Pension Schemes Bill [Lords]

Alan Brown Excerpts

Report stage & 3rd reading & 3rd reading: House of Commons & Report stage: House of Commons
Monday 16th November 2020 Commons Chamber

In conclusion, it is for those reasons, among many others, that I will support the Government today. I know just how hard the Minister has worked on the Bill, alongside his colleagues, and I thank him for his efforts. Tackling climate change is, of course, of crucial importance and the Bill most certainly marks the next step in our journey to reach net zero.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is a pleasure to follow the hon. Member for Keighley (Robbie Moore). I noticed that he mentioned cross-party working, so on that basis I look forward to him voting with the SNP tonight when we press some of the amendments to a vote. I very much appreciated that early commitment.

I rise to speak to new clauses 4 and 5, tabled by my hon. Friend the Member for Airdrie and Shotts (Neil Gray)—I have also put my name to them. In January 2018, I introduced a private Member’s Bill on multi-employer pension schemes, including provision for the protection of unincorporated businesses. The Bill was intended to correct what I saw as the unintended consequences of the section 75 amendments, which were legislated in 2005. Like many private Member’s Bills, it did not go anywhere, so tonight I am keeping a promise to the plumbers of my local Scottish and Northern Ireland Plumbing Employers’ Federation branch. I promised that I would do all I can to try to get legislative changes for a solution to the section 75 debt issue, which has adversely affected the plumbing and mechanical services industry pension scheme.

It is disappointing that nearly three years down the line since I introduced my Bill the reality is that we are no further forward. It is also just over four years since my hon. Friend the Member for Perth and North Perthshire (Pete Wishart) first raised the matter in a Westminster Hall debate. As he pointed out earlier, the then Minister pledged to find a solution to the problem. We are still waiting, despite the argument that there has been some progress over the years. I put on the record my thanks to SNIPEF and the Plumbing Employers Action Group for their assistance in tweaking the amendments to try to reflect ministerial comments that were made in Committee.

From 1995 until further changes in 2005, the plumbing pension fund was assessed on a minimum funding basis. When it was valued like that, the scheme was deemed fully funded and therefore any employer leaving the scheme did so without detriment to the overall scheme. As we now know, the 2005 changes led to the scheme being assessed on an insurance buy-out basis, which has caused the current issues. Those issues have been exacerbated, because those who left in compliance with the then rules on the old assessment did not accrue or owe any debts, but on the new basis, they have now created liabilities that the remaining employers have to pick up. Even now, the scheme is close to being fully funded if it was still assessed on an ongoing basis, which shows that changes should be possible. Given that the UK Government will not allow a change to the buy-out assessment process, surely we need to look at the modest changes proposed in new clauses 4 and 5.

Nobody is arguing against the principle of ensuring that a pension pot is sustainable. We understand the need to minimise risk to the taxpayer in terms of the Pension Protection Fund having to pick up any slack. However, the stark reality is that unless some amendments to legislation are made, many individuals will be made bankrupt. Surely we have a duty, as legislators, to prevent that. This is individual employers who were doing the right thing for their employees at the time, to ensure that their employees had a healthy pension in their retirement.

Over the years, Ministers have often referred to “easements”. However, statutory easements do not cover all situations—in particular, where an employer has retired or ceased trading or has triggered a section 75 debt prior to the closure of the pension scheme to future accrual. As my hon. Friend the Member for Perth and North Perthshire said, there is a small group of some 30 retired unincorporated ex-employers for whom no easements have ever applied. They are unable to use a deferred debt arrangement as that is only available for limited companies, and in any event, the scheme closed for future service in June 2019, meaning that the deferred debt arrangements cannot be used by a closed scheme. In addition, having been unincorporated businesses that have now ceased trading, they cannot apportion their debt to another business or person, so they have no easements or recourse available to them at this moment in time.

Due to a failure of notification, this group did not even know that they had debts until it was too late for them. The average debt that this group faces is some £500,000, with the highest being £1.2 million. Nobody benefits if these people are made bankrupt. The reality is that, if they are made bankrupt, the total debts will not be recovered. Critically, the pension fund will not be materially financially stronger even if these individuals are pursued and they lose their homes and are made bankrupt. Such punitive action is in no one’s interest. That is why we want these modest changes to be made.

In Committee, the Minister stated:

“The new clause would be unfair to those employers previously connected with the scheme who have already paid their section 75 debt”.––[Official Report, Pension Schemes Public Bill Committee, 5 November 2020; c. 123.]

