European Union (Approvals) Bill [HL]

Lord Freud Excerpts

Wednesday 15th July 2015 Lords Chamber

Moved by

[Lord Freud]

That the bill be committed to a Committee of the Whole House.

Motion agreed.

Universal Credit (Waiting Days) (Amendment) Regulations 2015

Lord Freud Excerpts

Monday 13th July 2015 Lords Chamber

[Lord Farmer (Con)]

My Lords, while the noble Lord, Lord German, and the noble Baroness, Lady Sherlock, raise important points for consideration, I have to disagree with them both and speak against these Motions. In fact, I would go further and say that in the light of the £12 billion taken out of welfare in last week’s Budget, I am surprised that they are asking the Government to find yet more savings in other places. This is the implication of these Motions.

The waiting days measure, which is consistent with the wider landscape of welfare in this country, is projected to save around £150 million per annum, although there may be some debate on that. Indeed it is a save-to-spend measure, and so removing the housing element and delaying implementation will sharply decrease the amount of funding available for a number of programmes to get people off benefits and into work. I think noble Lords would all agree that we need to make the best possible use of taxpayers’ money and focus spend here. So I am concerned that, in particular, the proposed Motions will curtail the amount of help the Government can continue to give the long-term unemployed, such as quarterly work search interviews for all claimants and voluntary programmes available to lone parents with children aged three to four years old to help them become work ready.

I have been reading the Government’s response to the Social Security Advisory Committee and note that the SSAC’s recommendation to take housing benefit out of the waiting days regime would cut savings by around a half to two-thirds, costing £70 million to £100 million, as well as increasing the complexity of the universal credit payment from the point of view both of IT and the user. The onus is therefore on those tabling these Motions to say where they would cut the £70 million to £100 million to enable these important initiatives that started last year to continue.

Looking first at the concept of waiting days before entitlement to employment-related support, noble Lords will be aware that waiting days have been a long-standing feature of the benefit system and already exist in other working-age benefits, such as jobseeker’s allowance and employment and support allowance. In addition, it must be recognised that many people who make a new claim for universal credit will have come from a previous job and will therefore have final earnings or other income to support themselves until their first benefit payment.

Again, taking this approach to universal credit is consistent with the wider benefit system, which is not designed to cover very short periods of unemployment or sickness. Waiting days are also more consistent with the world of work, where very short breaks between jobs are unpaid as no employer is receiving the benefit of any work. This Government’s determination to ensure as far as possible that welfare mimics the world of work is the right approach.

It is my understanding that the safety net for vulnerable people is not being dismantled and that a number of groups are exempt from this change, including people who are terminally ill, victims of domestic abuse, care leavers, 16 to 17 year-olds without parental support, and prison leavers. Also, those who are in work and receiving universal credit who lose their job will not be subject to waiting days as they are already in the system.

I was pleased to read about a range of other targeted exemptions, which seem to be a better use of scarce public funds than treating all people as equally in need. I am, however, concerned about those who are long-term unemployed and have no savings or incoming final payment, and this is where it is vital that claimants receive timely and effective personal budgeting support as well as, if necessary, cash support in the form of a universal credit advance. Again, I would say that this Government are right to take a more finely grained approach and help those who particularly need support in the very short term, instead of assuming that everyone is in the same position.

I turn to the other elements of universal credit not tied to employment support, especially the housing benefit element that is the concern of the Motion of the noble Lord, Lord German. My understanding is that as universal credit is simplifying the welfare system, not least to make work pay, it would run counter to that goal to treat the housing element separately. I think that this was said earlier, but paying universal credit as a single monthly sum to households aims to help to prepare claimants for the world of work or to keep them in that mindset when they drop out of the labour market.

Quite rightly there is an expectation placed on households to manage their own budgets. Obviously housing costs do not cease when someone finds themselves having to move on to universal credit, but neither do they cease when someone is between jobs. However, I was relieved to find out that protections are in place for tenants who fall into arrears and alternative payment arrangements are available. In other words, it is not a sink-or-swim situation but we are encouraging the norm that very many of those who are in work try to live by, which is saving something for a rainy day.

In summary I support the Government’s position on waiting days, on the grounds that when there is such a tight financial settlement it is imperative that the welfare system is simple but concentrated on those who need it most. However, I echo the Social Security Advisory Committee’s plea, which we have just heard, that this change be subjected to the test-and-learn approach that was a hallmark of welfare reform under the coalition Government. It is essential that we can irrefutably say that the exemptions and other fine print of the waiting days measure are delivered as promised.

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

Before considering the individual arguments, I think it would be useful to understand to whom exactly waiting days actually apply. It is not the most vulnerable: care leavers, the terminally ill, victims of domestic violence, youngsters without parental support and prison leavers have all been exempted. It is not those coming from other benefits such as jobseeker’s allowance or employment and support allowance. We have to remember that because universal credit is a benefit for low-income people in work as well as a safety net, many people in low-income and unstable employment will remain on universal credit as they move in and out of work. Hence, the very people for whom much of the concern has been expressed today will not be affected.

Noble Lords, and indeed the Social Security Advisory Committee’s consultation, highlighted a series of examples of cases that might be affected. These included the effect on a single mother reducing her hours to care for her sick child; the effect on those who have not been able to build up a cushion for a rainy day because they have been in low-paid work, on zero-hour contracts or in in-work poverty; the reluctance of claimants to take short-term employment as they fear they may have to serve waiting days again when the job finishes; the concern of landlords that their tenants might not be able to pay their rent because they lose a week’s housing and the disproportionate effect that that will have in London; and the fear that low-income people may borrow from payday lenders and loan sharks to keep afloat, a point made by the noble Lord—I find it hard not to call him my noble friend—Lord German.

I understand why these examples cause concern. They would cause me concern, too, if I was not confident that in such cases waiting days would not affect the most vulnerable. The single mother, the low paid, and zero-hours contract workers will most likely already be on universal credit while in work if their income is low. If on universal credit, they will not serve waiting days. Even if a person on a zero-hours or a short-term contract comes off universal credit, they will be exempted if they reclaim within six months. People moving from other legacy benefits are also exempted.

