Guaranteed Minimum Pensions Increase Order 2013

Debate between Lord McKenzie of Luton and Lord Kirkwood of Kirkhope

Thursday 28th February 2013 Grand Committee

[Lord Kirkwood of Kirkhope]

My Lords, I am pleased to follow my noble friend and concur with everything that he said. I have been doing uprating statements since 1984, I think, and I am here this afternoon really because I did not want to miss one. I have the boxed set, so I would feel that I was in the wrong place if I was not here. However, and this is me in my moaning mood, in the old days when men were men and women were women these debates were really big parliamentary occasions. These are huge sums of public money that we are considering this afternoon. This is no reflection on the Government at all, because while it is a question for the whole House I do not think that if we held this debate on the Floor of the Chamber there would be many more people here. I cannot help but say that it is a shame that we do not have more concern or attention from other colleagues albeit on what I accept is a ritual.

This is a very important annual debate, but this year it is different. My noble friend explained some of the differences, and I want to explore them a little more deeply, because, both qualitatively and quantitatively, these orders are different from any I have seen before. I make it clear that the Government are absolutely entitled, under the rules of the game as I understand them, to make these reductions against an economic background that we can all see. I am obviously not going to move against these orders, particularly in the context of the uprating Bill, which is in front of the House, but we are in exceptional circumstances. There is therefore a case for the Government to say, “For the next 12 months, Britain is a poorer nation and we all have to make a contribution towards getting back on to a steady state”. My point is that I am not confident that we will get back to a steady state for a number of years. I am not an economist and I do not know, but I really believe that the paradigm has changed and that we will all be forced to face up to the circumstances. That may be supporting the Government’s case more than I am accustomed to do, as the Minister might say.

The point I want to make on the back of that is that if we are in different circumstances if I can use the analogy of discretionary housing payments and if the Government are saying that the housing benefit changes are so profound that there have to be mitigating short-term, time-limited emergency procedures to take the sting out of them for low-income families, we may be forced to think about an equivalent emergency package for low-income households if year after year we find that we do not get back to trend levels of growth. I think that in future uprating debates we are going to be forced to look very carefully not only at adjusting the levels down but in addition at ways of getting behind people who are really at the end of the financial road. They have no scope.

The Government have recognised the plight of pensioners, and the rationale for that is understandable. My noble friend mentioned it: they have limited ways of increasing their earnings. The Government’s suggestion is that working-age households always have the option of work, but I wonder how realistic that is. If we are seeing food banks develop to the extent to which I fear they may develop in future in local communities, I think as legislators we will have to reflect that rather than just assuming that we are in a steady state and that the Government can take those savings out year after year. We might all need to think about how we tackle this. Part of that might be exceptional measures for low-income households.

The evidence comes at me every day from every source. This morning, I picked up a very interesting piece of evidence from the Money Advice Trust, which is a very important institution that I watch because I am interested in the development of payday loans. There are problems about some of the administration and regulation of payday loans. The statement from the Money Advice Trust demonstrates the changes that are happening underneath us and that are affected by this uprating statement. It reports that:

“its National Debtline service took over 20,000 calls for help with payday loans in 2012 … The figure represents a 94 per cent year on year increase, and an increase of 4,200 per cent since the onset of the financial crisis in 2007”.

I know a little about payday loans. Working families take advantage of them. I am not against payday loans. Short-term unsecured credit has a role to play. I do not think it is regulated properly, but that is a different argument. These are working-age families. In my estimation, these levels of increase are not going to get any less any time soon. I recognise that something has to be done with the deficit reduction, but we may need to have a grown-up discussion about this across the parties and across Parliament to make sure that we are not ignoring what is happening in a lot of our challenged communities, particularly in the old social-rented council estates of my native Glasgow, for example, where I know that some these changes that we are introducing on top of everything else that is happening will produce levels of financial challenge for particular groups. Lone-parent families are one group that I particularly care about, and I know that colleagues know even more about that than I do.

I am concurring with this order on the basis that we need to think about other ways of providing some sort of emergency relief—hopefully only short-term—as well as what we are doing in these orders. If we do not start thinking about that now, we will suddenly find that we will be hit by levels of malnutrition and child poverty that will be found completely unacceptable by the population at large. We have to avoid that at all costs.

Finally, I apologise for this because I should have checked before I came, but I do not know what the Government Actuary has to say about the National Insurance Fund, which is appearing in not the means-tested but the contributory dimensions of these orders. Presumably, no Treasury grant is being requested, although I would be surprised if that was the case. Can we have a statement from the Minister to the effect that the department and ministerial team are comfortable with the Government Actuary’s view of the orders as they stand? That is important for the Grand Committee in its consideration of these important orders this afternoon.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for her introduction to these two orders. We do not have much to raise on the first order. The GMP is a promised income for those who contracted out before 1997, so the order is a routine process, which we support.

I have just one question. The Explanatory Note refers to there being no new costs on the private or public sector as a result of these orders, but an uprating cost clearly has to be borne by someone: the pensions providers. Is that not the case?

We have covered much of the ground on the Social Security Benefits Up-rating Order, as the noble Lords, Lord German and Lord Kirkwood, have said. I do not mind having a rerun of this, although much has already been said and we still have more Committee proceedings to go, let alone Report, so I shall resist the wholesale revisiting of our debates, although if provoked I might withdraw that assurance.

The noble Lord, Lord Kirkwood, as ever, made an incredibly valuable contribution on where all this is heading. We all know that the deficit has to be dealt with, although we might argue with how that is being done. But we have not seen as part of an impact assessment—and it is something I would ask about—the impact of this uprating order on child poverty. What assessment, if any, have the Government made of this uprating order’s impact on things such as personal debt and poverty more generally? What do they think about the food banks, which are growing up in our country at the moment? One opened in Lewisham, but unfortunately it was on the day of the universal credit regulation, so I could not go. It is just one of just hundreds that are growing up in a country that we know could by any standards be classified as rich.

We have heard about the basic state pension and the much lauded triple lock—the highest of earnings, prices or 2.5%, in this case. We have no difficulty with the basic state pension having been a higher share of average earnings for some time, although is that not largely because average earnings are so depressed because of the state of the economy? My right honourable friend Stephen Timms in the other place dug away at the triple lock, saying that it is certainly a success in terms of rhetoric but that its practical implications have been much more limited. He knew of one that was not operated because RPI gave a better result, and in year 2 inflation was used. It was only in year 3 that the 2.5% kicked in, in excess of inflation. On the old basis of uprating by RPI in those latter two years, the award would have been higher. Perhaps the Minister can confirm that 1.5 million pensioner households are missing out compared with what would have been the position had the standard minimum guarantee been uprated by earnings and the savings credit threshold frozen.

