Oral Answers to Questions

Jonathan Reynolds Excerpts

Monday 17th May 2021 Commons Chamber

[Will Quince]

No one in this House wants to see anyone in this country reliant on a food bank, and the Secretary of State and I are working across Government to identify and tackle the root causes of food insecurity and poverty. In the meantime, we continue to spend over £100 billion a year on benefits for working-age people, and during the pandemic we have pumped an additional £7.4 billion into our welfare system to support those facing the most financial disruption. But I hope the hon. Gentleman will agree that it is right that we now shift our focus to supporting people back into work, because all evidence suggests that work is the best route out of poverty, and we have a comprehensive plan to do this via our £30 billion plan for jobs.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Since 2010 poverty has risen significantly in all parts of the UK, so much so that, despite having a job, one in eight workers are living in poverty under this Conservative Government. Given that the Government are adamant that they will make this cut to universal credit, which will affect people in work, should we understand that despite the Prime Minister’s levelling-up agenda, in-work poverty will continue to rise?

[Will Quince]

We take this issue incredibly seriously, which is why we have the In-Work Progression Commission, which is due to report back soon, and why we spend over £100 billion a year supporting people of working age through the benefit system and put an £7.4 billion into the welfare system over the course of the pandemic to support those facing the most financial disruption. But I have to say to the hon. Gentleman that he knows that the best route out of poverty is work. All the evidence suggests that that is the case; that is why all the efforts of this Government will be about, yes, ensuring that we have a strong, robust welfare safety net but also that the focus is on jobs, jobs, jobs—and through our £30 billion plan for jobs we will achieve that.

[Jonathan Reynolds]

I say to the Minister that work is the best route out of poverty but it has not been working for the last 11 years, and the evidence is there for all to see.

Many disabled people are worse off on universal credit than under the old legacy systems. Ministers know this because they were forced to introduce transitional protections and, when speaking in this Chamber, always urge people to use a benefits calculator when applying in case moving to universal credit would cost them money. Keeping the universal credit uplift would go some of the way, although not all the way, towards mitigating this unfairness, so if the universal credit cut goes ahead what is the Government’s proposed solution for these disabled people—or is this yet another area where the Government actually plan to level down?

Oral Answers to Questions

Jonathan Reynolds Excerpts

Monday 8th March 2021 Commons Chamber

[Dr Coffey]

Indeed, I will. I commend my hon. Friend for his advocacy for young people and making sure that they get into a growth sector.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

The economic forecasts that accompanied last week’s Budget painted a challenging picture for the Department for Work and Pensions over the next few years. Forecasts are not always correct but, if those are, we face a period of low growth and high unemployment. Based on what the Chancellor said about unemployment peaking at 6.5%, what would be the shortfall between the total number of young people out of work for more than six months and the maximum number of places available on the kickstart scheme?

[Dr Coffey]

I do not have that assessment to hand. The hon. Gentleman will be aware that the Office for Budget Responsibility significantly reduced its forecast in respect of the impact on unemployment, in recognition of the excellent provisions already made by the Government in the past few months and the ongoing measures set out in the Budget. We made a commitment to aim for a quarter of a million kickstart jobs to be in place by the end of this calendar year; we are well on track to doing that. We should recognise that kickstart is designed for those people who are furthest from the labour market. We will continue to use our excellent jobs army of work coaches, of whom we will have nearly 13,500 extra by the end this month, to help young people to get into work.

[Jonathan Reynolds]

I am grateful to the Secretary of State for her reply. I appreciate that that might not be information that she has to hand. Perhaps she could write to me with the specific figure because matching the scale of the challenge is surely what we all want to see.

In the Budget, the Government also chose to align the end of furlough, the end of the self-employment support scheme and the end of the universal credit uplift, so they all now come to an end on 1 October. She knows that we believe that the uplift should stay in place until we can replace universal credit with a better, fairer system, which, by the way, would be one where people are not worse off if they move on to it from the legacy system. Given that we all expect the end of furlough to at least have some impact on unemployment, would it not have made sense even to this Government to keep the uplift in place to at least help absorb the end of the furlough scheme? As it stands, just when people will again really need it, out-of-work support will be reduced to the lowest level in 30 years.

[Dr Coffey]

The hon. Gentleman asks a fair question about why these have all been taken in parallel. I think that it is to give certainty and direction to the country and to employers, particularly when it comes to the operation of the furlough scheme. As I have said before, this is really the time for those employers to get their workers ready again to go back into work, ideally sooner than before the end of September. Thinking about the temporary £20 uplift that was applied to universal credit, I think it is also fair to say that that is not the only way that we have supported people on benefits in the last year. There are also things such as the increase in the local housing allowance rate, which is on a permanent setting in cash terms. Those are the sort of other measures that we have taken, including to help some people on low incomes with the cost of living.

Income Tax (Charge)

Jonathan Reynolds Excerpts

Thursday 4th March 2021 Commons Chamber

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I am grateful to be called to close the second day of the Budget debate. Budget debates are, in my view, one of the very best parts of our parliamentary process. They are a chance to talk about the big picture—a chance to raise the things that must be said—and nearly 50 Members of Parliament have done so in this debate today. To be able to speak and vote on the measures in any Budget is a great privilege and responsibility for us all, and in closing the debate, I will talk about what I believe the Chancellor needed to do and reference the many good speeches we have heard.

However, we need to start with the big picture. What the Chancellor presented yesterday was a Budget of high taxes, high unemployment and low growth. I do not think that is in dispute. In fact, if the forecasts are right, the historically low levels of growth we saw going into this crisis are now the norm. That, combined with our serious productivity and business investment problem and the challenges caused by our leaving the single market, shows that the scale of the challenge is very significant indeed.

That means that there were two things I wanted most of all from this Budget. First, I wanted to see a clear road map to economic recovery, with a relentless focus on jobs, jobs and jobs again; and secondly, I wanted to see some recognition from the Chancellor that the terrible impact of the pandemic on the UK has been partly due to the state the country was in going into the crisis. Whether on NHS capacity, insecure work or child poverty, this crisis has taken the fraying social fabric of the UK and torn it apart. My hon. Friend the Member for Coventry North East (Colleen Fletcher) made that point very well.

The objective for us all should be to promise not to return to the country we had going into the pandemic, but to do better than that—to promise opportunity, prosperity and resilience far greater than we had in the decade leading into covid. After all, is that not what previous generations who sat on these Benches did after the crises that they faced? They turned their crises into a better future.

The starting point in any debate about protecting the British people in this crisis has to be a recognition of the inequality in how the pandemic has been felt. Yes, we have all been affected by covid in some way, but a person who, for instance, has been able to work from home on full pay, perhaps with a study and a garden, has been in a fundamentally easier position than those who have had no income for over a year. Men and women have been affected differently, with the majority of home schooling falling on women, and different parts of the country have been hit worse than others. That is why I was genuinely disappointed with the ambition, the scope and the policies of the Chancellor yesterday. The Budget did not have that big vision that we needed. I will address that and say what I would have preferred to see.

I will start with jobs. At least the Chancellor saw sense, listened to Labour and the unions and business, and did the right thing by extending the furlough scheme. It is remarkable to me that the Chancellor originally thought it could end last year. But even with furlough mitigating the rise in unemployment, a forecast of unemployment at 6.5% is very high. That means over 2 million people out of work. While furlough protects those in work, we need to do more for the 1.7 million already unemployed. We have lost 700,000 jobs in this crisis. Long-term unemployment is nearly half a million. Half of all disabled people are out of work. Kickstart is not delivering, and restart has not started. Crucially, even if kickstart worked as well as Ministers hope, the scale of the challenge is already greater than the full capacity of the scheme.

I wanted the Government to live up to their rhetoric and offer young people a real guarantee. Young people have suffered so much in the crisis, so let us take the action needed and make sure that no young person is out of work or education for longer than six months. We should promise young people an offer of education, employment or training and link those jobs and training to the challenges the country faces on social care, the NHS, schools and climate change. Time spent on furlough should count towards that limit, so that we do not see the long-term scarring that we know comes from periods of sustained economic inactivity. We could use the money already allocated to employment programmes. We could reform the apprenticeship levy to complement that and spend the money this year and next, when it will be most needed.