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[Lord Purvis of Tweed (LD)]

I have been listening to the debate very closely and I wonder whether the Minister can clarify something for the House. He will be aware that Clause 25 of the Scotland Bill concerns,

“persons to whom, and time when”,

universal credit will be paid. It will be a concurrent power lying with the Secretary of State and Scottish Ministers. How can the noble Lord make with so firm a view the statements about the operational aspects all being in place, when they are not necessarily in place in Scotland? Agreement will still have to be reached with Scottish Ministers about how this will operate. The figures that the noble Lord is giving and the assumptions he is making cannot necessarily be correct when the passporting of one system to another within Scotland is not resolved. Therefore, would it not be better to delay these regulations until these aspects, which could affect many people in Scotland, are clarified between two potential Ministers?

[Lord Freud]

Universal credit is a fully reserved matter. There are some areas that we will discuss with the Scottish Government by agreement but they do not include a mainstream policy such as waiting days.

[Lord Purvis of Tweed]

I know that the noble Lord is aware that the Scotland Bill is going through another place, but is he aware that Clause 25, which is headed “Universal credit: persons to whom, and time when, paid”, says:

“A function of making regulations to which this section applies so far as it is exercisable by the Secretary of State in or as regards Scotland, is exercisable by the Scottish Ministers concurrently with the Secretary of State”?

That is still the Government’s position in the Government’s Bill, is it not?

[Lord Freud]

I have expressed the exact agreement under the Smith commission and, as I understand it, as it appears in the Bill to which the noble Lord has referred.

I turn to the question about the savings raised by the noble Baronesses, Lady Sherlock and Lady Lister. In steady state the savings are currently estimated at £130 million to £140 million. In the current year— 2015-16—the figure is £30 million. I think that we can congratulate the noble Baroness, Lady Sherlock, on finding the formula relating to the £5 million difference. The figure goes up pretty rapidly to the steady-state figure over the next three years, so it reaches it by 2017-18.

The expenditure with the savings is committed for 2015-16, and I cannot pre-empt the spending review in the autumn. We discussed the things that that would be spent on.

I am trying not to bore the House by telling it things that it might find unnecessary. I can assure the noble Baroness, Lady Lister, that telephone calls are available to arrange meetings. For the most vulnerable, we will explain the availability of universal credit advances either on the phone or face to face if not digitally.

The noble Lord, Lord Kirkwood, and the right reverend Prelate the Bishop of Portsmouth asked: how will we ensure that people are supported in their work search? We have more than 26,000 staff now trained to provide job coaching, so we are rolling that out in scale.

Let me just wind up. I appreciate that noble Lords genuinely support universal credit. That sentiment has been expressed widely, particularly by the noble Lord, Lord Kirkwood, and the noble Baroness, Lady Sherlock. I understand that. It is a slightly odd debate in that way, because noble Lords are trying to reinforce universal credit. I absolutely understand and appreciate that.

It is a savings measure. It releases £130 million to £140 million in steady state. The blunt reality is that, in the present environment, if we did not find money here, we would have to find it somewhere else. The noble Lord, Lord Kirkwood, has an instinct about how these things happen to which I am very sensitive.

Last week, the Chancellor of the Exchequer set out a vision of a higher-wage, lower-tax, lower-welfare society. As a first step towards this, he pledged to raise the personal allowance to £12,500 by the end of this Parliament, with an £11,000 down payment in the next tax year. Coupled with the living wage, which he announced, it gives people the chance to make decisions about their own money. It is still absolutely right, as noble Lords have said, that universal credit continues to operate as a real safety net for the most vulnerable and offers real support to those wanting to work and support themselves.

I commit to keeping a very close eye on this. I have been alerted to it tonight by noble Lords as something to watch. We are committed to a test and learn strategy. We will be rolling this out from August. I will come back to your Lordships as soon as I have a reasonable level of data to let you know whether that is happening and whether I am right in what I am telling you today: that this will not affect the people about whom noble Lords are so rightly concerned; but that I am right that it affects the people who are flowing through the system and we are just not paying them as much during that short period. I hope I am right on that, and I think that I am, but I will look at this very closely and come back to the House on its concerns about the vulnerable and tell noble Lords what is happening and what my level of confidence is on that when we have real evidence.

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[Lord German]

My Lords, first of all, I thank all Members who have spoken in the debate. I particularly thank the noble Lord, Lord Freud, for his contribution. Many people in your Lordships’ House will recognise that one thing he is very passionate about is the success of universal credit. We on these Benches also support universal credit and wish to see it happen.

The issue raised today is about the very short-term responses that government makes to people who have the worst problems and are in the worst condition. The key question that I wanted to see answered in this debate was how people will manage in that period when they are at their weakest and most vulnerable through illness and unemployment. I know that some people are exempt, but not all are, and considerably fewer people will be exempted than the Government expected. It is about those very short-term measures. This is not about the response to people who are unemployed over a longer term. This is about the period when they have either lost their job or become ill and require support in order to do two things: support their family and pay their rent. The fundamental issue behind the Motion is that, in that period, when choices are being made, people will choose to feed their family first and pay the electricity bill to keep the lights switched on. They will then not be able to pay their rent. That is the period for which the very harshest part of the regime has to be dealt with. It is the very simplest and smallest of measures that we are asking to be changed today in order to allow people to be able to manage at that most difficult time.

A number of noble Lords talked about universal credit in the longer term. Of course we are impatient on these Benches for its rollout to occur more quickly, but it has to be right. That is why it is the smallest of measures that we are asking to be changed today.

I say to my colleagues on the Labour Benches that there is nothing incompatible with removing the housing element from the waiting days and then having a review on postponing the measures for the introduction—both go hand in hand. This is the most difficult part of the whole waiting-days regime and housing benefit is the crucial part that people will avoid when they have to feed their families.

To those who have said that there is an alternative in the form of emergency payments—universal credit allowance payments—I must say that, last year, in answer to Parliamentary Questions, we were told that two-thirds of claimants who asked for emergency payments to help bridge that gap, in this very short period, were refused by Jobcentre Plus. Nearly 150,000 out of 221,824 applications were turned down. We know from the Trussell Trust and others that food banks are about short-term financial crisis. It is that short-term financial crisis which we should seek to avoid.

