Pension Schemes Bill [HL]

Debate between Lord Kirkwood of Kirkhope and Lord Freud

Report stage (Hansard): House of Lords
Monday 19th December 2016 Lords Chamber

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

My Lords, these amendments put the noble Lord, Lord McKenzie, not just ahead but well ahead—because he and other noble Lords expressed concern in Committee about the Bill’s approach to regulation. With many regulations subject to negative resolution, they felt that they would not be subject to adequate scrutiny. Noble Lords will remember that I responded that I would reflect on that point, and the amendments before us now are a result of that reflection.

We accept that the first regulations made under several of the powers in the Bill could be made under the affirmative resolution procedure to allow for scrutiny via parliamentary debate. After the first set of regulations introducing the authorisation regime has been brought into force, subsequent amendments to those regulations are likely to be relatively minor and, as a result, we do not think that affirmative resolution at that stage would be appropriate. Parliament will, of course, have the opportunity under the negative resolution procedure to require a debate on any such regulations if there is concern.

The provisions that will be subject to affirmative resolution as a result of these amendments represent significant aspects of the authorisation regime, including the fit and proper person test, financial sustainability, systems and processes, continuity strategy and significant events.

I owe the noble Lord, Lord Kirkwood, a proper exposition of the process of how we get to these regulations. Currently there is an engagement process with stakeholders to develop the detailed policy. We anticipate that that and an initial consultation to inform the regulations will take place in the autumn of 2017. That will be followed by formal consultation on the draft regulations. Our intention is to lay the regulations over the summer period and commence them during October 2018.

I will now touch briefly on the actual provisions that are covered. Clause 7 relates to the need for individuals involved in the scheme to be fit and proper people. Subsection (4)(a) allows the Secretary of State to make regulations requiring the regulator to take into account certain matters when assessing whether a person is a fit and proper person to act in a particular capacity. Clauses 8 and 9 relate to the financial sustainability of a master trust. Clause 8 requires that the regulator must be satisfied that the business strategy relating to the scheme is sound and that the scheme has sufficient resources to meet certain costs. The power in Clause 8(4) is to enable regulations to set out matters that the regulator must take into account when deciding whether it is satisfied on these matters. Clause 9 relates to the requirement for a scheme strategist to produce a business plan, and the power in Clause 9(2) allows the Secretary of State to set out what information should be included.

Clause 11 makes provision for systems and processes. It includes a regulation-making power to require the Pensions Regulator to take into account specified matters when deciding whether it is satisfied that the systems and processes adopted by schemes are sufficient to ensure that they are run effectively. Clause 12 sets out the requirement for the scheme strategist to prepare the continuity strategy. The powers in subsections (5) and (6) allow the Secretary of State to determine the format in which the level of charges should be set out. Clause 16 puts a duty on specified persons involved in running an authorised master trust scheme to notify the regulator when they become aware that a “significant event” has occurred.

This group of amendments also includes one further amendment which inserts a power to make consequential amendments to other legislation, including primary legislation. I am grateful to the noble Lord, Lord McKenzie, with whom I have discussed this amendment, for allowing me to bring it forward at what I acknowledge is a late stage. It is a standard power that we have in other pensions legislation, and I really must repeat my apologies that it was not in place at the introduction. The power will be narrow in scope. It is limited to amendments that are consequential to allow for necessary technical fixes and will apply only to existing legislation and legislation passed in this Session.

While we have made every effort to identify and make the necessary consequential amendments in the Bill, pensions legislation, as I suspect noble Lords will acknowledge, is very complex and technical. Similar powers were included in the Pension Schemes Act 2015 and the Pensions Act 2014. The power is used to ensure that the legislation works as intended. For instance, the power in the Pensions Act 2014 was used to ensure that the new state pension was taken into account when setting the automatic enrolment earnings threshold. As was the case in these Acts, this power will also be subject to the affirmative resolution procedure when used to amend primary legislation.

After the concerns expressed in Committee, I hope that these proposed amendments have met noble Lords’ concerns that the crucial aspects of the regime will have appropriate scrutiny. I also hope that I have explained why the amendment to Clause 37 is necessary in order to ensure that the legislation works as it should. I will once again repeat my thanks to noble Lords for bearing with me in bringing forward these amendments at this stage, and I trust that I have explained the position properly and given the appropriate level of reassurance. I beg to move.

