Pensions Bill
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Baroness Dean of Thornton-le-Fylde (Lab)
My Lords, I support the two previous speakers, particularly my noble friend Lady Hollis. This issue was well aired in Committee and at later stages. At the moment it predominantly affects women. I welcome the Minister’s statement, but I am aware that we are not too far away from a general election and that things may change. The work that is to be carried out will obviously be done only after this Bill becomes an Act of Parliament, so what specific assurances can the Minister give to disabuse me of the notion that in reality this is being kicked into the long grass because it is rather inconvenient?
Lord German (LD)
My Lords, I am slightly confused by the remarks of my noble friend Lord Forsyth because he referred to a survey. When my noble friend the Minister spoke, I could have sworn that he was talking about a review, and there is more than a slight difference between a survey and a review. A review means that you look at the evidence and take action as a result. I noted the words used by my noble friend, that the matter will be addressed. Given that, can we have an assurance that if any review turns up evidence that this is a matter which affects a large number of people, action will be taken to address it? That is the difference between a survey and a review; a review implies action at the end of it.
I also wonder if my noble friend can reassure me that this review will look at the differences in zero-hours contracts, on which an enormous emphasis has been placed. They are seen as being at the heart of the problem. The ONS labour market survey shows that although there has been an increase in the number of people on zero-hours contracts, the number of women in part-time and multiple jobs has not been increasing over time. I think that a distinction needs to be made because the issue is not necessarily about zero-hours contracts, so I would be grateful if my noble friend could reassure us that that is not the emphasis. The emphasis here is on people who have mini-jobs or who fall below the lower earnings limit. They are not able to get the stamp which would qualify them for building up their pension. Given the number of years that the new pension requires—35 years—can my noble friend also say whether the review will take into account a lifetime of work? That is because if you have earned up to the limit or you have got your 35 years, whatever you do on top of that is not going to make a difference to the £149 or so that we are expecting to be the figure for the new state pension for a single person. That will have effects elsewhere on people’s personal economic trail.
I welcome the announcement made today by my noble friend, and I hope that he can reassure the House that these caveats will be taken into account when taking action.
Lord Turnbull (CB)
My Lords, when I heard mention of the Minister in the other place, two words came to mind: “kitchen” and “sink”. Indeed, the Minister claimed that there were 17 logical flaws in the case the Lords had put forward. However, it was not clear to me which were the objections of substance and which were the makeweight arguments. Of course, the problem is that there are not that many people in this category. Is it a problem that is going to be solved by universal credit, or is it not a problem because people have time to catch up later on? That is a very poor argument because you never know whether you are going to have time to catch up. Is it a problem of information? Is it a problem that in the fixing of it would create other problems? Lastly, there were arguments about drafting. For good measure some bad statistics were thrown in that referred to average numbers of people on average hours and average earnings, when you really need to look at the median if you are trying to calculate the numbers.
However, I welcome the statement from the Minister today because he appears to have conceded that there is an issue to address. As a matter of principle, I think it is not acceptable that someone earning £120 in one job can get credit, while someone earning two times £60 a week cannot. We have a duty to address this issue if it turns out that significant numbers of people fall into that category. I also welcome the review, and like other noble Lords I hope that it will be addressed with some urgency.
I think that one further assurance is needed. If it turns out that the Government do not have the powers, they should be introduced quickly. Opportunities to do that in social security legislation seem to arise every few weeks, so I do not think that it will be a problem.
Housing Benefit (Transitional Provisions) (Amendment) Regulations 2014
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Baroness Hollis of Heigham (Lab)
My Lords, in her powerful speech, my noble friend Lady Sherlock has explained our opposition to this statutory instrument. It brings more people into the bedroom tax which should be abolished. She has had support from all around the House today. The tax is disastrous. A previous Tory Government introduced and repealed the poll tax in the same Parliament. As the noble Lord, Lord Low, said, this Government should have the courage and decency to do the same.
You do, of course, need sanctions in social security to ensure, for example, that compliance with JSA work search is not voluntary. However, the bedroom tax—for the first time ever—falls on the innocent, disabled and vulnerable. They are punished when they have done no wrong: they simply occupy the house that the council allocated them. The Government have now said to them: move or pay. Most tenants can do neither. As my noble friend Lord Beecham said, tenants who want to move will be waiting three to four years. Arrears mount; single people or couples on the waiting list who want smaller accommodation will never get it; pensioners wanting to downsize cannot. As for overcrowding, outside London six times more families are underoccupying than overcrowding Just helping pensioners to move would sort it, with grace and consent. The bedroom tax destroys sound housing policy.
Will the Government, nonetheless, make their savings? No, because benefit cuts have been shunted on to tenants to become irrecoverable arrears. In Norwich, which has spent every penny of its DHPs, 60% of tenants affected by the bedroom tax are now in average arrears of £300 and mounting. Nationally, around two-thirds of affected tenants are in arrears. DHPs are utterly insufficient, short-term, and a postcode lottery, yet that is the policy on which the Minister, sadly, relies. Carers UK says that 75% of tenants trying to pay were cutting back on food, heating, medical supplies and mobility. The fragile economy of tenants collapses, as they turn to food banks, payday loans and loan sharks, with debts from which I doubt many will ever recover. The Government’s notional savings become tenants’ irreversible, irrevocable debts and, in the process, we destroy lives.
Fifteen per cent of affected tenants, nearly half of those in arrears, have already received eviction warning notices. What happens then? Do we evict tenants into the private sector—private landlords do not want them and it costs more—or into bed-and-breakfast accommodation which costs even more, or what? Should they be rough sleeping? What about children and disabled people? Through no fault of their own, there are people who cannot pay their rent because the Government have cut their benefit.
Instead, do we allow rent arrears to grow and in the process threaten the very viability of housing associations, as the noble Lord, Lord Taylor, said? We have offered the Minister three possible strategies to help because every defence of the bedroom tax is false. The first option is that the bedroom tax should not apply to disabled people, as the Work and Pensions Committee said only yesterday. Two-thirds of affected tenants are disabled. One may ask why. Adaptions, at a cost of £6,500 a property, become wasted. As regards space, the CAB has said that for disabled people that extra room for carers or equipment is,
“a lifeline as vital as a guide dog or a wheelchair”.
Finally, disabled people need the support of neighbours, as my noble friend Lady Lister said. We talk about social or community care and at the same time the Government seek to pluck disabled people out of the very communities that provide that social care.