[Lord Freud]

It is worth clarifying that on universal credit advances, which are an advance for people who feel they need this financial support, I am aware of hardly any turndowns. It is a very different process. It is important not to conflate the two types of financial support.

[Lord German]

I say with the deepest respect to the Minister, who I know is an honourable man, that only a very small number of people—and they are not with families and children—have received universal credit. We have to take as an example the past year, where the same rules have applied about being able to afford to repay that advance on payment.

I come back to the fundamental point: how will those who are the most vulnerable manage? I am afraid that I have not yet been satisfied that we will do all we can, and I therefore believe it important to test the opinion of the House on this matter.

Universal Credit (Waiting Days) (Amendment) Regulations 2015

Lord Freud Excerpts

Monday 13th July 2015 Lords Chamber

[Lord Freud]

My Lords, I will not make a statement but I repeat what I said—namely that I will come back to the House at the appropriate time. I think that I set a precedent last week in finding a way to keep noble Lords informed about what is happening. I will keep noble Lords informed about how this policy is going down.

Child Poverty

Lord Freud Excerpts

Wednesday 8th July 2015 Lords Chamber

[Baroness Lister of Burtersett]

To ask Her Majesty’s Government what steps they plan to take to (1) implement their pledge to work to eliminate child poverty, and (2) meet the 2020 statutory targets set out in the Child Poverty Act 2010.

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

In line with our manifesto commitment to work to eliminate child poverty, we will bring forward legislation to remove the existing measures and targets in the Child Poverty Act, as well as the other duties and provisions. The legislation will introduce a statutory duty to report on measures of worklessness and educational attainment. These new measures will drive real change and make the biggest difference to the lives of poor children now and in the future.

[Baroness Lister of Burtersett (Lab)]

Will the Minister explain how government accountability for the elimination of child poverty will not be seriously weakened when the targets are abolished, the measures of child poverty as such are effectively abandoned and child poverty is removed from the title and presumably remit of the Social Mobility and Child Poverty Commission—all at a time when punitive cuts in financial support for low-income families with children, in work as well as out of work, will blight their children’s life chances and childhoods?

[Lord Freud]

The HBAI measure will clearly still be published and is a useful measure to track what is actually happening. It is, however, a very poor measure as a statutory target because it is simply not forecastable. I come back to the point about the so-called cuts for those in work. After today’s Budget, by 2017-18, eight out of 10 working households will be better off as a result of the combination of personal allowances, the new national living wage, which will rise to £9, and the welfare changes. That is 17.7 million households better off.

[Lord German (LD)]

My Lords, a policy that reduces the number of children in poverty when the economy is on the way down yet actually increases it when the economy is on the way up is surely a nonsense. You can never eradicate child poverty under that measure. But surely household income and knowing the circumstances in which children live is a very important measure in determining whether they are in poverty. Will the Minister agree to the Government including household income as a factor in whatever child poverty measure they use in the future?

[Lord Freud]

We will clearly go on reporting on the HBAI measure. As a legal target it is very dangerous, and we have just seen why. In 2011, the IFS projected a figure which was wrong by 5 million children. The IFS thought that there would be 5 million more children in 2013-14 than there actually were when the figures came out. If it is a legal target, you have to start working to reduce your poverty by 5 million children—sorry, half a million children, not 5 million. That is completely unforecastable and implies huge unnecessary costs on the state.

[Lord Fink (Con)]

My Lords, how do the Government intend to help the 390,000 children who live in workless households? What measures do they have to do this?

[Lord Freud]

The number of children in workless households has been coming down rapidly. It has come down by 390,000 and is now at a record low. We are looking to encourage more families back into the workplace through the financial incentives around universal credit, the new national living wage—clearly, a very direct incentive—and free childcare, and we are working to boost the number of apprenticeships from 2 million under the last Government to 3 million under this one.

[Baroness Sherlock (Lab)]

My Lords, the devil for today clearly is in the detail. It is working parents who depend most on tax credits to make work pay and lift their children out of poverty but, while a single parent with two children who is working 16 hours a week will gain £400 from the new national minimum wage, which is very welcome, sadly she will lose more than twice as much in cuts to tax credits. How can this be right? How can the Minister tell the House that working families are better off when it is those very elements of tax credits and universal credit which make work pay that have been cut today? How can that be the security for families of which the Chancellor boasts?

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[Lord Freud]

My Lords, one has to look at all the elements that are going in. They are the new national living wage, the changes to welfare in both universal credit and the tax credits system and, clearly, the changes to personal allowances, which are moving up under our manifesto commitment to £12,500. Under universal credit there are gainers, but the real impacts that we will see from these changes will be on a dynamic basis because they will encourage people to go into work, and into better-paid work.

[Baroness Hollis of Heigham (Lab)]

My Lords, these Budget changes will actually make working families £40 a week poorer, with larger families even more so. It is a Budget for security but not for working families with children; a Budget for the family but not for working families with children; a route out of poverty but not for the working poor and their children. Will the Government accept that they have ensured that the face of poverty in this country will continue to be the face of a child?

[Lord Freud]

No.

Universal Credit

Lord Freud Excerpts

Tuesday 7th July 2015 Lords Chamber

[Lord Leigh of Hurley]

To ask Her Majesty’s Government what is their assessment of the experience of those claiming Universal Credit.

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

For those who are now claiming universal credit, the experience is a positive one. Work is clearly incentivised and as a result claimants look for work more actively, find work more quickly, stay in work longer and earn more. The system is simpler and easier to understand for claimants, those who advise them and departmental staff.

[Lord Leigh of Hurley (Con)]

I thank my noble friend the Minister for that Answer. What steps has he taken to protect the most vulnerable people encompassed by the system and those people who will be encompassed by it in the rollout?

