Autumn Statement

Mark Hoban Excerpts

Wednesday 3rd December 2014 Commons Chamber

[Mr Mark Hoban (Fareham) (Con)]

Stamp duty has often been a barrier to families in my constituency owning a home of their own or moving house. The reforms that the Chancellor announced today will save £1,300 on the cost of an average house in Fareham. Does that not demonstrate that it is the Conservative party that is on the side of the home owner and aspiration, in stark contrast to the Labour party?

[Mr Osborne]

My hon. Friend is absolutely right. It is a major reform of stamp duty that gets rid of the very distorting slab system. The current stamp duty system has attracted huge criticism from all sorts of groups, including property websites, those who help people to move home and, of course, home buyers. [Interruption.] The hon. Ladies on the Opposition Front Bench say, “Do it in the Budget.” I am doing it now so that people can benefit from it now.

Budget Resolutions and Economic Situation

Mark Hoban Excerpts

Wednesday 19th March 2014 Commons Chamber

[Mr Mark Hoban (Fareham) (Con)]

It is a pleasure to follow the right hon. Member for Newcastle upon Tyne East (Mr Brown). As someone who was born and brought up in the north-east, I too understand the deep-seated challenges that the region faces, and I hope that the emphasis in the Budget on rebuilding the manufacturing sector and investing in high levels of skills will make some progress towards tackling those problems.

The Chancellor is absolutely right to highlight the progress that has been made since we came to office in 2010, but also the further progress that we need to make. Our job is not done, and that is why the reforms announced by the Chancellor today, which refer to the need to strengthen the roles of the makers, the doers and the savers, are vital if we are to secure the future of our economy in a competitive world.

I want to highlight some of the progress that we have made. Not much has been said about the unemployment figures that have been published today. We have seen a fall in the unemployment numbers, according to both the claimant count and the labour force survey. We have also seen a big increase in the number of people in work. Record numbers of women are in work. Often the Opposition’s criticism is that these jobs are temporary or part time, but the reality is that employment increased by nearly 460,000 last year, and 430,000 of those jobs are full time. During the last year, we have seen a contraction in the number of temporary jobs in the economy, and therefore a significant increase in the number of permanent jobs in the economy.

[David Rutley (Macclesfield) (Con)]

It is appropriate to recognise the important work that my hon. Friend made as a Minister in helping to move this agenda forward, which was a real contribution. On the important point that he has raised, does he recognise that there is also an increase in the number of full-time self-employed people, who have made a conscious decision that they want to have a real say in the future of their own employment?

[Mr Hoban]

My hon. Friend is absolutely right. The number of people who want to take control over their own lives and employment, and who want the security that comes from self-employment, is significant, and the number of schemes that we have introduced to help young people find self-employment as a route out of poverty and unemployment have been a huge benefit to those who want to set up their own businesses.

The dynamism that we have seen in the private sector, which has led to this increase in employment, has been coupled with welfare reform—a key part of our long-term economic plan. Welfare reform has sharpened the incentive to work, and we expect more of those who are out of work, too. We have brought forward the point when we work with lone parents before their youngest child starts school, so that they are better prepared to start work rather than remain on benefit. For far too long, people who have been out of work through illness have been written off by the system and expected to live on benefits for the rest of their working life. We have been working with them to ensure that they get into employment so that they can look after themselves and their families, and achieve the dignity that we so often take for granted.

The recovery in employment is a product of a strong and dynamic private sector. I welcome the measures that the Chancellor has announced today to encourage business investment and to double the annual investment allowance to £500,000. That will encourage businesses in my constituency that are strong, growing, dynamic manufacturing businesses to invest more in capital equipment. They are aided by the reduction in corporation tax. We should not forget the importance that that has in sending a signal to businesses overseas that the UK is open for business and a place where they should do business. The reduction in corporation tax is mirrored by measures around the employment allowance and scrapping national insurance for young workers under the age of 21. These tax changes, along with cuts to red tape, the investment in skills and the reform of training, are part of our long-term plan to sustain the economy and job creation.

I want to spend a few minutes on the savings measures announced in the Budget. Since they took office, this Government have made radical reforms to pensions and savings. They ended compulsory annuitisation and we are seeing the successful roll-out of auto-enrolment, which will give many people their first chance to build up a pension pot for their retirement. In the next Parliament, we will be launching a single-tier pension, which will mean that people will retire on a pension above the level of means-tested benefits. We have seen the launch of the Money Advice Service and strengthened consumer protection through greater powers for the Financial Conduct Authority. They are important steps that will help reform the savings landscape, and as the Chancellor said they also create a fresh platform for radical reform of pension savings.

When compulsory annuitisation was scrapped, people could take full advantage of the flexibility of income drawdown products only if they could demonstrate that they would not be entitled to means-tested benefits. That meant they had to have a guaranteed income of £20,000 a year. That of course predated the introduction of a single-tier pension, and the limit was set at an amount that ensured that people would not fall back on those means-tested benefits. Now that the single-tier pension is in place, it is right to reduce that amount to £12,000 this year.