The second option is that it should apply only to those who refuse an acceptable alternative offer. Following the remarks made by the noble Lord, Lord Taylor, I should like to know what the position of the Lib Dems is. Will they continue to support the bedroom tax in Parliament while campaigning on the doorstep simultaneously for its repeal? The third option is that the Government could treat social tenants like private tenants and apply the bedroom tax only to new tenancies. Any of those options would help.
We will go further. The Labour Party is pledged to repeal the legislation. It is the most wretched piece of social security legislation that I have known in 25 years in this House. But by then, in the summer of 2015 after the election, we will have seen hundreds of thousands of social tenants—our fellow citizens, most of them disabled and many with children—punished for occupying a house that was allocated to them. They would have been doing no wrong but are unable to pay or to move. They may be deep in debt and fearing, or perhaps experiencing, the loss of their home. How can we do this to them? It is grotesque.
Lord German (LD)
My Lords, I am the first to recognise a political device when it comes my way. Indeed, this is a political device to secure a wider debate on the spare room subsidy on the back of regulations which have already been made and have come into effect. I do not dispute the need for political devices or regret the use of political devices but it is clear that that is what is being used. I think I should start by clearly laying on the line our policy as Liberal Democrats. What was said at our conference and what we have heard today from noble Lords is the preamble. But two things are being called for: the first is a review and the second is to do with housebuilding.
More crucially than anything else, we want to see the effect that this policy is having in this country. As I understand it—my noble friend can tell me—the review of the policy is due to publish its initial findings soon. I always hesitate when the word “soon” is used but I know that my noble friend loves the word, so perhaps he will indicate whether it will be before the end of this Session, before the Summer Recess or whatever. It would be useful to know when we can have that information.
One would expect that a Labour Party that has designed its policy to abolish the whole thing—we could have a debate about that—will want to assert that a huge amount needs to be put right. But we need facts that stand up to such an assertion and to know exactly where we are. We need to know whether things need to be changed as a result of that independent review, which was put in place by the Welfare Reform Act. That is the position of my party.
Perhaps I may dwell on the issue of correcting secondary legislation, which is what the Motion is about. The unexpected consequences of legislation of the past must have affected all Governments. I could assert that an opposition party present today will at some time have had to use corrective secondary legislation for something which has appeared after primary legislation has been put in place. Perhaps my noble friend can tell me whether I am right or wrong.
There are problems with the 1996 legislation. Perhaps my noble friend can tell us whether it was designed for social sector tenants. The impact that we are talking about is with regard to social sector tenants but my understanding is that that original legislation was put in place particularly for private sector housing and as a protection for private sector tenants. Perhaps my noble friend can advise us whether something that was designed for a different purpose is producing unexpected and unintended consequences.
My second point concerns what is happening in local authorities. Although I do not have as many years of experience in local government as the noble Lord, Lord Beecham, I did spend quite a considerable amount of time in local government. I cannot recall whether I spent more or less time than my noble friend Lord Tope. I certainly remember that we had the use of electronic equipment in the mid-1990s when I was a city councillor. How many local authorities are having to resort to paper trails in order to find out the number of people affected by the 1996 legislation? Do some local authorities have up-to-date information? When there are assertions that between 3,000 and 40,000 people are affected, somewhere there must be reasoning behind those assertions. Do we expect to find the correct solutions and answers soon? Will we be able to find out very soon how many people are affected?
Will my noble friend reassure the House that local authorities are being reimbursed for the extra work that they are having to do to trawl through the paper trails where those records have not been kept electronically or have been lost? Now that the loophole is closed, I understand that there is now an issue relating to discretionary housing payments paid to people who were subjected to the extra charge between March 2013 and March 2014. People who were awarded DHP were awarded it on the basis that they needed it at that time. Can my noble friend reassure me that there will be no question of people having to repay it and that that discretionary housing payment remains in place?
Today, the noble Lord, Lord Touhig, gave an example of a case, which has been publicised, in Torfaen, the borough in which I live. I note that the Government made additional money available for discretionary housing payments to all 386 local authorities in this land and that only about 80 applied for money. In Wales, only Cardiff, Caerphilly and Conwy—it is very easy to remember them as the three “C”s—applied for discretionary housing payments and Torfaen did not. One can only assume therefore that local authorities which say that they do not need any more discretionary housing payment have enough to make available to people who have a need. I have a number of questions to ask those who support the case, which I read about in my local newspaper. Did those involved go to the local authority? Did the local authority turn them down for extra support, given that local authorities have enough money as they did not need to apply to the Government for additional money?
The second issue my party is concerned about is that of new homes. One of the problems that might come about as a result of this policy is the distortion as local authorities and housing associations decide to build more single-bedroom units. Can my noble friend give me any indication of what is happening in the housebuilding sector, not just in England but also in Wales? We could have a direct comparison with the record on housebuilding of the Conservative and Liberal Democrat coalition and a Labour Government. On that matter, can my noble friend tell me whether the Government’s target for building 170,000 new homes in England by the end of this Parliament in 2015 is still on track? Is it being matched in Wales by the Labour Government on the number of houses that they will be building as well?
Finally, I would like to ask my noble friend a question about the overall budget for housing benefit. The Labour Party, the Liberal Democrats and the Conservatives have all said that we have to try to contain the overall budget. In fact, in the other place all three parties voted in favour of the retention of that hold on the overall budget. Will the changes that have come about as a result of amendments to the secondary legislation affect the original estimates of expenditure on housing benefit, and how much, if at all, will this put up the bill for housing benefit in this coming year?
I have asked my noble friend a variety of questions. I would be grateful if he could tell us when “soon” means in terms of the first stage of the review of this policy.
Baroness Sherlock
My Lords, I am in the unusual position of saying that I am not sure whether I agree with a single word that the Minister has just said. It was in fact the second most disappointing speech of the day.
The Minister has put forward three broad arguments. First, that it does not matter how many people are affected. But it matters to me, it matters to them and it matters to the local authorities, which have to deal with the mess that the Government have created.
