Oral Answers to Questions

Steve Webb Excerpts

Monday 11th March 2013 Commons Chamber

[Grahame M. Morris (Easington) (Lab)]

2. What steps he is taking to tackle the increased use of pension liberation schemes.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

We take the issue of so-called pension liberation very seriously. The Pensions Regulator is currently investigating 21 cases, and scheme assets worth over £50 million have been protected as a result of regulatory action.

[Grahame M. Morris]

Many pension liberation schemes are skimming off thousands of pounds in charges and commissions, and leaving customers exposed to punitive tax penalties. In the wake of mis-selling scandals such as that involving payment protection insurance, what action is the Minister taking to ensure that future pensioners are protected?

[Steve Webb]

The hon. Gentleman is right. When people transfer money from a pension, they must fill in transfer forms. We have established a “scorpion sting in the tail” information campaign, producing very eye-catching literature which people wishing to transfer their money receive before signing on the dotted line. It is a “buyer beware” measure, and is one of a suite of measures that we are taking to crack down on such fraud.

[Andrew Bridgen (North West Leicestershire) (Con)]

Many participants in pension liberation schemes pay extremely high interest rates on any loans that are taken out, and residual funds are invested at the discretion of the trustees, which can lead to insecure or poor investment decisions. Does my hon. Friend agree that that is in no one’s long-term financial interests?

[Steve Webb]

My hon. Friend is right. We are warning people to be extremely wary. In general, they should not get their money out before they reach the age of 55, except in the event of, for instance, terminal illness. Trustees need to be wary, and participants need to be wary. Those who spot fraud should report it, and we will continue to crack down on it.

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

19. Some £400 million has been liberated illegally from pension funds, and all that the rather incurious Minister is saying is that he has produced some rather catchy literature. Is that sufficient?

[Steve Webb]

If that were all we had done, no of course it would not be. Many of the Government’s anti-fraud authorities, including, among others, the Serious Fraud Office, are working with us. One of the challenges is that the money is sometimes transferred overseas, where we have less jurisdiction. However, what we need is trustees not to be transferring money—authorising the transfer of money—out into suspicious pension funds. So trustees have a part to play, as do scheme members.

[Ian Murray (Edinburgh South) (Lab)]

3. What recent assessment he has made of the effects of the Government’s proposal for a single-tier pension on women born between 6 April 1952 and 6 July 1953.

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[Heidi Alexander (Lewisham East) (Lab)]

16. What recent assessment he has made of the effects of the Government’s proposal for a single-tier pension on women born between 6 April 1952 and 6 July 1953.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

With permission, I will answer this along with Questions 7, 8 and 16.

We have today published a document analysing the pension outcomes of this group of women. Overwhelmingly, women in this group—who reach state pension age up to three years before a man born the same day—would get more pension benefits over their lives than a man with the same national insurance record.

[Mr Speaker]

The Minister is a man of formidable intellect and therefore I hesitate ordinarily to disagree with him, but I think that the grouping is with Questions 6, 7 and 16. I hope he does not mind.

[Ian Murray]

The Minister may have a formidable intellect but I am going to disagree with him. As he will know, half a million women born between 1952 and 1953, many of whom will have celebrated mother’s day yesterday, will lose out on this single-tier pension. Will he apologise to the 700 women in my constituency who are affected and have written to me? Will he do something before they lose out?

[Steve Webb]

I take your correction on the question numbers, Mr Speaker.

I think that the hon. Gentleman should apologise to the 700 women in his constituency, as he seems to be asking us to treat them the same as a man born on the same day—that appears to be the essence of his problem. If we did that, those women would have to wait up to three years longer for their pension, and they would not thank him for that.

[Catherine McKinnell]

Some 1,700 women in Newcastle will miss out on the single-tier pension, yet men born in the same period will qualify. Claiming that those women are better off because they are allowed to retire earlier is simply not good enough. If they are retired for 20 years, they could lose up to £38,000, which is well over twice what they would receive through benefiting from retiring earlier. What message does this send out to the hard-working women of Newcastle, many of whom celebrated not only mother’s day yesterday, but international women’s day on Friday?