We also know that for many consumers it is difficult to shop around to buy an annuity. They are bewildered by the choice in the market, and annuities are often the only product that many of them can buy. Recent surveys have shown just how badly off consumers are as a consequence of not shopping around. I think that the Chancellor’s announcement today about the simplification of the way people can use their defined contribution pension pot will radically transform the insurance and savings market. It will force insurance companies to demonstrate that their products are good value, and create room for innovation for others to come up with products that will help people maximise their income in retirement.

[George Freeman (Mid Norfolk) (Con)]

Does my hon. Friend agree that the historic reforms announced today on the pensioner bond, the tax simplification for annuities and the scrapping of the 10p rate will begin the process of rebuilding a savings culture in this country? We last did that in the 1980s, but it was shamelessly attacked by the former Prime Minister through a series of stealth taxes on savings and pensions.

[Mr Hoban]

My hon. Friend is absolutely right. I think this should be seen as the first stage in a series of reforms, because as the Chancellor also said in his statement, the Office for Budget Responsibility predicts that the savings ratio will continue to fall. As well as ensuring that we can provide a better deal for those in retirement, a better way for them to spend their pension pot and encouragement for them to build up more through individual savings accounts, we need to do more. I will come back to that in a moment.

These are radical reforms. I welcome another part of the package that goes hand in hand with the increased flexibility. The challenge that many pensioners face is finding advice and someone to help them through complex decisions about what they should do in retirement. Recent surveys have shown just what a bad job some of the comparison websites do for people trying to buy an annuity.

The right to advice is an important part of the package of reform, but I suggest to those on the Treasury Bench that we need to go further. The auto-enrolment savings system assumes that people do not think too hard about saving but save automatically. We then expect them at the point of retirement to engage in saving. We need to make sure that there is more advice and guidance available before they retire, to help them think about what age they want to retire at and what sort of income they want to retire on. I think that a key part of the next stage of reform should be to take that right to advice and see how we can provide better advice for people in the run-up to retirement in order to help them provide more for their retirement.

[Mr Redwood]

Is there not also a very cruel dilemma in public policy, in that savers want a better rate of interest but we need low interest rates to promote economic growth and to service the Government debt? There is a trade-off, and that is why tax breaks are particularly welcome at a time of low interest rates.

[Mr Hoban]

Absolutely. My right hon. Friend provides me with the opportunity to praise the Chancellor for introducing the pensioner bond. Those higher rates of interest will provide not only an attractive way of enabling people to save, but some support to the Treasury.

My hon. Friend the Member for Mid Norfolk (George Freeman) made a point about the savings culture. We must recognise that we need to help people on low incomes to improve their savings, too. Although the minimum contributions under auto-enrolment help people get on the savings ladder, they are not high enough to provide them with a reasonable replacement income in retirement that is proportionate to their income in work. Those higher up the income scale tend to do better. Not only do they qualify for higher tax relief, but their pension contribution rates need to be higher, too. They also tend to have additional sources of income and savings in retirement.

I encourage my right hon. Friend the Chancellor to look carefully at this area. I welcome the fact that we have increased personal allowances for those on low incomes. In a constituency like mine, where the average wage is £24,000 a year, increases to the personal allowance are valuable. However, as well as helping the low paid while they are in work, we should think about how we help them prepare for retirement. That would help provide a rounded package of measures to help people build up savings for their retirement and then, once they are in retirement, think about how they will get best value for money from those savings.

In conclusion, it is not possible simply to repair 13 years of damage in just a few years of this first term of Government. The problems we inherited were deep-seated and challenging: an economy that was unbalanced—it was too dependent on the south and on financial services—and a Government addicted to spending, taxing and borrowing. Tackling those problems against the backdrop of economic uncertainty abroad was not easy. Plenty of commentators, including from the Labour party, said that it could not be done. They prophesised huge increases in unemployment as we cut back the public sector, and they said we were cutting too far and too fast.

They have been proved wrong: the economy is recovering, growth in the UK is expected to outstrip that of our main competitors and more people are in work than ever before. Now is not the time for complacency. We need to continue with our reforms and drive the recovery forward.

Annuities for Pensioners

Mark Hoban Excerpts

Tuesday 7th January 2014 Westminster Hall

[Mr Mark Hoban (Fareham) (Con)]

I congratulate my hon. Friend the Member for Gloucester (Richard Graham) on securing this debate. He is spot on in saying that annuities represent an important market and that we must ensure that it functions properly, fairly and to the benefit of those who have saved for their retirement and done the right thing but now face the second most difficult financial decision of their lives. The cost of getting that decision wrong is clear.

The National Association of Pension Funds has suggested that, every year, pensioners lose between £500 million and £1 billion by not shopping around for the best annuity rate, and that they make the wrong choices for a variety of reasons. We must tackle that. The research suggests that more than half of retirees do not shop around for an annuity but roll over to one of their existing pension provider’s annuities.

When I was a Treasury Minister, I worked with the Association of British Insurers in drawing up its code of conduct, which helps to shift the balance away from the default option of staying with the pension provider and towards shopping around. My hon. Friend the Member for South Derbyshire (Heather Wheeler) referred in her intervention to the change in the wake-up pack and the forms in it. However, I question whether that code of conduct is working; we must look carefully at whether the effective default is to shop around. I am not sure that the evidence exists that the code has been as effective as it should be.

