Education: Conservatoires

Lord German Excerpts

Wednesday 10th October 2012 Lords Chamber

[Lord German]

I congratulate the noble Lord, Lord Lipsey, on this timely debate. Tonight, we are celebrating the spectacular contribution that conservatoires bring to the culture of our country and to performing arts in particular. We should also be celebrating the fact that just one-quarter of 1% of the student population of this country is contributing over £2.5 billion a year to its economic life. A small contribution from the state produces a much bigger return for our country as a whole. That economic fact cannot be overlooked.

It is true that we have to use large amounts of capital funding to be able to train and work with these students. They need large performing spaces, very expensive instruments and very expensive equipment. Let us compare that with the sciences, particularly medicine and dentistry, which also require large-scale capital investment. Institutions teaching those subjects are able to get research funding that is not available to conservatoires.

The problem that we have seen in England can be contrasted with the role of the Higher Education Funding Council for Wales. I pay tribute to the noble Lord, Lord Rowe-Beddoe, because if anybody walks into the Royal Welsh College of Music and Drama now, they will be astounded. Their breath will be taken away by the facilities in that brand-new building which contributes so much to our cultural life. The Higher Education Funding Council for Wales has a new premium funding which has tried to give to medicine, dentistry and other capital-intensive higher education institutions the ability to fund on a longer-term basis. The problem for HEFC in England is that it has had many supplementary grants but not brought the patchwork quilt together. My message to the Minister is that continued funding, in a comprehensive and sustainable way, is essential.

Jobseeker’s Allowance (Sanctions) (Amendment) Regulations 2012

Lord German Excerpts

Monday 8th October 2012 Grand Committee

[Baroness Turner of Camden]

My Lords, I rise to support my noble friend in relation to these regulations. They are extremely complicated and it is not surprising that the Government have thought it necessary to include a long Explanatory Memorandum. At a time when sometimes, in certain areas of the country, there are 50 applicants for every vacancy, it seems pretty impossible to introduce such complicated regulations. I think the Government should not be moved by a lot of the media coverage about scroungers. In fact, in my view, people on benefits are mostly not scroungers and would be very happy to have work if it were possible to find it. It is often very difficult indeed to do so.

I am particularly concerned about the effect on disabled people because I understand that assessments of people who are currently on DLA have already begun. A number have been in touch with me because they are concerned about what will happen if it is ruled that they are capable of some work when they feel that they are not. There is an appeals mechanism, which they then put into operation, and it often results in a change in the decision, but there is a long gap before the appeal can be heard, so what happens to people who are caught between two benefits? There is the DLA, which they want to remain on, and the jobseeker’s allowance, to which they will be transferred if they lose their appeal on DLA. This is a cause of a great deal of worry among people who are already very vulnerable and very concerned. I am not certain what consultation has taken place in relation to these regulations as far as the Government are concerned, but they are far too complicated. They do not give any indication about appeals. I am not quite certain how people will appeal if they are told that they are to be dealt with under various articles. Can they appeal it and, if so, what are the arrangements?

Secondly, I feel that people ought to have a much clearer idea of what is involved regarding sanctions and what is meant by “hardship”. The hardship point has already been raised by my noble friend. What actually is hardship? Many of the people on the benefits already feel that they are subject to hardship. Of course, even under the present circumstances, the regulations do not allow for what might be described as anything that is not hardship. In fact, everything possible is done to encourage people to look for work, and many people are only too happy to have work if they are capable of doing it and if they can get it. Unfortunately, we are not in that happy situation. In these circumstances, I really do think that the Government should take these sanctions regulations away and rethink the situation; otherwise, a lot of vulnerable people are going to get hurt when they should not be.

[Lord German]

My Lords, this set of regulations applies to changes that came out of the Welfare Reform Bill and the prospect of universal credit. I should like to explore three issues with your Lordships this afternoon. The first relates to proportionality, the second relates to clarity and the third relates to the timetable for bringing together the various parts of the sanctions regimes which now exist and the prospective sanctions regime for universal credit.

There have obviously been concerns about proportionality and about the three-year sanction, which clearly is very extensive. The Explanatory Memorandum says that it will be used only in the most extreme circumstances but can my noble friend, whom I welcome to the Dispatch Box today, give us an example of the type of case that would attract a three-year sanction of that sort?

I understand that clarity is needed, and this is the second issue. However, having read the documentation that accompanies these regulations, as well as the Explanatory Memorandum, I do not think that anyone under the threat of the sanction would instantly know precisely where the sanction would fall. There is clarity regarding 13, 26 and 156 weeks, but if noble Lords look at paragraph 7.6 of the Explanatory Memorandum, they will see that a certain degree of mathematical skill is required to be able to balance the variety of options. I do not object to that but can my noble friend tell us whether this whole sanctions regime could be set out in a chart on a single piece of paper, which would allow the people whom it might affect to truly understand it? That would be very helpful in aiding people to understand it.

In my view, the problem with clarity is where it leads in terms of direction to Jobcentre Plus staff, who make the decisions based on interpreting these regulations. On many occasions in relation to other aspects of assessment by Jobcentre Plus assessors and decision-makers, we have asked what the current regime is for allowing those decisions to be made more accurately. In response, both in the Chamber and in correspondence, the Government have told me that stress is laid on the importance of empowerment—empowering officials to make decisions and giving them discretion. Empowerment and discretion can sometimes conflict with clarity if the decision is so laid down and so restricted that there is no room for a decision in a particular circumstance.