That brings me on to universal credit, which many Members have understandably mentioned. Cutting universal credit and working tax credit by £1,000 this year would have been unthinkable and unforgivable, and I make no apologies for how hard we have fought the Government on this issue. The Chancellor could and should have done the right thing and the responsible thing many months ago, yet, as with free school meals, the Government have once again been dragged kicking and screaming to do the right thing. But what we heard yesterday was a half-measure—a £500 cut this year, with £1,000 cut the year after that.

Because of the way that Ministers have behaved, 6 million families have faced months of uncertainty about whether they would continue to get the support they need to cover the costs of the pandemic. These people deserve certainty, and all the Chancellor has done is inflict another cliff edge. On 1 October this year, furlough will end, the self-employment income support scheme will end and universal credit will go down to its lowest level in real terms in 30 years. How can that be right?

What is going on with working tax credit, which the Government are instead offering as a £500 lump sum? The Secretary of State for Work and Pensions was absolutely right when she said to the Work and Pensions Committee earlier this year,

“Previous experience would be that a steady sum of money would probably be more beneficial to claimants”

than one-off lump sums. I believe she reiterated that position in her introductory speech. She is right, but the Chancellor was not listening.

I have to raise again the plight of those people on legacy benefits such as jobseeker’s allowance and employment and support allowance, which my right hon. Friend the Member for East Ham (Stephen Timms), the Chair of the Work and Pensions Committee, did so very well in his speech. These people never had the uplift to begin with. The Government said that it was because it would take too long to do, and as the crisis has gone on, the Government have chosen to ignore them. They know it is not possible for many of those people to transfer on to universal credit because they might be worse off due to the design of universal credit. That is appalling.

What we needed was for the Chancellor to take his own advice on honesty, because the honest take on this situation is that we do not have a social security system that is fit for purpose. That is why keeping the uplift is so contentious. It is why those people on legacy benefits feel so strongly. It is why the excluded exist, and it is why the Government had to make so many changes to the system at the beginning of the crisis.

Although, hopefully, we will not have another pandemic, the impact of technology and trade adjustments on the labour market will become only more acute, and the sooner the Government recognise that, the better. The decision to lift the rate of universal credit was an admission that the level of support was not good enough to help families through this crisis. The uplift should remain until it is finally replaced with a system that provides genuine security for all. The Secretary of State said in opening that she is frustrated by that position. If the Government have been able to accept our arguments on corporation tax, a national investment bank and the minimum wage, perhaps in time they will accept this argument too.

This was a Budget that did not address the challenges facing our country today and offered very little for the future. That focus on the future should have run through the whole Budget, but it simply was not there. There was nothing on schools or education at all, even though, like so many, I have sleepless nights worrying about my children and how they will ever catch up from what they have lost. There was nothing serious for town centres, which are already grappling with changes and facing huge challenges as retail moves more and more online. There was nothing on the future of work and how we harness the change in working patterns to spread prosperity across the country. There was nothing even for our incredible NHS except a £30 billion cut from April this year and no mention of how we will get through the huge backlog of surgeries and check-ups or deal with the impending mental health crisis.

It is not enough. It is not good enough, and it is not the future that British people deserve as the reward for their sacrifice and hard work. I put it to the Government that they cannot fix the problem that the country faces, because they are the ones responsible for creating so many of those problems in the first place. That is why this Budget fails to protect the jobs, the livelihoods and the wellbeing of the British people to the degree that they deserve.

Oral Answers to Questions

Jonathan Reynolds Excerpts

Monday 25th January 2021 Commons Chamber

[Dr Coffey]

We have provided an unprecedented economic support package to protect and create jobs through the pandemic. For people who need to change careers, our sector-based work academy programmes—SWAPs—offer training, work experience and a guaranteed job interview to get those people ready to start a job, allowing them to learn the skills that employers in that particular industry look for. Alongside that, our flexible support fund has been boosted by an extra £150 million so that work coaches can help to support individuals facing redundancy through retraining and overcoming barriers to work.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op) [V]]

As we have heard, last week this House voted that the Government should not proceed with the £1,000 cut to universal credit set to take place in April. That position is now supported by 280 MPs, more than 60 charities and campaign groups, and the majority of the British public. I have listened to the Government today, as ever, but, as it stands, that cut is formally written into official Treasury documents, and the Prime Minister has indicated that he thinks the cut should happen, but last week the Under-Secretary, the hon. Member for Colchester (Will Quince), said that it was too early to make the decision. Will the Secretary of State clarify what is Government policy on reducing universal credit in April, what criteria will affect the decision, and who in Government will ultimately make that decision?

[Dr Coffey]

As has been explained several times to the House today, and previously by my hon. Friend the Member for Colchester (Will Quince), the Government introduced a raft of temporary measures to support those most impacted by the covid pandemic. The hon. Member is aware of the statement I made to the House, where I said that the situation would be reviewed in the new year, and that is exactly what I am doing. I am working closely with my right hon. Friend the Chancellor as we consider the options on how best to support people through the pandemic.

[Jonathan Reynolds]

I put it to the Secretary of State that she must give clarity to the millions of families this cut will affect. If she wished, she could give that reassurance now. I also ask for clarity on reports that the Chancellor is planning on giving a one-off payment to universal credit claimants, ignoring those on other benefits, and leaving the hundreds of thousands of likely new claimants expected this year with lower levels of support. Does the Secretary of State agree that it would be not only unfair, but a very poor use of public money to pay a lump sum to people on universal credit now, while cutting unemployment support to its lowest level for 20 years, just as unemployment is set to peak?

[Dr Coffey]

I can only more or less repeat what I said before. My right hon. Friend the Chancellor and I are actively working on proposals on how we can continue to make sure that we support people most badly affected by the pandemic. This is part of the discussions that are still ongoing, and I can assure the House that we are actively considering it and hope to make an announcement when we can, in order to give that certainty, as the hon. Member points out, to a number of people.

Universal Credit and Working Tax Credit

Jonathan Reynolds Excerpts

Monday 18th January 2021 Commons Chamber

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I beg to move,

That this House believes that the Government should stop the planned cut in Universal Credit and Working Tax Credit in April and give certainty today to the six million families for whom it is worth an extra £1,000 a year.

I am not here to claim that Conservative MPs are heartless, lack compassion, or have insufficient regard for the poorest people in this country. I know that after the vote on free school meals, many Conservative MPs, mainly after comments made by other Conservative MPs, received a high degree of personal abuse, and I want to make it clear unequivocally that that is wrong. I am here to put forward a clear and, I believe, compelling case that reducing universal credit and working tax credit this April would be fundamentally the wrong decision. It would be a profound mistake for families, for the economy and for our ability to effectively tackle and recover from the covid pandemic.

Before putting forward that case, I wish to address the Prime Minister’s suggestion that Parliament is somehow not the right place to have this discussion. Opposition days have been a feature of our parliamentary system for many decades. They were used very successfully by the Conservative party when it was in opposition—for example, when the Labour Government were defeated over resettlement rights for Gurkhas in 2009, or over post office closures. All majority Governments, except this one, have accepted that if they cannot win a vote in Parliament on one of their policies, then they have to change that policy. This decision cannot be deferred until a Budget, because the Government cancelled the November Budget and have not brought forward a Finance Bill since March.

I put it to all Members that Parliament is exactly the right place to have a discussion of such consequence to the country. The Government cannot expect to preach parliamentary sovereignty one week, and run away from parliamentary scrutiny the next. Too often, the Prime Minister seems unwilling to abide by basic democratic norms and to accept proper scrutiny and accountability. We have seen in the US where that can end.