[Lord Freud]

Clearly, as we roll out universal credit in the years to come, we will be pulling in people who are more vulnerable than the groups we are currently pulling in. We are looking to support them in a number of ways. That is one of the reasons why we are doing this careful rollout with a test-and-learn strategy. But the specific things we are looking at in this area are help with personal budgeting support and the development of universal support delivered locally, where we are in partnership with local authorities throughout the country. We are trialling that and the results will inform the future rollout.

[Lord Rooker (Lab)]

Is it not also true that the system is simpler to understand for cybercriminals? Given the fact that universal credit is going to be such a large percentage of government spending, what preparations are the Government taking to make sure that this system is clear and safe from cyberatttack?

[Lord Freud]

The noble Lord is absolutely right that this is potentially a major target for cybercriminals. We have made an enormous effort in developing the digital system, which is a two-way system, unlike the live system that we are currently rolling out across the country. We are making sure that that is safe from cybercriminals, and the first group of people are looking at security operations, because it is not a question of just building a system; you have to maintain it with a big team to make sure that nothing of that nature is going on.

[Lord Kirkwood of Kirkhope (LD)]

Will the Minister confirm that when this House enacted the Welfare Reform Act 2012, the planning assumption was that up to 1 million households would now be receiving universal credit? Will he acknowledge that actually the number of households receiving universal credit is just over 50,000? Will he also accept that that means that lots of families are being denied useful help month by month and the delay is therefore important? Will he undertake to talk to his business manager friends on the Government Front Bench to try to find ways of regularly updating the House over the next 18 months? The delays in the introduction of universal credit are now causing real grief within low-income households.

[Lord Freud]

One of my purposes today is to find a forum where I can update noble Lords in this Chamber about what is happening in a somewhat more sensible atmosphere than is perhaps seen elsewhere in the Palace of Westminster. On the point about timing we have reset this programme, as I am sure all noble Lords here well remember, and will not be going on to the rather sharp upgrades in the volumes that we were initially looking at. We are now designing it in such a way that we will test different groups and make sure that we roll it out sensibly. That was what the reset was about and, interestingly, it is exactly what the NAO and MPA are saying is the way to roll out big programmes.

[The Lord Bishop of Chester]

My Lords, in his Answer the Minister referred to universal credit as incentivising people to work. Can he give a bit more detail on just what that incentivisation involves? What is the typical marginal effective tax rate for someone who is on universal credit, given that I read recently that it can be more than 70%?

[Lord Freud]

The marginal rate—the rate at which one withdraws benefit—is 65%. In practice, among the incentive effects are that all the constraints about taking temporary jobs or trying part-time jobs have disappeared, as have some of the constraints against people who may be disabled with fluctuating conditions. They would not normally dare take on a job because if their condition came back, they would have to restart the process of getting on benefits. Because universal credit is both an out-of-work and in-work benefit, it means that there is no risk element to being in work.

[The Countess of Mar (CB)]

My Lords, the Minister will no doubt have seen and heard increasing criticism of tax credits as a way of supporting profit-making companies which should be paying proper wages to their staff but are bad employers. What are Her Majesty’s Government doing to reduce the number of people claiming tax credits and incentivise employers to pay proper wages to their staff, so that they do not need to claim tax credits?

[Lord Freud]

My Lords, it is a bad day to answer that question. The real point is that as we move from the combination of the benefit and tax credit systems into one universal credit system, the incentives will be restructured to encourage people to work their way down the taper.

[Baroness Sherlock (Lab)]

My Lords, I am grateful to the Minister for wanting to update us—in fact, he sent me a lovely letter last week telling me how well universal credit was going—but the point made by the noble Lord, Lord Kirkwood, was that we were expecting 1 million people to be on it by last year. In fact, in two years’ time there should be 7 million people on it. So if the Minister wants to update us, given that there are currently just 65,000 people getting universal credit, will he not follow the advice of the National Audit Office and tackle the secrecy surrounding the programme? In particular, will he agree to publish the full business case for universal credit and a proper plan with milestones, so that we can judge it and reassure people how their money has been spent and when universal credit will be rolled out? He will know that his good friend the Prime Minister has said that sunlight is the best disinfectant. Is it not time to throw open the windows of DWP and let some light in?

[Lord Freud]

We have completed the strategic outline business case and will be doing the outline business case this summer. We have actually put out quite a lot of figures, in particular on the amount that this programme is costing, which is down from the original £2.4 billion to £1.8 billion. The letter which I sent to the noble Baroness and various others, and which is available in the Library, tries to deal with the main changes going on in this programme. It reflects my determination that this House will be kept informed of developments as they come up. I have made a commitment to do that and I will do that.

European Union (Approvals) Bill [HL]

Lord Freud Excerpts

Monday 6th July 2015 Lords Chamber

Moved by

[Lord Freud]

That the Bill be now read a second time.

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

My Lords, the purpose of the Bill is to approve two draft decisions of the Council of the European Union. Both rely on Article 352 of the Treaty on the Functioning of the European Union, which allows the Union to take action to attain one of the objectives set out in the treaties, but for which there is no specific power given, provided it has the unanimous support of all member states.

For the UK to agree these draft decisions at Council, Parliament must first give its approval. Section 8 of the European Union Act 2011 provides that a Minister may vote in favour of an Article 352 decision only where the draft decision is approved by an Act of Parliament. I am pleased that Members of both Houses will have the opportunity to decide whether to approve such measures.

The first decision will enable the Former Yugoslav Republic of Macedonia to be granted observer status in the European Union’s Fundamental Rights Agency. This proposal has been around since 2010, clearing the UK parliamentary scrutiny processes then in place. In April last year the decision re-emerged, with the Greek presidency having lifted its block on the decision. At that point, all other member states were ready to vote in favour of the decision. However, the requirements of the EU Act meant the UK had to enter a scrutiny reserve for the decision pending approval by an Act of Parliament. The Former Yugoslav Republic of Macedonia has been an EU candidate country since 2005, but in recent years we have seen serious backsliding on reforms. A political crisis has been unfolding in the country over the past year, which has raised serious concerns about the rule of law and adherence to democratic principles. The Foreign Secretary recently discussed the crisis with EU partners at the Foreign Affairs Council on 22 June.