Jobseeker’s Allowance Regulations 2013

Debate between Lord McKenzie of Luton and Lord Kirkwood of Kirkhope

Wednesday 13th February 2013 Lords Chamber

[Lord Kirkwood of Kirkhope]

It is still a pleasure to follow the noble Baroness because she made a point that I was going to make. I want to make two remarks on which I would like the Minister to reflect. The first is about the contributory system—the national insurance system. In the middle of last year, I remember listening with great attention to a lecture given by a valued friend, Malcolm Wicks, who sadly died recently. He was a great defender of the national contributory system. He gave a lecture on how he melded the concept of citizenship with the national insurance principle. He said that this involved a lifetime longitudinal commitment both ways between the state and the individual, with people paying in and people taking out, and that people understood that. He was an exponent of that all his life and I certainly miss his good counsel and wisdom. I share his view. We cannot allow these regulations to pass without remarking that this is another notch down in the diminishing of the national insurance principle. I regret that. I understand why the Government are doing it because otherwise the misalignment would be confusing. If you are introducing universal credit, I understand the rationale and it makes perfect sense. However, universal credit does not have the advantage that the national insurance contributory principle had of giving a longer-term relationship between the state and the individual. I want to put that on the record in passing.

Secondly, conditionality for people who are paying national insurance contributions suggests to me that people should perhaps pay less because they now have to submit themselves to sanctions. I have a strong view on sanctions and earlier today the noble Baroness, Lady Hollis, reflected some of that. I take the Paul Gregg view that sanctions are positive only if you can get the full commitment of the individual who might be potentially taking on a jobseeker’s commitment that will lead to sanctions, and if they feel that they are in charge of the process. That is not the case with the system of conditionality as it is currently cast, although with a bit of flexibility it might be amended in that direction to put people in a position where they feel they are more in control of what is going on. They are then much more likely to understand the rationale of a sanction being applied to them. That is work in progress. I hope it will be part of the careful evaluation that the Minister explained to us earlier this afternoon the Government will undertake.

My points really comprise two moans about national insurance that I am getting off my chest. I do not expect the Government to do anything about it. However, these regulations change things in a way that is significant for the future of the national insurance system. Indeed, perhaps in the long term, once universal credit gets into a steady state, the Government of the day—whoever they may be—may want to ask themselves whether it is sensible to continue to have a residual diminishing national insurance contributory principle set of benefits running alongside universal credit. I am agnostic about that but I certainly think that it needs to be recognised in this important debate.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for introducing these regulations. I am fully supportive of the probing that my noble friend Lady Donaghy has done, particularly around the construction sector, on which she is very knowledgeable. I agree with the noble Lord, Lord Kirkwood, that, given the increasing demise of the contributory principle, it is important to consider how we re-establish that in this context, if we can. Of course, there has been an accelerated demise in various benefits. We shall talk about contributory ESA in a moment, but that is now payable for just one year and JSA is generally payable for just six months.

The Minister explained that these regulations refer just to contributory JSA and not to earnings-related JSA. I believe that he referred to my next point in introducing the regulations but, to be clear, I understand that as regards the entitlement under these arrangements, the national insurance contribution rules remain exactly the same as they are at the moment. In respect of national insurance credits, under current circumstances these can be obtained when the claimant satisfies the qualifying conditions for JSA, when he or she is not in work and earning. Will the Minister remind us what the credit and entitlement will be under universal credit when JSA is no longer with us? The Explanatory Memorandum recites that the rules for contributory entitlement are, except for the conditionality and sanctions regimes on which the Minister touched, “largely” unchanged. Will he particularise a little any other significant changes outside those two areas? As regards the alignment of the conditionality and sanctions regimes, we obviously see the merit of this and these regulations give us an opportunity to explore further how that actually works across the three benefits, including ESA.

Like others, I am grateful to Gingerbread, which briefed us on this matter, particularly as regards its focus on lone parent flexibilities, which was touched on extensively in our earlier debate. I will not go over that again except to say that I think the Minister said in response to the debate that 10 out of the 12 lone parent flexibilities are being carried forward, albeit in guidance rather than in regulations. I apologise if he covered this point earlier, but will he remind us which two are not being carried forward? We are aware that he has been pressed on flexibilities and that these should be set out clearly in the claimant commitment so that both the adviser and the single parent claimant can share the same understanding of what the regulations and guidance say about balancing work conditionality with caring responsibilities. It is understood that the noble Lord’s colleague in another place was sympathetic to this. Perhaps the Minister can say whether he agrees. It seems an ideal way of ensuring that all concerned are clear on the matter and it would help to focus the minds of advisers who may not always be up to date with the range of flexibilities available.

Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) (No. 3) Regulations 2012

Debate between Lord McKenzie of Luton and Lord Kirkwood of Kirkhope

Monday 15th October 2012 Grand Committee

[Lord McKenzie of Luton]

My Lords, I thank the Minister for introducing this order. I doubt whether it will take us quite as long as the business we have just dealt with. Like the Minister, I am happy to celebrate the start of auto-enrolment, which is a very important development in the pension landscape. In that context, we accept and support the need for this change to the regulations. I am sorry that my noble friend Lady Drake is not able to be with us today. She is not well, but she lumbered me with some questions.

What happens if as a result of current considerations of CPI and RPI, the construction of CPI is amended to include housing costs, which could cause it to be higher, and the formula for calculating RPI, using geometric rather than the current arithmetic mean, could cause it to be lower? Is the Minister confident that revaluation by RPI is likely to be more generous in most years?

On my noble friend’s behalf I want to ask about the schemes that apply discretionary revaluation increases. Does this mean that under their statutory funding objective to secure sufficient and appropriate assets to cover their technical provisions, those provisions must include revaluation at a rate no less than the minimum set out in regulations? Further, what happens when such a scheme is in deficit? Must its schedule of contributions and recovery plan be based on assumptions that include the minimum revaluation rate?

My noble friend has asked a further series of questions. For those schemes which apply discretionary revaluation increases, who under this SI can continue to do so and remain qualifying schemes provided that the revaluation is funded for and included in the statement of funding principles? Will the provision for revaluation be required to be at least that necessary to meet the minimum rate for the revaluation requirement of CPI or 2.5%, whichever is the lower? Further, in the event of an employer ceasing to participate in a scheme that applies discretionary revaluation increases, will any Section 75 debt be calculated on the assumption that the minimum rate for revaluation will apply? Finally, will those schemes which revalue by reference to the increase in average earnings continue to be required to meet the minimum rate for the revaluation requirement of CPI or 2.5%, whichever is the lower?

If the noble Lord would prefer to write on any or all of these questions, that may help us all. Having said that, we are happy to support these regulations.

[Lord Kirkwood of Kirkhope]

My Lords, I want to add my support for these regulations. I have myself had one of the four or five questions from the noble Baroness, Lady Drake. It concerns the consultation that the Office for National Statistics is engaged in at the moment in terms of RPI versus CPI. That needs to be thought about quite carefully because it could have a dramatic impact on some of the scheme rules we are talking about and which these regulations cover. I want to put in a request that the department ensures that the ONS is careful about this issue and that people are made aware of the consultation it is currently engaged in.

There is one point I do not understand. I imagine that an average salary scheme must be a defined benefit scheme and therefore it will have a statement of funding principles and trustees. Given that, I do not understand why the easier fix for this was not to change the scheme rules in order to make them compliant. I cannot believe that trustees would want to do anything other than that. They may have a contest for the sponsor of the scheme in terms of getting the resources, but I cannot see how that would be a problem. My question is this: although I am in favour of them, why are these regulations necessary? Why can the trustees of the scheme not deal with it by making a small amendment to the funding rules in the statement of principles for their own individual salary schemes?

