it is that there is a political choice not to pay.

I had the benefit of a letter this morning from the Treasury Minister, the noble Baroness, Lady Scott of Bybrook—the other Baroness Scott—referring to the Government Actuary’s quinquennial review, which was presented to Parliament last week. In her letter, she states:

“Increasing spending on today’s pensioners would pass the costs onto future generations of taxpayers.”


Well, I would welcome an opportunity to discuss the quinquennial review, and perhaps the Government Whips would provide the time. However, given the limited time available this evening, I say simply that the review, while commendable, tells us only part of the story. Taking the figures from the OBR, along with those from the Government Actuary, there will be the resources available in 2085 for everyone to be better off, even if national insurance contributions reach the level suggested in the Government Actuary’s report.

My final point relates to the triple lock. How much credence can we give to the Government’s repeated promises to keep to the triple lock for the basic state pension and the new state pension? On Monday in the Commons, after some confusion on the part of the Secretary of State, she said:

“I am again happy to put on record that the triple lock will be honoured in the future”.—[Official Report, Commons, 21/3/22; col. 99.]


But she said the same thing back in 2020, and subsequently broke the promise. The Minister here made a similar commitment in Grand Committee. The truth is that we already know that this Government are prepared to break their promise to maintain the triple lock, which was given voluntarily in the election manifesto and subsequently repeated by the Prime Minister.

The explanation given by the Minister here when this was discussed in Grand Committee was that

“setting aside the earnings link in the state pension triple lock for the year 2022-23 … was in response to exceptional circumstances”.—[Official Report, 9/3/22; col. GC 475.]

The problem is that we do not know what counts as the exceptional circumstances in which this Government will break their promise again. On this occasion, with the current uprating that we are talking about, we are told that the exceptional circumstances are the effect that coming out of the Covid measures has had on the earnings index.

So the question is not whether the Government will break their promise. We know that they are capable of breaking their promises. What we do not know about is the possibility that they will break their promise for further exceptional circumstances.

We simply cannot rule out the possibility that, come next November, when a decision is taken on next year’s uprating, it will be decided that this coming September’s CPI index is exceptional or anomalous. To be honest, with the prospect of it being more than 8%, according to the OBR, I hope that it is exceptional. I return to the OBR report and the nice graph—I cannot show it to noble Lords because that is against the conventions of the House—in which there is a leap up to the September figure, when it could be in excess of 9%, which is exceptional. What promise can the Government give that they will not say that these are again exceptional circumstances?

To conclude, can the Minister give us an unequivocal commitment, now, that whatever the CPI increase in September—8% or 9%—this will be applied to the 2023 increases?

[Lord Sikka (Lab)]

My Lords, it is a pleasure to follow my noble friend Lord Davies of Brixton, who spoke with great passion and eloquence to put the Government to shame for the plight of our senior citizens, who continue to be treated very badly.

The state pension is the main or only source of income for the majority of our senior citizens—they rely upon it. The Government introduced the triple lock but, despite it, pensioner poverty has actually increased; it has not decreased. The statistics show that many of our pensioners continue to suffer. From next month, the pension will rise by 3.1%. Pensioners and others face RPI, not CPI: try buying broadband and you will be told that the price will increase by RPI-plus, not CPI. People face increases in line with RPI, which is already about 8%. Last October’s Treasury Red Book showed that by suspending the triple lock the Government were denying retirees £30.5 billion over the next five years. That is a vast sum. They will never be able to catch up or make good the lost purchasing power.

The Government do not treat our senior citizens with any equity or respect. The winter fuel payment has been unchanged since 2011. Even before the current rises that are coming our way, the winter fuel payment would have had to double simply to cope with price rises and rates of inflation—the Government never increased it. A Christmas bonus was the grand sum of £10 in 1972. If it had kept pace with inflation, it be about £150; it is still exactly £10. The Government removed the free TV licence from the over-75s. It is no good saying that there are some who will still qualify for it if they negotiate the bureaucratic maze; many will simply not be able to and will either pay or volunteer to go to prison, because the Government want to criminalise avoidance of the TV licence fee. At least some of our senior citizens will get warmth and some food there, and some may well take up that particular option.

The Government still do not like people getting old. There are no prescription charges in Scotland, but the Government here are raising the free prescription age from 60 to 66. Why England has to be an outlier, I do not know.

In the last Budget, the Government handed £4 billion of tax cuts to banks. They took money away from pensioners and instead gave it to banks, which are absolutely awash with cash. Banks offer you a measly 1% interest on your savings and charge you 40% on your overdraft, but they are bailed out by the state, which acts as a lender of last resort. If that were not enough, it also handed £895 billion of quantitative easing to speculators, including banks, which made vast profits from that. But the Government do not want to pay our senior citizens a decent pension. That is a huge wealth transfer, which tells us something about the Government’s value system.

--- Later in debate ---

[Baroness Stedman-Scott (Con)]

The noble Baroness is right to point out that there are those on low incomes who are unable to work, and I shall talk to my noble friend Lady Scott and write with actions that the Government are taking. I do not have that information to hand.