Therefore, can my noble friend tell us whether the discretion that will be offered to Jobcentre Plus staff and their empowerment—which is the watchword, with which I entirely agree—in making decisions will sit comfortably with the clarity regime that has been outlined to us today? Will that be in some form of guidance? We have already heard from the noble Lord about the “good reason” concept. I could interpret “good reason” and I hope that I would do it effectively. However, I am not so certain that that would be without some form of interpretation and guidance, which would be a concept well understood to apply in these circumstances. A “good reason” has been a phrase used very commonly for making decisions. If it is still the intention that that allows discretion for Jobcentre Plus staff to be able to make decisions, perhaps that would be sufficient on its own if it was a well enough understood concept. Would my noble friend like to comment on that?

The third area that I would like to explore is the joining together of the three parts of the sanctions regime—the ESA regime, the jobseeker’s allowance regime and the universal credit regime that is to come—given that all three will be overlapping and running alongside each other during the course of the coming years until universal credit finally takes over. If this is an interim step, is it the one that is describing what will happen under universal credit? I wonder why we have not been able to do the same for employment and support allowance and why that has not been brought before us at the same time. Am I correct in understanding that that will be brought before us by a negative procedure in another set of regulations, which we will perhaps have to examine against this set of regulations? Perhaps it would have been more advisable to bring them both together.

However, it seems that the crucial issue is whether this actually lays down a pathway for what will be the regime applied under universal credit or whether we are to treat this as an interim regime, in which case we would be moving forward to another set of changes in the years to come as we apply universal credit. How far can we go along that road? It seems to me that an interim situation would be inadvisable but that a situation which was as close as possible to universal credit would be advisable.

Finally, having got from the Printed Paper Office before the Summer Recess a copy of the Explanatory Memorandum, I read paragraph 7.7 with interest until I got to the last sentence, which read:

“Under the revised regime claimants who re-apply for benefit following disentitlement for not being available for or actively seeking work will be subject to a”—

at which point the paragraph ended. I was so pleased on coming into the Room today to see that the Printed Paper Office has now completed the sentence with the words,

“loss of benefit period of 4 weeks”,

so that I do not need to ask about that. However, it would be helpful if either the authorities in this House or in the DWP were to make sure that when we have a lengthy Summer Recess before us, we can read the documents as they should be rather than as they should not.

Public Bodies (Child Maintenance and Enforcement Commission: Abolition and Transfer of Functions) Order 2012

Lord German Excerpts

Thursday 12th July 2012 Grand Committee

[Lord McKenzie of Luton]

My Lords, I thank the Minister for his explanation of the order, which is to abolish CMEC and transfer its functions back to the DWP, where it will operate as a business unit within the department. As we have heard, CMEC has not been around for long; it was created by the 2008 Act but was an integral part of the reform of the CSA that broadly followed the recommendations of the Henshaw report. This was essentially the third attempt to make it fit for purpose after its flawed creation in 1991.

That third attempt—we have heard some of this from the Minister—included a simplified assessment system, based on gross income, to be provided directly by HMRC; an overriding objective to maximise the number of effective maintenance arrangements; the removal of the compulsion on benefit claimants to use the statutory system; the obligation to promote awareness of the importance of maintenance arrangements; the obligation to provide information and guidance to parents by the Child Maintenance Options service; new IT systems eventually facilitating the provision of just one statutory calculation system; and a range of strengthened enforcement powers. All this was placed under the control of CMEC, an NDPB and, unusually, a Crown one at that—there are only a couple in existence.

We acknowledge that the transfer of the CSA was not a popular decision among staff who were concerned about losing their Civil Service status, although terms and conditions were protected. Truth be told, it was not the only possible structure within which the CSA revamp could have taken place. At the time, though, it was seen as having the merit of being part of giving the CSA a fresh start and of having not only a dedicated operational management but dedicated board oversight to see that the range of objectives were progressed. This was seen as important for the efficiency of the fundamental assessment, collection and payment arrangements but also for the wider obligations of the promotion of child maintenance and the provision of information.

It is understood that the Government contend that each of the objectives of the revamp endure and that reverting to be a part of DWP will not change this; the Minister has pretty much confirmed that. It is contended that the abolition of CMEC will allow for greater ministerial accountability for child maintenance. Frankly, that is at best a marginal argument. It suggests that there are not clear lines of accountability between NDPBs and Ministers. These are generally through regular reporting but technically through the department’s framework agreement and, of course, through budget-setting. These provided a natural separation between operational matters and policy, and the oversight of the board was important in ensuring a balance of effort and resource going to the collection process and the support service.

The Minister will be aware that, as in the other place, we seek assurance that the removal of the explicit objective to maximise the number of effective maintenance arrangements does not mean that it will not remain the key objective. Can we understand what data will be routinely available to monitor whether this is so? There is a risk that this will get subsumed into broader issues around family policy with which we might entirely agree but where there is a loss of focus on this aspect.

Incidentally, I note that the order is to take effect soon. Would it not have been better to have any transfer at the end of a financial year? Will the Minister confirm that there are no adverse tax consequences of the transfer of property, rights and liabilities from CMEC to the DWP? Can we please have an update on the move towards a single statutory system of child maintenance? What is the latest timetable?

