Public Bodies (Child Maintenance and Enforcement Commission: Abolition and Transfer of Functions) Order 2012
Lord Freud Excerpts(11 years, 11 months ago)
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Mental Health: Access to Work Support Service
Lord Freud Excerpts(11 years, 11 months ago)
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The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, I thank my noble friend Lady Thomas, as has everyone else, for raising this important issue. I am grateful for the important and thoughtful contributions from other noble Lords today. I have listened very closely, and I shall take the opportunity to outline how the Government are supporting disabled people into work, especially those with mental health conditions, and in particular how we are promoting the Access to Work service.
I assure noble Lords that I feel very strongly about this issue. Over the years there has been a huge change in how we think about mental health and work. Evidence shows that being in good work generally leads to improved outcomes for people with both mental and physical conditions. Returning to work often has a therapeutic effect. The workplace offers an important opportunity for people to build resilience and to develop social networks and their own mental capital. The Government aim to improve employment outcomes for people with poor mental health by supporting them to gain and sustain employment and to remain in suitable employment, and to ensure that they are treated equably in the operation of the reformed welfare benefits system.
We know that we need to do more. The employment rate for disabled people is just over 46%, compared with an employment rate for non-disabled people of around 76%. For people with mental health conditions, the employment rate is much worse at around 15%. This is a great loss, not least for employers. For example, people with autism—I accept that people with mental health conditions have something else, but this is related—can have exceptional talents and prove a tremendous asset to business. That is why we asked Liz Sayce to carry out a review of specialist employment support, and why we consulted on her recommendations that were published in June 2011. The responses to the consultation strongly supported the idea that money to support disabled people into employment should follow individuals, not institutions, and that government-funded segregated employment is not the way forward for disabled people.
Liz Sayce’s report recommended that Access to Work be expanded so that it can support more people. She suggested measures such as opening it up to internships and making it easier through, for example, an internet portal. On 7 March we published our response, in which we repeated our commitment to protecting the £320 million budget for specialist employment support but to spending it more effectively so that it could support thousands more disabled people into work. In answer to the question from the noble Lord, Lord McKenzie, there is a £15 million increase in Access to Work to help an additional 8,000 people, along with other efficiencies.
We announced in our response that we would accept all the recommendations on Access to Work and that we would work with disabled people to get these right. In particular, we announced the extra £15 million, and we will also recycle money freed from Remploy into Access to Work and other programmes to enable more disabled people to meet their aspirations and remain in work.
My noble friend Lord German asked what I would consider an additional measure of success in 12 months. It basically comes down to an increase in the number of people with mental health issues using the service. As we have sorted out, slightly under the carpet, 2%, even if that is more than 0.2%, is simply not enough.
Over the next 12 months, we will deliver a rolling campaign to build up a strong profile internally and externally with the aim of increasing the take-up from underrepresented groups. In particular we will build operational awareness of the Mental Health Support service. This service was established to allow Access to Work to meet the longer-term objectives of increasing the numbers of customers with mental health issues who gain assistance from the programme. The contract began in December 2011 and is due to run for three years. It offers additional support for individuals with a mental health condition.
In answer to the question from my noble friend Lord German on how it supports individuals, work-focused mental health support will be tailored to the individual. The other types of support that it offers include assessment of an individual’s needs to identify coping strategies; a personalised support plan detailing the steps needed to enter, remain in or return to work; suggestions for reasonable adjustments in the workplace or in working practices; advice and guidance to enable employers to understand mental ill health fully and how to support employees with mental health conditions; and signposting to other external support services and networks.
My noble friend Lady Browning asked about multiple diagnoses. Yes, that is part of this service as long as mental health is a factor in the need for support.
My noble friend Lord German asked whether the focus is on mental health or people with learning difficulties. It is on mental health.
Alongside this we will look at how we can inject more expertise in mental health into the employment support offered by the department. On the Work Programme, which is our biggest welfare-to-work programme, all providers have pledged to develop their expertise to support people with mental-health conditions to find, enter and remain in employment.
In response to the question from the noble Baroness, Lady Meacher, each Jobcentre Plus district has a mental health and well-being partnership manager. We are also looking carefully at how best to bolster the knowledge and confidence that Jobcentre Plus staff have about mental health, including close working with primary care trust mental health counsellors to enable the fast-tracking of customers for counselling.
The Government are considering their response to the health at work review—an independent review of sickness absence—which makes recommendations to help people who can work stay attached to the labour market through periods of ill health, while ensuring those too sick to work receive support quickly.
The review recognises that mental health in the workplace is poorly understood by employers and the public and that much needs to be done to eliminate the stigma. It makes a number of recommendations, including the establishment of a state-funded independent assessment service. The Government are considering their response to the report and will make an announcement in November. My own ambition for this response is that we take advantage of it as a key vehicle to expand medical capacity, particularly in the area of mental health, where capacity is scarce, and to provide support for people who work for smaller companies. I do not think that they will ever get the kind of support that a company such as BT offers, because BT is an extraordinary exemplar in this area. However, we can pull them a long way from the complete lack of support that happens to too many people in that area.
To close, I shall answer one of the questions asked by the noble Lord, Lord McKenzie of Luton, but I shall have to write about the others as there were too many for me to deal with in such a short time. The IAPT programme is being rolled out across England by March 2015.
I again thank the noble Baroness for raising this issue. It is critical because roughly 40% of people who end up in that state or who are on sickness absence have a mental health issue. To get our strategies right for people, we need to get our mental health strategies right.
Youth Unemployment
Lord Freud Excerpts(11 years, 11 months ago)
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The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, I thank the noble Lord, Lord Adonis, for the tone he set in introducing the debate, which noble Lords have followed. This has been a very thoughtful debate. The noble Baroness, Lady Sherlock, got it right when she said that we are all against youth unemployment but the question is how we solve it.