The noble Lord, Lord Hendy, and the noble Baroness, Lady Wilcox, raised the point that we are making savings at the expense of pensioners. We have increased most state pensions by 2.5% this year, when CPI in the relevant period was 0.5%. We made primary legislation to make sure that that happened, and we locked down the economy precisely to protect our older people. I cannot therefore recognise the points made by the noble Lord and the noble Baroness.

The noble Baroness rightly raised the issue of state pension underpayments. That should not happen, and we have apologised unreservedly, but I can confirm that the department has a dedicated team working on the correction activity. Sufficient additional staffing resources have been allocated to progress this activity, and further resources are being allocated through 2022-23. The Government are fully committed to ensuring that these historical errors made by successive Governments are addressed as quickly as possible to ensure that individuals receive the state pension that they are rightfully due in law.

The noble Baroness, Lady Wilcox, raised the issue of pensioner poverty for women. Reforms to the state pension have put measures in place to improve state pension outcomes for most women, and over 3 million women stand to receive an average of £550 per year more by 2030.

On the state pension underpayments, the noble Baroness, Lady Wilcox, asked, understandably, how we are prioritising cases. Resolving these errors is a priority for the department, as I have already said, and we are committed to doing so as quickly as possible. We have started reviewing cases when the individual is alive; in doing so, we are initially focusing available resources on older cases and those who we believe are most likely to be vulnerable.

I am conscious of the time. I have mentioned many things—but I hope that noble Lords will be reassured that the Government are fully aware of the concerns that people have over rising prices, and we have taken action, where possible, to help. I finish by again thanking the noble Lord, Lord Davies, for giving me the opportunity to set out the Government’s position.

[Lord Davies of Brixton (Lab)]

My Lords, this has been a worthwhile debate. I am conscious of the time: I could spend a lot of time rehashing all the arguments, but I am sure we will return to them. I feel this is the first of what may well become an annual event, and I look forward to future occasions. I thank my noble friends Lord Sikka, Lady Lister, Lord Hendy and Lady Wilcox, and the noble Lord, Lord Shipley, for their contributions. If the House were in a position to take a vote, the Motion would certainly be carried, but it would be meaningless in current circumstances.

I conclude by saying that I am sure the Minister had to mention the Spring Statement, but the truth is that the Spring Statement did nothing for the poorest pensioners. The whole debate has been about the poorest pensioners; there was nothing material in the Spring Statement for them. In fact, it made them worse off, by giving a further little upward shift to inflation. I thank the Minister very much for her reply, and I am sure we will continue the debate. I beg leave to withdraw the Motion.

Motion withdrawn.

Older Workers: Job Market Opportunities

Lord Davies of Brixton Excerpts

Thursday 3rd March 2022 Grand Committee

[Lord Davies of Brixton (Lab)]

My Lords, I thank the noble Baroness, Lady Altmann, for the opportunity to discuss this important issue. I agree that the central issue here is what we can do to enable older people to choose to stay in work or to return to work.

Over all this discussion, we have the pandemic and what we hope is a move away from it. It has had impacts across our whole social and economic life, not least in its effect on patterns of work for older people. Since the start of the pandemic, we have seen a steep reversal of trends in employment. There had been a consistent increase in employment rates among older workers since the mid-1990s and a fall in inactivity rates, but between 2019 and 2021, the department’s figures for employment show that the rates for 50 to 64 year-olds fell by 2.8 percentage points for men and 3 percentage points for women.

The Institute for Employment Studies has calculated that if pre-Covid-19 trends had continued, there would be almost half a million more older workers in the workforce than we have today. This reversal of the earlier trend clearly comes at a cost for those involved: to individuals who cannot afford to lose either the income or social structure that work provides and to society as a whole, with reduced output of goods and services.

To the extent that this reflects older people choosing of their own wishes to enjoy more leisure, as against income, it can be welcomed but there is little evidence that this is the main or significant driver. The truth is that most of those who have given up employment did not have a choice but were forced out of the labour market through lack of work opportunities, ill-health or family responsibilities. The question, therefore, is what we and the Government can do about it.

In suggesting some policies, I base my remarks in large part on the excellent and timely report from the TUC, published on 23 February, Older Workers after the Pandemic: Creating an Inclusive Labour Market. I urge the Minister to read it, if she has not already done so. The TUC’s report makes it clear that increasing older workers’ participation in the labour market will require major changes in the workplace to ensure that older workers have the skills they need and that jobs and workplaces meet the needs of an ageing workforce. This goes alongside the need to ensure that those who are unable to continue working into their mid-60s are not penalised as a result, which will require an overhaul of working and pension-age benefits.

As pointed out by the TUC, there are class and ethnic dimensions to the challenge we face in offering older people the opportunity to keep working. People in low-paid and manually intensive jobs are at far greater risk of being forced out of the labour market early. Those working with heavy machinery and in elementary occupations such as cleaning or security are particularly vulnerable, closely followed by people in caring and other service occupations, retail and customer service. Together, these occupations account for just three in 10 jobs in the labour market, but almost six in 10 people who leave the labour market come from these sectors. Plans to tackle labour shortages by helping more older people stay in work must tackle the structural discrimination that means workers on lower pay are more likely to be pushed out.