Secondly, there is the question of savings. I noticed that the Minister failed to answer my question on what the net savings would be. Clearly, these savings are vanishing before us like a will o’ the wisp. The Minister also failed to explain how the savings remain the same, despite the Government having had to increase the money allocated for discretionary housing payments from £20 million to £190 million. The Government seem determined to ignore the costs and problems created for councils and other housing providers. If there is any doubt about that, let us remember that the National Audit Office said that the Government’s costings do not take account of,
“the full scale of potential impacts”,
and do not include the additional costs faced by local authorities. We have heard so much about those costs today from my noble friend Lord Beecham and the noble Lord, Lord Taylor.
There is then the question of overcrowding. As my noble friend Lady Hollis pointed out, this argument is frankly specious. There are not enough smaller homes to move into, a point underscored by my noble friend Lord Beecham, and where they are they are in the wrong places. They are not in the places where people are being asked to move. People have not moved because there is nowhere to move to. During the passage of the Welfare Reform Act, the noble Lord, Lord Best, and my noble friend Lady Hollis put an amendment to this House which said that the bedroom tax should not apply if someone could not be offered somewhere else to move to. The noble Lord, Lord Taylor, had the courage to vote for that amendment at the time and I commend him for his consistency. Other noble Lords did not and the government Benches voted it down. Let us not therefore pretend that what the Government are really worried about is overcrowded houses. They had every opportunity to correct that and they failed it.
We have heard so many powerful speeches today about the misery and desperation caused by this policy. If the noble Lord, Lord Freud, really believes that this policy is a success, I would hate to see what his failures look like. If he feels that he is getting the right behavioural effects, what are they? Are they in the family described by the noble Lord, Lord Touhig, who are not eating? Are they the families who are going without or giving up bedrooms needed by carers or disabled people? No: the handful of people who have moved are doing so out of desperation, not because they were responding to a behavioural stimulus.
I found the speech from the noble Lord, Lord German, very disappointing. I was delighted to read the reports of Tim Farron saying that the Liberal Democrats were going to withdraw their support for the bedroom tax.
Lord German
When I asked my honourable friend in the other House whether that is what he had said, he said that he had not. I have his speech with me and I can also tell the noble Baroness that my honourable friend was interviewed by ITV on this matter but that ITV news decided not to broadcast his comments because they did not substantiate the allegations that the noble Baroness is now making, nor did they substantiate what the Guardian had said. Both of those sources are incorrect; the source is here in front of me and I invite my noble friends to listen to it.
Baroness Sherlock
My Lords, I am very grateful for that clarification. I take from it that the Liberal Democrats are in fact supportive of the bedroom tax and I thank the noble Lord for making that clear. If I have got that wrong again, the noble Lord has a very clear way of demonstrating it. They can join us in the Content Lobby today and the nation will judge them by that. If enough noble Lords were willing to come behind us today to stand up and say that this House does not believe that this is a good policy, or that this cruel, vicious, unfair and inefficient tax should be allowed to stay, a start would be to regret these regulations today. I urge noble Lords to do that and if enough people do, maybe the Government will think again. Maybe this House could start a process that would lead to the bedroom tax being repealed in this Parliament. However, if the Liberal Democrats will not do that and the Minister will not relent, let the country be in no doubt: the Labour Government will repeal this when they come to office. In the mean time, let us send a message today. I beg leave to test the opinion of the House.
Health and Safety Executive
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Lord Bates
I am grateful to the noble Lord for that question. I think that Martin Temple pointed out exactly that. He paid tribute to the work of the HSE, which it does day in, and day out, in maintaining safety standards. One reason why this country enjoys such high standards of health and safety in the workplace is because of the work of the HSE. It is of course necessary to ensure that its work is efficient and effective. For that reason, he suggested that the HSE focus its efforts on major hazard sites rather than those areas of relatively low risk. That is what it has been doing over the past couple of years.
Lord German (LD)
My Lords, one of the recommendations in the report is to delink the need to prop up the budget and fines for intervention. We have been here before with speed cameras, where there was a suspicion that police forces were increasing their budgets by overuse of speed cameras. How will my noble friend learn lessons from that, and from the recommendation in the report that fines for intervention should not be linked to propping up the budget of the HSE? What steps will he take to implement that?
Lord Bates
It is a good question. The point is that fines for intervention are where visits and inspections have taken place and problems have been found which have resulted in prosecution. In those circumstances, the view of the HSE and of the Government is that the taxpayer should not have to pick up the bill; the person who has not been fulfilling the obligation to implement the rules correctly should pay the price.
Housing: Inherited Social Housing Tenancies
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Lord German (LD)
Can my noble friend tell the House roughly how many people in this country are living in overcrowded conditions or are on housing waiting lists? Can he also put on the record the number of new social houses being built by this Government and compare that with the number built by the previous Government, because, clearly, housebuilding and social housebuilding are crucial?
Lord Freud
My noble friend draws the comparison between the amount of capacity that we have in this country and the demand for it. The number of people on the waiting list is 1.8 million, with the figure for overcrowding running at 250,000 on some estimates and 400,000 on others.
When this Government took office, we were left with the lowest level of peacetime housebuilding that this country had seen since the 1920s. Since then we have delivered nearly 400,000 new homes and put in very substantial investment. There is £11.5 billion public investment to boost housing supply over the four years of the spending review, and this is meant to lever in more private investment. The volume of housebuilding is now picking up. The starts in the quarter to December were up 20% compared with the same period last year.
Employment: Universal Jobmatch
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Lord Freud
My Lords, there is a great deal of confusion around this. I am pleased to be able to straighten it out, because there has been a lot of misrepresentation. There is a small amount of fraud on the site, as there is on other sites. It is less than one in 1,000. We clear them off. This is a hugely successful site. It has more than 500,000 employers on it and nearly 6 million job searches a day. It has transformed the service of getting people back into work, which is of course now at record levels.
Lord German (LD)
My Lords, despite the extremely good news today of the trend once more being employment up and unemployment down, there will always be a need for a website of this sort which matches the jobseekers with the job vacancies—and not just Mafia couriers. Can my noble friend tell us whether the security issues around this site are the responsibility of the aptly named Monster Worldwide Inc, which runs it on behalf of the Government? Can he also tell us, under his commitment under his department’s privacy policy, what security measures he has taken to avoid people’s personal details being circulated widely to those who should not have them?
Lord Freud
My Lords, we take security very seriously. One of the reasons that there is a difference between the standard Monster site and that run by the state is exactly to make sure that there is security in our site. We work closely with Monster on that. People have to be careful with their information on the site, as for anywhere else on the internet. We make sure that there is proper support for people and instruction on how to keep their information safe.