My second point, raised in the report produced by the Financial Conduct Authority’s consumer panel, is about what happens when people do shop around. It is clear that the quality of help available is variable. There are some good sources of advice, but too often they are less than satisfactory. Some websites are not clear about the charges and commission earned from putting someone in contact with an annuity provider. It is sometimes not clear whether the website is offering a view of the whole market or just part of it. I looked at the Money Advice Service’s website this morning and it is clear that its comparison tables draw information from a panel of annuity providers. Firms must be much clearer about what service they are offering when people are shopping around.

We must consider whether consumers are being ripped off by hidden charges when they are shopping around, whether they are comparing the whole market or a segment of it, and whether they understand the regulatory protection when using such websites. We must ensure that consumers are properly protected and think about existing sources of information and whether they are adequate. My hon. Friend the Member for Gloucester referred to the Pensions Advisory Service. The Money Advice Service also provides information on annuities; one recommendation from the consumer panel was that the support given through the Money Advice Service and the Pension Advisory Service should be beefed up to help consumers.

We need to bear employers in mind, as they are another important player in the market. The reason why our constituents have to make difficult decisions about how to spend their pension pot is that employees are moved away from defined benefit schemes to defined contribution schemes. We are putting much more risk on the shoulders of employees. Although a large number of employers support their employees in making such choices and put them into contact with a pension adviser at retirement, we need to encourage more employers to do that, so that more employees who are coming up to retirement know exactly what they should be looking for and who they should be consulting.

We need to look at how the annuities market functions, because a poorly performing market has a detrimental effect on income for pensioners and also, in the longer term, reduces the incentive to save. If people feel that they will not get good value for money when they retire, they think, “Why should I put money into a pension? Why shouldn’t I put money into a house instead, or into an ISA?”

We need to make sure that we have a properly functioning market. That is not to say that all that providers should be doing is the bare minimum set out in regulation. Providers should recognise that they have a role to play in having high standards, so that consumers feel that they are being treated fairly and they know, for example, what they are being charged, that they have the best possible rate and that they have explored all the options. Providers have a role to play, too, in ensuring a high standard of conduct in those sectors. A low standard of conduct will lead to potential mis-selling risks in future and, as we have seen in the banking sector, that costs the industry dear.

[David Rutley (Macclesfield) (Con)]

I congratulate my hon. Friend the Member for Gloucester (Richard Graham) on securing the debate. My hon. Friend the Member for Fareham (Mr Hoban) is making a compelling argument about the need to open up the market. I have been doing some research and it is clear that more than 400,000 people a year are making this decision. That is a huge number and it makes the case for opening the market up even more important. He talked about trying to delink product choices; we can look at what has gone on in the mortgage industry, for example, in decoupling household insurance. If we move forward to a more retail approach to the segment, it will help more people have a wide range of options as they consider this very important decision.

[Mr Hoban]

My hon. Friend is absolutely spot on. We need to ensure that there is a more retail-type approach. One reason why people are able to shop around and compare mortgages is that there is good-quality information out there.

It is easy to compare the different rates on mortgages and the monthly payments people will make on different mortgages. The charges are very transparent as well. We can learn things from the mortgage market and its transparency that can be applied to the annuities market. I do not often disagree with the pensions Minister, my hon. Friend the Member for Thornbury and Yate (Steve Webb), but I am not entirely convinced that being able to trade in annuities will work and be effective. There are some comparisons with the mortgage market that we cannot necessarily draw.

Finally, I want to make a broader point. Over the course of the past decade, there has been quite a lot of focus on, to use another bit of jargon, the accumulation phase—what happens when people build up their pensions savings. The previous Government commissioned Lord Turner to look at pensions. I think there was some dispute between Tony Blair and the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) about whether Lord Turner’s recommendations should be implemented, but they were, with cross-party consensus. There is considerable consensus over the introduction of the single-tier pension. One area that we have not debated in enough detail today starts that process. What happens when people spend their pension pot? What choices are available to them?

My hon. Friend the Member for Gloucester talked eloquently about an asymmetry of knowledge between someone seeking an annuity and an annuity provider, and about the circumstances that people face. Alternative products, such as income draw-down products, are out there, but that transfers both the investment risk and the longevity risk to the investor—the pensioner. We need to look carefully at the products out there, recognising that this very polarised market, with annuities on the one hand and draw-down products on the other, may not necessarily be in the interests of consumers. Other alternatives might be out there.

[Steve Baker (Wycombe) (Con)]

My hon. Friend is making his points with typical perspicacity. Before he concludes, will he consider what I think is one of the biggest factors in the market—the role of the Bank of England, both in terms of what it does to savers and what it does to the annuities market?

[Mr Hoban]

We were not going to get very far in the debate without that being mentioned; I am surprised that we got to four minutes past 10 before my hon. Friend raised the role of the Bank of England. I do not want to digress too much into that, but the Bank of England’s research into the inpact of quantitative easing on the pensions market demonstrates that there are upsides and downsides—that QE has stimulated the economy, and that has improved the value of equities as well as having a potential impact on gilt yields. However, let us leave that to one side.

