I thank the hon. Gentleman. I have said many times at the Dispatch Box that I admire the way that he contributes and offers support in trying to help some of the most vulnerable people in society. There were two aspects to his question, the first of which was about general communication. These are fast-moving events, and all constituency MPs are getting a lot of correspondence that asks very reasonable questions. We are trying to give answers that are as good as possible, but we really have to keep pushing people towards the gov.uk website, on which there is consistent communication. On the second point about a minimum net, that is where the welfare system comes into play, because statutory sick pay—it is important, and I will go over that—applies in only some cases, whereas the welfare safety net applies to all who need it.
I have worked very closely with the hon. Lady on a number of issues, and I know that she is held in huge respect across both sides of the House.
Prior to being an MP, I ran my own business, so I understand the concerns of self-employed people who have suddenly overnight seen dramatic changes to their cash flow and ability to trade as a business. I absolutely understand the worries that people will have, which is why we are allowing access to statutory sick pay or, depending on people’s personal circumstances, looking at whether they can turn to new-style ESA—the contributory benefit—which is probably the case for the self-employed, or the wider support offer through universal credit and the welfare net. People would need to look at their circumstances and talk to the jobcentres. We are all trying to do our best to provide as much certainty as possible, as quickly as possible, through the daily updates.
I would ask the hon. Lady to work with us on UC and with her local jobcentre. The National Audit Office recently commented that the right thing is to continue with UC. I understand that it is often difficult for individuals who are concerned about moving from the six legacy benefits to one benefit, but my experience from talking to people is that even though they were concerned, once they are on UC they almost exclusively say that it is a better system than the previous one.
I would hope that the possibility of evictions will be reduced by our new plans to allow many more people to have their rent paid directly to housing associations and, increasingly, to private landlords. The hon. Lady raises an interesting point, and she needs to give me an opportunity to look at it; perhaps she would like to come to my surgery in the House of Commons next week or write to me about it.
The geography of south Wales is quite unique and people have to navigate the transport difficulties to which my hon. Friends have alluded on a daily basis. There are huge difficulties in access across valleys and from parts of south Wales to others and the transport links need to be addressed.
If the closures go ahead, they will decimate the economies of town centres across south-east Wales—town centres that are already struggling to cope. The DWP is planning to relocate staff to a site that, until last week, was known only as “north of Cardiff”. Last week, we had confirmation that it has signed a lease for a site on Treforest industrial estate. It was probably the worst-kept secret, but anyway it has now been confirmed.
In January, I and my Welsh Assembly colleague, Dawn Bowden AM, along with members of the PCS union, undertook an early morning journey on public transport to the proposed new site. It proved that to get to the new location by public transport will, for some existing employees, involve travel by train and bus, and walking a distance through a poorly lit industrial estate, which will undoubtedly be a major challenge in the winter months. The journey took all of two hours.
The site has poor access from the nearest train station along a narrow road with no pavement and my understanding is that it will have 1,700 full-time equivalent roles, but initial observations show that the car parking provision would be limited. There is a clear expectation that members of staff will travel by public transport, but it is also clear that many would find it extremely difficult to make that daily journey by public transport. Some members of staff already commute long distances to get to their workplace in Merthyr Tydfil as a result of previous DWP workforce reorganisations. Having to travel even further would, in many cases, cause hardship.
The construction of a brand-new building with a view to lowering costs seems a little confused. In many communities across south-east Wales, there is an opportunity to look at existing buildings, which would undoubtedly have a competitive financial case and retain jobs and viable office space in town centres. Alternatively, if a large employer such as the DWP pulls out of town centres, buildings such as the former tax office in Merthyr Tydfil, which closed nearly a decade ago, will remain empty and become dilapidated over time, often becoming a blight on the local community and impacting heavily on the wider public purse in the medium to long term.
UK Government offices are currently based in a number of towns in south Wales, supporting local jobs and economies. I am bound to highlight the opportunities that exist in Merthyr Tydfil. The option of retaining current jobs and having an enhanced presence is more than worthy of consideration. The current DWP office in Merthyr Tydfil is well-established and the staff turnover rate is low. Many employees have worked in that location for a long time and are committed to providing a good service to the public, and the local jobs market means that vacancies in Merthyr Tydfil are filled quickly and applicants remain in jobs. The DWP office is modern and has space for additional staff. Traffic congestion coming into Merthyr Tydfil at peak times is minimal in comparison with larger towns and cities and would mean that staff and customers would gain easy access, whether for employment or accessing the service.
I hope the Minister will comment on the concerns I have raised. Has the DWP yet undertaken an equality impact assessment regarding members of staff? DWP announced the proposed closure of Merthyr Tydfil benefit centre along with others in the south Wales area, yet, to date, local, district and senior managers state that equality impact assessments have not been completed or even commissioned. I received a letter in July last year from the then Minister for Employment, stating that an equality analysis was due to take place, so I would be extremely disappointed and annoyed if, after nearly 12 months, that had not happened. I cannot understand how the decision to close a site that provides quality jobs in such a deprived area of south Wales can be made without an equality impact assessment being carried out and its findings being considered. Surely carrying out an impact assessment on such a move is an essential first step.
An announcement was recently made that staff on fixed-term appointments in Merthyr Tydfil benefits centre will not have their contracts renewed, meaning that there will be at least 40 fewer staff by the end of the year. Yet the work will still need to be processed. Staff at the centre are concerned that current workloads will be exported to other sites, some possibly outside of Wales. They are concerned that something is being kept from them. Does the DWP have plans to close the site earlier than originally announced?
I wholeheartedly agree. My hon. Friend’s point reinforces the point about having access to quality jobs and services in local communities.
The plans for the Merthyr Tydfil office have caused real concern in my community. The workforce are clearly concerned. The local and regional branches of the PCS union have raised objections. I and a number of Parliamentary colleagues from across south-east Wales have raised concerns. My Welsh Assembly colleague Dawn Bowden and many of her Welsh Assembly colleagues have raised concerns. Local traders and employers in the town are also concerned.
Although the Minister may ignore some of those concerns, I feel sure that he would not wish to ignore the concerns of the newest Conservative Association in the UK, the Merthyr and Rhymney Conservative Association, which stated in March that it also objects to the relocation of those jobs. I understand that the association has written to the Minister to raise its objections:
“Merthyr Tydfil and Rhymney Conservatives are against this move as we believe the 200 jobs should be kept locally and not moved down the valley. We believe this would have a negative impact on workers by increasing commuting times and adding extra travel costs which would impact their cost of living.”
The deputy chairman for membership also said:
“I believe the proposed move of the DWP office to Treforest will have a detrimental effect on the current 200 strong workforce. I am a strong believer in the idea that local jobs should be for local people hence why we have contacted the minister in a bid to get him to re-think this decision which could potentially have a wide impact on the wider economy.”
Perhaps the Minister will share his response and confirm whether he agrees with his Conservative colleagues.
I have serious concerns that such huge changes for staff and customers are being taken forward at a time when universal credit is about to be rolled out in the area. Universal credit has proved to be challenging in many other areas. For the staff to be worried about their future while dealing with a major policy change is not a constructive or a timely mix.
Will the Minister confirm whether an equality analysis has been carried out regarding Merthyr Tydfil benefit centre? The DWP prides itself on being a diverse and inclusive employer and has many disabled and vulnerable workers. As we know, the public sector equality duty in section 149 of the Equality Act 2010 requires public authorities, including Government Departments such as DWP, to consider the potential impact on people with protected characteristics when making policy decisions and delivering services. The PCS union has been vocal in demanding that a full equality impact assessment and health and safety review be carried out.
Why is the DWP ignoring the Government’s green policy, which is trying to reduce the number of cars on the road, by relocating service centres to an industrial estate with poor public transport links? Why is the DWP ignoring the Welsh Government and the TUC’s “Better jobs in local areas” campaign by relocating away from local communities to centralised locations in cities or remote industrial areas?
Finally, why is the DWP suddenly not renewing the contracts of staff on fixed-term contracts, leaving sections decimated and unable to function? Is it planning to close the site earlier than announced? I would be grateful for the Minister’s answers to those queries in the hope that he can quell some of the concern, anxiety and growing anger about the decision, which does nothing to support local town centres and economies, or to protect local jobs.
With respect, this matter was debated at great length in 1995 and in 2007, under the Labour Government, and they could have altered the decision if they wished to do so. At that stage they took the view that the changes were fiscally sensible, and in 2011 the matter was again debated by Parliament and there was a concession of £1.1 billion, after much consideration by this House.
With respect, this matter has been debated since 1995—long before the hon. Lady and I arrived in this House—and successive Governments have taken a similar view on the appropriateness of the action, based on affordability, workability and the applicable equality legislation.
Yes, indeed. My hon. Friend is quite right about the enthusiasm of jobcentre staff for universal credit, because it enables them to do more of what they want to do, which is to help people to get on and get into work. I can confirm to him that, yes, computers are available in jobcentres, and assistance is available when needed.
What I would say to anyone—Members of Parliament, newspapers, advisory bodies and food banks—is that we need to make sure that the facts are set out to new claimants: if they need to get access to support, they can get it quickly; they need to get in contact with their jobcentre; and they are able to access an advance, and they can get that money before Christmas.
It is a pleasure to follow the hon. Member for Coventry South (Mr Cunningham), and I congratulate the hon. Member for Easington (Grahame Morris) on securing this important debate. I am here to speak on behalf of my North Cornwall WASPI women. I have met them numerous times at different events over the past two and a half years. I presented a petition on their behalf last year, and many of them have come to see me at surgeries in the towns and villages of my constituency to express their concern about the challenging times that many women are facing. Other hon. Members have alluded to some of those challenges today.
Most people who come to see me have worked their entire life. They might well own their own home and not be in a position to make the transition for those 18 months. I support transitional measures for our WASPI women, and I believe we can reach a practical solution by reducing the state pension over a longer period of time. Private pension providers already allow that. The option should be given to people with public pensions.
The changes in 2011 were rushed and wrong. The equalisation of pensions from 1995 was the right thing to do but, with increases of between two months and 18 months, people have suffered in different ways, which we should acknowledge. People should be able to take their pension earlier, or have the option to wait and have the £159 a week, as it currently sits. I have produced some figures, and my benchmarks are based on the current life expectancy for a woman in the UK of 83 and the pension age in 1995 of 66.
At the moment, the state pension is £159.55 a week. Over the 17 years leading up to average life expectancy, the pension would cost just over £141,000. I have done some modelling based on £130 a week, £140 a week and £150 a week for a reduced pension over a longer period. I have used the baseline to measure that against the least affected women, those affected for two months, and the most affected women, those affected for 18 months.