He also stated that

“the new clause would weaken the protections contained in the current deferred debt arrangement system. We need to balance the needs of the affected employers with the risks to scheme members and other employers.”––[Official Report, Pension Schemes Public Bill Committee, 5 November 2020; c. 122.]

On the face of it, those are reasonable sentiments, but the issue is that so much of this debt—up to 60% of it—is orphan liabilities. There is an inherent unfairness in the way that the debts have been assessed, accumulated and attributed. We need to find solutions, rather than argue about ifs and buts as a way out of doing so. Otherwise, financially strong businesses can still be stuck with a huge, often unpayable debt, which takes a grave personal toll on the individuals involved.

While there are some options for managing or delaying section 75 liabilities available to those currently trading, there is little help available to those who have already retired. Our new clauses try to strike the right balance. The adjustments proposed in the revised new clause 4 are designed to narrow the focus of the amendments proposed in Committee to make it clearer what factors pension scheme trustees or managers should take into account when considering the application of de minimis discretion, and to make it clear that de minimis discretion should not be to the detriment of the pension scheme overall. That hopefully addresses some of the Minister’s concerns about fairness.

The Minister said that 0.5% in itself might be a small threshold, but there is concern about the cumulative effect of a number of 0.5% disregards. We need to stop finding reasons not to do something. The additional stipulations in new clause 4 should give added comfort in that regard, particularly the non-detriment aspect of the overall scheme.

New clause 5 would permit employers in a pension scheme closed to future accrual to apply for a deferred debt arrangement providing that they meet the other statutory tests. This would allow a deferred debt arrangement to be put in place where an employer triggered section 75 before scheme closure but did not have a DDA in place. Although the trigger for the deferred debt arrangement happened pre-closure, the employer must still meet the statutory test for a DDA; in other words, an employer must still be trading and have an ongoing contractual commitment to the scheme. This is needed to support employers who are still trading and otherwise trapped and forced to continue trading, unable to sell on or transfer ownership of the company.

I say to the Minister that we need to remember that some people are literally working themselves to death, unable to retire. I have constituents who are unable to stop working because of the section 75 debt and liability that hangs over them. A couple of years ago, a medium-sized company in my constituency stopped trading, but it is a safe bet that the individual who is the owner of that company still has a section 75 debt issue remaining. Action is required. As my hon. Friend the Member for Perth and North Perthshire said, it would be great if we could just make some progress tonight and if the Government supported these modest amendments. Just think of the relief that this could bring to many individuals. If the Government are not willing to do that, I look forward to hearing what their solution is instead.

--- Later in debate ---

However, the crucial point is surely this: the current legislation already provides a discretion for trustees not to pursue employers’ debts if they decide that it would be too costly or too lengthy to seek a recovery. Trustees also have the flexibility to collect reduced employer debts without compromising their Pension Protection Fund backing if they are funded above a section 179 basis, but, with no disrespect to the proponents of these measures, this is a decision ultimately for the trustees to take and it is the trustees who need to look at themselves to consider whether they wished to pursue this debt—

[Alan Brown]

One of the issues is that trustees have a legal duty in terms of the trust. At least this amendment would make it much easier for the trustees to implement not chasing up the debt. If somebody has a debt of £1.2 million, who defines what is too costly for the trustees to decide to chase that debt? That is part of the issue.

[Guy Opperman]

With no disrespect, that is a matter for the trustees. The hon. Gentleman can make the case to the trustees as to whether it would be too costly or too lengthy to receive a recovery.

In respect of new clause 5, the deferred debt arrangements were introduced as an easement to help employers struggling to manage their section 75 debts in an open non-associated multi-employer scheme. The new clause, I am afraid, offers only a temporary respite at best. The debt would still exist and would have to be paid in the future. The employer would have to pay potentially a larger section 75 debt in future if the scheme’s funding position declined further. The employer would also remain liable for deficit repair contributions. The amendment would not, I suggest, help sole traders who want to retire, or who have retired, and want to completely end their liability of the scheme.

In respect of new clause 2 and the Pensions Commission, I am afraid, as I have repeatedly made clear to the hon. Member for Airdrie and Shotts (Neil Gray), that this is not something that the Government can support.