Before I get on to some of the meatier stuff, I ought to deal with the moral dimension introduced by my erstwhile fellow student, the right reverend Prelate the Bishop of Chester. I reassure him and my noble friend Lord Roberts that there is good evidence to show that there is a positive correlation between having both more older people and more younger people in the workforce. The person who has done the best research in that area comes from the Benches opposite in the shape of the noble Lord, Lord Layard, who is not present but has done excellent research on this matter.
Clearly, the recession has had a major impact on the participation and unemployment rates of young people. As other noble Lords have pointed out, the relevant figures, having been broadly stable since about 1998, started to go up again in a very disturbing way from about 2004. I remind noble Lords of the underlying figures. In 1997, the number of youngsters who were unemployed or inactive was 1.14 million. By the time that this Government came in, the figure stood at 1.39 million and it has gone up a little since; it is now 1.42 million. Therefore, we are looking at something that stems from much more than a recession; we are looking at a structural factor in our economy and the failures of our education system to keep up with the changing economy and ensure successful transitions for all young people, as so many noble Lords have pointed out.
The noble Lord, Lord McFall, asked whether there should be a statutory target for youth employment. We do not think that that is the right answer. The noble Lord, Lord Giddens, asked where the jobs are coming from. The Government seek to turn round the economy to get those jobs provided by the private sector. Indeed, private sector employment overall has gone up by 45,000 in the quarter, a quarter of a million in the year and by 634,000 since the election.
The figure for youth unemployment is over the emotive 1 million mark. However, a lot of them—30%—are full-time students who are looking predominantly for part-time work. Rises in unemployment have been driven by longer-term factors. People who bear the brunt of those changes in the labour market are those who are trying to get into the market; that is a natural factor. However, joined to that is significant demographic change with a larger number of young people entering the labour market than was the case 10 years ago.
The noble Lord, Lord Adonis, talked about the Wolf report. Like him, I read that report with some astonishment and was shocked by its finding that at least 350,000 16 to 19 year-olds were getting little or no benefit from post-16 education. That report has been adopted in its entirety by the Government and we are trying to make the wholesale changes in the vocational education system that it recommends.
We also have lower productivity than many other nations, which is partly explained by the lack of skills in the working population. Increasing participation is designed to make a significant contribution to economic growth. However, it is easy to get too gloomy. A large number of youngsters succeed in education and make a successful transition into the world of work. The number of young people not in full-time education and unemployed is around 10% of all 16 to 24 year-olds, which is lower than after previous recessions. The noble Lord, Lord Adonis, talked about the long-term unemployed in this age group. One of the things that was distorting the figures was the fact that as youngsters moved into the long-term category, they were taken off on to training courses and were not classified in that way.
When you look through the figures at the underlying position, you will see that there has been an increase in the number of long-term unemployed since the election, but it has not doubled. Today, it stands at 167,000. If you calculated it on the same basis, it would be some 153,000 at the time of the election. Therefore, there has been an increase, which is not satisfactory in any way, but it is not a substantial, horrific figure. If you look at the total number and not just the long-term figure, there are signs that there has been a small decrease—again, this is not good enough—in the number of young people on jobseeker’s allowance and other forms of temporary support.
The right reverend Prelate the Bishop of Chester asked about the EU and the other moral question of the movement of labour. We are looking at this issue. Interestingly, over the past year, in contrast to before then, the employment rate of UK nationals has held up better in this market than that for non-UK nationals, which has fallen.
The noble Lord, Lord Giddens, and the noble Baroness, Lady Prosser, asked whether we should increase the number of young people in higher education. We have not changed the principles that date from 1963: namely, everyone who can benefit from higher education should be able to get it.
Clearly, too many young people are not in education, employment or training. However, most young people spend only a short time in that NEET category. The ones to worry about are those who spend a long time in it. As I think the noble Lord, Lord Wood, said, the longer-term impact of spending too long out of the workforce affects many factors. I endorse all that he said about the economic effect. That clearly concerns us as a Government, just as it concerns him.
The programme of education reforms, including increasing the freedom of schools, will help to raise attainment for all pupils by the age of 16. This year, we are increasing our investment to a record £7.5 billion to fund education and training places for 16 to 17 year-olds. Regarding the question of my noble friend Lord Roberts on careers guidance, through the Youth Contract we are putting in place extra adviser support for 18 to 24 year-olds, including referrals to careers interviews delivered by the National Careers Service.
We are also implementing a £180 million scheme to target financial support to young people who need it. This will provide guaranteed bursaries of £1,200 a year to help young people to overcome barriers to participation. Our approach to supporting unemployed young people into work is based on an individual’s need for short-term or more intensive, long-term support. For those who are closer to the labour market, the focus is on engaging young people in real work with employers and keeping them active in looking for a job. The options are work experience, skills, advice on apprenticeships and support with job search. My noble friend Lord German asked about working with the CIPD. We are working closely with it, particularly on finding employers who can offer work experience. Jobcentre Plus is working in every part of the country, placing thousands of young people in work experience.
Regarding the youngsters who need more support, the noble Lord, Lord Adonis, had a little bit of fun over how we are trying to make sure that the resources go towards the people who really need it by getting them into the Work Programme early. The aim is to get these people in at the three-month stage and the rest at nine months. As the noble Lord will be perfectly well aware, one way that we achieve efficiency through the Work Programme is by concentrating on payment by results. Clearly we will be able to improve the programme as it develops by refining the payments as we isolate those who are harder to help.