I put together my proposals over the past few days. The conclusion I have reached, according to the figures, is that the only group that would be affected if the proposals were introduced are the people who have to wait for 18 months, the most affected group. Even then, the Government would have to find only £2,357 over the lifetime of the pension. All the other models come out positively for the Government. We should do this as a gesture to the affected women.
Will the Minister sit down with me to look through my figures to see whether there is a satisfactory solution to the problem? I am happy to meet him if he is happy to meet me. We should consider a sensible way forward. I am not entirely sure I will be here for the winding-up speeches, but I would welcome the opportunity to meet the Minister at a later date to discuss a practical solution.
Does my hon. Friend agree that there are still loads of inconsistencies, such as that a one-year change in date of birth means an additional three years to reach the pension age for some of these women? That makes the way in which the Government have introduced these changes even more illogical.
Order. Before I call the hon. Member for Waveney (Peter Aldous) to begin his speech, let us make it very clear that we do not have cheering and clapping in any part of this Chamber. We do have, “Hear, hear” and we do have smiles and laughs, but we do not have cheering and clapping.
Equalising the state pension age between men and women is a principle about which the UK Government, the WASPI campaign and I am sure all of us in the Chamber agree. However, there is rightly concern about the unfair and disproportionate impact of the 2011 reforms on women born in the 1950s, and this concern is shared by Members on both sides of the House.
Some 5,200 women in my constituency are affected. Since the general election in June, as Members might imagine, I have been meeting local women who are affected by the changes and who, in some cases, have had to change their retirement plans radically because they were not made properly aware of the changes made by 1995 Act.
One constituent I recently met was employed by NHS Grampian for 39 years. She worked hard and full time for her whole working life, with no maternity leave and no long-term sick leave, until in 2014, during her last few years of work, she had to take a couple of months off for health reasons—first due to cancer of the womb, and subsequently cancer of the bone marrow. She requested retirement, and she was 60 on 1 December 2016, but because of the changes to state pension policy, she is not receiving a state pension, even though she paid in, in full, during her 39 years of working. This has caused her great strain and worry, and she is naturally concerned about her finances.
Last Friday, I met a 61-year-old constituent who expected to receive her state pension in 2016. She also contributed through national insurance for more than 40 years. When she received her first letter about the age changes from the DWP back in 2013, she was in full employment and good health, but her circumstances changed in 2015, when she was made redundant and diagnosed with breast cancer. I am thankful that my constituent has made a recovery following successful treatment to date, but she finds herself with no income, and the downturn in oil and gas in Aberdeen has made it very difficult for her to get even a job interview. At the moment, therefore, she has to rely on the very pot of savings that she worked hard to build up.
I wanted to highlight my constituents’ cases as a reminder that the state pension system is founded on a contributory principle. It is not a welfare benefit. Those cases show that this group of women have done the right thing. They worked hard all their lives and paid their dues in good faith, but now they face being completely short-changed. That is not fair.
We have heard a lot of bluster from SNP Members, but let us be clear that the Scottish Government have the powers to make a change. Their record clearly shows not only their incompetence, but their refusal to use those powers. Let us be absolutely clear: my constituents know that I will make their voices heard loud and clear in this place.
On shattering lives, the life expectancy for women in my constituency is among the shortest on these islands. This is a brutal attack on their end-of-life progress, especially if they are living with a short-term condition that will come to a brutal end with no pension from the Government.
Obviously, this is a UK-wide issue, not one that applies only to women in Scotland. The women I have spoken to are not looking for the kind of crisis grants that the Scottish Government can deliver. They do not want to go begging. They actually want what they are due.
Over the past two and a half years I have met many constituents who have been directly affected by the various changes to the state pension age. Listening to them, it is impossible not to feel every sympathy, given the circumstances in which many find themselves. If I suddenly found out that I would not be able to retire at the age I had expected, I am not sure that I could say how I felt—actually, I probably could, but I fear my language would not be parliamentary.
As a teenage boy in the early 1990s, I probably did not pay as much attention to women’s pensions as many other people did, but I do remember the announcement in 1993 that the state pension age would have to be equalised upwards. There was widespread publicity at the time, through the media and the leaflets that have been referred to. None the less, it is clear that many women, for one reason or another, were genuinely unaware of that. As late as 2012, 6% of the women affected still expected to retire at 60, despite the Department for Work and Pensions having sent out 11 million leaflets and letters. However, that was significant progress since 2004, when just 73% of the women affected were aware of the 1995 reforms.
Clearly there are solid reasons why successive Governments here and in many other developed economies have been increasing and equalising the state pension age. The fact that even a relatively small proportion of people affected were unaware of changes that will have such a large impact on their retirement raises broader issues about how public authorities communicate pension matters, and Government at all levels need to consider that.
The truth is that the state pension age will not be reduced to 60—arguably, that would be illegal under anti-discrimination legislation—so we must look at what can be done not only to help those women born in the 1950s back into work, but to help all those who will find themselves working later in life. I hope that the Government can come up with further suggestions on what support can be provided.
In 2012, overall participation of female eligible employees in a workplace pension was 58%, but since the introduction of automatic enrolment this had increased to 80% in 2016. For males, this has increased from 52% to 76% in the same period.
The Government will not be revisiting the state pension age arrangements for women born in the 1950s who are affected by the Pensions Acts of 1995, 2007 and 2011. This would require people of working age, and more specifically younger people, to bear an even greater share of the cost of the pension system.
I am not going to give way. I have only a minute left.
The Minister has accepted, as the Secretary of State did last week, that the system was not paying people fast enough initially, but also pointed out that the more recent figures showed that the Department had speeded up the payments, and that it has refreshed the guidance to ensure that people can receive advance payments, which I think is very sensible. [Hon. Members: “Loans.”] They are not loans; they are advance payments. Anyone who earns a salary is familiar with the concept of an advance.
I have looked at all the issues that the hon. Member for Oldham East and Saddleworth raised last week. The Secretary of State dealt with each and every one of those issues thoroughly during the debate, but the motion, which called for a pause, did not give a single reason why the Government should pause roll-out. The Secretary of State, the Minister and the Leader of the House have made it clear that as we develop changes in the policy, they will be reported to the House. That is why I do not find it surprising that after only three sitting days—as was pointed out by my hon. Friend the Member for North Dorset (Simon Hoare)—Ministers had not come to the House.
I think that the Minister set out the position very clearly today and that the House has debated it very clearly, and I therefore think that people should have confidence in a policy that will get more people into work.
Does my hon. Friend agree that it is one thing for the Government to ignore Opposition Members, but it is another thing—and foolhardy and irresponsible—for them to ignore organisations such as Shelter, Citizens Advice, Gingerbread and the Child Poverty Action Group, to name but a few, which are at the forefront of dealing with the chaos of this roll-out?
The hon. Lady is making a powerful speech. Does she agree that if the Government had a heart, they would put that pause on the roll-out of universal credit—and, indeed, on other benefit sanctions—before Christmas, so nobody goes without over the Christmas period?
The hon. Lady says there is mayhem. In my area, universal credit was rolled out 15 months ago, and although there are undoubtedly some problems, it is certainly not mayhem, and the measures introduced by the Government in recent weeks will fix the vast majority of the problems. So may I give the hon. Lady, and hopefully her constituents, the comfort that this will not be mayhem?
Last week we had a Labour Opposition day debate on pausing the roll-out of universal credit, and now we are debating the outcome of that Opposition day debate. Universal credit is a great move forward in how benefits are claimed. It is replacing an outdated system—a system which is complex, and which I have seen from my own experience in my constituency discourages people from working for more than 16 hours a week. Many of my constituents have wanted to work more than 16 hours a week and have said that it is just not worth the hassle, because if they were to do more than 16 hours even for a short period, they would be affected and could be left in financial difficulty, with waits for benefits to be reinstated.
Universal credit will ensure that people are better off in work and will make it far easier for constituents who want to work more hours and gradually increase hours to be better off, and to be able to do that without the stress or worry about the impact. This is a gradual roll-out over nine years, moving from 8% of the claimant count to 10%, and all new claimants. The number of people on universal credit as of the summer was 590,000, and 230,000 of them—nearly 40 %—were in work.
As with all policies, implementation is key. Of course when we move from an extremely complex system to a more simple system there will always be things that crop up, which the Government then work to address. That is shown by the fact that the Government are doing a gradual roll-out.
It is not just in Wales that that happens, but in other deprived areas of the UK—the north-east and south-west.
The Government claim to be making the changes in response to increases in life expectancy, but life expectancy varies significantly from region to region. Wales will be particularly hit. In some parts of England newborn babies might now expect to live to the age of 87, but in parts of Wales they might expect to live to just 76. Payments in might be equal, but payments out vary enormously. I urge the Government to phase in transitional state pension arrangements for all WASPI women. That requires a bridging pension and compensation for those affected, to cover the period between the age of 60 and the new pension age.
The voices of the women who have been so badly treated must be heard and heeded. Otherwise it might seem that the Minister believes that accepting unfairness and keeping quiet is just a girl’s job.
The WASPI women are angry and the Government are mistaken if they think, as I suspect they have thought up to this point, that if they hold firm the women will get bored—that they will be broken or beaten in the face of intransigence and give up. They will not give up. Even if they wanted to, they cannot. It is not a matter of pin money, but money to put food on the table and keep a roof over their heads. It is about being paid the pension to which they are entitled, so that they can have some kind of dignity in their retirement. They are not asking for a handout. They are not even asking for a hand up. They are asking for what is rightfully theirs—for what they should be able to expect.
The women have every right to be angry. Any fair-minded person who knows anything about the issue must surely be angry on their behalf. The delay to their pensions effectively deprives them of, potentially, tens of thousands of pounds. It is a travesty and must be addressed. Let us not forget that an attack on their pensions is ultimately an attack on the pensions of us all. The contract between the governed and the governing lies in tatters.
If the Minister feels that the Government have painted themselves into a corner and that retreat is difficult, I say this: there is courage and strength in admitting being wrong, in doing the right thing and in giving the women their due, not because the parliamentary arithmetic demands it but because it is right. I urge the Minister today to make the right choice and right a terrible wrong—to pay the women what they are owed, so that we can start to have a serious, mature and grown-up discussion about the future of state pensions. No one is opposed to the equalisation of state pensions. That is the way forward and I urge the Minister to start walking that path today.
I am going to set out these matters; please bear with me. In the 2017 Budget, the Chancellor allocated £5 million to increase the number of returnship schemes. We are working with employers across the public and private sectors to understand how returners can be supported back into permanent employment, building on successful examples run by companies such as Centrica.