Specifically on the enforcement powers, can it be confirmed that the powers set out in the 2008 Act can be implemented equally as effectively by DWP as by CMEC? What is the timetable for bringing them all into effect?

We are not sure this move is necessary or the right one at this time but will not oppose it, although we will seek to keep up to date with progress under the new arrangements.

[Lord German]

My Lords, I come to this discussion with some background knowledge of bodies being taken “in house” under the previous and present Labour Administrations in Wales. Accountability is crucial. The question we should ask is whether a body has the right purpose. In this case, the purpose is correct, in that CMEC provides a determined service and does not require the same flexibility of operation or fleetness of foot as, for example, an economic development body might need in attracting new investment into one’s country. However, the question of accountability remains. Any change of this sort works only if it provides a better outcome for customers at the other end and in terms of the services being provided. Does my noble friend the Minister agree that having a phone number for complaints, when last year there were 23,000 complaints, would not be a helpful way for the Government to proceed? Asking in a year or two whether there had been a certain level of complaint about the service and whether it had improved as a result would be the way to judge whether this is the correct move.

Additional funding for voluntary agencies and third-sector organisations to support this work was announced during the passage of the Welfare Reform Act. How does my noble friend see that dovetailing with the in-house operation? Will it deal with the level of change being anticipated? What relationship is there to be between those third-sector organisations and the department?

One of the criteria that always worry customers is, “Is there somebody who I can call or who I can contact who is dealing with my case?”. Will there be someone in the in-house regime who holds the file for a particular customer so that the customer can know who they will be talking to if they wish to make contact?

It would be to the advantage of the in-house service if other parts of the DWP were to provide supportive services. We know that people call CMEC at present with a variety of problems. They are not purely financial but relate to other sorts of service and support. Some of them are to do with local authorities; some are to do with caring responsibilities; and some are to do with work and so on. Can my noble friend indicate what range of on-call services the department will be able to provide to the new in-house operation? For example, data held under the universal credit system might be made available to people working in the new part of the department, thereby making things quicker.

At family breakup, a complex web of issues faces parents. What will be the scope of advice and signposting in the new regime? Will a sympathetic ear be available? Will there be someone who can provide a range of signposts to different services or make the connections if some of them are within the department?

I return to the issue on which I started: accountability. There will now be accountability to Ministers, but that accountability will be tested by Parliament. Does my noble friend intend to produce an annual report or regular update on performance in this area of work, so that noble Lords might be able to test whether the regime has worked effectively? Clearly, this service has not worked effectively over the years since its creation. It has caused a great deal of heartache for a large number of people. The ambition is to improve but we need to be able to test that improvement, and I wonder in what ways that will happen, apart from the normal scrutiny of the Minister through questioning. Perhaps the Minister could lay before Parliament some of the issues that have been successfully achieved or otherwise in data form so that we can make that judgment.

Social Security (Civil Penalties) Regulations 2012

Lord German Excerpts

Thursday 12th July 2012 Grand Committee

[Lord German]

My Lords, may I explore one item and ask a cheeky question at the end, related to the universal credit demonstration that some noble Lords were able to hear earlier on? Very welcome it was, too.

Paragraphs 9.1 and 9.2, which the noble Lord, Lord McKenzie, has already referred to, are about the guidance that is to be issued. In response to my questions to my noble friend about the way in which decision-makers behave, the answer has invariably been that we must encourage the empowerment of decision-makers. Of course, written guidance does not necessarily help people to use their discretion.

The other problem that is painfully obvious to many observers of the situation is that, when discretion is used, it may not necessarily be uniform throughout Jobcentre Plus offices. There have been a number of occasions, and some of these have reached the media, when decisions have been made on the basis of what may appear to be fairly flexible guidance but has been interpreted in a very literal way. If these penalties are to be most effective, then they are a weapon that has to be used with great discretion. Is my noble friend prepared to outline a little more about the nature of the work that will go on with Jobcentre Plus decision-makers to advise and empower them but also to train them in a method that does not simply consist of reading written materials from the department, and whether he has put in place a reviewing or monitoring mechanism—some way of judging whether that discretion is being used in a fairly uniform way? Nothing could be worse than if people were to rigidly apply rules in one office while next door someone was being treated with discretion and therefore differently. Noble Lords will know that it is difficult to strike a balance between discretion and uniform application. I wonder how that circle is being squared by the department, particularly in relation to paragraphs 9.1 and 9.2.

One of the problems found in the employment support allowance process is that claimants often fail to provide full evidence of their condition until perhaps after the decision has been taken and their appeal is on its way or reaches the tribunal stage. Does my noble friend see any use in the threat of these penalties that might assist people to come back earlier and give their full position and provide all the details in evidence that may be relevant to their claim up front in order that decision-makers might help to get the claim right at the first attempt?

This is a minor and very cheeky question. Under the universal credit, where real-time information is to be provided, is there a double banking system—does the claimant of universal credit also have to report these matters to the department? Is there a double check or, if there is a failure at one end of the system, will the claimant be blamed for what may have gone wrong in, say, information being inputted wrongly by his or her employer? Will any form of double-checking take place? Does the claimant stand any liability for what might happen in that respect?