[Steve Webb]

The message it sends out is that their MP did not listen a moment ago. We have published research today that shows that 85% of these women will do better over their entire retirement—both the first few years and their entire retirement.

[Catherine McKinnell]

indicated dissent.

[Steve Webb]

Unless the hon. Lady has read the research, I do not know why she should be shaking her head. It says that 85% will do better by being treated as women than they would by being treated the same as men.

[Kate Green]

You and I, Mr Speaker, have just had the great pleasure of welcoming a rather beautiful portrait of Emmeline Pankhurst to Parliament, and I hope that all colleagues will want to go to admire it in the Upper Waiting Hall. It is important that we remind ourselves that women’s political interests can sometimes be different from men’s, and I am grateful to have the chance to ask the Minister about his pension proposals and their implications for women today. Many women will struggle to achieve 35 years of full employment and full contributions, partly because of caring responsibilities and also because of labour market discrimination. What steps does he intend to take to address that disadvantage?

[Steve Webb]

As the hon. Lady says, we have a system of not only paid contributions, but credits. Although 35 years will be needed for the full £144, even a woman with 30 years will get thirty thirty-fifths of £144, which is more than the current basic pension of £107. So, many women will benefit from the new rules.

[Heidi Alexander]

The Minister says that 85% of women will benefit under the proposals that he has announced today, but what about the 15% who do not?

[Steve Webb]

It is gratifying that the main Opposition response to our proposals is that they want more people to benefit from them. The hon. Lady is right: there is a set of women—a small number of women—who would do better under the new system than the old, but overwhelmingly the vast majority will do better under the current system. She raises an issue about allowing people to choose whichever was the better, but it is not always certain—at the moment—what the better answer would be for their entire retirement. So we could not actually advise people in advance which category they would be in.

[Jane Ellison (Battersea) (Con)]

The Minister might be aware that during the pre-legislative scrutiny of the Bill there has been considerable confusion about how much some of these women would lose. There is considerable misunderstanding out there, so could he provide some clarity in this area?

[Steve Webb]

I am looking forward to two hours with the Select Committee this afternoon after this warm-up. My hon. Friend is absolutely right, in that some of the women in the group we are talking about will miss out on nearly £20,000 of pension if they were to be treated the same as a man born on the same day. I think that very few of them would think that a good deal.

[Gordon Birtwistle (Burnley) (LD)]

Does my hon. Friend agree that the reforms to the state pension will be advantageous to women in the future?

[Steve Webb]

Absolutely. The process of state pension reform was happening at a glacial pace and equality between men and women was many decades away. We have brought that equality forward and men and women on both sides of the House should welcome that fact.

[Nigel Mills (Amber Valley) (Con)]

We look forward to seeing the Minister later. Does he agree that one of the problems is that people just do not understand what the change will mean for them? What plans do the Government have to write to everybody to tell them what pension they would have received under the old system and what they will receive under the new one?

[Steve Webb]

My hon. Friend is right to say that information will be crucial. One thing we have been doing with the changes to the state pension age, for example, is writing to the individuals affected so that they know exactly what position they are in. All too often in the past, laws have been passed, no one has been told and it has taken many years for people to find out about it. An information campaign will be central to taking forward these excellent proposals.

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

The Minister has so far provided cold comfort for the 429,000 women who will not benefit from the new state pension when men of precisely the same age will. May I ask the Minister about a specific group of 80,000 women who are represented in Parliament today? Under the Pensions Act 2011, which this Government passed, their retirement age increased with little notice. Now they will miss out on the Government’s proposed new pension with an average loss to the tune of £9 per week. Is it fair to penalise these women twice in two years?

[Steve Webb]

To be clear about the particular group to which the hon. Gentleman refers, their pension ages increased by a maximum of six months under the 2011 Act. The vast majority of those 80,000 would be worse off if we treated them the same as men, which is what he seems to be calling for. I was not clear what else he was calling for, but treating them the same as men would leave them worse off than they are now.