Let me also say at the outset that, throughout the pandemic, the Opposition have always sought to be constructive. The official Opposition want the national strategy to succeed. In that spirit, we welcomed the changes that the Government made to universal credit at the beginning of the crisis. The £20-a-week weekly increase, and the suspension of conditionality and the minimum income floor, were necessary steps to support people. Recognition must also go to frontline Department for Work and Pensions staff, who kept our social security system going through the early stages of the crisis, making sure that hundreds of thousands of new claimants received the support they needed. All those staff deserve our praise, from the civil servants working in the Department to the security guards I met recently, who face difficult working conditions keeping Jobcentre Plus offices open.

However, the fact that such urgent changes were required to provide a basic safety net is a telling assessment of where the social security system was when we went into the crisis. If we cannot properly support people in a time of need without emergency surgery to the system, it is not fit for purpose. The fact is that support for people in this country when they lose their job or cannot work is significantly lower than in comparable European countries.

I will address three points: how we got here; the case for reversing this cut to secure our economy; and, finally, the human impact if the Government refuse to change course.

[Sammy Wilson (East Antrim) (DUP)]

Does the hon. Gentleman accept that a pressing reason to have a debate and vote on this issue today is the fact that all the evidence suggests that the restrictions resulting from the measures taken to deal with covid have hit the poorest in society hardest? Poverty is up, and those people who most depend on this kind of support are the ones who are most damaged at the moment.

[Jonathan Reynolds]

I agree. Inequality, and the differential impact on people, has been one of the defining features of this crisis. I do not think anyone can avoid that. It is relevant to make that point in this debate.

We have to be honest about the state of our social security system going into the crisis. Since 2010, poverty has increased significantly in the UK. In addition, people who were in poverty in 2010 are now so much deeper in poverty than they were. This is not an argument about definitions. Conservatives themselves were the driving influences behind bodies such as the Social Metrics Commission, which came up with a new definition of poverty that was actually very similar to the one that has traditionally been used. The Government’s own estimate is that 4.2 million British children live in poverty. That is shameful, wrong and unnecessary.

The UK, along with Ireland, is an outlier compared with the rest of Europe when it comes to inequality. That means that the reality for millions of families is that they went into this crisis already under significant pressure. As the Resolution Foundation said in 2019, the 1.7% increase to universal credit that year was the first working-age benefit increase for five years. Last year, the real value of basic out-of-work support was lower than when John Major was Prime Minister, so anyone claiming that the system is too generous, or who is trying to resurrect the stigmatising rhetoric of George Osborne, simply has no case to make.

[Steve Brine (Winchester) (Con)]

The hon. Gentleman is a reasonable man—I like him. He is making a sensible speech. While we are being honest about social security systems, is it still the Opposition’s policy to abolish universal credit, as it would have been had they won the general election in December 2019, although it is widely accepted to have been successful in flexing to expand in the current crisis? Is it still Her Majesty’s Opposition’s policy to abolish the entire system, and what do they propose putting in its place?

--- Later in debate ---

[Jonathan Reynolds]

Yes, it is our policy to replace universal credit—not to abolish the welfare state, as some of those videos from Conservative central office have tried to make out today. After I address the causes and the question before us today, I will be happy to talk about some other problems that go beyond the core amount of universal credit, and about why replacing universal credit is the right policy. But before we get to that point, I have to stress that, if this cut goes ahead, it will leave unemployment support at its lowest level ever relative to average earnings. That is not just morally unjustifiable; it is economically incompetent. Cutting unemployment support in the middle of a recession is always the wrong choice, which is why no Government have done so since the great depression.

[Laura Trott (Sevenoaks) (Con)]

I am grateful to the hon. Gentleman for his tone at the beginning of the debate. Just for our understanding, will he tell us whether the Opposition propose making this increase permanent? If so, how do they propose to pay for it?

[Jonathan Reynolds]

We believe that this uplift should stay in place during the crisis, and I do not think anyone believes that the crisis will end in April. I will make some points about long-term proposals near the end of my speech, as well as about why the whole system requires much more considerable reform than just tinkering around with the core amount.

The cost of paying for all this is significant: around £6 billion. That would vary depending on the levels of unemployment throughout the year, but any measure right now that cuts public spending or raises taxes in the middle of the biggest economic downturn for 300 years would be the wrong policy. Decisions will have to be made as we get into the middle of this decade to address the levels of debt that have been accrued by the Government during this crisis, but that is not the right choice now.

I want to focus on the point raised by the hon. Member for Sevenoaks (Laura Trott), because if the Government are seriously thinking about economic recovery, cutting universal credit is like pulling the rug from under the economy’s feet. This £20 a week is not saved by families; it is spent in shops and businesses across the country, stimulating the economy. We all agree that this pandemic and the unemployment crisis will not be over by April this year, and whatever protestations we have heard on social media or in the press—and, frankly, however people vote today—I know that there are many people on the Government Benches who agree with this case. The former Secretary of State for Work and Pensions, the right hon. Member for Preseli Pembrokeshire (Stephen Crabb), recently said:

“Withdrawing the uplift would reduce the spending power of people on lowest incomes. This will likely reduce consumption, meaning families going without essentials and household debts rising. It would also see a reduction in spending just when the economy needs it most.”

I could not agree more with that assessment. He is also right to draw attention to the levels of personal debt for some households.

As well as the real value of benefits being historically low as we went into this crisis, the pandemic has meant very real additional costs for most families. There are more meals for people to cook at home, and more days to heat their house. People have devices and lights on at times they would not normally, and have to buy what they need to teach their children at home. The clinically vulnerable have been forced to buy food locally, at a higher cost than in larger supermarkets. Everyone has experienced the pandemic differently, but for some the costs have piled on.

Citizens Advice told me this week that three quarters of the people it helps with debt who currently receive universal credit and working tax credit would have a negative budget if the £20 was cut. That means that they will have less money coming in than going out, and will not be able to cover basic essentials such as food or heating—and it will come at a time when one in three households has lost income because of covid, and 7.3 million people are behind on their bills.

The proposed cut to universal credit and working tax credit is not the only issue causing consternation in the country right now. I would particularly highlight the continuing injustice for those people on employment and support allowance and jobseeker’s allowance, who did not even get the uplift to begin with. That is unjustifiable and discriminatory, and I ask the Minister if he would mind specifically referencing that point in his speech. Reversing the April cut to universal credit is a specific, clear and unavoidable decision that needs to be taken, which is why it is right that we are bringing it to Parliament today.

Some of the speeches that we will hear today will no doubt say that we should focus on jobs and getting people back to work, and not on social security. The Prime Minister said something along these lines at the Liaison Committee last week, but Members will know that universal credit is an in-work as well as an out-of-work benefit—40% of universal credit claimants are in work—so that argument does not work at all. To be frank, it would be helpful if someone told the Prime Minister that. Universal credit is also means-tested, so if people go back to work and do not qualify for it, they will not receive it at all. If we want to have a serious discussion about boosting employment and making work pay, let us discuss work allowances, the taper rate and deductions, but let not the Government try to use that as an excuse to do the wrong thing on this cut.

Others might say that support should be more targeted and the basic allowance is the wrong element to target. In that case, the Government would, logically, scrap the two-child limit or the benefit cap, which disproportionately affect people in the most difficulty—larger families in areas with higher housing costs. However, when we put that forward, it, too, was rejected.

Finally, there has been a proposal for a one-off payment to compensate people affected by this cut. That is an awful idea. It does not address the real-terms reduction in support, just as unemployment is expected to peak. More than that, although 6 million families are affected by this now, that cohort will change in composition throughout the year. A one-off payment based on who is eligible now will fail to support some of the people who need that help the most. So please, Minister, ask the Chancellor to think that one through again.

I know it sometimes frustrates Conservative Members that we are still determined to replace UC altogether—I was asked that question earlier—but I say to them that, if they will not listen to those on the Opposition Front Bench, they should read the work of the cross-party Select Committee on Work and Pensions and read the report of the cross-party House of Lords Economic Affairs Committee, which is chaired by Lord Forsyth. They are clear and robust in highlighting the fundamental problems that currently exist: the five-week wait; the two-child limit; the erratic assessment period; the problems with paying for childcare in arrears; and the shocking design that means that many disabled people are worse off on UC. The last one of those is very personal to me and it simply is not right not to replicate how the severe disability premium worked under the previous arrangements. All this means that UC’s brand is severely tarnished. If everything was working as well as Ministers sometimes say, would we really be a country where food banks have gone from being a niche form of support, mainly for those without recourse to public funds, to a mainstream and essential method of keeping people fed? Would we have had the fundamental increase in child poverty, which is getting bigger with every year of Conservative government? Those questions deserve answers.