[Lord Freud]

My Lords, I shall try to deal with as many questions and to avoid writing as many letters as possible. The noble Lord, Lord McKenzie, asked about the latest figure on official error. The latest figure is £0.8 billion. As regards making sure that one civil penalty will apply, we have put in place processes for decision-makers to check whether a penalty has already been applied for the same failure or error resulting in the overpayment. Only the JCP and the decision-makers, PDCS, are dealing with the non-housing matters. The way in which we ensure that we do not get a double whammy with local authorities and DWP is for local authorities to apply their penalties only when the standard housing benefit or council tax benefit is the only benefit in payment. In that way, there is no possibility of an overlap.

We are drafting the guidance and we hope to share the final draft guidance with SSAC by the end of this month. We will look to share it with other relevant stakeholders at that time to take on board their comments. The guidance will cover the obvious examples of negligence, reasonable steps and reasonable excuses. As one would expect, there will be intensive training, which will explore definitions of the penalty criteria. I do not think that the figures have changed from the impact assessment that we discussed when we were looking at the Bill. The cost is £19 million over 2014-15. The appeals estimate, which we discussed, remains purely an estimate.

In response to my noble friend Lord German’s question on the difficult mix of discretion and consistency, it is important that we have clear guidance about what constitutes the penalty criteria. Each case will be individually considered by a decision-maker. They will have general duties, such as to look at only what is relevant and to explain their decisions to claimants. My noble friend’s idea had not occurred to me. He is more devious than me about using this process to make sure that we do not have different information going to decision-makers and later to tribunals. I think that I shall take that away and think about it, as it is rather clever. That is a design issue that we shall explore.

I say in answer to the noble Lord, Lord McKenzie, that we will monitor the new penalty to ensure that it is effective—and to what extent—and that there is equality of treatment. We will use evidence from a range of sources such as administrative data and wider data sets. In practice, one of the main success criteria will be that we impose fewer penalties as time goes by.

We talked in the past about the fact that we now have a framework for conducting trials much more coherently right through the system. Clearly, we will pick out the key behavioural impacts of different aspects of the policy. How sanctions will work in that area is something that we will look at with randomised control trials. It is a very obvious test and there will be mechanisms for conducting it. We will look at the results very closely, and rather earlier than at the results of other tests, once UC has come in. I hope that I have dealt with all the issues.

Mental Health: Access to Work Support Service

Lord German Excerpts

Monday 18th June 2012 Lords Chamber

[Lord German]

My Lords, I, too, congratulate my noble friend on giving us an opportunity to air this topic in such an interesting but also practical and informative debate in your Lordships’ House today. I shall take a practical approach to my questioning of the Minister and to some of the issues which have been raised.

The gateway to the mental health support service, now run by Remploy, is the Access to Work scheme, so it is essential that that gateway is not only open but welcoming. The focus must be on achieving a greater number of people passing through that gateway and a much greater understanding of what that portal means.

Looking at the literature around this whole area, I have found that some people will conflate—though they may treat them separately—learning disability and mental health issues. Will the Minister make it absolutely clear whether this mental health support service is for mental health issues or includes people with certain forms of learning disability?

The ONS figures with which we have been provided show us that only some 500 people were helped by the scheme in the first nine months of the past financial year. We are told, again by ONS, that the number of people who have mental health conditions could be in the region of one in six of our people. You would expect the number of people helped to approach that one-in-six figure, but 580 is just 0.2% of the total, so there has not been a huge impetus in the programme as it stood at the beginning of the year to get more people with mental health conditions into the programme.

The 2009 evaluation of the Access to Work programme states:

“AtW does not appear to be widely marketed and awareness of the programme seems to be fairly low”.

Liz Sayce, in her report entitled Disability Employment Support Fit for the Future, puts it more succinctly, saying:

“Access to Work should be transformed from being the best kept secret in Government to being a recognised passport to successful employment, doubling the number of people helped”.

My final question to the Minister, which I shall put to him again at the end but say it early enough to give him time to think about an answer is: if I were to ask this question in 12 months’ time, what would my noble friend view as being a measure of success? Would it be doubling the number of people who are helped? Would that be sufficient or would my noble friend wish to go beyond that aspiration? To achieve that, we need to raise awareness of the programme.

I need to say just a word or two about the other part of Remploy’s work, which is of course the Remploy factories, which have also been the subject of discussion and debate. It was interesting that only 6% of the employees of the Remploy factories have mental health conditions, compared to a quarter of the people to whom Remploy employment services are giving assistance, so we are looking at a different range of people here. Can my noble friend tell us—assuming that some of the 6% will not need to be in the programme because co-operatives, mutuals or employee buyouts may mean that some of those factories will continue—what special measures have been put in place for them? Are they being transferred automatically and directly to the Access to Work programme, and are they being given additional support beyond that which we now see within the programme?

The second issue relates not to the factories but to the broader workforce, and has already been mentioned: promotion and development of the Access to Work programme with employers and the broader workforce. It is all about perception, is it not? The National Health Service produced a figure that about one-half of people with mental health conditions would feel uncomfortable about discussing them with their employers. That is a slight improvement over the past decade, but the improvement has been very slow.

What can the Access to Work programme do to help employers and the workforce in general to understand mental health conditions and how they should be treated as an illness like any other? How can increased promotion to both employers and the workforce in general take place? In the notion of having the portal—the gate—open and accessible, it is crucial that awareness is raised.