I realise it is not going down well, but the point I am trying to make is that the Government are actually doing a significant amount to address the individual difficulties for those persons attempting to enter the labour market. Last year, the Government appointed Andy Briggs, CEO of Aviva, as the dedicated business champion for older workers, to spearhead work with employers on a business-to-business basis. I met Mr Briggs two days ago. He is clearly passionate about his mission to persuade employers to increase the number of older workers they employ by 12% by 2022. [Interruption.]
With great respect to the hon. Gentleman, the whole thrust of what he said in June 2016 was that there was no objection to the 1995 Act, due to the passage of time. He has now changed that position. I am only pointing out that the 1995 Act had a 15-year time limit. He knows full well that that is the case, and that that was his position at the time.
Sixteen years later, the coalition Government changed the approach in the Pensions Act 2011. The change was in a context where the impact of the post-war baby boom years is clearly still being felt. The number of pensioners is going up dramatically; notwithstanding any of the changes made by the 1995 and 2011 Acts, there will be around 25% more pensioners in 2050 than today. That is an extra 4.5 million pensioners compared with now.
Life expectancy has increased massively. In 1940, Government policy making indicated a retirement age at 60, and our forebears looked at a life expectancy of three score years and 10. Those days are long gone. A girl born today has an average life expectancy of 93. Those changes in life expectancies are significant, and the reality cannot be ignored. It is not ignored, and is set out in greater detail in the Cridland report, which looks at the future situation in relation to long-term pension age changes.
I have a minute and a half to finish, so I will culminate on this point. In 2011, there was extensive debate on those changes in the House of Commons. The matter was debated on a number of occasions between February and November 2011 in both the Commons and the Lords. Subsequently, the Department for Work and Pensions and the coalition Government made efforts to notify those affected, with 5 million letters sent out and a range of information provided, to make individuals aware of their state pension age.
I will make three final points. In relation to the transitional provisions, it is the case that the position was different in the original 2011 Act. Following extensive parliamentary debate in both the Commons and the Lords, that Act was changed such that no woman affected by the 2011 Act would have to wait more than 18 months from the date that they might have been expecting their pension. For some, the time will be much less. I also make the point that the new state pension introduced in 2016 is better and much more generous for many women than that which existed under the old system.
I congratulate the hon. Member for Easington on securing the debate. It is not the Government’s proposal to repeal or ameliorate the 1995 or 2011 Acts, but I accept that we must do all we can to assist everyone affected into retraining and employment, and to provide support if that is not possible. The commitment to provide support is clear, unequivocal and ongoing.
Order. May I remind the Front-Bench speakers that in 90-minute debates it is customary to make 10-minute speeches? I am being more generous because we are not so pushed for time, but 10 minutes is expected and not what we just had. Thank you.
I beg your indulgence, Mr Flello; I have been serving in a Bill Committee as the Opposition Whip. On the point about fairness, my hon. Friend will be aware that last week, on the Floor of the House, I asked the Prime Minister about my constituent Dianah Kendall and the impact of the state pension age changes on her life. The Prime Minister’s response was that no woman would wait longer than 18 months, but the reality is that many women will wait five, six or even seven years. That does an utter injustice to what she said on the Floor of the House.
It is a pleasure to serve under your chairmanship, Mr Flello. I congratulate you on having chaired this debate in a fair and exemplary manner, and for allowing those Members who were busy elsewhere in the House this afternoon the opportunity to speak, even if just briefly in an intervention. Important debates have been taking place this afternoon, and important work has been done in Bill Committees.
It is only right that I should take this opportunity to thank the hon. Members for Ross, Skye and Lochaber (Ian Blackford) and for Swansea East (Carolyn Harris) for being here. I know that they have been much occupied with the Under-Secretary of State for Pensions, my hon. Friend the Member for Watford (Richard Harrington) in the Pension Schemes Bill Committee, which explains why I am here instead of him. I thank the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) for opening the debate and hon. Members from all parties—and all parts of the British Isles, with the exception of Northern Ireland—who have contributed. It is most unusual for the hon. Member for Strangford (Jim Shannon) not to be present.
In recent decades, there has been a huge shift in how people spend later life. We are living longer, staying healthier for longer and leading far more active lifestyles, regardless of our age. More and more people are proving that age need not be a barrier to achieving great things. Some of the Olympians whom we sent out to Rio last summer were among the oldest athletes on record. I, for one, celebrate the fact that age increasingly places no bounds on those wishing to achieve new goals, try new things and play an active part in society.
The new state pension was introduced as a key reform to the UK pension system. The Government recognised that the pension system needed to change in response to the demographic and behavioural shifts of recent decades. For most people, we know that work is beneficial. It not only provides an income and a bedrock for saving, giving people greater control over their lives but crucially, the evidence shows that for most people, being in work can be immensely beneficial for both physical and mental health. The social and cultural benefits of remaining in work are sorely under-recognised. This Government’s pensions strategy does not focus only on the benefits to people. We know that the skills, experience and talents that older workers bring to organisations are invaluable. Older workers still have an incredible amount to offer.
It is also true that the living standards of pensioners have risen significantly, but we must remember that not all pensioners are in the same position. More than 1 million pensioners rely solely on the state for their income. That is why we introduced the triple lock in 2011 and have committed to continuing it over this Parliament. As well as guaranteeing increases to the state pension, we have fundamentally reformed it. Under our reforms, people will have a much better idea of what their pension will be, bringing more certainty and clarity where previously there was confusion. That design is integral to the Government’s ambition to provide a better foundation on which people can plan and build for a secure retirement. We want to make life easier and more comfortable for people in retirement.
If the hon. Lady will give me time, I will come to exactly that point later in my contribution.
It is important that we all recognise that the age at which we receive the state pension must rise. Life expectancy continues to rise, and it is a key priority for this Government to ensure the long-term sustainability of the pension system. For that reason, the Government have introduced regular reviews of the state pension age. The issue is also likely to feature heavily in the Cridland review, which will be published in the coming months.
We recognise that employment prospects for women have changed dramatically since the state pension age was first set in 1940, especially for the women affected by the acceleration of the state pension age. Alongside the age increases under the new state pension, we have made huge progress in opening up employment opportunities for women and older workers. Since the 1970s, women have seen repeated increases in employment rates in later life compared with their male counterparts. The number of older women aged 50 to 64 who were in work in 2016 stood at more than 4 million, which is a record high. Approximately 150,000 more older women are in work than this time last year.
The hon. Lady makes a valid point, but I would argue that there are also many men, and indeed many younger people, who have to be in work. We want to encourage more people to be in work and to play their part in society. As I said earlier, work is an important part of wellbeing. Work in itself provides emotional, physical and mental wellbeing effects.
The rate of employment for women aged between 60 and 64 is more than 40%—another record high. [Interruption.]
The hon. Gentleman is right, and this is not just a question of communication as in a formality—communication if there is a problem. We will be speaking to those points later. This is a point about communication and making sure that people know what they have, in the same way as a bank communicates, now mainly by the internet, so that people—
I will finish answering the previous intervention and then of course I will happily give way. The two points about communications are correct, and after the hon. Lady has intervened, I will do my best to go into the other point.
I smile, but not out of disrespect for the hon. Lady—quite the contrary. I knew that she would manage to bring in her favourite subject and I am grateful for the indulgence of the Chair in not declaring it out of scope, because she makes a relevant point. I nearly said “you”, Mr Rosindell. You would probably make it as well, if you were invited to speak on the subject.
The communication point that the hon. Lady raises has to do with the state pension. Generally, things have moved on dramatically—not just from a regulatory point of view, but with communication generally. We just have to look at the state pension side—before you rule us out of scope, Mr Rosindell. Millions of people look on the internet every year to see what the position is with their state pension. The same will apply—to bring us within scope—to private pensions. The younger generation of people do not just wait for something to come. They are aware the whole time; they see the information on their pay packet. My younger son started work after graduation in September. They sign up for the pension, it is explained and they are interested. They think it is years away, obviously, but they are interested. That is why I do not take the communication point lightly, and I will do my best now to talk in more detail about it.
We have mentioned the automatic enrolment review. That is critical—this is not just a way of sidetracking the point—because it will consider how individuals engage with their workplace pension scheme and how that can be developed so that members are better able to understand and maximise their savings. That is probably the most relevant change that we have to try to bring about—we as a Government are going to do this, but I am sure that any Government would—to get people really involved. We have appointed an external advisory board, including members that represent consumer interests as well as pension provider representation. We will lay a report before Parliament before the end of 2017. The relevant point, to bring us back to the Bill—you have been very patient, Mr Rosindell—is that it will take into account these findings. We will take them into account when considering the regulations under clause 12—that is the relevant clause—which I referred to a moment ago.
I hope that Members will forgive me for not going into as much detail as the hon. Member for Ross, Skye and Lochaber (Ian Blackford). My comments will be considerably shorter, which will give people some comfort tonight.
If we are able to have the financial resources in the future to spend on things our constituents rightly take for granted, such as our NHS and our children’s education, one challenge for the Government is to rebalance the economy away from an over-reliance on the state. Where it is possible and appropriate to do so, the individual and their employers should take more responsibility for their future financial security. The national living wage, which was introduced by this Government—and at a far higher rate than that proposed by the Labour party—has helped to shift the burden back on to employers and away from the state, which had found itself topping up wages through in-work benefits. Many in-work benefits did nothing more than subsidise hugely wealthy businesses at the expense of the British taxpayer. With the introduction of the national living wage, employers will now be required to take more responsibility for paying their employees properly.
I see automatic enrolment in a pension scheme in the same way as I see the national living wage. It is a way of helping working people to save for their future and a dignified, funded retirement. Auto-enrolment requires employers to pay into a pension scheme along with their employees, and the Government do their bit by giving tax relief on employee contributions. I expected employers to be less than enthusiastic about auto-enrolment and the additional costs it would mean for their business, but if anything I have found that businesses in my Southampton, Itchen constituency are very supportive. In fact, one business even suggested making auto-enrolment compulsory to ensure that its staff are saving for their future and not choosing to opt out, as up to 50% of them currently do.
As with all legislation, it is sensible to review how auto-enrolment operates in practice and to improve it where possible. The Bill does that. It contains particular provisions on the role of master trusts and those who operate them. Master trusts are the favoured financial product for investing employees’ pension contributions for the majority of small businesses in the UK. Many of them, including the National Employment Savings Trust, operate within the Pensions Regulator’s guidelines and have the quality assurance mark. However, there is widespread agreement that regulation for trust-based pension schemes in general is inadequate. The Bill aims to address that and, in so doing, give comfort to savers and protect their retirement savings.