[Lord Kirkwood of Kirkhope]

My Lords, obviously I welcome the Minister’s amendments, which are a very appropriate response to our discussions in Committee. The compromise that he has struck is useful—and not just in these circumstances. It is actually not a bad idea for legislation to start adopting some of these things because it might avoid some of the tensions we have seen in the past in social security legislation in terms of trying to get access to the secondary legislation. Taking the first regulations under the affirmative procedure is an excellent way out of the problem we saw in Committee.

The timetable that the Minister has laid out is very reassuring and gives people an idea of what to expect in terms of the consultation and the timeframe available. I understand Amendment 24. I know that such provision has been used previously in pensions legislation, but Ministers at the Dispatch Box will be well advised to note that this clause will be particularly carefully looked at not just by the House committees that scrutinise these matters but by the usual suspects on the Back Benches who crawl over the fine print of these things. If the use of such procedure is deemed to be inappropriate, the negative procedure is always available to us to make sure that there is no abuse of the powers taken under Amendment 24. Otherwise, the noble Lord, Lord McKenzie, and the rest of us are doing quite well so far. I hope that we can keep up this strike rate for the rest of Report.

Social Security: Claimants

Debate between Lord Kirkwood of Kirkhope and Lord Freud

Wednesday 30th November 2016 Lords Chamber

[Lord Freud]

I congratulate the right reverend Prelate the Bishop of Newcastle on her first question. I hope they will not all be as painful in future as this one. I cannot make that commitment. As is said in the report, the reality is that sanctions work. There is a lot of external evidence of sanctions having a substantial impact on employment uptake, whether you are looking at the evidence from Switzerland, the Netherlands, Denmark or Germany. Our own survey shows that people on both JSA and ESA are more likely to accept the rules of the system with the sanction system behind it.

[Lord Kirkwood of Kirkhope (LD)]

My Lords, does the Minister accept that if the National Audit Office is about anything it is about looking for value for money? Will he confirm that one of the important findings of the NAO is that in the fiscal year 2015 there were, for example, DWP sanction benefits savings, so called, just shy of £100 million net of hardship payments? However, the NAO came to the conclusion that the department had done no overall assessment of any kind of the downstream consequential impacts on other public services, so it is impossible to know whether the prosecution of sanctions as currently carried out by the department is effective value for money.

[Lord Freud]

I am in a difficult position because we are about to make our response to the NAO report, which is a formal process, so I do not have that response. Clearly the NAO concentrates on value for money. It wants more evidence and the department will be looking at providing it with some of that evidence in reply.

Pension Schemes Bill [HL]

Debate between Lord Kirkwood of Kirkhope and Lord Freud

Committee: 1st sitting (Hansard - continued): House of Lords
Monday 21st November 2016 Lords Chamber

[Lord Freud]

I think the reason is that it is pretty odd to have a hybrid approach to a list of requirements some of which are in the Bill and some in regulations. We are looking to put them all together in a coherent way in regulations, which we will consider how best to introduce to the House.

[Lord Kirkwood of Kirkhope (LD)]

My Lords, has any consideration been given to a right of appeal against a civil penalty of this kind, which looks like a substantial potential fine? Who is to judge this? For example, whose duty is it to say that the trustees have changed? It could be any of the other trustees and the administrative fine could be imposed on any one of them at random. There needs to be some kind of due process about substantial fees of this kind landing out of the blue on people who may not bear the main brunt of the significant event over which they are being arraigned.

[Lord Freud]

The noble Lord has opened himself up to a letter from me.

Pension Schemes Bill [HL]

Debate between Lord Kirkwood of Kirkhope and Lord Freud

Committee: 1st sitting (Hansard): House of Lords
Monday 21st November 2016 Lords Chamber

[Lord Kirkwood of Kirkhope (LD)]

My Lords, I wonder if I could make a short contribution on this amendment. I declare an interest: I am chair of a DB scheme for the superannuation fund for the GMC and have been chair for a number of years. It is a DB scheme and I do not have as much experience of DC schemes, but I am interested in the Bill. I am sorry that I was abroad when the Second Reading debate took place; I have read it carefully and some very powerful speeches were made.

We have heard again from the noble Lord, Lord Naseby, on the important point about mutuals and AVCs. An important point about AVCs has also been made by the noble Lord, Lord Flight, and I hope we will get some kind of indication about how the Government are going to respond to that.