At the same time, while black and other ethnic-minority workers are less likely to retire early than their white counterparts, those who leave the labour market early are significantly more likely to do so because of poor health and more than twice as likely to do so because of caring responsibilities. From an analysis of the Labour Force Survey, the TUC found that just 17% of black and minority-ethnic people between the ages of 50 and 65 who are economically inactive have retired compared with 40% of economically inactive white people, reflecting the wide ethnicity gap in average pension wealth.

So what can we do? First, particularly as we emerge from the pandemic phase of Covid, workplaces must be made safer for all workers through improved health and safety guidance and stronger enforcement. The Government should work with unions and employers to ensure that we address workers and skills shortages and deliver the Government’s stated ambition of a high-wage, high-productivity economy.

Secondly, we need to ensure that older workers have the skills needed to thrive in the labour market by giving them the right to a mid-life career and skills review and to access funded retraining and by providing tailored support for older workers at risk of long-term unemployment or of falling out of the labour market.

Thirdly, we should help older workers to manage disabilities and health conditions by ensuring that employers put in place reasonable adjustments for disabled workers and tackle workplace discrimination and by strengthening flexible working rights to allow older workers to manage workloads.

Finally, we have to look at reforms of the benefits system so that people of all ages who are unable to work can maintain a decent standard of living. We must pay attention in that area, which affects older workers most acutely.

Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations 2022

Lord Davies of Brixton Excerpts

Wednesday 23rd February 2022 Grand Committee

Finally, on charges, will the code give guidance in the absence of reference to a de minimis for small pots and on how charges in relation to performance fees will be fairly applied when a member seeks a transfer out?

[Lord Davies of Brixton (Lab)]

My Lords, I join the previous speakers in thanking the Minister for her helpful introduction. To a certain extent, it was discursive, in that it brought in broader issues to set the context for these regulations. I suspect that, in this area, we just have to get on and do it before we truly understand what the problems are. The Royal Mail proposals act almost as a pilot: we do not know how this is going to work until we actually do it.

The advantage of speaking after my noble friend Lady Drake and the noble Baroness, Lady Janke, is that almost all the points that I had in mind to make have already been made. In particular, we have to move towards multi-employer schemes. We have to move towards schemes that are effectively in payment-only arrangements. They are not really encompassed within these regulations, and we hope that, in due course, we will be able to move forward. When I say, “in due course”, I really mean “soon”, but it is good to have the issues on the table, and I am glad that the noble Baroness, Lady Janke, made those points and I echo them.

I am glad that my noble friend Lady Drake asked all those questions, as they are all pertinent and important and need to be answered. I have one slight question about her use of the term “central estimates” and the suggestion that these decisions have been made using prudent estimates. The problem with prudent estimates is: prudence for whom? One person’s prudence could be a counterparty’s lack of prudence. That is one of the central issues that still needs to be resolved in how these schemes operate: whose interests are being considered, and how to offset the interests of one group against another.

My natural inclination in those circumstances is to use what we used to call “best estimates,” which have now been retermed “central estimates”. “Best estimates” perhaps captures the issue a bit more closely, but people did not like using that term, so we now have to learn to use “central estimates”. The point is that, as soon as you move away from a central estimate, you move towards favouring the interests of one group as against a counterparty group. That is one of the issues. The question was entirely reasonable, but it is a particularly difficult one to answer, which goes to the heart of how these schemes will operate in practice.

My third point is about the sheer complexity of this set of regulations. It is a bit depressing that there are going to be even more regulations. I have been told that, in practice, it is easier to establish a defined benefit scheme than one of these schemes; the procedural hoops that have to be jumped through to establish a scheme are easier for defined benefit schemes than for these new CDC schemes. Perhaps that is the right approach, but its effect is doubtless to deter organisations that might otherwise be attracted to developing this form of provision, because they are intimidated against doing it in practice. As is the nature of things, they will tend to be smaller, less professionally savvy groups of employers. That is why moving towards a multi-employer model is so important and urgent.

I think it reasonable to assume that other employers of the Royal Mail model are limited. This will work only if it is provided for a whole range of different sizes and natures of employer, including employers without strong human relations or whatever the staffing function is called, and employers without a strong union presence that can get involved in the development of this sort of scheme. In my view, that will happen only when we have a multi-employer model.

Underpayment of Benefits: Compensation

Lord Davies of Brixton Excerpts

Tuesday 18th January 2022 Lords Chamber

[Baroness Stedman-Scott (Con)]

When things like this do happen, they are awful and nobody is proud of them, but I am very pleased to say to my noble friend that the team responsible is looking at what happened and putting in place processes that will ensure that, God forbid, this never happens again.

[Lord Davies of Brixton (Lab)]

My Lords, I take this opportunity to remind the Minister, the noble Baroness and the House of the underpayment of pension to widows and widowers. This is representative of some systematic problems within the department. Will the Minister be reporting to the House on the issue?

[Baroness Stedman-Scott (Con)]

I am not aware of the facts of the underpayment of the widows’ and widowers’ pension, but as I always try to answer in full, I will go back to the department, find out if there is any correlation and write to the noble Lord.