Universal Credit and Welfare Reform

Jim Shannon Excerpts

Tuesday 11th September 2012 Commons Chamber

[Mr Byrne]

If the Minister is accusing Refuge and Women’s Aid of a smear, I am afraid that he has got his facts seriously wrong. This element was not in the original design. Yesterday we finally extracted from the Secretary of State a commitment to change; now we want to know how it, along with a host of other things, will work in practice.

Some of these issues are now bedevilling local authorities. There is a serious risk that direct payments of universal credit, which includes housing benefit going to the individual, will result in local councils’ arrears bills and eviction rates beginning to rise. We are still no clearer about what will happen to the 20,000 housing benefit staff who work for local councils and will no longer have to process housing benefit claims once the DWP takes over the task. Are they going to be sacked or made redundant? Who will pick up the bill? Is it yet another bill that will fall on the shoulders of hard-pressed council tax payers?

[Jim Shannon (Strangford) (DUP)]

In my constituency, housing benefit applications are up by between 10% and 15% and extra staff have been employed. The waiting list for applications to be processed takes anything from six to eight, or even 10, weeks. Yesterday the manager of the housing benefit office told me that only six months into the scheme he is already cutting back on the moneys that are allocated to try to make them last until next April. Does the right hon. Gentleman think that in the case of housing benefit, chaos is knocking on the door?

[Mr Byrne]

I am afraid that that is absolutely right. That is the message that is coming back from local authorities all over the country. In fact, the Local Government Association told the Select Committee on Friday that there is

“a real risk that the central Government universal credit IT systems will not be ready on time”.

That was part of an array of evidence submitted about the mounting risks. The CBI said that the

“tight delivery timetable…is a risk to business”.

Citizens Advice said that universal credit

“risks causing difficulties to the 8.5 million people who have never used the internet”.

The Chartered Institute of Taxation said that for many people

“The proposed procedures for self-employed claimants…will be impossible to comply with.”

Shelter has said:

“Social landlords and their lenders have voiced considerable concern at the implications of direct payments for social tenants”.

The Association of Directors of Adult Social Services says that the abolition of severe disability premium is an

“apparent contradiction of the Government’s stated aim to protect the most vulnerable.”

Atos Healthcare

Jim Shannon Excerpts

Tuesday 4th September 2012 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Member for Rutherglen and Hamilton West (Tom Greatrex) on bringing this matter to the House. The issue affects us all as MPs. With benefits changing now and in the future, the impact on our constituents is greater than ever.

I want to focus on one thing, as I am conscious of the time. I will give an example of how the Atos system does not work when it comes to basic knowledge of the interaction involving the applicant who is appealing against the decision to refuse incapacity benefit or ESA to those who are wheelchair-bound and have severe mobility problems. They are asked to attend the appeal on the third floor of a building in the centre of town. The first question the receptionist will ask is, “Can you leave this building on your own if there is a fire?” That is a very important question, but the fact is they could not do so, so they have been asked to attend an appeal tribunal that cannot take place. They go home and join the back of the queue once again, having to wait perhaps another six or eight months. They are then asked to attend an appeal that takes place about 45 to 60 minutes away by car, going through traffic, pain and other problems to get where they want to be.

There are clear problems in the basic knowledge of the scheme. Whenever an elected representative makes a complaint about that to the relevant bodies, whether Atos or the Minister responsible in Northern Ireland, they take it on board and seem to respond. That is great, because we think we have won the battle for the constituent and the system in future. However, it does not work that way. Guess what happens? Next time, someone else in a wheelchair with severe mobility difficulties encounters the same problem. I want to illustrate that with an example, because we have a system that has failed my constituents again and again.

There has to be a grassroots change in how the system works. That is what the hon. Member for Rutherglen and Hamilton West is saying and why we are all here today. There are many people who fall into the category. It is assumed that if someone is not able to walk they can sit and do a job. That is unfair for many people because the problems they have with their back or the difficulties severe mobility they have mean they cannot stand or sit on a regular basis. I am very conscious of these issues and want to raise them. I hope the Minister will give a positive response. We need change or accountability—either one or the other, or indeed both.

Credit Unions (Modernisation)

Jim Shannon Excerpts

Tuesday 10th July 2012 Commons Chamber

[Mrs Moon]

My hon. Friend is completely right. We must take on board the fact that those are families who want to work and who get into debt in order to continue working, because they know that continuing to work will give their children a better start in life. They need support, and credit unions can give them a better level of support.

Greater competition for the high street banks and the more widely available source of affordable credit are both things that credit unions can offer. Therefore, what should be done to nurture credit unions and ensure that they can fill the gap while achieving long-term sustainability? The main recommendations of the feasibility report can best be summarised as the need to increase efficiency, to increase revenue and to increase skills. I understand that the Government plan to take forward the report’s recommendations and that the additional earmarked investment of £38 million will be conditional on the credit union industry meeting a number of agreed milestones for collaboration, modernisation and expansion. I hope that the Minister will elaborate on how that will work in practice.