Last April we launched the new £1 billion Youth Contract, which has been discussed. Regrettably, the cost of intermediate labour market interventions is very high for what they achieve, and we think that there are other ways of going about this. In answer to my noble friend Lord German, who asked whether the Youth Contract is enough, I can say that it has a very good take-up rate.
We are pushing out a lot of apprenticeships, with 256,000 having started in the first six months of the academic year 2011-12. In answer to a question put by the noble Lord, Lord Adonis, of those 256,000, 79,000 were for 16 to 18 year-olds, although I am afraid I do not have the data for 16 to 21 year-olds. We have introduced grants to encourage, particularly, smaller employers to take on youngsters in the 16 to 24 year-old age group.
Again in answer to the noble Lord, Lord Adonis, we have placements for work experience and apprenticeships in the DWP and across government. We have already put 49,000 people through work experience, and about half of them are now off benefits after taking part in the scheme. The success rate is virtually identical to that of the future jobs fund, but the difference is that the work experience scheme has cost £325 per placement, whereas the future jobs fund was running at around £6,000 a place.
Clearly, young people have borne the brunt of long-term structural and demographic changes in our economy and our society and also of failures in our education system. Noble Lords pointed out that other countries were rather more successful. Youth unemployment is too high and it has long-term negative consequences for individuals and for wider society. We are working across government to minimise the long and short-term impacts of young people being NEET and to ensure that they get the opportunities and support that they need.
We are determined to increase the participation of 16 to 24 year-olds in education, training and work to make a lasting difference to individual lives, improve social mobility and stimulate growth. We are interested not in quick fixes but in lasting change and we are changing the structures to help people on that basis. The change is aimed at helping young people to succeed in their careers and to make a much needed positive contribution to our future economic success.
Health: Needlestick Injuries
Lord Freud Excerpts(11 years, 11 months ago)
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Lord Walton of Detchant
To ask Her Majesty’s Government what measures they propose to take in order to implement the provisions of European Council directive 2010/32/EU, which is designed to prevent sharp (so-called needlestick) injuries, prior to the implementation date of 11 May 2013.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, the Government have asked the Health and Safety Executive to prepare regulations to transpose directive 2010/32/EU, to come into force on 11 May 2013. However, most sharps injuries arise from the failure to comply with existing well established standards. Therefore, the issue is not a gap in the law but in compliance. The HSE will consult on the proposed regulations and seek views on how all healthcare stakeholders can contribute to raising awareness of the required standards.
Lord Walton of Detchant
My Lords, I thank the Minister for that reply. I have seen the Answers that he sent to my noble friend Lady Masham in response to her Written Questions. Is he aware that a considerable number of healthcare professionals injured by hypodermic needles are failing to report those incidents for fear that they have been infected with HIV or hepatitis B or C, which could have a serious adverse effect on their subsequent employability? Does the draft impact assessment prepared by the HSE deal with how individuals infected in that way can safely continue to practise within the NHS?
Lord Freud
My Lords, I am not aware of underreporting. The reporting figures are actually rather low. In the past decade, fewer than 10 people have reported getting infected from being hit by a needle or other sharp object. Usually the infection, particularly more recently, is hepatitis B or C.
Lord McKenzie of Luton
My Lords, in March last year the Government set out their plans for reform of the health and safety system in Britain, and these included reductions in inspections. The document they published talked about:
“Areas of concern but where proactive inspection is unlikely to be effective and is not proposed”,
which included the health and social care sector. On what basis was that judgment made?
Lord Freud
The judgment was made on the basis of the number of injuries or incidents. Industries with a higher proportion of these were clearly ones on which one would target scarce resources. As I have just explained, the declared figures for injuries from sharps with infection are that 100,000 people a year cut themselves. However, the real concern is how many are infected, and that number is rather low.
The Countess of Mar
My Lords, can the noble Lord say whether the directive referred to in the Question asked by the noble Lord, Lord Walton of Detchant, applies to members of the veterinary profession? At least human patients keep still most of the time. Animals do not, and I know from my own experience what a needlestick injury can produce.
Lord Freud
This applies to human health and not to other industries such as waste and veterinary.
Baroness Masham of Ilton
My Lords, will the Minister consider expanding the directive to include patients living in the community, because there is so much emphasis now on care in the community? It is very difficult to get rid of sharps boxes, and if people have to inject themselves before going on an aeroplane there are no sharps boxes at airports.
Lord Freud
My Lords, it is important to make health and safety proportionate. This is a very particular problem. People cut themselves regularly. However, the issue is not that you cut yourself but that you infect yourself. The numbers are rather small, and it would be disproportionate to widen this out further than the directive because we already have well established safety procedures that are applicable more generally.
Lord Patel
Can the Minister clarify the employment status of people who are HIV carriers? As I understand it, the new regulation allows people who are carriers of HIV to work in the health service, including as surgeons.
Lord Freud
My Lords, I am outside my personal sphere of expertise on that particular question. I will have to write on that matter.
Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2012
Lord Freud Excerpts(11 years, 11 months ago)
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Lord Freud
That the draft order laid before the House on 26 March be approved.
Relevant documents: 44th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 22 May
Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2012
Lord Freud Excerpts(12 years ago)
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Lord Freud
That the Grand Committee do report to the House that it has considered the Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2012.
Relevant documents: 44th Report from the Joint Committee on Statutory Instruments
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, I am pleased to introduce this instrument, which was laid before the House on 26 March. I am satisfied that it is compatible with the European Convention on Human Rights.
The original qualifying earnings band was set out in the Pensions Act 2008. We amended the Act last year to insert the automatic enrolment earnings trigger but these figures are now up to six years old. It is essential to keep the automatic enrolment thresholds up to date and relevant.