There seems little in the Bill that anyone can disagree with, although some Members have said that it does not go far enough. We insist that our taxi drivers pass a fit and proper person test so that they can carry passengers, but until now there has been no such requirement on all those who operate master trusts and are potentially responsible for a worker’s entire retirement savings. The Bill will ensure that those responsible for running master trusts have to demonstrate their suitability to do so—not before time, in my humble opinion.
The Bill also requires schemes to prove their financial sustainability—something that most investors would assume was already a requirement—and will give the regulator new powers to supervise master trusts and intervene if a scheme is at risk of falling below the required standards. With more than 10 million workers estimated to be saving in auto-enrolment schemes by 2018 and more than £17 billion of extra workplace pension saving per year by 2020, it is imperative that master trusts, which will be responsible for much of that investment, are more tightly regulated than is currently the case.
Once the Bill is passed, a consultation process will begin. When he responds to the debate, will the Minister inform the House of any specific regulations that will be presented in the consultation document? How frequently will those regulations be reviewed by the Secretary of State?
The House will be rather pleased that I will focus purely on the Bill, which I very much welcome and have no hesitation in supporting.
It may be helpful briefly to explain the framework and history of master trusts. Such pension plans were historically designed primarily for single employers, or a group of related sponsoring employers with an in-built paternalistic and altruistic nature of management. However, the world of workplace pensions has changed rapidly and for the good, with the introduction of workplace pensions under auto-enrolment following the Pensions Act 2008. As we have heard from the Secretary of State, the latest figures suggest that more than 7 million employees are now enrolled across 370,000 employers. As we reach the final phase of the staging dates roll-out across smaller employers over the coming year, the number will expand massively, approaching 10 million people across possibly 1 million employers. The figure for current assets under management is at more than £10 billion a year and will grow rapidly. It could easily be the case that, over the next 30 years, master trusts contain assets exceeding £1 trillion.
The larger employer may already have had an employer scheme in place, but those are likely to have been contract based, whereby a pension provider—often an insurance company—is appointed to run an individual scheme. It is the smaller employer, under auto-enrolment obligations, that will be using the other possible course of action, which is the trust-based defined contribution scheme, whereby a number of employers—perhaps tens of thousands of smaller individual employers—will take part in an individual scheme. The new legislation will apply to those new trust-based schemes, ensuring that they are well run, financially sound and subject to appropriate oversight by the Pensions Regulator. It is essential that employees have confidence that schemes will protect their assets. After all, it is perfectly likely that an employee’s pension fund, after their house, will be the primary life asset upon which so much will depend.
The Select Committee on Work and Pensions, in its report of 15 May last year, devoted some time to highlighting the risks under the current limited regulatory arrangements for master trusts, amounting to little more than Her Majesty’s Revenue and Customs registration that practically anybody could overcome—loose arrangements that suited the original purpose of trust-based schemes, but which are wholly insufficient in the new auto-enrolment world. I pay tribute to the work of former Pensions Minister, Baroness Altmann, who similarly highlighted the lack of regulation of master trusts.
Following investigations, including one by the BBC, there were reports of unregulated applicants to the master trust market—notably, a promotion by MWP Pension Ltd, a company owned by former sports fashionwear traders that formerly traded as Wide-Boys R Us. With that type of background, new legislation is urgently needed, otherwise this area could easily become the financial scandal of the future.
Far from being overdue, it is a tribute to the ability of our legislative framework that risks have been recognised and the Government have acted quickly. The market itself has recognised the risks of the current lightweight regime. The Pensions Regulator, working with the Institute of Chartered Accountants in England and Wales—as my hon. Friend the Member for Amber Valley (Nigel Mills), a chartered accountant like myself, mentioned—created the master trust assurance framework, with a list available to all on the Pensions Regulator’s website. The list now includes 13 institutions that are complying with good practice. Before the Bill becomes law, I urge smaller employers considering their options as their staging dates approach to use any of those recognised schemes; do not use any other.
I welcome other aspects of the Bill, as it proposes triggering events, pause orders and an appropriately draconian penalty fine of up to £10,000 a day for non-compliance. I welcome the proposals and, with others, will examine their extent in Committee. Finally, and to the delight of all, the Bill gives authority to the Secretary of State to restrict charges, mirroring in part the provisions applying to the charges structure introduced within personal plans under the Bank of England and Financial Services Act 2016, and extending the Pensions Act 2014. As all Members will know, it is purely due to the effect of compounding that, over 40 years, a fund can grow by 50% or more with a simple fee-charging difference of just 0.75%. I certainly hope that the Secretary of State will use these powers to reduce charges as appropriate.
This Bill comes at the right time before contributions under auto-enrolment escalate over the years come, and I will support it.
I think we all know that that is not a point of order, but, not to worry, it has been put on the record.
As always, my hon. Friend speaks with great passion on a subject that she cares about. One of the things about the women born in the 1950s is that they were actively encouraged to give up work when they had children, so their pensions are actually smaller now than they would be had they taken maternity leave, and they are therefore at more of a disadvantage. Does she agree that we owe these women justice because they have been the backbone of this country for decades?
The Work and Pensions Committee, of which I am a member, worked on this issue at length earlier this year, and the SNP-commissioned report by Landman Economics draws upon much of our work—indeed, copies much of it. I certainly hope that the SNP did not pay too much for its report.
It is clear that there was a gross inequality in the old system, which had been untouched for some 70 years. It was very much a “kick it down the road” subject that few wished to touch, but we as Conservatives did touch it, because it needed touching. That said, I have not only taken the WASPI women’s concerns on board, but actually done something about it. I wanted to hear directly from local constituents about their own experiences, and to that end I held a Thanet WASPI forum on Saturday 21 May. It attracted not only local constituents but others who had heard about it from across Kent. In all, 100 women came.
I have also encouraged WASPI women to come to my surgeries and met campaigners, as have many right hon. and hon. Members from the across the House, outside Parliament. I have written to, and discussed the issue with, current and former Pensions Ministers and Secretaries of State, and I have presented a WASPI petition to the House. Few could have done more to understand the issue, to listen to the problem and to try and get a solution. I have tried to come up with a single solution, but therein is the problem: WASPI does not speak with one voice. The reason is that no one solution fits all the problems.
4. Whether his Department plans to take steps to introduce new transitional protection for women adversely affected by the acceleration of increases in the state pension age. (907334)
11. Whether his Department plans to take steps to introduce new transitional protection for women adversely affected by the acceleration of increases in the state pension age. (907341)
As the hon. Lady has mentioned, Labour proposed using pension credit as a transition mechanism for helping these women. This was discussed extensively during our debates on the Pensions Act 2011 as it went through Parliament, and it was decided that £1.1 billion would instead be used as transitional relief.
The cost of reversing the changes varies depending on whom one asks. The different political groups have come up with different amounts, varying between £7 billion and £30 billion, and that is quite apart from the substantial practical problems, such as risk of legal challenge, deliverability and all the problems associated with such options.
Universal credit, which is now being paid to more than 300,000 people, has already shown that people will get into work and progress in work faster and that they are more likely to seek work. If the Opposition accept, as I think they do, that work is the best route out of poverty, they will welcome universal credit because, when it is paid to more parents it helps children in those families to be in households where there is work. That will be the best way to get them out of poverty.
14. Whether his Department plans to take steps to introduce transitional protection for women adversely affected by the acceleration of increases in the state pension age. (906590)
Transitional arrangements are already in place. We committed £1 billion to lessen the impact of the state pension age changes on those who were affected, so that no one would experience a change of more than 18 months. In fact, 81% of women’s state pension ages will increase by no more than 12 months, compared with the previous timetable.
I can only reiterate to the hon. Lady what has been said many times before. The Government made transitional arrangements that came to more than £1 billion. [Interruption.] She is chuntering at me from a sedentary position. I could not hear, but will try to imagine what she was saying. The Government have made the transitional arrangements, and no further moves will be made to assist those women, all of whom will benefit in time from the significant increase in the new state pension.
I think most Members would accept that Governments of all colours have not done enough to support disabled people into work. This debate centres on whether the commitment made by this Government to halve the disability employment gap is progressing quickly enough, and in the right way. Looking simplistically at the numbers, which many Members have touched on today, there are now 365,000 more disabled people in work than two years ago, and more than 3.3 million in work in total, so we have made a good start. But we would all agree that it is not enough, and guess what? We believe that we should be working on this together. I am sorry that the hon. Member for Pontypridd (Owen Smith) has just left the Chamber, because I was so disappointed in his tone; I know he can do better.
We have accepted that we need to do things differently, so a Green Paper and a fresh new approach are exactly what we need. But we cannot rush that. I am disappointed not to have seen the Green Paper yet, and the disability charities I have spoken to are also eager to see it, but we need to decide whether tweaking existing systems and policies to meet a deadline is better than taking our time and getting it right. I do not think that it is. After all, any changes we make will affect the most vulnerable in society. I know that the new Secretary of State is determined to get this right, and disability charities have conveyed that sense to me too.
Although speed must not be our only goal, we must, I am afraid, keep in the back of our minds a deadline we have created for ourselves. I am sorry to say that the decision to cut the ESA work-related activity group before the White Paper had emerged was wrong; I regret the Government’s decision. It would give an incredible boost to the disabled community if they were to commit to freezing that decision just until the White Paper is agreed. If we can, we should. It should be a positive, ambitious and anticipated document. It is not enough for a Government simply to provide the financial and healthcare support for everyday living; we need to do everything we can to unleash the untapped potential skills and hopes of people with disabilities.
When I spoke to a gifted IT graduate with learning difficulties, she did not want to be protected from society; she wanted to be out there helping to build it, so why on earth could she not find a job? As a member of the Work and Pensions Committee, I have seen how the existing Work programme has simply not worked for disabled people. It is hugely successful for those closest to the jobs market, but not for those with physical or mental health issues. As our jobcentres evolve to support universal credit, so our work coaches will need to perform comprehensive triaging right from the beginning and provide a dedicated path of support from day one. People must not be allowed to sit on the merry-go-round of the system for two years before anything positive happens to them.
We need to make much better use of small third-party providers, such as the Papworth Trust in my constituency, which is one of the most highly regarded disability charities yet is running mainstream Work programme services because the payment method for specialist work choice provision is commercially unviable. That is ridiculous. Specialists know how to support disabled people and to identify what they can do, whereas much of the current pathway to employment focuses on what they cannot do.