I shall look at the changes in turn. Increasing efficiency, from the point of view of greater automation, reorganisation and collaboration, makes sense. Close working among credit unions and the ability to provide a greater variety of services to a larger customer base is clearly important, but I want to sound a note of caution. Part of the appeal of credit unions is their ethos of independence. In the section, “The Way Forward”, the report recommends that the Government select the best performing credit unions, which make commitments to fulfil certain requirements. The Department for Work and Pensions has suggested that, for that to work, credit unions would need to form consortiums of 15, with a joint minimum membership of 120,000.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Lady for bringing this matter to the House. In my constituency credit unions play a vital role in local communities and deliver to the people who really cannot afford banks. Does she agree that the Government changes should take into full consideration the importance of small credit unions and what they deliver to local communities?

[Mrs Moon]

I thank the hon. Gentleman for his intervention. That is exactly where I was going in my speech. The average size of a credit union is around 8,000 members, but many fall below that, including Bridgend Lifesavers. Its membership is growing, but it is still about 3,000, so it would be excluded from the modernisation plans. In fact, it would be impossible to meet the target of 120,000 members given that we do not have that total membership across Wales. Wales is a vibrant and active country for credit unions, and I have no problem being ambitious about what they can achieve, but I would like an assurance from the Minister that smaller credit unions that provide valuable services to their communities, such as Bridgend Lifesavers, will not get lost in a stampede aimed at economies of scale. Perhaps we could hear about the measures to be introduced to protect smaller, but still valuable, credit unions. I recognise the need to increase revenue through the expansion of membership and by increasing the products available and the interest rate that credit unions are able to charge.

Demand for credit unions is certainly not a problem, as the feasibility report’s research found. Of 4,500 consumers on a low income who were contacted, 60% expressed a desire for local trusted services, such as those provided by credit unions. The crunch came when they were asked about their awareness of local credit unions, with only 13% of those surveyed being aware of the services that unions provided. That might in part be explained by the previous links required for membership, so the legislative reform order that came into force in January will, I hope, tackle that issue, and I thank the Government for taking the measure forward.

The feasibility report emphasises the need to raise consumer awareness and to develop a strong credit union brand. A national marketing campaign is needed not only to reach those on lower incomes, but to broaden the appeal of credit unions generally. In the United States and in Canada, 40% of people are members of credit unions. The credit union is not just a low-income organisation; it is active across the income spectrum.

Disability Benefits and Social Care

Jim Shannon Excerpts

Wednesday 20th June 2012 Commons Chamber

[Maria Miller]

I do not think that it can be a false economy to make a change that will see the end of £600 million going out in overpayments. The change is long overdue. We need a benefit that supports disabled people in a flexible, non-means tested way that is not related to their work status, with a firmer gateway to ensure that we get the money to the people who need it. That will mean that we are not left in the situation we are in now, where 70% of people have a benefit for life and there is no inbuilt way of reassessing that. We need to see an end to that inaccurate use of much-needed money.

[Jim Shannon (Strangford) (DUP)]

Will the Minister give way?

[Maria Miller]

If the hon. Gentleman will forgive me, I will make a little progress. I want to move on to an issue that I think he will find very important: the role of universal credit in our commitment to supporting disabled people. We know that universal credit is a vital part of how we will support disabled people in the future, delivering a welfare system that people finally understand.

Under the current system, some people face losing up to 96p in every pound they earn through tax and benefit withdrawals. There are seven different components associated with disability, paid at different rates with different qualifying conditions. It is little wonder that disabled people have been put off moving into work for fear of losing out under the benefit system. Under universal credit, support for the most severely disabled will remain unconditional, as it rightly should, but we will also see a more generous system of earnings disregards for disabled people and carers. When people are able to work, or choose to work in spite of their disability or health condition, work will pay. The Labour party had 13 years to make those changes, but again it dithered and failed to make the right decisions for disabled people. I hope that the hon. Member for Strangford (Jim Shannon) agrees that it would have been better if Labour had voted with us on welfare reform so that we had strong support for these important reforms.

[Jim Shannon]

May I cast the hon. Lady’s mind back to the issue of the appeals process, particularly for those on ESA? Can she assure us, and me as the Member for Strangford, that when people attend ESA appeals those on the tribunal will totally understand the issues of mental, intellectual and cognitive behaviour? I perceive that they do not and that because they do not a great many people are turned down. Is it not unusual that 40% of those who are turned down for ESA win their appeals? Perhaps that is proof of the need for change.

[Maria Miller]

The hon. Gentleman is absolutely right to bring up the challenges in ensuring that the right support is in place for people with fluctuating conditions, particularly those with mental health problems. That is why so much emphasis has been put on that in the reform of how the work capability assessment works and in other areas, too. In the reform of the DLA, we are focusing on that issue—

--- Later in debate ---

[Ms Margaret Ritchie (South Down) (SDLP)]

In supporting the Opposition’s motion, I should like to bring to the debate the perspective of Northern Ireland, where there are separate but basically parallel social security systems.

Our society owes an enormous debt to individuals and organisations that care for friends, family and loved ones. That does not just make our society richer, but in Northern Ireland alone unpaid carers are worth more than £4 billion to the local economy. However, although the Government pay lip service to the work that our voluntary sector does, they are undermining it at every turn through their welfare policies, including the new work capability assessment for employment and support allowance and the move to personal independence payments from the existing disability living allowance.

In Northern Ireland, it has been estimated that some £500 million will be removed from the welfare budget as a result of the Government’s policies. That is clearly a move designed to cut expenditure rather than a constructive reform of the benefit system. By taking away financial support and introducing more stringent qualifications for personal independence payments and the work capability assessment, the Government will take a degree of freedom away from many people. That will only increase the pressure on the thousands of carers who will be left to carry the slack on top of their already demanding role.