We are moving to a situation in which people coming up to retirement will have a number of different sources for income in retirement. Those may be part-time work, equity in their houses or ISAs. There will certainly be a DC pension pot and there may be a DB pension. People’s income sources and needs will change over their retirement. Given that we are all expected not only to work longer, but to live longer, we will have choices to make. We need a proper debate about how we equip people for that post-retirement phase and how they can have the information they need to make the right choices—not only about what costs they will face in retirement, but about how to maximise their income in retirement.

Annuities are an important part of the market, but they are not the whole of it and we need a bigger debate to look at what is happening. That debate needs to involve not only pension companies and fund managers, but representatives of those in retirement, as well as those approaching retirement. It needs to ensure that the regulators—the FCA, particularly—are involved, as well as the Money Advice Service.

It is important that we get the issue right, because if we do not, many of our constituents will enter retirement with a lower income than they expect—perhaps lower than they feel is necessary to meet their financial needs. That is not good for them and it is not good for us. This debate has helped to spark a much wider process of debating how we ensure that people approaching retirement get the best financial deal possible.

--- Later in debate ---

[David Mowat]

My hon. Friend is right that the Government do not provide mortgages, but they do provide people with interest rate products. There is an analogy with annuities, which are an extremely important transaction. In any event, the industry is an artificial one, because it is driven, as I have said, by tax relief. Annuities are not optional—we can draw down, but, broadly speaking, until very recently, everybody has had to buy an annuity.

By the way, I did not advocate nationalisation. I am advocating that the Government offer a product. They can compete with the existing market, rather like the National Employment Savings Trust competes with the existing market. That is not nationalisation. If the existing market is pricing things in a certain way and making very clever decisions on longevity and actuarial things and so on, it will win, and so be it; good luck to it. However, I suspect that that may not be the case. We must bring trust back. I agree that it is important to make the market work. I floated the point about national insurance because I think that that proposal will have to happen, but I also think that there are a number of things we could do to make the market work better.

[Mr Hoban]

One objective of the FCA is to promote competition. It is currently undertaking a thematic review of the annuities market. That would be a very good starting point for it to undertake a market study to look at the economics of the annuity industry, to see whether it is making excessive profits, and to understand the charging structures in order to help to inform what the next stage of the reforms of the annuity market should be.

[David Mowat]

I have absolutely no problem with any of that. In fact, the next point in my notes is on the Office of Fair Trading. We should try to make the annuities market work better, in the same way as we should make the accumulation market work better. The fact that NEST has been introduced is not a reason not to have that happen. My proposal on the Government offering annuities alongside the market is not a reason not to make the market work better.

The point was made earlier on education in the market, the retail distribution review and all the rest of it. I do not agree that the charging structure is a disincentive, if that was the point made by my hon. Friend the Member for Vale of Glamorgan (Alun Cairns), who has left the Chamber. It might be a disincentive, but it is no worse than a charging structure that pays people to recommend products based on commission and all that that means. That is not a solution in its own right, but I agree that we should try to make the market work better. We should hold the ABI to account on the application of the OMO.

We could try other things. If one third of people continue to stay with their existing supplier and buy inappropriate products as a consequence, there is a case for enforced separation, meaning that people buy the decumulation product from a different provider from the one from which they buy the accumulation product. That is entirely reasonable if the OMO code of conduct does not work better—it is currently rather patchy.

Another thing we could do to make the market work better is enforce the simplification of annuities, exactly as we have done in the energy industry, with bands to allow the comparison of products from different providers. The case for that is even stronger in the pensions industry than in the energy industry. I want recognition that draw-down might be used on smaller pots than at present, so that it receives wider application. When I speak to anybody who is about to make a decision on whether to use an annuity or a draw-down, I recommend that they think long and hard before they go down the annuity route. We could do more on that.

We need to make the market work better. The point I made about national insurance also applies to accumulation. NEST is working quite well, and it will be an incentive for reform in the industry. We could do the same with the decumulation part of the industry.

I have a couple of final points. It is interesting that a Treasury Minister is replying to the debate and a pensions spokesman is speaking for the Opposition. In a way, the issue has suffered because it has not wholly been owned by either Department and has tended to fall between the two. I hope that that does not continue. I also hope that people in the industry listen to the debate—I see that a couple of them are in the Public Gallery—because it is not right for the current situation to continue. It is not right that the industry response is to play it long. In the time I have been speaking, 40 people will have signed up for annuities, 15 of whom will have bought the wrong ones. We owe it to all our constituents to get that fixed.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Dobbin. I congratulate the hon. Member for Gloucester (Richard Graham) on securing the debate, because annuities continue to rise up the political agenda. I was struck by the hon. Gentleman’s speech, which I interpreted as a clear message that the market is not working properly. Indeed, I understood him to say that the annuities market was broken and cannot be fixed simply through individual engagement by consumers. The repeated references to the Financial Conduct Authority’s consumer panel report were helpful, because the whole thrust of that report was that the market cannot be fixed purely by increased transparency.

Several Government Members referred to mortgages. A big difference between mortgages and annuities is that annuities are one-off products, so consumers cannot learn more about annuities over time through repeated purchases. I agree with the hon. Member for Fareham (Mr Hoban) that the idea of tradeable annuities, which was floated over the weekend by the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb)—I was a little surprised that the hon. Member for Gloucester repeated that suggestion—will not get far.