Throughout the crisis, the Government have often been behind the curve, never out in front, and they have left some decisions, such as on furlough extension, to the very last minute, in a reckless game of brinkmanship. That is heavily why we have, tragically, the highest death toll in Europe and the biggest economic downturn of any major economy. Let us not repeat that with this decision. We all know that families are looking at us, wondering what we will do to help make getting through this crisis just that bit easier. What they do not expect is the Government making it even harder. I hope that one thing we can all agree on is that the crisis has shone a light on some of the problems in the UK, problems that have made tackling the pandemic harder and provoked a discussion about what kind of society we want to rebuild when the pandemic is over.

If the ambition of Conservatives really is to level up the UK, it is hard to see how they can support a cut that would be so regressive to low-income families and which disproportionately affects the places the Government say they want to help. I am talking about families such Bethany and her child in Blackpool. She said to me, “I was made redundant due to coronavirus. As a single parent to a one-year-old, universal credit is now the only income I receive. If the Government does cut £20 a week, I will become one of the statistics needing to use a food bank. It devastates me to think that I will not be able to provide for my child should this decision be finalised.” Margaret, who has been volunteering at a food bank in Luton, says, “A young man came in for a food parcel. He looked thin and his face was grey. He sat down and he said that he thought he could last with no food until the universal credit came through, but he found that he couldn’t. He’d come in on a Wednesday and his universal credit was due on the Friday.” That is the reality before the cut has gone ahead. My inbox is full of personal accounts such as those. I urge every Member to look at what is in their inbox, read about the human cost of what it will be like for people if this cut goes ahead, address the worries people have about not being able to put food on the table, and think long and hard about the uncertainty and fear that all families face after 10 long, hard months of this pandemic.

I want to make a special appeal to the new MPs on the Conservative Benches whose constituents elected them in good faith for the first time in 2019. Many of those people are the first Conservative to ever be elected to those places. They have already made history and their success is a significant personal achievement. They will be remembered, but so will their votes. Most of all, when thinking about how to cast their vote today, I urge everyone to take a moment to reflect on what this cut will mean to the people who send us here: the uncertainty it will add in an already uncertain time; the loss it will bring when we have already lost so much; the fear it will cause when what people need is hope. So, for our constituents, for the economy and for the national interest, we need to cancel this cut and I ask every Member of the House today to support our motion to do so.

[Mr Deputy Speaker (Mr Nigel Evans)]

Before I call the Minister, I have three points to make. As people in the Chamber can see on the annunciator—I am not sure whether people can see it at home—there is a three-minute limit on Back-Bench contributions. For those who are contributing outside the Chamber, there is a timing clock, which you should be able to see on the bottom right hand corner of whatever device you are using. It would be a lot cleaner if Members could bring their contributions to a close before the three-minute limit is up, otherwise you will be interrupted by the Chair. For the convenience of everyone as well, the question will be put at 7.15 before we move on to the next business.

--- Later in debate ---

[Will Quince]

I thank the Chairman of the Work and Pensions Committee for that intervention. I would be very happy to meet him, alongside the Minister for Disabled People, Health and Work, to discuss, in particular, those in receipt of the severe disability premium. Yes, it is the position of Her Majesty’s Government that we want more people to move over from legacy benefits, including working tax credits, on to universal credit, because it is a modern, more dynamic benefits system; it is the future. However—this is a very important caveat—I would encourage anybody looking to move over from legacy benefits to universal credit to first go on to gov.uk and check their eligibility, because it is important to note, as I know the Chairman of the Select Committee knows well, that on application for universal credit, the entitlement to legacy benefits will cease, so it is very important that people do check.

As I said, we have a modern, dynamic, agile, fairer welfare safety net that, in the face of unprecedented demand, ensured that millions of people were paid in full and on time. Therefore, it is quite astonishing that the position of Her Majesty’s Opposition is to scrap it—a system that, by any measure, has passed the most challenging of tests. This weekend they briefed to the papers with a press released entitled, “Cut to universal credit to hammer families in marginal Conservative seats”, playing politics with the lives of nearly 6 million vulnerable people rather than focusing on helping them through this pandemic. We will take no lectures whatsoever from Labour on universal credit. There is little doubt that had we relied on the legacy benefits system, we would have seen queues down the streets outside jobcentres and long delays leaving families facing financial disruption without support.

[Jonathan Reynolds]

As the Minister has raised press speculation, will he comment on the news in the papers at the weekend that the reason he is here and not the Secretary of State is that the Secretary of State agrees with us and it is the Treasury that is behind the cut of £20 a week from April?

[Will Quince]

The reason I am here today responding to this debate is that I am the Minister responsible for universal credit and this is a debate about the £20 per week uplift to universal credit. The Secretary of State is in active discussions with Her Majesty’s Treasury, the Chancellor of the Exchequer, and, of course, the Prime Minister about how best to continue to support the most vulnerable, disadvantaged, lowest-paid and poorest in our society, as the Chancellor has consistently done throughout this pandemic.

--- Later in debate ---

[Laura Trott (Sevenoaks) (Con)]

I am grateful to the Opposition for bringing forward this debate, because it gives Conservative Members an opportunity to talk about the wide-ranging and comprehensive support that we provided to the lowest-income and most vulnerable families in this country. We did so not just through the £20 universal credit uplift, but through the furlough scheme, which we know is critical to keeping that vital link to work—the sustainable route out of poverty—through the hardship fund, through the winter support grant and through the catch-up schemes. This support has been provided to the families who most need it—and in a timely fashion.

It is worth dwelling on a point that the Minister and others have made: at points during this crisis, we had 100,000 people a day applying for universal credit, yet nine out of 10 applicants were paid on time—a fact that I hope to see recognised by more Opposition Members. In that context, it is inexplicable that we would now seek to scrap universal credit, and it is worth dwelling for a second on what we inherited from the Labour Government. It can be summed up in two simple words: welfare trap. We had a welfare system that was inexplicable, with six interacting benefits. If a person went into work, they actually lost money. There was an effective tax rate of 90%.

[Jonathan Reynolds]

I am grateful to the hon. Lady for raising that matter. The politics of the taper rate is one of the fundamental points in any welfare system. Under universal credit, the taper rate is 63%, but that does not account for income tax or national insurance, so the withdrawal rate is effectively 75p in the pound. She did not give the full picture. Universal credit, according to the Joseph Rowntree Foundation, reduces the deduction rate from over 80% for some families, but it increases the deduction rate for other families. There are more families facing a deduction rate of between 60% and 80% than before, so the situation is more complicated. It depends on a person’s circumstances, including the hours they work and whether they rent. Putting this in binary terms is not, I am afraid, correct. We should look at the detail, because that is what the debate deserves.

[Laura Trott]

The hon. Gentleman is quite right that there is a debate to be had about the right level of the taper rate, but I think we can all agree that it is better that people should want to earn more by working, and that the previous situation was worse. We have moved forward, but there is always more progress to be made, and it is important that we make progress. I think the new system is better than the last. We have a welfare system in which it pays, for the most part, to go to work. We are trying to provide a safety net, not a trap; that is the difference between now and what we had.

Today, we are discussing a complex question. The hon. Gentleman and other Labour Members will know that getting people out of poverty is more complicated than just giving them money. That is necessary, but not sufficient in and of itself. We need to provide re-training, help to get into work, and support for the whole family in the numerous challenges that they may face. It is absolutely right that this decision be taken in the round at a fiscal event, when we can think about how to look at all these things, and, crucially, how we pay for them.