If it is easier to give answers to these rather more simple questions by letter, I am quite happy to receive one as well.

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Lord Kirkwood of Kirkhope

Tuesday 14th February 2012 Lords Chamber

[Lord Kirkwood of Kirkhope]

My Lords, I am sure that is for the convenience of the House and I am grateful to my noble friend for making that clear. I could see the long faces on some of my Scottish colleagues getting longer by the moment. It is only fair to them that I apologise to them, because I have an interest in the Scotland Bill as well. However, I am sure it will wait until next Tuesday.

At this time of night I want to make a suggestion rather than a speech. Before I do that, I will say that I agree with the analysis of the noble Baroness, Lady Sherlock, about the money. I was a little dismayed at the way my noble friend opened this debate, because dealing with quantums of money and global amounts does not make an awful lot of sense unless there is some context. I much prefer to look at percentage shares of the benefit spend over time, and look at trends, rather than global amounts, because they sound like colossal sums of money. I agree with the noble Baroness on that point. It does not help the debate, because any of us who have been studying these things know that many single parents struggle on low incomes.

That point has been made and I will not pursue it, but I want also to make clear that in terms of the budget impact—which we have seen and which was referred to a moment ago—only 20 per cent of the cuts have attached themselves to household domestic spending and income. That will get worse. The Institute for Fiscal Studies, which has been quoted, has done some valuable modelling work that suggests there is going to be downward pressure on household incomes in single-parent families in future. That has to be borne in mind. Indeed, the Government’s own impact assessment on the ultimate rollout of universal credit from 2013, as I read it, shows that 500,000 working single-parent households will have a lower entitlement under universal credit. It is wrong to say that we are dealing with a category of rich people. There is a mixture, which I want to come on to in a minute in the main question I want to ask.

I have always been against charging. I was against it when the noble Lord, Lord McKenzie, was considering it. Along with the noble Lord, Lord Skelmersdale, we spent many a happy hour trying to resist charging, simply on the basis that it is a disincentive. I still believe that is likely to be the case. All developed western European nations now have various iterations of state-sponsored collection and enforcement services. We should—and will—have a new one, and one that will actually be cheaper as we will be using HMRC data. As my noble friend said, the service will be better and more efficient. There will be annual reviews and the data will be cleaned up as people are asked to come off the existing system and reapply—although that will be a much bigger undertaking than I think people imagine, and I hope that the department is prepared for that. However, it will be a cheaper and better service—£93 million cheaper, if my memory serves in respect of the impact assessment statement and other bits of information. It is important that we cherish the role that it plays and the impact that it has on lower-income families.

Looking at the figures, there are two dimensions to this—the low-income one and the high-income one. I remember an exchange when we last discussed this and have been reflecting on it since. The Government’s position is absolutely arguable for those who have an income of £50 or more per week via Child Support Agency maintenance. Twenty-two per cent of the case load gets 50 per cent or more, per week, of the maintenance delivered through the CSA. That is a big amount of money and gives us some options. Those kinds of families and households have much more flexibility in terms of options and choices. In those circumstances, it is perfectly reasonable to try to affect behaviour. The point I want to make is that 40 per cent of single parents receiving maintenance via the CSA receive less than £10 per week.

It is that category of transfer payment recipients that I am really concerned about. They do not have any options; they are in a very difficult place. The Government’s attempt to get behavioural change is much harder to argue reasonably in that context. I support the amendment of the noble and learned Baroness, Lady Butler-Sloss, but if we are stuck with charges and are reviewing them in 13 months’ time, would the Minister look urgently and robustly at the case for variation in the charges? If somebody is getting £10 per week, 12 per cent of that is quite a load of cash. If there were some way of getting the £75 million that the Government believe they need to fund the system going forward from fees, then they could do that by taking a little bit more out of households and families with a better take and a better return from the CSA than those who are at the bottom of the income distribution pile. If some thought could be given to that—and it is a bit of an ask at this time of night to get a reaction to that idea without notice—or even if the Minister were prepared to say that he would take it away and consider it in the course of the review, I would be happier about the results of the debate. If the noble and learned Baroness is thinking of taking her case to a vote—and that would also be a difficult ask at this time of night—her case has merit and I would support it. If we are stuck with charges, however, we should be looking at variations to try to cushion the effects on some of the low-income households that I think will suffer as a result of the imposition of these charges as currently cast.

[Lord McKenzie of Luton]

My Lords, I shall be brief. I agree with pretty much everything my noble friend Lady Sherlock said about the proposed charging arrangements. We certainly support the amendment of the noble and learned Baroness, Lady Butler-Sloss, because it does the right thing. It is dealing with those people who have no choice but to use the statutory system and cannot now use maintenance direct of their own will, because that depends on the non-resident parent applying to use it and on compliance by the non-resident parent. They have no other choice, and it is therefore wrong that they have to suffer a collection charge.

Will the Minister confirm—in respect of the reduced application fee of £20, which is welcome—that it is not going to be recycled to produce increased collection charges from mothers as well? It is important that we have clarity on that. To the noble Lord, Lord Newton, I would say that we will be in touch with our honourable friend Anne McGuire and tell her that she has misunderstood you. I am sure she would welcome that. The noble Lord, Lord Higgins, said that he thought the amendment of the noble Lord, Lord Boswell, had no cost. If that were right, I would be very worried about it because it presumably means that it is not going to affect the proposed arrangements, and I would not agree with that.

I say to the noble Lord, Lord Boswell, that I am disappointed in a sense with the proposition before us. I understand it is done with good intentions; I accept that because I know his commitment to these issues. However, if at the end of the day that is what is on the table, then that is what we would go with.

I say to the Minister that I do not think it was helpful to have some of those early statistics. Comparing the figure of £16 billion, which I understand is benefits and tax credits paid to all lone parents, with the fees that might be derived by those who use the statutory system of CSA is a nonsense idea. It does not make any sense at all. It is almost as though the assumption was that maintenance was money provided by the state. Maintenance is money that flows from non-resident parents—and we hope in increasing amounts in the future—to the parent with care. It is their money, not money provided by the state. So we probably have limited choices before us tonight. I hope the noble Baroness will feel able to press her amendment, but understand if she does not. If she does not, with a degree of reluctance I think we would support what is on the table from the noble Lord, Lord Boswell. Looking at it, though, I am not sure that it actually achieves anything that cannot be achieved from the existing framework of regulations. If it does, perhaps the Minister can tell us, but if we did not have that amendment, I am not sure that anything the noble Lord seeks to do under it could not be done anyway under the 2008 Act.

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Lord Kirkwood of Kirkhope

Wednesday 25th January 2012 Lords Chamber

[Lord Kirkwood of Kirkhope]

My Lords, I will just take two minutes to deal with that, if I may.

First, I have encountered the break-up of marriage at a variety of levels. I was involved in consistorial legal work before I was elected in 1983, and I spent most of my time in the House of Commons as a spokesman for my parliamentary group and then as a chairman of a Select Committee which endlessly looked at the 1991 Act and all the bits and pieces that flowed from it. It has been quite clear to me as a result of all that experience that if anybody tries to take some lessons and principles from the cases that are conducted in the High Court of the land, dealing with many thousands of pounds at a very high level, where things are fought over and the big silk hanky brigade of the legal establishment makes lots of money, they are a million miles away from ordinary people whose families break up week in, week out. I do not think it is safe to start contemplating the amendment tabled by the noble and learned Lord, Lord Mackay, and its consequences, when seen from that perspective. That is not what this is about.