Pensions Bill
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Lord German (LD)
I shall say a few words about the two issues raised by this amendment. They are important issues, albeit for a small number of beneficiaries, although that number will increase over time, as the noble Lord, Lord McKenzie, has just said. It strikes me that because of the loss of one part of pension credit, the part that gives this passported benefit for cold weather payments, the Government presumably have to have something in place to ensure that people are in receipt of that payment. Will my noble friend reassure the House that it is not the intention that eligibility for cold weather payments will be reduced so that only a few will be able to receive them for the very important purpose for which they are drawn? Can he tell us about the fuel poverty strategy which I understand the Government are consulting on and whether these issues are rightfully the sorts of issues which could be debated and discussed during the consultation? If that is the case, there is clearly a route forward, but I seek reassurance from my noble friend that both these schemes are intended to continue and that their purpose and scope will not be diminished.
Baroness Sherlock (Lab)
My Lords, I am pleased to support Amendment 1 which is tabled in the name of my noble friend Lord McKenzie of Luton. My noble friend has been like a terrier chasing the Minister on the subject of passported benefits and payments. The Minister may have thought he had shaken him off as he left the Moses Room at the end of the Committee stage, but I am sure he knew better. Indeed, it is to the Minister’s credit that he was content to return to this subject at Third Reading, knowing that he would face the onslaught of yet more gentle but expert and determined questioning from my noble friend Lord McKenzie.
I express my appreciation to the Minister for allowing his officials to brief us and to his officials for giving us for the first time a detailed list of all the benefits that are being passported from pension credit. However, that left some clear question marks about the future strategy for passported benefits. If the Minister is in a position to tell us where the Government’s forward plans are taking them, not just on these two, but on any of the other benefits that are not clearly passported from pension credit, I think the House would appreciate that.
My noble friend has set out the case characteristically clearly, and I need add little to it, but the House and the country will want to hear the Minister answer the questions asked by the noble Lord, Lord German. We want to be satisfied that people will not lose out and that there is an alternative plan for arrangements to replace the passporting of cold weather payments and access to the warm home discount scheme.
The point made by my noble friend Lord McKenzie about the role of rising energy prices in the cost of living crisis is visible to all noble Lords at the moment. This is a particular issue in relation to these two benefits in parts of the country that obviously suffer from lower temperatures. I should perhaps declare an interest as a resident of Durham where, despite the fact that we have a world heritage site and much to commend us, with lower rainfall on average, even I have to confess that our temperatures are on average perhaps a whisker below those on the tropical Riviera of Cornwall. On the other hand, this will not affect me until I reach state pension age and that is receding ahead of me at some rate, so perhaps no declaration of interest is needed.
The Government have indicated that they propose to introduce the new single-tier pension above the current level of the guarantee credit in pension credit. But it is clear that that could come in at just a shade above. If Ministers want to carry on asserting that reducing means-testing is an important part of these pension reforms, then they have to have a strategy on passporting—otherwise they will end up with the kind of cliff-edges which anyone who worries about means-testing will know can really be a trap for the unwary.
Maybe the Government have had the opportunity since Report stage to think through how this will be taken forward and can give the House the kind of assurances that have been sought by both noble Lords who have spoken. If they have not, which I will understand, I very much hope that the Minister can accept the amendment. Parliament has a right to know what will happen to these payments, and by the time we get regulations it will be too late. I look forward to the Minister’s reply.
Baroness Sherlock
My Lords, I congratulate the Minister on having spotted the error before Royal Assent and the Opposition have no problem with the amendment.
I, too, would like to take this opportunity to say a few words of thanks to my colleagues for all their wisdom and support. I thank especially my noble friend Lord Browne of Ladyton for doing so much work on this Bill and for being such a constant source of support. I would also very much like to thank the Minister for the way he has handled the Bill—for his openness and his willingness to engage with appeals from all parties and to share the information and knowledge of his department. I thank the noble Lord, Lord Bates, for adopting a similar style and for his engagement. I thank the officials, too, for their helpfulness and their willingness to answer so many questions—in my case, often very stupid ones, which they have answered with graciousness and lots of information. We have all very much appreciated that.
The Bill has benefited from scrutiny in this House and leaves this place a better Bill than when it arrived, as is so often the case. It is the first Bill I have taken all the way through from the Front Bench and I have learnt a great deal from noble Lords on all sides. I have been grateful for the kindness and indulgence of the House as I have learnt on the job—a sort of apprenticeship, as one might have it. As the Minister said, the Bill has now benefited not only from the one victory that the House scored on mini-jobs—we hope very much that the other end will see the wisdom of that but, if not, we stand by our beds awaiting its return should that prove necessary—but from concessions around things such as service wives, auto-enrolment and categories of employer, and in other ways as we have gone through it. I pass my thanks to all noble Lords who have contributed at any point in the process. We all share a common objective of getting people in Britain saving for their retirement and I hope this Bill will help contribute to that objective.
Lord German
My Lords, I add thanks from these Benches to my noble friend and to the staff who have been behind all the detailed benefits we have received from having such a deep level of understanding and knowledge of the Bill throughout. I want to mention two particular things. One is the recognition during the Bill’s passage through this House that my noble friend will look very carefully at the needs of children who are in distress. I look forward to seeing that coming forward again in future months as we come to a response to whatever my noble friend is able to deduce from that investigation.
The second piece of thanks that I have to give to my noble friend is for his ability to bring Her Majesty’s Treasury to a meeting with officials of the DWP. That way, there was a coalition not only of Members of your Lordships’ House but of my noble friend’s staff. That ensured that we got a recognition that where pensions in the public sector would be affected by some of the matters in the Bill, they would put an architecture in place for whenever some new money might become available.
While using this opportunity to put this on the record, I want to thank my noble friend for all the support that he has given. The quantity of literature and number of pages that we have received is something that we will weigh with great pleasure during the years to come, because of course the measures which this House is taking in this Bill will affect the population of this country for many generations in the future. It has been very significant to see the Bill pass through the House.
Employment: Universal Jobmatch
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Lord Freud
My Lords, Universal Jobmatch has revolutionised the service of Jobcentre Plus. It is a transformative service. We have many people registered on it on a paperless basis. Half a million employers are on that service. As I said, we monitor it the whole time. We are now looking at 179 employers who may be in breach of our conditions and will suspend them if they prove in breach. I can assure noble Lords that no jobseeker will be sanctioned for not applying for a job that does not exist.