The hon. Member for Gloucester provided compelling evidence of the fact that the market does not work effectively and cannot be fixed by individual engagement. His speech might stand as a metaphor for the Government’s approach, because there is general agreement that the market does not work properly—the hon. Member for Warrington South (David Mowat) made that argument eloquently. Moving from diagnosis to solution, however, the Government’s cupboard is pretty bare. I listened carefully to the solutions that the hon. Member for Gloucester suggested at the end of his speech. He noted that the Treasury had acted to remove the default retirement age and that people are no longer required by law to annuitise by 75. As the House of Commons Library made clear earlier this year, however, someone with a secure pension of less than £20,000 essentially has to annuitise by 75. Draw-down works well for those with big pension pots, but the rest of us still have to annuitise our defined contribution pot, so that is not a solution.

The hon. Gentleman was good enough to mention the Association of British Insurers code, but he was absolutely right to say that that is not enough. Let us be clear about what the ABI has done so far. The open market option gives people more information about their ability not to take an annuity from their existing pension provider. The hon. Member for Fareham was somewhat generous when he suggested that the results were not in yet to show whether that will deal with the lack of shopping around. It will not deal with the problem. All the evidence in the market shows that inertia is a powerful force on consumers that leads to excess profits for providers.

[Mr Hoban]

The code of conduct came into place only on 1 March last year, so it has run for less than a year. It is therefore hard for either of us to say that it has or has not worked.

[Gregg McClymont]

The hon. Gentleman referred to the Turner commission. The thrust of its conclusions—and, indeed, of the auto-enrolment pensions policy pursued by the previous Labour Government and the current Government—was that inertia is a fact of pensions markets. Auto-enrolment is an attempt to use inertia for the good of the public and the consumer. That is the basis on which pensions policy is developing under the pensions Minister—a process that began under the previous Labour Government.

There is a massive lack of engagement and involvement in pensions. Leaving aside the ABI, there is general recognition in the pensions world that the open market option is simply not going to do the job. That is the thrust of the FCA consumer report, which has been mentioned several times. Having looked at the matter closely over two years, and based on the Turner commission consensus, which we wish to maintain, I am prepared to say that inertia in the annuities market is a reality that leads to excess profits. That is not only my description, but the description given by the pensions Minister, who said in a recent television documentary that excess profits were being made by insurers, which is a product of inertia.

--- Later in debate ---

[Gregg McClymont]

I am not sure what the point of the hon. Gentleman’s intervention was, other than to show that he had not understood the point made by the hon. Member for Warrington South. Everyone else understood that he meant proceeding in the way NEST does, rather than nationalisation. For people who understood the point, no clarification was needed.

[Mr Hoban]

There is a fundamental difference between NEST facilitating the building up of pension pots and the state bearing additional longevity risk by providing annuities. The additional longevity risk would be borne by taxpayers if it were not correctly assessed. That would add to the existing longevity risk that taxpayers face through changing demographics and increased care bills and pension costs.

[Gregg McClymont]

That sounds a plausible point; I should say it is for the hon. Member for Warrington South, who put the idea forward. My observation is that the idea is not nationalisation, but something along the lines of NEST, and that it would at least be worth thinking about for the Government.

--- Later in debate ---

[Mr Gauke]

The hon. Gentleman is too quick to dismiss the role of individual engagement—it seems to me that he dismisses it almost completely. It is important that we engage individuals in such hugely important decisions, that we increase transparency and that we remove any hidden barriers that may exist. There is consensus—we all want the market to work. If we are to succeed, we must take every measure available to improve individual engagement. We should not dismiss it.

[Mr Hoban]

Is not the point that we can design legislation around inertia to benefit from it, and that we can also design out inertia? The default—acquiring an annuity from a pension provider—can be designed out through an effective open market option, which will ensure that consumers can shop around and have good-quality information. The mass engagement solution put forward by the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) is another way of tackling inertia. He accepts that we can change inertia and get people to shop around instead.

[Mr Gauke]

My hon. Friend puts it very well and I agree with his point.

To conclude, the view of all hon. Members who have spoken in the debate is that annuities are very important. There are concerns as to whether the market has worked as well as it might have done during a number of years, but there is recognition that the Government have made a number of reforms on our watch—I am delighted that my hon. Friend the Member for Fareham, who was so involved with those reforms, is here. However, we must keep our eyes on the matter and keep the spotlight on the annuities market. Crucially, we must ensure that the market is working in the best interests of consumers.

Autumn Statement

Mark Hoban Excerpts

Thursday 5th December 2013 Commons Chamber

[Mr Osborne]

Disposable household income is rising. The way to ensure that it continues to rise is to ensure that we have a sustained and responsible economic recovery. The cost of living for the people who live in this country cannot be detached from the performance of the overall economy, as the country sadly discovered when it had the biggest recession in modern history and people’s incomes were hit so badly. Our argument is that the only way to improve living standards in this country is to create jobs, support businesses as they expand and create those jobs, and ensure that the country gets out of its dependence on debt. That is precisely what we are doing.

[Mr Mark Hoban (Fareham) (Con)]

I commend my right hon. Friend for sticking to the course when others suggested that he was going too far and too fast. I am looking forward to voting for the charter for budget responsibility next year. What conclusion does he think people should draw if other parties in the House oppose it?