The Government consider that a decision enabling the Former Yugoslav Republic of Macedonia to become an observer to the agency would assist the country in tackling the reform challenges it faces and provide advice and help on human rights issues. A recent European Commission report set out a series of recommendations needed to return the country to the path to EU accession. This included reforms related to freedom of expression and the rule of law. Observer status at the agency could allow the country access to advice and assistance on fundamental rights issues to help take forward these reforms.

The second measure is a decision of the Council enabling the EU tripartite social summit to continue to operate. The summit is a regular forum for meetings of representatives of the European social partner organisations, the European Commission and the Council to enable high-level discussion between the three parties on employment and social aspects of the European agenda for growth and jobs. It was established by a Council decision in 2003 and usually meets on the eve of the European Council in spring and autumn. A new decision to re-establish the legal basis for the TSS became necessary because the article of the EU treaty it had relied on, Article 202, was repealed when the EU treaties were reformed under the treaty of Lisbon, agreed in 2007.

At the same time as renewing the decision under a new legal base, the draft decision seeks to take account of changes within the EU in the intervening decade so that it is fully aligned to wider strategies and reflects any technical changes. These changes are that, first, the Lisbon treaty gave the European Council a formal institutional role and its own President. To reflect this, the draft decision gives the Council President a joint-chair role at the summit. Secondly, the draft decision also brings recognition, in Article 152 of the Treaty on the Functioning of the European Union, of the value and role of the TSS as part of EU social dialogue arrangements. Thirdly, in 2010 the Europe 2020 strategy replaced the Lisbon agenda for employment and growth which the TSS originally served. Europe 2020 is the European Union’s 10-year jobs and growth strategy. It was launched in 2010 to create the conditions for smart, sustainable and inclusive growth. Finally, the decision had to recognise that some of the employer organisation members have changed their names.

Dialogue at European level is the purpose of the summit. The Government are able to support the continuation of the summit, the proceedings of which can lend support to building consensus for labour market reforms needed in other member states. The Council published the final agreed text of the tripartite social summit measure and it has received consent from the European Parliament. It is therefore ready for adoption, subject to UK agreement, as all other member states have given their approval.

There are no financial implications for the UK for either decision. There would be negligible or no financial impact to businesses, charities or the voluntary sector in the UK. Over the intervening decade, no apparent risks for the UK have emerged during the existence of the TSS. I confirm that I do not consider that any of the Bill’s provisions engage the rights set out in the European Convention on Human Rights, so no issues arise as to the compatibility of the Bill with those rights. It is also the intention for the Bill to come into force on the day of Royal Assent. For the reasons I have outlined, I commend the Bill to your Lordships. I beg to move.

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[Lord Freud]

My Lords, I am grateful for the contributions to the debate, albeit they are of a different nature to the contributions that I am used to on some of the more substantial things that we have discussed. I accept the distinction that the noble Baroness, Lady Sherlock, made in that regard.

Before I come on to the specific questions, I shall go through the two areas again. The point of the Bill is so that we can approve two draft Council decisions. On the question of how many such decisions there have been under Article 352, asked by the noble Baroness, Lady Ludford, we have had two this year and two last year—so it is not the beginning of the flood that Noah suffered. Under the Bill, we discussed the participation of the Former Yugoslav Republic of Macedonia as an observer in the work of the European Union Agency for Fundamental Rights. It is the objective of that country to become a member of the European Union, but it needs to set out key reform priorities, which have been set out by the European Commission. The Government want to encourage the Former Yugoslav Republic of Macedonia—I have to choose my words carefully—on the reform path. Granting observer status is consistent with that approach.

At this point, it might be worth picking up another point from the noble Baroness, Lady Ludford, on the name issue—because I have already used quite a lot of my time repeating four or five words very carefully. The UK has supported efforts which have been made under UN auspices to find a mutually acceptable solution to the name issue. Regrettably, I have to report that no solution has been found so far. There have been some confidence-building measures agreed between Greece and Macedonia and we hope that that will start to lead to a solution to the problem.

On that specific issue, the competency of the agency will not be extended by doing this. It means that the Former Yugoslav Republic of Macedonia should be supported to increase its human rights awareness and the promotion of fundamental rights within the country. The FRA could provide Macedonia with advice on the promotion of human rights and principles. It will collect and analyse data on the human rights situation in the country and assist with reforms. The noble Baroness, Lady Ludford, asked about the impact on accession. This process could possibly contribute in terms of its path towards the EU.

The UK does not take part in the tripartite social summit. However, the dialogue at this European-level forum is welcomed in support of building consensus for the labour market reforms needed in other member states. The summit has met for some years now and this draft decision effectively seeks to re-establish its legal basis. Both noble Baronesses asked whether we should be spending our primary time doing this. Essentially, Article 352 is a protection to make sure that things that do not fall within specific areas of EU competence cannot be agreed without this House and another place agreeing to it. That is the purpose of the article. These issues happen to fall within that position. The former Minister for Employment, Esther McVey, explained that the Government and the Commission’s understanding of the legal basis was the same and there was no alternative than to use Article 352. However, we can hope that we do not spend too much time in this House on matters such as this. As I said, there are not too many more due, certainly not this year.

I think that I have covered all the points raised by noble Lords. I commend the Bill to your Lordships and ask you to give it a Second Reading.

Bill read a second time.

Housing: Under-occupancy Charge

Lord Freud Excerpts

Tuesday 16th June 2015 Lords Chamber

[Baroness Hollis of Heigham]

To ask Her Majesty’s Government what estimate they have made of the number of those affected by the social rented sector size criteria who have downsized into smaller properties.

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

Across the seven months between May and December 2013, around 22,000 households affected by the removal of the spare room subsidy either moved to the private sector or downsized within the social rented sector. The final independent evaluation report will be published later this year. This will provide more up-to-date information on how people are responding to the policy.

[Baroness Hollis of Heigham (Lab)]

My Lords, 22,000 out of 600,000 people is very few. Most tenants cannot move, as there are not the small properties; nor can they afford to stay without going without meals or going into debt. Some are desperately downsizing from two-bed social houses at £82 a week to one-bed private flats at £140 a week. These are of poorer quality and half the size, but cost almost double the rent and therefore almost double the benefit bill, which we all pay for. We are smashing lives. Why are the Government pursuing such ugly, faulty economics, and why are they pursuing such pointless cruelty?