Lord German (LD)
My Lords, this website is crucial to people seeking to find a job, and many tens of thousands of people have found jobs as a result of it, but obviously there are concerns about people’s personal information and the security of it. What action has been taken against hackers, particularly those who seek to spread individuals’ personal information in their CVs to people to whom they have not applied for jobs?
Lord Freud
We have a thorough communication exercise to jobseekers to make sure that they look after their information online, just as anyone else needs to be careful with their information online, and we are currently looking to enhance our service through Universal Jobmatch to make sure that we do not have this kind of problem.
Social Security Benefits Up-rating Order 2014
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Lord Bates (Con)
My Lords, the Guaranteed Minimum Pensions Increase Order 2014 and the Social Security Benefits Up-rating Order 2014 were laid before the House on 27 January 2014 and I am satisfied that they are compatible with the European Convention on Human Rights.
I start by touching briefly on the Guaranteed Minimum Pensions Increase Order, which provides for contracted-out defined benefits schemes to increase their members’ guaranteed minimum pensions that accrued between 1988 and 1997 by 2.7%, which is in line with inflation as at September 2013. As noble Lords will be aware, we are not here to discuss the Welfare Benefits Up-rating Order 2014, which was made on 24 January. The rates increased by 1% in that order were debated in Parliament during the passage of the Welfare Benefits Up-rating Act 2013.
Turning to the Social Security Benefits Up-rating Order, I would like to start with the increase in the basic state pension. One of this Government’s first acts was to restore the earnings link to the basic state pension. Indeed, we went a step further and secured a triple lock for pensioners—a commitment from the Government to increase the basic state pension each year by earnings, prices or 2.5%, whichever is the highest. This year, as prices were greater than average earnings and 2.5%, the basic state pension will increase by CPI at 2.7%. The new rate of basic state pension will be £113.10 a week for a single person, an increase of £2.95 from last year. This means that from April 2014 the basic state pension is forecast to be around 18% of average earnings, a higher share of average earnings than at any time since 1992. Our triple lock commitment means that someone on a full basic state pension can expect to receive £440 a year more than if it had been up-rated by earnings since the start of this Parliament.
On pension credit, we have taken an important decision to ensure that the poorest pensioners are able to benefit from the effects of our triple lock. That means that, rather than rising in line with earnings at 1.2%—the minimum required by legislation—the standard minimum guarantee credit in pension credit will be increased by 2% so that the poorest pensioners benefit from the full cash value of the increase in basic state pension. Single people will receive an increase of £2.95 a week while couples will receive an increase of £4.45 a week. Consistent with our approach last year, the resources needed to pay for that above-earnings increase to the standard minimum guarantee have been found by increasing the savings credit threshold, which means that those with higher levels of income will see less of an increase.
I can confirm that additional state pensions will rise in line with inflation at 2.7% in 2014-15. That means that the total state pension increase for someone with a full basic pension and average additional pension will be around £196 a year. The decisions we have taken on pensioners reflect the Government’s belief that even in difficult economic times it is important to protect those who are less able to increase their spending power.
That belief is reflected in our decision to ensure that those benefits that reflect additional costs because of disability will be protected and will be increased by the full value of CPI at 2.7%. These include the personal independence payment, disability living allowance, attendance allowance, incapacity benefit, disability premiums in working-age benefits, the support component of the employment and support allowance, and the limited capability for work and work-related activity element of universal credit. That is also true of the carer’s allowance and the carer premium, both of which will be uprated in line with inflation.
In conclusion, I ask your Lordships to note that at a time when the nation’s finances remains under real pressure, the Government will be spending an extra £3.3 billion in 2014-15. Of that, about £2.7 billion is for the state pension and over £600 million will go to people of working age, with nearly £600 million of those increases going to disabled people and their carers.
The uprating commitment I have outlined today will give real support to the poorest and most vulnerable in society, ensuring that people who are least able to change their incomes are protected against increases in the cost of living. On that basis, I commend the orders to the Committee, and I beg to move.
Lord German (LD)
My Lords, I have a number of questions. First, I welcome the triple lock. This is the first time that we have seen prices as the lock that has come into play, which means that pensioners will always benefit from the best of the three options. This is the first time we have seen one of the three locks.
I will spend a few moments on the rationale behind the 1%, 2% and 0.7% for the pensions and other matters. This is really about what is contained in the Government Actuary’s report. For the first time, we see from the Government Actuary what the state of the fund is—the fund from which these benefits will be paid—not just for this year but through to 2018-19. I believe that this is the first time we have been able to have those projections. The report clearly shows that there are a number of difficult years to come, in particular 2015-16. Next year the actuary projects that the Government will have to put in £8 billion extra in order to keep the fund at its one-sixth level of what goes in and what comes out, and what is left in the fund. However, the last table of the Government Actuary’s report shows that the following year will be even more difficult. Can we have some comparison for benefits’ sake?
I will be quite happy if my noble friend wishes to send me information about this or to write to me about it. As we are projecting forward six years to 2018-19, can we have the figures showing how much has had to be contributed in the past 10 years, say, so that each year we can see what the graph or the direction of travel is? Quite clearly, it is not the usual case that the Government have to top up the fund to achieve that one-sixth balance. It might be useful to know how often that happens and what the projections are for the future.
I have just two short questions, one of which relates to the implementation dates in the order. I should probably know the answer to this question, but I would be very grateful if the Minister could answer it, although it is a question similar to, “Why do we always have elections on a Thursday?”. For the dates of implementation, which are contained within this order, we have 1, 7, 9 and 10 April. I know that it does not mean very much if someone has to wait a week longer for their benefit to come through, but why is it not possible to have a single implementation date at the beginning of the financial year, or is there some administrative reason for that?
My second and final question relates to the investments in the national insurance fund. I noticed that the projection from the Government Actuary is that they will fall from £127 million to £90 million. If the investments made £127 million last year, which obviously supported the amount of money that could be put into benefits without having to top them up from the Treasury, why do we see a lower projection in the coming year when all the signs are that investment opportunities are greater in the coming year than they were in the past year? I should be grateful for some explanation, but I will be perfectly happy if my noble friend wants to do that for me in writing.