Employment and Support Allowance (Blackpool South)

Mark Hoban Excerpts

Wednesday 5th September 2012 Westminster Hall

[The Minister of State, Department for Work and Pensions (Mr Mark Hoban)]

I congratulate the hon. Member for Blackpool South (Mr Marsden) on securing the debate. I sense that this might not be the last debate that I will have deal with on this matter. I assure him that we are committed to continuously improving the work capability assessment and appeals processes.

Many people with disabilities or health conditions want to work, which is why our reforms distinguish between those who are able to work, those who could work at some point with the right support, and those who cannot work due to health-related problems. The WCA is crucial in ensuring that those people are identified properly. We believe that the principles of the assessment are right, but the system we inherited from the previous Government contains flaws that undermine its effectiveness.

The hon. Gentleman is right: new Governments have an opportunity to make changes. We have made changes. We inherited a flawed system, which we are reforming to ensure that we get it right. We have moved swiftly to put things right, and have worked closely with a wide range of organisations to do so. We are trying to identify where claimants need additional support to prepare for work and ensure that they receive it as part of the ESA work-related activity group.

We have a statutory commitment to review the WCA for the first five years of its implementation. In June 2010, we appointed Professor Malcolm Harrington—a highly respected occupational physician—to undertake independent reviews of the assessment. He has completed two reviews and is currently undertaking the third. Those reviews set out a series of recommendations for improving the assessment. We fully endorsed the recommendations and are committed to making the changes as quickly as possible. For example, we have improved the standards and consistency of decision making through additional training of Atos employees and the better use of evidence. The hon. Gentleman made a point about communicating the findings of assessments to claimants. We have improved the way in which we do that, by providing personalised statements that summarise the key points of the assessment and by ensuring that we implement the customer charter. We have also changed the claims process better to support the claimant at each step of the process and ensure that they understand what is required of them.

We are confident that the improvements we are making to the assessment following the reviews will ensure that we increase the number of decisions that are right first time and improve the service provided to claimants. In addition, we are working with the relevant charities to build an evidence base for changes to the mental function and fluctuating condition descriptors—known as the evidence-based review.

[Mr Marsden]

Will the Minister give way?

--- Later in debate ---

[Mr Hoban]

The hon. Gentleman spoke for slightly longer than 15 minutes and raised issues that I want to cover in the time available.

We are consulting on changes to the cancer provisions. Individuals being treated for cancer should be placed in the support group. Professor Harrington recommended increasing the time taken to conduct WCAs, which we have accepted. It should improve the quality of decision-making. We seek to tackle and reduce the backlog that has been generated—indeed, clearance times have improved since January 2012.

The hon. Gentleman asked about training for Atos employees. All health-care professionals are registered with a professional body such as the General Medical Council or the Nursing and Midwifery Council, and must have at least three years post-qualification experience. All the health-care professionals are fully trained in disability assessment. They receive comprehensive training, ranging from eight days for a doctor to 24 days for a physiotherapist, before being approved by the Department’s chief medical adviser. Once approved, all health-care professionals are subject to ongoing quality checks through audit, which the Department itself validates. Approximately 20,000 such checks have taken place this year.

The hon. Gentleman suggested that DWP decision makers were decision makers in name only, and had to follow Atos guidance. Let me be clear: they are decision-makers, and they are able to look at the evidence supplied to them and to make the right decisions. They are empowered to divert from the conclusions that Atos reaches. I hope that that reassures him; it is a proper decision-making process, not a rubber-stamping exercise.

The hon. Gentleman raised the important issue of access to assessment centres. There are 123 permanent assessment locations and an additional 25 sites are used on a casual basis. I understand that 27 of those sites do not have ground-floor assessment rooms. Where Atos identifies individuals who have mobility problems, we try to ensure that such problems are accommodated and we will offer an alternative assessment centre. We are aware of the issue and Atos is working to resolve it.

The Courts and Tribunals Service received over 181,000 appeals in 2011-12. That is a reduction of 8% on the previous year, but I assure the hon. Gentleman that we are not complacent and have introduced various initiatives to reduce that figure further. We will maintain a firm focus on decision making and continue working with the Courts and Tribunals Service to ensure that processes are as efficient as possible where an appeal cannot be avoided. The Department makes millions of social security benefit decisions each year, the majority of which are not appealed.

To give an example, more than 1 million decisions on new employment and support allowance claims were made between October 2008 and May 2011 following the receipt of work capability assessments from Atos. Some 258,000 appeals were heard against decisions that the claimant was fit for work, and the tribunal upheld the DWP decision in 161,000 of those cases. That means that only 9% of the 1 million decisions made by the DWP in that period were overturned by the tribunal service, which speaks for itself in terms of our approach to ensuring that we get the best-quality evidence and make the best-quality assessments.

One reason why tribunals overturn decisions is that claimants sometimes present new evidence at the hearing. I would ask colleagues and others to encourage constituents to provide the DWP with such evidence as early as possible, because that would enable us to review and potentially revise earlier decisions, and to provide the claimant with the correct level of benefit sooner. We want claimants to provide evidence from their GP or consultant as early as possible, rather than wait for an appeal. We proactively seek evidence from GPs, but they sometimes do not respond to such requests, and medical professionals who are entrusted with the care of claimants also have responsibilities in that area.