The original figures are subject to a mandatory annual parliamentary review. This first review needs to catch up with six years’ worth of change. Our task is to consider the outcome of this year’s review—the revised rates that will apply when the largest companies start to implement automatic enrolment from July of this year. This is an important and much anticipated debate. I am glad to see that we have the benefit of having pensions experts and champions of automatic enrolment with us this afternoon. I have been grateful for their expertise in the past and I remain grateful now. I look forward to what I am sure will be a robust and thorough examination of these thresholds.
The power to revise the automatic enrolment threshold is a broad, flexible power. Flexibility is important. Rather than a lock-in to a set formula with a short shelf life, flexibility safeguards the interests of savers, employers and the public purse. Flexibility enables this and future Governments to react to the changing financial landscape, the number of people saving and the amount they are saving, all set against the backdrop of the shape of state pensions.
However, flexibility and the degree of discretion that Parliament has allowed makes the task of setting the automatic enrolment thresholds for private pension saving more challenging and perhaps more contentious than the state pensions uprating exercises that we are more familiar with. The amount of the automatic enrolment earnings trigger and the lower and upper limit of the qualifying earnings band are critical to deciding who should be auto-enrolled, when it makes sense to start saving and how much people should save. Targeting is critical. We must safeguard the interests of all workers who may be in scope for automatic enrolment including the lowest paid. If the trigger is too low the low paid may baulk at the costs and opt out.
Persistent low earners tend to find that state pensions provide them with an income in retirement similar to that in working life, without the need for additional saving. For these individuals, it will very often not be beneficial to direct income from working life into pension saving. If we are to meet the challenge of pension undersaving, we have to get the pension-saving message out into the workplace. We are about to see a revolution in workplace provision. We are asking employers, payroll providers and the pensions industry to take on significant additional responsibility.
Workers will need to understand how pension saving will work. They will need to know how automatic enrolment will affect them, when it will affect them and how much it will cost. We know people will see their employer as a first port of call. We have to make automatic enrolment simple for employers to understand, administer and explain. The automatic enrolment rates for this year need to balance complex interactions between targeting, simplicity, affordability, costs and savings, and take account of equality issues. The problem is that simplicity and pensions are not natural bedfellows. The Government felt that the best way forward was to have a full consultation on the proposals for the first year of live running. Up to now employers and the pensions industry have been working with figures that are unlikely to be the ones for live running. We wanted to share our thinking and the evidence we took into account as part of the review process.
We needed the views of employers who will have to make automatic enrolment work in practice; of the companies who will provide pension schemes; and of the representatives of people who will be brought into pension saving, possibly for the first time. The Government have now reviewed this evidence from the public consultation and weighed the costs, savings and low-earners issues carefully in arriving at the figures that I present to your Lordships today. Targeting is critical but the level of the trigger is a difficult judgment because everyone’s personal circumstances will differ and will change over their lifetime. When household finances are under pressure, we do not believe it is right to encourage low earners—whatever their gender—to save at a time when they may need to use all their income to meet their family’s present living costs.
We propose an automatic enrolment earnings trigger of £8,105, aligned with this year’s personal tax threshold. Tax relief is a core part of the automatic enrolment deal. We believe that automatic enrolment should target people once they earn enough to pay income tax and therefore qualify for tax relief, and should exclude the low paid who will have a high replacement rate from state pensions alone. This exclusion is from automatic enrolment, not from pension saving per se. People on low earnings in households with a higher earning partner may be in a position to put something into a pension. People on low earnings with an expectation of a rise may want to get a toehold on pension saving. That is why the right to opt in, with an employer contribution, is such an important feature of these reforms. Any rise in the trigger disproportionately affects women. I make it completely clear that we are not weighing equality against cost; gender is not the issue here. The outcome of this review is right for all people on very low incomes, regardless of gender.
The results of the consultation were powerful and persuasive. Simplicity is critical to the success of automatic enrolment. It is best supported by aligning the automatic enrolment thresholds with existing payroll thresholds to give employers and individuals figures that they are familiar with and can explain.
I turn now to the qualifying earnings band. The headline message from the public consultation was that the band should maximise pension saving. This suggested that the right direction was to set the lower limit fairly low—and nor should we set the cap so high that it significantly increased employers’ minimum costs.
I am acutely aware that your Lordships’ views were mixed about the point at which we should pitch the lower limit of the qualifying earnings band. There was some residual support for not having an earnings band at all. The previous Administration ruled this out on the grounds of cost, and we continue to do so.
There is a good case to be made that pensions saving should rise as earnings rise, and that the original thresholds in the Pensions Act 2008 should be revalued by the rise in average earnings. That proposition was put in place by the previous Administration. There is also a logical argument that the automatic enrolment thresholds that will drive minimum pension saving levels should rise in line with the consumer prices index, for consistency with the Government’s wider policy. Price inflation affects affordability. It has a very direct bearing on how much people can afford to pay into their pension, and a direct bearing on employer costs. However, neither price nor earnings inflation produces a figure that aligns with existing recognisable payroll thresholds, and the consultation rejected them.
The work on the development of automatic enrolment and the early legislation, led so ably in this House by the noble Lord, Lord McKenzie, gave us another solid canon to work with. Private pension saving should build on the foundation of state pension entitlement. The Johnson review gave us a solution to the de minimis level of pension contributions, via a gap between the automatic enrolment trigger and the earnings level from which contributions are collected. The lower limit of the qualifying earnings band must work hand in hand with the automatic enrolment earnings trigger to deliver the policy intentions.
The consultation rejected alignment of the lower limit of the band with the national insurance contributions primary threshold because it increased substantially this year to £7,605. We, too, rejected it. It would not deliver the policy intentions. It would be a logical point of alignment and is a recognisable payroll threshold, but it is too high a peg for automatic enrolment minimum contributions. It would reduce the gap between the trigger and the point from which minimum contributions are calculated to such an extent that we would lose the critical de minimis cushion, and then we would be back to the problem of penny-packet contributions.