Pensions Bill
Lord German Excerpts(10 years, 2 months ago)
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Lord Flight (Con)
My Lords, the noble Lord, Lord Stoneham, has made some very good arguments in favour of pot follows member, but I want to start—and I want to be sure that there is absolute clarity here—on the question of individuals having a choice about where they consolidate their pension savings. We are talking about the default option in discussing pot follows member versus aggregator and no more than that. When an individual joins a company scheme on moving jobs, it is quite important that he is able to choose where to consolidate his pension.
In terms of the default option, first, I have always felt strongly that the argument against the aggregator arrangements is: who chooses? That point was made by the noble Lord, Lord Stoneham. I cannot really see who is in an appropriate position to choose if we go to aggregators. Secondly, aside from the cartel point, the larger the amounts of money, the more difficult it becomes to manage that money. A whole lot of potential investments almost get ruled out because the market capitalisation of firms is not sufficiently large. Therefore, I do not see there being a huge virtue in having a limited number of colossal managers. I might add that NEST’s charges do not seem to be particularly competitive, particularly for the earlier years of membership.
To a certain extent, I believe that there are arguments for keeping all doors open but I do not feel that the case for the aggregator has by any means been won. On balance, I think that pot follows member is a better solution, essentially for the reasons given by the noble Lord, Lord Stoneham, although I shall not repeat them.
Lord German (LD)
My Lords, I shall try not to repeat the remarks of my noble friends Lord Stoneham or Lord Flight, but my noble friend Lord Flight makes a very important point about the default choice which is before people. That is what this amendment must seek to address but I think that it fails to do so. Noble Lords will recognise that what we have before us is a debate about either pot follows member or the aggregator; it is not a debate about choice. Except for the noble Lord, Lord Turner, who said that under certain conditions, the balance might be right, it is clear that those on the Labour Benches want to see an aggregator policy.
I accept that that is the purpose behind the amendment but that is why it is important to examine these issues. I shall say a few words about why we must have some form of automatic transfers of pensions. The main beneficiaries of automatic transfers are those people who, for the first time, are saving for their retirement, following automatic enrolment into a workplace pension, and then move jobs, leaving behind a small pension pot. A system of automatic transfers is necessary to stop the proliferation of small pots that will ensue as a by-product of automatic enrolment. The average worker in this country will have 11 jobs in the course of their working life. Automatic enrolment by 2018 will probably have 9 million people within it, and maybe even 10 million by 2020 who are new savers, saving more for their retirement than their work-based pensions. These are people who are being automatically enrolled. If we took no action the projection is that there will be around 50 million dormant workplace defined contribution pension pots within the system by 2050.
A successful system must focus on the interests of the member, allowing them to consolidate their pension savings. I notice that the noble Lord, Lord Monks, is not in his place but he is a trustee of the NOW: Pensions fund. His fund conducted research of more than 2,000 21 year-old plus people with at least one workplace pension. The result was quite clear: 39% of the individuals surveyed said that pot follows member was their preferred option compared to just 6% for the aggregator model. It was suggested that the aggregator model is so difficult to understand that people chose the easier one because they recognised its simplicity. Is it not the case that we are looking for simplicity? People were asked, “Do you want your pension to follow you, or do you want it placed somewhere else, which will be some distance from you both in employment terms and in being able to influence what it does?” People in that survey, which is probably one of the most comprehensive that we have had, said, given the choice, they preferred to have their pot following them when they changed jobs.
That suggests that explaining an aggregator model to the public, who do not understand the pensions market well anyway, would be much more of a challenge. People will not understand what is being made of their pension, seeing it going away to a distant aggregator, compared to the idea that their pension moves with them to their new employer. I do not believe that there is evidence that the interests of individuals would be best served by the undefined aggregator system. It will be difficult to administer, as my noble friend Lord Stoneham said, and will lead to the market being dominated by a few large schemes and providers, and where everyone will be guaranteed to have two pensions rather than one.
The issue raised by the noble Lord, Lord Turner, and by the noble Baroness, Lady Drake, about quality is crucial. I recognise, as we all do, that the OFT in its report on DC pension schemes said clearly that competition was not driving good value for money for all savers. That is precisely why the Government intend to legislate, and we are seeing some of that today at Clause 43 and Schedule 18, which the Government are dealing with. The whole process of raising the standard is crucial—most importantly, perhaps on charges. Perhaps my noble friend can confirm that it is the Government’s intention to introduce matters in relation to charging before the end of this Parliament.
I believe, too, that we have to consider the choices that people will have to make. Who will decide where an aggregator policy for them will be placed? How would the allocation process work? Would it be by a random list, a computer allocation or perhaps names in a hat? These are all unknowns. What happens to people’s pensions which are forced on them when they move jobs under the aggregator system is very unsatisfactory. Far better that they should have a simple system in which they have one contract with one pension which they take through with them.
However, the crucial factor is the standards that each of these pensions schemes have applied to them. That is why I welcome the Government’s initiative. I know that by the end of this year they will introduce proposals to ensure that the standards are right. As my noble friend Lord Stoneham said, we are looking for high standards, not a minimum standard, in this process.
We have before us a choice. We already have 2 million new savers as a result of automatic enrolment, and waiting will mean that many of the people being enrolled will be denied this opportunity as another scheme would have to be worked up and compared with the one proposed. The pension funds are already working with government in order to work the scheme up and to get it ready and in place. Can my noble friend tell me what progress has been made already to ensure that pot follows member is in a fair and fit state to be introduced rapidly?
We have to make a choice. It seems to me that we should choose the pot-follows-member position and thereby give greater power and greater pension outcome to millions of new savers. We should not accept the amendment.
Lord Turnbull (CB)
My Lords, I have not previously intervened in this debate. I declare an interest as a director of a life insurance company, the Prudential, which is not a big player in this market, but the views I will express are my own.
My first point relates to the high rate of change in our economy and society, which was remarked upon by the noble Lord, Lord Hutton. People are increasingly likely to adopt more flexible employment patterns. Does a seasonal worker—let us say he is a county cricketer who is not good enough to have a central contract with the England team but plays cricket in the summer and works in a fitness centre in the winter or, like Alec Bedser, humps bricks and builds up his strength—alter his provider season by season? How would you make that kind of system work? The pension pot follows member would not necessarily work for those kinds of people.
Secondly, the life expectancy of employers is not as great as one might think. Only 18 of the original FTSE 100 members are still in the index—some of them have gone out of business or been taken over and broken up—and turnover is likely to be even greater at the SME level. So relating pensions to one’s employer is not necessarily the best thing to do.