[Jim Shannon]

In Northern Ireland, we have more disabled people and more carers than elsewhere. Does the hon. Lady feel that the impact will be greater on people in Northern Ireland than on those in any other part of the UK?

[Ms Ritchie]

I agree, and when I was a Minister in Northern Ireland with direct responsibility for benefits, I saw every day of my working life the high proportion of people in receipt of benefits, particularly disability living allowance. That was a result of our divided and conflicted society and a legacy of the conflict itself, because we had a high proportion of people with mental illness. The new policies do not take that on board.

The Department’s subtext is clear—a presumption that many people receiving benefits do not need them. The Government claim that they are restricting the new benefit arrangements to those who need them most, but surely benefits should be granted simply to those who need them, without qualification. That is what any notion of the big society should be based on.

One of the main problems with the work capability assessment for employment and support allowance is the reasonableness of the mobility test. The test is whether a person can mobilise

“unaided by another person with or without a walking stick, manual wheelchair or other aid if such aid can reasonably be used.”

I know of constituents who have arthritis in their back, hips, legs and feet but are physically able to use a wheelchair. The test is hypothetical; even if a person has never been assessed for such a mobility aid, and such an aid has not been considered by their medical professional, they can be considered able to mobilise, despite their having a serious medical condition that would prevent them from mobilising without a wheelchair.

The incongruous element of the test is that, in many cases, a medical professional would not recommend a manual wheelchair for a condition such as arthritis, as it is a hugely life-changing and extreme intervention on someone’s mobility. Frustratingly, without the wheelchair element of the mobility test, many people with a physical illness would meet its criteria.

I am aware from constituents’ experiences at appeal tribunals that legal professionals also struggle with the lack of clarity on “reasonableness”. Such serious problems have left many facing uncertainty, which can cause severe stress to people who already face incredibly challenging circumstances.

[Jim Shannon]

I congratulate the hon. Lady on the comments she makes on behalf of those who are disabled. One issue with appeal tribunals is that doctors do not appear when they should, another is that people are asked whether they are mobile enough to get out of the building if there is a fire. If they say they cannot, they have to return home. Like me, the hon. Lady believes that those simple matters should be sorted out beforehand. Does she agree that a straightening of the appeal process is needed to make the process easier for applicants?

[Ms Ritchie]

Like me, the hon. Gentleman would agree that that is not the responsibility either of the Department for Work and Pensions in England or of the Department for Social Development in Northern Ireland; it is the responsibility of the Appeals Service in Northern Ireland. That is a separate organisation, and those questions need to be directed to it for a resolution.

The Government must acknowledge that the introduction of personal independence payments might have a different impact in Northern Ireland. Approximately 100 people per 1,000 currently receive disability living allowance, compared with 50 people per 1,000 in Britain. We simply cannot ignore the fact that Northern Ireland society is emerging, as I have said, from decades of conflict, which have left many people emotionally and physically scarred.

Northern Ireland also faces a common transition difficulty with Scotland, England and Wales. In Northern Ireland alone, some 117,000 people will have their cases reviewed on the introduction of PIPs, which will require the testing of more than 1,000 applicants a week. How will so many people be re-tested in a manner that is just, reasonable and fair? That is an enormous concern. It is especially worrying given the aforementioned fiasco of the introduction of the work capability assessments for ESA. As I have seen in my constituency, the number of successful appeals demonstrates what happens when the Government make ill-advised and poorly thought-out changes to the welfare system. I am extremely concerned that we will face exactly the same problems when PIPs are introduced.

Although it is important to pay tribute to carers this week, we must remember that they are carers for 365 days of the year. They are at the heart of our families and our society, and the Government should help them rather than introduce ill-considered and ideologically motivated welfare cuts that will do nothing more than simply increase financial stress and burdens, and many other burdens within the family and the community. I urge—even at this late hour—the Government to reconsider. The Social Democratic and Labour party firmly supports the Opposition motion.

Health and Safety Executive

Jim Shannon Excerpts

Wednesday 20th June 2012 Westminster Hall

[Meg Munn]

My hon. Friend makes an important point. That situation will be properly investigated and whatever was wrong put right, which is exactly what the Health and Safety Executive does, and does extraordinarily well. That is something of which we should all be proud.

Many of our major companies take great pride, not just in reducing accidents to a minimum but in seeking to carry out their business without any accidents at all. That is not just good for their employees but saves on business costs, making sense for everyone. Unfortunately, that approach does not extend sufficiently to those who employ drivers for a living. Astonishingly, when I first wrote to the Secretary of State for Work and Pensions about the matter, he replied that obstructive sleep apnoea in lorry drivers was not a health and safety issue. When I wrote again, he replied in more detail:

“medical fitness to drive is a matter on which the DVLA rightly takes the lead...HSE generally maintains that meeting DVLA requirements will satisfy the test of what is reasonable”.

I do not accept that meeting Driver and Vehicle Licensing Agency requirements is enough to meet the Health and Safety Executive’s aim of requiring employers to take steps to reduce risks to as low a level as is reasonably practicable. In addition to the work that the DVLA and the police do on road safety, the Health and Safety Executive has an important role to play in influencing more employers and trade union safety representatives not only to be aware of the dangers of undiagnosed sleep apnoea, but actively to encourage screening.