I mentioned Select Committees. I just want to draw noble Lords’ attention to the fact that the current Select Committee in the other place recently produced a report on this which recommended that where parents with care had taken all reasonable steps to investigate a private arrangement but that was not possible or appropriate, no charges should be made. In my view, there has never been an established case made for charging either parents with care or non-resident parents.

The Henshaw report was an extremely scrappy piece of work. The noble and learned Lord, Lord Mackay, rightly pointed to the fact that even the Henshaw committee, upon which most of the Government’s case is made, clearly said that it did not want any disincentive effect to be imposed as a result of charging. It made a different case altogether. Incidentally, the Henshaw committee report was as clever as to say that we should close down the CSA and have a residual body to chase debts. That is about how sensible some of the recommendations in the Henshaw committee report were. As far as I am concerned, it is true that it was discredited before the ink was dry and it went for ministerial consideration.

This issue is about whether charging will assist collaboration and co-operation between separating parties. I can see no understandable circumstances that charges would make it easier for people to stay together longer. I do not see how that case can be made or that it has been made.

The system we are setting up for 2014 will be much cheaper for a variety of reasons. From an administrative point of view, there is no need to put money into the system because the assessment process, the computer systems and so on will make the whole administration of this, if it all works, a lot easier. It is entirely affordable. The way in which some Ministers have been rubbishing the system is disgraceful. It is not a perfect system but it supports 870,000 children—I repeat, 870,000 children. This is not an insignificant institution which could be done without. Nudging 50 per cent of single parents with care get something like only £20 a week. That is the extent of the money that they derive from the system, but it is essential for those who use it.

Quite simply, collaboration between the parents who are separating will not be assisted by charging. It would inevitably result in less money flowing to the children in the charge of the parent with care. There is no case whatever for charging, so I am compromising greatly in supporting the entirely reasonable amendment moved by my noble and learned friend Lord Mackay. Speaking for myself, I would scrap the whole idea and not give it house room. I hope that the House will come quickly to a resolution and I encourage noble Lords to support the amendment in the name of the noble and learned Lord.

[Lord McKenzie of Luton]

My Lords, this has been a powerful, passionate and extremely well informed debate. If the debate has not been quite unanimous in support of the noble and learned Lord’s amendment, one thing on which there has been unanimity is the esteem in which he is held. On charging and the Henshaw report—which the noble and learned Lord mentioned, as did the noble Lord, Lord Kirkwood—as the report made clear, any charging regime should not dissuade vulnerable and low-income parents with care from seeking maintenance in the first place. That was translated into a White Paper of the Labour Government, which said that charging should be based on three clear principles: it should incentivise non-resident parents to meet their responsibilities; the clear burden of charging should fall on the non-resident parent and not the parent with care; and cost recovery via CMEC should never be prioritised over payments to parents with care.

A host of points have been made. I agree with what the noble Lord, Lord Cormack, said—supporting this amendment will not torpedo the Bill. If it would, I would doubly support it. But even on the basis that it will not, it should be supported. We have heard testament from a number of noble Lords, particularly the noble and learned Baroness, Lady Butler-Sloss, about the complexity and possible difficulty of people’s lives. We have to recognise that people just do not live tranquil, routine lives where you can easily come to agreement. As someone who briefly had ministerial responsibility for the CSA, I saw some horrendous cases about non-resident parents, mostly men, who would do anything to avoid meeting their obligations.

The history of the CSA/CMEC has evolved, and this is perhaps not the occasion to rehearse it. The fundamental point that the noble and learned Lord made was that this is about fairness; it is not about seeking to attribute blame to the challenges that couples find themselves in when they separate. I thoroughly agree with that. I am aware that the noble and learned Lord does not press this matter lightly. As we have heard, he has endeavoured to persuade his colleagues at the highest level in government on the proposition that he is advancing today. We should be guided by what is best for children and whether supporting this amendment would make it more likely that they will benefit from maintenance arrangements. We consider that it will, which is why we support it.

I suggest to the noble Lord, Lord De Mauley, that it would be really good if he could accept the amendment, particularly because so many noble Lords from his own Benches have spoken in favour of it. The clear and overwhelming view of the House is that the amendment should be accepted, which would be the right thing to do, without having to reinforce that with what would clearly be an overwhelming vote.

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Lord Kirkwood of Kirkhope

Monday 23rd January 2012 Lords Chamber

[Lord Kirkwood of Kirkhope]

My Lords, I concur with the noble Baroness, Lady Lister.

[Lord McKenzie of Luton]

My Lords, for the sake of brevity, I can say that I also concur with my noble friend and with the noble Lord, Lord Kirkwood. My noble friend is simply seeking to have the issue on the record.

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Lord Kirkwood of Kirkhope

Tuesday 17th January 2012 Lords Chamber

[Lord Kirkwood of Kirkhope]

The noble Lord is an experienced hand and has made a very interesting speech, but it would help the House enormously if he could be tempted to give an assessment—if he was the Minister facing Amendment 50—of how long he thinks it would take to discharge the responsibilities contained in the amendment.

[Lord McKenzie of Luton]

It is clear that the Government are going to have to do some of this anyway, but in terms of an overall time period it is clearly a matter of some months rather than weeks, but not a matter of years. It depends on the determination and effort that the Government bring to bear. They have the levers and the resources to cause this to happen quite quickly, I would suggest, but there has to be full engagement with disabled people for it to be meaningful. This does not mean endless delay in the introduction but it does mean a real level of reassurance before we embark upon this very significant change.

Jobseeker’s Allowance (Jobseeking and Work for Your Benefit) (Amendment and Revocation) Regulations 2012

Debate between Lord McKenzie of Luton and Lord Kirkwood of Kirkhope

Monday 16th January 2012 Grand Committee

[Lord McKenzie of Luton]

My Lords, I thank the Minister for his explanation of this order, which has our support. Enabling prison leavers to be referred to the work programme immediately upon release, rather than at the earliest after seven days, is to be welcomed. As the Explanatory Memorandum recites, those in employment are much less likely to reoffend, and the importance of this first week is acknowledged even though, as the Minister said, the focus will be on reintegration and securing a base rather than work preparation and job search. From the Explanatory Memorandum, it also appears that the JSA claim process will be conducted in prison so that entitlement can begin on release. Again, the Minister covered that. It is proposed to make use of the provisions of what I think is now Clause 96(2)(1) of the Welfare Reform Bill. What will the position be in the interim before the Clause 96 provisions can be brought into effect? What payment will be due to individuals between release and the otherwise first payment date?

The Minister might be relieved to know that I do not propose to reiterate the detailed inquiry about the work programme which was taken up in the other place. However, when is it expected that the Government will be releasing comprehensive data on its operation, about referral levels, categories, outcomes, cost et cetera? It would be helpful if the Minister would say a little more about the process of these additional referral opportunities. Will this become the main approach for those leaving prison? I note from the Explanatory Memorandum and the Minister’s confirmation that 16 and 17 year-olds will not be referred by this process. Will he say a little more about why? How many prison leavers have been referred to the work programme at day eight to date—from what the Minister said, it may be that the answer is nil—and certainly within 13 weeks of their claim? We understand that there is going to be a new category in the work programme. I am not sure whether it is just for those day one referrals rather than perhaps day eight referrals, week 13 referrals or any others.