We are trying to introduce, from 2013, a mandatory reconsideration process for social security benefits, which will be extended to remaining benefits, including ESA, at a later date. The new process will help to improve outcomes. It will allow the DWP to provide a full explanation of decisions with which claimants disagree, encourage claimants to identify and provide any additional evidence that may affect decisions and enable the DWP to review and, if appropriate, revise decisions. However, if claimants still disagree with the amount of benefit in payment, they can appeal to the tribunal. We are trying to beef up that reconsideration process to avoid the need for people to go to a tribunal, because we recognise the time that that takes. We are also trying to work closely with Her Majesty’s Courts and Tribunals Service to improve feedback from tribunals to understand better why decisions are overturned, which will help us to make further improvements to decision making.

I am conscious that time is running out. I hope that the hon. Gentleman recognises that we inherited quite a poor situation from the previous Government. The issues are difficult to resolve, but we are making progress, which is why we have asked Professor Harrington to undertake reviews—two are complete and he is now doing a third. Our approach is to make continuous improvements to the process to get the right outcomes for claimants, ensuring that those who can work receive the support that they need to get back into work and that those who are unable to work receive the support that they need through the welfare system. We are committed to making improvements. That is the path on which my predecessor set out and which I will continue to follow.

Bilateral Loan to Ireland

Mark Hoban Excerpts

Tuesday 4th September 2012 Written Statements

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

I would like to update the House on the loan to Ireland.

Ireland completed the sixth quarterly review of its International Monetary Fund and European Union programme of financial assistance on 21 June 2012, following which, the utilisation period for the fourth instalment of the UK bilateral loan began.

Upon request, the Treasury disbursed the fourth instalment of £403.37 million on 1 August 2012, with a maturity date of 3 February 2020.

The Treasury will provide a further report to Parliament in relation to the bilateral loan as required under the Loans to Ireland Act 2010 as soon as is practicable following the next reporting period, which ends on 30 September 2012.

As my written statement of 11 June outlined, agreement has been reached in principle on a new, lower interest rate on the bilateral loan to Ireland. This is subject to the loan agreement being revised to reflect the new interest rate. I will update Parliament once the revised loan agreement has been finalised and signed.

The Government believe that it is in our national interest that the Irish economy is successful and its banking system is stable. The Government continue to support Ireland’s efforts to improve its economic situation.

Money Laundering

Mark Hoban Excerpts

Tuesday 17th July 2012 Written Statements

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

The Government are today publishing their response to the consultation on proposed changes to the Money Laundering Regulations 2007 and an impact assessment on those changes. The 2007 regulations implement the European Union’s third money laundering directive in the UK.

The proposals being taken forward will both reduce the regulatory burden on firms and make the UK’s money laundering regime more effective and proportionate. The amendments are, for the most part, intended to benefit UK businesses by removing from the scope of the regulations those firms that are not at high risk of money laundering or terrorist financing and by enabling UK businesses to take full advantage of simplification measures provided in the European Union (EU) directive.

The Government committed to a post-implementation review of the 2007 regulations two years after they came into force. This review was undertaken in 2009-10, in conjunction with the Better Regulation Executive. The review entailed an extensive call for evidence, meetings, conferences and interviews with stakeholders. The Government’s response to the review was published in June 2011 and contained a consultation on 17 proposals to improve the UK’s anti-money laundering and counter-terrorist financing regime.

Following this consultation, which drew 72 responses and involved extensive engagement, the Government are taking forward proposals with a net annual benefit for businesses of £3 million.

The measures that will be taken forward are:

Extending the use of reliance: The Government will extend the permitted use of reliance, a mechanism by which a firm can rely on the customer due diligence (CDD) carried out by a different firm. This will minimise the duplication of CDD checks by the regulated sector and reduce the burden CDD places upon customers.

Exempting non-lending credit institutions: Only businesses that lend and advance money should be subject to the regulations. The regulations will be amended to exempt credit institutions that offer time to pay for non-refundable services, such as health and golf clubs. The Government do not consider that such businesses present a high risk of money laundering and terrorist financing, or that the global standards and EU directive require such businesses to be regulated.

Regulating overseas estate agents: Global standards and the EU directive require the regulation of estate agents because of the high money laundering risks in this sector. UK estate agents selling overseas properties will, therefore, now be within scope of the regulations.

Amending the fit and proper test: The “fit and proper persons” test is applied by Her Majesty’s Revenue and Customs (HMRC) to decide whether a person is suitable to run a money service business (MSB). This test will be amended in the regulations to ensure that individuals who are not fit and proper cannot run a business which is at high risk of money laundering, terrorist financing and proliferation of financing. This also ensures consistency with the financial action taskforce (FATF) global standards, the EU directive and the fit and proper test applied by the Financial Services Authority (FSA) under the Payment Services Regulations.

Right to appeal against HMRC decision: The Government will clarify the right to appeal, to ensure that individuals have easy and economic access to a fair hearing if they wish to challenge HMRC’s decision.

Regulatory enforcement measures: These measures support the Office of Fair Trading, HMRC and the FSA as supervisors in taking action to ensure compliance with the regulations.

A full explanation of the proposals being taken forward can be found in the Government’s response document and impact assessment. Copies have been placed in the Libraries of both Houses.