[Lord Freud]

My Lords, looking at the position in the round, people move from low-cost social housing to higher-cost private housing, but that allows another family who may have come out of private housing to go into social housing. You have to look at the bill as a whole, and the saving on this particular part of the bill is running at £0.5 billion a year.

[Baroness Eaton (Con)]

Can the Minister explain what the Government are doing with housing associations concerning the removal of the spare room subsidy?

[Lord Freud]

Local authorities and housing associations have responded with a range of programmes to manage the various benefit changes, including this one. It is instructive to look at the reports and accounts put out by housing associations. Affinity Sutton says:

“Overall, the impact on us has been less than expected”.

Sovereign says that a team of 12 tenancy support advisers has kept its arrears low; Midland Heart says that the year has concluded with arrears continuing to fall; A2Dominion says that,

“despite welfare reform changes, rent arrears have fallen”;

and Orbit housing group says:

“Our arrears have decreased … despite the impact of the spare room subsidy”.

[Baroness Sherlock (Lab)]

My Lords, the Minister does not have to take the word of my very well-qualified noble friend Lady Hollis; perhaps he should talk to the Tory MP Nigel Mills. He highlighted the plight of tenants who wanted to downsize but could not, so were hit with higher rents—the very point he is making. He went on to say:

“It … wasn’t desperately fair on them or desperately good politically”.

He also said that the bedroom tax caused,

“a lot of grief for what wasn’t the hugest amount of money”.

Or he could talk to Daniel Kawczynski MP, who called for a “root and branch” review; or David Cameron’s former speechwriter, Clare Foges, who said of the bedroom tax:

“It is not working as has been hoped and will remain a fly in the one-nation ointment”.

She urged the Prime Minister to move on from it. We keep hearing evidence. Is it not time that the Government admitted that we all make mistakes and that this one is a very bad mistake, a very expensive mistake and a very cruel mistake? Please will they put it right?

[Lord Freud]

There are signs of people both downsizing and going into work on a policy that was designed to save the state £0.5 billion a year and is doing so. One of the side-effects that is not properly appreciated is the extraordinary change in the numbers in social housing who are out of work. They have now reached the lowest levels that we have ever recorded.

[Baroness Maddock (LD)]

My Lords, it is quite clear from the Government’s own evidence in the last Parliament that there are many instances where people in social housing are unable to downsize—the accommodation simply is not there. Could I ask the Minister to look very carefully at the Private Member’s Bill introduced by the then MP for St Ives, Andrew George, trying to deal with some of the worst aspects of this now rather discredited policy?

[Lord Freud]

There are a substantial number of homes available each year. There are about 1.4 million single-bedroom social housing homes and, on the HomeSwapper site, there are now 55,000 one-bedroom homes and 142,000 two-bedroom homes to swap into.

[Lord Best (CB)]

My Lords, I congratulate those housing associations on keeping down their arrears through very heavy investment and a lot of hard work. I congratulate the Minister on producing and continuing to produce large sums of discretionary housing payments, which have been very important in alleviating some of the misery caused by the so-called bedroom tax. Will the Minister confirm that, although they obviously reduce the savings to the Treasury, the discretionary housing payments, which have saved a lot of people, will continue at their current levels or at higher levels in future?

[Lord Freud]

The current year figure is running at £125 million, which is very high and up substantially—by more than £100 million—on the figures that we were looking at in 2010. I obviously cannot make any commitment at this stage on its future levels—that will go into a spending review—but clearly this has been an important way of making sure that this policy goes in without the kind of impacts that some people were concerned about.

[Baroness Lister of Burtersett (Lab)]

My Lords, research published in the Journal of Public Health points to a disquieting amount of financial hardship as a result of the bedroom tax, as well as compromised diets, an impact on physical and mental health, and the disruption of important social networks. The Minister seems to think that downsizing is something simple. We are asking people to downsize from their homes, not just from housing, and we are disrupting their lives and networks. Will the Minister think again on this and take into account that, as my noble friend and many members of his own party have said, this is a cruel mistake?

[Lord Freud]

I am not sure that noble Lords can have it both ways. Either there is not very much downsizing or there is too much disruption of networks. I do not think that both can be argued at the same time.

Personal Independence Payment

Lord Freud Excerpts

Wednesday 10th June 2015 Lords Chamber

[Baroness Thomas of Winchester]

To ask Her Majesty’s Government what action they intend to take in response to the High Court judgment in R (on the application of Ms C and Mr W) v Secretary of State for Work and Pensions and others [2015] EWHC 1607 (Admin) that long delays in Personal Independence Payments are unlawful.

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

We are considering the terms of the judgment. We have achieved further reductions in average waiting times for an assessment, and they are now well within the Secretary of State’s target of 16 weeks.

[Baroness Thomas of Winchester (LD)]

I thank the Minister for that reply. I accept that waiting times have gone right down, but the judge’s comments were pretty scathing about the introduction of PIP before all the systems were fully in place, which, she said, led to the implementation being “inefficient”. Is he confident that the full rollout of PIP to the bulk of DLA recipients, currently scheduled for October, is entirely safe?

[Lord Freud]

The judge found significant shortfalls in the introduction, as the noble Baroness said, and we agreed at the time that that was simply unacceptable. Noble Lords will probably remember that at the peak of the backlogs we were looking at waiting times of 30 weeks. That was in June; we set a target of less than 16 weeks, and we have now gone down to seven. On that basis we are confident about the full rollout, although we will and are doing it on a safe and controlled basis.

[Baroness Campbell of Surbiton (CB)]

My Lords, during the general election campaign the Prime Minister stated his desire to “enhance” and “safeguard” PIP. Will the Minister say how the Government plan to fulfil that election promise to disabled people and reassure them that their payments will be protected in the Chancellor’s up-and-coming Budget?

--- Later in debate ---

[Lord Freud]

We will continue to support the disabled and the vulnerable in months to come.