I finally turn to new clause 1, which was proposed by the right hon. Member for East Ham (Stephen Timms) and the Chair of the Select Committee. It is quite clear that there is a common intent across the House to improve guidance to individuals. I cannot support his amendment, not least because it would potentially apply, so I am advised, to defined benefit as well as defined contribution. It is something that would massively enhance the workload of Pension Wise by at least 10 times. He will be aware that there are more than 4.4 million individuals with unaccessed DC pension wealth aged 45 to 54 in the UK. In 2019-20, Pension Wise processed 200,000 transactions. I respectfully suggest—

Oral Answers to Questions

Alan Brown Excerpts

Monday 19th October 2020 Commons Chamber

[Justin Tomlinson]

We have been clear, following our comprehensive review, that there will be three themes: we will change the six-month rule, we will improve consistency and we will raise awareness of the support available. Only last week, I met the MND Association and the Minister for Prevention, Public Health and Primary Care as we work at great speed to bring forward those much-needed changes.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

What assessment she has made of the effectiveness of universal credit in reducing levels of poverty.

[The Parliamentary Under-Secretary of State for Work and Pensions (Will Quince)]

The latest statistics from 2018-19 show that the rates and numbers of people in absolute poverty were lower than in 2010. Since those statistics were published, we have injected a further £9.3 billion into our welfare system, including an increase to universal credit of up to £1,040 for this financial year.

[Alan Brown]

The reality is that that is not enough. Thanks to the efforts of the Scottish Government to mitigate the worst impacts of austerity, Scotland has the lowest child poverty rates, but the impact of UK Government policies means that 4,600 children in my constituency are estimated to be living in poverty, which is absolutely shameful. Will the Minister listen to the calls of the End Child Poverty coalition and the likes of Macmillan Cancer Support and pledge to keep the £20 a week universal credit uplift to avoid putting more families and children into poverty?

[Will Quince]

One child in poverty is one child too many. We at the Department are continuing to work with Her Majesty’s Treasury and other Government Departments to monitor the evolving economic and labour market situation and identify the most effective ways to help people to stay in or close to work, both now and in future. It is important to stress that Her Majesty’s Treasury published a distributional analysis that assessed the impact of covid-19 on incomes compared with the incomes of working households in May 2020. That analysis showed that the Government’s interventions have supported the poorest households the most.

Universal Credit: Delayed Roll-Out

Alan Brown Excerpts

Tuesday 4th February 2020 Commons Chamber

[Will Quince]

I meet all sorts of organisations up and down the country, and they often raise some of the issues that the hon. Gentleman raises. Where there are issues with our system that I can make changes to quickly, I look at them, and if they do not have a huge fiscal impact, I will make them. Otherwise, we have to look to fiscal events. However, universal credit is an evolving process. If there are improvements that we can make—and I believe that there are—we should make them. I am looking at those very closely; if the hon. Gentleman has ideas, I would be happy to hear them.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

The National Audit Office has said there is no evidence that universal credit gets people into work, and that there is no way of measuring it from the Government’s perspective. The roll-out of universal credit in my constituency has caused council housing rent arrears to double, so that is putting a burden on local rent payers. In November 2018, income assessment period deductions for people getting two pay packets were found to be illegal. The Minister says he has lots of ideas to improve universal credit; can he give us an idea to improve at least one of those aspects?

Oral Answers to Questions

Alan Brown Excerpts

Monday 7th October 2019 Commons Chamber

[Dr Coffey]

There is an extra £600 million of support going to the most vulnerable. I really do want to encourage the Opposition to withdraw their early-day motion, because if they succeed in praying against this, they are hitting the most vulnerable people, and I am sure that is not something that they wish to be remembered for.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

10. What assessment she has made of the implications for her Department’s policies of the spending round 2019.

[Marion Fellows (Motherwell and Wishaw) (SNP)]

12. What assessment she has made of the implications for her Department’s policies of the spending round 2019.

[The Secretary of State for Work and Pensions (Dr Thérèse Coffey)]

The Department’s resource budget will increase by 1.9% ahead of inflation for the first time since 2011, enabling us to provide excellent customer service, help people move into and progress in work, and provide financial security through timely benefit payments. As part of this, the DWP has been allocated £106 million to support vulnerable people and help to tackle private rented sector housing affordability through additional funding for discretionary housing payments.