We looked for a point of alignment for the lower limit of the qualifying earnings band that would deliver simplicity and maximise pensions saving. We looked for a threshold that worked in conjunction with the trigger to solve the problem of penny-packet contributions. This happens at the national insurance lower earnings limit. A worker will start to build up a basic state pension on earnings above the national insurance contributions lower earnings limit. This is £5,564 for this tax year. The national insurance lower earnings limit is a figure that will be familiar to employers. It is similar, in today’s price terms, to the original proposition of the Pensions Commission and to the original figure in the Pensions Act 2008.
Lord McKenzie of Luton
My Lords, I begin by thanking the Minister for the manner in which he introduced the order—and I think I spotted a few kind words as well.
My noble friend Lady Drake set out our position with her usual precision and focus, so I will be brief. Auto-enrolment goes live in a few months and we should take this opportunity to reflect on the tremendous efforts that have been brought to bear, not least by my noble friend, to make it a reality. Although we do not have an identity of view with the Government on all aspects of its implementation, we acknowledge their role in taking this forward in challenging times. The introduction of auto-enrolment may not be preceded by a torch relay but its effect and indeed its legacy have the potential to outshine the other exciting event that we expect to experience later in the year.
Appendix A to the Explanatory Note sets out the impact of changing the earnings trigger and the upper and lower limits of the qualifying earnings band. My noble friend Lady Drake focused on our major concern: the impact of the raised earnings trigger. As she explained, far and away the biggest number of losers are women. There seems to be an implicit assumption—which was in a sense reiterated by the noble Lord, Lord German—that these would be persistent low earners. I would be interested to know what evidence there is for that. If we wanted to align it with something that had a PAYE component, what about the primary threshold, for example?
I looked at the Government’s response to the consultation. The reason given for excluding the primary threshold was that there was no tax relief at the lower end. How much work have the Government done on this? I went to the HMRC website to remind myself of the rules on tax relief for pensions. It states:
“Usually, your employer takes the pension contributions from your pay before deducting tax (but not National Insurance contributions). You only pay tax on what’s left. So whether you pay tax at basic, higher or additional rate you get the full relief straightaway. However, some employers use the same method of paying pension contributions that personal pension scheme payers use—read more in the section on 'Personal pensions'”.
That section states:
“You pay Income Tax on your earnings before any pension contribution, but the pension provider”—
this is for personal pensions—
“claims tax back from the government at the basic rate of 20 per cent. In practice, this means that for every £80 you pay into your pension, you end up with £100 in your pension pot. If you pay tax at higher rate, you can claim the difference through your tax return”.
What happens if you do not pay tax?
“If you don't pay tax you can still pay into a personal pension scheme and benefit from basic rate tax relief … on the first £2,880 a year you put in. In practice this means that if you pay £2,880 the government will top up your contribution to make it £3,600. There is no tax relief for contributions above this amount”.
So the assertion that there is no tax component available simply because you are below the tax threshold is not true. I recall that the proposition was that NEST would adopt that alternative means of generating tax relief for people who went into the NEST scheme. Will the Minister outline in some detail the extent to which that issue was factored into the considerations; and confirm what the position of NEST is intended to be in relation to the routes by which people may get tax relief when it is introduced?
It is a great pity that the issue of the trigger has left us apart. The noble Lord, Lord German, instanced the fact that the tax threshold may rise to £10,000—part of a wider deal, I understand. We will see whether and when that comes to fruition, but it will simply exacerbate the problem that my noble friend Lady Drake outlined in such detail. I hope the Minister can deal with that point.
Lord Freud
My Lords, I said I was expecting a robust debate. It has been short but typically robust. What has clearly come through is that the figures around the earnings band seemed to get general acceptance in this Committee, and the real issue we are discussing is the trigger level. It is common ground that it would be pretty hard to find an earnings trigger that would target auto-enrolment perfectly. Our aim is to maximise pension saving for those for whom it is valuable, and minimise the number captured of those for whom it is not. Clearly this is not a perfect science.
The rise in the value of the trigger takes us to the impact on the low paid. As noble Lords pointed out, on balance many more women are in this category—in particular years, though it may not be a continuous position. I should put on the record that the rise from the £7,475 threshold to £8,105 excludes does not exclude 75,000 women; the figure I have is 100,000. We might as well get that on the record. Of those affected, my information is that 82% are women. We recognise that women are more likely to work part time or work less than men, and that they will be disproportionately represented in the group excluded from automatic enrolment by the increase in the trigger.
With the trigger, and automatic enrolment generally, we are talking about soft compulsion. We have developed a system that aims to capitalise on inertia—the default is saving, but we have left people who are new to pension saving to opt out if they consider that they really cannot afford it. Automatic enrolment with an employer contribution is an incentive to save. For the first year, certainly, we do not want to encourage people who do not earn enough to pay tax to divert wages into a pension pot unless their circumstances mean that it makes financial sense.
A question was asked based on reading three pages of the HMRC site, which was very assiduous. Tax relief was one of the factors considered, but not the only one. Maintaining an adequate gap between the trigger and the bottom of the earnings band was also relevant. We also needed to make sure that the right people—those who could afford to save—were enrolled.
There are two ways for a pension scheme to access tax relief for individuals. As the noble Lord, Lord McKenzie, said, schemes using relief at source can get tax relief at the basic rate even if the individual is not a taxpayer. However, where a scheme uses a net-pay arrangement, individuals can get tax relief only if they have taxable earnings. To answer the specific question, NEST will use the former, so that all members can get that tax relief.