[Baroness Sherlock (Lab)]

My Lords, maybe I can follow that up a little more. The noble Baroness, Lady Campbell of Surbiton, specifically asked for an assurance of the Prime Minister’s guarantee that he would continue to support disabled people and that their benefits would be protected. Let me give the Minister the opportunity to give that. The Government want to make £12 billion of welfare cuts. Will he say today that none of those will fall on disabled people?

[Lord Freud]

I repeat what I said: we will continue to support disabled people and the vulnerable through that process.

[Lord Phillips of Worth Matravers (CB)]

My Lords, at the end of her judgment, the judge commented that the Secretary of State appeared to be grappling with the situation in a way which was “entirely appropriate”. Does the Minister believe that was a fair comment?

[Lord Freud]

I think the judge very much took on board the fact that the Secretary of State realised that something that was simply unacceptable was going on and that we took very large measures to deal with it. Those measures included ramping up the numbers—we ramped up the number of health officials by a factor of four—and we had many more places to do the assessments, and so on. That is what has got the situation under control.

[Baroness Gardner of Parkes (Con)]

My Lords, is the Minister aware that a great deal of time is taken to reassess the cases of people who have incurable and irreversible conditions? Would it not be of great benefit to the department for those people not to be reviewed so often?

[Lord Freud]

My noble friend makes a fair point. Indeed, one of the ways in which we have speeded up the process since last June is by making more paper assessments, and it is precisely that group of people for whom we are able to do that.

[Lord German (LD)]

My Lords, what assessment has the Minister made of people with Motability cars who may be waiting for a decision or who are seeking an appeal? While you can back-date cash requirements for people who make appeals and are successful, you cannot back-date a motor car.

[Lord Freud]

My Lords, of course, the people who are being reassessed, whether through a natural reassessment or through the full rollout, will continue to receive their DLA rates, as they were, until they get the conclusion of the PIP assessment. Therefore, there is no question of them losing a car in that period.

[Baroness Farrington of Ribbleton (Lab)]

My Lords, I did not quite understand the Minister’s reply to my noble friend. Did he say that the Government will protect disabled and vulnerable people during the forthcoming cuts, as the Prime Minister said they would, or did he say that they will not protect them?

[Lord Freud]

To clarify matters, I said that this Government would support disabled and vulnerable people through this process.

[Baroness Campbell of Surbiton]

Protect!

[Lord Alton of Liverpool (CB)]

My Lords, the Minister will recall that, during the debates on personal independence payments, warnings were expressed from all sides of your Lordships’ House about the dangers of rolling out this programme too rapidly, with some people possibly left exposed. He has told the House how long the average waiting time will be. Can he now tell the House the average amount of money involved for disabled people who have not received the funds that they are entitled to? What emergency provision is made for people who are, after all, some of the most vulnerable in our midst?

[Lord Freud]

The delay is of course unfortunate for people and we have said that that is unacceptable. The money is back-dated to the point of claim. Where people have a serious problem, we have a complaints process which they can use and we can try to make redress through that.

Pensions: Draw-down Charges

Lord Freud Excerpts

Tuesday 9th June 2015 Lords Chamber

[Lord Bradley]

To ask Her Majesty’s Government what assessment they have made of charges on drawndown pension products; what plans they have to assess such charges on an ongoing basis; and whether they have any plans to impose a cap on those charges.

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

The new pension flexibilities have given people greater choice to select the retirement product that is right for them. The pensions industry is designing new draw-down products and will actively monitor the market as it develops. We already have the power to limit or ban decumulation charges and if we see that providers are charging excessive fees, we will not hesitate to act.

[Lord Bradley (Lab)]

But does the Minister agree with his new ministerial colleague, the Pensions Minister, the noble Baroness, Lady Altmann, who I am pleased to see on the government Bench, when she said in the Guardian this year that a cap on draw-down charges was important,

“so that customers are not ripped off”?

She further said:

“A 2% a year charge just to keep your pension invested and have access to it would take away much of the investment return and be a terrible deal for customers”.

In the light of these comments, do the Government intend to introduce a cap on such draw-down charges?

[Lord Freud]

We are going to see how the market develops. It has been going for only two months, and if it looks appropriate, as I just said, we will introduce a cap on charges. I know that my new noble friend, the Minister for Pensions, absolutely agrees with that. The Prime Minister has also promised that we will keep a close eye on this.

[Lord German (LD)]

My Lords, at all stages between the pension saver’s pocket, the investment and back again, there are hidden charges and fees—admin charges, investment charges, platform charges, transaction charges and advice costs, to name just a few. Does the noble Lord agree that there should be transparency for pension savers, and that they should know what hidden fees and charges are attracted to the money that comes from their pocket?

[Lord Freud]

My Lords, I imagine that quite a lot of noble Lords in the House today will remember the amendment we made to ensure that we would get transparency of charging, and we are working on that process. That is for accumulation funds, but there is no reason why we should not introduce the same thing for decumulation funds, if that is appropriate.

[Lord Flight (Con)]

My Lords, the last Government introduced some really useful reforms for people saving for their pensions, and I trust the new Government will continue in that vein. I would simply make the point that it would be more useful if the Government were to put pressure on those firms providing products to have a reasonable charging structure, rather than seek to achieve this by legislative means. It seems to me that there is a very strong moral case for the Government so to do.

[Lord Freud]

We are doing that, as exemplified by the new Pensions Minister meeting the industry and working with it to make sure that it produces the right level of charging. The Government and the FCA are able to monitor that to see that we get appropriate and fair charges.

[Baroness Drake (Lab)]

My Lords, I refer to my entry in the register of interests, including my role with the Pensions Advisory Service. Some providers of income draw-down will charge between £150 and £200 each time a customer takes out cash, so a person with a £30,000 pot who takes out £5,000 in cash over six years will lose between £900 and £1,200. Will the Minister challenge the industry on why the charge to access cash now is so ridiculously high?

[Lord Freud]

As I said at the outset, this market is two months old and we are watching very closely to see how the charges develop. There is a range of different charges; some providers charge for drawing down and others do not, but we will be watching it very closely.