I suspect that the Minister will tell me that the police, the DVLA, the Department for Transport and the Vehicle and Operator Services Agency adequately ensure enforcement of the legislation, but I do not accept that. Given the cost of driving accidents, in lives and money, I ask the Minister to take this matter to her Department and look at it again.

Currently, employers have the legal responsibility, and I will continue—with, I am sure, Members such as the hon. Member for Orpington (Joseph Johnson)—to press more companies voluntarily to adopt the approach of Allied Bakeries, but the Government can make a positive change and ensure that the Health and Safety Executive’s expertise is brought to bear.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Lady on bringing this matter to Westminster Hall. Does she feel perhaps that the findings of the report that she has presented today should be made known to the devolved Administrations, for example the Northern Ireland Assembly, where the matter is a devolved one? The findings of the report would be important for those Administrations, so that they could also bring, or enable, legislative change, to prevent such tragedies.

[Meg Munn]

The hon. Gentleman makes an important point. Nowadays, lorry drivers increasingly drive not just in their own countries but abroad, and we know that the European Union has been considering this matter. It is absolutely right that the devolved Assemblies should consider the issue in their Parliaments and ensure that they, too, address it.

Before I allow the Minister to respond, I want to make my fundamental point, which is that the Health and Safety Executive is a great body, which does a good job. It could do so much more in addressing the nearly two thirds of fatalities at work that happen not in the areas that the executive currently covers, but on the road.

My strong representation is that although other organisations, the police, the DVLA and the Department for Transport consider certain aspects of the matter, no one is doing the kind of proper forensic investigation of such accidents that would mean that information could be fed back into guidance and really begin to make a difference. The consequences of lorries crashing into people are horrific, as our constituents would testify, and I would like the Government seriously to consider the matter. I do not expect the Minister to wave her magic wand today, but I urge her to go back to her Department and have a good look at this.

Universal Credit

Jim Shannon Excerpts

Wednesday 9th May 2012 Commons Chamber

[Maria Miller]

As I was saying, the hon. Gentleman rightly picked up on the importance of the online aspect of universal credit. It is designed to be an online service, providing access and support to claimants 24 hours a day. Importantly, it will also provide the service where constituents are, as opposed to where jobcentres are.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for giving way, and I apologise for not being here for the beginning of the debate. I was at another engagement down below, and I did not realise that the Adjournment debate had started.

I feel that certain people in the middle class are going to fall into the child poverty bracket as a result of the introduction of universal credit. What assurance can the Minister give me that such people will not be adversely affected by the changes that the Government are proposing?

[Maria Miller]

I welcome the hon. Gentleman’s intervention. At the point of transition to universal credit, we want to ensure that people will continue to receive the support that they were receiving before, if there have been no changes to their circumstances. It is important for everyone to understand that, as a result of universal credit, we will be making work pay. We will ensure that more people can stay close to the labour market, which will help them not only to get out of poverty but to stay out of it. We all know that families can cycle in and out of poverty; it does not affect a static group of people. It is therefore important that we have that support in place.

I want to get back to the digital nature of universal credit. We make no apology for the fact that this is designed to be an online service. It is designed to be available 24 hours a day, and to be available where claimants are and when it is most convenient for them to use it. The hon. Member for Nottingham East is right to say that that will not be the right approach for absolutely everyone, but let me stay with the group for which it will be the right approach. Estimates show that about 80% of individuals are already accessing services in an online scenario. We are not assuming that 80% will use the online service at the outset; we have always recognised that not everyone will be able to claim online. However, we expect that the proportion who do so will grow over time. We will supplement all of that with a face-to-face and telephone service that will always be available, for just the kinds of groups of people whom the hon. Gentleman referred to.

To ensure that we resolve any issues in advance of the system going live, and that we have the right kind of support in place, we are already working with local authorities on a number of pilot schemes. I urge the hon. Gentleman to look at the work that we are doing with the Local Government Association. We have also recently issued a joint prospectus calling on local authorities to deliver pilots to support residents in preparation for the introduction of universal credit in 2013. The pilots are expected to start in the autumn of this year and to end by September 2013. We will focus on delivering the kind of face-to-face support that individuals might need when claiming universal credit. I hope that he will agree that we will have a wide range of support available. It will be available online, as well as face to face and on the telephone.

The hon. Gentleman is right to say that it is important to get the IT right for this, and we are well under way in our designs and in testing the system to ensure that universal credit is introduced in 2013. Our ambition will, of course, always be to move the majority of people on to use of the online system, and we are working closely with other Government Departments and beyond to ensure that the best possible support is there to enable access to the internet for many people, supporting claimants to get even more value from being online.

The hon. Gentleman expressed an interest in the issue of fraud and the work being done to ensure that safeguards are in place. It will come as no surprise to him to hear that we take the issue of fraud very seriously indeed. Its prevention has been built into the heart of all policy and service design development. Universal credit will be protected by comprehensive and sophisticated cyber-defence and counter-fraud systems, which are currently under development with leading suppliers. I am sure that the hon. Gentleman will want to stay close to the sorts of issues that we are dealing with, but he will understand if I do not go into the details of those systems, as they are sensitive and not for open discussion.