Lord McKenzie of Luton
Does that mean that the tabulation in the Government’s response—which says that if the trigger is set at the primary threshold, it is not tax relievable at the lower end—would only run in some circumstances and would not run for many scheme members, particularly if they were members of NEST?
Lord Freud
Yes, on the basis of what I have just said, that is quite clear. For those saving in NEST, the figures would not work, while those saving in some other way, as the legislation currently stands, would not get the relief. NEST: yes; others: no. I think the silence behind me suggests a good spot there and I suspect we may look at that particular issue or anomaly —we may.
With the gently-gently approach of phased contributions starting at a modest level, we hope that we will not trigger a rush to the exit, but we do not know. We know what people tell researchers when they are asked. We can look at the opt-out rates in those countries that have similar systems. However, in the end, the evidence shows that if people feel they cannot afford it they are more likely to walk away, and the whole issue of pensions stays in the “too difficult to think about” pile. We are feeling our way here and there will be chances to make adjustments.
Baroness Drake
I appreciate that the Government are looking at the whole issue of the transfer of small pots. The point that I sought to concentrate on was that it is very likely that the market will apply a differential charging structure to inactive members and to active contributing members. Even though the Government have taken powers to control that, those powers will not stop differential charging. If a woman is full-time, then takes on a part-time job with another employer and is not auto-enrolled—and so becomes an inactive member—one of the consequences is that the charges on her remaining pot start to rise, because inertia is not turned into a positive. It is that narrow point. I appreciate that the wider review of pension pot transfers is coming up.
Lord Freud
I will stand my ground a little bit on this, because these are some of the issues that really come into consideration when we look at the broader issue of pension pots. My colleague Steve Webb has said a few things about this in public, and I know that he is looking in private at this differential charging issue, so it is something that he is considering.
My noble friend Lord German asked a related question about the opt-in/opt-out rates. Those will be monitored on an ongoing basis. He also asked about people coming in and going out as their earnings change, perhaps going from full-time to part-time. These people will continue to make and receive contributions according to the rules of the scheme that they end up going into when they go in, but if earnings dip to the extent that no contributions are due in a particular period, they will restart immediately when their earnings are high enough, so there is no waiting period.
I will now return to two issues to deal with them precisely. I only touched on the differential charging that the noble Baroness was concerned about. We have powers under the 2008 Act to set a cap should charges become inappropriately high. We recently extended those powers to cover deferred members. Therefore, we have all the necessary powers, and my colleague is aware of the issue. We are monitoring the charges with rolling research and will continue to do that as enrolment is brought in.
I will close my answers by doing justice to the point about tax relief made by the noble Lord, Lord McKenzie. We will continue to take that into account. The matter is not entirely straightforward, as we established. At this stage we do not know how many people will get relief at source as opposed to making net pay arrangements. We will keep that matter, too, under review.
This is our first review. It took a major consultation effort to decide on the trigger and the earnings band. We would have preferred to come out with this earlier, and I will try to do better on timing next year because early certainty is important, for employers in particular. It was right to consult this time, and to gather the views of people who will need to make automatic enrolment work in practice: those who will have to administer pension schemes, employers who will have to deal with all the questions from their workers, and people who represent those workers. The one message that we got from all of them was that we should keep this simple. I shall take that to heart for the future. Of course, it chimes with the Government’s Red Tape Challenge.
As I said, we will come back to this in a little less than a year. I know that I look forward to it as much as other noble Lords in the Room. I commend the order to the Committee.
Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2012
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Youth Unemployment
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Lord Kennedy of Southwark
To ask Her Majesty’s Government what action they are taking to reduce youth unemployment.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, the youth contract was introduced in April 2012 to provide additional support, with almost £1 billion, to young unemployed people over the next three years. It builds on the support already available through Jobcentre Plus and the work programme, enabling young people to look for work, gain work experience and skills and find real, lasting jobs.
Lord Kennedy of Southwark
My Lords, if it were not so tragic, the lamentable performance of the Government would be laughable. More than 1 million young people are not in education, employment or training. When are the Government going to pull their socks up and do something about this problem, or are they happy for young people to return to the misery of the 1980s?
Lord Freud
My Lords, let me just correct those figures. The number of people who are not students and who are unemployed is around 719,000. That figure is much too high but it is not near 1 million. We are doing an enormous amount to help young people into the jobs market, and we are doing it on a structural basis rather than making little fixes here and there.
Lord Roberts of Llandudno
My Lords, which Minister in the Government has specific responsibility for co-ordinating their struggle against youth unemployment? That is my first question; I think that I am allowed a second.
Lord Freud
My Lords, my colleague Chris Grayling is responsible for unemployment generally, and of course youth unemployment within that.
Baroness Turner of Camden
My Lords, what are the Government doing to stimulate the introduction of apprenticeship schemes in the private sector to make sure that such schemes are available to young people who otherwise would not have appropriate training?
Lord Freud
Apprenticeships are one of the key things to help youngsters into the market. There were 457,000 starts in apprenticeships in 2010-11, and 60% of those are for the age group that we are talking about, the 16-24 year-olds. We are pushing apprenticeships very hard, and we have put in a programme to reinforce that with incentives to SMEs: for each apprentice they take on, they get £1,500 a year. That is being financed for 40,000 youngsters.
The Lord Bishop of Blackburn
My Lords, in east Lancashire alone there are 5,000 18 to 24 year-olds out of work, of whom 3,000 have been out of work for more than six months and are still claiming benefits. We are very encouraged in my cathedral town of Blackburn that the world of education and the world of business are coming together to try to reduce that figure, but could the Minister give us in the north-west some hope that in the next three months we need not expect to see another cohort of young people adding to that figure of 5,000?