[Lord Hughes of Woodside (Lab)]

My Lords, when this policy was first made, to a great fanfare of trumpets, the Government were warned of the difficulties that would arise unless they took control of the matter. What the Minister is really saying is that no planning was done whatever and no thought whatever was given to how this matter would develop. Is he aware that, the way things are going, this will make the PPI scandal look like a children’s tea party?

--- Later in debate ---

[Lord Freud]

My Lords, noble Lords will be pleased to know that a great deal of effort has gone into making sure that this reform works. In particular, we introduced guidance in the shape of Pension Wise. We are working with the industry and monitoring what is happening. As I said, we will be prepared to go in and put caps on charges and address the issue of transparency if that is thought to be necessary.

[Lord McFall of Alcluith (Lab)]

My Lords, complexity and inertia still define the characteristics of this industry. The Government said that they would not hesitate to intervene if there is a rip-off, but rip-offs take place daily at the moment. In the absence of the Government’s will to go one step further, is there not a compelling case to ensure that the cash element is disclosed in these documents, so that people can see exactly what they are being charged on a monthly or yearly basis?

[Lord Freud]

That is one of the things that we will look at very closely. Clearly, we need to get evidence of how this particular part of the market develops. We already have transparency in the accumulation phase. If that is necessary in the decumulation phase, we will not hesitate to introduce it.

[Lord Davies of Stamford (Lab)]

My Lords, you do not need to wait to watch the market to believe that transparency is absolutely essential in any honest financial business. Why cannot the Government decide that there should be complete transparency of charges from the beginning? Should they not have decided that at the outset, when they introduced this new reform?

[Lord Freud]

My Lords, we have a marketplace and it is fair to give it a chance to develop. At the moment, according to the FT and Which?, the annual charges applied to decumulation pots are somewhere between 0.25% and, for high-end performers, 1%. For the set-up, the charge is somewhere between £70 and £300. As we start to gather this evidence and assess it, we will know whether we need to intervene.

[Lord Campbell-Savours (Lab)]

Is the noble Lord’s ministerial colleague, sitting at his side, equally in favour of this watching approach?

[Lord Freud]

I think the noble Lord will be able to see a quote saying exactly that: she is monitoring this very closely.

Construction (Design and Management) Regulations 2015

Lord Freud Excerpts

Thursday 26th March 2015 Lords Chamber

[The Lord Bishop of Chester]

My Lords, I have just one brief question for the Minister on the regulations. Paragraph 20 of the impact assessment refers to financial impact. It states that the deemed approach—which is much the better one, I am sure—will cost £1.3 million to homeowners and £4.6 million to contractors. All my experience is that costs to contractors get handed on to the people for whom they are providing their services, so how do we know that the £4.6 million will not simply be handed on to the homeowners to whom the services are being provided? How can one make that distinction?

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

My Lords, I thank the noble Lord, Lord Stevenson, for raising this issue and giving me the opportunity to reassure him and others on both the key points that he raises, which are the implications for domestic owners and for the entertainment industry. In particular, I reassure his plumber and joiner that their responsibilities in practice will not change as a result of the introduction of the regulations.

Since their first implementation in 1994, the Construction (Design and Management) Regulations—let us shorten them to CDM—have facilitated widespread culture change, improved ownership of risk, and a reduction in fatal and major incidence rates by two-thirds. That is a good news story in everyone’s book, and I welcome the chance to spell that out.

The CDM 2015 regulations are reformed and simplified. They retain technical standards to be achieved on sites, enable reduction in industry bureaucracy and improved compliance in small businesses, and address two areas of underimplementation of the temporary or mobile construction sites directive. Overall, the regulations are estimated to generate net savings to business of £121 million over 10 years. CDM 2015 is thus a significant enabler of growth in an industry employing more than 2 million people.

Despite the numerous benefits that the revision brings, the Government recognise that some businesses have raised concerns arising from the consequences of implementing certain requirements of the directive. The Government had no realistic option other than to implement these measures to comply with our European obligations and avoid the consequences of failing properly to transpose the directive, but we have done so in a way that minimises overheads, and at the same time have taken the opportunity to make the significant reforms to the regulations that I mentioned.

Those concerns relate to lower thresholds for health and safety co-ordinator appointments and written health and safety plans, and in application to domestic clients for the first time. The regulations have always applied to construction work wherever it is undertaken and whatever its scale, complexity and risk. Some stakeholders in the entertainment industry have been particularly exercised that unduly burdensome administrative requirements will now arise for minor construction work that is part of their day-to-day business.

The Government and HSE are aware that there is a sometimes a tendency in parts of the entertainment sector for overcompliance with health and safety requirements. Indeed, the HSE’s Myth Busters panel has dealt with a number of cases from the entertainment sector where a disproportionate approach or decision has been made. The guidance supporting the CDM regulations 2015 stresses the need for a proportionate and practical approach to the management of risk, and this of course is the Government’s goal, too. The industry needs to respond appropriately, and I am encouraged that the HSE is fully engaged with entertainment industry stakeholders to produce sector-specific guidance. This will help the industry to understand how its current management arrangements can be applied to comply with the CDM regulations 2015, and avoid overcomplicating matters which could incur unnecessary cost.

The right reverend Prelate the Bishop of Chester raised issues on costs added to homeowners. Clearly, in the end the costs will be added to homeowners—that is how it works. Contractors do work for people and add on the costs but those costs are extraordinarily small in an economy of—what are we, £1.5 trillion? Costs of £4.6 million are extremely small, particularly compared with the costs that homeowners would otherwise have had if they were not able to deem the issue down to the contractor, which is what this structure does.

To pick up the point of the noble Lord, Lord Stevenson, on the way in which this legislation was introduced through the negative resolution procedure, all health and safety legislation is made in this way. As I have explained, this change to the domestic client provisions was required to comply with EU law obligations and, as I say, that is the way that we always do these changes in HSE.

I think that I have dealt with all the questions raised. Let me thank the noble Lord again because I hope that I have provided reassurance all around that this provision is proportionate, saves money and makes sure that we are actually complying with our obligations.

Motion agreed.