The hon. Gentleman raised the issue of monthly payments, which I have touched on a little already. To be absolutely clear, we believe it important for universal credit to reflect what people experience in the workplace when they are working full time. For the most part, that means being able to budget around a monthly payment, a monthly salary or a monthly amount of money coming in. We will ensure that there is flexibility in the system for those who find that exceptionally difficult, but we believe that this will be an exception and not the rule.

[Jim Shannon]

I can see the logic behind the change to monthly payments, but it is clear that some who get weekly payments are not knowledgeable enough to know how to manage their moneys. Will the Government give any help to those who will depend on single weekly payments to start with, who will then have to manage on monthly payments, on how best to manage their money?

[Maria Miller]

The hon. Gentleman will be reassured to know that my noble Friend Lord Freud is looking at exactly those issues. We know that changing people’s behaviour cannot happen overnight. People need support and we will make sure that we understand the sort of support that will prove the most effective, as the hon. Gentleman would expect us to do.

The hon. Member for Nottingham East talked about the importance of banking in this process. Direct payments to bank accounts are an important part of helping people to prepare for work. We will encourage claimants to use bank accounts, and we are discussing this very issue with the British Bankers Association. We recognise, however, that it will not be suitable for everybody, so we expect to continue to pay rent directly to landlords in some cases and we will continue to ensure that suitable payment arrangements are in place for everybody. The hon. Gentleman is right that we need that nuanced approach for some individuals. The bulk of individuals, we believe, should be able to cope with the sort of monthly payments that I mentioned earlier.

Women’s Aid

Jim Shannon Excerpts

Wednesday 14th March 2012 Westminster Hall

[Mr Clarke]

I agree absolutely with the hon. Lady, but if—as I saw at Monklands Women’s Aid—staff at centres are compelled to contemplate the financial circumstances that they are facing as an organisation, that might take away some of the time that they would like to allocate to the wider objectives that she quite properly identifies.

For many women, the fact remains that refuge is desperately needed in emergency situations when their lives and their children’s lives are at risk. I hope that I have convinced the Minster that Women’s Aid is indeed a special case.

[Jim Shannon (Strangford) (DUP)]

Just 10 days ago, I had the opportunity to visit the Women’s Aid centre in Bangor; it is in North Down, but it is also responsible for Strangford, which is my constituency. The staff there very clearly indicated the financial squeeze that faces them. They illustrated it by talking about the future not only of the centre in Bangor, which is responsible for a large catchment area, but of the staff. If the Government do not address those issues, I fear that the future of Women’s Aid will have a question mark over it, not only in the right hon. Gentleman’s constituency but in mine.

[Mr Clarke]

Again, the hon. Gentleman speaks from experience and I passionately believe that we should not ignore such experience. He is dealing with what he sees in his constituency, day after day, and also reflecting our experiences in our own constituencies elsewhere.

Frankly, life and death issues are at stake here, and children can be victims of abuse too. We need to ensure the provision of free and safe refuge, which is crucial to the safety of women and children who are suffering abuse. That is an inviolate principle. At a time of desperation, people in Monklands, across Scotland and—as we have heard—throughout the United Kingdom must be afforded the opportunity to seek refuge. Most regrettably, domestic abuse is a considerable problem across our country.

Women’s Aid also performs a major role in the continued development of the children who are affected by abuse. In many families, children are often caught in the centre of a storm, and thus Women’s Aid focuses its attention on providing continuity for such children.

I urge the Minister to reconsider the current proposals on housing benefit. My plea today is that she reflects upon the comments that I and others make. Later, other hon. Members will undoubtedly make valuable contributions to the debate, and it is more than likely that they will be based on the kind of experiences that we have already heard about from hard-working, conscientious constituency MPs.

This subject and the real people who suffer domestic violence are too important for there to be a partisan Government. I am leaving an escape route for the Government when I refer to the unintended consequences of their proposals. If the Government ignore my representations, that could have a devastating impact on women across the country, leading to more women and children walking the streets.

We need the continuation of the marvellous back-up services that are provided by Women’s Aid and—lest we forget—managed by outstanding, caring people. Today I want not only to convince the Minister but to gain support from all parties. We cannot and we must not abandon women who are seeking refuge. In the words of the late Mother Teresa of Calcutta:

“Being unwanted, unloved, uncared for, forgotten by everybody…is a much greater hunger, a much greater poverty, than the person who has nothing to eat.”

Pension Industry

Jim Shannon Excerpts

Tuesday 21st February 2012 Commons Chamber

[David Mowat]

I agree. The key word that the hon. Gentleman used in that intervention was “transparency”. If the market is to work, there must be transparency and comparability, but it seems to me that there are people in the industry who do not want the market to work. The market might work better if independent advice were freely available, but in the past the industry has effectively controlled advisers by treating them as paid intermediaries with a commission structure that compromised their independence, and between 2002 and 2007 its payments to such intermediaries for their advice rose by 50%. Hopefully the RDR—the retail distribution review will deal with the problem, and I give the Government credit for that.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Gentleman on raising this matter tonight. My hon. Friend the Member for North Antrim (Ian Paisley) mentioned people who have taken out small pensions and who also fall into a tax bracket. Does the hon. Gentleman agree that their position should also be reviewed by the Government?

[David Mowat]

I shall be making a number of suggestions to the Minister later, and I certainly agree with what the hon. Gentleman has said.