The noble Lords, Lord Stoneham and Lord German, have tried to argue that the aggregator model will provide a comfortable ride for the existing incumbents and will create mega-providers. However, who are the providers of pot follows member? They are the existing pension providers. We should not make the easy assumption that one model is anti-competitive and will produce a concentrated market and the other will create a highly diverse and competitive market. They each have their own faults and we should not attribute a monopoly of virtue to pot follows member.
That is why this amendment, which provides a degree of choice, is valuable. It would give us a chance to rethink the circumstances in which aggregator is better and to answer the many questions that have been raised, and to rethink the circumstances in which pot follows member is the superior solution.
Pensions Bill
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Lord German (LD)
My Lords, the issues raised by this amendment are important, and I congratulate the noble Baroness, Lady Hollis, on her dedication to the issue over many years. She kindly told us in Committee how she was rebuffed by her own Government and today she repeated the argument that they used against her: one could not reasonably divvy up an employer’s national insurance—she used those words today again—if there were two or more such jobs. She further told us that women would not want to pay class 1 contributions. For that reason, this is an important issue. We are looking at people being able to contribute to their own pension and get the credits that they need to win a full pension in under 35 years.
Much of the discussion that noble Lords have heard today and in Committee has been about the way that people behave individually in response to the issues in front of them and about how people’s live are dealt with. The problem that we face is that there are no reliable statistics or evidence that show how individuals’ behaviour works. It is clearly possible—I heard it both in Committee and here today—to illustrate that in a way that works to the best of the argument that says that we need to move on this swiftly because there are so many people involved in a particular category. I do not mind people making contributions about the way people behave, will want to behave or are forced to behave, but I want to know how we can sort this problem out and do so in a realistic way that will result in a concrete outcome.
We are bound to hear more and more about zero-hours contracts. They are not a new phenomenon. Over the past 70 years, the notion of a job for life has all but disappeared. More and more people are spending time in self-employment, many people have more than one job and more people have part-time jobs. The single-tier pension itself is designed in such a way that an individual with a more varied work history will be able to build up their national insurance records to achieve the maximum state pension outcome, provided of course they get credited for their national insurance contributions.
The crucial issue, therefore, is whether universal credit will pick up and deal with this issue. I suspect that the answer given to the noble Baroness, Lady Hollis, when she raised this issue with her own Government, was that this is a very typically difficult issue for HMRC, given the range of information that it would require from every company in the land about who they employed and that it would have to combine the results and put them into a single file. That is of course precisely the process that is taking place, and will take place, through universal credit, which will pick up levels of flexible income including, by implication, that relating to zero-hours contracts. It is interesting that the lower earnings level, below which you do not have to pay or get credit for national insurance contributions, is £5,772 per annum at present. The Labour Force Survey figures show that those on zero-hours contracts work, on average, 20 hours a week at £9 an hour, which is enough to exceed the lower earnings limit. If the figures we have before us are to be believed, most people will be receiving enough income to receive the national insurance contribution.
The other issue about universal credit is that it will look very carefully at how it credits people and bring, as we have heard, another 800,000 people into the crediting system. For example, a single person without savings, earning below that £5,772 per annum level, will be eligible for universal credit and thereby eligible for the national insurance contribution. The question that I have to ask my noble friend is about the delivery of universal credit. In Committee, the Minister said it would be delivered in 2016-17 and the noble Baroness, Lady Hollis, said in 2019-20, although she hoped it might be earlier than that. I apologise if it was somebody else on her Benches but those are the sorts of span. If we believe my noble friend, and it is 2016-17, will this problem be dealt with from the outset by those who are then brought into the universal credit system? If that is the timetable, I ask noble Lords to consider how long it would take to put in the interim solution. In effect, what is being asked for is an interim solution between now and when universal credit comes in for a pensions system that comes into play in 2016.
What is the interim position? Do we need to ask HMRC to invent a system for itself? When the noble Baroness, Lady Hollis, asked the Labour Government for one in their time, they rejected it. I believe they said that it would be cumbersome and expensive. Do we need to have that in place or could we be reassured that, almost within the very short period of the implementation of the single-tier pension, universal credit will be in place in a sufficient and timely position so that the vast majority of people who are occupying two or more jobs that produce an income over a year of less than £5,772 at the current rates will be able to be credited? That is the key question.
Lord Forsyth of Drumlean (Con)
I did not participate in Committee but I am listening to my noble friend’s carefully constructed argument. Is not the point about this amendment that it is permissive? It simply provides the Government with an alternative; it does not oblige them to do anything. I cannot really understand why my noble friend is opposing the amendment while advancing that argument.
Lord German
It is because we have a response in place, which is the universal credit system. What matters more than anything is that the system is in place in time to capture the people who will be most affected by this in the implementation years, from 2016 onwards. That is the fundamental question and I await the answer in my noble friend’s response.
Lord Browne of Ladyton (Lab)
My Lords, I support my noble friend’s amendment—and, having listened to the contribution of the noble Lord, Lord German, I am delighted that I do not have to answer the questions that he posed. I suspect that the noble Lord who is the Minister for Welfare Reform had wanted to avoid having to give a date as to when the universal credit system will be functioning well enough to provide the sort of functionality that the noble Lord, Lord German, seems to think that the alternative to this amendment requires. I will listen carefully to the Minister’s response and write down any date that he gives us in relation to that. It is also a pleasure to follow my noble friend Lord Morris, who speaks with significant experience of, and great authority about, the workings of the modern labour market, and who has assisted us greatly in understanding the need for this amendment.
As my noble friend said, this issue was debated in the Commons and in Committee at some length. I have considered carefully the various government responses, as my noble friends Lady Hollis and Lady Drake clearly have. They are to be congratulated for having produced here what could be described as an elegant, permissive, statutory device that adds to the Minister’s armoury in his desire,
“to seize this issue head-on”.—[Official Report, 18/12/13; col. GC 328.]
He used that phrase in our debate when he expressed equal concern—the words are mine—as the rest of us about this issue. I believed, as did all those who were present debating the issue, that he shared our concerns. Indeed, in his contribution to the debate he indicated why he had come to that conclusion.