The White Paper needs to look at the whole world of a disabled person, so if the Secretary of State does not mind, I am going to add a few things to his list. Do they have good accessible housing? What about the social care to support them at home and to help them get up and get out the door? It is not just about the employment services. We have to understand what they need. It is not enough just to treat the benefit application processes; the entire journey through ESA and PIP needs looking at again, and that should be coupled with a cross-departmental assessment of everything a disabled person needs to fulfil their potential.
Forgive me—I am honestly not seeking an extra minute—but I genuinely do not understand the question. Did the hon. Lady mean medical professionals in jobcentres?
Perhaps we can have a conversation later, because I do not understand the question. I am sorry.
Departments need to work together—hell might freeze over—and perhaps share budgets. Having the right housing, for example, is the absolute beginning of a disabled person’s journey to work. If the fund available to deliver the Work and Health programme is significantly less than those for its predecessors, the Work programme and Work Choice, we will need to be smarter about how we spend it. Let us target young disabled people before they leave school. I heard the hon. Member for Airdrie and Shotts (Neil Gray) talk about his nephew. It is absolutely wrong. We should be getting in there and grasping people’s potential before they come to feel they cannot achieve. That is so wrong.
What about people who have only just gone on to ESA and disabled people who are in work? As we have heard, it is considerably more difficult for disabled people who have been out of the workplace for a long time to get back in. We need to get in there while their self-esteem is still high. I was once out of work for more than a year. It is flipping hard, and it is significantly harder for a disabled person. Access to work must also mean access to work experience and job interviews. You do not put fuel in a car when you have reached your destination; you need fuel for the journey to get there. And as we have discussed, people need to know about it too.
Would it not be great if we could design the process around the person, rather than pushing individuals with differing complex needs through a process just because the process was there first? We need to stop pushing square pegs through round holes; only then will we achieve our ambition of halving the disability employment gap. If the Secretary of State continues to demonstrate a willingness to make that happen, he and the Government will have my support.
I am grateful to the Backbench Business Committee for agreeing to hold this debate in the main Chamber. I pay tribute to my right hon. Friend the Member for East Ham (Stephen Timms), whose erudite and considered opening speech was a great contribution to the debate. The hon. Member for North Devon (Peter Heaton-Jones) talked about the broader context, and I will be only too pleased to do the same in a moment. My hon. Friend the Member for Edmonton (Kate Osamor) spoke powerfully about the plight of lone working parents, who are particularly affected by cuts to the work allowance. I certainly agreed with the hon. Member for Gloucester (Richard Graham), who is no longer in his place, on the idea of ensuring that we visit Jobcentre Plus offices to see universal credit in action, something which I did recently with my right hon. Friend the Member for East Ham, but it is equally important to be in contact with local citizens advice bureaux and to visit food banks to see what is happening on the ground.
We heard a useful contribution from the hon. Member for Airdrie and Shotts (Neil Gray), who pointed out very well the new approach promised by the new Secretary of State of looking at people, not statistics. I look forward to the Minister telling us how she has changed her approach under her new boss, as I am sure everybody does. We also heard useful contributions from the hon. Members for Lanark and Hamilton East (Angela Crawley) and for Banff and Buchan (Dr Whiteford); my hon. Friend the Member for Neath (Christina Rees); the hon. Member for Horsham (Jeremy Quin); my hon. Friends the Members for Salford and Eccles (Rebecca Long Bailey) and for Cardiff South and Penarth (Stephen Doughty); the hon. Members for Foyle (Mark Durkan) and for Rutherglen and Hamilton West (Margaret Ferrier); and my hon. Friend the Member for Westminster North (Ms Buck).
This debate comes at a key time—a key moment of test for the new Secretary of State—because the outlook is bleak. The Institute for Fiscal Studies expects absolute child poverty to increase from 15.1% in 2015-16 to 18.3% in 2020-21. The Resolution Foundation believes that 200,000 more children, predominantly from working households, will fall into poverty this year. Gingerbread powerfully makes the point that my hon. Friend the Member for Edmonton made about cuts to the work allowance hitting single parents particularly hard. There is a set of damning statistics on this, which the Children’s Society has set out. A working single parent can lose up to £2,628 a year. What was the Government’s response to that? What did they say could be done about that? They told the Social Security Advisory Committee that parents could work three to four additional hours a week on the national living wage.
My hon. Friend is absolutely right about that. The hon. Member for North Devon wanted the broader context to be taken into account, so let us take into account the national living wage as well. A single parent who is already working full time on the national living wage of £7.20 an hour will have to work 46 extra days a year, which is more than two additional working months. How on earth can that be put forward as a reasonable proposition by anybody? It obviously is not reasonable.
The Government were warned about the problems they face today as a result of cuts to universal credit. The Social Mobility and Child Poverty Commission report released just before Christmas, on 17 December, said that the “immediate priority” had to be ensuring that the cuts to the work allowance planned for this April did not go ahead, but the Government simply did not listen. The problem that they are getting to is that their approach is starting to deny the very purposes that universal credit was set up for. The Resolution Foundation states:
“But it is also much changed as a result of the increasingly tight financial restraints placed on it over recent years. These have involved more than just a reduction in the money available under UC, they have also altered the very structure of the policy—changing the composition of winners and losers and fundamentally damaging its ability to deliver against its purported aims.”
Perhaps that explains why the Government are so terrified of publishing an up-to-date impact assessment. Perhaps it explains why they are so terrified of telling us the figures as to what they expect will happen to child poverty over this Parliament.
The hon. Lady can shake her head, but that is why only 16% of claimants on DLA received it at the highest rate, yet the figure for PIP is 22%.
We may or may not get to question 21. Patience may be rewarded. We shall see.
I have given way many times and I am afraid that we are now getting to a stage at which MPs are simply repeating points that have already been raised. I am mindful that many hon. Members wish to speak. Nobody can accuse me of not being generous in giving way, but I wish to make progress.
The changes that were made, and the transitional arrangements made in 2011, benefited a quarter of a million women who would have otherwise have had a delay of up to two years. For more than 80% of those affected, the increase in the time period will be no more than 12 months. The House voted for this amendment to the Bill and a concession was called for. A concession was considered by the Government, proposed by the Government and accepted and voted for by this House. The Government promised to consider transitional arrangements in 2011 when the legislation was going through, and that is exactly what the Government delivered—a reduction in the time period from two years to 18 months at a cost of £1.1 billion. That shows that the Government were listening to the concerns of Members and responded to them at the time.
The hon. Lady needs to appreciate that the concept of dealing with pensions and money is that the concession was made—
That concession was made by the taxpayer—[Interruption.] It was made by the taxpayer, and the total cost was £1.1 billion—
As I have said, and I am sorry that the hon. Lady has not got the message yet, and that she does not appreciate that the time was shortened by six months—[Interruption.]
My hon. Friend has it spot on. Communication, as the hon. Member for Weaver Vale (Graham Evans) said, is one of the issues at the heart of the matter. What happened in 2011 compounded what had happened previously, and the situation is totally unfair.
The debate has been quite good since we got to the Back-Bench speeches, although my hon. Friend the Member for Pontypridd (Owen Smith) did a good job of kicking things off. I welcome the comments of the hon. Member for Blackpool North and Cleveleys (Paul Maynard), who drew attention to my hon. Friend’s six suggestions and said that they were a good starting point. The hon. Member for East Worthing and Shoreham (Tim Loughton) said that there was a deal to be done, and I think he is right. The hon. Members for Salisbury (John Glen) and for Mid Bedfordshire (Nadine Dorries) encouraged Ministers to find a way to put right the injustices.
The women we are talking about are not asking for the world. They are not even asking for the things that some people have suggested that they are asking for. They are simply asking for a reasonable settlement and a reasonable deal, which is what they deserve.
I am grateful to you, Mr Deputy Speaker, for the opportunity to speak on this important issue. I thank the women of the WASPI campaign for their tireless efforts in persisting in bringing this issue to the Government’s attention. I want to speak for the women in my constituency of Burnley, and for the thousands of women who will be affected. There has been much talk about the financial impact of the change and what the cost will be, but let us not forget that these women are taxpayers who have worked hard and paid in. They are asking not for a benefit, but for a right to which they are entitled.
I want to talk about the impact on people. I have talked to women in my constituency who are physically struggling every day to cope with their physical jobs. One lady I spoke to during my surgery at the weekend was in tears as she told me about her many years of working in an engineering foundry. She is staggering on towards her retirement age. She is in bed at 7.30 every night, having been barely able to make it to the bus station to get the bus home. She has spent long years working on the minimum wage, and the only light at the end of the tunnel was retirement at the age of 60. She thought that she might just be able to stagger on until then. However, not only have the goalposts been moved, but there just has not been any communication with her. Let us not get into the blame game of arguing about whose fault it was or was not that she did not know, but the fact is that she did not know.
There has been a lot of talk about what happened in 2011 and in 1995. I was not a Member of Parliament then. I would say that we are where we are. Let us tackle the problem we have in front of us now. Hon. Members on both sides of the House have made sensible suggestions about sitting down together with the WASPI women, around the table, on a cross-party basis and without scoring political points, to work out a solution to this terrible mess.
I absolutely agree with the hon. Gentleman. People find themselves in a vicious circle and can never see the end. That is the problem. In other words, we are putting people through absolute misery for nothing.
As we have heard, the Government tell us that discretionary housing payments are available to tackle the shortfall, but Shelter says that that provision is already overstretched. With such extensive reforms to welfare, a shortage of affordable housing and drastically rising rents in the private sector, the reality is that there is only so much that discretionary housing payments can cover. They are a mere sticking plaster and will not solve the problem. Even the House of Lords has deemed the welfare reforms a step too far, causing the Government embarrassment. Worse still, the UK is, shamefully, the first country ever to be investigated by the UN in relation to the convention on the rights of persons with disabilities. The UN is currently looking at our welfare policies for the disabled.
Before the Scottish Government invested millions of pounds to alleviate the bedroom tax in Scotland, many people in my constituency of Ayr, Carrick and Cumnock were a thrown into turmoil by the policy, with some tenants receiving eviction letters that caused unnecessary anxiety and worry. We should not be spending our already diminishing budget on mitigating Westminster austerity policies. That money should be spent elsewhere. Meanwhile, the Scottish Government will ensure that housing continues to be a priority by building affordable housing, creating jobs and boosting our economy. I am pleased that the Scottish Government have committed to abolishing the bedroom tax as soon as they have the powers to do so. I ask the Tory Government to think again and to put the needs of people back at the centre of their welfare policy.
On the point about the bedroom tax financially punishing people, does my hon. Friend think that it causes people to go to payday lenders such as Wonga and take out loans with extortionate interest rates to survive?
It is a pleasure to serve under your chairmanship, Ms Dorries. I congratulate my hon. Friend the Member for Cardiff Central (Jo Stevens) on securing this debate.