I also give the Government—in fact, the last Government —credit for setting up the National Employment Savings Trust, without which auto-enrolment would be entirely untenable. Given its low charges and what appears to be a sensible investment policy, the organisation has an important contribution to make. However, as I shall make clear later, I think that the Government could be more radical about what NEST can achieve.

Let me summarise the position by saying that the fund management part of the industry has evolved into a mess. The market has failed owing to asymmetry of information and lack of transparency, and we are about to impose auto-enrolment on top of that mess. The £35 billion of tax subsidy that is currently provided will increase, and will be supplemented by employer and employee contributions which will also run into the billions. Those cash flows ought to be finding their way into better pensions rather than into the Chelsea property market.

I ask the Minister to assure us that before any of this happens, he will take the following steps. First, there should be a template for charge structures that will facilitate transparency, comparability and reporting. An analogous debate is taking place in the Department of Energy and Climate Change about energy suppliers, who are being required to introduce tariffs that allow comparison. Exactly the same should happen in this industry: indeed, it is more important for it to happen in this industry than in energy.

Secondly, there should be a charges cap on any supplier who becomes involved in auto-enrolment. I was staggered to read in a written answer that the Minister did not consider that necessary. A 1% cap was applied to stakeholder pensions, and the same should apply in this case.

Thirdly, some of the restrictions on NEST should be removed. The philosophical basis of the contribution limit of £4,400 and the restrictions on transfers in and out was that the purpose of NEST was not to compete with the market, but to operate in the parts of the market in which organisations do not wish to operate. That is an inadequate approach, and I think that the Government should be more proactive. Finally, the Government must ensure that there is no further slippage in the introduction of the RDR. Unbiased investment advice is sorely needed, and needed soon.

I fear that unless those measures are adopted, auto-enrolment will compound a failure that could easily become our next mis-selling scandal.

Let me now say something about annuities. It is possible for people to take their pension pots and then purchase annuities that will support them for the rest of their lives. However, the background is already tough—quantitative easing and life expectancy have driven down annuity rates—and the solvency II requirements may make the position even worse. It is clearly critical that the public obtain the best value possible. This means shopping around, but that is exactly what the big players in the industry do not want to happen. They want to stop it because it is their belief that they “own” that customer relationship, and they want to turn that ownership into more profit using two techniques. The first is the attempt to make the transition from savings into annuity seamless. That means putting an application form in with the final pension statements along with their own quotes. This, combined with a relationship sometimes developed over decades, is often enough to trap retirees into unsuitable and inadequate products. The second technique is using the asymmetry of information that we have seen in other areas to ensure that the retiree would need a maths qualification and a lot of intellectual self-confidence to sort out a better deal.

I have mentioned complexity, and I found the following sorts of annuities on the web—enhanced, fixed, guaranteed, immediate needs, impaired, income, index-linked, joint life, lifetime, lump sum, protected rights, purchase life, single life, variable life, with profits and smokers. For the average punter to work out intelligently what is best for him and his family using that lot is very tough indeed. The fundamental business objective is simple, but that is not how the market has evolved. The consequence has been mis-selling on an epic scale. A recent report from the CASS business school mentioned an existing provider offering £3,600 for an annuity pot and then a subsequent provider offering £26,000. That may be an outlier, but the facts are that 90% of retirees buy pensions from their existing fund manager and a very high number of those get below what the open market would offer. This matters to the Government—or it should do—because those massive profits siphoned off by the industry are resulting in hardship and an increased reliance on state benefits.

What should we do? I have five suggestions for the Minister. First, the Government should consider setting up an equivalent of NEST, specialising in the low cost provision of annuities. The IT and business process challenges around annuity provision are easier, as the cash does not need to be collected. At a stroke, the Government could provide an organisation that was a hallmark for fairness and best practice. Lord Myners has suggested that the Government allow people to purchase Treasury bonds direct, which would fit in with my proposal.

Secondly, the Government should consider making it illegal for the organisation that administers the saving regime to also provide an annuity. The advantage of this is that it keeps the Government out altogether while helping to make the market work. At a stroke, we would get new entrants to the market who are likely to be smaller, hungrier and more efficient. There are many precedents for this in the private sector. I used to work in the IT industry and it was not uncommon for those who designed an application to be forbidden to bid for implementation, because the procurement people wanted to ensure that the relationship advantage that had developed did not affect the pricing for the final step.

Thirdly, if the Government continue the existing system, in which providers attempt this seamless transition, there should be a rule that an annuity provided should be signed off by an independent financial adviser. That is a simple step and would ensure that the lethal combination of asymmetry of information and “relationship abuse” do not combine to rip off the retiree.

The fourth measure is a similar regime for annuities as I have suggested for charges for investment funds. We should insist on a few, relatively simple categories, and that would force transparency and comparability, also forcing the market to work properly. I believe in the market, but in this industry it has not worked. The industry will say that standardisation will limit choice, but they would say that, wouldn’t they? This is a simple transaction that needs to be made easier.

Finally, the Government should implement a system in which retirees approaching the annuity purchase point are much better informed about their options. They should be able to go to the open market and it should be forbidden for application forms to be put in with the actual pension round-up statement. The National Association of Pension Funds has a number of sensible measures in this regard, but I am of the view that that fifth one, on its own, is not enough.