Finally, I ask my noble friend: apart from numbers as a measure of success, is there anything that he would like to see in 12 months time about the manner in which the whole Access to Work mental health support service has been carried out?

Youth Unemployment

Lord German Excerpts

Thursday 14th June 2012 Lords Chamber

[Lord German]

My Lords, I too pay tribute to the noble Lord, Lord Adonis, for securing this debate. I shall say a few words later on about his opening remarks because he raised matters of great importance that lie underneath this important issue. As many noble Lords, including my noble friends Lord Bates and Lord Roberts, have said, this is not a new problem. We have seen the number of unemployed young people reaching ever upwards since 2002, but it is acerbated at the moment. Young people are especially badly hit by poor economic times. Employers are reluctant to hire new workers, more experienced workers compete for lower paid entry-level jobs and older workers hold on to their jobs for longer than usual.

As the noble Lord, Lord Giddens, said, this is not simply a UK problem. It affects the developed world and the developing world alike. Across Europe, the Americas, the Middle East and north Africa, the problems are the same. In its recent youth employment trend report, the ILO forecasts that the current high levels of youth unemployment around the world will continue for the next four years. The growth in the knowledge economy, globalisation and technological change have led to a fall in the demand for low-skilled workers. Entry-level jobs tend to be concentrated in the service sector, and many of them require people to have soft skills. We can think of the people who answer the telephone when you have a banking problem or an insurance problem. They require soft skills and a readiness to be available for on-the-job work from day one. It is regrettable that many of our young people without work are not coming out of the education system with these skills.

We have a long-term issue with a serious short-term spike, although the short term might extend over two or three years. As with all longer-term, deep-seated problems, a degree of political consensus is required if we are to tackle the long term. In his very interesting opening remarks, the noble Lord, Lord Adonis, concluded that there were areas of great agreement, which is what we are hearing today. For the longer-term problems that we are going to have to deal with, which will span more than one election period, does he have any ideas about how we can promote that consensus over a number of years? Equally, does he have any idea how we can produce it for the UK as a whole? I was interested, and I know that my interest was shared by many people around the Chamber, in the way in which you have to handle the education system and make changes to ensure that we get the outputs that we need. However, I know that those views are somewhat in conflict with those of some of his colleagues currently holding ministerial posts in the country in which I live. If we have a requirement to provide UK solutions to problems of this sort, I wonder how we can best get together and reach that consensus, which cannot be achieved without the education and skills agenda.

My second point is about the underlying problem that we are trying to solve here. You could address different remarks to different parts of the problem, but I agree with the ACEVO commission on UK employment, whose conclusion was that there is a,

“lack of vision for the ‘forgotten half’ of young people who are not destined for university or a high quality apprenticeship post-16”,

and that the route into work for these 16 to 18 year-olds was,

“more like an unmarked field of landmines”.

That drives me to the conclusion that the issue that matters more than any other is those young people who are in the NEET category, a term we have used extensively in this debate. I suspect that that is too general a title but this group is the most difficult to reach, and early intervention is crucial if we are to make a change, which is why the pupil premium is so important in getting in early. In terms of intervention, those people are the most difficult to reach—the high fruit on the tree, if you like; the most tricky to find appropriate solutions for. They become even more important at times of economic difficulty, as more educated younger people enter the jobs market at the lower-skills end, so displacing the unskilled. All the figures now show that a growing number of people are moving into that category of core NEETs.

I shall give your Lordships examples of pre-NEET work being done in two areas that I know well. The first is at Newport High School in Wales and the second is Bedminster Down School in Bristol. Both these schools have taken pupils from the age of 13 out of the school environment altogether, put them into a community environment and worked with them on trying to raise their skills, with such a level of success that those pupils have achieved a pass rate of five GCSEs or more of about 50%, and about 50% of that 50% are going on to post-16 education. These experiments are probably being replicated around the country. Are we building upon those successful stories of local experience and local work, which may well be replicated by voluntary organisations and schools throughout the country? It is important that we try to meet the substantial needs of this group of young people who are so difficult to reach.

The youth contract contains a suite of measures, but does the Minister believe that they are yet of sufficient scale to deal with the problems that we are facing in both the short and long terms? I also believe that we will have to do more on the supply side. Most of the interventions that we have been talking about are on the demand side, but we have to work much more strongly with employers. The Chartered Institute of Personnel Development rightly says that employers can and should make a difference by building a relationship with young people from school to labour-market entry. What are the Government doing to support the institute in its campaign to engage more employers? On the demand side, it is really a question of whether the Government have done enough to rationalise the myriad relatively small-scale funded interventions. I know that the Local Government Association is keen that that should happen.

This debate has been a wonderful opportunity to work together in seeking common solutions, and I believe that it has gone a considerable way towards achieving that.

Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2012

Lord German Excerpts

Tuesday 22nd May 2012 Grand Committee

[Baroness Drake]

My Lords, starting positively, it is most welcome that auto-enrolment will really commence in October 2012, and this order is obviously an essential part of getting to that position. The pay reference periods in the draft order and the corresponding earnings values in respect of the relevant sections of the Pensions Act 2008 are sensible. We can understand why, for example, a daily pay reference period could deliver results that were not the policy intent.