My real reason for speaking is to support the comments by the noble Lord, Lord McKenzie. I have been doing legislation of this kind for some time, and this is by some margin the most statutory-instrument-framework type of Bill that I have come across. I understand perfectly well that there are reasons for this; long consultations about some of the problems that the Bill addresses could have provoked some of the outcomes we are trying to avoid. But I spent the weekend looking at the Bill and found that its vagueness—in terms of the policy that is left to the Government to decide at a later stage, much of it through negative rather than affirmative regulations, as currently set out in the Bill—makes it impossible to fit the pieces together properly.

I may be revealing my lack of experience—there are other colleagues in the Committee who know far more about some of the detailed aspects of master trusts—but I make a real plea to the noble Lord, Lord Freud, who has experience of dealing with concerns of this kind on all sides of the House from other Bills in the past.

Policy notes are one way of doing that. I do not think anyone is seeking to stop, hold back or prevent any of the ambitious and necessary outcomes that the Bill seeks to achieve, but we could well be in a position of being presented with statutory instruments in an undesirable way. We have had some conversations about what powers we in this House should properly have over secondary legislation and how we should exercise them. I think that can be avoided if the Minister adopts his tactic of consulting at every opportunity—at the appropriate moment as soon as the policy is finalised; offline, as it were—and with some policy notes. Then we will be confident that it will be safe for us to sign off Royal Assent for the Bill in the expectation that every opportunity will be taken by Ministers at every stage, if they cannot provide draft statutory instruments, to make alternative arrangements such as policy notes so we can be sure that we know what we are voting for and considering in secondary legislation. That is a very important point that the noble Lord, Lord McKenzie, made.

The Constitution Committee does not do notes of this kind unless it is seriously concerned, and we as a Committee would be foolish not to pay careful attention to the fact that it is urgently drawing matters of this kind to our attention. So I hope that we can get some kind of reassurance on that point from the Minister on the wind-up on these important amendments.

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

Clause 1 is critical to the Bill. It sets out the scope for the regime, so I welcome these considered amendments, which give us the opportunity to explore this important clause in detail.

We have taken considerable care in defining master trusts and setting the scope for the new authorisation regime. The guiding principles throughout have been twofold: the first is to ensure that members are protected against the risks that arise in these new structures; the second is to ensure that the extent of any regulation is proportionate.

For example, the definition applies to schemes which are open to more than one employer because the level of engagement and involvement of the employers and scale of such a scheme is likely to be very different from that of a single employer scheme or a scheme in which all the employers are part of the same corporate group. It applies only to schemes which offer money purchase benefits because of the risks that the member bears in relation to such benefits, but we have been careful not to create a loophole for schemes which offer mixed benefits—as we will come on to later.

However, we also need to be mindful of the fact that master trusts are a recent development in a rapidly changing pensions landscape, and the master trust market is evolving all the time. A one-size-fits-all regime may not be proportionate, and we therefore need flexibility to be able to respond to the needs and changes. It is for this reason that Clause 39—which we will come to later in Committee—makes provision allowing for the disapplication of some or all provisions of the Bill for certain schemes.

Turning to the specific amendments, my noble friend Lord Flight seeks to exclude from the definition “AVC only” and “relevant centralised” schemes. I have sympathy with his intentions. Many defined benefit schemes offer AVCs for historic reasons and could be considered to be DB schemes to all intents and purposes, but schemes such as this could be excluded from regulation under our powers under Clause 39, and we prefer to use this power rather than to create a list of exemptions in the Bill, allowing time for more detailed consultation with industry about the diverse types of scheme that currently exist.

I put it on record that our intent is to propose such a carve-out. That is: we intend to consult on regulations under Clause 39(1)(b) to disapply some or all of the provisions of the regime for a mixed benefit master trust scheme, where the only money purchase benefits are those related to additional voluntary contributions of non-money purchase members, but we will also be considering carefully the need to avoid creating any avoidance loopholes as we go through that process.

In relation to the relevant centralised schemes, I am concerned that my noble friend’s amendment may go too far. The definition to which he refers is not confined to industry-wide or not-for-profit schemes, and although there may be a case for excluding some such schemes, I am wary of creating a loophole.

Our aim is to protect members from the risks that are particular to master trusts, and these may equally arise in industry-wide schemes. Similarly, although it is true that most master trusts are run for profit, and that this gives rise to certain risks which the regime seeks to protect, it is not this feature alone which determines the nature of master trusts.