[Alan Brown]

The Joseph Rowntree Foundation has highlighted that, with more social housing and lower housing costs, Scotland’s poverty figures are lower than the rest of the UK. The reality is that the biggest poverty factor is still Tory austerity. The Institute for Fiscal Studies has estimated that recent announcements will only mitigate a quarter of the cuts implemented since 2010. It is clear from the Secretary of State’s answer that a 1.9% increase is not enough. If austerity is really ending, when will the other three quarters of the cuts that have been implemented be reversed?

[Dr Coffey]

The hon. Gentleman will be aware that the Government have lifted 400,000 people out of absolute poverty since 2010 and that income inequality has fallen. I encourage the hon. Gentleman to go back to the Scottish Government and see what more they are doing to increase the number of higher paid jobs, because we all know that the best way out of poverty is to work.

Personal Independence Payments: Supreme Court Ruling

Alan Brown Excerpts

Tuesday 23rd July 2019 Commons Chamber

[Justin Tomlinson]

We have made a real commitment, and we work closely with stakeholders representing a huge variety of disability and health conditions, empowering them to challenge, to make suggestions, and to work with our teams to help shape the training guidance. That is why an increasing amount of money is being spent each year on supporting people with disabilities and long-term health conditions. As I said, at £55 billion a year, spending is up £10 billion since we came to office. That is a record high, and it will continue to increase as we work, listen and engage with the people who have frontline experience, which the Government have committed to do.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

I have a constituent who is rebuilding his life after spending some time in jail. His mental health condition means that he has communication issues and that crowds are a problem for him, which makes travel on public transport more problematic. All of that makes it difficult for him to maintain family contact and access the necessary support groups. He was denied PIP despite my office sending supporting letters and trying to help him hit the PIP descriptors. What changes will the Government make to the system so that my constituent will get the support that he deserves, as in the Supreme Court ruling, and be able to go forward and fully integrate into society?

[Justin Tomlinson]

I would be happy to look at that specific case. On the broader point of supporting people transitioning from prison back into society, I pay tribute to the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Colchester (Will Quince), who has responsibility for family support. He has been working with the Minister of State, Ministry of Justice, my hon. and learned Friend the Member for South Swindon (Robert Buckland), the prisons Minister, to make sure it is joined up. We have had successful trials to make sure that work coaches go into prison in advance of a person’s leaving, as it is key that those who need the support can access it as quickly and as smoothly as possible. The case raised by the hon. Member for Kilmarnock and Loudoun (Alan Brown) highlights why that is so important.

Universal Credit: Managed Migration

Alan Brown Excerpts

Monday 22nd July 2019 Commons Chamber

[Amber Rudd]

I simply do not recognise the hon. Gentleman’s characterisation either of my ministerial colleagues or of the intention of universal credit. The hon. Gentleman describes his jobcentre in some detail, and I expect he knows some of the work coaches who do such a remarkably good job engaging with individuals and trying to help them into work. I ask him to remember that before he describes the system as not fit for purpose. The former system was not fit for purpose, with six different benefits from three different places and no personal interaction. Universal credit is much more positive for his constituents and for mine.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Will the Secretary of State look at the system that encourages claimants to take out a new enterprise allowance to go into business, but one year down the line, when they might still be building up that business, the system assumes that they are earning a minimum amount? A Kilmarnock couple came to my surgery on Friday to say that they have been left with absolutely no income because their UC assessment has assumed wages that they are not making. They are in hardship, and it is quite possible that businesses will fail as a consequence of this system. Does she agree that that is another example of why universal credit is not fit for purpose?

[Amber Rudd]

I want to take this opportunity to say that the new enterprise allowance has been a great success in supporting businesses, and I am pleased with how it has been picked up by MPs and constituents. As for the one-year policy that the hon. Gentleman referred to, we must ensure that we get the right balance between supporting enterprise and making sure that taxpayers are supporting businesses that have a strong future. If he feels so strongly about it, he will no doubt want to make a submission to the spending review at the end of the year, but I think that the balance is right at the moment. We have to think about whose money it is, how it is spent and where work will be available to people.

Oral Answers to Questions

Alan Brown Excerpts

Monday 1st July 2019 Commons Chamber

[Alok Sharma]

Of course. The Secretary of State, I and all colleagues want to ensure that absolutely every single person claiming universal credit gets the appropriate support and the right level of support. I would be very happy to look at that individual case with the hon. Lady. I would just say on sanctions that these are not just handed out; there is a clear process. I can tell her that, in February 2019, only 2.45% of those who were under conditionality requirements actually had a sanction and the average sanction’s length was 30 days. But I will look at that case for her.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

My constituent, Craig Ferguson, has Asperger’s, but works in retail. He broke his leg, was not entitled to statutory sick pay and was advised to switch to UC. He then lost his severe disability premium. His UC has automatic deductions for an employment support allowance overpayment and, at times, he receives no UC award at all, which means that he has to depend on savings. How is that fair? Can his case be reviewed?