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[The Minister of State, Department for Work and Pensions (Steve Webb)]

From 8 April, people living in temporary accommodation will, in most cases, be unaffected by the removal of the spare room subsidy in the social rented sector. However, where a local authority’s own temporary accommodation is used, the spare room subsidy will be removed if the tenant is placed in accommodation that is larger than they need.

[Katy Clark]

In North Ayrshire the council owns 63% of the accommodation used as temporary accommodation, and the bedroom tax will apply to approximately two thirds of those properties. Will the Minister look again at the definition of temporary accommodation, given that this policy will simply mean that local authorities end up spending a lot more on less suitable accommodation from the private sector?

[Steve Webb]

We think that local authorities using their own stock to discharge their homelessness function should, wherever possible, house people in appropriately sized accommodation. If there are short-term problems in matching families to accommodation size, discretionary payments are available and can be used to support any shortfall a local authority may experience.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

Half of all the temporary accommodation in Scotland is council-owned and the accommodation size reflects the existing housing stock and a varying range of needs in that sector. The discretionary housing budget in Scotland will not even cover the cost of keeping disabled people in specially adapted homes, so in no way will it cover the needs of people in temporary accommodation. Will the Government look again at this and reconsider what I can only assume is an unintended consequence or an oversight?

[Steve Webb]

The hon. Lady raises the important issue of the mismatch between the housing stock and families who need housing. That has gone unaddressed for decades and we now need to address it. We recognise that there may be particular issues in Scotland, partly with rurality and partly with the housing stock, and we are happy to continue having that conversation with hon. Members.

[Mark Pawsey (Rugby) (Con)]

15. What arrangements his Department is making for benefit payments to people who are unable to receive them through a bank or building society account.

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[Mr Betts]

This question was raised with me by my constituent, Mr Leonard Jolicoeur. He asked whether it is true that someone who is of pensionable age when the new single-tier pension comes in and who has a small occupational pension and therefore does not receive pension credit will get the existing state pension, but that someone who is in exactly the same financial circumstances and becomes of pensionable age after the single-tier pension comes in will get the new single-tier pension, which is some £40 a week more. What can the Minister say to persuade my constituent that it is fair or reasonable for somebody who is in exactly the same financial circumstances as his neighbour to get £40 a week more than him?

[The Minister of State, Department for Work and Pensions (Steve Webb)]

That is not what would happen. People who have contracted out into an occupational pension, such as his constituent, currently get money off their state pension, which is called a contracted-out deduction. That will remain part of the single-tier proposition. Therefore, somebody such as his constituent who has contracted out would not get the £144. There is no cliff edge. There would be a deduction for past contracting out in both cases.

[Andrea Leadsom (South Northamptonshire) (Con)]

T3. Does my right hon. Friend agree that for Opposition Members to talk of the spare bedroom subsidy as a tax shows a profound lack of understanding on their part of what a tax actually is?

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[David Mowat (Warrington South) (Con)]

The Pensions Minister will have seen the recent press coverage about the high margins generated by annuity providers. That comes as no surprise given the complete market failure that has occurred in large parts of the private pension industry. Will he consider imposing a uniform product structure—as has been done in energy—and will he enforce legally the open market option?

[Steve Webb]

My hon. Friend has a good track record of challenging the issue of charges and value for money. The Association of British Insurers has just published its code of practice, to which members have to sign up, to ensure that instead of people just defaulting to the provider they save with, they shop around. We will monitor closely whether that makes the market more effective. [Interruption.] Opposition Members are shouting “Do something”, but they did not do something when they were in power.

[Mr William Bain (Glasgow North East) (Lab)]

A constituent I met on Saturday is a divorced lone parent who works hard for a low income, and his children stay with him on three evenings a week. Why does the Secretary of State believe that such a hard-working individual should lose £12 a week under his hateful bedroom tax?