I am grateful for the amendment tabled by the noble Lord, Lord McKenzie, and the noble Baroness, Lady Drake. As the noble Lord said, it is a probing amendment to investigate the boundaries of the definition. The amendment would change the definition of master trusts in the Bill and extend it to all schemes which offer money purchase benefits, including those which are used by only a single employer or employers connected to each other.

On the noble Lord’s question of how and when we plan to consult on draft regulations, and indeed on the question asked by the noble Lord, Lord Kirkwood, we have worked with the industry and the regulator to establish the key criteria for master trust authorisation. We intend to continue these discussions to develop more detailed policy and secondary legislation. We will follow the published government principles to ensure that consultation is an ongoing process, using the most appropriate forms of communication. The timing of that formal consultation on draft regulations will depend on a number of factors. We anticipate that the initial consultation to inform the regulations may take place in autumn 2017. I hope that that gives the noble Lord, Lord Kirkwood, some reassurance about the process.

The amendment would extend the scope of the definition and the authorisation regime considerably and would do so in a way that would be disproportionate. To take the example of the scheme starting as a single group employer picking up a non-associated one and moving back and forth, if the scheme is intended to be used for more than one unconnected employer, it is within the scope of the regime. If it starts with only connected employers but takes on an unconnected employer, it will fall within the regime at the point that it takes on the unconnected employer.

Benefit Cap (Housing Benefit and Universal Credit) (Amendment) Regulations 2016

Debate between Lord Kirkwood of Kirkhope and Lord Freud

Tuesday 8th November 2016 Lords Chamber

[Lord Freud]

I am sorry. I did not mean not to be serious. My best understanding of this is that where someone has been capped and will no longer be capped then we will inform them of the change. If that is not the case, I will write to the noble Baroness; if it is, I will not. However, I am pretty sure that it is the case.

To pick up on the concern expressed by the noble Lord, Lord Kirkwood, regarding the point made by the Secondary Legislation Scrutiny Committee, the committee wrote to my colleague the Minister for Welfare Delivery to express concern about the equality analysis. I imagine that the noble Lord saw that letter. Ministers fully considered the equality analysis at the same time as the regulations were made but there was simply a delay in publishing it. Perhaps noble Lords can cast their minds back to the peculiar period in our history following the June referendum, when the machinery of government perhaps was not working quite as smooth as it usually—or always—is.

On evaluation and the Ipsos MORI survey that the noble Lord talked about, the numbers came about because it was a longitudinal survey to understand what was happening; a lot of different levels of analysis went on, which looked at different outcomes, some of which were done on a quantitative basis, others on a qualitative basis; that was a qualitative one. We are committed to go on evaluating it and now we are developing the plans to understand behaviours and attitudes. The quarterly benefit cap statistics will continue to be produced, and the May 2017 release will be the first to show the impact of the lower levels.

I hope I have reassured the House that the Government have put in place measures that provide significant additional support to claimants affected by this policy to help them adjust, and wherever possible to move into work.

[Lord Kirkwood of Kirkhope]

My Lords, I am grateful to the Minister and to all colleagues who have contributed to this debate. I think it has been worth while. My difficulty with the Minister’s response—which I will study, as I always do; I have the box set of the Freud responses over 10 years—is that I was looking for “additional”, but I did not get that. It is also too passive. A lot of good work is laid in front of some of these people who are confronting quite catastrophic changes in their financial circumstances. I would have expected a benefit team to have been geared up to deal with that specifically, certainly for six months or so, and that is absent. That is inadequate, because people will suffer as a result of it not being there.

I trust that the Minister has taken the message that although we had important debates about this in 2010 and 2015-16, this is a clear and present danger if it is not got right, and it will continue to be considered in that vein by the department. However, because of the absence of the activity that I was looking for and the additional measures which were not produced, I fear I must test the opinion of the House.

Welfare Reform and Work (Northern Ireland) Order 2016

Debate between Lord Kirkwood of Kirkhope and Lord Freud

Tuesday 13th September 2016 Lords Chamber

[Lord Kirkwood of Kirkhope (LD)]

The Minister is right to point to the differences that apply in the different jurisdictions throughout the United Kingdom, but would he agree with me that the excellent work that Professor Eileen Evason did in identifying the mitigating factors has helped bring forward this set of proposals, with which I agree? After a four-year period, taking this together with what is happening in other parts of the United Kingdom such as Scotland, it should be possible for the DWP centrally to look at best practice and at whether some of these mitigating measures are having a beneficial effect that could be applied in other parts of the country.