Lord Freud
My Lords, one of the things that has changed in terms of looking at young people is that we are getting some real figures that are not disguised, as they were, by people going into training and coming back again. We are counting people who are long-term unemployed as long-term unemployed, and the figure in the country as a whole for those unemployed for more than six months is currently 163,000. That figure is too high but, if you compare like with like, only about 10,000 more than it was when we first came into power.
Lord Peston
My Lords, is the Minister aware that unless and until we get a Government who place the restoration of full employment as a central aim of government economic policy, the young people of this country have no hope substantially of returning to work? We need a policy of full employment and not the kind of Elastoplast policies that the Minister is talking about.
Lord Freud
I am sure that the noble Lord will agree that the lump of labour fallacy is not how one should run an unemployment policy and that a competitive employment approach is the right approach. The way that one achieves that is by skilling up the workforce so that people can take jobs. That, in itself, expands the economy by more than it would otherwise expand. I am sorry that the noble Lord does not agree. I know there are noble Lords on the Benches opposite who dislike the lump of labour fallacy as much as I do.
Lord Flight
My Lords, the apprenticeship scheme is already achieving a lot and can achieve a lot more, but one of the problems is that when people come off jobseeker’s allowance their pay on an apprenticeship is very modest and they often cannot afford the travel costs. The Mayor of London is happily providing the travel costs for apprenticeships in London. Will the Minister look at expanding this where it is needed elsewhere in the country?
Lord Freud
I will look at that because one of the central thrusts of our policy is to ramp up apprenticeships. One of the most encouraging signs I saw when I visited a work programme contractor the other day was the way that having sustained outcomes—long-term jobs—is driving it towards putting youngsters into apprenticeships. That is a very happy fact pulling them together, and I will very happily look at anything we can do to reinforce the drive to apprenticeships.
Lord McKenzie of Luton
My Lords, will the Minister explain why the Government have taken the decision to exclude disabled young people on the work choice scheme from accessing wage subsidies under the youth contract? Does that not mean that they will be doubly disadvantaged?
Lord Freud
My Lords, we are trying to tier a structure of programmes where work choice, which is supported with its funding, is the way that young disabled people are supported.
Workers’ Memorial Day
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Lord McKenzie of Luton
To ask Her Majesty’s Government what plans they have to mark Workers’ Memorial Day on 28 April.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, the Government extend their sympathy to all those for whom Workers’ Memorial Day is especially poignant. It is right to commemorate those killed, injured or made ill through work. The day also highlights the importance of good health and safety in the workplace. The Government continue to recognise Workers’ Memorial Day and consider that families and friends of those affected, and organisations representing workers, are best placed to decide how the day should be commemorated.
Lord McKenzie of Luton
My Lords, I thank the Minister for his reply, which I take to be personally sympathetic to Workers’ Memorial Day—which, as he said, is about remembering those who have been damaged by health and safety failures, and renewing the case for good health and safety provision. The Minister will have been availed of the report of Professor Löfstedt, which the Government commissioned. It states that,
“the vast majority of employers and employer organisations acknowledged the importance of health and safety regulation in their responses to the call for evidence and felt that, in general, the regulations were broadly fit for purpose. During the course of my review, I have neither seen nor heard any evidence to suggest that there is a case for radically altering or stripping back current health and safety regulation”.
Does the Minister agree with that? If he does, will he encourage the Prime Minister to refrain from such unhelpful utterances as “killing off the monster of health and safety”, and to act responsibly in these matters?
Lord Freud
My Lords, we are very supportive of the report by Professor Löfstedt. He made the point in the report that legislation,
“can contribute to the confusion, through its overall structure, a lack of clarity, or apparent duplication in some areas”.
That is why we are driving through reforms designed to make the system easy to understand, easy to administer and easy to enforce.
Lord Alton of Liverpool
My Lords, does the Minister agree that one of the cruellest industrial diseases is the asbestos-related lung cancer mesothelioma, which can strike up to 40 years after exposure and has thus far claimed the lives of 30,000 workers? Is not one of the best things that the Government can do to support such workers is to respond positively to the all-party calls made in both Houses for mesothelioma victims not to have to face surrendering up to 25 per cent of their much-needed compensation to pay legal costs—compensation which they need in facing the last nine months to one year of their lives?
Lord Freud
I am spending considerable time on mesothelioma currently and I hope to sort out the real problem, which is the large number of people suffering from the illness who are getting no compensation at all because they cannot trace who was insuring them. I hope to see some real progress in this area—looking at the whole area of mesothelioma, both those who have been traced and those who are untraced—and to report back on that in the not too distant future, certainly before the summer.
Lord Forsyth of Drumlean
My Lords, when I was responsible for health and safety as a Minister I asked to see all the regulations applying to small businesses. There was a three-month delay, and when I asked why, I was told that the Health and Safety Executive would have to hire a pantechnicon to send them round. Is the Prime Minister not absolutely right to emphasise the importance of the culture of health and safety in the workplace, rather than masses of regulations that people cannot possibly be expected to absorb and comprehend?
Lord Freud
Yes, my Lords, the Prime Minister is right: legislation must be comprehensible to people if it is to be useful. That process is currently under way, and we aim to reduce the legislation by up to half by 2014. We are confident that that can be done in a way that actually enhances the effectiveness of our health and safety regime.
Baroness Turner of Camden
My Lords, I thank the Minister for his sympathetic response. However, is he not aware that there is one organisation which represents organised employees in this country that has a system of training and of safety representatives that is well worth considering? I am, of course, talking about the TUC. Does he not think it a good idea to have some consultation with the TUC on these matters?