The spare room subsidy, or the bedroom tax as it is more commonly known, is causing stress and hardship across the country. It is the most unfair and pernicious tax since Margaret Thatcher’s poll tax. We are here to debate the regional impact of the tax, so I will outline some of the issues it is causing in my consistency and in the south Wales valleys more generally.
The principle of providing larger properties for families and smaller properties for single people and couples is understandable. People often decide for themselves to move to a smaller property when their children leave home or their circumstances change, but that is a choice. Unfortunately, there are not many one and two-bedroom properties in many communities in my constituency, so people affected by the bedroom tax must decide either to stay in their property—thereby incurring a financial penalty that places great strain on their ability to manage—or move to a smaller property in a village or community some miles away.
Before being elected to this place, I was cabinet member for housing at Caerphilly Council, which covers a third of my constituency. In that role, I met a number of people who wished to remain in the homes they had lived in for many years. They did not want to move to a smaller property miles from their family and friends. Unfortunately, the strain of paying the bedroom tax in addition to their utility costs and household bills meant that they often had little money left to put food on the table.
I need to make some progress, because lots of people want to speak in this debate and I do not want to take up too much time.
Let us remember that, way back, the Turner commission said that people should be given at least 15 years’ notice of changes to the state pension age. The Pensions Act 2014—we wait ages for a Pensions Act and then they are like buses; a load come along together—set up periodic reviews that aimed to give people at least 10 years’ notice. One could argue that, in principle, the 1995 Act gave that kind of notice, but lots of people did not know about it. There was no requirement under the Act to inform individual women who might be affected. Indeed, apparently what happened was that the Department produced a leaflet. That is very nice, but if people are going to request the leaflet, they must know about the changes coming forward. I certainly did not know that it existed, and I do not think anyone else did. There was an advertising campaign about preparing for retirement, but it was aimed at both men and women. It was not aimed specifically at those whose state pension age was changing. There were a few inserts and adverts in papers and magazines.
For most people, those things were background noise as they were getting on with their lives. No one wrote to the individual women who would be affected. It was not until 2009 that the Government started to do that, but that process was stopped in 2011 as we debated yet another Pensions Act to introduce more changes. That gross dereliction of duty on the part of the Department for Work and Pensions cannot be defended.
After the Pensions Act 2011 was enacted, the Government again began to write to people. They finished the process in 2013, but that meant that some women, if they were notified, received only between three and four years’ notice of changes to their pensions, which was not nearly enough time to make proper provision. In fact, some did not receive notification at all, as we have heard, because their letter were sent to their old address. Some received the wrong state pension forecast and they were not corrected.
Before she became Minister for Pensions, Baroness Altmann said that
“until recently, many of these women were expecting to receive their state pension at age 60, since they were unaware of the changes made in 1995”.
Indeed, the former Pensions Minister said the same thing. In 2015, when he gave evidence to the Work and Pensions Committee, he said that it was clear that there was a cohort of women who did not know about the changes and that
“there is no question about that.”
The rapid changes introduced by the 2011 Act have resulted in huge inequalities, because small differences between people’s date of birth may mean a big difference to the dates when they reach their pension age. Women born in the 1950s are particularly affected, and I am grateful to those women who have written to me with specific examples of what is happening. I shall quote some of them because I stress to the Government that this is not an academic exercise. Real people are on the receiving end of the changes and many of them are suffering.
One lady wrote to me pointing out that her husband was born in January 1954, meaning that he can retire at the age of 65 years and two months. She was born in August that year, but cannot retire until she is 65 years and 11 months. She said, “Whatever that is, it is not equality,” and it is not.
My hon. Friend is right. The system is riddled with inequalities.
Many women have received wrong information. One lady who contacted me wrote:
“I have a pension calculation from the DWP telling me that I retire at 60 and this would not be reviewed until 2020”—
someone obviously keeps her paperwork carefully. She went on to say:
“I have had no notification or correspondence from the DWP informing me of these changes and have…just found out by applying for a State pension forecast…To be told at the age of 58 that you will not get any pension until you are 66 does not give enough time to plan or budget”—
she is right.
Many women have been caught out by the changes in the number of years’ contributions to national insurance required before receiving a full pension. One lady said:
“I was made redundant after 30 years and I contacted the NI people to ask about my contribution record…I was told because I had paid a full 30 years I didn’t need to pay anymore”.
She then found out that she
“was no longer getting a full pension but approximately £35 a week less because guess what I haven’t paid enough NI contributions in the last 7 years! I WAS TOLD I DIDN’T NEED TO!”
In any private pension scheme, that would be called mis-selling, but we see the same from the Government.
Another lady highlighted the fact that many of this cohort of women took time out to look after their children or to act as carers, meaning that they did not build up enough occupational pension. In some cases, women were not allowed to join occupational pension schemes at all and some were working before the Equal Pay Act 1970 came into force. She said:
“I am also penalised here because when I did return to work after my children were older I did not accrue enough to have a reasonable work pension…It is totally demeaning that I have to rely once again on my husband who is 67 this year and worked from the age of 18.”
That is not equality.
Another lady, who is also a carer, said:
“I will be 62 next month and found out that I will not be getting my state pension until I am 65 and some months. I made Choices in my mid fifties and gave up work to look after my husband expecting to only wait 5 years or so to get my pension but it came as a shock to find out that I wasn’t”.
People have made decisions based on information they were given at the time in good faith, but they then found that decisions had been overturned.
I am sure the hon. Gentleman’s constituents will be grateful that he managed to slip in that last bit concerning his court. As I have told him previously, no firm decisions have been taken on that issue. On other matters, I am pleased that the hon. Gentleman pays such detailed attention to what is happening in the MOJ.
I refer the hon. Lady to the Chancellor’s autumn statement. He said he would be allowing £700 million-plus for the courts reform programme and there would be £1.3 billion for reforming the Prison Service. We in the MOJ are also consolidating our estates programme generally in terms of the offices and space we use. If the hon. Lady reads the statement, she will also be aware that my Department will be making 50% administration cuts by 2019-20.
Does my hon. Friend know that 167,400 working families in Wales will be impacted by these cuts and that 134,600 of them are families with children?
Would it surprise my hon. Friend to hear that, under universal credit plans, some 116,000 disabled people who are in work—and therefore doing the right thing, according to the Government’s narrative—will be £40 a week worse off under the Government’s proposal?
It is a pleasure to serve under your chairmanship, Mr Turner, and I congratulate my hon. Friend on securing the debate. She has given some figures about single parents, and this shows the full extent of the policy: for a single parent—say, a mother with one or more children—the work allowance of universal credit will be halved from this April, going from £8,808 to £4,764. In cash terms, that is a loss of £2,628 a year. Does that not show the stark reality of this policy?
I apologise for not thanking my hon. Friend for securing the debate in my previous intervention or saying what a pleasure it is to serve under your chairmanship, Mr Turner. The Secretary of State was referring to the number of people currently receiving universal credit who will be protected by some measure, but is that not a little disingenuous given that the Government are about 1,000 years behind schedule on delivering universal credit? They had expected some 2 million people to be on it by now. Should the Government not be a bit more embarrassed about mentioning the small number who are already receiving universal credit?
It is a pleasure to serve under your chairmanship this afternoon, Mr Turner, and I congratulate my hon. Friend the Member for Swansea East (Carolyn Harris) on securing this important debate.
It is hard to justify why so many people live in poverty in a country as wealthy as the UK. I believe that one of the key explanations is that the welfare state, designed to protect us all against risks such as unemployment, illness and old age, simply fails to provide an adequate income for families and others when they are unable to support themselves fully.
It is truly shocking that in 2016, in-work poverty is growing. In some areas, the number of working households in poverty is greater than the number of non-working households. Major factors appear to be low pay and part-time work, and zero-hours contracts are also a major contributory factor.
On the contrary. Average weekly earnings have grown consistently in the past year—
Let me finish my sentence and I will. Wages have been growing faster than inflation for 14 consecutive months and, as much as the Labour party has been utterly disparaging about the introduction of the national living wage, which says a great deal about its attitude to pay increases, we know for a fact that when the national living wage is introduced later this year, we will see an enormous—
I will give way in a moment. I have been very respectful by listening to and not intervening in the contributions of Opposition Members. More people will benefit when the national living wage is introduced in April.
Tata is not a particular case study for Wales or the United Kingdom. I hope that the hon. Lady recognises that the steel industry faces huge challenges around the world. In China, people are also losing their jobs because of what has happened in the steel industry. Jobcentre Plus and the Department for Work and Pensions have been there from the outset to support people who have lost their jobs in the steel industry by helping their families at this very difficult time and supporting them to find work. The marketplace is challenging, but the hon. Lady is the Member of Parliament for a Welsh constituency and she has a duty to acknowledge the support that is being given—the work that Jobcentre Plus staff in her constituency are providing—to individuals and families who have lost their jobs.
The hon. Gentleman is taking the noble Lord’s suggestion out of context. There was quite a substantial discussion about universal credit including a gross representation of the roll-out—the hon. Member for Bermondsey and Old Southwark (Neil Coyle) said, in jest, that it would be “a thousand years”. All hon. Members know, because they have heard it from me previously, that universal credit is now in three quarters of all jobcentres and will be in all jobcentres by April 2016, so the roll-out will take a few more months and certainly not a thousand years as the hon. Gentleman suggested.
I come back to the principle of the reforms. Universal credit transforms the welfare system and has been designed to ensure that people are supported in work. It is a subject of many discussions I have had with the hon. Member for Bermondsey and Old Southwark in previous debates. Yes, there is a financial safety net and support through universal credit but, importantly, the universal credit system is designed to support people to progress in work. Jobcentres deliver support, providing a single point of contact with much more personalised support, advice and guidance from a dedicated work coach.
The concept of the work coach is working. I have sat in on many interviews when I go to see our colleagues—particularly work coaches—working in jobcentres and helping people to develop in their roles, especially people who are moving from part-time to full-time work or who are seeking to work more hours depending on personal circumstances. Work coaches help them to develop the right kind of skills and confidence to secure employment. Surely hon. Members cannot disagree with the fundamentals of supporting people into work, giving them confidence, and helping them to develop new skills, should that be the appropriate route for them.
I am proud of way in which we work with other aspects of the state when we look into co-locating our services with housing associations, further education colleges and local authorities. We have 30 fully co-located sites, where we can join up and bring public services together to ensure that we have the right kind of service delivery for individuals.
I am conscious of time as I can see the clock ticking, but I want to emphasise that the Government are fundamentally focused on providing in-work support through stronger local partnerships in constituencies to ensure that we support individuals on universal credit or benefits, help them to get back into work, and secure better employment outcomes and better futures for them in the long run.