The Opposition said this was not the time to think about fiscal events. We have shown that we will throw the kitchen sink at protecting the most vulnerable during this crisis, but that does not mean that we can make uncosted spending pledges. We need to think very carefully about how we deploy our money. That is not to say that a debate should not take place, but we should think about this in the context of our wider spending pledges, and in the context of making sure that we target support at the most vulnerable in society. I am very glad that, at the outset, all of us, wherever we sit in this House, recognised that we are all here to do that.

Oral Answers to Questions

Jonathan Reynolds Excerpts

Monday 30th November 2020 Commons Chamber

[Dr Coffey]

My hon. Friend rightly draws attention to this important point. As a result of actions by this Government the UK is the first major economy to put climate risk and disclosure into statute for pension schemes, leading the way on this issue, having already legislated for net zero by 2050 and introduced ESG—environment, social and governance—legislation through 2018 amendments to the occupational pension schemes investment regulations. I genuinely look forward to when we manage to complete the Pension Schemes Bill to bring all that into effect.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Last week the Chancellor described the scale of the unemployment crisis in the UK when he said that we could be facing 2.6 million people out of work next year. The Government’s major announcement to tackle that was the restart programme, but analysis of the spending review document shows that restart will not get up to scale until 2022, a full year after unemployment has peaked, so what will the Government be doing next year, as unemployment peaks, to help people get through the crisis?

[Dr Coffey]

The hon. Gentleman is right to draw attention to our plan for jobs. He will be aware that there are a number of schemes already under way, including kickstart, JETS and the sector-based work academy programme. It will take a little time to contract for the long-term unemployment programme, but I assure him that, compared with the last financial crisis just over a decade ago under the Labour Government, we have acted far more quickly in getting these employment contracts in place, because we need to make sure that people do what they can to try to remain connected to the labour market.

[Jonathan Reynolds]

I am grateful to the Secretary of State for that answer, but last week the Chancellor said that this is the biggest economic crisis for 300 years, and he is right, so I cannot understand how those same spending review documents show the Government cutting universal credit next April—a £1,000-a-year cut, taken from 6 million families just when they need it most. No Government since the great depression have cut unemployment benefits during a crisis, so how can the biggest economic crisis for 300 years be the time to do so?

[Dr Coffey]

As the hon. Gentleman knows, the Government introduced a raft of temporary measures to support those hardest hit, including the furlough scheme, the self-employment income support scheme and the £20 UC uplift. The Chancellor has confirmed the UC uplift until March ’21, and it is right that we wait for more clarity on the national economic and social picture before assessing the best way to support low-income families moving forward. That is exactly what I put in the written ministerial statement last week.

Pension Schemes Bill [Lords]

Jonathan Reynolds Excerpts

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

[Nigel Mills]

I agree, and I was coming on to that argument. I am not sure that achieving net zero can be pushed down to individual pension schemes and individual investment advisers. I suspect we will have to accept that between now and 2050, there will be some businesses out there that are bad for the environment but we are still going to need their products and services. We will need some of those even after 2050. We will achieve net zero by having other businesses that are more positive for the environment, with some still being bad for it. I am not sure that we can require every individual pension scheme to be a net zero investor. Otherwise, there will be a load of things that they just cannot invest in, as they cannot achieve that strategy.

I fully agree with the sentiment and agree that the industry needs to do more. I said on Second Reading that what we do not need are posh written documents that sit there with nice-sounding promises that never get implemented. We need pension schemes and their investment managers to be much more—

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I will not address this in detail because I will have my own opportunity to do so, but I make it very clear that the amendment does not enforce or mandate pension funds to be net zero. It would ensure that they have an investment strategy, including a stewardship strategy, that is consistent with those objectives. It is drafted specifically to address those concerns and hon. Members have nothing to worry about in that regard.

[Nigel Mills]

I am grateful to the hon. Member, but I am not sure what the amendment would achieve then. If we say to a pension scheme, “You need to make sure that your overall investments are consistent with the nationwide net zero strategy”, they can just say, “Of course we are because there is a nationwide net zero strategy and we are just investing in legal businesses”, which we would presumably put taxes or carbon levies on to make sure we push this. It becomes a circle that would presumably mean only that the trustees have to produce a strategy and occasionally review it. It would not actually drive a great deal of different behaviour. I think I would want to see much more activist investment from pension schemes and their investment advisers to ensure that the businesses that they are investing in are sticking to their obligations and strategies on how they can reduce their impact on the environment, making sure that those promises are being kept on a management level rather than setting trustees an impossible target, which I am not sure would even mean what hon. Members seek to make it mean.

--- Later in debate ---

[Neil Gray]

I was—I have it right here. We took some comfort from that statement from the Minister, but I have to emphasise the word “inappropriate” in respect of that de-risking journey. For the avoidance of doubt, will the Minister confirm that unless schemes started to move towards significant maturity, there would not be any appropriate de-risking journey? Will the Minister further confirm that he has no intention of insisting that all open schemes progressively de-risk their investments if any remain sufficiently far from significant maturity, and that he will ensure that the regulations do not have that effect? If so, how will they ensure that? We also ask the Minister to accept amendment 7, but if that does not happen, we will support the Liberal Democrat amendment 1.

On amendments 9 and 10, we return to the treatment of vulnerable customers and the need to better define the difference between guidance, advice and information. We touched on this in Committee and the Minister accepted the principle of where we were coming from with our amendments but could not accept them into the Bill. I ask him to look at that again. The SNP have tabled amendments to require that specially trained advisers and guidance are made available to people in vulnerable circumstances, including but not limited to persons who suffer long-term sickness or disability, carers, persons on low incomes and recipients of benefits. Circumstances of those types can have a significant impact on people’s finances and long-term savings plans. It is also the case that people in difficult financial circumstances may be more likely to utilise new pension freedoms, but at a cost to their long-term savings.

It is clear that the UK Government had not put in place adequate safeguards to ensure that older people who opt to free up their funds would not end up in a desperate financial situation later. Those with less money are more vulnerable to economic shocks in their personal finances, as well as being potentially more vulnerable to scammers who give misleading or false advice for free. That is why we have re-tabled amendment 10 to ensure that customers who use the pensions dashboard are made more aware of the difference between information, guidance and advice, which are very different things. People who expect advice as to what route they may be able to take may be disappointed to receive only various pieces of information. Likewise, there may be issues with exactly what the body is allowed to advise and to what extent it is able to advise on the options available. It is a simple amendment but would be extremely helpful in taking the issue forward.

As on all these issues, we have tabled amendments in good faith to try to improve the legislation. We look forward to hearing what the Minister has to say in his response to the debate.

[Jonathan Reynolds]

I place on record my thanks to all Members who participated today and in Committee. In particular, I thank my shadow Work and Pensions team for their diligence and hard work. I also place on record our thanks to the Minister and our colleagues from the SNP for the open dialogue that has been maintained throughout the Bill’s passage.

The Opposition did not vote against the Bill on Second Reading, and it is not our intention to vote against Third Reading later. We agree with the broad aims of the Bill and believe that it adds a series of worthwhile improvements to our pension system. However, we have continually sought, as is the role of the Opposition, to improve the Bill further to make it the best legislation that it can possibly be. On Second Reading, I laid out how we wanted to achieve this, with additional measures to protect pensions, people and the planet. Although there was thoughtful debate in Committee, it is disappointing that the Government removed some critical parts of the improvements that were made in the Lords. That is why we have brought back two groups of amendments today, as well as seeking a new amendment, which is an opportunity to make a historic step forward in tackling climate change. I will address each in turn.

First, on protecting pensions, a well-regulated pensions system is vital to give people confidence that it will be there for them in their retirement. Pension funds are not just any financial product. They are usually the sole means of looking after someone in old age, and are responsible for their financial security for an entire phase of their life. Today’s retirement landscape is challenging. The Labour party does not oppose the pensions industry in finding new ways to meet those challenges, but we strongly believe that any innovation must be well regulated, which is why we have introduced new clause 6. We introduced that provision in Committee, to ask the Government to introduce proper regulation of so-called pensions superfunds, which are profit-making consolidation vehicles for defined-benefit pension schemes. At present, they are subject only to an interim regulatory regime announced by the Pensions Regulator in the summer.