[Lord Freud]

The DWP has embedded a “test and learn” approach, and really does look at things. Clearly, where you have different strategies in the different countries of the United Kingdom, one can look at what differential impact those policies have had. I am sure that the DWP will take the opportunity to assess that.

The Welfare Reform and Work Act built on the 2012 reforms. This order provides the legislative framework to replicate some of the most important aspects, with changes such as improving fairness in the welfare system by changing the benefit cap level. This order will bring the level of the benefit cap in Northern Ireland alongside that in Great Britain, ensuring parity, through changes such as providing new funding for additional support to help ESA and UC claimants with health conditions and disabilities into work, as well as reforming the ESA work-related activity component, so that the right support and the right incentives are in place for those capable of taking steps back to work. Then there are changes such as correcting the unsustainable rise in benefits compared to earnings by freezing most working-age benefits. Importantly, these changes will help to ensure that the budget of the Northern Ireland Executive is placed on a stable footing.

It was agreed in the fresh start agreement that the Executive could supplement benefits from within their own budget. The agreement allocated up to £585 million of the Executive’s block grant over four years to provide supplementary welfare payments in Northern Ireland, which would be reviewed in three years. Under the 2015 order, the Assembly has already passed some regulations for supplementary welfare payments relating to the 2012 reforms. The provisions of this order will give the Assembly the ability to design and pass further such regulations, including a cost-of-work allowance, and supplementary payments to those affected by the removal of the spare room subsidy. These time-limited payments follow the recommendations of the Evason report, which flowed from a commitment in the fresh start agreement.

This order is about delivering the fresh start agreement and returning Northern Ireland to a position of legislative parity and financial stability. It is about supporting hard work and creating the right incentives for people to find work and create a self-sufficient life, supported by but independent from the state. It is about making sure that spending on welfare is sustainable and fair to the taxpayer, while protecting the most vulnerable. Building an economy based on higher pay, lower taxes and lower welfare is right for the UK, and right for Northern Ireland. I beg to move.

Universal Credit

Debate between Lord Kirkwood of Kirkhope and Lord Freud

Tuesday 19th July 2016 Lords Chamber

[Lord Freud]

As I said, I am looking at this area. It is not as simple as some of the figures might make you think. I, too, read the IFS research with great interest. Inequality among children has fallen very steeply since the mid-1990s, most of it post the recession. Whenever the IFS says anything nice, I really appreciate it. It said that the important reason was a remarkable fall in the share of children in workless households. Indeed, we have half a million fewer since 2010.

[Lord Kirkwood of Kirkhope (LD)]

Will the Minister confirm that, if my history is right, he is the single surviving Minister since 2010 holding down the same office in government, promoting the interests of universal credit? Is this because the subject area is so complicated, or maybe because he is unpaid? Do any of the 11 pilots currently being mounted by the department address the issue raised by the noble Lord, Lord Hylton, which is important? Packages of support and advance payments are available, but this does not seem to be communicated to the people who need them most. I hope that the Minister will stay in his position for some time yet.

[Lord Freud]

I thank the noble Lord. His sums on this are right, although, along with him, I am not sure whether that is a compliment or the opposite. With the figures that we are looking at, we are disentangling legacy systems—which are pretty odd in themselves—from the new system. One fact about the very big ALMO figures is that ALMOs want rent a week in advance, so it is not surprising that a lot of people are in arrears when you compare them with housing associations, which take the rent four weeks in arrears. That is the kind of thing that I have to disentangle.

Universal Credit: Rent Arrears

Debate between Lord Kirkwood of Kirkhope and Lord Freud

Wednesday 13th July 2016 Lords Chamber

[Lord Freud]

What we are aiming to do with universal credit—and there is evidence of success in this—is to get people to take control of their own lives. It is much more difficult for people to switch to going into work if their rental situation is locked up in a dependency situation. We are aiming to free people from that so that they can move into work. There are good signs that we are being successful in getting people into work.