In support of the arguments that I set out in my own contribution in Grand Committee, I simply want to make three points today. First, the phenomenon of people working in two or more low-earning jobs is not a limited one. They are often on zero-hours contracts but certainly on short hours, with each job under the level at which national insurance contributions are made, and are therefore not building up a contributions record towards the state pension. Nor indeed is it a temporary phenomenon, as has been argued, often coming at the end of a working life. Nor is it an experience limited to rural communities, although it is very prevalent there.
Since I shared the content of my overheard conversation on the Transport for London overground train, I have consciously inquired of young people whom I meet in this city and back home in Scotland how many of them are working for more than one employer. For noble Lords who have not heard this short anecdote, I will repeat it. A few days before we debated this matter in Committee, I overheard a conversation among three young people on an overground train as I was making my way home from your Lordships’ House. It was very clear to me that they had all been working together in what I suppose we would call a mini-job and that they each had two other jobs.
What was significant about them was that two were graduates and the third certainly had a tertiary level of education. I found that surprising. I do not know why I found it surprising, but it caused me to inquire the same of other young people, and I have come to the view that this is the norm for thousands of young people in the first phase of their employed life, even for graduates. It is a significant feature of a flexible labour market and, along with zero-hours contracts, it is part of the reason that politicians, particularly Ministers, and employers celebrate its flexibility. Undoubtedly the number of people in this situation is growing, not declining.
The question of numbers leads me to repeat a point I made in Grand Committee, which has already been made by my noble friends. The Government assert that there are about 50,000 people in this category. I am not convinced by their estimate of the scale of the problem. That is based not on my experience but on evidence that has already been referred to. We await the outcome of the—I think still anticipated—BIS consultation on zero-hours contracts, which was promised in October and is due to report by the end of March, but I have not seen a lot of evidence of it. We should reflect on the fact that in the fourth quarter of 2012, the ONS estimated that there were 250,000 people on zero-hours contracts. However, a contemporaneous survey of employers by the CIPD estimated that in fact the figure was around 1 million.
As we have heard, the union Unite estimates that as many as 5.5 million people are employed on such contracts up and down the UK. Following the CIPD estimate, the ONS conceded that the Labour Force Survey, which is based on responses by individuals, more than likely understated the numbers. The ONS then announced, as my noble friends have told your Lordships’ House, that it would change the way it collected its data from autumn 2013,
“so as to obtain more robust data”.
The importance of this contradictory information is not that it goes directly to the heart of the estimate from the Government, but that clearly it must have informed the Government’s estimate. None of the estimates that the Government have for the scale of this problem is at all reliable. Therefore, your Lordships cannot be convinced that a strategy based on unreliable statistics is a reliable strategy.
Finally, the Government’s responses appear complacent. Steve Webb, the Pensions Minister, suggested in the Commons that there was only a tenuous link between having multiple jobs below the LEL and being unable to build up the required 35 years’ contributions, and referred to this problem as a temporary phenomenon. In our debates in Grand Committee, the Minister promised that universal credit would resolve the issue. The noble Lord, Lord German, has already gone through the pros and cons of that in some detail, and my noble friend Lady Hollis significantly undermined that argument by pointing out the categories of people who are in these jobs who would be denied universal credit in the first place and therefore the consequent crediting of national insurance contributions.
I say with respect to the noble Lord, Lord German, that that is the one point of our argument that he did not engage with. Even if universal credit is the answer for some of those people, it cannot be the answer for all people in this category, and in the absence of reliable statistics, it is not easy to see what proportion of people would benefit from a universal credit system that met the coincidence of engagement with the challenge that the noble Lord, Lord German, set out.
What do we need? We need an alternative. We can have no confidence that the approach of either the Pensions Minister or the noble Lord, Lord Freud, will be sufficient. If it is not, the net effect will not only be to deny access to the modern pension system to a significant number of people, most of whom will be the least well paid working people in our society. As the numbers grow—and they will—it will also, in the long term, severely undermine the pensions policy that is now agreed across your Lordships’ House, because it will increase the number of people who have to depend on means testing in retirement.
We support the amendment tabled by my noble friend. We want to make it clear that this is a solution for now, in the context of the Bill. We hope the amendment will be agreed and will become law. It will then be for the Government to take it away and for the Minister to seize the opportunity to use it to address the issue head-on.
The Lord Bishop of Wakefield
My Lords, having been one of the signatories, along with 26 other Anglican bishops, to the letter that went to the Daily Mirror last week, I am loath to speak too much about amendments to government legislation. However, on this particular occasion, because bereavement support is such a notable part of our business and ministry, I am very bothered about the direction in which the legislation is going.
I should like to reinforce what was said earlier by the noble Baroness, Lady Hollis, about cost. It seems to me that it is not a question of cost but of how long support is given to people. What many clergy learn and what people often forget is that, as the noble Baroness said, it is not just the first three months which are difficult—the problems continue throughout the whole of the first year. More than that, it is a matter of showing support for people over the whole period of time that the emotional pain of bereavement continues to be very severe. The issue of supporting people financially has an impact on that emotional pain.
Speaking on behalf of a group of people who spend so much of their time trying to support those who have been bereaved and who need to understand how they can be helped, we might take good note of these amendments. They will not cost more money. They have been tabled simply to try to offer more support over a longer period of time—not only in the raw first year, but over the first three or four years, and particularly where young children are involved and the emotional impact is even greater.
Lord German
My Lords, these are delicate and sensitive issues. I pay tribute to the noble Baroness, Lady Hollis, for using her ingenuity to make sure that these issues are right at the forefront of our discussion on Report. The major issues have already been raised and were expressed from these Benches both at Second Reading and in Committee. The evidence I quoted from the research literature on these matters identifies absolutely clearly that one needs to be extremely careful when dealing with these very difficult times for families. Indeed, what we should recognise is that some people may be able to regain a sense of normality more rapidly than others. You cannot make a distinction or see clear lines between one family and another. It seems that this is very much about the circumstances in which people find themselves and how those positions are managed and handled. The issues raised by these amendments have to be a source of major concern to Members on these Benches, and as I say, they were raised earlier.
I am grateful to my noble friend Lord Freud for giving us an opportunity to discuss these matters in considerable detail between the Committee stage and today, and to help shape a Government response which adequately meets the concerns expressed. An adequate response from the Government has to satisfy the discussion we had in Committee and be highly relevant to the issues already raised today in this Chamber about these sensitive matters, particularly relationships within families. I want to see a process that meets the issues and was raised in that evidence. This is what I want to challenge and talk to my noble friend about.