Order. There will be a five-minute limit from now on.
One of my constituents, Angela Pugh, has sent me valuable information, and I thank her and WASPI. She outlined one woman’s experience. She said that the job market is not ready to accept older women and that many are forced to accept zero-hours contracts, temporary contracts or low-paid contracts that offer no financial security. Does my hon. Friend agree that those women—the backbone of this country—have been betrayed by the Conservatives?
Does my hon. Friend accept that that is not the only way in which older women have been discriminated against? The raising of the tax threshold disadvantages older women much more than it disadvantages any other group, and the pay gap for older women is bigger than for any other group. Do we not need to hear the voice of older women more clearly in politics, as it is obviously being completely ignored by the Government?
I congratulate the hon. Member for Paisley and Renfrewshire South (Mhairi Black) on securing the debate. I also congratulate members of WASPI—many of the women are in the Gallery today—on its magnificent campaign. Had they not had that campaign, I fear that the problem would have gone unnoticed and certainly would not have been addressed.
The Pensions Act 1995 increased the state pension age for women from 60 to 65 over the period April 2010 to April 2020. It was not a short-notice change—the notice was 15 years. In a debate in October 2013, the Minister, Steve Webb, accepted that some women did not know about the change at the time, but went on to say:
“Although it was all over the papers at the time, these women were a long way from pension age and probably turned the page when they saw the word ‘pension’”.—[Official Report, 8 October 2013; Vol. 568, c. 54WH.]
What a way for a Government to expect people to find out!
The coalition Government legislated in the Pensions Act 2011 to accelerate the increase in the state pension age, which became 65 in November 2018. They intended to equalise the state pension age at 66 by April 2020, but that was amended. During that debate, the then shadow Minister, my hon. Friend the Member for Leeds West (Rachel Reeves), expressed concerns. Largely because of that, the date was amended and we got a reprieve of six months. The Government seem to believe that that is some compensation.
I will not say much about the impact, because hon. Members who have read about it will know. Anne Keen, one of my constituents and a leading WASPI campaigner, is in the Gallery today.
I will come on to those specific people—[Interruption.] In the overall numbers, it is the vast majority—[Interruption.] I am going to make some progress.
We have to see the bigger picture. A lot of the analysis that has gone on is static. Even the Institute for Fiscal Studies, which I know a lot of hon. Members will refer to, acknowledges that it is a static analysis. Universal credit is not a stand-alone measure. It is part of our wider, dynamic package of reforms to support families in work and to make sure work pays. We are raising the personal allowance to £11,000 for the next tax year, saving the typical taxpayer over £900 a year, and we have pledged to raise it to £12,500 by the end of this Parliament. The national living wage will come into effect from April. That will directly benefit 2.75 million people and it is forecast to reach over £9 an hour by 2020. That might upset Opposition Members who campaigned for £8 an hour, but we felt that that did not go far enough.
I thank the hon. Lady for her question. I worked closely with her on our commitment to halving the disability employment gap, and I have a lot of respect for the work she does. In this case, the person—again, presuming it is a static analysis and that they are already in—will be cash protected as they are transferred to universal credit, so they will not be cash worse-off.
We have rising wages and near zero inflation. We have had 13 months—[Interruption.] We have strong economic growth, delivering record jobs and creating opportunities for people to get into work and to increase their hours. We have simplified the benefits system, reducing the potential for claimants to miss out on money to which they are entitled and, crucially, allowing them the time to focus on actually finding work, rather than on navigating the complex, chaotic system. We have already seen from the independent investigation that we are talking about 50% more time. We also have work coaches to support people in work, which is vital.
Earlier this year, the Select Committee on Justice and the Public Accounts Committee criticised the Government’s civil legal aid changes, saying that they limited access to justice for some of those who need legal aid the most and that, in some cases, they resulted in cases becoming more difficult and therefore costing the taxpayer more. Does my hon. Friend agree that that very much echoes the cases that we see, week on week, in our constituencies?
I am grateful to my hon. Friend for raising the important subject of litigants in person. I have spoken to court staff and judges who are deeply concerned about the impossible position that they are placed in when they have to make a decision on cases involving, but at the same time end up giving advice to, litigants in person who are desperately unable to cope with the complexities of the legal system in which they have to operate.
I congratulate the hon. Lady on securing this important debate. She will be aware that in the area that the Ministry of Justice names Dyfed Powys 2, which consists of all of Ceredigion, Pembrokeshire and all of Powys—the Opposition Members present will be aware of the geography of the terrain—it is suggested that only four solicitors’ practices will offer the reduced legal aid. Does she agree that that is the worst kind of access to justice imaginable?
Before my hon. Friend leaves the point of criminal courts charges, I am a member of the Justice Committee and we have just agreed that it was right to change the system. However, of the £5 million that was levied, only around £300,000 has been raised, leaving a debt on a large number of people who should not have had that charge imposed on them in the first place. Through my hon. Friend, I ask the Minister to tell us what will happen to those who have been levied the charge and who have not yet paid.
Does my hon. Friend agree that it is quite ridiculous that, at the last Justice questions, the Minister suggested that people could access justice by telephone?
The Minister did indeed say that mobile phones would be the way forward for my constituents. We are facing closures in Pontypridd and Bridgend, which are difficult enough to get to at the moment. To tell those constituents to come down the valley and change transport to get to Cardiff will add another impediment to access to justice. Through my hon. Friend, I would say that the Minister really needs to think this through again and to think about the geography of Wales. We are not flatlands with a huge transport hub; we are valleys. I know that your constituency is affected by the issue as well, Mrs Moon.
Order. I have before me only two names of Members who have asked to speak. At 5.20 pm, I intend to call the Front-Bench spokesmen for the Labour party and the Scottish National party, who will have five minutes each, and then the Minister, who will have 10 minutes. I will first call Albert Owen, and if other Members wish to speak, they will have to rely on the generosity of the hon. Gentleman and the next Member to be called if they are to get in before 5.20 pm.
We have some 20,000 magistrates. At any given point, there are always some who are resigning. It is regrettable that some have felt it necessary to resign on that basis, but I will say that magistrates do hugely beneficial work. It is an important role in society and they give up valuable time of their own to do a good service. Of course, it would be wrong for me to comment on individual circumstances, but it is regrettable that some have felt it necessary to resign on that basis.
It is not yet known how much has been recovered, because those statistics will be forthcoming in the December quarterly statistics. Just to explain, they were not in the September quarterly publication because, although initial data from the first three months of operation—the change having taken place in April—were included in the regular September quarterly statistics, it was not possible to provide separate figures on the charge in time for that publication which met the data quality standards required for published management information. Detailed figures will, however, be published on 17 December.
I note the comments made about the effects on the offender’s plea decision and the issue of access to justice. The Government are committed to ensuring a fair and effective criminal justice system that is accessible to all, and we are assured in the knowledge that the coalition Government carefully considered the compatibility of the criminal courts charge provisions with the European convention on human rights, on article 6 “access to the court” grounds. Article 6 of the European convention on human rights has an implicit right of access to the courts, and the charge does not interfere with that right in any way. In particular, it should be remembered that the charge is imposed at the end of proceedings. Defendants facing trial are not required to pay the criminal courts charge and the charge is not a condition of an offender being able to access the courts. A person will be subject to the charge only if convicted following a court hearing that will have taken into consideration all the available evidence. Therefore, those who are innocent and should be found not guilty by the courts will not be required to pay the charge.
We should also remember that our justice system already creates a number of incentives for those who enter early guilty pleas to ensure that the wheels of justice run more smoothly. For example, if defendants who are guilty enter a guilty plea as early as possible, the courts recognise the benefit to victims, witnesses and the criminal justice system as a whole by means of a reduction in sentence. I recognise, however, the need to ensure that any incentives are proportionate and I note the concerns expressed about the matter.
The hon. Lady is making an important point, but she should remember that vulnerable young people will be exempted from the changes.
I congratulate the hon. Lady on her excellent speech, which has covered so many matters, but I want to ask about a couple more. Does she share the concerns expressed by organisations such as Parkinson’s UK about, first, the appropriateness of progressive disease sufferers being placed in the work- related group and, secondly, how under the Government’s Bill employment and support allowance payments will be cut to the level of jobseeker’s allowance? There are serious concerns about people such as sufferers of Parkinson’s in that regard.
It is a pleasure to speak in this debate, Mr Pritchard. It is interesting that those in the Chamber are from the Opposition Benches, although the Minister is present as well. I am pleased to see him and I look forward to his contribution. We are concerned about tax credits and such issues, but whatever we say is not meant against him—it is not a personal attack. I want to put that on the record.
I am in the Chamber because I am concerned about the impact of changes to welfare benefit—tax credits, specifically. Recently we have heard a lot about that in the news and the Leader of the Opposition asked about the issue during Prime Minister’s questions today. The news has been full of stories about tax credits so I want to touch on them; they are vital to people in my Northern Ireland constituency where, as of April 2015, 6,500 were in receipt of tax credits. Of that number, 4,500 were in work and 2,000 were not.
Such figures speak for themselves. The majority of people receiving tax credits are in hard-working families on low incomes, and they need some extra help to get by. What worries me, however, are—I will say this with respect to the Prime Minister’s reply today; he mentioned the increase in those who will be tax exempt—those in the £10,000 to £11,000 bracket. If tax credits are taken from them, they will feel the pain more than anyone.
Of the 4,500 in work and in receipt of tax credits in my constituency, 2,500 received both working tax credit and child tax credit, 1,300 received child tax credit alone and only 700 received working tax credit alone. As a clear result—this, too, was mentioned by the hon. Member for Swansea East (Carolyn Harris) in her introduction—the Institute for Fiscal Studies estimated that the number of children living in poverty increased over the past three years from 2.3 million to 2.5 million: 200,000 more children in poverty, which is massively worrying. The IFS also estimates that the reductions in tax credits will see that figure rise to 2.8 million. Think about that number of children in poverty for one minute—up from 2.3 million to 2.8 million, 500,000 more in child poverty.
Only last month, I spoke about the importance of eradicating child poverty; it now seems like an ever-intensifying and uphill battle, in particular for those struggling to make ends meet. We must also bear in mind that two thirds of children living in poverty in the UK are from working families, which makes the situation much harder, especially given that the cuts could reduce working family incomes by an average of £1,400 per year—someone today mentioned that the figure could be £1,800. Certainly there will be a large reduction in the income of such families.