[Lord Kirkwood of Kirkhope (LD)]

My Lords, the Minister’s announcement that he is undertaking a review is very welcome, but will he include the evidence that the noble Lord, Lord McKenzie, has just put forward about the increasing incidence of rent arrears? We need to make sure that this is merely a short-term spike and not a long-term trend. In the course of his researches, will he look into why the safety net measures built into the design of universal credit, to which he referred, appear to be failing in this instance? This is important. By a country mile, this is the biggest change programme that Her Majesty’s Government are bringing forward. It is mission-critical for the United Kingdom, particularly after Brexit, and it is important that we get it right.

[Lord Freud]

I absolutely accept that we need to get it right. I am spending quite a lot of time with the ALMOs. I have had a couple of meetings with Eamon McGoldrick and John Bibby to discuss their findings. It is complicated. The essential fact is that landlords like their money paid in advance and all benefits systems pay in arrears, so we do not know how much of this is what the ALMOs call book arrears and how much is real arrears. We need to get to the bottom of that and we need to get to the bottom of what are the processing and payment systems issues. We need to understand what the existing arrears are. They are much higher than we expected—50%—and that is a frightening fact. We may be looking at a group going into UC which is unusual because it is moving up and down, and we need to understand and quantify those factors.

Welfare

Debate between Lord Kirkwood of Kirkhope and Lord Freud

Monday 21st March 2016 Lords Chamber

[Lord Freud]

I accept that one of the issues around the disability element is that we have a fairly one-size-fits-all approach. One thing that the new Secretary of State will be very interested to hear is how best to manage the process in the light of that complexity—I know that he is very aware of it. I have tried to deal with the Motability issue. It is different people who are getting that and it is based on a better test; PIP is a better test than DLA. We are putting a lot of resource into assessments and their quality is now showing some good improvement.

[Lord Kirkwood of Kirkhope (LD)]

My Lords, I am pleased that the Minister paid tribute to the outgoing Secretary of State for Work and Pensions. He is a man I have known over many years and he had a sense of mission, which I think we should acknowledge. I hope that the new Secretary of State will have an equal sense of mission, particularly in relation to universal credit, which was, I think, what drove the past Secretary of State to distraction and out of his office. To me, universal credit is the most important thing that the Government still have to deliver. Will the Minister assure the House that the conversation that the new Secretary of State has announced in relation to disability will not delay the forthcoming White Paper process too long? I am in favour of consultation, and I am also in favour of the Government paying attention to consultative responses, but can he assure the House that the White Paper is still on track?

[Lord Freud]

I have known Stephen Crabb for a time. He was a Whip for the department and then he was in Wales, where he dealt with welfare issues. I have high hopes for him in pursing the reform agenda. He is up for it and he will be pretty effective at it. I look forward to providing him with all the support that I possibly can in this agenda. Clearly, in getting this reform going, the conversation has to be balanced with the speed. He is conscious of that and will look to get something going at the fastest possible speed, commensurate with making sure that we get it right and get the views of quite a complicated set of constituencies.

Welfare Reform and Work Bill

Debate between Lord Kirkwood of Kirkhope and Lord Freud

Monday 21st December 2015 Lords Chamber

[Lord Freud]

I will have to write on that latter point. The funding for the £2,000 comes from Motability itself—the charity—as I understand it, based out of the reserves it has built up. It needs very substantial reserves because the risk in a leasing business is in the residuals, which can be very volatile, even though you are the biggest. You need very substantial reserves, but it took a view that it had some excess which it was prepared to spend in this way. I urge the noble Lord to withdraw his amendment.

[Lord Kirkwood of Kirkhope]

My Lords, the moment that the noble Lord, Lord Rooker, suggested to me that this was something worth looking at, I noticed that Motability Operations had set up a review of its remuneration committee’s decisions for its executives. The annual report, which has just been published, shows that it has merely tinkered with this. There was a real hope that it would respond to some of the external interest in what it was doing, yet it has come back with some tiny amendments to the remuneration package and increased the co-salaries in the way that I explained earlier.

I think that the Minister should tell his friends at Motability that Parliament is interested in this. It is in Motability’s interests to respond to the need to be more transparent and to be more assiduous in explaining what it is doing and why it is doing it. This will not go away; I will be standing shoulder to shoulder with the noble Lord, Lord Rooker, so the sooner we can get a modus vivendi whereby Parliament shows that there is an interest in engaging, the better that would be for Motability and for everyone else. However, I beg leave to withdraw the amendment.