In summary, it is vital that our people in our country save more than they are saving at the moment, but we do not wish to continue saving if the tax relief on that is channelled off for the property market in Chelsea and does not go to the savers themselves. Ordinary families continue to be penalised by an industry that has made supranormal profits by creating and exploiting a market failure, and the Government need to address that. If the Minister allows auto-enrolment to go ahead without reform, we are setting the scene for the next mis-selling scandal. I understand that it is tough for him to resist the lobbyists, who will be all over him on this, but self-regulation is not enough and the time to act is now.

Work Capability Assessments

Jim Shannon Excerpts

Wednesday 1st February 2012 Westminster Hall

[Tom Greatrex]

I entirely agree with my hon. Friend. Such issues were among those identified. My contention is that those problems should have been dealt with before the system was rolled out further, and we are now dealing with the consequences of those decisions.

The Atos half-yearly report for 2011 was very upbeat. It noted that operating margins had increased year on year to €166 million—an 11% increase from the first half of 2010. Its operating margin in the UK in 2011 was a healthy €34 million. The outlook for the second half of 2011 was similarly rosy: Atos expected profits to increase by 6.2%. I say all that not to congratulate Atos and marvel at how successful it has been, but to preface my next remarks.

Recommendation 13 of Professor Harrington’s first review was

“better communication between Decision Makers and Atos healthcare professionals to deal with borderline cases”.

In their initial official response to Harrington’s 2010 review, the Government accepted that recommendation, noting:

“Decision Makers already contact Atos healthcare professionals to discuss individual case issues in some instances… we will ensure this happens more often… Agreed measures will be adopted nationally during 2011.”

In a letter that I received from the DWP dated 1 November 2011, I was advised that good progress had been made on that key Harrington recommendation. The DWP letter claimed that

“Atos Healthcare Professional deployment in Benefit Centres has been trialled and has proven to be an effective way of improving communications to discuss borderline cases.”

However, on 20 December 2011, just over six weeks later, in answer to a written question that I had tabled, the Minister advised that

“at the end of the trial, Atos health care professional capacity pressures meant that the initiative could not be continued. From the start of December, DWP and Atos have agreed the implementation of a telephone helpline so that Decision Makers can speak directly to health care professionals to obtain medical advice in specific cases. This is an interim arrangement until Atos are in a position to reintroduce the deployment of health care professionals in benefit centres.”—[Official Report, 20 December 2011; Vol. 537, c. 1082W.]

That is a hugely significant development. This may have been due to when I tabled the question or when the Minister chose to answer it, but he slipped that answer out just before the Christmas holidays. The fact that Government policy is not being followed by a company in receipt of £100 million of taxpayer funding a year will startle many of my constituents and, I am sure, the constituents of many other right hon. and hon. Members.

I should be grateful to the Minister if he gave me answers to a number of questions. What exactly does the phrase “capacity pressures” mean? Does it mean that Atos cannot recruit the right number of health care professionals to undertake its work? Is it unable to fulfil its contractual obligations because of the amount of work that it has to get through? What discussions has he had with Atos about those capacity pressures? Does he believe that they undermine the ability of Atos to fulfil its responsibilities under the contract? What other services have been withdrawn as a result of capacity pressures in Atos? I am sure that if he is not able to answer, I will find a way of crafting written questions to get the answers from him.

To me, the phrase “capacity pressures” implies an undermining of the way in which the Government sought to deal with these issues, which was by saying that Harrington’s recommendations would be implemented in full. If that is not happening in the instance to which I have referred and perhaps in other instances because of capacity pressures in Atos, is that not a damning indictment of the failure of the system as it is currently set up?

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Gentleman on bringing this matter to the House. No one decries the need for profit, but is it not time that we got away from profit and on to service delivery? Does the hon. Gentleman share my concerns about many patients who go through the process of a work capability assessment and particularly those with cancer, whose health deteriorates when they experience more stress? There should be an emphasis on people’s health, rather than on the profit at the end of the year.

[Tom Greatrex]

I thank the hon. Gentleman for his intervention. He puts his finger on a very important point. I am referring to the anxiety and concern that the process causes people, particularly if they are waiting for an assessment. If they enter the appeal process when they have had an assessment, they could wait up to eight months for an appeal. There is an issue about the whole of that process. Long time scales are involved because of the sheer number of people who are being dealt with—or not being dealt with. At the same time, we should never forget that those individuals are trying to deal with the process, and they are feeling huge anxiety. Particularly if they are already unwell, that could well affect their health. That is an important point.

Inflammatory Bowel Disease

Jim Shannon Excerpts

Tuesday 31st January 2012 Westminster Hall

[Chris Evans]

I agree completely with the hon. Gentleman, and I will develop that point about workplaces further as I go through my speech. I am glad that he has raised it. Very often in this place, we quote statistics and sometimes we use them to bash the Government, but in the middle of all those statistics there are real human tragedies and stories that are taking place. As I have said, I am glad that the hon. Gentleman raised that point and I hope that his mother is dealing with life a bit better now.

I want to return to the point that I was making about young people with IBD. At a time when more and more of our young people are struggling to find work, the last thing that we need is for them to rule out career options. Since becoming involved in the campaign to raise awareness of IBD, I have heard story after story from young people who are unable to fulfil their potential because of the problems that the condition causes. This story is particularly common:

“Leanne is a full time foundation degree student from Crewe and has a part time job in a local pub. As a 19 year old she finds it especially hard having an illness which isn’t highly understood or visible. Having a condition which includes side effects like fatigue means not all employers or educational institutions understand the challenges she faces, and she even says that most people mistake this fatigue for laziness. She has had bad experiences in the past with employers and teachers who do not fully understand her condition and what it can mean on a daily basis. She describes herself as a passionate individual who wants to commit to jobs and her education, but finds it difficult on bad days. She has in the past been called “unreliable” during a flare-up of her illness. This ignorance can be damaging and can have a lasting effect on someone so young.”