It is also pleasing that the Government have held to the definition of qualifying earnings that reflects the common pay components that make up the pay packet. Aligning auto-enrolment triggers and thresholds with tax and national insurance thresholds in the interests of simplicity for employers wherever possible would seem a sensible approach—but only to the point where the pursuit of simplicity does not undermine desirable outcomes, particularly for women.

Aligning the upper limit of the qualifying band of earnings with the NI upper earnings limit provides simplicity, complements the policy intention and, by extending the range of earnings, increases savings a little. Similarly, setting the lower limit for the qualifying earnings band to the NI lower earnings limit provides simplicity and maintains contribution levels when auto-enrolment is triggered. That is the positive.

However, our concern is that the level of earnings that triggers the automatic enrolment of a worker is set for 2012-13 at £8,105, the PAYE threshold. This further rise in the trigger excludes yet more women, and places simplicity above enabling millions of women to increase their savings pot. We remain concerned for the reasons we have rehearsed previously: raising the earnings trigger has a disproportionate impact on women and the Government are repeating the errors of the past in designing a second-tier pension system that does not work for the life pattern of many women. In 10 years’ time, the error will be obvious, particularly to women themselves. I have no doubt that action will be taken to amend it, but by then thousands of women will have lost out unnecessarily.

The Government’s response to the automatic enrolment earnings threshold consultation reports that the main focus of consumer organisations was on equality issues, particularly the impact of higher thresholds on low-paid workers, the majority of whom are women, but clearly their views are not a dominant influence in setting the trigger. Millions of women have a life pattern in which periods of full-time work are interspersed with significant periods of part-time work when their caring responsibilities are at their greatest.

On the Government’s figures, of the workers eligible for auto-enrolment, two in five—39%—are women. Raising the trigger from £5,035 to £7,475—the 2011-12 PAYE threshold—excluded 600,000 individuals, 78% of them women, most of them part-time, but that decision was made. However, raising it to £8,105 excludes another 75,000 women, on the grounds of simplicity. If, over time, that earnings trigger rises even further in real terms, tracking proposed increases in the tax threshold, the number of women excluded from the benefits of auto-enrolment will grow even more.

The effect of excluding these women is, first, that they may not start to save when the reforms are introduced. Secondly, when they transition from full to part-time jobs they may face increased charges on their pension pot accumulated as a result of becoming an inactive member. Thirdly, ceasing to be auto-enrolled when they become part-time workers could break the persistency of the savings habit they built up when working full-time.

The Government sympathise with the view that only those who benefit from tax relief should be auto-enrolled. This ignores the working of the tax credit system. For example, household income brought to account when calculating universal credit disregards 50% of that income paid in pension contributions. Of course, before the reforms it was 100%. To quote from the Johnson report commissioned by the Government:

“Many or most very low earners are women, who live in households with others with higher earnings and/or receiving working tax credits. These may well be exactly the people who should be automatically enrolled”.

Those excluded women also suffer a loss in lifetime pay, albeit deferred pay, because they do not have access to the employer’s 3%—and for some employers the figure is higher. However, they will still lose out from any lower wage growth that flows from the cost of automatic enrolment.

If policy is predicated on the belief that most people will not begin to save unless the power of inertia is harnessed through auto-enrolment then it cannot be the case that the right of those below the earnings trigger to “opt in” will seriously mitigate the risk that many women will face lower incomes in retirement as a result of the level at which the trigger is put. As to persistent low earners, the argument that they should not save because they get state pension and benefit means yet again that there will be no “asset accumulation strategy” for low earners. If 100% of pension contributions were disregarded for universal credit calculation, this would reduce the risk of a fall in people’s welfare prior to retirement.

Furthermore, if the Government accelerate the move to a single flat-rate pension, depending how that is done, together with the more generous crediting arrangements for carers introduced by the Labour Government, then the incentive to save can increase for significant numbers. As the Johnson review again observes:

“earnings are highly dynamic and there are relatively few people who have low earnings throughout their lives”.

A make-weight argument for the higher earnings trigger is that it reduces the number of small pots of pension saving, which are disproportionately expensive for the insurance industry to administer. But of course that argument is totally contrary to the policy intention. The answer to that problem is the public service obligation of NEST not to increase the numbers of workers excluded from auto-enrolment.

Much is made by large employers—though having read the review, one sees that not many of them directly make submissions—of certainty and business planning from linking the earnings trigger to the PAYE threshold, so setting the direction of travel. In 2012-13 the Government are rolling out to the large employers and are raising the earnings trigger in order to simplify the process. However, these are large firms well versed in dealing with complexity. Surely we should not be trading fairness for women, which they need, for an alleged simplicity which these companies do not require.

Many large employers have already been given the simplifying benefit of an alternative certification test. Many use salary substitution, managing the complexity of employees opting both in and out of salary substitution. They are experienced in deploying often complex measures to manage their pay and tax liabilities and frequently changing tax rules. Do 75,000 more women need to lose the benefit of auto-enrolment to give them the alleged simplicity they seek?

To return to the positive: while we welcome the commencement of the new employer duty, and recognising some of the positives in this order, we remain concerned about the position of many women that is created by raising the earnings trigger.