Welfare Reform and Work Bill

Debate between Lord Kirkwood of Kirkhope and Lord Freud

Monday 21st December 2015 Lords Chamber

[Lord Freud]

I have tried to make it as clear as I can that we are looking at the level of earnings here. It is not a matter of direct comparisons between earnings and income: we are looking at the level of earnings.

[Lord Kirkwood of Kirkhope]

May I try to make sense of this? I do not think that the Government know what the disposable income per head is of the families that are subject to the benefit cap. That is my objection, because big families obviously have a disposable income that is divided by the number of people in the house. I do not think that these metrics exist, and therefore the noble Baroness is absolutely correct: it is not safe to rely on earnings, because you are not comparing like for like. The really important question for me is: how do we know, in relation to the impact it has on children, what the disposable income per head is in those families that are subject to the cap?

[Lord Freud]

I accept that that is a point about which noble Lords opposite are concerned, but I can only reiterate that we have reached these levels by using the basis of earnings. That is the basis.

--- Later in debate ---

[Lord Freud]

I am clearly not in a position to comment on the work that we do, but I can say that estimating dynamic effects is extraordinarily difficult. We are working on improving how we do that. One of the reasons why we can often get into sterile debates is that getting hold of the real figures and the real behavioural impacts is very difficult. I quoted our child poverty experience. The latest Universal credit at work, in which we outlined theses new approaches, set out big behavioural changes. Many more people—13% more—are going into work, compared with the comparable JSA. That is an example of behavioural effects that is very difficult for us to pre-estimate.

Amendments 92, 93 and 94 are tabled by the noble Baronesses, Lady Meacher, Lady Sherlock, Lady Pitkeathley and Lady Lister, the noble Lords, Lord McKenzie and Lord Kirkwood, and the Earl of Listowel. These amendments would require the Secretary of State, when reviewing the level of the benefit cap, to have regard to any impacts on disabled people, their families and carers; the relationship between the level of the cap and median household income; the promotion of the welfare of children in the United Kingdom; households affected by the cap; and public authorities, local authorities and registered social landlords.

The noble Baroness, Lady Sherlock, asked whether we will go on reducing the cap. The Bill requires the Secretary of State to review the level of the cap at least once during a Parliament and provides him with the power to review it at any other time if he considers it appropriate. We believe that this provides the most effective means of ensuring that the cap stays at the appropriate level, while also providing the stability that households on benefits require. Any changes to the benefit cap level will be sensitive to its key principles of maximising work incentives, bringing fairness for working households and providing a reasonable level of support for capped households.

The noble Baroness, Lady Pitkeathley, spoke about carers. I emphasise that the Government recognise the contribution carers make to society. I will deal with carers when discussing the amendment that appears in a later grouping.

The power to review the level of the cap is necessarily broad and has been drafted to allow the Secretary of State to take into account any matters he sees relevant—for example, the wider impacts on families and children. I do not think it right to prescribe in legislation any particular factor which must be considered as part of this review.

Amendment 94 requires the Secretary of State when reviewing the level of the benefit cap to take into account the impact on disabled people, their families and carers. As I mentioned, there are exemptions from the cap for people who are a member of a household that includes somebody who is entitled to attendance allowance, disability living allowance and PIP.

That has been in place since the cap’s introduction and reflects the fact that these benefits are paid in recognition of the extra costs that disability can bring. There is also an exemption for those who are entitled to the support component, and the equivalent in UC, whose health conditions mean that they are unable to undertake any work-related activities. Those exemptions are not changing.

The new provisions will allow the Secretary of State the ability to consider the context of the cap and its level in a broad and balanced way. For example, he may take into account, although he is not limited to these, factors such as: earnings, housing costs and the wider impact on disabled people, families and carers.

[Lord Kirkwood of Kirkhope]

How does this fit into the annual uprating statement? The Minister has just said that the Secretary of State, who has this power, must do it once in every five-year period. There is an annual social security uprating where all these things are considered. Surely we are not going to have, at random in the middle of the year, the Government coming up with a judgment on the cap that is in isolation from the rest of the established procedures for uprating benefits.

[Lord Freud]

The established procedures, of course, are basically to go in line with CPI; this is a much broader look than that, as I have tried to describe. While we have safeguarded those with illness or disability, we do not think it right that in undertaking a review of the level of the cap the Secretary of State should have a legislative requirement to take into account any extra impacts on specific groups.