Lord Freud
My Lords, I am pleased to say that alongside my colleague Chris Grayling I wrote to the general-secretary of the TUC on the matter of Workers’ Memorial Day. We are in regular contact with him on a large number of matters, and this is one of them.
Lord Wigley
My Lords, on the question of mesothelioma, to which the Minister referred a moment ago, can he indicate whether the ideas which he will be working on over the coming period will require legislation? If so, why are the Government not taking advantage of the legislation that is currently going through this House?
Lord Freud
My Lords, it is possible, depending on the outcome, that we will need primary legislation on mesothelioma. However these things take time and we will have to structure any solution in consultation with the various stakeholders in order to get there. There is not time at the moment to attach any relevant legislation quite as rapidly as the noble Lord suggests.
Lord German
My Lords, Professor Löftstedt said in his report that there needs to be general community support as regards an understanding of risk. I therefore welcome the Government’s establishment of the independent challenge committee which allows the public to make a challenge when they see a risk that they believe is not appropriate. Can the Minister tell us how that body will be independent given that its chair is also the chair of the HSE, and whether it will not require a wider reporting mechanism than that currently envisaged?
Lord Freud
My Lords, my noble friend is absolutely right in the sense that it is often not so much what the regulation says as the way in which it is applied and used, and often those who are most shocked by how the regulations are applied are those in the HSE. This is a really valuable element of our society which has led to our having the lowest level of fatalities from workplace accidents in Europe. It is important that we concentrate this effort on where it really does save people’s lives. I think that the HSE does have an interest in making sure that that happens.
Occupational Health Services
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Lord Harrison
To ask Her Majesty’s Government what they will do to encourage co-operation between the Department for Work and Pensions and the Department of Health to improve access to occupational health services including early intervention physiotherapy.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, the Department of Health and Department for Work and Pensions work closely together on improving the link between health and work, including helping to improve access to early intervention services for people at work with health problems. It is the responsibility of local and national health service and public health organisations to commission services to meet the needs of their community, including the provision of physiotherapy services.
Lord Harrison
My Lords, given that this country loses some £7 billion each year because of back and neck pain suffered, and given that some half a billion pounds is lost through NHS staff suffering in the same way and that the proper and timely application of physiotherapy would help enormously in returning people to work, can the noble Lord ensure that physiotherapy services are well funded and provided for in a timely fashion and that, in the development of government policy, the left hand of the DWP knows what the right hand of the NHS is doing?
Lord Freud
My Lords, I share the noble Lord’s concern about having adequate physiotherapy services. We are making quite a lot of strides in the combination of helping people to stay in work and getting them back to work and good health. There have been a lot of pilots, which I could go through if there were time. A lot of work has been done on this and it is right at the forefront of our concerns. We will be trying to optimise the position as we look at our response to the sickness absence review.
Lord Addington
My Lords, my noble friend spoke about the link between the Department of Health and the Department for Work and Pensions. Will he ask the Department of Health to make sure that if somebody has a soft tissue injury, which is usually what we are talking about, not only are they allowed to see a person who is qualified to assist them with it—usually a physiotherapist—but they are encouraged to do the exercises they will be given? If you think that treating any injury and stopping it becoming chronic can be done by somebody prodding you once a week, you are mistaken.
Lord Freud
I will not talk about the prodding too much, my Lords, although we get plenty of that here. One of the most valuable developments has been the self-referral process. There has been a lot of experimentation and piloting in relation to self-referral to physiotherapy and it has all been found to be very valuable. Patients have been empowered and highly satisfied with the results, with a lower level of work absence. The service provision has reduced costs and has substantially reduced the quantity of medicines prescribed as a direct result.
Baroness Finlay of Llandaff
Do the Government recognise that, given that on average 17 days’ sickness absence can be related to musculoskeletal disorders, the placement of physiotherapy in the workplace, as has happened in Rhyl in North Wales, can result in a decrease in sickness and the maintenance of people in work? Rhyl’s experience is of 82 per cent of people being able to remain in work, but that requires joined-up thinking between employers, health services and the benefits system.
Lord Freud
My Lords, that is absolutely smack on what the sickness absence review is looking at and whose recommendations we will be examining. The noble Baroness mentioned Rhyl. There have indeed been some quite remarkable improvements in this area. The project with which I was most impressed was in Lincolnshire, where triage was available on the same day. Advice, triage and signposting dramatically reduced the level of absence from work and, indeed, reduced the number of sessions of prodding that were required.
Lord McKenzie of Luton
My Lords, one of the long-standing issues around occupational health services and intervention physiotherapy, particularly those which are accessible through the workplace, is the tax treatment of the cost, and in particular, whether it is an assessable benefit on individuals. I imagine that the likes of Barclays Bank have a way round this, but can the Minister say what the Government’s general approach is?
Lord Freud
As you know, my Lords, I always find it difficult to say what the Chancellor may or may not do at any time in the future, so I will avoid that. However, I will point out that there was a recommendation in the sickness absence review to have some of those services tax-allowed by the employer. The recommendation is there and we will clearly look at it.
Baroness Fookes
My Lords, my noble friend will, I am sure, be aware of the pioneering work undertaken by Tomorrow’s People in putting employment advisers into doctors’ surgeries entirely on a voluntary basis. Is he happy with the extent to which this now exists, or could more be done?
Lord Freud
My Lords, various pilots, in particular those around putting employment advisers into improving psychotherapy services—the IAPT—seemed to go very well indeed. Clearly, having obtained that intelligence, we will be moving in that direction. I have talked a lot about pilots and trials in this area. It is rather recent that as a state we have begun to look at helping people to stay in work as part of the solution rather than keeping them out of work. That is why some of this is quite new and we are finding our way in this area.