In particular, will the Minister confirm that this will not be an automatic process that will squeeze out other programmes? I am sure that, if he were in his place, the noble Lord, Lord Ramsbotham, would talk about some of the programmes of which he is aware. I certainly remember sessions where we had presentations—I think that the Forestry Commission was engaged in employing people even before release from prison. These were imaginative programmes that really made a difference to people, and I would not wish to see these opportunities trump them and squeeze them out.

Subject to any points arising from those questions, we support the order and wish the Government well with this initiative.

[Lord Kirkwood of Kirkhope]

I add to the welcome that the noble Lord, Lord McKenzie, has rightly given to these regulations.

I am particularly interested in this aspect of the work programme because I am a non-executive director of the Wise Group in Glasgow, which has for some years been running a programme called “Roots Out of Prison” that has been extraordinarily successful. The Minister rightly pointed to the fact that other aspects of the public service and the voluntary sector need to help if these projects and this work are to be successful. The Scottish Prison Service was exemplary in the way that it encouraged Wise Group employees, who were reformed former convicts who had been trained by the Wise Group, who went into Barlinnie prison in the first iteration of the project. Inside the prison, those Wise Group employees, working on a voluntary basis, engaged in capturing the interest of some people who were about to be released. I was not aware that the jobseeker’s allowance regulations made that first seven-day period a bit of a difficulty—I do not know how they got round that—but all that I can say is that it was a splendid project that worked to everybody’s benefit.

As the Minister or someone else said, the first seven days are crucial. The people who are waiting to meet disaffected offenders, particularly young offenders who may have completed their first sentence, when they come out of the door at 7 on a Thursday morning, are usually the drug dealers. The drug dealers know that that is when the prisoners are let out, and they say, “Come with me to the pub and I’ll help you”. Then of course the prison leaver is back into a cycle of recidivism. Somebody should be there to welcome the prison leaver and take them somewhere, or talk to them before they come out about their housing benefit and getting accommodation. Local authorities could help some of these ex-convicts to find places where they can immediately go to live. Then the whole system would be more positively pointed at people who are in a very vulnerable set of circumstances.

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Lord Kirkwood of Kirkhope

Wednesday 11th January 2012 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I shall speak also to the other amendment in our name in this group. Perhaps more than any other component of these changes, the inclusion of the assessment period in the tally of days which count to limit contributory allowance serves to underline that this is fundamentally about budget cuts. The assessment phase of an ESA claim normally ends 13 weeks after the beginning of an entitlement. It is the period during which DWP gathers relevant information about a claim to determine whether a person has limited capability to work or limited capability for work-related activity. While the assessment is under way, there is no entitlement to an additional component. Indeed, it is the additional component which is supposed to reflect the additional needs of those who are not job ready. If the assessment determines that a claimant should be treated as having limited capability for work or work-related activity, the relevant additional component will be backdated to the end of the 13-week period, albeit that the assessment period may have been longer. During the 13-week period, the individual is entitled to only the contributory ESA rate equivalent to the income support JSA basic personal allowance rate. This is the same rate as the contributory JSA rate. By including in the 365-day period the 13-week assessment phase with no additional component, the Government are denying the receipt of 13 weeks of the additional component at the end of the period. This is demonstrably unfair.

We will doubtless be reminded of the cost implications which are, I think, £20 million a year after 2012-13 and £115 million for that year, the accumulated effect of those hitting at the start of the system. The effect of what the Government are proposing is that the additional component receivable by those entitled to contributory ESA in the WRAG will be available for only nine months, not 12 months. This is an example of where somebody has looked at every conceivable means of clawing back moneys from sick and disabled people. The benefit to government is said to be £100 million in a year, but looked at another way, this is an additional £100 million in a year taken from the pockets of the disadvantaged.

Amendment 41A addresses the position of those with fluctuating conditions who might move between the WRAG and the support group. Fluctuating conditions have been a strong feature of our debates on this Bill and on previous welfare reform measures. Concerns have been expressed about how work capability assessment operates for those with such conditions, whether there is sufficient training for DWP staff and providers and whether there is appropriate expertise which can be brought to bear to make sure that the system works as it should for people with fluctuating conditions. This brings with it the prospect of individuals potentially moving between the WRAG and the support group when reassessment arises.

Movements into the support group have been protected by the government amendment, and for so long as somebody is in the WRAG or the support group movements into the latter would not be denied contributory ESA, but periods in the WRAG are accumulated for the purposes of the time restriction. The problem this brings is as follows: consider somebody with cancer or another fluctuating condition who has spent, say, 11 months in the WRAG, has moved to the support group for a period and whose condition subsequently improves so they move back into the WRAG on a reassessment. If the clock does not then start again, they are given one month to prepare themselves for the loss of contributory benefit and to seek to re-enter the workplace. This problem would be made worse if there was an extensive period in the support group because of the greater disconnect with prior work-related activity. It is submitted that the amendment is a narrow and entirely reasonable proposition. The Minister may have figures about how many people it might affect, but it is suggested that it is unlikely to be many.

Amendment 41A, which has been tabled by the noble Lord, Lord Patel, precludes the starting of the time-period limitation for contributory ESA until the relevant provisions of the Bill enter into force. It has our support as it stands. As we discussed earlier, the clock has already started. When this legislation enters into force—the earliest date being April this year—some 100,000 people will lose their contributory ESA overnight, and for some that will be as much as £94 a week. Some may have been receiving it for the bare 365 days yet have paid their national insurance contributions for decades. We await further comments from the noble Lord, Lord Patel, but on any reasonable analysis, this is retrospective legislation and should be opposed. If there is to be time limiting of contributory ESA, in the normal course of events one would expect it to operate for claims after the introduction of the legislation. The Government are applying it to existing claims. Worse, they are counting days for which the allowance has already been received. Letters of notification have served only to cause confusion and dismay. Just imagine the consternation that would be caused by having a letter drop on the doormat telling you that in six months’ time it is likely that you will lose as much as £94 a week of your income—overnight.

In their understandable need to address the deficit, which we acknowledge, I believe the Government have lost all perspective and all sense of fairness. They have been thrashing around in all directions to grab back money on the flimsiest of propositions. Frankly, they should be ashamed of themselves.

[Lord Kirkwood of Kirkhope]

My Lords, I want to make a brief contribution to this debate because we have had a busy day and I think we all want to go away and reflect on what some of the earlier important amendments and votes mean for the rest of the Bill.

As I was preparing for tonight’s consideration of the Bill, I thought that Amendment 40A had some real potential to try to keep some channels open to the department. We have had some very powerful speeches and some significant decisions taken by the House. For myself, I want to go away and read all of those carefully. If we were looking for a way of trying to meet some of the obvious concerns that have been expressed in this debate, both internally and externally, this amendment suggests that there might be a possibility of getting something that can stand the test of time and that does not destroy the tight financial framework within which the Minister is seeking to operate. I know that he cannot on a whim say, “Yes, this is something that is possible for me to go away and look at”, but I think this is potentially realistic.