Welfare Reform and Work Bill

Debate between Lord Kirkwood of Kirkhope and Lord Freud

Wednesday 9th December 2015 Lords Chamber

[Lord Freud]

That is the point that I just made: they could not determine the extent but they could determine the direction. Lastly, the Sheffield Hallam report, which the noble Lord, Lord Patel, mentioned, says that it is unlikely that they will move into employment because of the obstacles that they face. However, we are providing additional support. Indeed, that report did not look specifically at the WRAG.

A number of noble Lords have questioned why we are suggesting that claimants who have been found to be “not fit for work” should be expected to be able to work. I stress that ESA claimants in the work-related activity group have been found to have limited capability for work. The same is true for universal credit claimants. This is very different from being unfit for any work and, although they are not required to look for work, ESA explicitly recognises that claimants may be able to undertake some work via the permitted work rules.

On the question from the noble Baroness, Lady Meacher, about adding employability to the WCA, the Secretary of State announced his intention to look at how assessments can be better geared towards those preparing for work. As a number of noble Lords have pointed out, we have announced a White Paper to set out our reforms to improve support for people with health conditions and disabilities.

There may be limitations on the type and amount of work that people in the WRAG can do, and they may also need workplace adjustments, but employment is not ruled out. This is an important distinction; we know that many people with disabilities and health conditions are already working, and many others want to do so. The move to universal credit, an in-and-out-of-work benefit that supports small or fluctuating amounts of work, means that many of the barriers in the current system that claimants face when moving into work are removed. Those are the kind of issues that the noble Baroness, Lady Hollis, was talking about with regard to linking rules. This is particularly helpful for people whose health condition means that they can work only some of the time.

To pick up the points from the noble Lord, Lord Low, and the noble Baroness, Lady Grey-Thompson, about the way in which some of these costs are used when either finding work or being in work, travel-to-work costs can be met by the Access to Work scheme, and travel-to-interview costs can be met by the flexible support fund, which is run in JCP. The Government are committed to ensuring that disabled people are able to participate fully in society, and we have set out our ambition to halve the disability employment gap. It is a duty of the Government to support those who want to work to do so and, as I have already mentioned, most people with disabilities and health conditions want to work, including the majority of ESA claimants. Some 61% of those in the WRAG tell us that they want to work, and we mean to put those people’s ambitions at the centre of what we do.

On the point raised by the noble Baroness, Lady Meacher, and touched on by my noble friend Lord Blencathra, about whether employers would employ disabled people, we recognise that that is an issue and have pushed the Disability Confident campaign. We have Access to Work behind that, not to speak of the incentive structure of universal credit to get people into work.

In 2012, the UK had a disability employment rate gap of 34 percentage points, which was higher than that in France and Germany, with 19 and 22 percentage points respectively. Therefore, we know it is possible for us to do better and ensure that people with health conditions do not get trapped in the benefits system. That leads to why we are committed to halving the gap.

[Lord Kirkwood of Kirkhope]

Could the Minister give us some assurance about the impact of the 60% reduction in the departmental expenditure limit between now and 2020? I hear what he says, but to get the kind of service that he aspires to needs specialist help and experienced people, who will be harder to find because the department will have less money to pay them.

Housing: Underoccupancy Charge

Debate between Lord Kirkwood of Kirkhope and Lord Freud

Tuesday 3rd November 2015 Lords Chamber

[Lord Kirkwood of Kirkhope (LD)]

Does the Minister accept that there is an important regional dimension to all this? I support the request made by the noble Baroness, Lady Quin, for a regional look at some of this, and also her idea of looking again at the Newcastle study, which demonstrated not only that the bedroom tax increased poverty but that it had an adverse effect on health and well-being, and on social responsibility and networks within neighbourhoods. When the final report is published, will he use his best offices to get a regional dimension into it, so that it considers the community-wide impact, not just the household impact, and the totality of the policy across the piece? I hope that the report will be published before the end of the year.

[Lord Freud]

Yes, the current plan is to publish the report before the end of the year. It does incorporate the regional effects, and I will take the noble Lord’s points about how thoroughly it does so when I go back and talk to the team. For very obvious reasons, I have not seen what is inside that report before it is published, but I will transmit those thoughts to the team.

Universal Credit

Debate between Lord Kirkwood of Kirkhope and Lord Freud

Tuesday 7th July 2015 Lords Chamber

[Lord Freud]

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

[Lord Kirkwood of Kirkhope (LD)]

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

[Lord Freud]

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