[Lord German]

My Lords, I recognise in the consultation document and in the response from the Government that three-quarters of the respondents supported the trigger that is now being set by the Government in this legislation. Of course, this is not an exact science; one cannot say that a specific figure is the level at which people will benefit from coming in to automatic enrolment. However, we should recognise that for many low earners, investment in pensions is potentially unsuitable, and that it is not suitable for persistent low earners. I will come back to that point in a moment.

When the Pensions Commission did its initial work, it stated that low earners might aim for a gross replacement rate of 80% or more of their income when they retired. The Johnson review—which I, like the noble Baroness, will quote from—stated:

“This disproportionate impact on women is something we would wish to avoid if we believed that these people would benefit from saving”.

Individuals who are low earners throughout their lifetime will receive a relatively high income—I stress “relatively”—in retirement, without private pension saving. Paul Johnson quotes the example of an individual earning £10,000 a year from the age of 22, who would see a replacement rate of around 97% from the state alone. Therefore, the question is where the target trigger should be set. Surely the objective must be to maximise pensions saving where that saving is valuable and minimise it for people for whom it will not be worth while.

There is no doubt that this will have a disproportionate effect on women, but the question is whether potentially it would not be worth their while to invest in this manner. Would they benefit from the savings? The question that is being asked here is about what the threshold should be and whether it should be somewhere in the region of the figures that Paul Johnson quoted in his review for the Government. Individuals who are low earners throughout their lifetime will receive a relatively similar income without private pension saving. The question is: does the trigger enable people to come back in when their earnings level rises above the tax threshold? The question that the Minister might like to answer is: what will be the procedure for people who have been low earners, who are underneath the trigger, who have not chosen to opt in but who reach that figure to be automatically enrolled? If they are in the category of persons who will occasionally fall back below and then rise above the trigger level, how will their re-enrolment occur? Will there be encouragement, and will they be tracked so that the re-enrolment will occur seamlessly, without them losing out?

The other way in which people’s choices could be made is through opting in. I note that the consultation response from the Government states that people will be encouraged and that employers will be required to pass on information to their workforce. However, there is a difference between passing on information and encouraging people. The difficulty that many employers will have with low earners is in determining whether this is potentially good for them. It is a very difficult judgment to make, given that it may not be the right choice for a person who is a low earner throughout their life but might be for someone who is a low earner now but who has the potential to move back and forth across the trigger line.

Workers’ Memorial Day

Lord German Excerpts

Monday 23rd April 2012 Lords Chamber

[Lord Freud]

My Lords, it is possible, depending on the outcome, that we will need primary legislation on mesothelioma. However these things take time and we will have to structure any solution in consultation with the various stakeholders in order to get there. There is not time at the moment to attach any relevant legislation quite as rapidly as the noble Lord suggests.

[Lord German]

My Lords, Professor Löftstedt said in his report that there needs to be general community support as regards an understanding of risk. I therefore welcome the Government’s establishment of the independent challenge committee which allows the public to make a challenge when they see a risk that they believe is not appropriate. Can the Minister tell us how that body will be independent given that its chair is also the chair of the HSE, and whether it will not require a wider reporting mechanism than that currently envisaged?

[Lord Freud]

My Lords, my noble friend is absolutely right in the sense that it is often not so much what the regulation says as the way in which it is applied and used, and often those who are most shocked by how the regulations are applied are those in the HSE. This is a really valuable element of our society which has led to our having the lowest level of fatalities from workplace accidents in Europe. It is important that we concentrate this effort on where it really does save people’s lives. I think that the HSE does have an interest in making sure that that happens.

Employment: Work Programme

Lord German Excerpts

Wednesday 29th February 2012 Lords Chamber

[Lord Freud]

My Lords, I must point out that the NAO acknowledged that the Work Programme addressed significant weaknesses of previous programmes; that key elements within it improved affordability and drove value for money; and that it was a significant achievement to introduce it in a year. It is expected to help more people more effectively and for less money than previous programmes. As for information, ERSA has put out some information about what happened to the first cohort. It said that people got into jobs at a rate of between 18 per cent and 23 per cent, which was more or less in line with the expectations of the industry.

[Lord German]

My Lords, up and down the country there are third sector and charitable organisations supporting the Government in delivering this Work Programme as subcontractors. However, the National Audit Office report shows that many of these subcontractors are concerned about the way they are being treated by the prime contractors, and recommends that the Government should institute a programme of spot checks to ensure that they are fulfilling the standards which I know the Government have put in place. Can my noble friend tell me whether these spot checks have taken place yet, and if not, when are they likely to take place, and will he report to the House?

Welfare Reform Bill

Lord German Excerpts

Wednesday 29th February 2012 Lords Chamber

[Baroness Lister of Burtersett]

My Lords, I support Motion A1 as the best outcome we could possibly hope for in the current circumstances. However, I would like to suggest another area that the review should look at in terms of a foreseeable consequence, which is the impact of this measure on social support networks. I was an adviser to a Joseph Rowntree Foundation-funded project carried out by some of the people involved in the review instigated as a result of the noble Lord’s earlier intervention: namely, Sheffield Hallam University, which has been looking at the relationship between poverty and place over a three-year period. It produced a report last year which considered these research findings and set them against various explicit and implicit assumptions in government policy. One of the points made in the report was that if forthcoming social housing and housing benefit reforms obliged low-income households to relocate, this might most affect those with the strongest connection to their existing neighbourhood. Surely this goes against so much of government policy. These reforms will make it harder for people to find work because social networks are very important in helping low-income people find work. They will make it harder for those with children to enter or sustain work because social networks are so important in terms of help with childcare. The reforms will undermine the big society. Social networks are the capillaries of the big society. The report suggests that the reforms will reduce people’s feelings of security, safety and sense of belonging. I am sure that this is not what we want. I do not know whether the Minister will respond positively to my suggestion. However, if he does respond positively, as he did with regard to the suggestion of the noble Lord, Lord Best, for a review, I hope that he will take on board the impact of this change on social support networks.