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Member for Islwyn (Chris Evans) for bringing this matter to the House. The hon. Member for Brigg and Goole (Andrew Percy), who spoke earlier, has illustrated very clearly the issues involved. As elected representatives, every one of us has to deal with these issues every day with our constituents.

The hon. Member for Islwyn has referred to work. The civil service in particular seems to have issues with its “early warning scheme”, as it calls it, and there is no flexibility in that system. Does the hon. Gentleman feel that it is time for the civil service to address that issue, so that people who want employment in the civil service can stay in it and not have to leave?

[Chris Evans]

Yes, absolutely, and that is really the crux of the issue. IBD is not a condition that causes symptoms all the time; there are flare-ups, and then the condition goes back down and people go back to normal life. If there is a problem in the civil service, I hope that the Minister will address it when he responds to the debate.

In today’s economic climate, with youth unemployment at the level that it is, we cannot allow someone with IBD to believe that their condition bars them from the job market. I heard another story of a young person, James, who was diagnosed with IBD in his early teens. James is currently studying for a degree at the university of Sheffield, but he is worried about managing his symptoms in the workplace when he graduates and begins to look for work in what is already a challenging job market. James has said:

“I think the use of the toilet without restrictions has to be paramount. I also think employers should give employees the opportunity to confidentially declare any illnesses which may affect the efficiency of their work. I think employees, regardless of what illness they have, should be allowed to use the facilities, so people who are ill do not feel isolated. Also, I think there should be no stigma attached to having the sudden urge to use the toilet. This is often the case, I would have thought, if you work/live with the same people for a long time. I am concerned that, after having worked so hard to get my first job after I graduate, if I have to have time off for illness or procedures I will be under more pressure in my job. The job market is so competitive and if someone is less ill than me, I will be placed under more pressure due to a situation beyond my control. It is pretty inevitable that I may need time off while working, but due to the competitiveness of the job market there will always someone who will be able to take my place.”

--- Later in debate ---

[Chris Evans]

That was the point that I was trying to make. All we are looking for is a little understanding from employers. We are not asking for a great change in legislation. We want them to foster an environment where people do not feel embarrassed about going to their employers about their condition and that, when they do have to take medication, they are allowed time to do so. That will not affect anyone’s productivity; if anything, it will improve it.

As I have said, I do not want anyone to think that only young people face this problem. Some are forced to take early retirement due to the unpredictable nature of their disease. Until last year, John was a university lecturer. He found that working and living with a chronic condition such as inflammatory bowel disease was too much to cope with. He was unable to rely on the stability of his bowels while giving lectures. He chose to take early retirement without much of a fight. It took 18 months to get his pension released early on partial incapacity grounds, which took a toll, as his condition was going through a flare-up. Even though he has come to terms with his current medication, in order to help keep his symptoms under control, the IBD is difficult to live with and dictates how much travel he can do on a daily basis. It has been financially tough on John and his family, as he was the sole source of income, which has now been halved. The majority of his lump-sum payment made on retirement had to be used to fit a downstairs toilet.

I do not have to tell anyone how important it is to keep people in work, particularly in this economic climate. However, we have to accept that people with fluctuating health conditions may be in or out of work, and employers have to adapt to the different needs of those with the illness.

[Jim Shannon]

One clear issue is the disability living allowance and the benefits system. Does the hon. Gentleman feel there are occasions—I am aware of them—when the benefits system is not flexible enough to enable someone to achieve disability living allowance and to return to work later, if they have to?

[Chris Evans]

That is why we need flexibility in the benefits system. When people have this debilitating disease that very often stops them from working—they cannot do anything, they cannot leave the house—they cannot claim benefit. They do not even slip into the system or anything like that. That has to be borne in mind.

In the week that we are debating the remaining stages of the Welfare Reform Bill, it is important that the benefits system reflects the different needs and requirements of those with fluctuating health conditions. It is crucial that those with IBD do not struggle to cope at work through illness, or live in poverty when they are unable to work. I have heard stories about people with the disease having no income, which forces them out to work. Take this testimony:

“As my symptoms are not regular, I do not qualify for any benefits. So when I am actually too ill to work, I must simply either choose not to work or lose money. It is stressful having to explain the situation without going into too much detail.”

The Government need to recognise the disabling elements of long-term fluctuating conditions such as IBD and include provision for those in the benefits system. The importance of that is underlined by the Government’s introduction of universal credit, and the need to attend back-to-work interviews. The unpredictable nature of IBD means that people with the condition, who are required to attend interviews and undertake other work-related activities, may at times require flexibility, should they experience a flare-up of their condition.

Ultimately, IBD does not have to hinder someone’s work potential. People live with the condition and make a positive impact in the world of work every day. All they ask for is sensitivity and understanding. I do not think that is too much. Therefore, I believe that employers, health professionals and policy makers have a duty to ensure that there is a greater understanding for those with fluctuating conditions such as IBD.