That is a substantial change, as these funds currently advertise high rates of return to pension investors. We believe that, as a minimum, those products need a proper and robust regulatory regime, underpinned by legislation, that is on a level playing field with the rest of the industry. We are not a lone voice on that. The Governor of the Bank of England has written to the Secretary of State to raise concerns about the potential risk to financial stability and to scheme members. The Opposition would like to hear a commitment today from the Minister that legislation for a full regulatory regime will be forthcoming before the market begins to develop seriously.

Moving on to other matters, the adequate funding of defined-benefit schemes is critical to their future. We were disappointed by the removal in Committee of clause 123, which related to the funding requirements of open and closed defined-benefit schemes. That point has just been made, and I shall not quote the Minister directly again. However, we understand that he has relied frequently on the regulator’s bespoke option in the draft defined-benefit funding code to provide reassurance for open schemes that they will not be required to follow the funding and investment strategies of closed schemes. However, there is a long list of people who have expressed doubt about that option, and who believe that it risks the premature closure of otherwise healthy schemes, including the Pensions and Lifetime Savings Association, the Institute and Faculty of Actuaries, Lane Clark & Peacock, the Trades Union Congress, the Confederation of British Industry, and even one of the Minister’s predecessors as pensions Minister, Baroness Altmann. I recognise that there is no disagreement between the Minister and Opposition parties on the desired outcome, but we still believe that there is virtue in reintroducing the clause. If amendment 7 or amendment 1 is pressed to a vote, that will be done with our support.

Protecting people in schemes is vital, which is why we have introduced three changes, to try to strengthen the consumer protections in the Bill, with amendments 11 to 15. We all agree that the pensions dashboard, when it arrives, will be an incredible opportunity for people to see all their pensions information in one place for the first time, but safeguards must be built in to prevent hasty decision making and consumer exploitation. The last thing we want is for people to make bad choices, prompted, for example, by market disruptions or unscrupulous operators, until they are more accustomed to that level of access. We believe that we can tackle both those things by giving the public dashboard a protected head start and keeping commercial transactions off the dashboard until further legislation is introduced in line with our amendments.

We also believe that there must be accessible and transparent fee information on the dashboard. For too long, it has been possible to rely on the opacity and complexity of pensions to obscure the real lifetime cost of transactions. Greater transparency would surely be welcome.

I spoke on Second Reading about the scourge of pension scams. People can become particularly vulnerable to scams in the years immediately before retirement. We have heard throughout the debates on the Bill terrible stories, such as the one articulated by my right hon. Friend the Member for East Ham (Stephen Timms), about people falling victim to fraudsters who rely on confusion about pension freedoms, and not only take people’s lifetime savings but leave them with a huge tax liability. No punishment is severe enough for those who commit those crimes. We all agree that further action is needed, so we support the amendments tabled by my right hon. Friend, who chairs the Work and Pensions Committee, as they would create an opt-out system for speaking with Pension Wise in the five years before retirement.

Finally, I have spoken about protecting pensions and protecting people, and now I want to talk about protecting the planet. Our colleagues in the Lords worked hard with the Government to bring in requirements in the Bill on the assessment and disclosure of climate risk in pension investments. This is a historic step: the first time it has ever been included in UK pensions legislation, and we all should and do celebrate that fact. However, we know that, with the climate emergency getting even more serious, it is possible to go even further. Amendment 16 would allow regulators to mandate occupational schemes to develop a clear investment strategy that is aligned with net zero greenhouse gas emissions at the pace the science demands.

The Paris agreement of 2016, which committed to efforts to limit global warming to 1.5° was a groundbreaking and critical step forward in global co-operation to beat climate change, but I believe we do not do enough to explain to the public and our constituents that the changes we need will only be delivered by starting to influence how vast amounts of private capital are allocated, alongside direct Government decisions on, for instance, decarbonising power and transport. I have to say that I would have thought that argument would garner more sympathy with Conservative Members of Parliament.

UK pension funds represent trillions of pounds, and steering more of that towards our climate goals, yes, would be radical, but this amendment is not just about where capital is allocated. It is about the stewardship that we need to see from all asset managers over the companies they have investments in. This is not a divestment amendment, nor does it limit the choices available to fund managers. The hon. Member for Grantham and Stamford (Gareth Davies) said that the ESG data is patchy, and he is right, but he will appreciate that asset managers demanding better data have been a fundamentally important driver in making that better, and the E—environmental—is actually the most robust part of ESG data. It does not make sense to me to say that the data exists for the Government to issue a green bond, but not for a pension fund to formulate a Paris investment strategy.

We, as the Opposition, ask the Government to deliver a green economic recovery from the pandemic by investing to support the creation of at least 400,000 new jobs, but achieving progress on climate change demands change in every part of our economy, and despite what we have heard from Government Members today, the industry is already showing us what is possible. Aviva, one of the UK’s biggest pension providers—it supports this amendment —has recently announced that its auto-enrolment default funds will aim to achieve net zero by 2050. That is £32 billion of capital, which is actually going beyond the scope of this amendment. In October this year, the BT Pension Scheme set a goal of net zero by 2035 for its entire portfolio, worth £55 billion. There is also a great deal of good practice in public sector DB schemes, such as the Local Government Pension Scheme.

What is more, today’s amendment was developed and backed by a whole host of organisations across the public and private sectors, with dozens reiterating their support in a letter to the Prime Minister last week. These include ClientEarth, Make My Money Matter, ShareAction, E3G, Christian Aid, West Yorkshire Pension Fund, Good Energy, Ecotricity, the Aldersgate Group, the Climate Coalition, the Carbon Tracker Initiative, Friends of the Earth, Greenpeace, Business in the Community and the TUC. I would like to thank all those organisations for the work they have done in getting us to this point. However, I will also say to the Minister that this is not a top-down initiative. The evidence shows that Members themselves want their funds to start taking this seriously.

In addition, the investment case makes this simply the right thing to do. The Department for Work and Pensions has itself acknowledged that considering the financial impacts of climate change is consistent with fiduciary duty. Pension funds are long-term stewards of capital. What could be more long term than the sustainability of our environment and our economy? These two objectives simply do not conflict. As is said in an excellent comment piece in The Daily Telegraph today—that in itself is a sign of the times—it

“now looks irrefutable that environmental and social factors are a clear guide to company quality and future investment returns.”

I reiterate that this is not about the Government dictating to pension funds about when and who to invest their money in, and we are not seeking to compromise trustee independence. It is simply about putting a strategy in place that considers their role in meeting our climate objectives. Trustees can maintain their total discretion over what strategy they choose to achieve that goal. Furthermore, this proposal is designed to allow the Government the flexibility to guide schemes via regulations to ensure that trustees have a strategic plan to become Paris aligned over a period of time. Any measures resulting from this amendment would be subject to extensive consultation with market participants, so that their design could take into account what works best for schemes of different types and sizes. This is written to be as accommodating as possible. The Chancellor of the Exchequer came to the House last week and outlined his ambitions to make the UK a leader in green finance. It is true that we have been lagging behind our European counterparts for many years when it comes to green bonds. As the shadow Economic Secretary in the last Parliament, I made that point frequently, and I was often given reasons why we could not do that similar to those we have heard today against amendment 16. I am tempted to say that if we wait until the end of this Parliament, even this amendment may well become Government policy.

With the new US Administration poised to rejoin the Paris agreement in 2021 under the new leadership of President-elect Joe Biden, I put it to the House that we can make this an even more historic week for tackling climate change by passing amendment 16 today. That is why we seek to include it in the Bill.

--- Later in debate ---

[Jonathan Reynolds]

I thank all colleagues for their participation in today’s proceedings and throughout the passage of the Bill. In particular, I thank the Minister; my hon. Friends the Members for Feltham and Heston (Seema Malhotra) and for Westminster North (Ms Buck), who led for the Opposition in Committee; and Sophia Morrell and Lily Lewis from our staff teams. I pay tribute to the shadow Pensions Minister, my hon. Friend the Member for Birmingham, Erdington (Jack Dromey). He is a peerless source of knowledge, wisdom and advice, and he has played a significant role in this legislation. Unfortunately, he could not participate in Committee or today’s proceedings because the House does not have in place the measures required to allow all MPs to participate safely on an equal basis during the pandemic. This is clearly not a satisfactory situation, and I know that many Government Members concur with that. I welcome the moves today to finally get this resolved.