I have said it before and I need to say it again: the financial changes will make a huge difference to everyday folk on the street. The number of people coming into my office to get food bank vouchers has increased so much in the past year and indicates the trend. I have always felt that food banks contribute greatly to our society, bringing people together to contribute and to help those less able to look after themselves. By that very nature, food banks are positive—I want to put that on the record—but the fact that so many people are using them is another case entirely.
That is exactly the point I am coming on to. We have to be more flexible. In terms of mental health conditions, we know that one in five people going for ESA will have a mental health condition as their primary concern. That increases to just below 50% on a menu of conditions. A mental health condition is one of many types of condition that fluctuate, which has to be recognised. That is why the principles of universal credit will make a considerable difference.
This is not just about support to get people into work, although that is incredibly important; it is also about keeping people in work. For example, 300,000 people a year with a mental health condition drop out of work. I know from having employed someone with a mental health condition that it is a lot easier to keep someone in work than for them to drop out, navigate the benefits system, rebuild their confidence and get back into work. We are doing a huge amount of work. There are lots of pilots and lots of lessons that we are learning. Rightly—this goes across the political divide—we all recognise the significance of mental health conditions and other fluctuating conditions. Life is not simple and the system has to recognise that.
That brings me to the hon. Member for Merthyr Tydfil and Rhymney (Gerald Jones). I am delighted to say that his local football team finally got promoted the other season, which stops his team knocking mine out in the play-offs every year. I have had too many long journeys that have ended in great disappointment. He, too, rightly highlighted the need for flexibility. With universal credit, we will be encouraging the coaches. We will be making the coaches build a flexible relationship with the claimant, recognising that each person is an individual and has different challenges and, crucially, different opportunities.
We have talked about childcare. Obviously, there was our announcement about going from 15 hours to 30 hours. Crucially, this is a devolved issue. We will keep a very close eye on what the devolved Assemblies are doing to see whether there are lessons to be learned and, as ever, we will seek to share best practice. Capacity is a key issue. I recognise that. Between 2009 and 2012, we created 230,000 places—an increase of 12%. We have announced £2 million of start-up grants to encourage more childcare provision. We are simplifying the regulatory framework. That is something we look at.
I thought that it was a fair point about the jobcentre environment. I have done many tours of jobcentres and I think that is something we need to look at. Again, we are doing pilots on how we can change the environment and the services that are offered—joined-up services. Those were fair points on jobcentres. I think we would all recognise that there is work to be done there.
Many of the points in the speech by the hon. Member for Ross, Skye and Lochaber (Ian Blackford) were from the tax credits debate. That is not really today’s debate. There will be an opportunity for that next week, but those important points have now been placed on the record. I say to all the people concerned that we cannot look at this issue in isolation. The introduction of the national living wage will help 2.7 million people. The ripple effect will filter through to 6 million people in total. The changes to the personal income tax threshold have made a significant difference to our lowest earners, taking 3.2 million of them out of paying any income tax at all. I particularly welcome the measure whereby that will lock in with inflation once we hit £12,500, so we will not start to see the creep of people being dragged back into paying income tax. I very much welcome that and of course the increased numbers in work. We support the principle that work is the best route out of poverty.
The hon. Member for Aberavon (Stephen Kinnock) made some interesting points. I gently remind him, in relation to the quote that he used, that those were the very people who elected us to form this Government.
I understood the concerns expressed by the hon. Member for Banff and Buchan. I have made an offer before to meet to discuss those, because I know that she has a real desire to see an improvement in this area. I felt sometimes that there was a bit of confusion between the ESA system and the personal independence system; on some of the points, I felt that. I think it would be worth our having that meeting to discuss the issues in detail. I will say that there has been a complete transformation in the service that a claimant would expect through personal independent payment from when it was initially rolled out. There were well documented problems. I have done Westminster Hall debates on that before. We are now down to 11 weeks—median—end to end, and five weeks for an assessment. That is well within where we would expect to be, but it is a journey. We continue to meet organisations that help with the training and with improving the claimant’s experience.
Crucially on mental health, under DLA a disservice was done to people with mental health conditions. Under personal independence payment, all impairments are treated equally and the system is geared up to recognise them. That is part of the reason why we are now seeing 20% of claimants getting the maximum benefit, compared with just 16% under DLA. Rightly, the assessment has to be about dignity. The assessors are there to help people with their claims. I am happy to meet to discuss that further.
On ESA, let us remember that, on the WRAG group, only 1% of people are coming off that benefit. That shows that the current system has needed to be reformed. I welcome the extra £60 million that we will be spending on providing specialist support, rising to £100 million by 2020. That leaves me with just 20 seconds. I am sorry that I have not been able to touch my formal speech.
I do agree with my hon. Friend, which is why I want to get to the Bill. This backdrop of rising employment, falling deficit, increased productivity and higher wages brings me to the Bill before the House today. This is a Bill for working Britain, and it is underpinned by three key principles: first, work is the best route out of poverty, and being in work should always pay more than being on benefits; secondly, spending on welfare should be sustainable and fair to the taxpayer while protecting the most vulnerable; and, thirdly, people on benefit should face the same choices as those in work and those not on benefits. I wish to talk about each of those principles in turn.
My focus in government—and the focus of the Government —has been to ensure that it pays more to work than to be on benefits. This Bill builds on that principle. First, it extends the important principles of the benefit cap. The £26,000 cap we introduced in 2013 has been a huge success—
One moment, please. The cap has been a huge success in getting people back to work and reintroducing fairness to the welfare system. Capped households are more than 40% more likely to go into work after a year than similar uncapped households. It is right to keep the level of the cap under review to ensure that it continues to be fair and that it provides the right incentives for people to move into work.
No, I will give way to the hon. Member for Swansea East (Carolyn Harris) in a second, but I wish to make a bit of progress.
We know that around four in 10 households outside London earn less than £20,000, and the same proportion of households in London earn less than £23,000. To ensure that the cap better reflects the circumstances of hard-working families, the Bill lowers the current cap to £20,000 for households outside Greater London, and the Greater London cap will be set at £23,000. The exemptions will continue to apply to the most vulnerable, which includes people on disability living allowance and personal independence payment, those in an employment and support allowance support group and those moving into work who are entitled to working tax credits.
I am sorry, but I did not quite hear the hon. Lady. Will she repeat what she said?
The impact assessments are in the Library and the Vote Office. Full assessments have been made.
When viewed alongside the recent Budget, this important Bill shows a clear determination among Conservative Members and the Government to recalibrate Britain and our society in a way that is to be welcomed for the reasons that many of my right hon. and hon. Friends have given.
I support the Bill wholeheartedly, but many Members will be looking for further detail and clarity as it progresses. In particular, I draw Ministers’ attention to carers and the need to ensure that local authorities have enough money to deliver the troubled families programme, which I welcome. Additional thinking also needs to be given to the condition regarding a woman having to prove rape. That is an enormously sensitive issue on which further work and clarity are needed.
Government Members have sat and listened to this debate in amazement. In the speeches of Opposition Members, Ministers have resembled the four horsemen of the apocalypse, riding through the town, with the firstborn having to be sold and vital organs having to be cut out to pay the bills. It has been a debate riven by ideology; not the ideology of the Government, who have approached the Bill as a pragmatic and one nation Government, but the ideology of the left—both the separatists and the Labour party—which believes that welfare is and should be a lifestyle choice. I do not know which planet some Opposition Members are living on if they do not believe that certain people in society have made a choice. Under the system that has been allowed to emerge under Governments of both colours, welfare has ceased to be a safety net and has become a way of life. Let us return to the welfare system that Beveridge envisaged: a helping hand up, and a safety net below which no fellow citizen should fall.
Some may want to wade through vomit, like the hon. Member for Hayes and Harlington (John McDonnell), but I suggest that the hon. Gentleman is wading through the primeval swamp, for the Labour party is clearly in disarray. No Labour leadership contender was prepared to put his or her name to either the Opposition or the rebel reasoned amendment.
I listened with great attention to the Scottish nationalists this afternoon, because, according to the press, they can no longer say their Rs. Well, they could certainly say their Rs today, but I am afraid that, when it comes to welfare reform and economic management, they do not know their Rs from their elbow.
The Bill will reward work, incentivise our fellow citizens, and, most importantly, deliver fairness to hard-working families and the taxpayers who have to pay the bill. My right hon. Friend the Secretary of State has worked hard on this Bill, and it deserves the full support of the House.
This Bill, in combination with the summer Budget, asks us to make three choices. It asks us to think about what sort of society we want to live in, the place of welfare in that society and whether welfare should be a way of life. It asks us to think about the relationship between the state, employers and labour. It also asks us about our tolerance for people being better off on welfare than in work. I know where I stand on those three issues, but I have heard that some on the Opposition Benches are wavering.
On the first of those questions—what sort of society we want to live in and the place of welfare in that society —I am pretty sure we have a consensus that welfare should be a safety net and should be a hand up rather than just a handout, but that means that a benefit such as child tax credits, which nine out of 10 families are receiving, simply cannot be right. Either a benefit should be universal, as with the NHS, or it should help those in trouble, but this one is at present stuck somewhere in between. It is absolutely right that we should move towards tax credits being for far fewer families—five out of 10 families in due course—but arguably we should go further, because in future people’s incomes should cover their cost of living. That is the direction we are going in with the living wage going up towards £9 an hour in 2020.
On the second question—the relationship between the state, business and labour—right now we have a high employment society, but we have a problem of low pay topped up by the state combined with low productivity. We need to move to a situation in which people have a decent wage and businesses keep more of their earnings through there being lower tax, with those earnings being reinvested in the workforce. We will then have a workforce that receive higher pay and that are worth more to their employers, who invest more in their workforce. That is a much better economy to have, with people being better paid and more productive.
The third question—our tolerance of people being better off on welfare than in work—was, I am sure, a real sticking point for all of us on the doorsteps. We got a very clear message from the voters at the election that it is not right for people to be better off on welfare than in work. It is a huge source of resentment when people see they are paying taxes that support somebody in a lifestyle they cannot afford. A couple might stop at having one or two children when they would like to have more but they realise they cannot afford it.
The Scottish Government have repeatedly called for a halt to the PIP roll-out, which has been an extremely messy, damaging and stressful process for claimants. Last week, I tabled a question to ask the Minister what review was being done of those with mental ill health who had been denied PIP on the basis of tests with a physical aspect. The answer was that the Government are not currently reviewing the matter, which is no comfort to constituents of mine who have come to me in abject despair having been denied PIP and become embroiled in the messy, uncertain and lengthy appeals process.
Disabled people are already at risk of being in lower-income households, and the UK Government’s cuts are making things worse. Currently, half of all people living in households with a disabled adult are in the bottom 40% in terms of income.