[Lord German]

My Lords, I commend the thrust of this amendment. However, as has been demonstrated, the way in which it is drafted may mean that it does not include everything that we would wish it to include. I would expect the Minister to comment about the way in which a review should be conducted. I do not wish to sound like a well-worn record but I have a long-standing view about the way in which major shifts and changes should be reviewed. It is absolutely essential that any part of the Bill which has profound implications for change should be reviewed in a proper manner. I wish to use two analogies—a route map and a set of milestones. We use a route map to get a sense of direction, find out where we can turn off a route and make diversions, whereas a milestone signifies the distance that we have travelled. Reviews which rely solely on milestones do not necessarily fulfil the point to which the noble Lord, Lord Best, referred: namely, to make changes on route. That is one of the key issues for any form of review of major change.

The Government’s principal success in this field was their appointment of Professor Harrington to undertake a series of milestone reports. One of his reports was colloquially referred to as his report number one and a half. He continually places on record what he sees as being the changes which are necessary. He has followed different routes and different avenues in looking at the whole issue of the WCA and the way in which it is adopted. That has enabled the Government to make changes as they are going along. I commend the suggestion to the Government that they should think carefully about appointing independent people to conduct a continuous evaluation so that we not only have the milestones when formal reports have to be submitted but changes can be made as the need for them arises. Such a process gives flexibility to the people who are conducting the evaluation to address problems as they emerge.

I make no apologies for returning to the issue of foster carers. I raised it in Committee, on Report and I raise it again today. As we have just heard, the sum of £30 million is intended to support 40,000 households which contain disabled people or foster carers. What analysis has been done of the adequacy of that sum or of whether 40,000 households is the correct figure to cover people who fall into both those categories? I refer specifically to foster carers. We have a distinct shortage of foster carers in our country. Only 65 per cent of children in care are in foster care, which means that many thousands of children who could benefit from this provision if appropriate foster homes could be found for them are missing out. However, it is natural and reasonable that social services departments and fostering services place increasing emphasis on the importance of finding a good match vis-à-vis a child and a foster carer. That has inevitably led to a longer time span in appointing foster carers. Did the Government take that extended time span and the increased demand for foster carers into account when calculating the support that they would make available to the groups I have mentioned? We do not know how many of the 40,000 households include disabled people and how many include foster carers. I should be grateful to my noble friend if he could respond to those points.

In conclusion, I commend to the Minister the review process proposed in the amendment. As has already been pointed out, some noble Lords may think that the amendment should include other matters. Its proposed new subsection (3B)(g) would allow other matters to be taken into account. One might want to refer to the problems caused by disrupted education. I believe that noble Lords have referred to that in previous debates on the Bill. It seems to me that the amendment may not have the right wording but its sense of direction is very appropriate. I hope that my noble friend the Minister will be able to accommodate its main thrust.

[The Lord Bishop of Ripon and Leeds]

My Lords, I too thank the noble Lord, Lord Best, for the amendment and for his persistence on this issue. He has continually sought to get us to think of ways in which we can provide support for those who may be in need as a result of the Bill’s provisions. Therefore, I support Motion A1.

There has been much debate about what effect the Bill will have in practice when it becomes an Act. Some believe that it will result in a very positive change of culture which will be of benefit to all. Others believe that we still massively underestimate the Bill’s effect in terms of the number of people whose lives will be damaged and who will be made homeless as a result of it. A tremendous variety of assessments have been made regarding how many people will suffer as a result of the Bill, not least the number of children who will suffer.

I spent this morning with staff of a charity called Streetlights, which seeks to support those who are unemployed in the City of Westminster. It is based just round the corner from here in Great Peter Street. It provides food for those who are homeless and at the same time, in seeking to provide holistic support, points individuals and families towards legal and mental health support. Streetlights is backed by the Church Urban Fund, and I was there this morning, partly because of the fund’s promotion of today, 29 February, as a “spare day” to encourage volunteering for places such as those run by Streetlights. I was therefore able to talk both to those who run Streetlights and their clients about the effects of homelessness in general and the particular effects that those in charge there envisage as a result of Clauses 11 and 68. They are convinced that homelessness will increase significantly as a result of the bedroom tax proposals and other measures in the Bill. We cannot know whether they are right or not, but it is a real concern among charities that are seeking to find volunteers who will be able to provide necessary support and are pretty unclear as to whether they will be able to do so.

I therefore support very firmly the idea of a review, so that when there is some evidence that we can talk about, we can look at the ways in which we can support and help those in most need. I was very grateful indeed in our earlier discussions on the Bill for the Minister’s promise of a review of the impact of the benefit cap as it comes into effect so that we can find out what is actually happening as a result. I very much hope that he will be able to repeat that sort of assurance and promise now. I support the amendment.