On the whole, this has been a positive experience. Perhaps the most significant change made in the Bill is the introduction of the new collective defined-contribution schemes, which we will have to monitor carefully, as well as more substantive measures of benefit to our constituents. This legislation deserves to pass its Third Reading, and it will do so with the support of the Opposition.

Supporting Disadvantaged Families

Jonathan Reynolds Excerpts

Monday 9th November 2020 Commons Chamber

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I thank the Secretary of State for advance sight of her statement. The Opposition welcome any move that will stop children from going hungry over the tough months that lie ahead. I would hope that that is true of everyone elected to this Parliament, so I still cannot believe that the Government have had to be dragged kicking and screaming to the right place and to acknowledge that, in this country, in this day and age, no child should be going hungry. I am astonished that the Government can somehow pretend that we did not all hear hours and hours of justification from them, in this House just a fortnight ago, for why they thought the absolute opposite of what has been announced today.

In my 10 years in Parliament, I have never been so depressed as I was when I listened to the comments made on the Conservative Benches during the holiday hunger debate and on social media afterwards. That was not because of the disagreement on policy; debate and disagreement are what Parliament is all about. What I could not stand was the toxic commentary and the stigmatising of good people in hardship due to the economic mess this Government are themselves responsible for. I am talking about the unacceptable insinuations about money for children’s food being spent on brothels and drugs, with no evidence to back that up. I am talking about Tory MPs attacking businesses in their own constituencies that had stepped up when the Government would not do so, and using that compassion as evidence that financial support was no longer required for those businesses. I am talking about the same tired old clichés about state dependency at a time when it is the state itself that has had to close businesses and workplaces to deal with the virus. People who themselves have only ever known privilege were showing us that they did not even know how poverty was measured in this country, and in one case did not know the difference between the calculation of a median wage and an average wage. It was unedifying, it was ignorant and it was insulting to British families, so I ask the Secretary of State to start with an apology for that debate and that vote, because the tone of her statement today does not match the tenor of the debate.

Welcome as this statement is, the Government have, as at every stage of the pandemic, acted too late. Half term has been and gone, so let me thank the real hero of the hour: Marcus Rashford. I think the Secretary of State might have forgotten to mention him, but Marcus deserves immense credit for his campaign and for what he has achieved in such a short space of time. The depression that I and many others felt when we listened to the debate here in Parliament turned to joy when his activism unleashed the most incredible response from UK businesses over the half-term holiday. Even though they are facing extremely tough times themselves, they stepped up. That is because in a compassionate society it is a given that children should not go hungry, but why did it take that extraordinary outpouring of community support to make the Government see that?

Let us get to the heart of the issue. All of this is so important because the social security system in this country does not give people the support they need when they hit hard times. That is why this announcement matters so much. That is why furlough had to be invented. That is why the self-employed and contractors are in such a precarious position. In her announcement today, the Secretary of State once again referenced the £9.3 billion that the Government have put into social security since the beginning of the crisis. I ask the Government and all Conservative MPs to reflect on this question: if, after they have spent an additional £10 billion, there is still so much incredible hardship and unmet need out there, what does that say about the system that they have created over the 10 years preceding the crisis? I note, by the way, that there is still no sign of the Department for Work and Pensions’ review of food bank use, which was due out on 19 October, but we all know what it will say.

At the beginning of this crisis, the Opposition asked for five urgent measures to stop families falling into significant hardship: sharing the £20 increase in universal credit across legacy benefits; scrapping the savings threshold so that savers would not be punished; ending the punitive two-child limit; ending the benefit cap so that people could receive what the Government had already announced; and turning the universal credit advance into a grant, rather than a loan. Those five measures would have been a big step towards alleviating child poverty and giving people the support they need, and they are still required. Yet, unbelievably, instead of acting, the Government are still on course to cut universal credit by £20 in April next year, when we know the pandemic will still be affecting people’s livelihoods. That will be a cut for 6 million families. I ask the Secretary of State to spare Britain’s families that brinkmanship and spare us the inevitable U-turn after the event. On top of the announcement today, will the Government commit to not cutting universal credit in six months’ time? For once, will they make the right decision before it is too late?

[Dr Coffey]

I welcome the hon. Gentleman’s support for these measures, but I am somewhat disappointed by his approach. It is quite simply false to label this as anything other than a significant expansion of existing support measures and delivering on our manifesto commitments to support disadvantaged children and families. This summer alone, 50,000 children benefited from the holidays and activities fund and, as we have said, next Easter, summer and Christmas, that will be open to all eligible children who want to take part in it. Also, I think that an additional 2,500 breakfast clubs have been started during covid.

I would remind Labour Members that their proposal simply to extend vouchers for free school meals recipients over Christmas would have cost £40 million for the two-week period, and that only school-age children would have been eligible. By contrast, our new package of support, building on the £63 million earlier in the year for the local welfare assistance fund, is £170 million. It will last 12 weeks and support thousands more disadvantaged children and families. That is not to mention the commitment to extend the holiday activities and food programme, the Healthy Start vouchers and food redistribution charities. Recognising the Barnett consequentials, this represents more than half a billion pounds of support for children and families. That is happening in a much more targeted way, trusting our local councils, which can draw on the variety of information they have to ensure that we help the most disadvantaged and vulnerable people at this time.

It is that targeted approach that really sets this policy apart. We will work with councils up and down the country to ensure that every child is warm and well fed this winter.

Oral Answers to Questions

Jonathan Reynolds Excerpts

Monday 19th October 2020 Commons Chamber

[Dr Coffey]

My hon. Friend is absolutely correct, and I praise him for raising this issue on behalf of the many people he represents. This Government are committed to tackling fuel poverty, particularly among pensioners, and will continue to deliver winter fuel payments this year. I was pleased by the work done by my Department to make sure that those on pension credit, including in your constituency, Mr Speaker, received the £140 from the warm home discount scheme, without lifting a finger.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

As the Government place millions of people across the country under new covid restrictions, they will be asking many people to undergo significant cuts to their income. Last week, the Prime Minister said that due to the job support scheme and universal credit

“nobody gets less than 93% of their current income.”—[Official Report, 14 October 2020; Vol. 682, c. 368.]

Unfortunately, that is just completely wrong. The reality is that a person employed by a business that the Government are ordering to close could still lose a third of their income, and for an unspecified length of time. Their rent, mortgages and food bills will not be any lower, so how does the Secretary of State expect those people to get by?

[Dr Coffey]

The Government have taken unprecedented action in the design of their new schemes, recognising that some businesses right around the country are still experiencing a loss in demand. As a consequence, we have developed two different schemes, one of which is “a third, a third, a third” in terms of helping people with their cost of living. Where we believe, in conjunction with local leadership, that it is the right thing for certain sectors to be closed in areas, the two-thirds support of wages is important. Of course if people do come under a certain threshold, they may well be eligible for UC, which would help top up their ongoing income during these difficult times.

[Jonathan Reynolds]

Secretary of State, this is important, because it is the barrier to additional restrictions being introduced. As the Government know, people who are eligible for the job support scheme and may be losing only a third of their income are, comparatively, the lucky ones, as people in receipt of UC or jobseeker’s allowance will be left on just a fraction of their current income. With that in mind, I have a straightforward question for her: it is clear that we are not going to be out of this crisis by April next year, so will the Government do the right thing and scrap their plans to cut UC to an even lower amount next April?

[Dr Coffey]

What is different from the regime we had earlier in the year is that then the strong message was very much for people to stay at home and retail was closed, along with a number of different sectors. That is not the case anymore: we have now had to intervene in a much more limited number of sectors, often in conjunction with the local leadership. As a consequence, we will continue to review the best ways to support people through the welfare system, as well as through the plan for jobs and the measures that the Chancellor has introduced.