[Alok Sharma]

Of course, I am happy to look at that individual case. Perhaps the hon. Gentleman will get in touch with my office after this session.

--- Later in debate ---

[Guy Opperman]

I cannot speak on the specifics of the individual scheme, but the majority of the employers in these schemes are incorporated and are not personally liable for any debt. The flexible apportionment arrangement can be used to help unincorporated employers who wish to incorporate, and the plumbing pension trustee has a streamlined flexible apportionment arrangement process that employers can use. Alternatively, where the employer debt arises in multi-employer schemes as a result of an employer cessation event, there are a number of mechanisms in the occupational pension schemes employer debt regulations that can be of assistance.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Rubbish.

[Mr Speaker]

I think that is the technical term.

Local Housing Allowance: Supreme Court Ruling

Alan Brown Excerpts

Thursday 13th June 2019 Commons Chamber

[Will Quince]

The hon. Gentleman raises a good point. Those groupings are based on broad rental market areas, and in some parts of the country they pose an issue. A number of Members from across the House have raised this issue with me and I am looking at it.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Under this Government we have seen the introduction of the bedroom tax and universal credit, both of which are causing rent arrears, and the Minister has actually admitted that UC delays are leading to an increase in prostitution. He says that the reason for the freeze in LHA rates, which is now making people homeless, is to stop the private rented sector being subsidised, yet another Government policy is leading to increased numbers of properties in the private rented sector. The right to buy has resulted in 75,618 sales and over 21,890 new starts since 2012, leading to a further imbalance between public and private sector housing. When will this Government get a joined-up, just social policy?

[Will Quince]

First, I want to correct the record. I did not make those comments at the Work and Pensions Committee yesterday, and if the hon. Gentleman checks the record he will see that that is the case. Since the freeze, LHA rates have been adjusted through targeted affordability funding, as I mentioned earlier. In addition, over £1 billion has been made available since 2011 in discretionary housing payments. I have made it clear that the freeze ends in March 2020 and, ahead of a spending review bid, I am looking at numerous options.

Employment and Support Allowance: Underpayments

Alan Brown Excerpts

Monday 25th February 2019 Commons Chamber

[Sarah Newton]

If people have not got any money and are destitute in the way that the hon. Gentleman describes, they need to go to their jobcentre and speak to their work coach. They can be signed up to universal credit and go away with an advance on the same day. I wholeheartedly agree with the more general point about making sure that we make the right decision the first time so that people are not delayed by going through mandatory reconsideration and appeals, and that is what we are working to do.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

When it comes to the 20,000 deaths, the Minister says that we as MPs cannot draw cause and effect in terms of underpayments. But surely, as a Minister, she cannot rule out any contributory factors unless we have a proper review and investigation into the circumstances in which those people died and what the effect of underpayments was. When will that review and investigation take place?

[Sarah Newton]

Let me reassure the hon. Gentleman and other Members that if anyone makes an assertion to the DWP that in some way the treatment of someone’s benefits contributed to them taking their own life, that matter is taken extremely seriously and a full investigation is undertaken into the circumstances.

Universal Credit

Alan Brown Excerpts

Monday 14th January 2019 Commons Chamber

[Alok Sharma]

A clear set of criteria determines whether someone can claim universal credit. If the hon. Lady has a specific case or specific sets of cases, she should come to discuss those with me.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

rose—

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

rose—

[Mr Speaker]

Ooh, what a taxing choice! I call Mr Alan Brown.

[Alan Brown]

A good choice, Mr Speaker.

Following on from the question asked by my hon. Friend the Member for Central Ayrshire (Dr Whitford), has the Minister assessed how many EU citizens who have made their lives here are now routinely being turned down for universal credit? I am thinking of people such as my constituent Laura Nani. Until we got the decision overturned last week, she would have been evicted for rent arrears, and left homeless and penniless. When will the Minister look into this? Will he apologise to my constituent for the DWP getting it wrong? I note that the Prime Minister is sitting next to him, and when I raised this matter at Prime Minister’s questions, she dismissed it out of hand.