There are a number of reasons for supporting it, not just because it is realistic and meets some of the concerns but because it wins some extra time for everyone. The extra three months would be of significant advantage to the claimants concerned. My noble friend Lady Thomas made an important point earlier when she said that Harrington has a great deal of potential. I do not think that has been properly reflected in any of this evening’s discussions. The Government have set out their stall very robustly about the five-year set of annual reviews. I am well pleased, and I think everyone else is, about the progress that Professor Malcolm Harrington is making. Perhaps he should be invited to consider some of these things, including what might be done around the assessment phase. All I am saying is that I think there is some potential here for getting a compromise that might be winnable in terms of the financial constraints and might keep the channels open through the rest of the proceedings of this Bill—we might be able to come back to it at Third Reading.

In the balance of what else has happened today, this might seem nugatory or irrelevant, but I do not take that view. I think there is a mechanism here that is sensible and that may be doable. It will not be easy and there cannot be any guarantees, but I would really counsel my noble friend the Minister—who I know is actively concerned about all of this and is trying to find a way through that meets his financial framework as well as the concerns that have been expressed so powerfully by colleagues—to give this very careful consideration. The hour is not great but the House might be well advised to think carefully about this after the Minister has responded. I feel quite strongly that Amendment 40A may be worth considering voting on if we cannot get a response from the Minister that meets some of the concerns that have been expressed this evening.

--- Later in debate ---

[Baroness Hollis of Heigham]

If my noble friend will allow me, would the Minister be content if we were to introduce such a power by regulation at Third Reading, which would commit him to nothing or everything, according to how he wished to play it in future?

[Lord Kirkwood of Kirkhope]

Before whoever it is who is speaking sits down, I should say that I think that the Minister is making life difficult for himself. If he cannot take the advice that he is getting from all sides—and I, too, concur with what has been said—I, too, will look to get an expression of opinion from the House, which I really do not want to do. The suggestion that has been made about regulation-making powers is an easy out. I do not care what the Box thinks, actually; the Minister has the knowledge and the wisdom to take that decision right now, which would be a beneficial outcome for everyone.

[Lord McKenzie of Luton]

That has been helpful, as has been the intervention of my noble friend Lady Hollis, and I think that I can see a way forward. We do not need the Government’s permission to introduce an amendment in due course to take a regulation-making power, so if there is not that opportunity at the moment we will find out between now and subsequent Report days or even Third Reading. I think that that is what we will do; it will be a route through this. On that basis, and with that preliminary notice to the Minister, I beg leave to withdraw the amendment.

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Lord Kirkwood of Kirkhope

Thursday 3rd November 2011 Grand Committee

[Lord McKenzie of Luton]

How does the noble Lord envisage definitions of avoidable complexity being built in to the legislation—by regulation, perhaps, or a bit of guidance here and there, or perhaps even something in primary legislation?

[Lord Kirkwood of Kirkhope]

I have no idea—it was a thought in my bath. I confessed that at the beginning. However, it is worth reflecting on. Of course the noble Lord is absolutely right—as soon you start thinking about it, you start putting in layers of complexity. I think a challenge to Ministers is not a bad idea, even if it was just on the wall or behind the desk—I would settle for that. I beg to move.

[Lord Freud]

My Lords, in some areas I broadly agree with the Delegated Powers and Regulatory Reform Committee’s suggestions, and the Government have brought forward amendments to make these changes. Where key principles are established the first time the powers are used, these amendments will make the regulations subject to the affirmative procedure in the first instance. As to Amendment 66, Clause 6(1)(a) allows for regulations to set out circumstances in which a claimant will not be entitled to universal credit even though they meet the conditions of entitlement. I am grateful for the opportunity to reassure the Committee that the negative procedure will afford Parliament adequate control over the use of this power.

As I set out during our debate on Clause 6, there will be a number of specific groups who will not be able to access universal credit. These may include certain prisoners and children leaving full-time care who remain the responsibility of the local authority where payment of universal credit would lead to duplication of provision. This will broadly reflect similar rules in current benefits.

Similarly, I would like to reassure noble Lords that it is appropriate for the regulations on hardship and claimants falling into the no work-related requirements group to be subject to the affirmative procedure only in the first instance. In both cases, our intention is that the initial set of regulations will clearly establish the key principles of the new system. We have already provided noble Lords with a draft of the regulations to be made under Clause 19(2)(d). We have also published a briefing note on the conditionality threshold. We have debated these matters at some length earlier in Committee. Once the system that we have set out is in place, it is unlikely that the regulations will change significantly, and I hope that is the assurance that my noble friend Lord German was looking for.

There are three areas where I am unable to accept the committee’s recommendations or the noble Lord’s amendments. First, the committee and the noble Lord have suggested that Clause 47 should be removed from the Bill. Clause 47 relates to the parliamentary procedure for regulations relating to the requirements on jobseeker’s allowance claimants to be actively seeking, and available for, work. These powers are currently subject to the affirmative procedure. The clause makes them subject to the negative procedure.

These powers were groundbreaking when first introduced in 1995, as the noble Lord pointed out. However, the House now has had more than 15 years experience of how these powers are used. There is a wide understanding of what the phrases “actively seeking” and “available for work” mean; in fact, it fundamentally underpins our active labour market approach. We believe that this experience means that it is now far more appropriate that this power is subject to the negative procedure. Their use is now well established and we have no intention of departing from that precedent.

Secondly, Clauses 33 and 89 allow for supplementary, incidental, transitional and consequential amendments to other legislation to be made through regulations. To pick up on the point that my noble friend made about the Scottish Government, who have powers under Clause 33 to make consequential amendments in their area of remit, they specifically requested that these regulations be made by affirmative procedure in the Scottish Parliament. This was the result of one of our helpful non-statutory discussions, which I am sure an FOI request will show in all its glory. Amendments 70 and 99 would make any regulations that amend primary legislation subject to the affirmative procedure.

It is likely that a large number of minor amendments to other legislation will be necessary as a result of the importance and scale of the changes that the Bill introduces. It is not unusual for some of these changes to be made through secondary legislation, and such consequential powers are usually subject to the negative procedure. Moving away from this precedent would take up a very significant amount of parliamentary time and could pose a risk to the timetables for both universal credit and personal independence payment. We therefore feel that the negative procedure remains appropriate.

Amendments 55E to 55G and 69ZA seek to make regulations that contain definitions of “disabled”, “severely disabled” or “work” subject to the affirmative resolution procedure. It inserts a new subsection into Clause 43 and consequential amendments to the terms where they arise in Clause 41. I can reassure the noble Lord that these amendments are not necessary. Clause 43(3) already provides that a wide range of regulations will be subject to the affirmative procedure the first time that the power is exercised. This includes the regulations to be made under Clause 12 providing for additional amounts that will include the definitions of the terms mentioned in the amendment. Noble Lords may recall that the illustrative draft regulations on elements provided to your Lordships already contain a draft definition of “disabled” and “severely disabled”.

Under Amendment 69ZA, the noble Lord seeks to significantly widen the scope of regulations subject to debate in both Houses, covering consequential amendments and changes to working age benefits and pension credit. It would be completely impractical for this House to debate the numerous consequential amendments being made to both primary and secondary legislation, and a poor use of parliamentary time. I have already explained why it is more appropriate that Clause 33 should remain subject to negative procedures, but none of the other provisions identified by this amendment was covered by the report of the Delegated Powers and Regulatory Reform Committee. We are therefore satisfied that the negative procedure is appropriate.

With regard to universal credit, I should also point out that all the regulations on entitlement, awards and claimant responsibilities will be in a single set of regulations. They will necessarily be affirmative in the first instance because if any regulations within a set are affirmative they all are. So, even if the Bill does not require the affirmative procedure for specific points, it will apply in practice.

Amendment 71 would introduce a different form of scrutiny for universal credit regulations requiring the Secretary of State to avoid creating any unnecessary complexity into the system. I strongly support the spirit of the amendment in the name of the noble Lord, Lord Kirkwood. A key aim of universal credit is to simplify the benefit system. Simplification is a publicly stated, fundamental principle that has guided the design of the new system. Any requirement for simplicity would have to be finely balanced against other considerations, such as affordability or easing the transition to work. I acknowledge that this is a probing amendment, but perhaps a duty to consider the simplicity of any changes, as suggested by the noble Lord, would be a better approach than that in the amendment. However, any Government would clearly have to be concerned about the detailed interpretation of simplicity, which, as the noble Lord, Lord McKenzie, took delight in pointing out, is a subjective term.

Nevertheless, I will look at this idea very closely. I can assure the noble Lord that we will put in place a number of non-legislative safeguards to protect universal credit from unnecessary complexity. These include governance processes to ensure simplification and consistency in policy design, and working with claimants to ensure that universal credit is simple to understand and administer.

Given these explanations, I urge noble Lords to withdraw or not move their amendments.

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Lord Kirkwood of Kirkhope

Tuesday 1st November 2011 Grand Committee

[Lord McKenzie of Luton]

My Lords, this is a probing amendment in respect of hardship payments generally and issues around recoverability in particular. The draft regulations that have been provided to us indicate that hardship payments will be made where a universal credit payment has been sanctioned but where the award has been reduced below a certain level and the claimant can demonstrate that they are or will be in hardship as a consequence of the sanction. It is understood that the regulations will broadly replicate existing JSA regulations. Claimants will be required to continue to meet work-related requirements.

Under existing JSA arrangements, a person can qualify for hardship payments at the beginning of a period of a claim if a decision about eligibility is awaited. Will similar arrangements operate for universal credit? What happens where there is a couple claim but the couple splits up? Does the unrecovered amount attach to the claimant who was sanctioned? Further, when will recovery actually start?

I should have said that there is a key difference between the arrangements proposed for universal credit and the existing JSA regime in the plan to recover hardship payments from some claimants. The notes suggest that this will include everyone who is not in the “vulnerable” category. Is this still the intention? The Minister will be aware of the deep concern that this prospect has raised. It is planned that recovery will be based on existing legislation relating to the recovery of overpayments and payments on account. Will the Minister explain what these are? Using the model for recovery for those who have been overpaid for those who have been in receipt of just 60 per cent of the amount of the sanction reduction does not seem innately to fit well. Over what period or at what rate will the hardship payments be recovered? What if the recoveries themselves push claimants into hardship?

I shall repeat a question I put a moment ago. What happens where there is a couple-claim and the couple split up? Does the unrecovered amount attach to the claimant who was sanctioned? When will recoveries actually start—while the claimant is still in receipt of the hardship payment or after benefit is restored?

The Minister will recognise that to qualify for hardship payments, claimants have to be just that: in hardship, a few steps away from destitution. The Minister may well say that that would be of their own making, but we should not overlook the chaotic lives some people live, compounded for some by mental health and other fluctuating conditions. Too many claimants exist at the very margins of financial solvency, and recovering hardship payments could tip them over the edge.

I want to pick up on a point made by my noble friend Lady Sherlock a moment ago about the announcement of the increase in the amounts which can be recovered for fines to £25. What will be the relative claim in respect of these payments? Will the hardship payment recovery take precedence over these other amounts, and how will that be sorted out? Will the recovery of hardship payments reflect other deductions which are already being taken from benefits? I beg to move.

[Lord Kirkwood of Kirkhope]

My Lords, I am trying hard to say nothing from this end of the table because it is important to make progress. However, I too am very worried about the press reports that have coming since the summer. I said at the beginning of our first session in Committee that some of the language that was being used in relation to these issues and to benefit deductions was extremely worrying. It is getting more acute and more refined. I do not think the Minister can hide behind the defence that he tried to use, although it is absolutely accurate. Changes of this kind would come under the powers given to the courts because these things will be decided in court. But the latest BBC newswire I have seen on this issue described the Prime Minister, David Cameron, talking about benefit reductions for fines up to a maximum of £25 under universal credit. That came from a BBC report. If the Prime Minister has it in his heart and head that universal credit is going to be subject to what I calculate to be a 37 per cent reduction in the standard allowance, I do not think it is fair for this Committee, or indeed the House, to go through all these legislative proceedings, pass this Bill and give it Royal Assent, without some consideration of exactly what that means.

Now I have two complaints. First, as I said in the first day in Committee, a particular language is being used. The Prime Minister talked about the current maximum deduction of £5 as “much too soft”. Indeed, the Secretary of State is not absolved from some of these phrases which really target people on benefits. Of course, we are talking about people in the courts and who have committed crimes. We may even be talking about people who took part in riots—I am not sure about that. That has to be borne in mind and taken into consideration, but to remove up to 25 per cent of £67.50—the level that I understand is being set for the introduction of universal credit in 2013—is a massive reduction for anyone to contemplate. It will simply push people to the margins.

Secondly, what kind of benefits are we talking about? Are claimants to include state retirement pensioners who may find themselves in the courts? Are they contributory benefit claimants who may well have been paying in for all their lives to get that access? Under this new regime, are they likely to be subjected to a £25 benefit deduction? It is not sensible for the Committee or House to contemplate going into universal credit against the background of this being possible without serious consideration of what it is, in detail, that is in the mind of the Prime Minister or Secretary of State. I completely absolve the Minister of any of this stuff, but he must understand that it causes serious concern to people. I guess that this could be introduced by a change in regulations, late at night on a wet Thursday. Unless I get some pretty compelling, better evidence about the provenance of this idea, I will be there, wet on a Thursday, waiting for him. It is unimaginable that we should just pass these things willy-nilly because these benefit claimants riot and need 37 per cent of their entitlement reduced. It is unconscionable and we need a better explanation than the one we have at the moment.

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Lord Kirkwood of Kirkhope

Wednesday 26th October 2011 Grand Committee

[Lord McKenzie of Luton]

My Lords, I was responding to the Minister’s reply and saying that I am sure we are all glad to hear that there is no intention to rush into these things. Perhaps I may say to the noble Lord, Lord Kirkwood—when he is in his place—

[Lord Kirkwood of Kirkhope]

He is behind you.

[Lord McKenzie of Luton]

It is always good to know that the noble Lord is behind me and I thank him for his kind words. I want just to say, on the nature of our debates, that we could have had a big debate around conditionality as a whole, but in Committee surely what we should be doing is going line by line through this legislation, challenging and probing it in order to try to understand its full intent. But even in itself, in-work conditionality is a new and big topic, as a number of noble Lords have said.

The key issue which has emerged is: what is the default position in respect of lone parents with children aged 13 or older? Certainly our understanding from the briefing is that the default position would be the 35 hours national minimum wage. If the noble Lord is now in a different position on that, or perhaps we have misunderstood it, it would be good if that is put clearly on the record. That would deal with the points made by my noble friends Lady Hollis and Lady Sherlock. However, in their different ways, my noble friends Lady Drake, Lady Lister and Lady Donaghy have pointed to the newness of and some of the risks and challenges posed by issues around capacity, how the discretion is going to be exercised and what it does to the employment relationship. We are in uncharted waters and these are issues of real concern.

In respect of using gross earnings, I did not object to this and I understand why that might be the basis on which it would be done. I said simply that where there are other features of someone’s employment terms, particularly employer pension contributions—someone might have lower pay but a good employer pension contribution—to try to force them away from those would not make any sense. I am sure that is not necessarily in the Minister’s mind, but those sorts of issues are associated with the capacity that is needed to make these evaluations. They would mark a departure for Jobcentre Plus and providers.

We remain concerned about providers. I understand that we may be close to negotiating the next round of contracts and that it can be addressed in those, but I think we would hang on to the point that, as it is currently structured, there is the potential for real conflict where providers are remunerated on getting people into work—at least 16 hours a week, I think—and keeping them in work. What in-work conditionality will do, if the noble Lord says it has to be done outside the work programme, is take people off that scheme, possibly before they have enabled the provider to earn their full remuneration for keeping them there long enough. It is those sorts of conflicts with which we have some difficulties.

I think that we have given this a good airing. I hope that we have put down a marker about our concerns, and certainly our concerns about taking up a framework for legislation. We know that this type of legislation inevitably has a framework basis to it, but with something so unformed and in many respects as vague as this, it is quite difficult for us to say that we will support it. That is why I return to my point that we may look for some sort of sunset provision here in order to see how it all works out in practice. Having said that, I beg leave to withdraw the amendment.

State Pension Credit Pilot Scheme Regulations 2010

Debate between Lord McKenzie of Luton and Lord Kirkwood of Kirkhope

Monday 5th July 2010 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I thank the Minister for his explanation of the order before us. I will not rise much to his opening salvo about the state pension, except perhaps to remind him gently that it was a Conservative Government who broke the link with earnings, and it was the previous Labour Government who, on coming into office, had to address the abject situation that many pensioners found themselves in, hence pension credit. That is how the previous Government lifted hundreds of thousands of pensioners out of relative poverty. Perhaps, though, that is for another debate.

It goes without saying that we support the pension credit pilot, which, as the noble Lord, Lord Kirkwood, acknowledged, has as its basis the provisions of Section 27 of the Welfare Reform Act 2009. Maximising the take-up of income-related benefits is an effective way of tackling pensioner poverty. We know that, despite considerable take-up activity, a significant number of people who are entitled to pension credit are still not claiming it.

The noble Lord, Lord Kirkwood, said that the regulations are, in his view, basically tactical in enshrining means-testing as part of the system. I remind him that the package on which the pensions system is based stems from the Turner commission: improvements to the basic state pension, relinking it to earnings, and improvements to S2P, particularly the flat rating. The other component is, of course, auto-enrolment, on which we await the results of the review that is under way. My noble friend Lady Hollis, who is not with us today, has strong views about wrapping pension credit, S2P and the basic state pension into one pot.

[Lord Kirkwood of Kirkhope]

I have said that, too.

[Lord McKenzie of Luton]

Indeed, among the advocates of that I include the noble Lord and possibly even the Pensions Minister, although we shall see what will flow from that.

We note that the limited consultation that the DWP undertook before the election showed general support for the pilot, although, as ever, with some reservations. Clear communications are, as the DWP’s response to the consultation acknowledges, of paramount importance. We are likely to be dealing with many people who are vulnerable and who could be distressed at seeing ad hoc credits appearing on their bank statements.

A condition of eligibility of receiving benefit under the pilot is that a person must receive retirement pension that is paid by way of direct credit transfer to a bank or other account, a point that the noble Lord, Lord Kirkwood, probed. I am not sure whether the Minister has information to hand—if not, perhaps he could write—but we would be interested to know what percentage of people in receipt of retirement pension are now paid other than by these means. Are there data covering the extent to which such people are underrepresented or overrepresented in the entitled non-recipient category? We ought to know that.

The noble Lord, Lord Kirkwood, also touched on a question that arose about the design of the pilot, which involves the payment of just three four-weekly amounts. Is that sufficient to provide the information to satisfy the objectives of the pilot? Given the set-up costs of the pilot, it would be a pity if the opportunity were missed to provide a secure evidence base. On what basis is the Minister satisfied that the three-month period is sufficient to meet the objectives for which the pilot is designed?

The pilot is to cover both the guarantee credit and the savings credit, so the spread of amounts of payments could be quite wide. Is the Minister also satisfied that the proposal to select 2,000 at random from the entitled non-recipient population will pick up a sufficient range of circumstances to enable a comprehensive evaluation of the differing reasons for lack of take-up?

Of course, the pilot has to be seen in the context of other campaigns that are under way to improve the take-up of benefit. Perhaps the Minister could give us an update on these. Specifically, could he tell us about the outreach programmes and the current volumes of face-to-face visits that are being undertaken? What progress is being made on the programme that allows one phone call to access three benefits—pension credit, council tax benefit and housing benefit? Will this continue alongside the pension credit pilot payment?

The noble Lord will recall our deliberations towards the end of the Welfare Reform Bill on the renaming of benefits and the campaign by the Royal British Legion to improve the take-up of council tax benefit by designating it as council tax rebate. If memory serves, we had common cause on this; the noble Lord indicated that it had the support of his party, particularly the now Prime Minister. Will the Minister tell us what progress has been made on this and the current timetable to bring it to completion?

The relationship between pension credit and housing and council tax benefit is important. I understand, for example, that no capital limit is applied to the latter two if a person is in receipt of the guaranteed credit. Both elements of pension credit can be the passport to social fund payments, both discretionary and regulated. Do the amounts paid under the pilot not count for these passporting purposes? If this is the position, is there a risk that, by claiming housing benefit separately during the course of the pilot and/or refraining from claiming pension credit until the end of the pilot period, an individual might miss out, albeit for a short period?

We welcome the pilot. As I have said, it is another means of improving the take-up of pension credit. It is encouraging to see it move forward, notwithstanding the more disagreeable rhetoric that typically emanates from this coalition Government around the welfare system, focusing on fraud and error and itself creating a climate that will deter some people from claiming their just entitlement. This is all against the backdrop of draconian cuts to be visited on government departments and local authorities, with knock-on effects for the voluntary and third sectors—collectively, the support system for helping the most vulnerable to obtain their rights. It is to be hoped that the benefits of this pilot will not be swept away in the deluge of cuts, which would impair the functioning of those whose efforts are directed at helping the poorest and most disadvantaged.