Pension Schemes Bill [Lords]

Jonathan Reynolds Excerpts

2nd reading & 2nd reading: House of Commons & Money resolution & Money resolution: House of Commons & Programme motion & Programme motion: House of Commons
Wednesday 7th October 2020 Commons Chamber

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I am grateful to be called to speak in this Second Reading debate. Since I became the shadow Secretary of State earlier in the year, I have been carefully following the progress of the Bill in the other place and am pleased that it has finally reached this House.

First, I record my sincere admiration for and thanks to my colleagues in the other place—noticeably Baroness Sherlock, Baroness Drake and Baron MacKenzie—for their laudable work in carefully and thoughtfully amending the Bill.

In opening the debate for the Opposition, I shall outline our perspective on the Bill as it stands, as well as addressing the three areas—protecting people, protecting pension schemes and protecting the planet—in which Labour would like to see further amendments made as the Bill progresses. However, let me say clearly at the outset that my colleagues and I broadly welcome the Bill. We have been in dialogue with the Government for some time about its contents and the issues that it covers, and I am grateful to the Pensions Minister for his time this week on a number of matters. We will therefore not oppose the Bill today.

My message to the UK’s pensions industry is that it should have confidence in the strong commitment that exists across the House of Commons to a pension system that is sustainable, sufficient and able to meet the challenges of an ageing population. Although we broadly support the measures in the Bill, we believe there is more to be done to create the robust system that we want. As the Bill progresses, we will seek to make those arguments in the usual way.

A new piece of pensions legislation is always an important step. Personally, I am fascinated by pensions, but I appreciate that not all people feel the same way. For many people, retirement feels like a distant concept. The understandable financial pressures that many families experience—especially at the moment—make longer-term considerations harder to contemplate. Even in better times, talk of defined contributions or lifetime allowances can cause some eyes to mist over. I feel strongly, though, that we will not be able to address the major public policy questions we face without getting people of all ages to make a genuine connection between their future prosperity and happiness and the pension plans that they are making today.

The connection I mention is essential because the outlook for today’s young people is drastically different from that in years gone by, and that has become even more critical in the light of this year’s events. We already know that the combination of student debt, higher house prices and—most of all—the impact of the 2008 global financial crisis and the austerity that came after it has meant that for the first time there is a generation of British people who might not be better off than their parents. That is why in last week’s debate on the Social Security (Up-rating of Benefits) Bill I made the point that the triple lock is not just about the level of the state pension for existing pensioners but about how we index the state pension so that it keeps its value for future generations who are not yet retired. We also have to make sure that we have a complementary system of occupational provision in which people have knowledge and control of their savings, with strong regulations to protect consumers’ interests, and in which people can easily comprehend how the decisions they make will affect their retirement plans.

All that brings me to the contents of the Bill. First, I want people to know that their pension savings—their assets—will directly contribute to the future they want for themselves and their family. I am immensely proud of the work that my Labour colleagues did in the other place—much of it behind the scenes—to put climate commitments for pension funds into UK legislation for the first time ever. This is not just lip service, but genuine commitments, formalising the requirements of the Task Force on Climate-related Financial Disclosures and enshrining a commitment towards the Paris agreement for trustees and managers of occupational pension schemes. That is fundamental to tackling the climate emergency and it is a vital contributor to the health of pension funds. The long-term prospects of fossil fuel companies have implicit risks and it is only right that those risks are taken into consideration as part of the financial responsibility that schemes have towards their members.

The UK should be leading the way on green finance, but we have been slipping behind internationally in recent years. I want to explore ways that we can go even further to achieve that goal. The connection between people, really thinking about where their money is invested, is a key component of helping them to become more involved and more informed about their financial future overall.

The Bill also contains the blueprint for the pensions dashboard, one of the most long-awaited policy initiatives in history. We want to future-proof that dashboard, so that one day people can see in black and white an easily understandable measure that tells them how exposed to climate risk their retirement portfolio is. I know that the industry wants to make sure that we learn to walk before we start to run, and that the creation of the dashboard in itself is no small proposal, but I want us to be as ambitious as we can. Frankly, there is no time to waste when it comes to the climate emergency.

That takes me to my second point, on protecting people. For too long, there have been cases of unscrupulous people using the complexity of the pensions industry to exploit those using it. The dashboard, in particular, has a vital role in making information transparent and easily accessible. That includes making sure that it has the capacity to clearly spell out to people what their fees are and who they are really paying, and for what. One of the very good amendments in the other place was to protect the dashboard from private transactions for a fixed period, and I am disappointed that the Government seem not inclined to keep that.

When consumers are presented with the new information that the dashboard will provide, we would prefer to have a moratorium on how products and new services are sold and marketed until people get used to having ready access to this information. In the wake of, for instance, volatile markets brought about by the coronavirus pandemic, it would be very easy for people to panic and make decisions that might not be in their long-term interests. We want to look at how we use the Money and Pensions Service to best mitigate this, especially when it comes to transfers.

Small pension pots, as has been mentioned, continue to be a major problem. How we can use the dashboard to easily consolidate those pots with minimum hassle and cost has to be on our minds. The dashboard will bring a sense of immediacy and transparency to that, but we need to make sure that people make their decisions when they are fully informed.

The other element of this, sadly, is pension scams. Regrettably, George Osborne’s pension freedoms, exactly as was warned of, have been a watershed moment for fraudsters, who have taken advantage of such a significant change in the rules. As the shadow City Minister and now as the shadow Secretary of State for Work and Pensions, I have been made aware of some truly dreadful stories. I remember one especially bad case where the victim not only lost their pension to the scam, but was then pursued by Her Majesty’s Revenue and Customs for many years for the tax payable on that money, because they had accessed it under the age of 55, even though they had been under the impression that they were moving it to a legitimate investment for nowt. That is the kind of scam that absolutely ruins lives, and the penalties and action taken against fraudsters should be severe.

We should also take pride in the fact that there have been several substantial successes in pensions policy in the last few years. Auto-enrolment is a prime example of that—a hugely successful policy begun by the last Labour Government. Thanks to auto-enrolment, by March 2019 more than 10 million people had been auto-enrolled in a pension scheme, according to figures from the Pensions Regulator. Of course we want people to be more engaged in their pensions, but default options that are easy to set up and straightforward to contribute to are essential.

That brings me to my final point, on protecting pension schemes. What that means is ensuring a strong infrastructure so that we have a well-protected and well-functioning system. First, we will urge the Government to retain the cross-party Bowles amendment inserted in the other place. We do not want the regulation to work in a way that unnecessarily closes defined-benefit schemes that would otherwise be open for new members, and that is what we are worried will happen if open and closed schemes have to meet the same investment and maturity profiles. That is why we believe it is wrong to treat open and closed schemes in the same way, but that is another issue we intend to explore further in Committee.

Big challenges demand big answers, and that is why Labour supports the introduction of collective defined-contribution schemes as a potential way to get a better deal for workers than traditional DC schemes might offer. In doing so, we are mindful of the arguments from other countries about the need to ensure intergenerational fairness in those schemes, but we believe that those safeguards can be built in.

However, one area where we feel the Bill is silent is the creation of pension superfunds. These are very large funds of capital intended to consolidate several smaller DB schemes and run them as one large fund on a for-profit basis. Many are advertising substantial returns to potential investors. That is potentially an extremely significant development, and we do not believe it is appropriate for the Government to leave it in the hands of the Pensions Regulator to rule on this matter. The Government know the concerns that we have raised, and concerns have also been expressed by the Governor of the Bank of England and many people in the industry. I do not understand why these measures are not in the Bill, and the Opposition plan to push the Government again for more answers on this in Committee.

We believe that the measures in this Bill are important and worth while. We want well-managed, sufficient and sustainable pension provision that addresses long-term needs and is intergenerationally fair, and we want to begin the process of allowing savers to be much more engaged and in control of their assets. While the Bill does not give us everything we want, it makes solid steps towards that goal, and it is our belief that it deserves to have its Second Reading today.