ECOFIN

Mark Hoban Excerpts

Tuesday 17th July 2012 Written Statements

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

The Economic and Financial Affairs Council was held in Brussels on 10 July 2012. Ministers discussed the following items:

Economic governance—“two pack”

The incoming Cypriot presidency updated Ministers on the process to be followed for trilogue negotiations with the European Parliament on the “two pack” of economic governance proposals. The Parliament has suggested changes to the proposals. The Council confirmed that the general approach it agreed on 21 February would be the starting point for the negotiations: the first working-level meeting with the Parliament was scheduled for 11 July.

Revised capital requirements rules (CRD4)

The presidency briefed Ministers on progress made in trilogue negotiations, and expressed its wish to finalise the negotiations as soon as possible. It had already held its first trilogue and had scheduled further meetings very soon. It will aim to achieve adoption of both the directive and the regulation at first reading, though it acknowledges several outstanding issues requiring resolution—including the mechanism for member states to impose additional prudential requirements, remuneration policies, crisis management, sanctions, the balance of power between the authorities of “home” and “host” countries, corporate governance, and the powers of the European Banking Authority (EBA). The UK favours a full and faithful implementation of Basel 3 in the EU and member states having the flexibility to increase minimum standards in order to protect financial stability in their jurisdiction.

Proposal for Bank Recovery and Resolution Directive

The Commission presented its proposals for a directive, which the Council noted, and Ministers held a preliminary exchange of views. The presidency’s aim is for the Council to agree a general approach by December.

Presentation of the Cyprus Presidency Work Programme

The new presidency presented its work programme on economic and financial affairs for the next six months. It will prioritise implementation of recently adopted initiatives on economic governance, fiscal consolidation, strengthening the European financial services framework and accelerating structural reforms, as well as some tax issues. Ministers exchanged views on this: I highlighted the European Commission’s €15 billion upward revision to its June proposal for the 2014-2020 multi-annual financial framework, which was already unaffordable, and called for re-prioritisation of the EU budget. The Council took note of the presidency’s programme.

Follow-up to the European Council on 28-29 June 2012

Ministers discussed work required to follow up the June European Council discussions, on establishing what has been termed “genuine economic and monetary union” and a banking supervisor. On the latter, the Commission will present proposals, expected in the autumn: the Council held a preliminary exchange of views in advance of these. I intervened to welcome the European Council’s commitment to the integrity of the single market and to highlight the need to protect against its fragmentation—such as discrimination between the euro area and euro “outs”—and I pointed out that banking union makes sense for the euro area, as mutualised risk should be accompanied by mutualised control.

European Semester

The Council adopted the recommendations to member states on their economic and fiscal policies, and the specific recommendation on the economic policies of the member states of the euro area. As required by the “comply or explain” principle established by economic governance legislation agreed last year, the Council provided explanations of its modifications of Commission proposals and recommendations.

Ministers also discussed the European semester more broadly and suggested ideas for improving the process in 2013. The presidency called for further discussions at Council meetings scheduled for the autumn.

Spain’s Excessive Deficit Procedure

In a late addition to the agenda. Ministers agreed to extend Spain’s deadline to correct its deficit under its excessive deficit procedure. Spain will now have until 2014 to bring its deficit below the EU’s 3% of GDP reference value.

Other business

The Council agreed to recommend the nomination of Yves Mersch (currently Head of Luxembourg’s central bank) to the executive board of the European Central Bank (ECB). This recommendation will be submitted to the European Council for a decision, after consultation with the European Parliament and the ECB’s governing council.

Annual EU Finances Statement

Mark Hoban Excerpts

Friday 13th July 2012 Written Statements

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

I am today laying before Parliament, the “European Union Finances: Statement on the 2012 EU budget and measures to combat fraud and financial mismanagement” (Cm 8405). It is the 32nd in the series.

The statement gives details of revenue and expenditure in the 2012 EU budget and covers recent developments in EU financial management and measures to counter fraud against the EU budget. It also includes an annex on the use of EU funds in the UK.

The current economic and financial climate demands that the EU spend within its means, the Government remain determined to ensure transparency and better value for money in EU budget spending, and to push for improvements in EU financial management.

Counter-Terrorist Asset Freezing Regime

Mark Hoban Excerpts

Friday 13th July 2012 Written Statements

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

Under the Terrorist Asset-Freezing etc. Act 2010 (“TAFA 2010”), the Treasury is required to report quarterly to Parliament on its operation of the UK’s asset-freezing regime mandated by UN Security Council Resolution 1373.

This is the sixth report under the Act and it covers the period from 1 April to 30 June 2012. This report also covers the UK implementation of the UN al-Qaeda asset-freezing regime and the operation of the EU asset-freezing regime in the UK under the EU Regulation (EC) 2580/2001 which implements UNSCR 1373 against external terrorist threats to the EU. Under the latter regime, the EU has responsibility for designations and the Treasury has responsibility for licensing and compliance with the regime in the UK under part 1 of TAFA 2010.

Annexes one and two to this statement provide a breakdown by name of all those designated by the UK and the EU in pursuance of UN Security Council Resolution 1373.

The following table sets out the key asset-freezing activity in the UK during the quarter ended 30 June 2012: