Grand Committee

Monday 24th February 2014 Grand Committee

Monday, 24 February 2014.

Arrangement of Business

Monday 24th February 2014 Grand Committee

Announcement

15:30

[The Deputy Chairman of Committees (Baroness Andrews) (Lab)]

My Lords, I advise the Committee that, if there is a Division in the House, the Committee will adjourn for 10 minutes.

Public Bodies (Merger of the Director of Public Prosecutions and the Director of Revenue and Customs Prosecutions) Order 2014

Monday 24th February 2014 Grand Committee

Motion to Consider

15:30

Moved by

[Lord Faulks]

That the Grand Committee do consider the Public Bodies (Merger of the Director of Public Prosecutions and the Director of Revenue and Customs Prosecutions) Order 2014.

Relevant Documents: 17th Report from the Joint Committee on Statutory Instruments, 27th Report from the Secondary Legislation Scrutiny Committee.

[The Minister of State, Ministry of Justice (Lord Faulks) (Con)]

My Lords, the purpose of the draft order is to give legal effect to the administrative merger that took place just over four years ago, on 1 January 2010, between the Revenue and Customs Prosecutions Office, which was the prosecuting arm of HM Revenue and Customs, and the Crown Prosecution Service. The decision to merge the CPS and the RCPO was announced in April 2009 by the noble and learned Baroness, Lady Scotland, who was the Attorney-General at the relevant time. The purpose of the merger was to create a strengthened prosecution service, to safeguard and improve the high-quality work done by both organisations in serious and complex cases and to provide efficiency savings. Those objectives have to a large extent been achieved.

The merger that took place in 2010 did not involve legislation. Sir Keir Starmer, who was then DPP, was appointed Director of Revenue and Customs Prosecutions as well. Since that date, the person holding the positions of both DPP and Director of Revenue and Customs Prosecutions—now Ms Alison Saunders—has been running the two offices under one umbrella. There is a single management structure and cases investigated by HMRC are now prosecuted by a specialist fraud division of the CPS.

Although the administrative merger has been a success, there are disadvantages in the two organisations still existing as legally distinct entities. First, it might give the appearance that the merger is incomplete and could readily be reversed. This might call into question whether the change is intended to be permanent. Secondly, it has practical implications for how the organisations work. The Government consider that a legal merger would bring about greater efficiency and effectiveness. That is why we are bringing forward the present draft order under the Public Bodies Act 2011. The Act provides for the functions of certain public bodies—listed in the schedules—to be abolished, merged or transferred. The effect of this draft order is to transfer the functions of the Director of Revenue and Customs Prosecutions to the DPP, thus putting the existing merger of the RCPO and CPS on a statutory basis.

As there is a requirement for Ministers to consult on proposals before laying a draft order under the Act, a consultation exercise took place in 2012. Views were sought on the proposal that legal effect should be given to the administrative merger and on whether the proposed approach would achieve the desired effect. Those organisations and individuals who commented—only eight did so—either supported the proposal or did not object to it. There was concern that the specialist expertise of the RCPO should not be lost; the Government agree that this is an important aim. As the consultation response explained, cases investigated by HM Revenue and Customs are handled within the CPS by the same specialist casework division that prosecutes the most complex and serious fraud and corruption cases investigated by the police.

An order made under the 2011 Act must serve,

“the purpose of improving the exercise of public functions, having regard to (a) efficiency, … (b) effectiveness, … (c) economy, and … (d) securing appropriate accountability to Ministers”.

I am grateful to the Secondary Legislation Scrutiny Committee for its careful consideration of the draft order, and I welcome its conclusion, which was expressed in these terms:

“the Government have demonstrated that the draft Order serves the purpose of improving the exercise of public functions and complies with the test set out in the 2011 Act”.

I do not think that your Lordships would welcome a detailed description of the draft order, which—as is so often the case—is by no means as brief as my summary of its effect might suggest. As for its effect, I cannot do better than quote these lines from the Scrutiny Committee’s report:

“The Government present a convincing argument that the overall effect of the transfer of the responsibilities of the RCPO to the CPS will result in streamlining the process by including it in a larger group where economies of scale can be identified from using prosecutors and administrators for a wider range of duties. Although the economies realised by this Order are comparatively small, the improvements to efficiency are more substantial, with the potential for the more flexible structure possible under the new arrangements”.

I commend the order to the Committee. I beg to move.

[Lord Hope of Craighead (CB)]

My Lords—

[Lord Beecham (Lab)]

My Lords, try as I might—oh, I am so sorry.

[Lord Hope of Craighead]

My Lords, perhaps I can insert a few words of welcome for the measure. I used to prosecute in the High Court of Justiciary in Scotland as an advocate depute. From time to time, cases arose north of the border where the Revenue wanted to prosecute in the High Court. As the Minister will know, in Scotland all prosecutions are in the hands of the Lord Advocate. I remember having to deal with officials from the then Inland Revenue and, separately, HM Customs, who were somewhat upset that they could not conduct those prosecutions themselves but had to hand the papers over to me or my colleagues so that we could conduct the matters on their behalf.

Of course, the order has nothing to do with the position in Scotland, which is quite unaffected, and it is unnecessary to do anything about it because it is well established that prosecutions will continue to be handled by the Crown Office under the overall supervision of the Lord Advocate. As the noble Lord said a moment ago, my experience was that efficiency was promoted by combining the prosecution element—the exercise in presenting the material in accordance with the best use of the courts—in one body. It seemed to me at the time rather odd that, south of the border, there was this division of functions, which gave rise to uncertainty in my mind as to exactly why it was necessary for there to be a separate prosecution system at all in the hands of the Revenue or HM Customs.

So, from a rather unlikely quarter, I admire what is being done administratively and entirely approve of the Minister’s suggestion that it should now be endorsed in legislation. I am sure that this is a good measure to promote efficiency.

[Lord Beecham]

I must begin by apologising to the noble and learned Lord. I had not noticed that he was here and obviously intended to speak; I apologise for that.

As I said, try as I might—and I certainly tried—I cannot find anything much to object to in the 19 pages of the order or, indeed, the 134 amendments embodied in it. The principle is clearly right and it is sensible to combine the two positions. However, although this does not quite fall within the Minister’s brief, there are still questions to be asked about the operation of the service as a whole, particularly in relation to staffing.

Of course we are only talking about part of HMRC for the purposes of the order, but within HMRC there have been significant staff reductions. To be precise, 1,697 staff left in 2012-13. That forms part of a significant reduction in funding of HMRC amounting to about £2 billion, or 16.5%, by 2015. The Chancellor’s reinvestment, as it were, of £154 million, which was announced with a flourish a couple of years ago, will not make much of an impact on that massive cut.

The question arises, therefore, about the implications for staffing on what had been the HMRC function. Will the staff be protected, or will there be reductions? The record of HMRC in recovering moneys is clearly not very good. The Public Accounts Committee criticised it for collecting more than £1 billion a year less in December 2012 than it would have done, had it had the relevant staff.

Another question in relation to staffing is: will those who will be employed in the completely unified structure be paid comparably to those with whom they will no doubt be locking horns in the private sector? For that matter, is there much of a two-way flow between the department as it is now constituted and the private sector? I am not talking about the prosecution side thus far, as far as I am aware, but concerns have been expressed about people coming to work for the Inland Revenue from the private sector and then going back to the private sector and so on. I am not asking the Minister to answer this today, but it would be helpful if he would let us know the position in relation to movement inward and outward of staffing, particularly on the Inland Revenue side.

One of the concerns raised—I do not think with any great force in the consultation—was about the need to maintain within the prosecution side expertise of Inland Revenue matters. The Government seem to be satisfied on that, and I am not challenging that assertion, but it underlines the need to keep an eye on matters. No doubt the Government will be reviewing the situation as it progresses.

A further point relates to the third arm of prosecutions in this country, which is the Serious Fraud Office, which comes under the aegis of the Attorney-General and is separate from the DPP and HMRC, which we are now discussing. Given the somewhat challenging history of the SFO in recent years, I wonder whether it might be opportune at some time to consider a further merger between that department and the structure that we are formally approving today. I am not suggesting that the Minister can give an immediate response to that, but it is something that his colleagues could look into. In principle, it might seem sensible to have a seamless prosecution service dealing with serious fraud and tax fraud and the other matters that come under the direct surveillance of the DPP.

Having said that, we certainly do not object to this order and wish the fully combined departments well in their endeavours on behalf of the public and the taxpayer.

[Lord Faulks]

My Lords, I am grateful for the remarks of the noble and learned Lord, Lord Hope, for bringing to the debate his experience from Scotland and for endorsing the desirability of this move from that vantage point. As well as making certain economies, we think that it will prevent potential demarcation disputes of the sort to which he referred.

The noble Lord, Lord Beecham, as ever, probes slightly beyond the scope of the statutory instrument, as I am sure he would be the first to accept. On the question of staffing and training, there is perhaps one aspect with which I can help the Committee. The legislation removes the barriers to the staff of the CPS and the staff of the RCPO from working on mixed duties.

The question of training is relevant. The HMRC prosecution work will remain for the immediate future within the CPS central fraud division, which prosecutes cases nationally. Expertise already exists within the division and the new staff are trained internally. Where any HMRC work is to be devolved, this will be managed carefully and appropriate training and support will be provided.

I am given to understand that RCPO is entirely separate from HMRC, and there have been no staff reductions as a direct result of the merger. I anticipate that the noble Lord, Lord Beecham, was talking of staff reductions more generally, but I can confirm that, in so far as the issue of the statutory instrument is concerned, there are no such reductions.

As always, I will take back his remarks and observations generally about the Serious Fraud Office and whether or not further consolidations might be made with profit, as well as his observations generally about staffing and the involvement of the private sector. I am grateful for those contributions.

We submit that the draft order is a modest but worthwhile measure. In effect, it will complete what was unfinished business and should enable improvements and efficiency to take place. I commend it to the Committee.

Motion agreed.

Electoral Registration and Administration Act 2013 (Transitional Provisions) (Amendment) Order 2014

Monday 24th February 2014 Grand Committee

Motion to Consider

15:47

Moved by

[Lord Wallace of Saltaire (LD)]

That the Grand Committee do consider the Electoral Registration and Administration Act 2013 (Transitional Provisions) (Amendment) Order 2014.

[Lord Wallace of Saltaire (LD)]

My Lords, I have been asked by others involved in the ERA process how many more electoral statutory instruments there might be to consider. I am pleased to report that in the case of individual electoral registration the preparations for implementation in June are well advanced and it is anticipated that there will only be a handful of additional SIs during the remainder of this year.

The two short instruments before the Committee today will enable some fine-tuning, getting IER off to the very best possible start, which I am sure noble Lords will all welcome. Perhaps I should say, and I hope that the noble Lord, Lord Kennedy, will convey this to his colleagues on the Labour Benches, that some of them still seem to be very sceptical about the transition to IER, but so far this has been a remarkable success story, as the matching has been more complete than we had expected. That is part of the reason why we are continuing to adjust as we take this process along.

The draft order makes a small change to allow the start of confirmation matching to begin nearly a week earlier, from 16 June to 10 June. We hope and expect this to increase, from 64% to 83%, the proportion of unconfirmed electors receiving these invitations to register during July, rather than in the holiday month of August, which we expect to deliver a significantly better response rate. This is surely a common-sense piece of fine-tuning and well worth doing.

The second instrument, the draft regulations, will enable the testing of the IER digital service to continue for as long as may be necessary before it goes live, ensuring that the system will be able to do everything required of it once IER begins.

The Grand Committee will have observed that the order and regulations amend existing instruments, some of which were made only quite recently. Given that these are two more instruments, why do we need to make these now and add to the rather large ensemble that we seem to be creating?

To explain, the changes that we propose build on work carried out over the past year. The regulations now being amended to extend the testing period were made in March 2013 so that we could conduct the dry run of the process for confirming existing electors. In planning this, we had regard to the principle that the use of personal data for testing should be limited to a defined period. Last year’s regulations therefore provided for exchange of data to end around now.

In addition, not having a crystal ball, when those regulations were made we could not have known exactly what the testing schedule for 2014 would be, partly because the contracts with electoral management systems suppliers were yet to be concluded. However, a simple change to the dates in last year’s order will ensure thorough testing before we go live. When the dry run took place across Great Britain last summer, we got much better results than we had expected, indicating that at the transition to IER it should be possible to confirm an average of at least 78% of the electorate.

We were able to discuss with electoral administrators and the Electoral Commission options for making best use of the results of the live confirmation run. The solution emerged to allow the start of the transition to be brought forward a week from 16 to 10 June. The 2013 transitional provisions order was already before Parliament and to have withdrawn it to amend that one date would have caused uncertainty about all the other aspects of IER covered by the order, impacting everyone working on electoral administration across Britain.

In conclusion, these two short statutory instruments before the Grand Committee today will each, in their own way, play a further constructive part in the successful implementation of individual electoral registration in Britain. I hope that all parties will welcome this and I commend them to the Committee.

[Lord Kennedy of Southwark (Lab)]

My Lords, it is good to be back here again to discuss these instruments with the noble Lord. To start off, the noble Lord made the point about some of my colleagues having worries about this, some of which I share. I worry about the speed of the transition and about what will happen if things go wrong. The Government have quite rightly put a lot of emphasis on voter fraud and on accuracy, but sometimes I feel that we put less emphasis on completeness.

As I have said many times to the noble Lord here and in the Chamber, on estimate around 6 million people live in our country who are not on the register but are eligible to be on it. I do not see much evidence that much is going on to get them on to the register. The Government should address that, and quickly. It is of equal priority to anything else that we are doing.

In general I support IER. Many noble Lords will be aware that I am a former member of the Electoral Commission, so I know about the work that has gone on in the Government and in the commission to get this right. However, I will keep pressing the noble Lord on the question of completeness, because it is important that all citizens are able to take part in our electoral process.

As the noble Lord says, the two instruments before us today bring forward minor changes, bringing IER into effect. The first order amends a previous order and brings forward the earliest date for the matching of existing electoral registers with data held by the DWP from 16 to 10 June. That is fine as far as it goes and I hope that the process will go smoothly.

I note in the order that publicity is to be undertaken by the Electoral Commission, which is welcome. I have some knowledge of the work that the commission is doing on that. However, I am not convinced that that is going to be enough. The Government will have to look at what else can be done. This is an enormous change that is taking place. I do not know what they can do; maybe the noble Lord can tell the Committee what other plans the Government have, or look at more plans. I certainly think that we should look at things such as specific funding to local authorities to do extra work. Noble Lords will know that EROs employed by local authorities do lots of the extra work, such as going door to door, and it may well be that additional funding is needed beyond what they normally receive. If at the end of this process there are fewer people on the register than there are now, it will be matter of much regret—in fact, we should aim to get many more people on the register. Perhaps the Minister could look at that.

How will the Cabinet Office monitor the completeness and accuracy of the electoral register throughout the process and after transition to IER? The second statutory instrument deals with the IER digital service. We have no issues with that, but I return to the general point that I made at the start of my contribution: with such a major change taking place, are we doing everything possible to ensure that those citizens who are not on the register now will be on the register in future?

[Lord Wallace of Saltaire]

I thank the noble Lord for his comments. I was conscious when I answered a question on this matter the other week of how long we have all been involved in this. The right reverend Prelate the Bishop of Wakefield asked me whether I had thought about the problems in Kirklees and I realised that it was the summer before last that I had been in Holmfirth talking to the Kirklees electoral registration officer. We have been at this, preparing for it, with local electoral registration officers and others for quite some time now.

I shared a lot of the concerns that others had at the outset and I have to say that I am impressed by the thoroughness shown by people at both the local and the national levels in working through to make sure that the transition is a success. We have in some ways the advantage of being able to learn from the Northern Irish experience, where there was a certain drop as one moved from household to individual registration, and we are working on several different fronts to deal with that. As the noble Lord will be aware, the biggest single reason provided by surveys for why people do not register is that they are not interested in politics and do not want to vote. That means that all of us in politics have to be out there arguing that it is in their interests both to register and to vote. National Voter Registration Day the week before last was an autonomous voluntary initiative, with which the Government were very happy to co-operate, to push that issue further up the agenda. We are co-operating with a range of voluntary organisations to get at particularly difficult, vulnerable groups who are less likely to register. We will continue to do that. We expect everyone to keep us up to the mark on this. We have allowed in the legislation for a final parliamentary vote to approve the transition after the next election, but so far, so very good and so much better than I expected, and I do not see it failing.

It was suggested that we might be more concerned about accuracy than about completeness. We are of course very concerned about completeness, which is why we are so pleased with the success of the data-matching exercise so far. We are providing additional funding to maximise registration; we have just provided an additional £3.6 million to be distributed to every electoral registration officer according to levels of electoral under-registration to help them with the costs of local activities for maximising registration. I remind the noble Lord that the boroughs that come up with the largest amount of under-registration are not those that have the strongest Labour vote or the highest poverty index. Kensington and Chelsea and Westminster come high among them, partly because there is such a rapid turnover in the population and people do not get round to registering while they are there.

We are providing funds to EROs because we understand that they are best placed to determine what local activity is most effective in maximising registration levels. We are not mandating how they make use of this funding; a great deal depends on local circumstances. I was shocked to be told some 15 months ago that in Wandsworth, for example, some 20,000-plus properties are now behind locked access, so that doing a door-to-door canvass has become a great deal more difficult. Those are not just council flats but the new blocks of flats along the Thames that sell for far too much money. So yes, we still face some difficulties but we are working extremely hard and providing extra resources and we are working with voluntary organisations to maximise registration and to make it as complete as possible. We hope to co-operate as actively as we can with all those concerned, including, of course, those within the Labour Party.

16:00

[Lord Kennedy of Southwark]

I hope that the noble Lord accepts that we all have a responsibility for getting people on the register, but the Government have a very special responsibility. Secondly, he has made this point before and I am getting a bit irritated: I have never, ever suggested that it is about getting Labour voters on to the register. It is about getting voters on to the register—I do not care who they vote for. The fact is that there are 6 million people in this country not on the register to vote. I want to get them on. That is what I am all about, as a member of the commission and as a Member of this House. I do not care if they are in Kensington and Chelsea and all vote Tory. That is absolutely fine. They should be on the register.

[Lord Wallace of Saltaire]

I apologise. I may indeed have been casting that comment at some of the noble Lord’s colleagues who have made that point very strongly to me. We all share an interest in this and we want to get as many people to vote as possible. We have no idea what they will do when they vote—whether they will vote for one party or another or even spoil their ballot papers—but rebuilding public commitment to democratic participation is a wider issue that we all face. I hope that we will all work together to ensure that this transition is entirely a success.

I am reminded to repeat, as I announced in the House during Questions the other week, that we have just awarded five organisations nearly £250,000 of funding to promote registration in their areas. So we are working on this and the transition is not yet over. But the noble Lord will know, as I do, that unfortunately some parts of the British public are not particularly engaged in either local or national politics, which is a problem that we all face.

Motion agreed.

Electoral Registration (Disclosure of Electoral Registers) (Amendment) Regulations 2014

Monday 24th February 2014 Grand Committee

Motion to Consider

16:02

Moved by

[Lord Wallace of Saltaire]

That the Grand Committee do consider the Electoral Registration (Disclosure of Electoral Registers) (Amendment) Regulations 2014.

Motion agreed.

Industrial Training Levy (Engineering Construction Industry Training Board) Order 2014

Monday 24th February 2014 Grand Committee

Motion to Consider

16:03

Moved by

[Viscount Younger of Leckie]

That the Grand Committee do consider the Industrial Training Levy (Engineering Construction Industry Training Board) Order 2014.

Relevant documents: 19th Report from the Joint Committee on Statutory Instruments.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)]

My Lords, the purpose of this order is to seek authority for the Engineering Construction Industry Training Board—the ECITB—to impose a levy on employers in its industry in 2015, which will relate to an assessment of employers’ payroll in the 2013-2014 financial year.

It is worth spending a little time elaborating on the reasons why there is a statutory training levy in the engineering construction industry. The associated engineering construction industries construct and maintain the power and utilities infrastructure essential to the UK economy. The industries include coal and gas power, offshore oil and gas, chemical and pharmaceuticals, nuclear power and renewable energy. The construction and maintenance requirements for these industries require a mobile, flexible and highly skilled workforce. It is the employers in these industries who have, since 1991, come together to support collective action through the levy to develop the workforce, manage risks and address skills needs.

Skills are central to creating a strong, sustainable and balanced economy. The Government are committed to ensuring that skills provision meets the needs of employers and learners. While the Government have a role in setting the framework for success, employers need to be in the driving seat if we are to equip the workforce with the skills that employers need. The ECITB has a central role in the training of the workforce and in supporting the industry to achieve sustainable growth. In doing this, the Government look to the ECITB to minimise bureaucracy and to ensure that support to employers is both relevant and accessible. The ECITB is employer led, and its role is to encourage the provision of adequate training of employees and prospective employees in its industry. It provides a wide range of services, including setting occupational standards, developing vocational qualifications and delivering apprenticeships, as well as paying direct grants to employers who carry out training to approved standards.

Let us briefly reflect on what the levy has achieved. In 2013, the ECITB supported more than 2,500 apprentices at various stages of their apprenticeship programmes. Completion rates for apprenticeships in the industry are more than 90%, significantly higher than the national average. In each of the past two years, the ECITB has supported more than 30,000 learners in training programmes, including apprenticeships, skills and technical training and management and professional programmes.

The ECITB is a non-departmental public body that operates under the provisions of the Industrial Training Act 1982. The Government review all public organisations to ensure that they are delivering an effective service that offers value for money. The ECITB is currently being reviewed as part of this triennial review of industrial training boards. The review will report by the end of this summer.

The majority of employers in the engineering construction industry continue to support a statutory framework for training. The ECITB is a model of the successful application of such a framework, and the order that we are considering today will enable these statutory levy arrangements to continue. I welcome this order as evidence that employers in the engineering construction industry want to continue to invest in the skills of their workforce.

The Industrial Training Act permits the ECITB to raise a levy on employers so that the costs of training are shared more evenly among companies in the industry. This order gives effect to proposals submitted to us for a levy to be collected by the ECITB in 2015. The proposal involves the imposition of a levy in excess of 1% of payroll on some classes of employer. The Industrial Training Act requires such an order to be approved by affirmative resolution of both Houses.

The levy order can only be made if the following three conditions are satisfied: first, that the amount of levy is appropriate to meet the current skills requirements of the industry; secondly, that the proposals are necessary to encourage adequate training in the industry; and, thirdly, that the previous levy order received support from the majority of employers and the levy rates remain unchanged. I can confirm that my right honourable friend in the other place, the Secretary of State for Business, Innovation and Skills, is satisfied that these conditions have been met.

The Act also requires the ECITB to include proposals for exempting small employers from the levy. This order therefore provides that small firms will be exempt if their expenditure on payroll and sub-contract labour is below a certain threshold that the industry considers to be appropriate. I will come to the details of the thresholds in a moment. Those firms that are below the threshold and exempt from paying the levy are still able to benefit from grant and other support from the ECITB, and many of them indeed do so.

The ECITB does not propose to make any changes to its levy rates or small firms exemption thresholds for this levy order. The rate for site employees will remain at 1.5% of total payroll, plus net expenditure on sub-contract labour. Employers who spend £275,000 or less on site employees will not have to pay the levy. The rate in respect of off-site employees—often referred to as “head office” employees—is 0.18% of total payroll, plus net expenditure on sub-contract labour. Employers who spend £1 million or less in respect of off-site employees will not have to pay the levy. Of all the establishments that are considered to be leviable by ECITB, it is expected that around 35% will be exempted from paying the levy.

For the ECITB, the one-year proposal is expected to raise around £29 million in levy income. The Committee will note that the ECITB order covers a one-year period, whereas the Industrial Training Act requires that levy orders should normally cover a three-year period. However, a one-year levy order can be made if, first, it is made within two years of an earlier levy order for which the ECITB obtained employer support and, secondly, the levy rate is being kept the same. For this order, the ECITB will be relying on the consensus established for the 2012 order, which had the support of 59% of employers, who were likely to pay 69% of the levy. Notwithstanding that, the ECITB also undertook a consultation with the industry last year, which showed that 68% of employers, likely to pay 76% of the levy, supported the proposal for the levy to continue. The ECITB has proposed a one-year levy order, at the request of the industry, to retain the flexibility to review the levels of levy required to meet future demand. Next year, the ECITB levy order will cover a three-year period, which will be coterminous with the Construction Industry Training Board three-year levy cycle from 2015 onwards and therefore allow the ECITB to develop longer-term plans.

The Committee will know from previous debates that the ECITB exists because of the support that it receives from employers and employer interest groups in their sectors. As I indicated earlier, there is a firm belief that without the ECITB there would be a deterioration in the quantity and quality of training in the industry, leading to a deficiency in skills levels. This draft order will enable the ECITB to continue to carry out its vital training responsibilities. I commend the order to the Committee.

[Lord Jones (Lab)]

My Lords, it is traditional to thank the Minister for his introductory remarks, and I do so most sincerely. I want to advance just a few points, which I hope that he will see as relevant. If he cannot answer them specifically today, he may do so by letter.

I agree that the aim should be to achieve a balanced economy, as the Minister has said, and I agree that, inevitably in today’s conditions, employers should be in the driving seat—without any shadow of a doubt. The third main point that he made in his introductory remarks was that we need the Engineering Construction Industry Training Board, which is central to Britain’s manufacturing future. It is good to know that Ministers are looking in some detail at how the board operates.

Is it possible that the Minister could tell us how much in grant is being paid, to the latest date that may be available, by Her Majesty’s Government to the Engineering Construction Industry Training Board? What amount was paid in the two years previous to the current financial year?

16:14

My recollection from another place is that the future of Britain’s training boards was a matter of great debate, some controversy and not a few voting procedures throughout the early years of the 1980s. My recollection is that Lord Prior—he did not have that title then—took the lead in the proposals on the future or otherwise of training boards. It occurs to me, in this year 2014, that it might be relevant to raise some matters concerning the future of training boards as it was seen in the early 1980s. I am not sure whether the Minister was born then, but certainly his officials may not know of the origins of the current policy of this Government from the point of view of where the matter stood in the early 1980s.

I recollect that the Minister who took the business—day in and day out, and particularly at night after 10 o’clock—was the late Peter Morrison, who was the Member of Parliament for Chester. In angry and controversial debates in that House, he had the difficult task of proposing that a large number of industrial training boards were to be abolished. These proposals were very controversial. There were responses from outside Westminster, which will come as no surprise, from the then very large trade unions, some employers and employers’ organisations. The winding-up proposals were steam-rollered through the other place and there is no doubt that the board that we are now debating was a survivor.

The conclusion that I drew from the then Government’s decision to eliminate many training boards was that the skills base of Britain was denuded, and denuded seriously and for some time. Some of the great blue-chip companies in Britain virtually abandoned all training—large numbers of them ended training. I believe that Britain’s economy and manufacturing base suffered permanently from what I thought were mistaken policies. It is good to hear the Minister today taking the view that he now has on the future of the ECITB.

There is a helpful Explanatory Memorandum, no doubt produced by the Minister’s able officials behind him. Will he amplify on how many apprentices he believes are now being trained in small businesses throughout our country? With training in mind, how are small businesses coping in today’s difficult climate? We all know that banks are being accused of not enabling small businesses to grow into the future as they should.

Can the Minister say who chairs the ECITB? Does he know the chair’s background, and likewise with regard to the CEO? It seems that these two people are of key importance in sustaining and developing the manufacturing base in this country.

I refer to paragraph 7.8 of the Explanatory Memorandum, to which the Minister alluded. It is an important paragraph on ministerial policy, and I want to know in what way he proposes to monitor the board’s activities, so that we have an assurance that the board and the Government’s view of manufacturing will continue to be positive.

Again, I thank the Minister for his opening remarks.

[Lord Young of Norwood Green (Lab)]

My Lords, broadly speaking, I, too, welcome the statutory instrument. I thank the Minister for his introduction. I thank my noble friend Lord Jones for, as usual, giving us a historical analysis and some context for ITBs. I was around at the time, but I must admit that I could not remember all that detail about the wholesale slaughter of the industrial training boards.

[Lord Jones]

I hope my noble friend will allow me to say that the one omission I made in my boring remarks was that I was the opposition spokesman on these matters at that time.

[Lord Young of Norwood Green]

That accounts for it—it concentrated his mind wonderfully.

It was a helpful introduction by the Minister and I thank him for giving us some of the statistics. I was going to ask him about the number of apprenticeships and he gave us that figure, together with completions. Perhaps he could disaggregate that figure a bit further: how many apprenticeships were there in the 16 to 18 age group, and in the 19 to 24 age group? How many high-level apprenticeships were there?

Also, how many apprenticeships are there in this sector in public procurement contracts? I am sure that the Minister remembers the many occasions on which I have berated the Government for their failure to insist on a compulsory requirement for apprenticeships in public procurement contracts. It would be interesting to know how many apprenticeships in this sector are involved with public procurement contracts.

There is one other aspect of the construction industry that is still a matter of concern. The thresholds are based on the number of employees, but, unfortunately, it is still a well known practice in the construction industry—

[The Deputy Chairman of Committees]

There is a Division in the House. The Committee will adjourn for 10 minutes.

16:22

Sitting suspended for a Division in the House.

16:30

[Lord Young of Norwood Green]

My Lords, to continue, I was making the point that it was interesting to hear the Minister talking about threshold firms. One of the continuing problems with the construction industry, as I was saying, is still the problem of bogus self-employment, especially on large sites where it makes a difference. I know, for instance, that there are some more enlightened managers of some of the large projects who have been trying to encourage companies not to engage in this and, as they should do, to register people for PAYE who are in fact continuously being employed; this would obviously count towards the threshold for the training levy. It would be interesting to hear whether the Minister has any views on that and whether he agrees with me that this is a continuing problem.

With those questions and that slight reservation, I welcome the order.

[Viscount Younger of Leckie]

I thank the noble Lords, Lord Young and Lord Jones, for their contributions to this afternoon’s debate. I would like to address several questions that were raised and, if I may, start with the noble Lord, Lord Jones, who asked how much was paid by the Government in grant to the ECITB. I can reassure him that the funding for the ECITB is raised from the employer levy, so the ECITB does not receive any grant-in-aid funding from the Government. However, all funds are accountable to Parliament, which might give some further reassurance.

The noble Lord, Lord Jones, also raised the history of ITBs and the background to the closure of the ITBs back in the 1980s. It is nice for me to know that he thought that I might have been too young in the 1980s to understand, or to have been around for, the levy system, but it happens that I was employed by a major multinational textiles firm at the time and was working in human resources. I remember very clearly working with my superior to monitor and fill in the levy forms, which were pretty extensive, so I have some experience of that.

Bringing us forward to the modern day, I should say that the training boards continue with the support of employers, and the Government do not want to impose levies on industry but are responsive to employers who can benefit from such arrangements. That is the case for construction and engineering construction, which have mobile and flexible workforces. Who knows, other industries by sector may approach the Government for a similar regime. There are none so far, but the noble Lord makes a good point.

The noble Lord, Lord Jones, raised the issue of how the ECITB is monitored. The Minister in the other place has an annual meeting to review the performance of each ITB. The performance and accounts are for public record and are published annually. The Secretary of State for Business, Innovation and Skills appoints all the board members, and Government officials attend all the board meetings regularly to review performance with the boards.

The noble Lord, Lord Jones, asked about small businesses, with a particular focus on SMEs. It is very much a feature of the industry that the majority of employers are larger. I am happy to have a discussion with the noble Lord outside about my views about how small businesses are progressing.

On apprentices, the noble Lord may well know that we have managed to find 1.5 million apprenticeships since 2010. The noble Lord, Lord Young, also asked about apprenticeships and how many in the 16 to 18 year-old and 19 to 25 year-old bracket were involved in public procurement contracts. Although we do not have a breakdown of the numbers by age group or in public procurement contracts to hand, the nature of the engineering industry is likely to mean that the majority of apprentices will be aged 19 or over. I will certainly write to the noble Lord with any concrete figures that we can find to enlighten him.

The noble Lord, Lord Jones, asked who chairs the ECITB and who its CEO is. It is nice to be able to name names for once. The board is chaired and led by Andrew Collinson, who has extensive experience in the engineering construction industry, and the chief executive is David Edwards. The key feature of such boards is that they are employer led, and all the board members have experience of the industry and can speak on behalf of employers.

The noble Lord, Lord Young, raised the issue of bogus self-employment, to paraphrase his question. That is an issue in the construction industry. The orders cover not just PAYE but labour-only contracts. I agree that that matter needs further consideration, and I am grateful to the noble Lord for raising that point.

The proposal before the Committee relates to the engineering construction industry, and it continues to be the collective view of employers in the industry that training should be funded through a statutory levy system in order to secure a sufficient pool of skilled labour. I commend the order to the Committee.

[Lord Young of Norwood Green]

Before the noble Viscount sits down, I meant to ask this question during my contribution—I apologise to him. Were the figures he cited of 2,500 apprenticeships and 30,000 learners an increase on previous years? If he does not have the answer, obviously I understand.

[Viscount Younger of Leckie]

It may be appropriate for me to help the noble Lord by writing to him, but this might also be a moment to explain that the ECITB supports about 2,000 apprenticeships every year. I think I need to give a more precise and concise answer about the year-on-year figures, which I will endeavour to do.

Motion agreed.

National Minimum Wage (Amendment) Regulations 2014

Monday 24th February 2014 Grand Committee

Motion to Consider

16:39

Moved by

[Viscount Younger of Leckie]

That the Grand Committee do consider the National Minimum Wage (Amendment) Regulations 2014.

Relevant documents: 19th Report from the Joint Committee on Statutory Instruments.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)]

My Lords, I shall also speak to the National Minimum Wage (Variation of Financial Penalty) Regulations 2014.

The purpose of these proposals is, first, to clarify that work experience opportunities offered to young people as part of traineeships, helping them to compete in the labour market, are not subject to national minimum wage requirements—this reflects the situation with other government programmes—and, secondly, to take a tougher approach on employers who do not pay their workers the minimum wage that they are legally entitled to by increasing the financial penalty that employers have to pay.

First, let me turn to traineeships. The Government are committed to tackling youth unemployment. Central to this is equipping young people with the skills that employers need. Employers tell us consistently that young people often lack the right skills, attitudes and experience when they apply for an apprenticeship or other job. Some 29% of employers say that experience is “critical” when recruiting, and a further 45% say that it is “significant”.

The traineeship programme was introduced in August 2013 to address this problem in England. Traineeships in England are a training programme that includes work experience. Lasting a maximum of six months, the programme has three core elements: work preparation training; English and maths for those without a good GCSE standard in these subjects; and a high-quality work experience placement with an employer. Traineeships unlock the sometimes hidden potential of young people who are motivated to work but unable to get on the first rung of the ladder because they lack basic skills and are not yet ready for work. Traineeships are there for these young people to equip them with the life skills and confidence that they need to make that vital first step into sustainable employment.

Over 500 training organisations have indicated that they will deliver traineeships in the first year of the programme, and many employers are already on board, including household names such as Virgin Media and Siemens. Many smaller employers have been engaged locally by training providers. We expect the programme to grow over time, helping more and more young people to get jobs, but we rely on employers offering work experience opportunities to make this possible.

Exemptions from the minimum wage for participants in government schemes or programmes with work experience, such as traineeships, are commonplace in minimum wage legislation. The Government consider that traineeships are covered by an existing exemption. However, given that there are a number of government programmes with work experience to which different exemptions apply, we are pursuing a bespoke exemption that specifically names and describes traineeships in the regulations, for the avoidance of any doubt that any work undertaken as part of a traineeship is exempt from the national minimum wage.

I will now turn to the second reason that noble Lords are here today in Committee. The Government continue to be committed to increasing compliance with minimum wage legislation and effective enforcement of the law. Everyone who is entitled to the minimum wage should receive it. The Government actively target employers who disregard their responsibilities and we investigate any complaints made against them. We will not hesitate to pursue civil and criminal proceedings where necessary.

Her Majesty’s Revenue and Customs began enforcing the minimum wage in April 1999. Since then, HMRC has identified more than £45 million in arrears for over 200,000 workers during more than 65,000 employer interventions. Her Majesty’s Revenue and Customs follows up every single complaint from a worker made through the free pay and work rights helpline. This commitment is at the core of minimum wage enforcement.

Our compliance and enforcement action is making an impact. In 2012-13, HMRC identified £3.9 million in wage arrears for over 26,000 workers. This is a 33% increase in the number of workers that the Government were able to help in 2012-13 and a 26% increase in arrears identified compared to 2009-10. Noble Lords will know how vital the minimum wage is for low-paid workers, and the Government are actively keeping our compliance and enforcement strategy under review. Our approach will continue to be informed by intelligence and data, where we ensure that we make the best use of all the tools and resources at our disposal.

Employers have a responsibility to ensure that workers receive the minimum wage that they are legally entitled to and should be well aware of the different rates for the national minimum wage depending on the circumstances of their workers. If employers are unsure, they should call the pay and work rights helpline for information.

16:45

The Government are taking a tougher approach on employers that break national minimum wage law and are bringing in these regulations to increase the penalties imposed on employers who underpay their workers in breach of the national minimum wage legislation. It is our intention that higher penalties will deter such employers and ensure that workers are correctly paid.

In 2012-13, 708 employers received penalties totalling more than £776,517 for failing to comply with national minimum wage law. The financial penalty is calculated as a percentage of the total underpayment as set out in the notice of underpayment served on the employer by the officer enforcing national minimum wage legislation. This regulation will increase the percentage figure from 50% to 100% and increase the figure for the maximum financial penalty from £5,000 to £20,000. If employers pay the unpaid wages within 14 days, the penalty is reduced by 50%. Employers also have 28 days to appeal against the notice of underpayment issued by HMRC.

In addition to this secondary legislation, we will go further to achieve the Prime Minister’s commitment to increase the penalty of £20,000 to apply per worker. However, we will need primary legislation to make this amendment to the National Minimum Wage Act 1998.

I conclude by reiterating the Government’s commitment to the national minimum wage and the protection it provides to the low paid without damaging their employment prospects. Through these regulations we are providing the necessary clarity that any work experience undertaken as part of a traineeship in England is exempted from the national minimum wage. However, we are taking a firmer stand against businesses that should be paying their workers the national minimum wage. I commend this order to the Committee.

[Lord Jones (Lab)]

My Lords, I thank the noble Viscount, Lord Leckie, for his useful introduction—if I may call it that. Looking at the Explanatory Memorandum to the National Minimum Wage (Variation of Financial Penalty) Regulations, I think that it appears to the reader here in Grand Committee to be a helpful, positive approach.

I welcome a tougher approach—that may be quoted—and the aim of skilling the young unemployed must be welcomed. I note that on this matter he mentioned England but, perhaps understandably, he did not venture to mention Wales. Is he able to give any information when he replies to the Committee as to what is happening in Wales on this matter?

It is also worth welcoming the aim of increasing compliance, which will necessarily involve instituting criminal proceedings. We heard in the Committee just now a very welcome commitment to the national minimum wage itself, which is a foundation statement when bringing in legislation such as this to your Lordships’ House. However, I recollect that in another place, when the national minimum wage was proposed by the Government of Mr Tony Blair, the opposition to it was somewhat lengthy and rather loud. It is good to hear from Her Majesty’s Government now a different tone of voice and a very obviously sincere commitment from the Minister.

With reference to the legislative background, we can only give three cheers to the phrase in the Explanatory Memorandum which states that,

“workers are entitled to be paid at least the minimum wage which is specified as one of four hourly rates”.

Also, paragraph 4.2 states that,

“the officer may serve a notice of underpayment requiring the employer to pay arrears to the worker or workers named in the notice”.

We can only imagine the difficulties of young people who are getting a miserable wage by law—some are not getting even that—and trying to make their way in a very difficult climate. Her Majesty’s Government should not lose sight of that dreadful situation across the nation today.

The Explanatory Memorandum also makes clear that there will be a requirement on,

“the employer to pay a financial penalty to the Secretary of State within 28 days of service of the notice”.

That has to be welcome, but I have questions concerning the policing that aims to prevent underpayment. Is the Minister able to tell us how many people make up that specific unit in HMRC’s enforcement section? If the work of the Government is to be done effectively, one hopes that that specific arm of government is adequately staffed. Often the suspicion is that HMRC is not adequately staffed, and it would be reassuring to hear what the numbers are.

Secondly, is the Minister able to tell us the total amount of fines for the latest available year? What was the largest fine imposed? Is he able to throw any light on that large fine, such as the details of the company? Is he able to enlarge on the answer, should he have it available to him?

[Lord Young of Norwood Green (Lab)]

My Lords, I thank the Minister for his introduction of these statutory instruments. I will deal with the traineeships first.

When reading the Explanatory Note, I noticed that the traineeships do not get any pay, or if they do it will be up to the employer; nor is there any requirement to pay travel expenses or lunch et cetera. I wonder how much the travel expenses—never mind the lack of pay—act as a deterrent to young people taking up these traineeships.

Obviously, we welcome anything that makes young people more employment ready. There was a reference to English and maths, but I am always surprised these days when I do not see any reference to IT. That is now such a key part of any young person’s employment capabilities that I would have thought it would have been in the mix.

It was also interesting to hear from the Minister that 500 training organisations have agreed to deliver these traineeships. As we know from experience, some of the apprenticeship training that was being delivered lacked quality and the Government had to take action. Bearing that in mind—it is not only this Government who have suffered, as we also had some difficult experiences—I think that it really emphasises the need to ensure that there is a monitoring process to ensure that we are getting value for money and a quality training process.

On minimum wage compliance, there have been lots of announcements by the Government. I certainly welcome the number of probing questions asked by my noble friend. I will be interested to hear the Minister’s answers. The Government have been saying over a period of time that they are going to “name and shame” those firms. It might act as an extra deterrent if they did so. Like my noble friend Lord Jones, I welcome the Government’s espousal of the minimum wage. He is absolutely right to remind us of the dire predictions that were made at the time about the terrible effect that it was going to have and the millions of jobs that were going to be lost—not taking into account the impact on millions of workers who were being paid, in some of the worst examples, £1 an hour.

I am glad that the Government are now fully in favour of the minimum wage, although not every Conservative Member of Parliament seems to be—indeed, some of them have put down Motions calling for small firms to be exempted from paying it. I would welcome some assurance that the Government will not be going down any such road. Given their previous strange decision regarding their magnificent bargain offer to employees to get rid of their employment rights in return for shares, I wonder what take-up there has been on that. It was almost like buy one get one free—if you believe in that, clearly you also believe in a free lunch.

To return to this statutory instrument, I found myself a bit confused by all the statistics being given by the Minister. I think I have this right: he talked about there being £45 million of arrears; I was not sure how many complaints that had resulted from. I could not quite comprehend whether or not these figures were going down as a result of the enforcement. That is what we want to see. I was pleased to hear the Minister introduce the pay and work rights helpline. It seems to be carrying out its function.

We welcome the higher penalties, although we probably think that they should be even higher still because there still seems to be a significant number of employers that believe they can get away with not paying the minimum wage, which is a real disgrace. The Minister and the noble Lord, Lord Jones, referred to getting a 50% reduction if you pay what you should have been paying. I suppose that I can see some logic in that if it gets them to pay up, but I would like some assurance that, if the same employer were to commit this offence again, we would not allow them to have a second chance of getting a 50% reduction. Would that apply if there were a repeat offence?

To summarise, we generally welcome this measure. I would be interested to know why we have not yet had any examples of the Government actually naming and shaming employers, which might act as a further deterrent, and I would like some clarification on how many cases of enforcement there have actually been over the period that this has been taking place.

17:00

[Viscount Younger of Leckie]

I thank noble Lords for their contributions during this very brief debate and I hope to address all the points that were raised.

The noble Lord, Lord Jones, raised important points about young people. It is true that there is much more work to be done. Although the deterioration of the labour market situation for young people predates the recession and this Government and the recession hit the employment rates among young people particularly hard—I think that everybody is aware of that—there are signs of recent improvements in the statistics.

In the three months to November 2013, there were 920,000 unemployed young people. While that figure was down 39,000 both over the quarter and over the year, that number illustrates how much work we need to do and must do. However, around a third of young people were in full-time education. The unemployment rate for this group was 18.1% in the three months to November 2013—young people make up around 9% of the total population. The number of young people on the claimant count has fallen for 19 consecutive months and was 315,000 in December 2013. In addition, the number of young people who have been claiming JSA for more than 12 months is down by around 25% over the year.

Youth unemployment remains lower than after past recessions: for example, 9% of 16 to 24 year-olds have left full-time education and are workless, against 12% back in 1993 and 14% in 1984. I thought that it might be helpful to produce some context for this discussion but at the same time reiterate how much more work there is to be done.

The noble Lord, Lord Jones, referred to Wales—a very important country and I say so as a Scot. I should clarify that the national minimum wage is a reserved matter. Changes to the penalties regime will cover the United Kingdom. Traineeships will be available only in England and the bespoke exemption will apply only in England. Therefore, in effect, it is not applicable in Wales and there will be no impact there.

The noble Lord also raised the issue of policing to prevent underpayment and asked how many people made up the enforcement unit within HMRC. That is a very specific question on which I will be very happy to write to him to give the figures.

The noble Lord, Lord Young, raised the issue of pay for traineeships. As he said, the general view is that traineeships would not be paid; there is no obligation for employers to pay. It is very much hoped that all employers will see fit to pay for meals and for some transport, but there is no obligation to pay them. He also mentioned skills in maths and English. As he knows, we are progressing with those skills for those people who do not have the necessary GCSEs.

On IT, the noble Lord made a very good point. I think that it is fair to say—and it is a bit of a generalisation, I know—that most young people are pretty savvy when it comes to IT, but it is noted that the noble Lord has raised that issue. It is not part of the programme, but it is noted and I shall take it away.

[Lord Young of Norwood Green]

I agree with the Minister that they are savvy in some ways. Most of them have PhDs in social networking, though not necessarily in the dangers and risks. I am interested in IT skills as they would apply to enhancing their employment prospects, which is a slightly different sector.

[Viscount Younger of Leckie]

I fully accept that point. I shall endeavour to write to the noble Lord with some information on that if we have it, looking specifically at the traineeships and IT.

The noble Lord asked whether the 50% reduction in penalties applied if someone was a repeat offender. The answer is yes. It applies only to the financial penalty. Just to be clear, the employer has to pay back the full arrears to employees within 14 days for the 50% reduction to be applicable.

The noble Lord raised an important point about quality and asked how we would ensure the quality of the traineeships. We have put in place a number of measures to ensure that the work experience is a high-quality learning experience for each young person. Only providers who are graded good or outstanding by Ofsted are eligible to deliver traineeships. The Department for Education has published guidance on what is required to ensure that the work experience is of good quality. Providers are responsible for actively monitoring the work experience placement and working with employers to ensure that it meets each individual’s needs. Providers are given funding to support them to do this, and we have commissioned an external evaluation of traineeships starting from the first year. My department, BIS, is funding the Education and Training Foundation to deliver a traineeship support programme for providers delivering traineeships, focused on ensuring that they are high-quality programmes. I hope that gives some reassurance to the noble Lord.

The noble Lord, Lord Young, raised the matter of naming and shaming. I can assure him that that is very much on our radar. He will be aware that the revised national minimum wage naming and shaming scheme came into effect on 1 October 2013. As I said earlier, the new rules are part of government efforts to toughen up enforcement of the national minimum wage and to increase compliance. By naming and shaming employers, it is hoped that our publicity will be an additional deterrent to employers who would otherwise be tempted not to pay the national minimum wage. This is on top of financial penalties, to which I just referred, which employers already face if they fail to pay the national minimum wage. As for the timing—which was the specific question from the noble Lord—I cannot give a precise date, but we are likely to start naming employers very soon.

The noble Lord, Lord Jones, asked about the total amount of finance available for enforcement in the latest year available. HMRC enforces the national minimum wage on behalf of the Department for Business, Innovation and Skills. The national minimum wage enforcement budget allocation for 2013-14 is £8.3 million.

The noble Lord, Lord Young, asked a question as to what financial support is available to young people on traineeships. I mentioned earlier that employers are not required to pay young people, but I failed to mention that young people on traineeships will be undertaking educational training and will be able to apply to existing programmes of financial support aimed at learners, including the £180 million bursary fund for those aged 16 up to 19 and the discretionary learning support fund for those aged 19 up to 24. I hope that gives a fuller answer than my previous one.

I believe that I have covered all the questions raised, but I would like to reiterate, in conclusion—

[Lord Young of Norwood Green]

I asked the Minister for some clarification on the figures that he quoted for HMRC—the amount that was in arrears—so that I could get a clearer picture of how well HMRC is succeeding in tackling this problem. He did not really return to that. There were two figures that I wrote down: one was £45 million in arrears, and I am not quite sure what period of time that related to; the other figure he quoted was something like £3.9 million in wage arrears. I just could not make sense of those; that might be my fault rather than his, so that is why I asked for clarification.

[Viscount Younger of Leckie]

The noble Lord is right to ask for clarification, not to the extent that we do not have the figures. The best thing to do would be for me to write to the noble Lord with the figures. There is a tabulation in front of me and I think it is better to give those specific figures, and to copy in any noble Lords here today who might also like to see them.

I would like to conclude by reiterating the value of the government-funded traineeships programme in England, which is providing young people with the skills and experience they so vitally need to take their first step into the labour market. Traineeships are a central pillar in this Government’s commitment to tackling youth unemployment. These regulations simply clarify the fact that employers offering work experience opportunities to young people as part of a traineeship on their journey towards employment will not be required to pay the national minimum wage, as is the case with other government programmes that include work experience. These regulations will now be debated in the other place in the charge of my honourable friend Jenny Willot MP.

Motion agreed.

National Minimum Wage (Variation of Financial Penalty) Regulations 2014

Monday 24th February 2014 Grand Committee

Motion to Consider

17:10

Moved by

[Viscount Younger of Leckie]

That the Grand Committee do consider the National Minimum Wage (Variation of Financial Penalty) Regulations 2014.

Relevant documents: 19th Report from the Joint Committee on Statutory Instruments.

Motion agreed.

Public Bodies (Abolition of the National Consumer Council and Transfer of the Office of Fair Trading’s Functions in relation to Estate Agents etc) Order 2014

Monday 24th February 2014 Grand Committee

Motion to Consider

17:10

Moved by

[Viscount Younger of Leckie]

That the Grand Committee do consider the Public Bodies (Abolition of the National Consumer Council and Transfer of the Office of Fair Trading’s Functions in relation to Estate Agents etc) Order 2014.

Relevant documents: 17th Report from the Joint Committee on Statutory Instruments, 26th Report from the Secondary Legislation Scrutiny Committee.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)]

My Lords, with much to cover I hope that the Committee will forgive me if I set out the prospective changes in some detail.

The purpose of this order is: first, to abolish the National Consumer Council and transfer its relevant functions to Citizens Advice, Citizens Advice Scotland and the General Consumer Council for Northern Ireland; secondly, to transfer the Office of Fair Trading’s estate agency functions to the Commissioners of Her Majesty’s Revenue and Customs and Powys Trading Standards; and, finally, to transfer residual OFT functions relating to its former consumer advice scheme to Citizens Advice and Citizens Advice Scotland. The scheme itself was transferred to the citizens advice services on 1 April 2012.

This order will complete a programme of consumer landscape improvements that the Government first embarked upon in 2011. The National Audit Office report Protecting Consumers, published in June 2011, and the Public Accounts Committee report on the same issue both highlighted the fact that the existing consumer landscape was confusing, duplicative and therefore inefficient. To address that, in April 2012, following consultation, the Government announced a series of reforms to the landscape of consumer bodies. Over the past two years, we have streamlined the landscape of Government-funded consumer organisations to make it easier for consumers to understand where they need to go to get help. The reforms will deliver a better deal overall for consumers by making it clearer who is responsible for what and by facilitating better co-ordination between consumer bodies and enforcers.

The improvements that we have made so far include: focusing the new Competition and Markets Authority, which will replace the Office of Fair Trading from 1 April, on identifying problem markets and developing effective solutions to competition issues; establishing the National Trading Standards Board and Trading Standards Scotland in 2012 to prioritise national and cross-local authority boundary consumer enforcement; moving responsibility for consumer-facing education and general consumer advocacy to Citizens Advice and Citizens Advice Scotland; moving responsibility for approval of consumer codes to the Trading Standards Institute; and launching Consumer Futures in May 2013 to represent consumer interests in gas, electricity, postal services and—in Scotland—water services. These organisations work together as part of the Consumer Protection Partnership—the CPP—to collectively identify issues causing consumer detriment, and agree priorities for collaborative action.

Let me turn now to the specifics of this order. The order will abolish the National Consumer Council and transfer relevant functions to the umbrella bodies Citizens Advice, Citizens Advice Scotland and the Consumer Council for Northern Ireland. The function will be based in the head offices of Citizens Advice, not within the local bureaux on our high streets. This change will bring together the technical expertise of Consumer Futures with evidence from consumers across the country from the citizens advice service bureaux and the national consumer advice helpline. This combination of technical expertise and intelligence gathering will enable the Citizens Advice service to act as a robust advocate for consumers, influencing policy development on general issues and on the complex energy and postal services markets. Careful analysis of emerging trends in consumer complaints will enable Citizens Advice to speak out on behalf of consumers on areas of particular concern and to lobby policymakers to improve consumer welfare.

Alongside the Consumer Futures function, anyone needing impartial help or advice on a consumer issue will, as now, be able to phone the national helpline, contact their local bureau or use the interactive help on the Citizens Advice web pages. This means that the customer journey for the consumer who has a complaint is clear and simple.

Complaints data will not be the only intelligence-gathering mechanism available to the Citizens Advice service. It will also receive the National Consumer Council’s information-requesting powers, a move overwhelmingly supported by respondents to the government consultation in 2011. Although those powers are not used regularly, the threat of their use makes it easier to obtain key information necessary for effective advocacy. I will elaborate on this point for a moment, if I may. When this order was debated in the other place, there was some concern that the Government were intending to curb Citizens Advice’s access to those information-gathering powers. I stress that the Government have no plans whatever to diminish the ability of the Citizens Advice service to fulfil the role of consumer advocate by restricting that essential power.

18:44

The Public Bodies Act 2011 requires that where statutory protections exist, they should be maintained in any transfer under the Act. That is what we are doing here. We are simply transferring the statutory provisions that would, as now, in theory give the Government the ability to limit the scope of this power in future, should that prove necessary, but I am happy to confirm that the Government cannot envisage a scenario where such a move might be required. I should also say that Citizens Advice is happy with this arrangement.

The transfer of the Consumer Futures function is a testament to this Government’s confidence in the major role that Citizens Advice plays in our civil society. We firmly believe, contrary to some claims in the other place, that the leadership of Citizens Advice will be well placed to deliver the Consumer Futures functions alongside its other bureaux and helpline services. Citizens Advice will of course continue to receive the same amount of funding from an industry levy to allow it to deliver that important work.

The order also transfers essential estate agency functions currently carried out by the OFT to commissioners of HMRC and Powys Trading Standards, prior to the abolition of the OFT on 1 April. Currently, the OFT can issue warning and prohibition orders against estate agents who have acted dishonestly or breached provisions of the Estate Agents Act 1979. Ultimately it can prohibit those persons it considers unfit from carrying out estate agency work.

The Government believe that from 30 March, those functions would sit best with the enhanced activities of trading standards. That is in line with our approach, set out under the Enterprise and Regulatory Reform Act last year, which noble Lords will recall, to focus the Competition and Markets Authority, the successor to the OFT, more explicitly on market-wide issues.

Under the oversight of the National Trading Standards Board, a lead trading standards authority—that is, Powys County Council—will make use of the network of national, regional and local trading standards intelligence to provide an effective, intelligence-led, value-for-money service.

The funds for policing the UK estate agency market will be transferred from the OFT to Powys County Council, via the NTSB’s enforcement grant, and ring-fenced to ensure that it is used for the purpose intended. Powys will be responsible for approving redress schemes which handle complaints from individual consumers, as the OFT is currently. It will have access to the same tools as the OFT to ensure that estate agents meet their obligations. We would of course expect the CMA to continue to play a role if there are any market-wide issues that need considering.

The new system will also benefit from trading standards’s traditionally close relationship with business. That allows for effective oversight and enforcement of the industry. It makes more sense to assign that responsibility to a single lead authority than to distribute it across a range of different trading standards teams, who would be less able to build up the expertise and capability.

There is form here. The lead authority model has been extremely effective in delivering other trading standards services. For example, fraud worth more than £145 million has been tackled by the Scambusters and the illegal money lending teams in the past 18 months. The Illegal Money Lending Team is a trading standards unit based in Birmingham City Council, but it provides an England-wide service and has received plaudits for its successes.

When the order was debated in the other place, there was some concern about the process for appealing against warning and prohibition orders issued by Powys County Council. To confirm, the Government are not proposing any changes to the estate agents appeal process under the Estate Agents Act 1979 through this order. An appeal can be made to the First-tier Tribunal (Estate Agents), which forms part of the General Regulatory Chamber of the First-tier Tribunal. It is administered by the Tribunals Service, an agency of the Ministry of Justice. Appeals will therefore continue to be considered at the national level, not within Powys or Anglesey. In practical terms, this means that agents receiving a prohibition or warning order will appeal to the tribunal within 28 days of being notified, as is the case now.

Estate agents are also required to be registered with the OFT for anti-money laundering purposes and to pay fees to cover reasonable administrative costs. Carrying on estate agency business without being registered is a criminal offence. We are proposing to transfer this function to HMRC, which we believe will be well placed to deliver this work robustly. HMRC already supervises a number of other sectors under the money laundering regulations, and has both experience and capacity on the ground.

This order will also tidy up a number of minor legislative provisions relating to the operation of the former Consumer Direct advice line, transferred to Citizens Advice administratively in April 2012, with legislative changes to enable funding for calls relating to gas, electricity and postal services issues made under the previous public bodies order. Section 8(1) of the Public Bodies Act provides that Ministers may make an order only where they consider that it,

“serves the purpose of improving the exercise of public functions”.

Such orders must have regard to,

“efficiency … effectiveness … economy, and … securing appropriate accountability to Ministers”.

I am confident that the changes I am proposing meet all these criteria.

I will begin by addressing efficiency and effectiveness. Publicly funded consumer advocacy is carried out by a number of organisations, including the NCC, Citizens Advice, Citizens Advice Scotland, and to some degree by the OFT. There has been significant overlap between these bodies and there is therefore scope for efficiency improvements in the use of public funds; for example, both the NCC and Citizens Advice produce reports for consumers on the energy market and both have strong links with sector regulators.

This order will create efficiencies by greatly reducing the overlap and duplication of effort in consumer research and analysis by merging the expertise of the NCC with the Citizens Advice service. Both Trading Standards and the OFT possess enforcement powers under the Estate Agents Act. Transferring the OFT’s powers to Trading Standards will simplify the landscape.

The appointment of a lead enforcement authority to carry out this work on behalf of all authorities means that the supervision of prohibition and warning orders will be effectively co-ordinated and consistently applied across the UK. Enforcement activity will be better targeted through continued use of a central intelligence-gathering process and decision-making gateway. The potential for enforcement gaps relating to the estate agency industry will be mitigated.

Powys County Council has been chosen to act as lead authority following a robust tendering exercise, in which every local authority in the UK was invited to bid. Bidders were required to demonstrate how they intended to carry out their new duties and to provide a breakdown outlining how the funding will be allocated. Through this process, a panel led by the NTSB selected Powys as the authority best placed to provide the most efficient, effective and value-for-money service.

The transfer of anti-money-laundering supervision to HMRC also has substantial efficiency and effectiveness benefits. HMRC will be able to exploit operational synergies and share information across HMRC regimes where non-compliance is identified, thus realising efficiencies and introducing more effective measures.

The reforms implemented by this order maintain robust measures of accountability. Citizens Advice and Citizens Advice Scotland are required by both charity and company law to ensure good governance. It is therefore not necessary to impose further statutory governance provisions. Instead, the bodies will be held accountable through well established grant funding relationships, which will be expanded to set out the requirements and key performance indicators relating to these new activities. Performance will be closely monitored by my department to ensure that the successor bodies are delivering good outcomes for consumers and achieving good value for money for levy funders and taxpayers.

In the case of estate agency enforcement, Powys County Council is ultimately accountable to BIS. Powys will report to the NTSB in its role as co-ordinator, and the NTSB is accountable to BIS for the performance of its enforcement teams and projects, including estate agency work. Anti-money-laundering supervision is subject to HMRC cost controls and HM Treasury and parliamentary oversight.

There are also some small economic efficiencies resulting from this order. Under the OFT, the anti-money-laundering supervision of estate agents was 95% industry-funded, with the remainder coming from central government funding. The new regime will be 100% industry-funded. This represents a saving, albeit a modest one, of approximately £55,000 per year.

The Opposition in the other place questioned whether the Government had clearly met the compliance criteria under Section 8(1) of the Public Bodies Act. I remind the Committee that the Secondary Legislation Scrutiny Committee supported our view that we have thoroughly met all the relevant requirements. Indeed, the Committee was satisfied enough to invoke the 40-day scrutiny process rather than the 60-day one.

These proposals complete the Government’s programme of improvements to the consumer landscape. In abolishing the National Consumer Council and transferring relevant functions to Citizens Advice, and transferring the OFT’s estate agency functions to HMRC and Powys County Council, this order puts the finishing touches to a landscape that will work more efficiently and effectively for the public. I commend the order to the Committee.

[Lord Whitty (Lab)]

My Lords, I declare one current interest and one past interest: I am vice-president of the Trading Standards Institute, and I was chair of the National Consumer Council and Consumer Focus.

This is the last block of changes that the Government are introducing in this field. While I will end up by wishing the organisations and their staff well in trying to work this out, I cannot but express regret and sadness at what has happened and some anxieties about the future. Not only will this order finally abolish the good work that has been done for the past 50 years by the National Consumer Council, founded by the late Lord Young of Dartington, but it reflects a failure by the Government—actually, successive Governments—in achieving just what the Minister started out by saying they were trying to achieve: namely, clarity for consumers, a lack of confusion and a lack of overlap. Even this last piece of the jigsaw transfers powers from two organisations to five, with another two, the National Trading Standards Board and the CPP, also involved, which does not exactly improve understanding and overlap.

When the NCC, Energywatch and Postwatch came together following the 2007 Act, it was a partial achievement of what the Labour Party had promised in the 2005 manifesto, with which I think my noble friend was very familiar. The original intention was to bring together all statutorily based bodies with an interest in representing the consumer in the policy-making and enforcement process. Actually, it never happened quite that way, due at that stage partly to interdepartmental problems, in that the Ministry of Transport refused to allow what is now Passenger Focus to move in, Defra batted a draw and, although there was a way of getting the Consumer Council for Water in, that was never actually triggered. The relationships with the panels that were set up in Ofcom and the then Financial Services Agency never fully materialised, although that is also reflected in the legislation.

17:30

When the new Government came in, I thought that they had grasped the need to rationalise all the statutory-based bodies and the other powers. I understood that the original intention of BIS Ministers, and certainly of senior officials, was that they would try to bring together what was by then Consumer Focus, covering energy and general consumer issues, with the expertise that the NCC over the years had developed in consumer law, consumer redress, European consumer policy and so on, with particular problems on the postal and energy side. They were going to bring in the Consumer Council for Water and, hopefully, the transport bodies, and have a tighter relationship with those bodies that existed within other regulators.

That was also defeated by interdepartmental squabbles or defensiveness but was aggravated by the new Government’s double intention and their obsession with abolishing quangos on the one hand and public expenditure cuts on the other, both of which hit the activity of Consumer Focus seriously. They had another objective from the beginning, which was to transfer the whole function away from the public sector into the third sector. Some of my colleagues were deeply opposed to that but I could understand the rationale. However, they should have brought all the bodies together first and then transferred them into the third sector under the aegis of Citizens Advice, or whatever.

In practice, that opportunity was completely missed because the Cabinet Office insisted that a quango had to be abolished as fast as possible. The Public Bodies Bill was going through Parliament, and we know the inadequacies of that Act, how it was dealt with and how it has been implemented. At the same time, the Treasury was demanding cuts in public expenditure. Those cuts mainly hit the mainstream consumer activity of Consumer Focus, which was directly funded by the taxpayer. By and large, the money coming from industry, as the Minister said, continued and will continue in the new arrangement. However, all those areas of expertise that the NCC had developed have been hit seriously by cuts in expenditure. It is not true to say that there was significant overlap with the work of Citizens Advice. There was at the margin, but the work, and the prime focus of Citizens Advice, was different. The expertise is already being lost, and I fear that under the new arrangements there will be more loss.

This is not a happy story for consumer representation in policy-making. Nor is it a happy story in terms of the consumer who wants to know why his or her particular problem is not being covered by the service provider, the regulator or the Government; it is as confusing as it ever was. However, this has gone a long way down the road. I have anxieties about what will materialise. My anxieties are of three sorts, one of which in recent months has been largely allayed. It was about the apparent difficulty of getting Citizens Advice and the traditions of Consumer Focus and the NCC to understand each other. In recent months I think that that has significantly improved, or so I am informed. Of course, it is only part of the old NCC/Consumer Focus role that Citizens Advice will be taking over.

My second anxiety is that the focus of Citizens Advice will be elsewhere. It is a superb organisation in dealing with consumer complaints. Its role in policy has been more limited, and it has not had the relationship with the regulator and the industry that, for example, Consumer Focus, and Energywatch before it, developed in relation to the energy companies. Nor has expertise extended to the whole area of consumer law—perhaps, in particular, to European consumer law, where an expertise rested with the NCC and Consumer Focus and was recognised right across Europe. Indeed, the European organisation, BEUC, greatly relied on them to provide that level of expertise. That seems to be in danger of being completely lost in the new arrangements.

My third anxiety is simply about resources. Although, as the Minister said, the money that comes from the postal and energy sectors will be transferred, the money that is spent on these more general areas of expertise and input has already been cut. There has been some increase in the central government grant to Citizens Advice, but that is against the background of Citizens Advice seriously suffering, directly and indirectly, from public expenditure cuts more generally. A vast amount of the resources for Citizens Advice on the ground comes from local authorities, but that has been severely cut back in many parts of the country. Another part of its resources comes from charities, which themselves are quite dependent on public expenditure; that part has also been squeezed. I would like the Minister to give me the figures for the central government grant, but it seems to me that the Government had already cut the grant to Citizens Advice. They are now topping it up by an amount that is supposed to reflect the additional responsibilities arising as a result of the transfer of the functions of Consumer Focus and Consumer Futures into the organisation. I remain to be convinced that those resources are there.

On a happier note, and perhaps not putting quite such a gloss on history as the Minister, I am glad that the Government have changed their mind about the allocation to Citizens Advice of Section 24 powers in the 2007 Act. There were severe anxieties, some of them understandable, about transferring significant powers to demand information from providers of goods and services of all kinds that were given to Consumer Focus by the 2007 Act to a body that was no longer a public body. However, the Government seem to have seen the light on this one and those powers will now be transferred. I am glad that they are being transferred and that the Minister has reiterated the assurance that there will be no constraint on Citizens Advice using those powers. In reality, they will not be used very often, but the existence and threat of use of those powers will make providers of goods and services sit up if Citizens Advice takes on the role that Consumer Focus used to have of tackling major business bodies and government bodies over their treatment of the consumer. I therefore welcome that part of the order. I hope that the new arrangements work. I have my doubts because, frankly, it is a bit of a sorry history.

Although the transfer of estate agency functions to Powys looks slightly odd, it may well work. The reality, though, is that if you look at it in total, no one is going to understand why a problem with an estate agent in Balham is being dealt with by Powys County Council. Looked at more broadly, the reality is that as a result of this measure and the previous one, trading standards have taken on a lot more responsibilities at a time when their own resources, personnel and role within local authorities are being severely squeezed—in some local authorities, beyond the point where they are a viable operation. Therefore, while I do not disagree with giving trading standards some of the old OFT functions, I do not think that it will work effectively if the resources of trading standards in total are being squeezed at the same time. I hope that the Government will take those points on board.

[Lord Harris of Haringey (Lab)]

My Lords, I declare an interest as chair of the National Trading Standards Board, to which reference has been made several times today. I will confine my remarks primarily to the transfer of functions in respect of estate agents from the Office of Fair Trading, and will comment on the process and some of the points that my noble friend Lord Whitty has just made.

Powys County Council was selected following due process, a tendering process in which a number of other local authorities—I cannot remember whether it was five or six—had made expressions of interest and put forward detailed tendering documents. Powys County Council was awarded the contract on the basis of the strength of its bid and the perceived view that it was best able to deliver the service most effectively.

It may seem strange that a single local authority—I think it matters not whether that authority is in Wales or England—is given a national function in this way, but the National Trading Standards Board does that in respect of a number of national functions. The Minister referred to the Illegal Money Lending Team for England. That service is provided through Birmingham City Council and the arrangement works extremely well. There is a similar arrangement for the Illegal Money Lending Team in Wales. Another example is the National Trading Standards eCrime Centre, which is provided by North Yorkshire County Council. These are national functions, nationally available, provided throughout the country but delivered through a single local authority. That is the arrangement that is being followed in this case.

The benefit of this structure is that while individual local authorities are leading on these issues, they are part of a national network and structure. They are able to work with local authorities around the country on the development of intelligence. A national intelligence unit for trading standards, funded by the National Trading Standards Board, is provided through Suffolk County Council. So it is part of a national network.

My noble friend Lord Whitty spoke eloquently about the way in which the Government have simplified and introduced clarity to the arrangements for trading standards and consumer protection. Of course, greater clarity and transparency would have been provided had the Government looked across legislation and considered the licensing of letting agents, which is also in progress at the moment, and seen a potential synergy between locating the licensing of letting agents with the licensing of estate agents, given that letting agents and estate agents are often effectively the same individuals. No doubt the Government’s desire for clarity and simplification will mean that these issues will be reviewed in due course.

No doubt the Minister will give us a clear assurance on this, but my understanding is that all the resources that were available to the Office of Fair Trading for this estate agency licensing work have indeed been transferred to the National Trading Standards Board, and that money will be passed through to Powys County Council to do this work. My noble friend commented on the difficult financial circumstances that most trading standards departments around the country are facing. The average reduction in trading standards budgets appears to be approaching 40%.

17:43

Sitting suspended for a Division in the House.

17:49

[Lord Harris of Haringey]

My Lords, when the Division intervened, I was simply making the point that trading standards departments around the country have been facing substantial reductions in their budgets over the past few years. It is estimated that, overall, trading standards funding from individual local authorities will, on average, have diminished by 40% by 2015, which is a substantial change. The only assurance that I can give my noble friend Lord Whitty is that the resources for the estate agency function will be ring-fenced.

The only other point that I wish to make is that the service that will be provided through Powys County Council will, however, be branded as a national trading standards function. It will quite clearly be a national function supporting estate agent regulation throughout England and Wales.

[Baroness Hayter of Kentish Town]

My Lords, I share the views of my noble friend Lord Whitty that this is actually a sad day. I am sorry that the Minister did not pay tribute to the extraordinary work that the NCC has done over its life. It has been seen as that third part of civil society. There have always been the employers and the trade unions, represented quite rightly by their bodies; a third body representing consumers has been really important for making markets work, being a big national player along with the TUC and the CBI. It is a great sadness to lose that, particularly—and I will come back to this—given the fragmentation that the Government have managed to put in its place. This was just about trying to get rid of a certain number of quangos; we know that that is what it was. There was a rush into it and very little understanding of what the NCC actually did because, as my noble friend Lord Whitty said, there was very little duplication. I should confess—or rather boast—that I was a member of the NCC council and there was very little duplication between what we were doing and what Citizens Advice was doing. Citizens Advice deals with people coming through the door; we were trying to think of problems five, 10 or sometimes 15 years ahead.

Sadly, we lost the argument by just 12 votes at the time that the Public Bodies Bill went through the House, and my guess is that, having dealt with the complexity of transferring those functions, BIS may have belatedly recognised the force of our arguments. There are problems with Citizens Advice taking over the work of the NCC. At the moment, it can answer only 45% of its telephone calls and we have heard from my noble friend about the cuts to the advice service, so there are problems there. However, we recognise that the decision has been taken and we therefore need, or want, whatever replaces the NCC to work as well as possible for the sake of consumers. That is the important criterion.

I have five questions ready to ask about the order, but before that, I have another question. Given the report on the pre-emption of Parliament by our own Constitution Committee—which noted, when the Public Bodies Act 2011 was merely a Bill, that a number of public bodies began to wind down their activities in anticipation of abolition—can the Minister confirm that no public money was spent on the abolition of the NCC and the transfer of functions prior to the relevant approval by Parliament?

On the order, there are five areas in which we seek either assurances or answers. One is on the transfer of Consumer Focus’s statutory information-gathering powers—which have already been mentioned—to Citizens Advice. There was an earlier debate here about whether those could be overused, and in fact our Secondary Legislation Scrutiny Committee returned to that issue. My concern is different: it is the potential underuse of those powers by Citizens Advice. Given the increasing demand on it for its own advice services from very hard-pressed consumers, my concern is that it might take its eye off its longer-term policy role, which has been played hitherto by Consumer Focus. It was partly with that in mind, when the ERR Bill went through, that my noble friend and I argued at that stage that someone—I think we suggested the CMA—should have a sort of reserve power to ensure that sufficient attention was paid to this element of Citizens Advice’s work, given that its own programme and budget were laid down by its individual charitable trustees. Those trustees are not accountable to BIS or any other arm of government. Our question, therefore, is: what happens if Citizens Advice falls down on that part of consumer protection? Who would know? It would certainly not be the consumers: there is no accountability for this work to consumers. The letter that Vincent Cable wrote to the noble Lord, Lord Goodlad, on 17 January, said:

“The Consumer Affairs Minister will hold…Citizens Advice…to account for effective delivery of these functions on behalf of consumers”.

I am not clear how that will happen. Will it be done simply by the terms of the grant? If so, how will the Minister hear consumers’ views and what action would she take if, for example, Citizens Advice failed to prioritise vulnerable consumers or the users of government-provided services? How would the Minister know and what would she do if she found any such problems?

18:00

The second question arises about the transfer of the OFT’s role in issuing a warning and prohibition orders in relation to estate agents and the approval of the estate agent redress scheme, which was touched on by my noble friend Lord Harris. My noble friend also mentioned that the ERR Act made it mandatory for letting agents—sometimes, as he said, the same organisations as estate agents—to belong to a redress scheme. As he said, the Government are not giving the same powers to Powys on redress schemes for letting agents as they are for estate agents. So the existing OFT-approved redress scheme will come under the watchful eye of Powys, but those redress schemes will have to apply to a completely different body to be approved to be the redress scheme for letting agents. That would be nonsense; perhaps the noble Lord will take a moment to explain that to us.

The Secondary Legislation Scrutiny Committee also raised some serious concerns about how Powys could reconcile its accountability to different bodies. Obviously, Powys, as an elected authority, has a responsibility to its electors. As we have heard, it will be accountable to BIS for this part of its work, it will report to the National Trading Standards Board, and it will be accountable to the Trading Standards Institute for the administration of its grant. Perhaps the Minister could explain how easy it will be for the people concerned to report to so many different bodies. After all, as my noble friend Lord Harris said, it will be the national body covering 25,000 estate agents which, between them employ about 1 million people.

Meanwhile, there is the role of Anglesey. The Minister seems to say that appeals were to the tribunal, but the information I have from Powys dated 2 December 2013 outlining the appeal process—not for redress schemes but for estate agents who have been barred—states:

“The Banned/Warned person has the right to appeal against this decision and must do so within 21 days of being notified. Appeals will be referred to Isle of Anglesey County Council who will arrange a hearing of the Appeal with 14 days”.

Can the Minister confirm that I am reading that correctly and, if so, whether every estate agent in England and Wales would have to get themselves to Holyhead within 14 days for a hearing, and reassure us that Anglesey, which is, I think, only just out of special measures and likely to merge with another local authority, is up to that task?

Thirdly, I turn to the transfer of the ML role to HMRC. I just say: congratulations, this bit is brilliant. I hope that the Minister does not faint to hear that. In fact, in a previous existence, when I was chair of the Property Standards Board, I very unsuccessfully urged the then Labour Government to do that, so I am delighted that that is happening; it is very sensible. It means that the HMRC will then have a complete list of estate agents, so will be very helpful if the Minister could tell us whether that will be given to Powys, which would undoubtedly help it in its work. As an aside, it is rather silly that anti-money-laundering affects estate agents, who do not handle money, but does not affect letting agents, who do. Maybe someone else could deal with that.

Fourthly—this was touched on by my noble friend Lord Whitty—there is real concern about whether this new architecture will ensure the continuation of the European work that has been so well done by Consumer Focus and, before that, by the NCC. I do not think that the Committee needs telling how much consumer law is made in Brussels, so any reduction in that could be a real detriment to consumers. There is no mention of it, or indeed of the EU, in the explanatory document or in the scrutiny committee’s report—at least, I could not find it. Looking around the Room, I am not the only person who found that it was not there. It would be useful to have some clarification from the Minister about the continuation of this work.

Lastly, I reiterate what my noble friend Lord Whitty said: so much for a clear system. We get rid of the OFT and the NCC, and instead we have the Competition and Markets Authority, Citizens Advice and Citizens Advice Scotland, the Trading Standards Institute, Consumer Futures for a little bit, the Consumer Protection Partnership, the National Trading Standards Board, Trading Standards Scotland and Powys and Anglesey county councils. How that is a clearer architecture leaves me bemused.

The Government have said that they will monitor this set-up. Perhaps the Minister can tell us whether and how that report will come to Parliament. However, the Opposition do not consider that this order meets the test of the Public Bodies Act 2011, that measures should lead to a more efficient, effective and appropriate level of accountability to Ministers. It is a dog’s breakfast. It is accountable to Powys for some things, to trading standards for others, to BIS indirectly through a grant and accountable partly to the trustees of an independent charity. The one group to whom it is not accountable, of course, is consumers themselves.

The order implements an overhasty, ill thought-out change. It is simply about the Government wanting to abolish a quango. It is not about protecting consumer interests or about transferring the tool that is needed to a legitimate and single strong body. I fear that by splitting the system in this way, the order is diluting the powers to help consumers to get a fair deal out of the market. It is for that reason that we regret that the order has come here.

[Viscount Younger of Leckie]

I thank noble Lords for their valuable and detailed comments on an issue that I recognise holds some sensitivities in terms of these changes for certain members of the Committee. I thank the noble Lord, Lord Harris, for his broad support and some reassurances on the estate agency part of the changes.

I start by paying tribute to the work and experience of the noble Lord, Lord Whitty, over many years and indeed decades. I listened with some care to his comments but he will not be surprised to hear that I do not agree with much of his general analysis of the consumer landscape. We believe that these changes are beneficial. I shall start by addressing some of his overall comments, and I hope that that he will forgive me if I duplicate what has been said already.

He started by saying that the reform landscape and the changes set out under the order do not achieve the clarity that he had hoped for. We firmly believe that the reforms we are making are a great improvement. Consumers will have a single port of call for Government-funded information, advice and guidance. The Citizens Advice service will be well placed to use its expertise to direct its advocacy and speak up on behalf of consumers. I recognise that some of the detail of the order is complicated, but that is the nature of legislation. It is the outcome that is important.

The noble Lord and the noble Baroness, Lady Hayter, expressed sadness at the abolition of the NCC. I will say, if I have not said it in the past, that I personally recognise the great contribution that the National Consumer Council has made to consumer issues over the years, and the no small part that a number of noble Lords have played in contributing to that. I believe that I said this earlier, but the NCC’s strong track record of consumer advocacy was one of the key reasons for the body being folded into Consumer Focus when it was created by powers under the Consumers, Estate Agents and Redress Act 2007. The great track record of the NCC was enhanced and expanded when it joined with Energywatch and Postwatch to form Consumer Focus in 2008. It will be further enhanced when it joins the Citizens Advice service as a result of this order.

The noble Lord, Lord Whitty, asked how the consumer journey will work under the new arrangements. He cited the word “confusion” relating to other regulated issues. We believe that the consumer journey will not change significantly under these new arrangements. We are simply joining up the policy-making and regulatory oversight expertise of Consumer Futures with the existing consumer complaint-handling abilities of the Citizens Advice service. As a result of these changes, anyone needing impartial help or advice on a consumer issue, whether that is a general matter or on a regulated issue in a sector, will be able to phone the national helpline, contact their local bureau or use the interactive help on the Citizens Advice web pages.

The noble Lord, Lord Whitty, raised the issue of the failure, as he put it, to bring other related sectors within Consumer Futures. The order is more about better working and not simply about moving bodies around, which may have been the expression he used. Citizens Advice will work closely with other consumer panels, joining up on regulated issues of common interest and concern.

The noble Lord also raised an issue about the citizens advice bureaux and whether they had the expertise to deal with the work. I can reassure him that the Citizens Advice service is already fully engaged on policy and research across a very wide range of consumer issues. It has both the experience and expertise to provide a highly effective voice for consumers, and this capability will be bolstered by the expert staff transferring from Consumer Futures. The Citizens Advice service will benefit from its close connection to the citizens advice bureaux and its management of the new consumer advice helpline that is replacing Consumer Direct.

The noble Lord, Lord Whitty, also raised the issue of the funding of the citizens advice bureaux, and stated that it had been cut. I refute that by saying that the Government have not cut Citizens Advice funding. In 2014-15 we will maintain the core grant funding to the Citizens Advice service, which is a combined total of £21.8 million, at a time when other public bodies are seeing their funding cut. That will ensure that the vital central services provided by the umbrella bodies to the bureaux network are maintained. Funding to the service to deliver advocacy on energy—

[Lord Whitty]

My Lords, my question was slightly different. It concerned the addition of what was the Consumer Focus function, particularly the function that was not funded by industry, which has been handed over to Citizens Advice. Has the amount of money that was previously spent by Consumer Focus on that area of its work prior to 2010 been reflected in a proportionate increase in the funding of Citizens Advice? My impression is that it has not, and that while the aggregate amount for Citizens Advice may have been maintained in difficult times, the full reflection of what was previously done elsewhere is not reflected in that total figure. It would be useful to have the figures.

18:14

[Viscount Younger of Leckie]

Absolutely. I was going to say that I will be more than happy to write to the noble Lord to confirm the precise figures. I reiterate that it is not our intent to cut the funding. The funding to the service to deliver advocacy on energy and postal matters will be maintained as currently allocated to Consumer Futures, at £8.7 million, with an additional £220,000 allocated to the general Consumer Council for Northern Ireland to deliver postal advocacy. This funding will be recouped via the levy from the energy and postal industries.

The noble Lord, Lord Whitty, also asked whether I would ensure that the lead local authority is properly resourced to undertake this work. This is to do with the estate agency functions. The baseline costs of policing the UK estate agency market will transfer, as he knows, from the OFT into the NTSB’s enforcement grant. This amount will be ring-fenced from the main portion of the grant to ensure that the full funding will be used for the purpose intended.

The noble Lord, Lord Harris, spent some time speaking about Powys and the transfer of the OFT estate agency function. In thanking him for his support, I want to clarify—perhaps for the noble Baroness, Lady Hayter—that we believe that the role of Powys is very important within the new national enforcement regime, and I re-emphasise the national element of that for the avoidance of doubt. The noble Lord and the noble Baroness asked why the Government were not harmonising letting agencies in addition to the changes that we are making to estate agents. The noble Baroness will be aware that letting agents are already subject to consumer protection legislation. The Government do not believe in excessive regulation. The amendment of the Estate Agents Act to include letting agents would lead to overregulation of the market, which would run a real risk of reducing supply in the rented sector, which in turn would drive up rents and reduce the choice for hard-working tenants.

[Baroness Hayter of Kentish Town]

I am sorry that I was not clear. I absolutely understand that—I may not go along with it but I completely understand it. I asked about a different issue. At the moment, a redress scheme for estate agents has been approved by the OFT. Approval for that redress scheme will now go to Powys. I understand that. There will then be redress schemes for letting agents—I think they will be the same schemes, but that is neither here nor there. In order for a letting agent to be approved by the redress scheme, they will not be able to go to Powys to get a tick; I understand that they will have to go through the DCLG. That is the same issue mentioned earlier by my noble friend about two departments not quite co-operating. My question is not about the letting agents themselves but the approval of a redress scheme for letting agents. It is extraordinary that it is not being done in the same way as for estate agents.

[Viscount Younger of Leckie]

I have listened carefully to the noble Baroness, and I believe that she is correct. She mentioned the DCLG, and I can say that the reforms will create a new requirement for letting agents to join an approved redress scheme. It will be implemented through the Enterprise and Regulatory Reform Act 2013, which she was very much a part of, with my good self. The order simply transfers existing enforcement arrangements from one body to another rather than creating a new redress scheme. I do not know whether that answers the noble Baroness’s question.

[Baroness Hayter of Kentish Town]

We will exchange letters.

[Viscount Younger of Leckie]

Indeed, a further exchange of letters would certainly clarify the matter.

The noble Baroness raised an important point about Citizens Advice being able to answer only about 45% of calls—to paraphrase her question. I am not clear where those figures come from because Citizens Advice is now reporting very high levels of satisfaction on the use of its national call line. Perhaps the noble Baroness can advise me on where she got those figures. They may, dare I say, be slightly outdated, but I would be very pleased to speak to her offline, as it were, about that.

The noble Baroness also raised the important issue of accountability relating to Powys County Council. She said that it is convoluted and unclear, but we believe that that is not true. Ultimately Powys County Council will be accountable to BIS, as I explained in my opening speech. As she knows, Powys will report to the National Trading Standards Board in its role as co-ordinator, and the NTSB is accountable to BIS. I am not entirely sure why she is concerned about that because we believe that there is actually quite a short direct reporting line to BIS. Again, I am extremely happy to speak to her outside this Room to clarify what I mean by that. At the same time, the noble Baroness raised the issue of Anglesey. I can confirm that Anglesey’s licensing committee will play no role in appeals against Powys’s warning and prohibition orders. These will be made first to the First-tier Tribunal.

The noble Baroness also asked how the Government will ensure that Citizens Advice will deliver on the work that it has been given and how its work will be monitored. We will hold annual performance reviews with the Citizens Advice service to ensure that the new arrangements are effective and that the successor bodies are delivering on behalf of consumers. We will also make a review of the full suite of statutory provisions within five years of the order coming into force.

The noble Baroness also raised the question of whether Section 24—in other words, the information-gathering powers—would be underused. I reassure her that Citizens Advice will have full access to these powers should it require them. She also asked when Powys and HMRC would receive the list of estate agents from the OFT. HMRC is already in an information-sharing agreement with the OFT as a supervisor under the Money Laundering Regulations 2007. The order provides an information-sharing gateway for Powys that will come into force as soon as the order is made.

The noble Baroness also asked how the consumer will be represented in Europe. The CMA will be responsible for acting as the UK’s single liaison officer in ensuring compliance with the consumer protection co-operation regulation. It will forward individual enforcement actions to the NTSB unless they relate to problems where it takes the lead. However, Citizens Advice will continue to work closely with its European counterparts, as Consumer Focus does now.

I have given due regard to the Secondary Legislation Scrutiny Committee’s decision and comments. I hope that I have answered all the questions that were raised. If I have not—there were quite a few questions—I will be more than delighted to expand the letters that I have already committed to writing to the noble Baroness, Lady Hayter, and any other Peer. The Government conclude that the order meets the requirements of the Act, and I commend it to the Committee.

Motion agreed.

Children: Competitive Sport

Monday 24th February 2014 Grand Committee

Question for Short Debate

18:23

Asked by

[Baroness Heyhoe Flint]

To ask Her Majesty’s Government what steps they are taking to encourage younger children to participate in competitive sport.

[Baroness Heyhoe Flint (Con)]

My Lords, I am pleased to have the opportunity to lead this debate because last month I was incensed to read that Surrey Rugby, part of the RFU, was changing the ethos and rules for children’s mini-rugby, age six to 11, meaning that teams need no longer play to win and that they must also be of mixed ability, not the strongest that keeps on winning. My blood pressure shot up rapidly and the scheme provoked wider anger in the game. Ex-England international player and board member at Esher Rugby Club Simon Halliday said:

“We are appalled and have withdrawn from all Surrey rugby competition. In sport there are winners and losers. As long as you don’t demean the loser, it’s straightforward”.

Chris McGovern, the chairman of Real Education, criticised the Surrey rules, saying:

“This is not in the interests of children. It will rob them of motivation and incentive, and does not prepare them for the real world … Children can learn from failure and they have to lose sometimes”.

Steve Grainger, the RFU’s development director, countered:

“If we are not meeting children’s needs and not presenting them with a format that suits them, we are not delivering to our customers”.

What a ghastly word—“customers”. This guidance applies to Surrey’s mini-festivals. Scores will be regularly reviewed and current RFU regulations state that:

“Matches must be brought to an end if … at Under 7s to Under 12s the try difference rises to more than six”.

An accompanying Daily Telegraph editorial headed “Must try less hard” stated that,

“misplaced egalitarianism risks denying non-academic children the valuable opportunity of excelling on the sports field”.

My comment is that youngsters, whether playing rugby or on their Xbox, thrive on competition. A game where no one wins is not much fun.

Sport England must hope that its massive government investment into sport will help youngsters to learn more about life’s battles if they strive to win and learn how to lose. Sport England stated to me:

“We know that many young people enjoy taking part in competitive sport, and that others are more comfortable simply taking part with a focus on personal challenge. We think that competition and realising talent are essential elements of a high quality grassroots sports sector”.

Sport England is investing up to £35.5 million between 2010 and 2015 in the Sainsbury’s School Games, delivered by the Youth Sport Trust. Some 70% of schools in England have signed up for them. There is thus a clear demand for organised, competitive sport. Sport England’s investment philosophy for primary school sports is:

“We want all children to have good physical literacy—able to run, throw, jump, with confidence, through PE at their primary school; to have a positive experience, and associate PE with fun and enjoyment and also to have exposure to a range of activities including competition”.

To emphasise the Government’s commitment to young children having an enhanced sporting experience, the Prime Minister announced just three weeks ago that the Government will extend primary school sport premium funding up to 2020. It was previously guaranteed until 2016. This premium provides £150 million a year for primary schools to enhance their provision of PE, physical activity and school sport. The funding is fully ring-fenced, with an average primary school receiving around £9,250 annually.

The Youth Sport Trust, an independent charity devoted to changing young people’s lives through sport, chaired by the noble Baroness, Lady Campbell, very much welcomes the Prime Minister’s announcement. It states that it believes that this investment has the potential to transform PE, sport and physical activity provision in our primary schools, and that it is crucial that schools are supported and encouraged to use sport premium funding to secure sustainable improvements to provision. The Youth Sport Trust believes that participation in competitive sport at school is a key part in any child’s sporting journey, building key life skills such as teamwork, determination and leadership. The trust also believes that any focus on competition should allow all young people to participate fully in PE and school sport, including those who are less inclined to take part in competitive activities.

Going forward, if the Government are committed to driving the take-up of competitive sport in schools, it is imperative that measures to promote this are articulated as part of a wider PE and school sport programme. I would be pleased to hear assurances from the Minister that this commitment is at the forefront of government thinking.

The FA has made sensible changes at youth level, most notably that season-long competitions have now been removed in favour of shorter-format trophy events providing several competitions throughout the season, capturing children’s imagination and preventing runaway winners. This still promotes the importance of winning and losing and allows the recognition of winners, but here is a message to Surrey Rugby: no reselection is imposed on youngsters’ teams that have the audacity to keep winning.

The ECB Cricket Foundation’s Chance to Shine schools programme, with government backing, has the overall aim of reintroducing cricket into state schools. It uses cricket as a catalyst for developmental issues like behaviour, attainment, teamwork, life skills and values. The ethos is simple: link cricket clubs to local primary and secondary schools, provide qualified coaches to deliver cricket sessions and matches in schools, train teachers and encourage children to come and play at cricket clubs, thus encouraging competition. Since 2005, more than 2 million children, including 1 million girls, have received coaching through the programme—a great achievement.

Kwik Cricket, another ECB grass-roots initiative, provides children of primary school age with a fun, inclusive and fast-paced introduction to the game of cricket. The main aim is to inspire children to play cricket through a national competition framework. Each summer, the largest structured primary school initiative in England and Wales gives children aged five to 11 at 10,000 schools the opportunity to play and learn cricket in a competitive but fun environment. There is even an ECB Ashes school challenge, a free interactive primary school resource that enables students to learn about cricket’s most famous series. Perhaps in future England’s school youngsters could beat Australia interactively, unlike in the recent real live men’s Ashes cricket series. The women’s cricket team is of course absolved of this little barb.

The DCMS Taking Part survey 2013 states:

“For 5-10 year olds, the most common way of participating in competitive sport was playing sport in their school in organised competitions”.

It is a well known fact that increasing physical activity in lessons, including competitive elements, from twice a week to daily is reported to have a significant effect on primary school pupils’ academic achievements in maths, reading and writing. The DCMS document Creating a Sporting Habit for Life: A New Youth Sport Strategy made clear that a key goal for the Government was to increase the number of young people participating in school sport, including building a lasting legacy of competitive sport in schools. Competitive sport was also included in the PE component of key stages 1 and 2 of the revised national curriculum in England for September 2013, which sets out the purpose of PE for younger children as:

“A high-quality physical education curriculum inspires all pupils to succeed and excel in competitive sport and other physically demanding activities”.

My right honourable friend the Minister for Sport, Helen Grant, stated in the other place:

“Competition can be great, but not everyone likes it. We want people to be active and to enjoy sport, which is why changes have been made to the national curriculum to provide a broad range of team and individual activities such as dance that will appeal to those who may be a little less competitive”.—[Official Report, Commons, 12/12/13; col. 336.]

However, you try telling contestants in “Strictly Come Dancing” that dance is not a competitive art form, or even that cheerleading teams do not compete to be the best. The Women’s Sport and Fitness Foundation, which is backed by the Government, found in its survey Changing the Game, for Girls that,

“it was not competition per se that girls say they dislike, but rather other people’s negative behaviour in competitive situations, including: cheating … fighting … arguing”.

I am not sure which sport they were thinking of in this perception. Perhaps it was hopscotch or conkers.

If you want to hear what competition in sport can do for the development of youngsters, turning them into rounded adults fit for life and business, hear what Helena Morrissey, chief executive of Newton Investment Management, one of the most influential women in the City and member of the Women and Sport Advisory Board— created last September by the right honourable Maria Miller, Minister of State at DCMS—had to say on the subject:

“Watching my sons play rugby, football and cricket has reinforced for me the importance of learning to be part of a team … The importance attached to the boys’ team sports by their schools and peers is also great training for playing in front of a ‘crowd’. The boys learn to deal with performance nerves, to overcome disappointments, to have the strength of character to carry on when losing—and to enjoy victories”.

Helena Morrissey’s company sponsorship of the Women’s Varsity Boat Race is a leap of faith to make equality a reality in a corner of the sporting world. She said,

“and then our daughters will be inspired, their schools compelled and the curriculum altered—to develop, ultimately, more women prepared to run businesses and the world”.

That is what competition in sport can achieve. Britain’s triumphant gold medal winner in the skeleton bob at the Sochi Winter Olympics, Lizzie Yarnold, commented in a BBC interview:

“You don’t get better unless you push yourself”.

That is what competition should do for us all, young and old. I hope that my noble friend and the Government agree.

18:33

Baroness Massey of Darwen (Lab): My Lords, I am delighted that the noble Baroness, Lady Heyhoe Flint, has secured this debate. She and I both played competitive—very competitive—hockey and cricket, and have the knuckles to prove it. Today I want to explore some of the issues around how far we should push competitive sport and to whom.

This debate is, of course, very timely, given the excitement of the recent Winter Olympics, the enthralling Six Nations rugby and the more disappointing Ashes tour of Australia, although of course the England women’s team won. Sport is around us all the time, and I am pleased to see that MPs and noble Lords are consistent in asking questions of Ministers about the importance of sport for young people.

There are of course concerns and tensions. Sport is only partly at international level and only partly competitive. As has already been mentioned, the noble Baroness, Lady Campbell, recently talked about “a crisis of inactivity”—not of sport, of inactivity. There have been reports of competitive sports encouraging pupils to cheat because of pressure to win and suggestions that pushy parents and grandparents on the touchline set a bad example for behaviour at sporting events. I have seen that. Sadly, there are examples of the poor behaviour of professional, or at least competing, sportsmen—usually, they are men—which degrade the name of sport.

Let me try to tease out the issue further. When I taught in schools and, indeed, when I was in school all those many years ago, it was clear that many children were not going to succeed in competitive sport. Sport for them did not improve self-belief and self-esteem; quite the contrary. Such pupils hated games, invented excuses not to do them, lied, forged sickness notes from parents, and so on. Sadly, they were often bullied and disparaged for not being able to catch, throw, run or swim. I am sure that it is the same in schools today. We know that many girls simply give up physical activity when they do not have to do it at school. What a pity.

I have always supported the notion of health-related fitness, as well as competitive sport; they are not mutually exclusive. Many schools now offer dance, movement and exercise which all can enjoy. Classes in yoga, tai chi, Pilates and Zumba—whatever that is—are proliferating in communities. They are not competitive, except perhaps in relation to oneself. Walking is competitive in relation to oneself and the elements. I went for a walk in Sussex recently and fought against the wind and the mud.

If there is enjoyment in being able to perform a physical activity, the activity may well continue, to the benefit not only of the body but of the mind. It is well known that physical activity also improves mental performance. Mr Gove recently praised the academic achievement of pupils in Shanghai schools. I wonder whether he is aware that in Shanghai, pupils also do one hour of physical activity a day.

I turn to cricket for a few final thoughts. Wasim Khan, chief executive of the Cricket Foundation, has spoken of concern that so many youngsters may be struggling “in a pressure cooker” to win at all costs. He has emphasised the need to play fairly and to respect the rules and the opposition. The ECB programme, Chance to Shine, cited by the noble Baroness, Lady Heyhoe Flint, is a brilliant example of taking sport into inner-city schools. It is competitive, but in a fairly light-hearted way.

The noble Baroness’s Question refers to younger children competing in sport. I must say that I would not like younger children to be demoralised by an apparent lack of sporting ability or being in a pressure cooker. Younger children should be, and many are, active creatures. They like being physical. If they can taste the excitement of competition, handled well and positively, that could be a good experience that it can be fun to not win. All I am saying—I think that the noble Baroness will agree—is that qualities of collaboration, teamwork and respect for others are part of sport and that those qualities should not be downplayed in favour of competition, particularly at an early age.

18:38

[Lord Addington (LD)]

My Lords, I thank my noble friend for tabling this debate, although I fear that when I read the articles about Surrey, I understood why they are bringing that provision in. To deal with that first, rugby union is a game where physical size and strength are important. If you have a group of children who are bigger earlier, they do not compete; they smash down and defeat their opponents and drive them down. They gain nothing in terms of competition from being bigger and stronger; they do not actually have to be very good at the game; and those that they are walking over do not benefit from that either. That is why, in a club game, it is now encouraged that if someone matures earlier, you stick them in with older people. Thus, that article becomes more understandable. When someone says, “You’re taking away the trophy from my children and my club”, I say, “If you’re judging the success of your club by a trophy won by under-nines, go away and have a think about yourself”. That is my take on that.

When it comes to competition, I do not know a sporting activity in which competition is not involved. Competition does not mean the end result but the process by which you undertake these games—how, in any team sport where you have a ball, you move that ball around to achieve your ends. How you teach people to run and receive the ball within the confines of that game is the essential competitive element from which a score can be derived. The competition is the build-up, part of the structure, the movement and the correct way in which you do that. People get obsessed about scores, results and league tables that they can publish and point at—and they are often the people who are not taking part in the sporting activity.

In concentrating on the true competitive element—that is, getting somebody in a competition where the outcome is not more or less predetermined—you are creating competition. By evening the sides out, you create it. Why do you have first, second and third teams in adult sport, in amateur games? It is so that you have even competitive results. The RFU is removing trophies from its junior ranks because they are meaningless for the adult game. The idea that you should have a contest on as even terms as you can get, where the result is not guaranteed, is essential. If we can bring this into the youth policy, it means making sure that people are trained properly to create these situations.

To go back again to rugby union, the sport I know full well, it was probably the worst game for children ever at full 15 level on a full 15 pitch. “Let’s put the winger out there and see if he gets hypothermia first or dies of boredom”, because the ball is too big for him to carry and the pitch too big. All team sports suffer from this to an extent. Rugby is probably the worst, but I remember Trevor Brooking recently saying something about having a full-sized pitch and small children, and how the biggest kid who can kick it down the field and then win it in the air will win you the game. Half of both teams become irrelevant.

Therefore, when we are talking about competition, look at the essence of what it is. Forget about the league tables and the junior trophies. Let us talk about the really difficult bit: creating a situation in which someone gets something out of that process of competing with someone on as even terms as possible. It ain’t going to be for everyone, but most of us will benefit far more from having that skill than we will from not having it.

18:42

[Baroness Grey-Thompson (CB)]

My Lords, I thank the noble Baroness, Lady Heyhoe Flint, for tabling this debate. I have a number of interests in sport, all of which are declared in my entry in the register.

Too often, the offer in schools is seen as a choice between competitive and non-competitive sport, and the sporty and non-sporty children. Sadly, it is not quite that simple. As noble Lords may imagine, I am a huge supporter of competitive sport for everyone, but delivered in the right way, not just for those who are talented. It should be used as part of a drive to encourage lifelong participation in physical activity. Currently, 80% of women are not fit enough to be healthy. This alone should give us cause to think about primary school provision because that is where disengagement begins.

In recent years there have been many improvements in how sport is taught and coached, along with the development of the talent pathway and its relationship with competition. However, age grouping is a rather crude measure, as while young people develop there can be a significant disparity in skill level, and even a little training can make a huge difference in performance. Sport Wales is doing some great work in this area which is,

“player-centred, development driven and competition-supported”,

moving away from competition being the main focus. This is very positive because it will do a great deal to improve people’s experience of competition and keep them involved for longer.

I have been on the losing side many times and, quite frankly, it is miserable. Many sports have guidelines on how winners should behave, and I am glad to see that this will be extended to what I call overenthusiastic parents. There has been a lot of debate about the right way to encourage fair play and, while losing can be perhaps a little easier to understand, if not accept, as you get older, it is down to the skill of the coaches and teachers to balance competitive teams but not in a patronising way. I have seen some great examples of balance and, while being beaten by a massive margin is miserable, knowing that someone was being easy on you is worse. We should be more creative, but I do not wish to see junior competitions dumbed down; trophies should be awarded for excellence, effort, and commitment.

The Minister for Sport in another place, Mrs Helen Grant, has been extensively quoted this weekend speaking about girls in sport. She was building on research that has shown why many girls drop out of physical activity and how they feel about competition. We know the issues—they have not changed that much in the years that I have been involved—but one piece of news that I am really pleased about is that the ECB has professionalised the women’s game and is offering paid contracts. I heartily congratulate it and cannot wait for other professional sports to follow. There may always be challenges around body image for young girls but we can make it cool for girls to be sporty and competitive, and what the ECB has done is very powerful.

What we can change relatively easily is how we deliver physical activity in schools. Young people need to be physically literate. If they are taught good, basic skills, they will be able to take part in a wide range of activities with increased confidence and think more positively about participating and competing. For me, the solution is simple: we need to help teachers to deliver physical literacy. The investment that the Government have made is incredibly useful, but think what we could do if we took a radical approach and changed initial teacher training. Can the Minister update us on what plans Her Majesty’s Government have to look at teacher training, especially at primary level, so that a lot of women teachers who may have dropped out of sport between the ages of seven and 12 can understand the principle of physical literacy and are better able to teach core skills? It is not about measuring how far children can jump, run or throw. We do not expect children to do long division without teaching basic maths skills, but that is what we are doing to our children in PE.

None of this is easy to get right—if it were, we would have done it a long time ago. If this were a school report, it would read that we have shown some progress but we could do a lot better.

18:46

[Lord Allen of Kensington (Lab)]

My Lords, my background is a career that started in the steel industry in Scotland when I was 17 and has spanned more than 40 years working in business, broadcasting and the media, but I am delighted to be able to make my maiden speech on a subject that I am equally passionate about. I had the privilege of chairing the Commonwealth Games in Manchester in 2002, was vice-chair of the London 2012 bid and was Mayor of the Olympic Village. Visiting thousands of grassroots clubs as chair of nations and regions has fuelled that passion. I remember vividly one particular visit to the Percy Hedley Academy for Disability Sports in north Tyneside where I was asked to play wheelchair football, demonstrating that this sport is not for the faint-hearted as I sped around at 20 mph much to the amusement of the young, elite athletes.

I thank the noble Baroness, Lady Grey-Thompson, an athlete of distinction, a friend and a great inspiration, for her kind words of introduction. I also congratulate the noble Baroness, Lady Heyhoe Flint, a cricketing legend, on securing such an important debate.

Today is my first time at the crease on an unfamiliar pitch. I have yet to become familiar with the House but my own fitness has improved as, many times, I have gone down the wrong corridor or up the wrong stairs. In this, I have had great assistance from the wonderful staff and Peers alike, and I am very grateful to them for that. I also pay tribute to my sponsors, the noble Baroness, Lady Jay of Paddington, and the noble Lord, Lord Bragg, and thank them for their patience in answering my many “daft laddie” questions such as, “Why do we say ‘Good morning’ in the House when it is 2.15 in the afternoon?”.

Although feeling humble and, as you can see, slightly nervous in the presence of such distinguished Members of your Lordships’ House and so many sporting greats, today is an opportunity for me to highlight and honour the 2 million heroes who give up their time each week to help sports clubs in their communities.

In 2012, the world witnessed how London made the two greatest sporting events, the Olympics and Paralympics, even better. Seventy thousand Games makers and London 2012 volunteers around the country played a huge part. Every competitor I spoke to told me how important volunteers are at grassroots level: it had been volunteers who had inspired them, volunteers who had coached them and volunteers who had raised money for their equipment and training. We therefore need to encourage disabled and able-bodied people from all walks of life to join this army of volunteers: the Ritas who, after a gruelling shift at work, turn up even on the wettest Wednesday evening in Wigan, Winchester and Wishaw to coach the under-12s; the Roys who give up their time to repair and maintain the club houses; the Alans who do the fixtures and the transportation; and the Amys who spend many hours doing the accounting and the administration. These heroes are contributing to the many benefits that sport brings and, most importantly, to improving the health and life expectancy of our young people.

Data from Public Health England show that 30% of 10 to 11 year-olds are overweight or obese. Diabetes UK warns that type 2 diabetes—normally associated with obesity and inactivity in middle age—is now becoming prevalent in children, with around 1,400 children diagnosed with this condition. We need urgently to address and reverse those trends if we are to avert an obesity and chronic health time bomb. Getting kids into sport will play an important part but we need to build capacity, and that means more volunteers. Sport England reports that seven out of 10 clubs need more volunteers. I am honoured to be chair of the Join In Trust, which aims to match grass-roots clubs with the thousands of people who are looking to find rewarding and interesting things to do in their communities. Last year we signed up more than 100,000 sports volunteers. This is a good start, but we must do more.

18:50

[Lord Hoyle (Lab)]

May I say to my noble friend that I seem to be always doing “firsts” with him? I met him on the first day when he started at Granada and now I am following him on his maiden speech. He has a lot to offer this House, and I hope that it will not be the last that we will hear from him; I know that it will not.

I thank my noble friend Lady Heyhoe Flint for initiating this debate because it is very interesting. In field sports, it is often the adult motivation we are looking at rather than that of the children who are participating. We should start from that kind of standpoint. I will explain what I mean by that. Very often, many of the practices that adults expect of children are too difficult for the children themselves to do. They are expected to win at all costs. Every Saturday, I take our dog for a walk and I go past schools where they are playing football. I tell you as an engineer that the language that I hear there frightens the dog—and the dog is a Rottweiler—never mind frightening me. The other problem, which has been mentioned before, is about not being good enough, because, as has rightly been said, kids are at different stages of development. Very often, it is the most physically developed who get on to the team, and that is a detriment to the others.

Given my connection to rugby league, I want to talk about what we are trying to do there. We are running a new pilot scheme. In 2011 we decided to look at what was happening with seven and nine year-olds and see what we could do about it. We looked at the existing practices that were taking place, and from that a pilot scheme has evolved. It is designed to make playing itself more fun for the children—to make them enjoy it and want to do it. It is designed also to give them more time on the ball and to develop their skills. It is absolutely providing that. To give them an opportunity to develop skills is very important.

We called the new format we developed a festival format, and it is getting more and more children to participate. That in itself is very important. It is a modified game so all children can play. No child is left out: there are enough teams to ensure that everyone has a chance to participate in it. There are no substitutes either, so they all get a chance to develop their skills. Even when they have not been interested, we are finding that there is an interest that children take. More importantly, we are finding that this interest is being carried on later in life, so that the interest in sport continues.

The pilot scheme itself was launched in Leeds and was particularly successful in east Leeds, which is one of the more deprived areas of the city. We saw a dramatic increase in under-sevens who are participating in the game and registering to be in it. It is a new step forward, as far as we are concerned, in getting children involved in the game. I will finish on this because my time is up. Having been rolled out in Leeds, it is now being rolled out across Yorkshire and that will be followed by Cumbria, London and the north-west, so I hope noble Lords will wish it every success in the future.

18:55

[Lord Thomas of Gresford (LD)]

My Lords, I, too, thank the noble Baroness, Lady Heyhoe Flint, for sponsoring this debate, and congratulate the noble Lord, Lord Allen, on a wonderful maiden speech, which we all enjoyed.

I agree with other noble Lords that dads can be a bit of a problem. They are standing there yelling their heads off and trying to fulfil their own dreams; normally they were not very successful themselves. I remember one friend of mine pulling his youngster off the field and saying, “You little blankety-blank coward”, which I did not think was very helpful for a 10 year-old, and that is the sort of conduct that you see. I have been there refereeing, controlling dads on the line, coaching and trying to get parents to realise that little Johnny may not have been picked for the very best of reasons. The problem is that children feel that they have failed, and become disillusioned.

The noble Lord, Lord Hoyle, talked about rugby league and outlined the programme that the RFL has carried out. The one area that he did not refer to, however, was north Wales. I declare an interest: my son is the chief executive of the North Wales Crusaders. The club started up two and a half years ago, and rugby league is now the most delivered sport in schools in north-east Wales. It is simple and inclusive. Coaches focus on the physical literacy to which the noble Baroness, Lady Grey-Thompson, referred. It encourages them to run, pass, catch and dodge with the ball in hand, and promotes the fun aspects of the game before anyone gets hung up on winning. This is done first in school sessions and then encouraged at larger mass participation events. The North Wales Crusaders’ “Give & Gain Day” brought 400 children together from 20 schools to attend one event, where players from the professional team, who had qualified as coaches especially for the event, ran different “skill stations”, encouraging the children to develop that physical literacy before being introduced to a competitive environment.

Competitiveness is introduced in a controlled and inclusive way so as to avoid the “biggest/strongest/fastest” issue that my noble friend Lord Addington talked about. I recall that when I was in school, one Kilblinski—known as “Killer Kilblinski” to his friends—was playing with us in the First XV aged just 15. The Crusaders have developed some simple strategies; for example, if a child scores a try, he is taken off the pitch for two minutes and given a break. This means that those who hog the ball spend less time on the pitch if they simply try to score every time they touch the ball and do not include those around them. That is a very sensible way of getting more involved.

In the past 12 months the Crusaders have held 578 coaching sessions, with 95 schools or clubs involved; 2,800 children aged eight to 17 did on average nine sessions each. However, the local council and Sport Wales—which is focused on the union game—provide minimal funding: between them, they do not even cover the cost of one community coach’s salary. That has to be addressed if this sort of participation is to be encouraged.

The absolute key to all this is bridging the gap between school and the community game. Sport does not end when the school gate is closed. North Wales Crusaders are developing a network of “doorstep” clubs, which can be easily introduced into all communities. Who knows? Rugby league may dominate the north of Wales as union does, very successfully, the south.

18:59

[Lord Moynihan (Con)]

My Lords, in 2006, Gordon Brown, as Chancellor, wrote an outstanding Olympic manifesto. In an article titled My Fight to Get Britain Fit for the Olympics, he outlined the following measures: to offer children four hours of school sport by 2010; to lead the world in 2012 as one of the fittest and most sporting of nations; to offer after-school sport and links to all local sports clubs; to have every school playing competitively in local leagues; to increase sports volunteering in schools and communities by 1 million; to provide every potential young sports star with extra support to help them train and develop; and that every school should have access to playing fields and better sports facilities.

It would be good to report that one of these laudable sports legacy initiatives had been achieved. Sadly, I cannot report that any of these measures have been delivered because the necessary building blocks for an Olympic sports legacy for young people were absent. The hard evidence, as evidenced in the recent Select Committee report, excellently chaired by the noble Lord, Lord Harris of Haringey, who I note is in his place today, highlighted that. The reality is that work for young children must start now, but how?

First, I applaud the approach taken by Scotland in its “Excellence” curriculum for physical education in primary schools that calls for all subjects to be delivered in a physically active way—not always through competitive sport. A step change is also needed at the Department of Health towards preventive health rather than having clinical targets, and recognition by the Department for Education that physical education has a distinctive and vital role to play in education. As has been rightly pointed out, primary school teacher training in sport is in need of far higher prioritisation.

The biggest neglect in national strategy during the past two decades has been the lack of focus on how local authorities can assist. In the main they provide most of the facilities that clubs and national governing bodies need to support young people and they often finance the most accessible first-stage coaching opportunities across a range of sports. The Government need to support local government, making spend on recreation and leisure mandatory, not discretionary. They need to invest in incentives for local authorities to use for clubs and their members; for example, a more systematic provision of rate relief.

The School Games initiative was the silver bullet in the mind of Jeremy Hunt in the run-up to the London Olympics. That was thought to address competition in sport. It was a good idea in principle but I regret that it has become in many respects a complex and unwieldy bureaucratic structure of activities ranging from level 1 up to level 4. I well recall going to a county level 3 in Kent where “Splat the Rat” and golf with giant plastic clubs and foam balls were in evidence on a hard tennis court. That was not competitive sport between teams representing their schools. Everybody enjoyed themselves but the reality is that funding, as recognised by the Government, should go first into schools to improve delivery. It needs to be directed towards the governing bodies of sport that for decades have built the expertise and experience in delivering competitive school sports. We have the Rosslyn Park National Schools Sevens, the National Schools’ Regatta, and the evidence of my noble friend Lady Heyhoe Flint, in her excellent speech, on ECB initiatives.

I shall close by quoting the interesting article by David Walsh that some of your Lordships will have read in the Sunday Times yesterday. He said:

“If one wish transcended all others in the aftermath of London 2012 it was that more young people, especially girls, would see sport as something they wanted to do and levels of participation would rise”.

Sadly, it has not happened.

18:59

[Lord Pendry (Lab)]

My Lords, I, too, congratulate the noble Baroness, Lady Heyhoe Flint on initiating this debate, albeit a short one, but because of the importance of the subject, I hope that there will be a major debate on the Floor of the Chamber in the future.

I make no apologies for raising the question of boxing in schools, and its importance. I wish to illustrate the beneficial side of competitive sport, particularly boxing at school and amateur levels. Certainly at these levels, boxing is not harmful, yet some of my so-called friends, knowing that I started my boxing at school, think that it did some damage to me, finishing up as a Member of Parliament and a Peer of the realm.

[Lord Hoyle]

We have thought that for years.

[Lord Pendry]

They may well also say that about the noble Lord, Lord Moynihan, who, like me, boxed at Oxford although, I must say, in different years and at different weights.

Seriously, though, boxing in schools promotes skill development and a structured pathway leading to competition and coaching. Some who contend that boxing is a dangerous and inappropriate sport for youths are, in my view, misinformed. Boxing is not only about fisticuffs and strength but is a sport based principally on skill, structure, rules and discipline. It is also a sport that appeals to both boys and girls, and is less dangerous than many sports as defined by Sport England.

Intersport boxing competitions have taken place in various schools near where I was an MP, in Manchester, but also in London, the south-west and other areas of the country. I argue that in those schools, competitive boxing increases fitness levels and promotes a healthy lifestyle. Many teachers have witnessed increased motivation in disengaged students, improvements in self-confidence and self-esteem, greater enthusiasm and positive behaviour. Boxing teaches both girls and boys about the value of respect, sportsmanship and self-worth. In my view, teachers and parents heavily support competitive boxing in schools, with schools such as North Chadderton School in Oldham, which I recently visited, allowing students to be assessed practically on their boxing skill as part of GCSE and A-level studies. At one of the schools I went to recently, in fact, the Ofsted inspector was quoted as saying that,

“it was a refreshing change to the normal PE curriculum and an excellent lesson”.

As I have a minute or so left, I shall simply say that the current debate brought about by the Minister for Sport underlines the need for a more appropriate approach to sport. What planet is Helen Grant on when she advocates young girls to take up more feminine sports like cheerleading, ballet and roller skating to make them look “absolutely radiant”? Tell that to Nicola Adams, the boxing gold medallist, or Gemma Gibbons, the silver medallist in judo, or indeed our speakers today: the noble Baronesses, Lady Heyhoe Flint, Lady Massey and Lady Grey-Thompson, the greatest Olympian of them all. They are all feminine and all radiant.

I would go on complimenting noble Lords but my time is up. I hope that we have a bigger and longer debate in the other Chamber soon.

19:08

[Lord Stevenson of Balmacara (Lab)]

My Lords, I congratulate the noble Baroness, Lady Heyhoe Flint, on securing this debate and warmly welcome the maiden speech by my noble friend Lord Allen of Kensington and his welcome attention to volunteers in the world of sport, without whom, of course, much of what we enjoy in sport today in the UK would not be there. As my noble friend Lord Hoyle said, he clearly has a lot to offer the House and we look forward to hearing from him in future.

As the noble Baroness, Lady Grey-Thompson, said, despite the title, most noble Lords who have spoken in this rather excellent debate have challenged the binary assumption of the title and drawn attention to the need to think much more widely about the question of how we locate competitive sport within sport in the context of other issues, such as the problems with obesity in the population; issues about body image, which affect boys and girls; the role of physical literacy, which is important across many ways in which we engage with the world; and the role of elite sports men and women in our society, possibly in combination with the way in which the media relate to them.

As the noble Lord, Lord Moynihan, said, the situation that we face at the moment is pretty dire because we have not achieved the aspirations that we all had when we engaged with the Olympics. Indeed, the situation has got worse since the end of the previous Government. In 2009-10, more than 90% of pupils were taking part in two hours of PE and school sport a week, up from an estimated 25% in 2002. In competitive sport, 78% of pupils—77% of girls and 79% of boys—took part in intraschool competitive activities. In 2009-10, 49% of pupils took part in interschool competitive sport; again, up significantly. That was a reasonable starting point and it was largely down to the success of school sport partnerships, which have not been mentioned much today but were a notable feature of the past decade or so, which increased participation for both men and women and did not pose the question of whether it was competitive or encouraging participation—it was both.

Recent research has shown a 60% decline in the number of schools involved in organising school sport partnerships, and that is to be regretted. We now read in the papers that more than half of children fail to get at least two hours of physical education every week. The Education Select Committee published a report in July that criticised the Government’s approach to school sport, saying:

“There is clear evidence that the ending of the school sport partnerships funding has had a negative impact, including on the opportunities for young people to access competitive sporting opportunities in school”.

I would like the Minister to reflect on what we were told in 2011 by the then Secretary of State, Mr Jeremy Hunt, who said that he was,

“banishing once and for all the left-wing orthodoxy that promotes ‘prizes for all’ and derides competition”,

and that he could sum up the Government’s sports policy in three words: more competitive sport. Is that really the answer? Does it not need, as we have heard, a more nuanced response, from local authorities, schools, health and education, all working together? I would be grateful if the Minister could answer that question.

19:11

[Lord Gardiner of Kimble (Con)]

My Lords, first, I congratulate my noble friend on securing this debate and thank noble Lords for a lively and well supported exchange of views. It has been very much enriched by the maiden speech of the noble Lord, Lord Allen of Kensington, who brought his very considerable experience of these matters. The noble Lord definitely hit a six with his maiden speech, and I congratulate him.

The summer of 2012 showed us that there is a tremendous appetite in this country for sporting competition. In the past year, 83% of children aged five to 15 reported that they had participated in some form of competitive sport—I think that the noble Lord, Lord Stevenson of Balmacara, and I need to go over our figures together—with 79% taking part in school and 37% outside of school. We want these figures to increase.

Competitive sport plays an important role in a child’s development. As the noble Baroness, Lady Grey-Thompson, and the noble Lords, Lord Allen and Lord Stevenson, said, it is all about improving health and well-being, but it also helps to teach children how to deal with the ups and downs that life undoubtedly brings. I was very struck by what IOC President Thomas Bach said last night in the closing ceremony about recognising victory and defeat with dignity. It also teaches children how to work in a team, which is extremely important, and many of your Lordships have been involved in very senior team-making. It also improves confidence and increases concentration.

Furthermore, it is a widely held view that children should be physically active as early as possible so as to gain the skills and confidence they need to compete in sport—as well as life skills—and take them on into adult life. That is why the Government are committed to reviving competitive sport and why we have given it a much needed boost by establishing the School Games and investing in the PE and sport primary school premium. I agree entirely with the noble Baroness, Lady Grey-Thompson, that it must be delivered in the right way.

Launched in 2011, the School Games features more than 30 sports, many of which have been raised during this debate. It is sponsored by Sainsbury’s and run by the Youth Sport Trust, and has already transformed competitive school sport. It is designed to give every child the chance to play more competitive sport, regardless of ability or disability, across four levels.

At level 1, pupils compete against their peers in school, culminating in an annual school games sports day. At level 2, schools compete against each other. Level 3 features the best athletes from levels 1 and 2, who represent their school at a county festival. Last year, more than 100 summer and winter festivals took place, involving more than 100,000 pupils, about 10% of whom were children with disabilities, and 36% of whom were of primary school age.

19:15

Level 4 is the pinnacle of school games. It is predominantly for secondary school children, and gives the best athletes the chance to compete at a major sporting event. About 1,400 athletes competed in Sheffield last year. Manchester will host this year’s finals.

My noble friends Lady Heyhoe Flint and Lord Addington had somewhat differing views about rugby in Surrey. I understand that the RFU, the national governing body for English rugby, remains committed to providing more opportunities for children to compete. Almost 17,000 schools are voluntarily taking part in school games—nearly 70% of all schools in England—including approximately 13,000 primary schools.

Our aim is to have 80% of schools signed up by this time next year and, ultimately, for 100% of schools to be signed up. Our commitment to school sport does not stop at school games. The Prime Minister recently announced another year of £150 million of funding for the PE and school sport premium, which my noble friend Lady Heyhoe Flint outlined. That funding is now in place up to 2016, and the Prime Minister has said that, should he remain Prime Minister, it would be in place up to 2020.

This ring-fenced funding goes directly into the hands of every primary school head teacher in England to spend on improving PE and sport. Heads decide how to spend their premium, but they are free to use it to get involved in school games and to take advantage of the free support that that provides, including access to one of the 450 school games organisers in post throughout England.

Ofsted has produced guidance for schools on what good PE and sport provision looks like, and inspectors will be looking for good practice during their inspections. This includes paying staff or coaches to run competitions, or increasing participation in school games. In addition, PE rightly remains a compulsory part of the curriculum and has a greater emphasis on competitive sport.

We want all primary schools, large and small, town, suburban and country, to benefit from school games. Schools can spend their premium on training teachers and/or bringing in coaches to give them expertise to teach. Several noble Lords, including my noble friends Lord Addington and Lord Moynihan and the noble Baroness, Lady Grey-Thompson, raised the issue of teaching, particularly in the primary school context.

The new PE curriculum specifically places greater emphasis on pupils’ development of physical literacy at key stages 1 and 2. In addition, with funding of £750,000, the National College for Teaching and Leadership is running a pilot programme to train 120 primary specialist teachers in PE in three teaching schools. Obviously, we need to build on that, and I should very much like to have a discussion with several of your Lordships about the teaching experience, because that will clearly be essential.

[Lord Thomas of Gresford]

Does my noble friend agree that the Government in Wales ought to take note of the investment that this Government are making in sport for children?

[Lord Gardiner of Kimble]

My Lords, I would go further than that. I think that all home nations should think about that carefully, for the reasons outlined by your Lordships, the key points about the health and well-being of children, so I very much endorse what my noble friend said.

On facilities, the Prime Minister recently announced a new £18 million fund to help about 600 primary schools that are most in need. We know also that secondary schools open their facilities to help primary schools that require additional space for competitions. I hope this will be an expanding feature, because this is another key sector where there are facilities in the area from which we must make sure that all school children can benefit.

Sport England has commissioned Fit for Sport to run a pilot exploring how schools in Somerset could get more involved in School Games, for example by posting their results online against which other schools could compete. The result was increased participation.

I want also to refer to Project Ability—a bespoke project within School Games, which has helped to introduce around 25,000 young disabled people to competitive sport. A good example of this is in Gloucestershire, where a sailing event was an inclusive competition with special educational needs or disabilities children and non-SEND pupils from different schools competing in joint teams, with the winners awarded combined medals. This is another example of ways in which we should be working.

I also wanted to raise an issue that has obviously been a matter of some discussion in the newspapers, and I think it quite rightly belongs in this debate. This is about ensuring that girls are given as many competitive opportunities as boys. The noble Baroness, Lady Massey, particularly raised this, as did my noble friends Lady Heyhoe Flint and Lord Moynihan. I was interested to be briefed that now more girls than boys are competing at the School Games county festivals. I very much hope that this will be a feature of a continuing competition between the boys and the girls to ensure that the girls are in the lead on this.

I turn now to volunteering. School Games is about more than just competing in sport. The noble Lord, Lord Allen, who chairs the highly successful Join In programme, will know well that School Games is also helping to build teams of volunteers. Volunteers in sport are crucial: without them, most sport simply could not happen. School Games is supported by a range of volunteers, including non-teaching staff, parents and the children themselves. I must also refer to referees, as my noble friend Lord Thomas of Gresford raised referees as a very important feature of any sport. The county festivals alone benefited from more than 12,000 young volunteers giving up their time to support the athletes and spectators, while the majority of volunteers at the national finals were young people, with over 500 involved in Sheffield last year.

Children should be able to enjoy and participate in competitive sport from a young age, and take those skills with them on into secondary school, the community and beyond. The important word that came out was “fun”. My noble friend Lady Heyhoe Flint mentioned the “fun environment”; the noble Lord, Lord Hoyle, mentioned the word “fun”. It is very clear that rugby league in his part of the world is in very good heart as it is in Wales, in my noble friend Lord Thomas of Gresford’s part of the world. Boxing is a game which the noble Lord, Lord Pendry, has mentioned. They are all very much part of the community. That is why, in addition to the School Games, and the premium and the curriculum, we have our £1 billion youth and community sport strategy for 11 to 25 year-olds, which includes specific programmes for Sport Activate and community satellite clubs to help children make the transition into community sport.

I want to reassure your Lordships that the Government are taking serious steps to encourage younger children to participate in competitive sport. The advantages of children participating in the right way and volunteering are recognised, as evidenced by the involvement of four government departments in this work. This debate has illustrated the firm commitment of so many of your Lordships to take this matter further and quite rightly so; it has highlighted the immense practical experience and truly exceptional sporting success your Lordships bring as we all seek a healthier and more fulfilled life for the children of our country.

Committee adjourned at 7.24 pm.

House of Lords

Monday 24th February 2014 Lords Chamber

Monday, 24 February 2014.

14:30

Prayers—read by the Lord Bishop of Wakefield.

Death of a Member: Lord Moran

Monday 24th February 2014 Lords Chamber

Announcement

14:37

[The Lord Speaker (Baroness D'Souza)]

My Lords, I regret to inform the House of the death of the noble Lord, Lord Moran, on 14 February. On behalf of the House, I extend our condolences to the noble Lord’s family and friends.

Courtesy Titles

Monday 24th February 2014 Lords Chamber

Question

14:37

Asked by

[Baroness Deech]

To ask Her Majesty’s Government what plans they have to promote equality in the use of courtesy titles.

[Lord Wallace of Saltaire (LD)]

My Lords, while the Government recognise the equality issues surrounding the use of courtesy titles, we have no plans to alter their use due to the complexity of the system and the likelihood of confusion arising from alteration to the long-standing custom and practice governing this matter.

[Baroness Deech (CB)]

I can assure the Minister that, having looked into the issue, it is not as difficult as he imagines and that there could be change. Does he not agree that equality has to start in this House and that the use of the title “Lady” by the wives of knights and noble Lords is discriminatory unless a title of some sort is also accorded to the husbands of noble Baronesses and dames? Either the title should be used only by those to whom it was awarded, or husbands and wives and partners have to be treated equally.

[Lord Wallace of Saltaire]

My Lords, I think the statement that equality must start in this House is one which will be received with surprise by a number of those outside. I thank the noble Baroness for encouraging me to read Debrett’s for the first time. Having read Debrett’s for the first time, I know this is a highly complex issue. I recognise that the use of courtesy titles and titles for the spouses of Peers—which are apparently legal titles, not courtesy titles—has grown up over the past 500 to 600 years. The rapid changes in the relationship between the sexes and in marriage over the past 50 years have, of course, left us with a number of anomalies, of which the Government are well aware, but we are not persuaded that it is urgent to adjust them now.

[Lord Dholakia (LD)]

My Lords, now that same-sex marriage is on the statute book and will be implemented before long, has the Minister given any serious thought to the award of knighthoods—or damehoods for that matter—to people who have entered into such relationships?

[Lord Wallace of Saltaire]

My Lords, that is taken care of within the Marriage (Same Sex Couples) Act 2013. I understand that exceptions have been made for this in that Act and in the earlier Marriage Act. The coalition Government and, I am sure, all parties are much concerned about the weakness of social mobility in Britain. I am not sure that we should spend too much time concerning ourselves with the subtle finesse of social stratification.

[Lord Hunt of Kings Heath (Lab)]

My Lords, that was a truly Conservative answer. The noble Lord has spent far too long on that Bench. My question is entirely relevant to the question of courtesy titles. Can the Minister confirm that the Government are intending to introduce yet another list of new Peers to your Lordships’ House? Can the noble Lord reassure me that that is not the case?

[Lord Wallace of Saltaire]

My Lords, I am not informed on the subject so I can neither assure nor reassure the noble Lord. I have asked some female colleagues in this House how much their husbands care about not having a title and a number of them have told me robustly that their husbands not only do not care but positively do not wish to have them. I am aware that a number of wives of Members of this House do not use their courtesy titles either.

[Lord Trefgarne (Con)]

My Lords, given that we changed the law of succession for the sovereign only last year, are there any plans to change the law of succession for hereditary peers rather than the question of courtesy titles?

[Lord Wallace of Saltaire]

My Lords, we spent some time on Fridays on a Private Member’s Bill on this very question. The House was some way from consensus on it the last time we debated it.

[The Countess of Mar (CB)]

My Lords, is the noble Lord aware that there is a precedent? In 1392 and 1408, when there were two Countesses of Mar in their own right, their husbands were made Earls for their lifetime on the basis that the women could not go to war or sit in Parliament. However, I have asked my husband and he said that he does not want to be Earl of Mar because he neither wants to go to war nor to sit in Parliament.

[Lord Wallace of Saltaire]

My Lords, I am very grateful for that remark. I was aware of that precedent and I am told there was another Scottish precedent, from the 16th century, in which the husband was refused the appropriate title.

[Baroness Sharples (Con)]

My Lords, is my noble friend aware that I have actually killed off three husbands so perhaps the question does not arise for me? Are there not much more important matters that the Government should be concerned with?

[Lord Wallace of Saltaire]

My Lords, when the Opposition Front Bench accused me of being Conservative it was precisely because I was saying that the Government think there are other more important things. I would have thought that the Opposition Front Bench might agree with that.

[Baroness Howarth of Breckland (CB)]

My Lords, I accept that there may be more important things to contend with at the moment, but this is a question of equality. I was concerned by the noble Lord’s reply that it was too complex. Does he remember that, at one time, it was too complex to give women the vote?

[Lord Wallace of Saltaire]

My Lords, the British constitution is extremely complex. If we attempted to redesign it on a rational basis this House would certainly not exist. Whether or not the monarchy would exist is another question. We live with odd elements of tradition and history that are part of the rich tapestry of the country. These do evolve. I doubt whether very many children of newly appointed life Peers now accept or use the title of “Honourable”. We are moving slowly and we adapt as we go on.

[Baroness Gardner of Parkes (Con)]

My Lords, is the Minister aware, having read Debrett’s, that the way we are constantly referred to in the press as “Lady Sue” someone or “Lady Joan” someone is totally incorrect? The woman’s Christian name is always printed with “Baroness Something”, but this does not apply to the men. By doing that, the press is elevating us and making us the daughters of someone with a much higher, hereditary, title.

[Lord Wallace of Saltaire]

My Lords, I am much better informed on that issue than I was a week ago. Perhaps I may have forgotten in a week or two’s time.

[Lord Dubs (Lab)]

My Lords, would it not be better to get rid of titles altogether?

[Lord Wallace of Saltaire]

The noble Lord might well say that; I could not possibly comment.

Drug Companies: Medical Trials

Monday 24th February 2014 Lords Chamber

Question

14:44

Asked by

[Lord Kennedy of Southwark]

To ask Her Majesty’s Government what action they intend to take in respect of drug companies that withhold the results of medical trials.

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)]

My Lords, companies are legally required through the marketing authorisation application process to provide the relevant regulatory authority with all information for evaluation of a medicine. This includes clinical trial results which are both favourable and unfavourable. The Medicines and Healthcare products Regulatory Agency has powers to take action where particulars supporting an application are incorrect or where the company has failed to inform authorities of new information that would influence the evaluation of the benefits and risks of the product.

[Lord Kennedy of Southwark (Lab)]

My Lords, the number 1 risk on the Government’s national risk assessment for civil emergencies, ahead of both coastal flooding and a major terrorist incident, is that of pandemic influenza. Is the noble Lord concerned that Tamiflu, which is supplied for use in a flu epidemic, may not be as effective as was once thought? Is he concerned that many large-scale trials of Tamiflu have not been publicly reported?

[Earl Howe]

My Lords, during the course of last year, the Government gave detailed evidence to the Science and Technology Committee on the issue of data provision in respect of clinical trials. The committee made a number of helpful recommendations on the removal of barriers to transparency. In our formal response, we set out how we would work to achieve the aims of greater transparency. In the light of that response, the Government are looking into the recommendations of the PAC report on the stockpiling of Tamiflu and access to clinical trials data, published in January. We will give our formal response to the report next month.

[Baroness Brinton (LD)]

My Lords, evidence shows that the chances of a complete trial being published are roughly 50%. The recent EU clinical trials draft directive will require all trials to be registered before they start, and full results to be published within a year. However, the regulation will be applicable only to trials starting from this year. How do the Government plan to ensure that pharmaceutical companies will release medical records for drugs that were launched before 2014?

[Earl Howe]

My noble friend raises a topical question. The industry’s trade body, the Association of the British Pharmaceutical Industry made clear, in its code of practice in 2012, that companies are obliged to publish all clinical trial results within a year of marketing authorisation and publicly register new clinical trials within 21 days of the first patient being enrolled. That, of course, is a forward-looking exhortation, but we are encouraged by the fact that the industry is taking an increasingly responsible view in this area by publishing data voluntarily, as demonstrated by companies such as GSK, AstraZeneca and Johnson & Johnson. We want to encourage more companies to do the same.

[Lord Walton of Detchant (CB)]

The noble Earl has made very clear the legal background to the present situation. He is fully aware that if a drug that has been fully tested and shown to be highly effective, and NICE has recommended that it should be prescribed to patients, the authorities have the legal responsibility to prescribe it. If, on the other hand, NICE has been given evidence to indicate that a particular remedy is ineffective as a result of negative clinical trials, is it equally incumbent on health authorities to recommend that that drug should not be prescribed?

[Earl Howe]

Certainly, my Lords, any advice that comes from NICE on the clinical effectiveness of a drug should be adhered to by commissioners. It is not, however, mandatory that that happens. Commissioners have discretion in that area.

[Lord Mawhinney (Con)]

I compliment my noble friend on the full and comprehensive Answer that he gave to the Question, and on the reassurance that it contained. Do he and his colleagues think that perhaps the issue here is not the legal framework but the issue of transparency and ease of access to information? If they think that that has some merit, would they be willing to consider having a simplified summary of the legal position on the department’s website for easy access for those who are interested?

[Earl Howe]

I absolutely agree with my noble friend. The Government are committed to transparency in the area of clinical trials. Transparency is important for patients, the public, researchers and the NHS, and it can be achieved through ensuring trial registration and outcome publication, as well as making data available through the appropriate channels. I think that the new EU regulation will be extremely helpful in promoting transparency, and the availability of summaries of all trials and clinical study reports will be a part of that regulation. However, I take my noble friend’s point about a simple guide for the public and I will gladly consider it.

[Lord West of Spithead (Lab)]

My Lords, will the Minister confirm that the work put in hand by the previous Government to ensure that we had the capacity to produce sufficient quantities of drugs to counteract various types of bird flu, once it had been identified, has now been completed and that we are in a position to be able to do that?

[Earl Howe]

My Lords, I readily acknowledge the work done by the previous Government, which makes this country probably the best prepared in the world for a flu pandemic.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I come back to the question raised by the noble Baroness, Lady Brinton. Once a medicine goes off patent it can, through generic production, remain available to members of the public for many years. The evidence seems to be that trials that give a favourable verdict are twice as likely to be published as trials giving unfavourable results. Could the noble Earl focus a little more on whether the industry can be encouraged to produce evidence around those trials in relation to current medicines as well as future ones? I also refer noble Lords to my health interest in the register.

[Earl Howe]

My Lords, it is important to point out that the MHRA does not have evidence that there is systematic or large-scale withholding of data. However, it has investigated cases in the past where clinical trials and safety data were not properly reported. The Government believe that the proposals included in the new EU clinical trials regulation will, as I said, contribute to greater transparency in the area of clinical trials. It must be remembered that any company infringing even the current rules can lay itself open to some very severe penalties.

Health: Folic Acid

Monday 24th February 2014 Lords Chamber

Question

14:52

Asked by

[Lord Rooker]

To ask Her Majesty’s Government, further to the answers by Earl Howe on 18 December 2013 (HL Deb, col 1261) and 21 January (HL Deb, col 567), what was the population sample of females of child-bearing age used in the National Diet and Nutrition Survey for folate status; and on what dates the survey data were collected.

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)]

Blood samples for folate-status analysis were collected from more than 600 females of childbearing age—15 to 49 years—as part of a UK representative sample of adults and children in the National Diet and Nutrition Survey. Blood samples were collected over four years from 2008-09 until 2011-12.

[Lord Rooker (Lab)]

My Lords, will the Minister accept that those figures are much smaller than recent research samples such as the 50,000 people involved in the Lancet-published research last year and the 500,000 women in England over a 12-year period in the research published last week that showed that the quantity of folic supplements taken by them was actually falling, which is the current policy? Given that the UK has the highest rate of neurological defects in the whole of Europe—80% of which pregnancies are terminated—is it not time to make a decision, talk to industry, the medics and science and join the other 70 countries protecting women from those births?

[Earl Howe]

My Lords, I recognise that this is an extremely important decision for the Government to make, affecting many people’s lives. I do not accept the implication behind the noble Lord’s question that the numbers involved in the analysis were somehow statistically invalid. I am assured that they represent a valid statistical base. We welcome all robust new evidence around the issue of fortification, such as the study published last week by the Wolfson Institute, and I can assure the noble Lord that we will take a decision on this matter as soon as possible.

[Lord Hunt of Kings Heath (Lab)]

My Lords, could the noble Earl give a little more precision as to what “as soon as possible” actually means? He referred to the study produced by the Wolfson Institute last week. Is he aware of the comments of Sir Nicholas Wald of the Wolfson Institute that it will be a public health tragedy if this country does not follow the example of the many other countries that have introduced this in a mandatory way? Is it not time that the Government simply made a decision? Indeed, they are clearly briefing to the media that they are going to make a positive decision. Why do not they just come clean and say, “We’re going to do it”, and say which date it will start from?

[Earl Howe]

My Lords, as I have explained on earlier occasions, it is very important that we use the latest data to reach a robust and defensible view of the risks and benefits on this issue. We will take the new National Diet and Nutrition Survey data on folate status into account when we do reach a decision. As for the position taken in other countries, while a number of countries have introduced mandatory fortification of flour with folic acid, others notably have decided against it, including Ireland and New Zealand.

[Lord Patel (CB)]

My Lords, the single most effective public health measure, which would prevent the birth of babies with severe spina bifida and lifelong disability, would be 400 micrograms daily of folic acid. Why would we not do that as a public health measure, when all the scientific evidence is already there?

[Earl Howe]

My Lords, in recommending the fortification of flour with folic acid, the Scientific Advisory Committee on Nutrition also advised that action should be taken to reduce levels of voluntary fortification, which, as the noble Lord knows, is applied to a number of breakfast cereals, for example. That is no easy matter. It would be necessary to avoid folate levels exceeding recommended limits and to put action in train to achieve that. There are other conditions and advice attached to the SACN recommendation; it is not quite as straightforward in practice as the noble Lord might suggest, although I recognise that the recommendation from SACN is there.

[Baroness Gardner of Parkes (Con)]

My Lords, I am very disappointed by these answers today. I thought that this matter was signed and sealed when we heard my noble friend’s answers some weeks ago. In reply to my question, he just said that I was a bit premature in asking whether it could be put in brown bread as well as white. Really, the facts have been established that in order to have an overdose you would have to eat two or more full loaves of bread, and I think that the danger of any pregnant woman doing that is pretty small.

[Earl Howe]

My Lords, my noble friend always raises some extremely valid points and, of course, I take them. However, I would just gently point out that SACN is concerned about overdosing, which is why it urged that action should be taken to reduce levels of voluntary fortification. Mandatory fortification of a staple food is, I would suggest, a serious matter for the nation, and these decisions have to be reached in a robust and responsible way.

[Baroness Symons of Vernham Dean (Lab)]

My Lords, can the Minister tell us who is actually doing the assessment on the data that are available so far? The noble Earl finds himself in a difficult position as we revisit this question almost on a monthly basis. A number of us are at a total loss to know why he cannot tell us when a decision will be taken. Will the assessment be made in his department and, if not, where is the assessment going to be made so that Ministers are given the knowledge and data to make a decision on this question, which is long overdue?

[Earl Howe]

My Lords, the Scientific Advisory Committee on Nutrition is the body charged by government to advise Ministers, and the decision will be taken by Ministers. But we have thought it prudent and sensible to take into account the latest data on the folate status of the population. The information that SACN drew from is more than a decade old, and we do not think that that is a sensible basis on which to take a decision one way or the other. So we must wait for that evaluation.

[The Countess of Mar (CB)]

My Lords, does the Minister agree that there is an equal conundrum with adding fluoride to water? Her Majesty’s Government seem to be quite happy that fluoride should be added to water, yet there is a possibility of overdose if people have fluoride tablets, fluoride toothpaste and all sorts of other things. What is the difference between that and folates?

[Earl Howe]

My Lords, as the noble Countess says, the issues are in many ways similar. As she knows, in the case of fluoride, Parliament has taken the decision that it should be a local matter and that is how the system now works.

[Baroness Brinton (LD)]

My Lords, given that there is a delay in the Government’s decision, what is being done to ensure that young women are informed about the importance of having some supplements? Waiting until they are pregnant is clearly too late.

[Earl Howe]

My Lords, government advice on taking supplements is available to women through a number of channels, including Healthy Start, NHS Choices, Start4Life, The Young Woman’s Guide to Pregnancy and the Information Service for Parents. To improve maternity services for women, NICE has published a comprehensive suite of evidence-based clinical guidelines in this area.

Health: Meningitis B Vaccine

Monday 24th February 2014 Lords Chamber

Question

15:00

Asked by

[Lord Turnberg]

To ask Her Majesty’s Government whether they plan to introduce a vaccine for meningitis B in children.

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)]

My Lords, the Joint Committee on Vaccination and Immunisation, the independent expert committee that advises the Government on immunisation matters, has not yet made a final recommendation about the use of the meningococcal B vaccine, Bexsero. The JCVI is due to report in March 2014, having reviewed additional evidence at its meeting earlier this month. We will respond to any JCVI recommendation as quickly as possible.

[Lord Turnberg (Lab)]

My Lords, I am grateful to the Minister for that response. Meningococcus B causes a very nasty form of meningitis. It affects about 1,000 cases a year, mostly in children. It kills about one in 10 and causes severe and lasting disability in one in three. It is no wonder that it is a parent’s worst nightmare. Yet the safe and licensed vaccine that can prevent most cases was turned down by the JCVI after what seems to have been rather a doubtful cost-benefit analysis. Will the Minister make sure that when the JCVI comes to look at it again, as it is doing, it uses a more relevant discount value for the quantity and quality of a child’s life; and that once the Government have received the committee’s advice, they will make a rapid decision to make the vaccine available?

[Earl Howe]

I can give the noble Lord an assurance on the latter point. We will take a decision as rapidly as we can once we receive the JCVI advice. I appreciate that the JCVI’s interim position statement will have been disappointing to many people. I know the noble Lord recognises that it is important that decisions about the introduction of new vaccines into the national immunisation programme take account of evidence of their effectiveness, safety and cost-effectiveness compared to other healthcare interventions. We need to wait and see what the JCVI’s final advice is. I am aware that it is looking at the cost-effectiveness methodology that is used for vaccines of this type.

[Lord Avebury (LD)]

My Lords, do the options now being developed by Public Health England at the request of the Government include a population-based evaluation of the meningitis B vaccination, taking into account the discounted lifetime cost to the public sector of supporting children who are disabled by the disease? Will my noble friend also explain why the Department of Health assumed that the carriage effects achieved with meningitis C do not read across to this variant of the disease?

[Earl Howe]

I can tell my noble friend that the JCVI has been considering both those issues: first, the possible need for a population-based evaluation of the MenB vaccine to address uncertainties in its effectiveness; and, secondly, what the possible effect of the MenB vaccine on the carriage of meningitis B bacteria might be. I say again that we need to wait for the JCVI’s final statement of advice to get clarity on either of those issues.

[Lord Hunt of Kings Heath (Lab)]

My Lords, of course I understand that we need to await the outcome of the Joint Committee’s further deliberations. However, following up the Question asked by my noble friend, if the committee sticks to the view that a vaccine would have a huge impact on an estimated 1,000 young people every year but still considers that that is not cost-effective, surely it calls into question the methodology that it is using. Will the noble Earl say a little more about how the Government can ensure that this methodology is put under full scrutiny?

[Earl Howe]

Last October, in recognition of concerns about the methodology currently used for assessing cost-effectiveness of vaccines, the JCVI agreed that a working group should be formed to consider two issues: first, how the impact of vaccination programmes to prevent rare diseases of high severity should be best assessed; and, secondly, whether there were aspects of cost-effectiveness in relation specifically to children that should be addressed. It is a complex issue both economically and, indeed, ethically. We should not expect a report from that group, once it has been established, until next year at the earliest.

[Lord Patel (CB)]

My Lords, the vaccines that my friend, the noble Lord, Lord Turnberg—he is a friend, at least as regards medical matters—talked about are developed through a new kind of science, which does not involve the use of eggs or any other animal material, and therefore is not only more effective but produces fewer side-effects, particularly in children. The vaccine that we are talking about is for a particular type of meningitis. The new vaccine may not be considered as cost-effective as a conventional vaccine. However, if you take into account clinical side-effects, the new vaccine may be considered cost-effective, so a different kind of assessment must be carried out that is based not just on conventional cost-effectiveness.

[Earl Howe]

The noble Lord makes a series of very important points. I know he will understand that it would be wrong for me to be drawn into going into too much detail on the clinical and cost-effectiveness of this vaccine because that is the job we have given to the JCVI.

[Baroness Masham of Ilton (CB)]

My Lords, how do we compare with other European countries in giving children this vaccine?

[Earl Howe]

Our childhood immunisation programme generally bears comparison with any country in the world and is very extensive and very successful. However, the incidence and prevalence of meningitis B is higher than in many other countries, which is why there is such concern about it.

[The Earl of Listowel (CB)]

My Lords, will the Minister assure the House that, if this vaccine is accepted, the infrastructure will be in place to enable it to be administered swiftly to as many children as possible? Are health professionals trained and ready to administer the vaccine, if it is decided to accept it?

[Earl Howe]

The main practical constraint is manufacturing the vaccine. However, I assure the noble Earl that the NHS is well equipped to deliver the vaccine once it has it in its possession.

Pensions Bill

Monday 24th February 2014 Lords Chamber

Report (1st Day)

15:07

Clause 2: Entitlement to state pension at full or reduced rate

Amendment 1

Moved by

[Baroness Hollis of Heigham]

1: Clause 2, page 2, line 7, at end insert—
“( ) Regulations may provide for circumstances in which a person may opt to have a year treated as a qualifying year if by aggregating income from two or more jobs, that person’s earnings are equal to or greater than the lower earnings level for that year.”

[Baroness Hollis of Heigham (Lab)]

I am grateful for the tolerance of the House in allowing me to delay speaking for a moment or two while noble Lords are leaving the Chamber. They are clearly underwhelmed by the issue that we are about to debate.

I strongly welcome the new state pension. Pensions are attached to the waged labour market. Only one job in four created since 2008 is, according to the Work Foundation, permanent; 1 million or more are zero-hours contracts with no certainty of any work at all. Hundreds of thousands of others are short-hours contracts and, along with other non-standard employment patterns such as term-time working, job sharing and so on, comprise 40% of all jobs—I repeat, 40%—as employers seek to match a flexible and irregular labour force to flexible and irregular demand.

Part-time work and flexible work may suit, and does suit, many women, students or older people on a pension. Those jobs are in cleaning, catering, domiciliary care—involving 150,000 people—hotel and retail, and are usually paid at around minimum wage level. Very many of those people will not be building a state pension. Our pension structure, both state and private, has not yet caught up. It is 10 or 15 years behind as the plates shift in the labour market.

This amendment, which is permissive, seeks to put a pension floor under workers who may work in several mini-jobs and put in quite long hours—30 or so a week—but who cannot, under rules set out decades ago, build themselves a new state pension. If they are in one job with sufficient pay they will build a state pension, but if they are in several jobs with identical pay they do not. If your Lordships agree today we can begin to do something about it.

Under Governments of both parties we have sought to credit people into the national insurance system for a state pension where, for good reason, people are not in waged work. They include mothers of young children, disabled people and carers. Universal credit, which I strongly support, will credit another 0.8 million people into national insurance, I understand.

So where are we? From 2016 you will need 35 years’ worth of credits or payments into the national insurance system to get a full state pension. If you are unemployed and on JSA, and later on UC, you are credited in for free. If you have a child under 12, are a grandparent caring for a child whose mother works or are on disability benefits or carer’s allowance, you are rightly credited in for free. Your Lordships have over the years been at the forefront of pressing all Governments to bring such groups rightly into the national insurance system. If you earn above the lower earnings limit, or LEL, at £5,700 a year you come into the national insurance system for free. If you earn more than £7,500 in a single job you come into the NI system but pay. If, however, you work 30 hours a week and earn £11,000 a year but in several, splintered jobs, you cannot add the pay together to get above the LEL. Come retirement, you do not have a decent state pension.

Hence this amendment. It seeks an entirely permissive way in which to future-proof our state pension structure for those in the new flexible economy who work in and combine mini-jobs, by allowing them to combine the earnings from several jobs for a pension if that takes them over the LEL at £5,700. In the past, perhaps 50,000 people, mostly women, were affected, especially in rural areas, as they stitched together a patchwork of cleaning, fruit picking, bar work and so on, and they relied instead on their husband through the married women’s dependency pension. That pension, which would have protected her, is being abolished. She—or you, or we—is on her own and will not get any state pension from her patchwork of mini-jobs. From now on she gets nothing at all. The reason is that the labour market has changed dramatically in the past decade or so with the growth of zero-hours and short-hours contracts.

Short-hours contracts guarantee part-time work for three, 13 or maybe 23 hours. Zero-hours contracts, however, do not guarantee you any hours at all. You may in practice work 10, 15 or more hours fairly regularly. Equally you could find at the beginning of your shift, 10 minutes before you are due to start work, that there is no work for you: you get no pay and go home. I understand that every Domino’s Pizza worker is on a zero-hours contract—ZHCs—as are hundreds of thousands of staff in McDonald’s, Boots, Burger King, Subway, Wetherspoon and Sports Direct. They work in food joints, call centres, customer services and domiciliary care; they are cooks, cleaners, drivers and waiters; they are agency workers—almost all of whom are on zero-hours contracts. Most are on, or on around, minimum wage. Far from this being a shrinking sector of the market, the number of such contracts is increasing rapidly and very many of those workers will not be building a new state pension.

15:15

How many people are affected? Labour force statistics show 250,000—from a very small sample—but everyone, including the ONS itself, thinks that this is a severe underestimate. The chartered institute of personnel directors polled 2,000 employers and believes that about a million people are on zero-hours contracts alone, excluding other short-hours contracts. The research of the Resolution Foundation and the Work Foundation works with these figures. The independent research by Mass1 of 5,000 union members for Unite includes all types of short-hours contracts, including zero-hours contracts, and estimates that they affect 5.5 million people. Some zero-hours contracts are in better paid IT or FE and above the lower earnings limit. Some may offer regular work; some may go to people who are in their 60s and are happy to amplify an existing pension. But how many who do need to build a pension are earning below the lower earnings limit of £5,700 in one job? Of these, how many are running alongside it another job, also below £5,700, which, added together, would bring them into the NI system and give them a pension? Of those, how long may they work in this way, outside the NI system, so that over the years ahead they cannot make good their shortfall? Finally, of those in several mini-jobs, how many may none the less come into the NI system through credits, because they have a child or because they are on universal credit?

My data come from all the existing research that I am aware of. With the different sample sets and with cross-cutting the findings—which I have done as honestly as I can—I can only make an estimate, so I apologise that the data do not allow more precision. Half of those under the age of 30—3.75 million, the Mass1 survey suggests—are on short-hours contracts of some form or another. Usually, they will not get credits, not even for children, or qualify for UC if they are single people, which they usually are, and living at home, as often they are. From the personnel directors’ survey of zero-hours contracts, nearly 40% work under 16 hours a week, in other words, below the LEL. Of all part-time workers in April 2013, 30% earned below the LEL, the entry point to NI, according to Unite. A third of those run other part-time work alongside their first short-hours jobs and two-thirds of those second jobs are at minimum wage or also below the LEL.

Such patterns of work may continue for many years. It is not a question of this being temporary, for students who will soon be in full-time jobs. Such patterns may continue for many years. The chartered institute of personnel directors’ polling of employers shows that 40% of zero-hours workers have been with their employers for five years or more and 20% for 10 years or more. In that time, most of them will not be building up a state pension. If in that period they cannot earn above £5,700 in any one job, they will not qualify for an adequate state pension, whatever their total wage. I calculate as best I can—it is a guesstimate—that perhaps 250,000 people, very often in their 20s, are working in two or even three part-time jobs, each of which is below the threshold but which, aggregated, could bring them into the NI pension system. Most want but cannot get more hours in any one job. They might earn £11,000 from two jobs and may even pay tax, but they cannot build a state pension for the simple reason that their wage comes from two jobs, not one, and they are not allowed to put them together.

In the past, we were told that their pay could not be aggregated for national insurance purposes because you could not divi up employers’ national insurance among different employers and that, in any case, the numbers were small, were temporary, were declining and UC would sort it. Not one of those statements do I believe to be true, and we need to rethink the issue.

UC will indeed help some and I welcome it, but it will not usually help single people—the largest group—nor usually women without younger children or households where the joint income, including his income, floats them off UC altogether. Nor are the numbers small and declining: I estimate the figure to be some 250,000, and it is growing. Given the real-time information built into UC, we now know who gets what without burdening employers. In other words, the old obstacles to aggregation have gone. In any case, do we actually need an employer’s contribution? After all, those on benefits such as JSA have no employer, do not pay and are in the system, and those in a single job earning £7,000 or so do not pay but are in the system.

This Bill rightly—and I congratulate the Government on it—brings 4 million self-employed people into the new pension system without an employer’s contribution but paying just £2.70 a week. We could bring short-hours workers, including zero-hours contract workers, into the system by credits, as we do the unemployed, or by payments, such as with the self-employed. We could use voluntary buy-back NICs when people approach retirement, except that the Government currently will not allow us to do so because it is not possible to go far enough back. The amendment does not propose a particular solution, although I can think of several. We need departmental resources to see which makes best sense. The amendment as moved is permissive and would cost no money at all.

It is said that future regulations may allow this sizeable cohort of people—I believe there are a quarter of a million or more at any one time and perhaps several million people over their working lives—to come into the NI system by whatever route any future Government may choose, or indeed not choose. It would mean that in future, if we wanted to address this issue, we would not need primary legislation because a permissive power would be built into the Bill—a statement which could be drawn down in any future policy development. Zero-hours and short-hours contracts are a growing part of our deregulated labour market.

On 5 February the House of Commons had a debate on job insecurity. Vince Cable helpfully has a review of zero-hours contracts under way, reporting, I understand, at the end of March. Needless to say, every single speaker in the debate at the other end ignored the issue of pensions. Every single piece of research—there are about half a dozen—on zero-hours contracts that I have read ignores the issue of pensions. However, we have a Pensions Bill and making this permissive amendment to it would have the DWP poised to respond swiftly to the BIS review.

The amendment would help to future-proof the Bill and allow us, should we see fit following Vince Cable’s review or beyond, to put a pensions platform under thousands of people who are poorly paid and deeply insecure with fractured work and yet are often unable to move on to better jobs. Why should they lose their state pension because we want services and employers want flexible staff around the clock? That should not cost them their pensions. It is the dark side of the flexible labour economy. This afternoon, with your Lordships’ agreement, we could do something about it at nil cost. Therefore, I beg the Minister to accept the amendment and to take this power for the future. We should not turn our backs on some of the most vulnerable and insecure workers in the country. They have difficult working lives. Let us not blight their pensions as well. I beg to move.

[Baroness Drake (Lab)]

My Lords, a sustainable welfare system needs to be affordable, but it also has to be inclusive and responsive to the realities of the contemporary labour market. For a long time, the national insurance and state pension system has been exclusive, indeed unfair, in its application to a particular group of workers, mainly women—a community which the department estimates to be about 50,000 and consisting of people who undertake mini-jobs. Each job delivers earnings below the lower earnings limit of £5,668, the access point for the national insurance and state pension system, but there is no provision for people with these mini-jobs to aggregate their earnings in a way that would allow them to enter the national insurance system. For example, a woman with two part-time jobs, earning £100 a week from each, will not accrue national insurance and pension rights unless she is covered by some alternative crediting arrangements. Someone earning £110 from one job would accrue. Yet £100 equals about 16 hours on the national minimum wage, so a person with more than one such mini-job could be working a significant number of hours.

Mini-jobs may be driven by caring responsibilities, work availability and, more recently, the increasingly common phenomenon of the zero-hours contract. Some of these women could gain state pension through their husband’s entitlement, but from 2016 they will not be able to build up an entitlement through their spouse because the new single-tier pension allows women to accrue pensions only in their own right. My noble friend Lady Hollis demonstrated the example of women in households who no longer have young children and whose spouse’s income floats them off universal credit being locked out of the pension system. The Bill makes the default position of entitlement through their spouse for many women disappear, which gives the problem fresh urgency.

My noble friend Lady Hollis has long campaigned to have this unfairness addressed and lists the rebuttals she has faced over the years: that it is not reasonable to try to share employers’ national insurance across mini-jobs; that the women will not want to pay class 1 contributions; that there are not very many of them; that their situation is temporary; that they have time to make up missing years; and, if all else fails, that there is pensions credit.

However, the urgency and the scale of the problem have increased exponentially since my noble friend started her campaign and those rebuttals are no longer valid. A much larger number of people with mini-jobs are affected as a result of the growing use of zero and short-hours contracts, where workers have little or no control over the hours they may be offered in any one week. The Office for National Statistics estimates that 250,000 people worked on zero-hours contracts between October and December 2012. However, its survey relied on people understanding that they were on zero-hours contracts, and the ONS has conceded that that may well have resulted in the true figure being substantially understated and that it may be much higher. The ONS is now running a survey to,

“obtain robust data directly from employers”.

As my noble friend said, the Chartered Institute of Personnel and Development suggested that up to 1 million people—around 3% to 4% of workers in the UK—are on zero-hours contracts.

The zero-hour mini-job problem is now systemic in nature. According to the Government’s workplace employment relations survey, in 2011 23% of workplaces with 100 or more employees used zero-hours contracts. Surveys reveal sector concentrations too: 61% of domiciliary care workers in England were employed on zero-hours contracts; and Unite and others report a high incidence in low-paying sectors such as the docks, retail, catering and social care, and they are not restricted by age. These workers face weekly insecurity in hours and pay and many are not building up entitlement to national insurance benefits. The DWP and the Government will have to address a problem that now has scale, is systemic and does not interface with the national insurance system.

When launching his consultation on zero-hours contracts, the Secretary of State, Vince Cable, said:

“It is clear that they are much more widely used than we had previously thought”,

and further that:

“Our aim through this consultation is to find which options best prevent any abuse of zero hours contracts while maximising the opportunity and flexibility such contracts can present”.

This suggests he believes these contracts will be a widespread and sustained phenomenon. The noble Lord, Lord Freud, in his normal straightforward manner in Committee when responding to my noble friend Lord Browne, recognised the growing evidence of zero-hours contracts. He said that,

“the Government have estimated their costings and needs, on the basis that it is a tiny minority”,

and that this basis,

“will be undermined. He certainly makes me even more uneasy about the neglect of this group than I was before we discussed the issue today”.—[Official Report, 18/12/13; col. GC 332.]

15:30

As my noble friend has said, little is said about the implications of these contracts for people’s access to the NI and benefit system. Universal credit may be a work in progress but meanwhile many people will be disadvantaged. A solution is needed so that those in mini-jobs and on zero-hours contracts are not excluded from the pension system. The noble Lord the Minister in Committee argued that the new systems—universal credit, real-time information and single-tier pensions—may provide a new opportunity to address this problem and to find a way of dealing with it. He said that the department intended to look more broadly at crediting arrangements to examine the possibilities of modernising and simplifying the arrangements. He was, however, reluctant to offer a timetable, implying it could take years.

Universal credit may or may not be available to help some of these workers in due course, but given the delays in rolling it out, realistically it may be several years beyond April 2016. We cannot wait that long. We need a solution that will work sooner. In April 2016 women will lose their default protection of building a pension entitlement on their spouse’s NI record; and those trapped in mini-jobs, including zero-hours contracts, are growing in number and will be excluded. A key criterion for the reform of the state system, often referred to by the Prime Minister, is that it must work for women. In this instance, it clearly does not. As my noble friend has clearly pointed out, there will still be young and single people in mini-jobs denied access to the pension system which the universal credit system does not resolve.

Already for many workers on zero-hours contracts who are low-paid, the interaction between variable hours of work and the tax credit system can be a source of concern, particularly where their hours do not fit the guidance from HMRC on regular, usual or typical hours. Eligibility under universal credit, while it is not based on a certain number of hours worked and will be based on real-time information provided by employers to the Revenue, is unlikely to be without significant problems for women and for workers on zero-hours contracts.

The new single-tier pension will be extended to cover some 4 million self- employed people—people who were previously only eligible for the lower basic state pension—a development which is to be welcomed. The political will existed to improve their position. Where is the political will which we need to deal with those doing mini-jobs, whose numbers have increased exponentially to millions?

We need a timely and fair response so that the national insurance state pension system is able to reflect the developments in the labour market and to cater for those in mini-jobs. My noble friend has suggested ways which the department could work through to find a way forward. The state pension system has not sufficiently evolved to be responsive to the modern labour market. With zero-hours contracts and mini-jobs, the scale of disadvantage embraces not only the 50,000 mini-job holders originally identified by the DWP but also the thousands—potentially millions—impacted by zero-hours and short-hours contracts.

[Lord Morris of Handsworth (Lab)]

My Lords, in supporting this amendment I am pleased to follow my noble friend Lady Hollis. I know that she has marshalled the arguments and found the evidence, which she has advanced with authority and passion. Nevertheless, in this debate I seek to reinforce two points that I feel strongly about. First, all the evidence tells us that many people will be adversely affected by not having national insurance credits, not only while they are in work but, most importantly for this Bill, when they move into retirement. Secondly, for too long we have known that this situation is occurring, but we have made the excuse that not many people are in mini-jobs. That argument no longer holds good. We are told that they are here today and gone tomorrow, so we have avoided tackling the problem.

We must remind ourselves that the economy is changing. It is more demanding and is now a truly 24/7 economy which has to be serviced, so those who are affected by the Government’s lack of effort to find a solution to the problem are hard-working people who deserve not just our praise, but our recognition that they, too, should enjoy the same rights and security as others. The answer we have received so far is that they are only part-timers, although it is recognised that many are earning less than the lower earnings limit. The evidence tell us that many are on low pay and that people have not just one mini-job, but two or even three of them under so-called variable contracts spread over five, six or seven days a week. More than that, although they are in work, they are insecure and many have no knowledge of what they will be expected to do next week or the week after. They suffer the inconvenience of not being able to plan their lives and look after their families. People in mini-jobs are doing what the Government have asked us all to do—to be flexible—but of course flexibility in this instance does not provide the security of universal credit or jobseeker’s arrangements. In fact, these people are being penalised for doing exactly what is required to maintain a stable and robust economy. In reality, this group of people should enjoy a system of deferred credits as they are making themselves ready for work for when the economy gathers momentum, as we all know it will.

I said earlier that we have not tackled this problem because we believe that not many workers are involved, but the numbers have been played down. The DWP states that 50,000 people are affected, and this figure has been widely cited by Ministers in both Houses. However, as my noble friend Lady Hollis set out so clearly in her evidence, that figure of 50,000 is a gross underestimate of the number of people in so-called mini-jobs. I suggest that anyone who doubts the number of people involved visits the interchange at Bank DLR at around 5 pm on any working day. Thousands of financial sector workers flow off the DLR only to be replaced by thousands of cleaners and maintenance workers flowing back to service the offices of Canary Wharf and elsewhere in east London. However, that is not the end of their day. Many return later at night to clean hotels and shops. This can be seen wherever there are offices, factories, shops and restaurants in the towns or cities of the United Kingdom. It is a universal pattern of work that has evolved in the past half decade.

I understand that it has been said that providing fairness to people in mini-jobs will add to the work and put considerable stress on employers, and that the computerised systems of government departments cannot cope with the strain. The technological strain is nothing compared with the mental strain and insecurity of the people who are trapped in these so-called mini-jobs. The DWP and HMRC can resolve this problem. All that is needed is some joined-up thinking. They can resolve it, because we are talking about the lives of thousands of people and about fairness. If they are not provided for today while at work, society will have the responsibility and duty to provide for them in retirement.

In seeking to tackle in-work poverty, the Government are rightly proud of raising the tax threshold incrementally to those earning £10,000. However, what is the point of seeking to tackle the scourge of in-work poverty through the tax threshold system by creating poverty in old age through the Pensions Bill? There is not much point at all. In the past, Ministers have argued that this problem of crediting people with multi-jobs may place a burden on employers. The price of not placing a burden on employers is the price of placing a burden on the whole of society in the years ahead, as some of these workers become pensioners. With part-time working and zero-hour contracts on the increase, this is a reasonable expectation for any civilised society to place on them.

In the lexicon of today’s employment pattern, we hear the language of “mobility”, “flexibility” and “creativity”, but for the economy to thrive and deliver its full potential, management too must break out of its silo mentality and be creative and flexible in its ideas, as it seeks to determine how a reward package can and should be made, to ensure that we provide not just for today’s but for tomorrow’s pensioners. At the very heart of this must be the transferability of national insurance credit. It is simple. All we need are the two major departments of state to sit down, have a conversation and, of course, seek knowledge based on the experience of the people who are at the receiving end of these mini-jobs.

I strongly believe that we should make policy on what is right and fair for the workers affected. By any logic, the Minister must admit that it cannot be right that someone can be unemployed and get a credit, but get nothing for having some type of work—so-called mini-jobs. These workers do not seek favours. On their behalf, I hope that this House will give them fairness.

15:45

[Lord German (LD)]

My Lords, the issues raised by this amendment are important, and I congratulate the noble Baroness, Lady Hollis, on her dedication to the issue over many years. She kindly told us in Committee how she was rebuffed by her own Government and today she repeated the argument that they used against her: one could not reasonably divvy up an employer’s national insurance—she used those words today again—if there were two or more such jobs. She further told us that women would not want to pay class 1 contributions. For that reason, this is an important issue. We are looking at people being able to contribute to their own pension and get the credits that they need to win a full pension in under 35 years.

Much of the discussion that noble Lords have heard today and in Committee has been about the way that people behave individually in response to the issues in front of them and about how people’s live are dealt with. The problem that we face is that there are no reliable statistics or evidence that show how individuals’ behaviour works. It is clearly possible—I heard it both in Committee and here today—to illustrate that in a way that works to the best of the argument that says that we need to move on this swiftly because there are so many people involved in a particular category. I do not mind people making contributions about the way people behave, will want to behave or are forced to behave, but I want to know how we can sort this problem out and do so in a realistic way that will result in a concrete outcome.

We are bound to hear more and more about zero-hours contracts. They are not a new phenomenon. Over the past 70 years, the notion of a job for life has all but disappeared. More and more people are spending time in self-employment, many people have more than one job and more people have part-time jobs. The single-tier pension itself is designed in such a way that an individual with a more varied work history will be able to build up their national insurance records to achieve the maximum state pension outcome, provided of course they get credited for their national insurance contributions.

The crucial issue, therefore, is whether universal credit will pick up and deal with this issue. I suspect that the answer given to the noble Baroness, Lady Hollis, when she raised this issue with her own Government, was that this is a very typically difficult issue for HMRC, given the range of information that it would require from every company in the land about who they employed and that it would have to combine the results and put them into a single file. That is of course precisely the process that is taking place, and will take place, through universal credit, which will pick up levels of flexible income including, by implication, that relating to zero-hours contracts. It is interesting that the lower earnings level, below which you do not have to pay or get credit for national insurance contributions, is £5,772 per annum at present. The Labour Force Survey figures show that those on zero-hours contracts work, on average, 20 hours a week at £9 an hour, which is enough to exceed the lower earnings limit. If the figures we have before us are to be believed, most people will be receiving enough income to receive the national insurance contribution.

The other issue about universal credit is that it will look very carefully at how it credits people and bring, as we have heard, another 800,000 people into the crediting system. For example, a single person without savings, earning below that £5,772 per annum level, will be eligible for universal credit and thereby eligible for the national insurance contribution. The question that I have to ask my noble friend is about the delivery of universal credit. In Committee, the Minister said it would be delivered in 2016-17 and the noble Baroness, Lady Hollis, said in 2019-20, although she hoped it might be earlier than that. I apologise if it was somebody else on her Benches but those are the sorts of span. If we believe my noble friend, and it is 2016-17, will this problem be dealt with from the outset by those who are then brought into the universal credit system? If that is the timetable, I ask noble Lords to consider how long it would take to put in the interim solution. In effect, what is being asked for is an interim solution between now and when universal credit comes in for a pensions system that comes into play in 2016.

What is the interim position? Do we need to ask HMRC to invent a system for itself? When the noble Baroness, Lady Hollis, asked the Labour Government for one in their time, they rejected it. I believe they said that it would be cumbersome and expensive. Do we need to have that in place or could we be reassured that, almost within the very short period of the implementation of the single-tier pension, universal credit will be in place in a sufficient and timely position so that the vast majority of people who are occupying two or more jobs that produce an income over a year of less than £5,772 at the current rates will be able to be credited? That is the key question.

[Lord Forsyth of Drumlean (Con)]

I did not participate in Committee but I am listening to my noble friend’s carefully constructed argument. Is not the point about this amendment that it is permissive? It simply provides the Government with an alternative; it does not oblige them to do anything. I cannot really understand why my noble friend is opposing the amendment while advancing that argument.

[Lord German]

It is because we have a response in place, which is the universal credit system. What matters more than anything is that the system is in place in time to capture the people who will be most affected by this in the implementation years, from 2016 onwards. That is the fundamental question and I await the answer in my noble friend’s response.

[Lord Browne of Ladyton (Lab)]

My Lords, I support my noble friend’s amendment—and, having listened to the contribution of the noble Lord, Lord German, I am delighted that I do not have to answer the questions that he posed. I suspect that the noble Lord who is the Minister for Welfare Reform had wanted to avoid having to give a date as to when the universal credit system will be functioning well enough to provide the sort of functionality that the noble Lord, Lord German, seems to think that the alternative to this amendment requires. I will listen carefully to the Minister’s response and write down any date that he gives us in relation to that. It is also a pleasure to follow my noble friend Lord Morris, who speaks with significant experience of, and great authority about, the workings of the modern labour market, and who has assisted us greatly in understanding the need for this amendment.

As my noble friend said, this issue was debated in the Commons and in Committee at some length. I have considered carefully the various government responses, as my noble friends Lady Hollis and Lady Drake clearly have. They are to be congratulated for having produced here what could be described as an elegant, permissive, statutory device that adds to the Minister’s armoury in his desire,

“to seize this issue head-on”.—[Official Report, 18/12/13; col. GC 328.]

He used that phrase in our debate when he expressed equal concern—the words are mine—as the rest of us about this issue. I believed, as did all those who were present debating the issue, that he shared our concerns. Indeed, in his contribution to the debate he indicated why he had come to that conclusion.

In support of the arguments that I set out in my own contribution in Grand Committee, I simply want to make three points today. First, the phenomenon of people working in two or more low-earning jobs is not a limited one. They are often on zero-hours contracts but certainly on short hours, with each job under the level at which national insurance contributions are made, and are therefore not building up a contributions record towards the state pension. Nor indeed is it a temporary phenomenon, as has been argued, often coming at the end of a working life. Nor is it an experience limited to rural communities, although it is very prevalent there.

Since I shared the content of my overheard conversation on the Transport for London overground train, I have consciously inquired of young people whom I meet in this city and back home in Scotland how many of them are working for more than one employer. For noble Lords who have not heard this short anecdote, I will repeat it. A few days before we debated this matter in Committee, I overheard a conversation among three young people on an overground train as I was making my way home from your Lordships’ House. It was very clear to me that they had all been working together in what I suppose we would call a mini-job and that they each had two other jobs.

What was significant about them was that two were graduates and the third certainly had a tertiary level of education. I found that surprising. I do not know why I found it surprising, but it caused me to inquire the same of other young people, and I have come to the view that this is the norm for thousands of young people in the first phase of their employed life, even for graduates. It is a significant feature of a flexible labour market and, along with zero-hours contracts, it is part of the reason that politicians, particularly Ministers, and employers celebrate its flexibility. Undoubtedly the number of people in this situation is growing, not declining.

The question of numbers leads me to repeat a point I made in Grand Committee, which has already been made by my noble friends. The Government assert that there are about 50,000 people in this category. I am not convinced by their estimate of the scale of the problem. That is based not on my experience but on evidence that has already been referred to. We await the outcome of the—I think still anticipated—BIS consultation on zero-hours contracts, which was promised in October and is due to report by the end of March, but I have not seen a lot of evidence of it. We should reflect on the fact that in the fourth quarter of 2012, the ONS estimated that there were 250,000 people on zero-hours contracts. However, a contemporaneous survey of employers by the CIPD estimated that in fact the figure was around 1 million.

As we have heard, the union Unite estimates that as many as 5.5 million people are employed on such contracts up and down the UK. Following the CIPD estimate, the ONS conceded that the Labour Force Survey, which is based on responses by individuals, more than likely understated the numbers. The ONS then announced, as my noble friends have told your Lordships’ House, that it would change the way it collected its data from autumn 2013,

“so as to obtain more robust data”.

The importance of this contradictory information is not that it goes directly to the heart of the estimate from the Government, but that clearly it must have informed the Government’s estimate. None of the estimates that the Government have for the scale of this problem is at all reliable. Therefore, your Lordships cannot be convinced that a strategy based on unreliable statistics is a reliable strategy.

Finally, the Government’s responses appear complacent. Steve Webb, the Pensions Minister, suggested in the Commons that there was only a tenuous link between having multiple jobs below the LEL and being unable to build up the required 35 years’ contributions, and referred to this problem as a temporary phenomenon. In our debates in Grand Committee, the Minister promised that universal credit would resolve the issue. The noble Lord, Lord German, has already gone through the pros and cons of that in some detail, and my noble friend Lady Hollis significantly undermined that argument by pointing out the categories of people who are in these jobs who would be denied universal credit in the first place and therefore the consequent crediting of national insurance contributions.

I say with respect to the noble Lord, Lord German, that that is the one point of our argument that he did not engage with. Even if universal credit is the answer for some of those people, it cannot be the answer for all people in this category, and in the absence of reliable statistics, it is not easy to see what proportion of people would benefit from a universal credit system that met the coincidence of engagement with the challenge that the noble Lord, Lord German, set out.

What do we need? We need an alternative. We can have no confidence that the approach of either the Pensions Minister or the noble Lord, Lord Freud, will be sufficient. If it is not, the net effect will not only be to deny access to the modern pension system to a significant number of people, most of whom will be the least well paid working people in our society. As the numbers grow—and they will—it will also, in the long term, severely undermine the pensions policy that is now agreed across your Lordships’ House, because it will increase the number of people who have to depend on means testing in retirement.

We support the amendment tabled by my noble friend. We want to make it clear that this is a solution for now, in the context of the Bill. We hope the amendment will be agreed and will become law. It will then be for the Government to take it away and for the Minister to seize the opportunity to use it to address the issue head-on.

16:00

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)]

My Lords, I thank the noble Baroness, Lady Hollis, for the amendment which gives an opportunity to debate again a most important issue which is close to her heart and with which I am sympathetic. Over the years we have had quite a few discussions on how the issue is best addressed.

Single-tier reforms strengthen the contributory principle and reduce disparities in outcomes between individuals. They are designed to fit with the working lives of today’s young people, who should find it much easier to plan for the future, counting on a full single-tier pension. At first glance, it may appear that the national insurance treatment of those in low-paying mini-jobs is at odds with these principles. However, I would like to explain why we think mini-jobs are not the problem they might seem to be and why, looking at how to adjust the national insurance system to combat this perceived problem, we may end up with solutions which create more problems and knock-on impacts than they solve.

The noble Baroness has been as assiduous as always in exploring all the sources to illustrate her case for change. Her central estimate was that 250,000 people would be affected. I continue to be confident in the department’s estimate of the number who—if we were to aggregate their earnings in the way proposed—would gain that extra qualifying year. That number is some 50,000 at any one time, which is fewer than one in 500 workers. This number makes perfect sense when you look at the opportunities the national insurance system provides for gaining state pension qualifying years. The entry point for workers is through the lower earnings limit, which is set at £109 a week. This is £40 below the primary threshold which is when national insurance starts to be paid. At the national minimum wage, this is just 18 hours a week for a year or six months of full-time work. There is also a comprehensive crediting system that recognises caring responsibilities and those unable to work.

The 50,000 figure is a snapshot from 2012-13 and individuals may gain a qualifying year in other years. In the single-tier system, full pension entitlement is achieved after someone has built up 35 qualifying years. People can therefore spend a third of their working lives outside the national insurance system and still gain the full single-tier amount. This was a deliberate part of our design, to recognise that people have increasingly varied careers and working lives, and yet can still reasonably count on a full single-tier pension in their retirement planning.

My noble friend Lord German inquired about the timetable for the introduction of universal credit. We are planning to pull that in for the bulk of people, virtually everyone, in 2016 and 2017. That would certainly include everyone in the workforce. The numbers beyond that are some of the people who are currently on ESA on a long-term basis in the support section.

If we were to take a similar snapshot to that of the 50,000 in 2012-13 but in 2017, we would find that individuals with the same characteristics may well be getting a credit through universal credit. This will bring at least a further 800,000 people into national insurance credits. For instance, the partner of the claimant or those on very low earnings—below the lower earnings limit—will be brought into universal credit because the Government believe that it should pay to work.

We have had a parallel discussion on zero hours, which has clearly been a source of concern around the Chamber today. There is concern at one level from the employment practices perspective. As noble Lords are fully aware, BIS is consulting on this issue. There is also a degree of uncertainty around the prevalence of this practice and whether it is increasing; as noble Lords have pointed out, the ONS is looking closely at evidence for this. However, we know that the proportion of women with two or more jobs is similar to the proportion of 10 years ago; in other words, around 5% of all workers. We are not talking about using the word “exponential”, which I have heard around the Chamber once or twice this afternoon. The number of women in full-time work rose in the past year by more than 270,000, and the number of women in two jobs actually decreased in that year by 25,000.

Clearly, when we look at zero-hours contracts, I need to make the point to the noble Baroness, Lady Drake, that I did not indicate in Committee, nor have I indicated, that the number of individuals on those contracts was small or in some way insignificant. However, the question at hand here is about access to the national insurance system and there is no evidence to suggest that being on this type of contract presents barriers to entering the national insurance system because of low pay.

Figures from the Labour Force Survey and the Chartered Institute of Personnel and Development—the CIPD—both show that those on zero-hour contracts work an average of around 20 hours a week, as my noble friend Lord German pointed out. This is enough to exceed the lower earnings limit even on the national minimum wage of £6.31 an hour. Data from the ONS suggest that the average wage for those on a zero-hours contract is nearer £200 a week. In response to the point of the noble Lord, Lord Morris, the Labour Market Statistics show that full-time employment in the year is up 408,000, and part-time employment has gone down by 12,000.

I understand that the amendment is permissive, and even without any evidence of a significant problem one might think it would be helpful to increase the Government’s options in this respect. However, it is simply not necessary, given the extensive regulation-making powers already available, to modify the crediting system. In response to my noble friend Lord Forsyth, it is hardly useful to have redundant legislation on the books.

This amendment would allow people to opt in to have their earnings aggregated. It is not clear that this can be achieved without requiring a very high evidence base. For instance, if we introduced a system where people could effectively send in the employee’s rate of national insurance, we introduce incentives for employers to play the system. Some will contrive to avoid employers’ national insurance but without disturbing their employees’ national insurance position. The noble Baroness, Lady Hollis, suggested that the employer need not pay national insurance. However, even if that were the case there is still a significant burden on the employer. We also could not verify the wages without disproportionate cost. This would incentivise people to underreport earnings to get into the system on the cheap.

Aggregating earnings would have significant consequences for employers, including those people who would not now consider themselves to be employers. Take, for instance, the position of a woman whose job it is to clean private houses for a few hours each day of the week. The nature of the work would mean that she is likely to be employed and could have a number of jobs with different households. Under aggregation, each of those households would need to operate a Pay As You Earn scheme. They would need to contact HMRC to open such a scheme. They would then need to obtain and familiarise themselves with payroll software and use it to report earnings under real-time information to HMRC every time they pay their cleaner.

In response to the question from the noble Lord, Lord Morris, on joined-up thinking between the DWP and HMRC, I am pleased to say that we are actually working—I suspect for the first time—in a very joined-up way to get the RTI system to work. However, we do not want to require employers who would otherwise not have to have a PAYE scheme to open one up on an ad hoc basis. The point discussed by the noble Baroness, Lady Hollis, which would allow people to class themselves as self-employed, seems slightly odd given the concern about job security that motivates the debate we have just had over zero-hours contracts. Blurring the line between employment and self-employment is a minefield from a tax policy perspective. It introduces incentives to create more mini-jobs and to play the system.

The processes required to capture and collate earnings from people in mini-jobs cannot be achieved by simply tweaking the system. Moving to the aggregation of earnings from mini-jobs can only sensibly be considered under the work on the operational integration of income tax and national insurance contributions announced at Budget 2011 by the Chancellor. As noble Lords will be aware, national insurance liability is calculated on a per job basis but income tax liability is aggregated across all sources of earnings so the issues are similar. The Government concluded that given the scale of the change that operational integration would entail and the amount of change that employers are already managing, including the introduction of real-time information, they would await further progress on these before moving forward on tax/national insurance integration.

In the short term, we are not complacent and are determined that people who do the right thing and work are treated fairly. Beyond a radical overhaul of state pensions in this part of the Bill, specifically to make it fit for today’s workers, I have described work that this Government have undertaken to expand crediting coverage for low earners through universal credit and improving monitoring of zero-hours contracts.

This amendment may be intended to place a marker to nudge the Government into taking action, but it comes without strong evidence of a problem and the type of action that it promotes is piecemeal tinkering, which could create perverse outcomes and new unfairnesses, especially in the tax and national insurance system. I hope that the noble Baroness will withdraw her amendment.

16:15

[Baroness Hollis of Heigham]

My Lords, first, I thank very much my noble friends Lady Drake and Lord Morris for their powerful and moving speeches. I thought that their contributions were extraordinarily impressive, and I am sure that they moved many people in this House.

I shall address first the comments of the noble Lord, Lord German, many of whose points were dealt with very effectively by my noble friend Lord Browne from the Front Bench. Basically, he ran two arguments. First, he said that most of the people concerned would be on UC, and he pressed the Minister instead on UC. Secondly, he commented on the problems for HMRC in combining possible jobs. On the first argument, on UC—and I am very much in favour of universal credit—we agree the statistics are that another 800,000 should come into the NI system as a result of crediting arrangements. That is great, but the point is that UC is income-based and that income is surprisingly low. No one has mentioned that today. For example, if you are a single person and you earn more than £4,000 a year in any job, well below the lower earnings limit, you are above the level for universal credit so you do not get credited in. If you are a married woman, your husband is in work and you have two children—I am aiming for a generic family, if you like—and if he is earning more than £12,000 a year, that family is not entitled to UC, apart from housing benefit. She may be earning £4,000 or £5,000, but that will not give her a credit through him. Those two groups of single people and married women, which my noble friend identified and I seek to identify, are both outside the reach of UC. What is worse—and neither the Minister nor the noble Lord, Lord German, mentioned this—is that it is happening at the same time as we are withdrawing the married woman’s dependency pension of 60% that she would have had as an alternative and could have relied on. That is what is new. If she cannot get into the pensions system through universal credit, she cannot get in at all, and that has been created and constructed by this Bill.

The noble Lord, Lord Freud, said that he was confident of his figures of 50,000 people, but he was equally confident about two years ago when we were debating welfare reform and the figures then were 20,000 or 25,000. They have doubled exponentially in the past two years or so, and they may go on to grow equally geometrically, as opposed to arithmetically, over the next few years. He says that his statistics are broadly in line, but I do not know about that. His statistics are based on labour force statistics offered by the ONS, which the ONS now says are unreliable; that therefore means that his statisticss are unreliable. My statistics of 250,000 are the best that I can do with all the evidence there is, overlaying different subsets. I accept that, but I am as confident as I can be on the evidence that exists that at least 250,000 people and maybe more—it is an increasing problem—are outside the national insurance system and will not be credited in either through UC or any caring responsibilities.

The noble Lord quoted average income. An average income is pulled upwards by the proportion of people who work in IT, for example, which is highly paid, or in further education, where they are paid piecemeal. The Chartered Institute of Personnel and Development—which the Minister quoted several times, although he did not quote this—says that 40% of the 1 million people who are employed work below 16 hours per week. We know that the majority of those are on, or on around, the minimum wage: for example, in jobs in domiciliary care, hotels, waiting, driving or security. A mean average is no use in this, because the figures are skewed hugely upwards by people in IT, who may be very well paid—perhaps at £50 per hour—and come within zero-hour contracts. We need to see how many people are below the LEL in one job and work in a second job that is also below the LEL, which together would bring them into the NI system from which they are currently excluded. I repeat: that figure is likely to be 250,000—nearly every single person and most married women.

The Minister says that it would produce all sorts of perversities and paradoxes. There is no greater perversity than the situation in which, if you are unemployed and on JSA, you are credited in for free national insurance, but if you work 30 hours a week in two 15-hour jobs, earn £11,000 and pay tax, you cannot get into the NI system and get no state pension. Which of those is the perversity? Do not work and you are in for free; or work as best you can, by putting jobs together, and you are outside the system. Is that right or decent? It is not. I would like to test the opinion of the House.

16:21

Division 1

Ayes: 215

---

Labour: 140
Crossbench: 58
Independent: 4
Democratic Unionist Party: 1
Conservative: 1
Green Party: 1
Plaid Cymru: 1

Noes: 210

---

Conservative: 136
Liberal Democrat: 66
Crossbench: 5
Independent: 2

16:34

Amendment 2

Moved by

[Baroness Hollis of Heigham]

2: Clause 2, page 2, line 13, at end insert—
“( ) A person is not entitled to bereavement support payment and is exempt from work conditionality as specified in section 30(1A), if he or she has reached pensionable age.”

[Baroness Hollis of Heigham]

My Lords, I should like first to say a word about procedure. I am glad to see the noble Baroness, Lady Anelay, in her place; that is helpful. This is a paving amendment that the Public Bill Office assures me is appropriate. Amendment 21 in this group—and only Amendment 21—is consequential on Amendment 2. Therefore, any vote on the first amendment is, in the words of the Companion, also a vote on its directly consequential amendment—although it does not, of course, determine any other amendments in the group. If it were not directly consequential there would be no point in a paving amendment. As I have carefully taken the clerk’s advice on this, I hope that the Minister and the House will agree with my statements. If the Minister does not agree that Amendment 21 is consequential, perhaps he could indicate so now because I would not wish to waste the House’s time.

[Lord Freud]

I am happy to accept it as consequential.

[Baroness Hollis of Heigham]

I am grateful to the noble Lord, as this allows us to have a substantive discussion on bereavement—which I know concerns many of your Lordships—in good time and not in the late hours this evening. I know that the Minister is sympathetic to the situation of distressed children and widowed parents. I hope that I can refer generally to widows, as there are three times as many women who are bereaved with children as men—and I know that the Minister means well by them. I hope that the House will agree that this is neither a party matter nor, as it is permissive, a cost matter, as the cost is almost too low to estimate.

This is a modest amendment that seeks to help widowed persons avoid additional pressure in the most stressful and distressing period of their lives. Three-fifths of bereaved parents are in work at the time of bereavement—virtually all fathers and around half or so of mothers. Most fathers with a terminally ill wife continue, or continued, to work. Most mothers, however, give up their jobs to care for their husband. Fathers would normally go back to work after a couple of weeks; indeed, they are often anxious to do so. Some mothers may feel able to do so as well, depending on the age of their children and the nature of their job. However, many widowed mothers were not in work, because they had younger children, or they had stopped working to become carers and—this is key—many mothers who were in work when their husband died drop out of work for some time while they support their children. If they return to work later, it may be to a different job, to one that is part-time or less demanding. Whereas work seems to be essential and continuous for fathers, it becomes secondary and broken for bereaved mothers.

The Government are reconstructing bereavement benefits, with more money paid as an up-front lump sum and less as a monthly payment—which, at £400 a month, will be paid only for 12 months and topped up by universal credit while the claimant is out of work. After 12 months, bereavement support payments stop and, if the parent does not return to work, she may draw her full income from UC. Being on UC normally entails work conditionality—entering or re-entering the labour market. The Minister has agreed—for which I am delighted—that for kinship carers, work conditionality associated with claiming UC should not apply for 12 months after they have taken on the care of children. But—and this is the point of my amendment—work conditionality for widowed parents, unlike for kinship carers, will kick in after six months, not 12 months, while they are still on bereavement benefit. That benefit runs for 12 months precisely because the Minister, in all decency—and I respect him for it—recognises that they need that support for 12 months. Surely work conditionality should be aligned with those 12 months.

The Minister said in Committee that he thought that six months’ relief from work conditionality while on bereavement allowance, if the claimant receives some UC top-up, was “generous”. I confess that that shocked me. It is generous only by comparison with the situation of someone who is not a bereaved spouse, and I think that that is not a proper comparison. If the mother has returned to work, or wants help to do so earlier than that—and some will—that is fine, but I do not think it right and decent to require her to attend work interviews and full work conditionality and job-hunting after six months, when she has grieving children who need her more than ever.

In Committee, the Minister justified this by saying that work conditionality after six months,

“is necessary to help them adjust and regain control of their lives”.—[Official Report, 15/1/14; col. GC 146.]

I was shocked by that as well. From my experience, the exact opposite is true. If work conditionality kicks in at six months while the woman is still on bereavement benefits and she is not ready for it, she loses what little control she has in handling her family life. Instead, that power is transferred to the DWP—perhaps to a 23 year-old young man in a local benefit office who, I expect, will be well intentioned until the pressure of targets bears down on him. He is probably a young man without children and without any experience of bereavement. It is assumed that he knows better than she does what is best for her and her children in their grief. I hope that he asks his own mother for advice, because he probably will not have a clue.

I do not think that that is acceptable. We are turning this young man at the age of 23 into her parent and treating her as the child, denying her, as a parent, the ability to look after her children in the way she believes is best. This is a sort of cruel-to-be-kind, tough-love philosophy towards a grieving widow and severely distressed children. Tough love is perhaps fine for youngsters who are on JSA and do not want to get up in the morning, but we are bullying into seeking work a widow with children who is still numb with grief and hugely distressed. We really cannot have that.

In this paving amendment and the consequential amendment attached to it I am not arguing that a widow’s benefit should be increased, although personally I would support that. The amendment is not about more money; it is about allowing widows to decide what is best for them and their family in the immediate aftermath of bereavement. For me, the immediate aftermath is the first year during which all the anniversaries occur—Christmas, his birthday and the anniversary of his death. I know, as do many of your Lordships, that that first year is the hardest.

I ask your Lordships to put themselves in the widow’s place. Her husband’s death may have been sudden, due to an accident at work or in the car, and she is still traumatised by the shock, or he may have died after an illness such as a stroke or cancer and she is exhausted through caring for him. She is wiped out and her mental and physical health is pretty fragile. It is just at this time when, although she is exhausted herself, her children are distraught and most need her. Children I know who have experienced the death of a parent have regressed into bed-wetting, nightmares, broken sleep and school phobia. They have lots of mysterious tummy aches and frequent headaches, and they display challenging and clearly needy behaviour. Irrationally, they suffer anguish that in some way they were responsible for their father’s death. They feel guilty that they had never told the lost parent how much they loved him and are fearful that they may lose their mother as well.

Older children worry about their mother’s safety if she is late back, or they fear they may lose their home. They are profoundly upset a second time over at their mother’s grief. Stoically they try not to weep, as that makes it harder for her to cope. “He is not here to hug me”, said one young girl. They dream of him and experience severe depression. Children need their surviving parent to be physically available for them. They need the trust that exists between a child and his mother to discuss their father’s death. Emotional availability follows from that. In Committee, the noble Lord, Lord German, quoted very movingly from research into the effect of bereavement on children’s later lives, from delinquency to poor mental health and suicide risk, and the noble Baroness, Lady Finlay, mentioned cases of multiple deaths.

Every family is different, as is the work status of any bereaved parent, but this amendment, at no cost, permits the bereaved parent to decide what is appropriate for her and her family. We know that currently, bereaved parents do not take all the time off that they could from work. They do not exploit the system; they do not abuse it; they do not milk it. They want to work when they feel fit enough and their children are steady enough, but only they know that, not the DWP or the local benefit office. That is the point of having 12 months of bereavement payments. Insisting on work interviews and work conditionality at six months, or even leaving it to the discretion of 23 year-olds in local offices, adds stress to the suffering of the parent and distress to the pain of the child. We really should not do that.

The amendment would give widowed parents a breathing space from work conditionality alongside a bereavement payment while they rebuild their fractured lives. This House has always looked out for widows and children and I hope that it will do so again today. I beg to move.

16:45

[Lord Freud]

My Lords, the House may find it helpful to know that, although I do not agree that a change to conditionality in respect of only this specific group of amendments is appropriate, I am proposing to conduct a wider review into the circumstances where children could be in considerable distress and where it is clear that conditionality should not be applied. I am not attempting to curtail debate but it may be of advantage to the House to have that information in order that we may have a more informed debate on this group of amendments.

[Baroness Finlay of Llandaff (CB)]

My Lords, I have Amendments 18, 19 and 20 in this group. I am grateful to the Minister for informing us of his proposal to hold a review of the level at which conditionality is set in relation to considerable distress in bereaved children. I appreciate his concern and the time that he has spent with me and others in looking at the problems of bereaved children.

However, I must point out that bereaved children express emotions differently from adults. Indeed, the most distressed children often appear almost blunted to the death of the parent and are simply quiet, withdrawn and can even appear disinterested. I hope that there will be no attempt to assess an individual child’s distress because I can foresee the problem of some families blaming that child for not caring enough, and therefore blaming that child for somehow not falling into a group that could have had more benefit. Sadly, transference occurs in bereavement and sometimes bereaved parents project their anger at the death on to the way in which the bereaved child is behaving and are on a very short fuse with the child, which compounds that child’s isolation. These are complex situations and there are serious long-term sequelae.

When a parent dies the support that the state offers must be easy to understand. It must support the widowed parent in providing support to their grieving children. Noble Lords are well aware that the death of a parent places enormous pressure on the rest of the family. The surviving parent has to both provide stability to children and adjust to life as the sole carer and earner while dealing with their own grief as well as that of their children. Quite often they have had no time to begin to adjust to impending widowhood—for example, in any sudden death, whether it is through a road accident, manslaughter, murder, suicide or whatever—and yet their children’s need for stability following the death of a parent makes it vital that the surviving parent is available to them, is present and is able to respond to their needs, which may change almost from minute to minute, hour to hour.

Stopping payments after only one year will have a significant impact on family finances but the major disruptions include the widowed parent often having to increase their working hours to replace lost income, thereby being less available to the children at the time when they are most in need of support. Amendment 18 seeks to increase the period of time that the bereavement support payment is payable to at least three years or until the youngest child has reached the age of seven, whichever is the longest period.

Can the Minister clarify the cost analysis that underpins the decision to end bereavement support payment after only one year, because one year is much too short to address a family’s needs? Removing the payment at the first anniversary of the death adds an additional pressure on the family at a time that is already very emotionally difficult when they often relive the acute episode surrounding the bereavement. Many families report that the second and subsequent years following bereavement are even harder than the first because support from friends and family tends to disappear and children can experience late effects of dealing with grief and bereavement.

The current allowance is paid until the youngest child leaves full-time education. The proposal to reduce this to a period of just one year is a dramatic change. Data provided by the Childhood Bereavement Network suggest that only one family in 28—that is, 4%—claims for less than one year. Most families would therefore receive payments under this Bill for a much, much shorter time than they would under current arrangements, especially if the children are younger. In Committee I described the shortening of this period of time as cruel. A year is a very short time in the life of those bereaved, whether adult or child.

The current benefit is paid until children leave full-time education in recognition partly of the complex emotional needs of young children. Removing the payment when the dependent children are very young is particularly worrying. Pre-school children become very clingy when they realise that one parent is no longer around. They require stability and security. The grief of losing a parent is challenging enough without compounding the disruption caused by the stress of worsened financial hardship for the surviving parent with the premature ending of a bereavement support payment.

Amendment 19 seeks to clarify that the bereavement support payment will be payable to a widow who is pregnant at the time of her spouse’s death. Can the Minister confirm that when the spouse of a pregnant woman dies the allowance would be payable to her? Amendment 20 seeks to clarify what support would be offered in the tragic event of both parents dying. Can the Minister confirm that in the event that both parents die, the guardian of the surviving children under the age of 18 will be eligible for any bereavement support payment which would have been paid to a surviving parent had that parent not died, and that the guardian has six months in which to lodge the claim? Can the Minister also confirm that the changes to the bereavement support payment do not affect the guardian’s allowance? Finally, can the Minister confirm that changes to the bereavement support payment do not affect child benefit?

[Lord Rix (CB)]

My Lords, I cannot claim to be either a young widow or to have young children. My children are actually middle-aged but my wife died a year ago last week and I know perfectly well that a year is really not sufficient time to put to one side all the problems which arise from the death of a partner. I was married for 64 years and, both for my children—middle-aged as they may be—and for me, the grief continues. I know perfectly well that if you are a young widow with young children, to be asked to change your life or to look at the possibility of going into work after six months is absolutely absurd. I support both these amendments with all my heart.

[The Earl of Listowel (CB)]

My Lords, I am sure that the House will want to reach a conclusion on this debate as soon as possible, but as treasurer of the All-Party Parliamentary Group for Children I would like to express my strong support for Amendment 21, tabled by the noble Baroness, Lady Hollis. I also pay tribute to the Minister for the care with which he has clearly been considering this very sensitive matter. That does not surprise me given that his great-aunt, Anna Freud, set up the Hampstead War Nurseries towards the end of the Second World War. She dealt with children who had been separated from their parents and provided them with much needed care. She also made forensic observations of what happens when a child is separated from the parent, looking at the different sequelae of those changes. What she discovered was that while she could feed the children well and provide exercise so that they were healthier, the emotional damage done to them as a result of being separated from their parents was simply huge. The concern must be that if widowed parents are not well supported and given all necessary consideration they may emotionally withdraw from their children, with all the adverse consequences highlighted by the noble Lord, Lord German, in Grand Committee.

[The Lord Bishop of Wakefield]

My Lords, having been one of the signatories, along with 26 other Anglican bishops, to the letter that went to the Daily Mirror last week, I am loath to speak too much about amendments to government legislation. However, on this particular occasion, because bereavement support is such a notable part of our business and ministry, I am very bothered about the direction in which the legislation is going.

I should like to reinforce what was said earlier by the noble Baroness, Lady Hollis, about cost. It seems to me that it is not a question of cost but of how long support is given to people. What many clergy learn and what people often forget is that, as the noble Baroness said, it is not just the first three months which are difficult—the problems continue throughout the whole of the first year. More than that, it is a matter of showing support for people over the whole period of time that the emotional pain of bereavement continues to be very severe. The issue of supporting people financially has an impact on that emotional pain.

Speaking on behalf of a group of people who spend so much of their time trying to support those who have been bereaved and who need to understand how they can be helped, we might take good note of these amendments. They will not cost more money. They have been tabled simply to try to offer more support over a longer period of time—not only in the raw first year, but over the first three or four years, and particularly where young children are involved and the emotional impact is even greater.

[Lord German]

My Lords, these are delicate and sensitive issues. I pay tribute to the noble Baroness, Lady Hollis, for using her ingenuity to make sure that these issues are right at the forefront of our discussion on Report. The major issues have already been raised and were expressed from these Benches both at Second Reading and in Committee. The evidence I quoted from the research literature on these matters identifies absolutely clearly that one needs to be extremely careful when dealing with these very difficult times for families. Indeed, what we should recognise is that some people may be able to regain a sense of normality more rapidly than others. You cannot make a distinction or see clear lines between one family and another. It seems that this is very much about the circumstances in which people find themselves and how those positions are managed and handled. The issues raised by these amendments have to be a source of major concern to Members on these Benches, and as I say, they were raised earlier.

I am grateful to my noble friend Lord Freud for giving us an opportunity to discuss these matters in considerable detail between the Committee stage and today, and to help shape a Government response which adequately meets the concerns expressed. An adequate response from the Government has to satisfy the discussion we had in Committee and be highly relevant to the issues already raised today in this Chamber about these sensitive matters, particularly relationships within families. I want to see a process that meets the issues and was raised in that evidence. This is what I want to challenge and talk to my noble friend about.

17:00

As many people will know, a review has little relevance if it does not result in concrete outcomes. My discussions so far with my noble friend have given me considerable confidence that we will see a changed regime at the end of the review. There is a second issue, which relates to speed. We need to make sure that the regulations, associated not really with this Bill but with universal credit, are in place and that there is a chance for people to put their views on record to that review. Quite clearly, a normal government review of this kind would not give a swift response, but we need to get that response in place before people are brought into the universal credit fold.

Therefore I have a number of questions about my noble friend’s review. The first is about scope. So far today, the amendments have been about specific parts of the conditionality regime. Will my noble friend confirm that his review will not just be about the children of married parents, but also of those in a partnership where one is bereaved and the children find themselves in forms of distress? Will it also include situations where a child loses a brother or sister, or those who flee from violence? Violence is often a cause of people fleeing, and of great distress to those children, yet distress to children is a difficult thing to define—as the noble Baroness, Lady Finlay, described. Is it not rather about the situations in which children find themselves in distress? Is that the purpose of this review? Is it about where and how we see that distress occurring, so we describe the circumstances, rather than the actual distress itself? That would be crucial in ensuring that we get a powerful outcome.

Does my noble friend have the powers to bring in new regulations without putting them in the Bill? Does he have the power to make sure that the results can be put into regulation and guidance, and would any new powers be required for whatever circumstance might be the outcome of his review? What is the timetable for implementing the review’s recommendations, in particular so that any family brought into the universal credit fold can be brought into the new proposed conditionality arrangements which might come out of the review? Some outcome timetable would be very useful to understanding, especially as we have a need for speed.

What assurance of independence and impartiality does my noble friend have within his review? Would he consider appointing an external expert adviser to accompany him on this review? It might be sensible to consider someone who has first-hand, practical experience of distress situations in which children find themselves. How will the Minister conduct evidence gathering? It is important that stakeholders and Members have views and can express them to the ministerial review. Who will the Minister conduct his evidence gathering with, and will he include evidence gathering from a research base, which we heard about today and which I referred to in Committee?

Finally, how will the review’s findings be reported to this House and Parliament in general? In particular, how will Parliament have an opportunity to discuss its outcomes? Given the opportunity for a wider-scoped review which will touch upon some of the situations which are excluded from the amendments before us now, it is possible that we may see before us a real opportunity for a concrete examination of these issues and, more importantly, some specific concrete outcomes which will make changes to the situation before us.

[Baroness Sherlock (Lab)]

My Lords, I am not surprised, having sat through Committee, that this has been such a powerful debate. We have had some very important, moving and well informed speeches at all stages of the Bill touching on these subjects. I am very grateful to the noble Baroness, Lady Finlay, and to the noble Earl, Lord Listowel, for sharing their expertise in these areas, as well as to the noble Lord, Lord Rix, for being willing to share with us the experience of bereavement and its ongoing impact on one’s life at any age.

My noble friend Lady Hollis laid out the case very strongly at the outset. I am delighted that the Minister is interested in reviewing the impact on families with a distressed child and how that relates to conditionality in the future. It is an excellent commitment and I look forward to seeing the results of it. It is up to my noble friend Lady Hollis to make a judgment on this but I do not think that that in any way precludes the need for this amendment, which is about a very specific category of person—people who are bereaved and who may find themselves going on to claim universal credit but who would normally be expected to go out to work because they had children of school age. Both of those things are important.

I still have with me the very powerful speech made by the right reverend Prelate the Bishop of Derby at Second Reading, in which he laid out his experience of pastoral care for the bereaved, something reprised very effectively today by the right reverend Prelate the Bishop of Wakefield. I do not need to say very much more about why this matters. Many Members of this House have had experience of bereavement in one way or another and there can be few more important issues than how a country supports its citizens when the worst of all possible things happens to them.

The Government’s case throughout this debate has been that these bereavement reforms are not really about money. From 2016 to 2020, they estimate the changes will cost an extra £110 million, because they will protect payments under the current system, but that thereafter, in total, there will be small savings. The argument is that these are reforms not cuts. The Government have said throughout that they want to simplify the system and put resources where, in their view, they are most needed: as a short-term intervention to allow a bereaved spouse or civil partner to deal with the immediate costs of the death of a partner. If support is needed in the longer term, that is what universal credit is for.

Amendments 18 to 20, in the name of the noble Baroness, Lady Finlay, address the question of how long bereavement support should be paid for. In Committee, the noble Baroness laid out some very moving circumstances in which families could find themselves, clearly drawing on her own clinical experience. I know that the Minister expressed sympathy with what she said, and it may be that his review of distress will address that. I would be interested to see what he has to say when he comes to speak.

Amendments 2 and 21, in the name of my noble friend Lady Hollis, quite specifically seek to relax the work conditionality requirement for those in receipt of bereavement support payment. This is particularly important for widowed parents. There is a difference between those who do not want to work and those who would like to work, or go back to work, but who have been forced to recognise that the reality of the state that their children are in is such that they have to choose—of course they will choose their children and not work, unless they have literally no choice. Some parents will need a longer period, both to adjust to their own grief and shock and to deal with the grief and shock faced by their children.

It has already been pointed out that the regulations for universal credit mean that kinship carers are exempt from work conditionality for a year from the time that they assume the care of the child. This was agreed by the Minister—under the persuasive pressure of my noble friend Lady Drake and others—in recognition of the fact that adults need time to adjust to being, effectively, a single parent. Why should the same principle not apply to bereavement? I would be very interested if the Minister could answer one question about his review: does he intend to change the regulations to allow bereaved parents specifically to be exempt from conditionality? In Committee, he said that he was reviewing this and that he wanted to change the guidance given to decision-makers in jobcentres. But that is a very different question altogether. I can see why that might be the way forward for distress in general—after all, distress comes in very different forms and some judgment would have to be made about when the family was distressed. The awful thing about bereavement is that it is horribly clear: one is either bereaved or one is not, and I therefore do not think there is a need for the kind of flexibility that might be needed in other circumstances.

I also worry because I have heard many cases, as I am sure other noble Lords have, where young jobcentre officials, with the best of intentions, ended up making bad decisions because they did not properly understand what it was like to be a single parent trying to juggle more than one child and a part-time job. That person could of course simply say, “I am sorry but despite whatever you say, I am not going back to work because I have to prioritise my children”. If that happens, their benefits get sanctioned. They can appeal, but do we really want them to have to go through that six months after losing their husband, wife or civil partner? When 58% of appeals against sanctions on jobseeker’s allowance are successful, how much are we willing to bet the farm on the effectiveness of decisions by individuals in jobcentres? In my case, it would be not very much.

At Second Reading the noble Lord, Lord German, used words such as “harsh” and “cruel” to describe the decision to force widowed parents back to work after six months. I believe that he was right. He cited the research, which he touched on again today, showing that outcomes for children very much depend on the effectiveness of the remaining parent in coping. That is partly about their availability to children. All that this amendment from my noble friend Lady Hollis does is to ask that those widowed parents who need to claim universal credit alongside bereavement support payment to make ends meet should not be required to go back to work for 12 months. After all, the Government have decided to focus their support on that first 12 months, so surely they should be willing simply to stretch this for the same period.

I have heard it said that a year is too long: since employers do not offer bereavement leave for a year, why should the state? It is because employers cannot do that that so many parents end up giving up their jobs when they lose their spouse or civil partner. The combination of burdens is simply too much to cope with. Universal credit is meant to be the safety net for those very parents, and it must be here. This amendment specifically recognises that the Government are planning to recycle all the resources spent on bereavement to be able to create this new system. All it does is to give them the power to recycle that money in whatever way they want, such that that reform should include this small change—that for 12 months after losing one’s husband, wife or civil partner a parent should not be forced back to work.

We should be clear that a decent society will not put bereaved children in the position of having lost one parent only to find that the other is not able to give them the level of care that they need at this crucial time. Many people in this House will know that losing a parent in childhood is a life-changing event: one never gets over it. We cannot protect children from that horror but when it happens, please let us at least say that we will support the remaining parent as best we can. It is clear that this House does not think that the Government have got this part of the Bill right. Amendments 2 and 19 give them the means and the incentive to go away and get this right. I urge the Minister to accept them.

[Lord Freud]

My Lords, losing a spouse is one of the most tragic circumstances that a person will have to endure and, as such, it has been recognised since the outset of the welfare system that the bereaved need some financial assistance. Bereavement benefits form a crucial part of state support but limited reforms over the years have led to a complex system, which has not kept pace with changes in the benefit system or wider changes in society. This legislation will address this. With a simple payment structure focusing support on the period immediately after the bereavement and a single contribution condition, the new bereavement support payment will be far more easily understood and claimed. It will mean that more people will benefit, particularly younger widows.

A claim to the new bereavement support payment is made by the surviving spouse or civil partner. The noble Baroness, Lady Finlay, raised those extremely tragic cases where not only is there one bereavement but the surviving spouse dies shortly afterwards. She is of course right that there can be no expectation that a claim is made by the surviving spouse in such circumstances. I take this opportunity to make it absolutely clear that, as with the current benefits, there will be arrangements in place for claims to be made posthumously. Every year, the Department for Work and Pensions receives around 10 posthumous claims to bereavement benefits made on behalf of a bereaved spouse who has subsequently died. There are regulations to ensure that appropriate payment can be made in respect of these claims.

17:15

Currently if a person who would have had an entitlement to a bereavement benefit themselves dies, regulations allow the DWP to appoint a third party to act on their behalf and make a claim. Once a person has been appointed to act on behalf of the deceased they have six months from the date they were appointed to make a claim. The amount awarded following a posthumous claim would match the entitlement the deceased would have had if they had made a claim. I can assure the noble Baroness that the regulations will be updated so that this practice will continue under bereavement support payment. With regard to guardian’s allowance and child benefit, the payment of these benefits is not affected by the award of current bereavement benefits, and this relationship will remain unchanged under bereavement support payment. It is worth saying that, due to the design of new bereavement support payment, such posthumous awards will be higher than under the current system because the new benefit is made up of a higher initial lump sum and monthly instalments.

Let me now spend a little time explaining exactly why we have decided to design the benefit as a higher lump sum and 12 subsequent monthly instalments. This is an issue that the noble Baroness, Lady Finlay, and the right reverend Prelate the Bishop of Wakefield raised. The counterargument is that bereavement has long-term implications for families. I understand this, and I realise that after a single year bereaved families will still be suffering and will be in need of support.

My point—and I hope it does not sound too counterintuitive—is that, looking at the welfare system as a whole, I am convinced that the best way to provide this support is through a shorter-term payment of bereavement support payment and a longer-term income replacement benefit in the shape of universal credit. If we pay the bereavement support payment for a longer period—for example, for three years—it could be done in a cost-neutral way only by reducing our proposed payment and spreading it over a longer period. This would mean providing less money in the period directly following bereavement. From the responses to the public consultation and the findings from the independent social research, it is clear that, regardless of household income, the death of a spouse has a significant financial impact which is acute in the initial months following bereavement. That is why we have decided to focus the benefit on the shorter term when the need is greatest. Let me be clear that this shift is not about saving money. In fact, we will be spending £110 million more over the first four years after implementation than if the current system had rolled forward.

My greatest concern about extending the duration of the bereavement support payment is when you consider the welfare system as a whole. The fundamental design principle of the new benefit is that, as a short-term payment designed to address the additional costs of bereavement rather than everyday living costs, it is clearly distinct from income replacement benefits or pensions. This means that we can fully disregard the payments from universal credit and benefit cap calculations, and this will clearly benefit the less well-off. For example, an unemployed single parent with one child who is entitled to bereavement support payment could receive £9,800 in the first year. In addition, they could receive the standard allowance and the child element of universal credit, which is more than £7,000 a year. On top of this, they may also be able to access other support such as help with housing costs. By extending the duration of the payment, the benefit would resemble an income replacement benefit and would need to be treated as such in the calculation of the benefit cap and universal credit. If we assume that we carried on paying the instalments at the rate of £400 per month, universal credit recipients in the poorest income quartile could lose around £4,800 per year and up to £15,000 by the third year. Our analysis shows that any increase in duration accompanied by removal of the bereavement support payment disregard from UC and taxation of instalments is effectively a transfer of money from poorer to richer recipients.

We are also concerned that a longer payment would be likely to be classified as a survivor’s pension under EU social security co-ordination rules. This would impact on the cost of other benefits, notably healthcare, sickness and family benefits. Analysis shows that if bereavement support payment is treated as a survivor’s pension and is paid over a three-year period, the costs of the bereavement benefit could increase by £400 million, which is four times higher than our planned investment of £110 million.

I turn to the conditionality regime, the issue which noble Lords spent most of this debate on. Our debate in Committee made me go back and think about this whole area from scratch. I will go into the final element—the review—which I touched on earlier and which is a way of thinking about the whole area, not just for this narrow group.

Bereavement has a long-lasting effect on families. We should never lose sight of the fact that the support we provide should not just be financial but help the bereaved to adjust to their situation and regain control of their lives. This process of adjustment varies hugely according to each individual; in particular, bereaved parents draw on a wide range of support mechanisms to get themselves and their children through. For those who are not in work or who have stopped working, part of this process of adjustment is looking to return to work. We know that long periods out of the labour market can have a negative effect on a person’s emotional and psychological well-being. This is why the Government also have a responsibility to help people regain control of their lives: universal credit helps people to do this.

I turn to the timing of when parents feel they need to go back to work. IFF Research concluded that:

“Most people thought it acceptable for the state to make contact following bereavement to offer employment support”,

as long as the approach was “individual and sensitive”, and,

“the typical timeframe suggested was between six and 12 months after the bereavement”.

I agree that supporting children should be every parent’s first priority. This is why universal credit ensures that bereaved parents are never subject to conditionality for the first six months. After this initial period, universal credit offers tailored support. Parents or lead carers of children under five are not expected to work and therefore will not be required to look for and apply for jobs. For those parents with children over five, work- related requirements are still tailored. Parents of children under 13 will be required to look only for work that is compatible with school hours. Parents of older children may have the hours that they are expected to be available for work tailored to the specific care needs they have in relation to the child.

I stress that we have no intention of requiring bereaved parents with childcare responsibilities to take jobs that do not take into account their children’s needs. This engagement is intended to be supportive—for example, supporting with confidence-building or training where a bereaved parent is entering the labour market for the first time or changing career path. Claimants’ individual circumstances are always considered before conditionality is applied and the current legislation allows for some to continue without any conditionality. A move to a fixed, 12-month conditionality exemption, as the noble Baroness’s amendment suggests, assumes that bereaved parents do not want the state to offer support in this period. This is wrong—

[Baroness Hollis of Heigham]

My Lords, the noble Lord has misrepresented both my amendment and my speech. I said that many parents would welcome it, but that the decision on at which point within that 12 months they returned to the labour market lay with them, not with the local benefit office.

[Lord Freud]

The point I am trying to make is that it is far better to recognise that individual responses to grief vary. As a number of noble Lords have said, grief often does not manifest in behavioural and emotional challenges until months or even years down the line, as a child matures. That is why, under universal credit, advisers have the flexibility to personalise requirements at any point, responding as circumstances arise. Where parents are facing difficulties with school, childcare arrangements or other extenuating circumstances, advisers can limit or even lift requirements.

I recognise that the application of that flexibility depends on the ability of those advisers. While I feel that our advisers are able, it is important to ensure that they have the best guidance and training to deal with such difficult cases. That is why we are currently working with experts in the field including the Childhood Bereavement Network, the Children’s Society, Cruse Bereavement Care, WAY and Gingerbread, to ensure that guidance and learning clearly articulate how advisers can identify and support parents in these circumstances, including the particular circumstances in which it would be inappropriate to apply conditionality. Our advisory services are also being repositioned as a profession with a clear career path, accredited learning and ongoing professional development. The learning programme will ensure that advisers have up-to-date skills to deal with any claimant interaction and support them in making relevant and appropriate decisions on an individual basis.

That is the standing position. I now move to the more specific response that I wish to make following our discussions in Grand Committee, particularly in answer to the points raised by the noble Baroness, Lady Finlay. I recognise that there are circumstances in which children could be in considerable distress and in which it is clear that conditionality should not be applied and flexibility is essential. I do not, however, see such cases as being limited to bereavement. There may be other circumstances in which children need additional care—for instance, where a family is fleeing domestic violence.

I assure the noble Baroness that we are not looking for a measure to define “distress”. Indeed, we need to establish exactly what the expression means; we are using it as a shorthand and there may be a much better way of capturing the concept, which is one of the things that a review should do. We are looking to identify specific circumstances in which we could expect a child to be distressed, and in which they will therefore have additional needs that need to be recognised. Claimants would need to demonstrate only the circumstances they are in, not the fact of distress, which is, as the noble Baroness has pointed out, extraordinarily difficult to establish.

I therefore want to conduct a review as quickly possible, in order to embed any new rules in the regime before we take new claims to universal credit from families. That is why I propose to undertake the review myself. I would like, in practice, to conclude that review by June or so. I will report back to the House following that. I am not quite sure of what form that will take but we will find the right form nearer the time.

17:30

The scope of the review will include not just where there is a bereavement payment due but where there is the death of a partner, possibly unmarried, where the child’s sibling dies, or where a family is fleeing domestic violence. There will be other examples. We will start with an evidence-gathering phase. I should like to involve Members of this House—one or two have already demonstrated extreme knowledge—but I would also look to engage an expert adviser and to conduct open evidence-gathering sessions, including one for Peers. If that review concludes that changes to universal credit regulations are needed, I am able to bring those forward under the existing powers in the Welfare Reform Act 2012.

I think I have covered the areas raised by my noble friend Lord German. On the point made by the noble Baroness, Lady Sherlock, clearly I am able to commit to this review on the basis that the amendment proposed by the noble Baroness, Lady Hollis, does not go through. I would not be in a position to commit to a review with a changed context because if there is an ad hoc change to a significant proportion of those in the scope, I will have to work out again exactly how to scope any proposal that I have.

[Baroness Hollis of Heigham]

I am sorry, but why? The noble Lord has already made the judgment on kinship parents. This is a permissive amendment, which he can draw on if needed. If he does not need it because of his review he does not need to deploy it. It is there as a safety net, so why is he asking the House to make it an either/or judgment?

[Lord Freud]

My Lords, this is not a permissive amendment. It makes a change to the conditionality regime for one element. If I need to look at how I do a review, I would have to look again at the specific context of doing this review.

[Baroness Hollis of Heigham]

I am sorry; I crave the indulgence of the House. Let me read the substance of Amendment 21:

“The Secretary of State may by regulation and within the overall budget for bereavement support payment exempt any widowed parent from work conditionality while in receipt of said payment”.

The Secretary of State “may” do that by regulation. As I said, the amendment is permissive. I am sorry that the noble Lord did not, perhaps, fully appreciate that.

[Lord Freud]

My Lords, let me make my point here. I will have to look again. As noble Lords know, a “may” in this context is a very substantial “may”. I will have to look again at the context in which I would want to do something such as this. I may very well want to do it, but I cannot make a commitment to have both at this stage. On that basis, I urge the noble Baroness to withdraw her amendment.

[Baroness Hollis of Heigham]

My Lords, I am still slightly baffled by the less than satisfactory response of the Minister. Let me first thank the noble Baroness, Lady Finlay, the noble Lord, Lord Rix, the noble Earl, Lord Listowel, the right reverend Prelate the Bishop of Wakefield and my noble friend Lady Sherlock for their very powerful and moving speeches on something that really matters: trying to protect and support widowed parents for the first 12 months of their bereavement. I welcome the Minister’s offer of a review on distress. However, what he has suggested is so wide that I rather doubt—although I would be pleased to be proven wrong—that he will be able to turn this into effective policy.

I give one tiny example, which I was thinking of as the Minister spoke. He was going to extend this to the distress of cohabiting parents when one of them dies. It is not too far fetched to suggest to the House a situation where a woman was with the father of her child or children in a cohabiting relationship but they then separated. She then had a period of perhaps five or seven years with someone else, to whom the children really connected and related. Then she moved on to a new boyfriend—a new stepfather—for perhaps the past year. Could the Minister tell me which of those three would have to die—forgive the language—for her to be entitled to bereavement benefit under the proposal of distress? Is it the recent stepfather, over whom the children are not especially distressed but the mother is highly distressed; the long-term stepfather, who has helped to bring them up, to whom the children were committed and over whom they are distressed while she is less so; or their natural father, who is giving them financial support and they see regularly? Which is it? I suspect one cannot do what the Minister seeks to do.

[Lord Freud]

My Lords, I am grateful to the noble Baroness for making the point for me. If we do these things piecemeal, we will not get the right answer. That is why my response to what the noble Baroness, Lady Finlay, said to me in Grand Committee was to think that we need to look at this comprehensively. We need to get this issue right across the piece and understand how to incorporate it as a whole into our conditionality regime. That is the response that I am looking to do, not to sort it out on the Floor of the House where we simply do not have enough information to do it properly at this stage.

[Baroness Hollis of Heigham]

My Lords, I make two points. First, we are not seeking to sort it out on the Floor of the House. I am seeking the consent of the House, if it is so minded to give it, to a permissive amendment, which does not commit the Government to anything they subsequently decide is inappropriate in the light of further research. The second point is that the Minister’s definition of distress is so wide that I genuinely believe, from my limited experience in Parliament, that he will find it very difficult indeed to turn it into deliverable policy. I am sure he is as aware as I am that it will end up depending on the discretion—he made this point himself—of local people in local benefits offices, such as the 23 year-old who will be interviewing the widowed parent. Is she numb? If so, does that mean she is coping or not caring sufficiently? Alternatively, is she voluble? Does that mean she is coping or not caring? He will have to peer into her soul and we should not go there.

The Minister says that he wants to help widowed parents to adjust, to,

“regain control of their lives”,

with tailored solutions. He is saying that the local benefits office, the 23 year-old, will decide. The 23-year old will turn her into his dependant, reliant on his judgment as to what she should do and what is best for her family. That is inappropriate and improper. You are making the adult back into a child and adding to her stress and distress. The Minister should not be going down that path. He will not be able to do it by clear policy; he will depend on discretion. Neither of those routes is satisfactory for a small and coherent group that we can easily define—that is, widowed parents with children following a bereavement.

The Minister is opposing a permissive amendment dealing with a small, specific group, which he can respond to exactly as he has already helped—and I am glad of it—kinship carers. He has allowed kinship carers 12 months off on work conditionality; he can do the same thing for this very specific group and make their work conditionality freedom align with the 12 months in which they are receiving bereavement benefit. After all, that is precisely why they have bereavement benefit in the first place. If they have it because they need support following their bereavement, at the same time they need the freedom from the additional pressure that the Minister’s work conditionality will ensure.

The Minister said that it was not quite either/or, but suggested that—

[Lord Freud]

My Lords, I just want to make the point that if you pick out particular groups and have legislation just for them, you end up with the kind of carbuncled benefit system that we are trying to escape from. I am determined to try to build a system that is coherent across the piece, and I want to look at all the situations to make sure that they are consistent.

[Baroness Hollis of Heigham]

My Lords, I understand the Minister’s support for grand schemes. We will see whether the grand scheme of universal credit, which I support, will deliver what he hopes that it does—and I hope it does. But here we are dealing with a situation in which we have kinship carers and widowed parents, and we may be talking subsequently about women experiencing distress in domestic abuse situations, and the Minister is trying to make something coherent. He is trying to fit them into one common mould, but he does not have to. He may come up with appropriate and different solutions for different groups because, as he himself said in his reply, every family is different and may need different help. This amendment would allow him to do precisely that.

The amendment does not cut across any review in any way, any more than his 12-month provision for kinship carers does. It seeks only to protect a small, identifiable and precise group from additional pressures of work conditionality at no cost at all and at a time when they and their children are most deeply distressed. I do not think that they should be put on the back burner for a review that may or may not deliver what I hope the House will think is the right path to take. If the review goes ahead and the Minister does not need the amendment, as it is permissive, he does not need to draw on it. If his review falters, which I think it will because he is asking too much of it, the amendment would give protection to some of the most vulnerable people in our country at the time of their deepest grief.

It is very simple. The amendment is permissive but says that we recognise the situation of widows and widowed parents and will give them, under the new system, one year of bereavement benefits and payments. This amendment asks for that one year, which we recognise is the period of most grief and distress, and that we should also not apply the pressure of work conditionality. This House has always looked out for widows and children, and I am asking the House to do it again today. The amendment is permissive and cost-free, and the Minister can build on it if he wishes to do the review. It is just a small safety net of help for grieving children and their grieving parent. I beg your Lordships to protect them tonight. I wish to test the opinion of the House.

17:43

Division 2

Ayes: 202

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Labour: 148
Crossbench: 37
Independent: 6
Bishops: 1
Plaid Cymru: 1

Noes: 237

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Conservative: 148
Liberal Democrat: 72
Crossbench: 13
Independent: 2

Ukraine, Syria and Iran

Monday 24th February 2014 Lords Chamber

Statement

17:55

[Lord Wallace of Saltaire (LD)]

My Lords, with permission I will repeat a Statement that the Foreign Secretary is making to the House of Commons.

“Mr Speaker, with permission I will make a Statement on the situation in Ukraine and Syria and relations with Iran.

Last week more than 80 people were killed and 600 injured during the worst bloodshed in Ukraine since the fall of communism. It was the culmination of unrest that began in November when President Yanukovych announced that the Government would not sign an EU association agreement. The House will join me in sending condolences to the families of those who died or were injured.

On Thursday I attended the emergency meeting of the EU Foreign Affairs Council, which agreed sanctions on those responsible for the violence, as well as assistance to promote political dialogue and help for the injured.

On Friday President Yanukovych and the opposition signed an agreement, also supported by the whole European Union, and I pay tribute to my French, Polish and German colleagues for their efforts to bring this about. But events have moved rapidly since then, including the departure of President Yanukovych from Kyiv and the removal of guards from government buildings.

On Saturday the Ukrainian Parliament, the Rada, voted to restore the 2004 constitution, to release Yulia Tymoshenko, and to impeach the President. He has said that he will not step down, but it is clear that his authority is no longer widely accepted. A number of members of the previous Government have been dismissed and appointments made in a new unity Government. Rada Speaker Turchynov has been appointed acting President until early elections on 25 May.

Ukraine now has a pressing need for constitutional reform, improvements to its political culture, free elections, an end to pervasive corruption and the building of a stable political structure. We look to the new Government to create the conditions for such change and, in a spirit of reconciliation, to ensure accountability for human rights violations.

For our part, the international community must work with the new Government to discourage further violence and agree international financial support. Ukraine’s financial situation is very serious and, without outside assistance, may not be sustainable. An economic crisis in Ukraine would be a grave threat to the country’s stability and have damaging wider consequences.

I discussed this work with the German and Polish Foreign Ministers over the weekend and spoke to Foreign Minister Lavrov of Russia earlier this afternoon. The Prime Minister has spoken to President Putin, Chancellor Merkel and Prime Minister Tusk, and the Chancellor discussed Ukraine with G20 Finance Ministers in Australia. Later today I will go to Washington to discuss this and other issues with Secretary Kerry.

While in Washington I will hold talks with the International Monetary Fund, which is best placed to provide financial support and technical advice in Ukraine. Such support could be provided quickly once requested by the new Government. It requires a stable and legitimate Government to be in place and a commitment to the reforms necessary to produce economic stability. International financial support cannot be provided without conditions and clarity that it will be put to proper use.

The noble Baroness, Lady Ashton, is visiting Kyiv today and I will visit shortly. Our fundamental interest is democracy, human rights and the rule of law in Ukraine. This is not about a choice for Ukraine between Russia and the EU; it is about setting the country on a democratic path for the future. We want the people of Ukraine to be free to determine their own future, which is what we also seek for the people of Syria.

On Saturday the United Nations Security Council adopted Resolution 2139 on Syrian humanitarian assistance, which the United Kingdom called for and co-sponsored. This is the first resolution adopted by the Security Council on the humanitarian crisis since the start of the conflict three years ago and it was agreed unanimously. It demands an immediate end to the violence, the lifting of the sieges of besieged areas and the unimpeded delivery of humanitarian aid including, importantly, across borders where necessary. It authorises the UN to work with civil society to deliver aid to the whole of Syria. It condemns terrorist attacks, demands the implementation of the Geneva communiqué leading to a political transition, and says that this transition should include the full participation of women.

The passing of this resolution is an important achievement, but it will make a practical difference only if it is implemented in full. We will now work with the United Nations and our partners to try to ensure that the regime’s stranglehold on starving people is broken.

The UK continues to set an example to the world on humanitarian assistance. Our contribution to the Syrian people now stands at £600 million: £241 million allocated for humanitarian assistance inside Syria; £265 million to support refugees in Jordan, Lebanon, Turkey, Iraq and Egypt; and £94 million of allocations that are currently being finalised. We have pressed for other countries to do more, including at the Kuwait conference on 15 January that resulted in more than $2.2 billion in new pledges.

The Security Council resolution is a chink of light in an otherwise bleak and deteriorating situation. An estimated 5,000 Syrians are dying every month. Nearly 250,000 people remain trapped in areas under siege. The bombardment of civilian areas with barrel bombs continues unabated and there are reports of attacks with cluster munitions as well. An inquiry led by distinguished British experts reported on the photos of the bodies of around 11,000 tortured and executed Syrian detainees. Some 2.5 million Syrians are refugees in the region, 75% of them women and children. The UN expects 4 million refugees or more by the end of this year.

Against this horrifying backdrop we continue to seek a negotiated settlement to end the conflict. But there is no sign of the Assad regime having any willingness whatever to negotiate the political transition demanded by the United Nations Security Council.

The second round of Geneva II negotiations ended on 15 February without agreement on future talks. UN and Arab League envoy Lakhdar Brahimi had proposed an agenda for a third round of talks focusing on violence and terrorism—the regime’s stated priority—and a transitional governing body, in parallel. The regime refused this. As a result the talks were suspended, with Mr Brahimi clearly laying responsibility for this at the regime’s door.

The National Coalition, by contrast, approached the negotiations constructively and in good faith. It published a statement of principles for the transitional governing body, stating that it would enable the Syrian people to decide their own future and protect the rights and freedoms of all Syrians. Those supporting the regime side, including the Russian and Iranian Governments, need to do far more to press the regime to take the process seriously and to reach a political settlement, as we have done with the opposition.

We will continue our support for the National Coalition and for civil society within Syria. We are providing £2.1 million for Syrian civil defence teams to help local communities deal with attacks, and improve the capability of local councils to save the lives of those injured and alleviate humanitarian suffering. This includes training, which is now under way, a communications campaign, and £700,000 of civil defence equipment. This includes personal radios, rescue tools, protective firefighting clothing, fire extinguishers, stretchers and individual medical kits.

The UK is also proposing a £2 million package of training, technical assistance and equipment support to build the capacity of the Free Syrian Police, working with the United States and Denmark. I have laid before Parliament a minute to approve £910,000-worth of equipment, including communications equipment, uniforms and vehicles for the Free Syrian Police. We also intend to make a contribution to the Syria Recovery Trust Fund, established by the UAE and Germany, which will focus on healthcare, water supply, energy supply and food security; and we are working with the Supreme Military Council to agree the best way of restarting our non-lethal support, which we halted temporarily in December.

The regime’s foot-dragging is also clear on the removal of chemical weapons from Syria. According to the Organisation for the Prevention of Chemical Weapons, only 11% of Syria’s declared chemical stockpile has so far been removed, and the regime has missed the 5 February deadline for removing all chemicals. This has delayed the destruction operation by months and puts the 30 June final destruction deadline in jeopardy. This slow rate of progress is clearly unacceptable. The UN Secretary-General and the OPCW have made it clear that Syria has all the necessary equipment to enable the movement of the chemicals. The OPCW’s director-general is pressing the Syrians to accept a plan that would see the removal of all Syrian chemicals in a considerably shorter period, enabling the 30 June deadline to be met.

Turning to Iran, the first step agreement with Iran came into force on 20 January and continues to be implemented. The E3+3 and Iran met last week to start negotiations on a comprehensive agreement aimed at ensuring that Iran’s nuclear programme is, and always will be, exclusively peaceful. The talks were constructive. The E3+3 and Iran agreed on the issues that need to be resolved as part of a comprehensive agreement; and in broad terms on the approach to negotiations for the coming months. The next round of talks will be in mid-March in Vienna. The E3+3 and Iran plan to meet monthly in order to make swift progress on the issues that need to be resolved in the ambitious timeframe we agreed under the November Geneva deal of implementation starting within a year.

The House should be under no illusion that the challenges here remain very considerable. A comprehensive solution must address all proliferation concerns related to Iran’s nuclear programme. To that end, existing sanctions remain intact and we will continue to enforce them robustly.

We continue to expand our bilateral engagement with Iran. Indeed, Iran’s non-resident chargé d’affaires is visiting the UK today. Last Thursday, we and Iran brought the protecting power arrangements to an end. This is a sign of increasing confidence that we can conduct bilateral business directly between capitals rather than through intermediaries. I thank the Governments of Sweden and Oman for acting as protecting powers since the closure of our embassy, and for their strong friendship and support for the UK. We will continue step by step with these improvements in our bilateral relations providing they remain reciprocal. We are, for example, working together on ways to make it easier for Iranians and British citizens to obtain consular and visa services.

On all these issues we will maintain intensive diplomatic activity in the days ahead and I will continue to keep the House informed on our work with other nations—whether it be in Europe, the Middle East or the prevention of nuclear proliferation—to ensure a more peaceful and stable world”.

My Lords, that concludes the Statement.

18:08

[Lord Triesman (Lab)]

My Lords, I thank the noble Lord, Lord Wallace of Saltaire, for repeating the Statement made in the other place, and the Foreign Secretary for providing an advance copy of it to the shadow Foreign Secretary, which I have read and which was of great assistance in preparing for our discussion this afternoon.

The events in the Ukraine demonstrate just how dangerous a moment this is. The deaths of more than 80 people and injuries to many hundreds more is ample demonstration of the personal cost to the population of a country eager for democratic change. I join the Government in expressing our condolences to the families of those who have been killed and our profound hopes for the recovery of those who have been injured.

It is far from clear what will happen next. I can see that there are deep differences in the Ukraine between those who want a modern European identity and those turning back towards a Russian, indeed, even, I think it is fair to say, Soviet-style identity. I do not accept, and fear the consequences of, the pejorative name-calling that we have seen in recent weeks. There may be a small number of nationalist extremists in the group who overthrew Mr Yanukovych, but I see no evidence at all that warrants the denunciation of the opposition by Yanukovych’s supporters or, indeed, by the Russian state media, in terms of an uprising of fascism in the country, as they have described it. Using the language of 1941 may be useful to opponents of change but bears no relationship to the real events of today.

What is needed today is systematic constitutional reform. What are needed are democratic institutions supported by popular elections to those institutions. What is needed is a willingness to determine democratically the balances between the different peoples in different parts of the country and the platform for reconciliation that only they can construct. What is decidedly not needed is any Russian statement about the potential need for what it has called “fraternal intervention”. That very phrase has a history, not least from the Czechoslovakian intervention of 1968. It is fundamentally unhelpful to hear that language because it leaves serious ambiguities as to what might happen next. No military intervention would be tolerable, and President Obama is surely right: Ukraine is not a piece on a Cold War chessboard. I assume that Her Majesty’s Government agree with this when they say that this is not a matter of choice between the European Union and Russia for the people of the Ukraine. It is essential that Mr Lavrov understands the goals of greater democracy in that country and a new generation potentially taking up the mantle. The global consequences of any military intervention are unthinkable. Ukraine is, whatever its financial difficulties—to which I must return in a moment—after the European part of Russia, the largest nation in Europe. It is rich in agriculture and many other resources, and in its culture. It stands at a key strategic frontier. Nothing could make a fraught situation worse than if there were to be some form of military intervention.

I make one other observation after talking with Ukrainian diplomats in the past couple of days. For the most part, they have said that they want to turn towards Europe and the EU. These are matters of choice for them, not me, but that is what they have expressed. They see it as a great economic opportunity, which sadly they need greatly, but just as much as a bulwark against corruption and a foundation for a reliable system of rule of law. However, you will find that if you speak to them they also think that the United Kingdom has far too little or possibly even nothing to add to the argument that they want to advance. They will tell you, without much diplomatic small talk, that the United Kingdom’s attitude to Europe is, at best, one of weak co-operation with that body that they aspire to join. At worst, the attitude is one of somewhat bloody-minded hostility likely to be seized on by those who are hostile, for nationalistic reasons, to a Ukrainian future that is more closely bound with Europe. Those diplomats take this matter seriously. Least of all can they understand—and they made this point to me with some strength—how the main party of government here in the United Kingdom left the centre-right Christian Democrat bloc, to which many Ukrainians see themselves as fairly naturally aligned, to gravitate towards a more extreme right alignment that they abhor and think is a risk to their country. That risk is being seized upon by the Russians.

Today the House will want to know what the United Kingdom can contribute to a peaceful outcome. I suggest that it could start by appointing a dedicated special envoy. This is a problem that is not going to go away overnight and will need to be addressed over a period of time. Ukraine’s economy is, as we have heard in the Statement, despite the fundamentals that should augur well, close to being wrecked. Is Russia still willing to contribute the financial support that it has hitherto offered to the Yanukovyck regime, or has that offer been withdrawn? I hope that the Minister will be in a position to tell us.

What contribution does the Foreign Secretary believe the IMF could provide? Two months ago he dismissed the idea advanced by my right honourable friend Douglas Alexander. Yesterday the Foreign Secretary agreed with the idea. Do the Government regret that the past months have drifted by, with the Ukraine drifting towards calamity? Of course conditions would have been needed at all stages, but how is the work on the conditions to be conducted in good time in order to have the impact that we now need it to have—it is plainly needed—yet avoid the mistakes, because the conditions are also about those, made by the Orange Revolution in 2004?

Will the Foreign Secretary call for the renewal of negotiations on the EU association agreement? In doing so, will he emphasise, as he will need to, the United Kingdom’s continuing support for the European Union, so that it is understood to be, in our view, a positive benefit? The Foreign Secretary has been talking to Mr Lavrov, as was said in the Statement, and I sincerely welcome it. Will he make these kinds of proposals to Foreign Minister Lavrov? Will he seek Mr Lavrov’s guarantee that Russia will not encourage south-eastern Ukraine to break away from Ukraine as a whole?

On Syria, we, too, welcome United Nations Security Council Resolution 2139. The position in that country, as the Foreign Secretary says, is grotesque and horrifying. He is quite right. Nevertheless, the humanitarian appeal is in desperate straits. We have called for a new donor conference to build funds that are desperately needed. Will the noble Lord, Lord Wallace, back this call this afternoon? What proposals do the Government have to encourage the regime’s supporters, especially Russia and Iran, to press Syria for a political settlement? There is every reason to think, as the Statement says, that the Syrian regime is not addressing the negotiations with any degree of seriousness. Assad is not serious. What are the Government’s objections to establishing a Syria contact group to encourage negotiations? As the Statement says, the current position is—I use the word used by the Foreign Secretary—“unacceptable”, whether we are talking about the use of chemical weapons or their decommissioning, or indeed anything else that the Syrians were expected to do as a result of the discussions that had begun.

On Iran, I repeat the congratulations offered to the noble Baroness, Lady Ashton. She probably feels burdened by congratulations these days but, goodness knows, nobody deserves them more. We welcome the framework agreement in Vienna last week. It is helpful and, I suspect, constructive in a limited way. Progress, however, is dependent on Iran sticking to the agreements it made last November. The number of centrifuges is reportedly still in excess of 10,000. A far lower limit was set in November. What steps do Her Majesty’s Government advocate to bring Iran into line with the deal that it itself has agreed? How will the Government here review the sanctions regime? I make none of these final points in order to be negative about what can be achieved or, indeed, about what has been achieved, but I know that these are conditions in which, if pressure is not continued in the right direction, the opportunities for backsliding are profound, and the dangers that come with them are still more profound.

I ask these questions out of sympathy, not hostility, for the objectives that have been expressed in the Statement, but the House will want to know the answers.

18:17

[Lord Wallace of Saltaire]

My Lords, I thank the noble Lord for his support for the Government’s approach. Perhaps I may simply say that the British Government do not presume that they do anything on their own in any of these circumstances. On Iran, we are working as part of the E3+3, which, as the noble Lord said, the noble Baroness, Lady Ashton, chairs so well. We are working on Syria with the Syrian core group, which consists of European countries, the United States and a number of Arab countries. The group continues to meet regularly as a means of pulling together those most concerned about the future of Syria. As the noble Lord said, the Foreign Secretary talks to his opposite number in Russia on a very regular basis. On Ukraine, we gave active support to the Polish, German and French Foreign Ministers in their efforts to help in Kiev. The Poles, after all, have a common border with Ukraine—and, to some extent, a common history—and we are part of a group of European countries that are of course actively engaged. However, in none of these, whatever Ukrainian diplomats may think, do we think that we operate separately from our partners and allies in Europe, across the Atlantic and across the Middle East.

In terms of asking the Russians not to do anything to encourage parts of Ukraine to split off, Crimea may in some ways be more of an immediate danger than south-east Ukraine. It may be one of the impacts of what has been shown on Ukrainian television in the past two or three days—in terms of the depths of personal corruption of the Yanukovych regime—that eastern Ukraine will be less prepared to resist the changes than it might otherwise have been. The Yanukovych regime, which was most strongly supported in the Donetsk region, as the noble Lord knows, has been more thoroughly discredited than we anticipated three or four days ago. Of course, what is happening in Ukraine is moving very rapidly and it is unclear what will emerge. We are working with others; I take the noble Lord’s point about whether we intend to appoint a special UK envoy, but I suspect that my right honourable friend the Foreign Secretary would say that we are working with others—we are part of the international community on this—and we intend to go on working with them.

In terms of the compliment made to the noble Baroness, Lady Ashton, we should also recognise that, of the women doing extremely valuable work in international diplomacy at present, the noble Baroness, Lady Amos, is also doing a certain amount of very valuable and quite dangerous work in humanitarian assistance to Syria. We should be proud of the extent to which British women—Members of this House—are attempting to assist in these very difficult and, to a considerable extent, interconnected conflicts.

Certainly, a number of Governments, including our own, have said that the Vilnius association agreement remains on the table for Ukraine, but I again stress that we are not trying to make Ukrainians make a definitive choice between joining the European Union and leaving the Russians behind or the reverse. Clearly we have to find a solution through which Ukraine can adopt a more open form of government and a much stronger sense of the rule of law, begin to rebuild its very battered economy and restructure its enormous debts to a range of other countries. That, however, requires a new Government to emerge and we and others will do all we can, as we move towards the presidential elections now set for May, to assist the interim Government in moving in those directions.

18:22

[Baroness Falkner of Margravine (LD)]

My Lords, I say to my noble friend that I am extremely relieved to hear that the Foreign Secretary is travelling to Washington to have discussions with the US Administration but, more importantly, to have discussions with the International Monetary Fund. Can he tell the House how much leverage we have with the IMF? We know, of course, of its exasperation that €300 billion was expended on very necessary eurozone bailouts but that only €610 million was pledged to Ukraine before the crisis started in November. Perhaps there has been a lack of urgency on the part of the IMF-EU relationship with Ukraine that has led us to where we are now.

I also congratulate the Foreign Secretary on the very measured tone that he has taken in terms of Russia. We need to co-operate with Russia and Ukraine and we also need Russia on Syria. However, on Syria—I do not wish to detain the House, I will be brief—surely we need to be tougher with Russia because we have wasted, some might say, two opportunities now in Geneva without seeing any progress whatever. To what extent might we help the Free Syrian Army to gain access to weapons so that it can defend wives and children?

[Lord Wallace of Saltaire]

On Russia and Syria, I remind the noble Baroness that the resolution passed on Saturday in the UN Security Council was passed unanimously. This demonstrates, to an extent, that the Russians are beginning to lose patience with the regime, which is bombing, starving and besieging its own people throughout much of the country. That is at least some step forward. Of course we engage with the Russians as actively as we can on these and a number of other subjects.

On the question of help to the Syrian National Council and the moderate opposition in terms of weapons, the Government take the position that the House of Commons showed its unwillingness to provide military support in Syria and that we will not change our policy on that until we have brought that issue back to the Commons. That may happen at some time but, at present, we are providing non-lethal assistance to the Syrian opposition and will continue to do so.

[Lord Jay of Ewelme (CB)]

My Lords, first, I welcome what the Minister has said about the moves to re-establish normal diplomatic relations with Iran. The more difficult and more complex our relationships are with countries, the more important it is to have a well plugged-in embassy in place and I hope very much that we will have normal diplomatic relations with Iran as soon as may be.

Secondly, and this echoes what the noble Baroness, Lady Falkner, was saying, it seems that the link between these three countries—Ukraine, Syria and Iran—is the role of Russia. I was glad to hear that the Foreign Secretary has spoken to Mr Lavrov this morning. Will the Minister confirm that the strengthening of our engagement with Russia, both bilaterally and through the EU and other international organisations to which we belong, should now be a real priority for our foreign policy?

[Lord Wallace of Saltaire]

My Lords, I am well aware from many conversations with the Foreign Secretary that he has been working extremely hard over the past six months and more to engage the Russians on a wide range of issues; as the noble Lord will know from long experience, this is not always easy. It has been something that we have needed to do. Whether one calls the negotiating group on Iran the E3+3 or the P5+1, some of the members of that group are easier to work with than others but we do try to hold them all together.

On the current question, as I said in the Statement, we are moving forward gradually and proportionately and looking for reciprocal gestures and, so far, so relatively good. As the noble Lord will know, the current regime in Iran is complex and one always has to be aware that there are other aspects of the regime from the ones to whom we are talking.

[Lord Howe of Aberavon (Con)]

I wish to say only a few words and to concentrate on Ukraine in this context, because it is an unusual subject for us to be considering and it is in a very serious condition. I am glad also to be here in the presence of the noble Baroness, Lady Williams of Crosby, as very shortly after Ukraine began emerging from the regional history the two of us were invited to form part of a multinational advisory group in Ukraine, helping it to develop its nationhood. At different stages we had the privilege of meeting both Yanukovych and Tymoshenko. It is very important to hear that our Government are supporting Ukraine with its problems at present; it certainly needs it.

I remember that when the two of us went down for the first time into Independence Square it was full of people, and we could not help noticing the statue of Stalin covered over with posters on behalf of the Pope. I remember that it was Stalin who said:

“The Pope! How many divisions has he got?”.

It shows, in a way, the extent of the divisions between the two groups in those early years of Ukraine’s growing independence. Having met both Yanukovych and Tymoshenko, one realises that they are both figures of some substance and figures facing real problems without all that much background and without assistance. It is important that we recognise the significance of Ukraine as an independent country of some real substance in the future, and I am delighted that Her Majesty’s Government are already doing so to that effect. It deserves it and I am sure that we can give some real help.

[Lord Wallace of Saltaire]

I thank the noble and learned Lord for all those comments, with which I agree.

[Lord Hurd of Westwell (Con)]

My Lords, has my noble friend seen some rather disturbing press reports today about rows and ructions within the group of Syrians who are opposed to the Assad regime? This has happened before and it may happen again, but how does my noble friend assess the cohesion of the anti-Assad forces in Syria?

[Lord Wallace of Saltaire]

That is a very difficult question to answer in some ways because, as the noble Lord well knows, there is a very large variety of fighting groups. Indeed, in north-eastern Syria in the past week or two the moderate forces in the opposition have been fighting radical jihadis to expel them from ground otherwise occupied by the opposition. However, my experience of the Geneva II talks so far is that the representatives of the Syrian National Council have been more coherent and more constructive than some had predicted in advance. We are doing all we can to support the Syrian National Council in being an inclusive body, including Kurdish and Christian representatives, women and so on, and in strengthening its links with the moderate fighting forces on the ground. Of course, the picture remains extremely unclear. It is currently very difficult to get around inside Syria for obvious reasons, but we are a little more confident than we were that there is a reasonable opposition willing to work for a transition regime, through which we and others can work.

[Lord Wills (Lab)]

My Lords—

[Baroness Symons of Vernham Dean (Lab)]

My Lords—

[Lord Elystan-Morgan (CB)]

My Lords—

[Lord Judd (Lab)]

My Lords—

[Lord Ahmad of Wimbledon (Con)]

I think that we should hear from the noble Lord, Lord Wills, because he has been trying to get in for a while.

[Lord Wills]

I am very grateful and my question is brief. The Minister will be aware of reports that there has been a significant flight of capital from Ukraine in recent weeks. What steps are Her Majesty’s Government taking to ensure that assets that have been corruptly acquired in Ukraine are not being laundered in this country?

[Lord Wallace of Saltaire]

My Lords, that is a question that I have asked myself inside government. We are concerned about the movement of funds whose origins are not entirely clear. I am assured that the Government are monitoring these movements, but of course it is a matter of concern.

[Lord Elystan-Morgan]

My Lords, it is utterly laudable and understandable that the United Kingdom and the other countries of the European Union should commit themselves to substantial economic aid for Ukraine. However, will the Government give an unreserved commitment to abjure every temptation to try to involve Ukraine in any militaristic alliance or allegiance with western European countries, bearing in mind that the chief port of Ukraine, Sevastopol, is the base of the Russian Black Sea fleet and that such a militaristic course, though tempting on the face of it, would be utter insanity?

[Lord Wallace of Saltaire]

My Lords, I have seen the base of the Russian Black Sea fleet in Sevastopol with the Ukrainian Black Sea fleet, such as it is, not far away. I recall that someone for whom I used to work, Admiral Sir James Eberle, was invited in the early 1990s to advise the Russians and the Ukrainians on how the Black Sea fleet should be divided between the two. His recommendation was that the best thing was to scrap the entire fleet. Unfortunately, the advice was not taken.

[The Lord Bishop of Wakefield]

My Lords, perhaps I may focus my question on Ukraine. It seems to me that there are some senses—not exactly repetitions—in which we are seeing replayed some of the things that were not resolved in the early 1990s with the collapse of the Soviet Union. I remember that at that time I was working at Lambeth as the archbishop’s foreign secretary, as it were, and on one occasion the telephone was brought to me in the bath. There was a call from the gatekeeper telling me that Mr Gorbachev was in captivity in the Crimea and he thought that I ought to know so that I could do something about it. Some very good and quite low-key, and low-cost, initiatives were taken by Her Majesty’s Government at that time to support the development of democracy in the various republics that resulted from the collapse of the Soviet Union, including Ukraine. Can we be reassured that, once things become a little more stable, those sorts of initiatives might be looked at again? I am suggesting not carbon copies but that sort of thing.

My other point is that only the churches never recognised the division of Europe. The Conference of European Churches always worked across Europe. There are very serious divisions in the churches in the Ukraine, often reflecting some of the fragmentations that exist in the country as a whole. Again, that is another area where Her Majesty’s Government might work with others to see how one moves towards a more democratic situation.

[Lord Wallace of Saltaire]

My Lords, I continue to learn how close church links can be across national boundaries. I was in Armenia some months ago and was met by a very chatty archbishop, who seemed to know almost every bishop I had ever met in this country. However, we all know that the Orthodox Church in and across the former Soviet Union is a very complex and divided entity, and not all its branches are committed to anything that we would recognise as a liberal approach to organised religion. Sadly, the different branches of the church in Ukraine represent that rather well.

[Baroness Williams of Crosby (LD)]

My Lords, along with the noble and learned Lord, Lord Howe, I had the honour to be one of those who advised the Ukrainian republic at the moment of its independence from Russia, and I have kept closely in touch with it ever since. I begin by saying—I shall not be long—that the noble Lord, Lord Triesman, is absolutely right in indicating that the way in which Ukraine has been desperately trying to find security and, not least, to strengthen its relationships with the EU is an astonishing statement of trust in the EU. Perhaps it is time that we recognised that rather more than we sometimes do. It is a statement of belief in the future of a united Europe.

Perhaps I may ask one question of a practical kind. Outside the realm of governmental relations, how far does the Minister believe that in relations on a cultural level, on a religious level—indeed, with the appointment of Pope Francis possibly much more easily than in the past—and, not least, on an educational level we could establish a much stronger and more helpful relationship with Ukraine than we have done without putting at risk its relationship with Russia? I fully agree with the noble Lord, Lord Elystan-Morgan, that that relationship should not be made into a military one. I believe that there is much ground here for extensive and helpful relations between this country and what I hope will, before long, be the emerging democracy of Ukraine.

[Lord Wallace of Saltaire]

My Lords, I did not answer the question from the noble Lord, Lord Elystan-Morgan, about military alliances. Across what the EU has called the “eastern neighbourhood”, we are aware that some countries—for example, Georgia—have a stated ambition to join NATO, and that is another delicate set of issues with which we will all have to deal. I have to say to the noble Baroness, Lady Williams, that I think I beat her to help the new Ukrainian Government. The John F Kennedy School of Government asked for a Wallace to go to a conference in Kiev in December 1991. I found it almost surreal talking to a newly independent Government about the attributes of statehood that they suddenly found themselves having. I know that the noble Baroness, with the rest of the Kennedy school and others, then took over a much more detailed programme.

We are, of course, entirely open to cultural and educational relations. We very much want to work with Ukraine. I have no doubt that the British Council and others will wish to be engaged in as much assistance to Ukraine as possible—in particular, helping it to develop a much clearer concept of the rule of law and of the importance of law in every aspect of the economy, society and government.

[Baroness Symons of Vernham Dean]

My Lords, on Syria, in discussing UNSCR 2139, the Minister made the point that it was passed unanimously, which is very much to be welcomed. However, did the British Government press for it to be a chapter 7 resolution? As the Statement rightly said, the passing of the resolution is an important achievement but it will only make a practical difference if it is implemented in full. As it is not a chapter 7 resolution, what sanctions can be invoked if the siege of the 240,000 people continues; if there continue to be 5,000 deaths every month in Syria; and if the chemical weapons are not dismantled by 30 June this year? Without a chapter 7 resolution, is there really nothing very much that the UN will be able to do?

[Lord Wallace of Saltaire]

My Lords, we are doing our best to carry the P5 with us as we go. That is an important part of where we are going. It is extremely important that we got the first resolution on Syria for some time agreed unanimously by all participants. That is a significant step forward and we should not underrate it.

I agree that the situation is appalling. I am told that somewhere between 300,000 and 500,000 people are trapped in Aleppo at the moment. Part of the expectation of what will happen is that there may be another surge of refugees across the frontiers in the next six months if some of these sieges are lifted, as, of course, we very much hope they will be.

The fact that this is not a chapter 7 resolution does not necessarily mean that attitudes—including the Russian attitude and, perhaps with it, the Chinese attitude—will evolve. The behaviour of the regime in killing and starving its own people is losing the sympathy of the whole international community.

[Lord Alton of Liverpool (CB)]

My Lords, the Minister answered the noble Baroness, Lady Symons, by talking about the role which the United Nations Security Council might play in the future. One of the things we should be doing is looking at the role of the International Criminal Court and the ability of the Security Council to make a referral—not least because Ban Ki-Moon only this week said that unspeakable suffering was being experienced by the children in Syria, with some 10,000 of those killed so far being children. In the Foreign Secretary’s Statement we heard about the barrel bombs that are continuing to rain down on Aleppo; the sieges being undertaken in places such as Homs, where people are being starved to death; and, in previous times, the use of Sarin gas and the fact that only 11% of chemical weapons have been removed thus far. Surely it is time for us to start thinking about collecting the evidence against those who have been responsible for these deeds, whether they come from extremist militant groups or the regime, to ensure that one day they will face their day of trial.

[Lord Wallace of Saltaire]

My Lords, a number of groups, both governmental and non-governmental, are collecting evidence of atrocities in Syria as we go forward. We are committed to a transition regime rather than a destruction regime because we are well aware of the lessons of Iraq where, under American leadership, most of the institutions of Saddam Hussein’s state were dismantled, leaving us with an ungoverned and ungovernable country. We are also very clear that in any transition there is no place for the core members of the Assad regime, and that is what we intend to negotiate through the Geneva II talks.

Pensions Bill

Monday 24th February 2014 Lords Chamber

Report (1st Day) (Continued)

18:44

Amendment 3

Moved by

[Baroness Hollis of Heigham]

3: After Clause 2, insert the following new Clause—
“Pension statement
(1) The Secretary of State may by regulation introduce arrangements for the periodic notification to individuals of their entitlement to request a pension statement.
(2) Such regulations shall not require the provision of such notification before a person has reached the age of 45 nor, subject to subsection (3) below, more frequently than once every five years.
(3) Such regulations shall require notification of entitlement to receive a pension statement in the penultimate year before a person reaches state pension age.”

[Baroness Hollis of Heigham (Lab)]

My Lords, like others, I am delighted that we are introducing a new state pension, based on 35 years of contributions, which will help to float older people off poverty and encourage savings. However, if that is to happen, people have to know where they stand as they go along, especially women who may have acquired credits and young people on short hours-contracts, on which we voted earlier today. They need to know how reliably their state pension entitlement is building up and whether they need to take any action to make good shortfalls.

It seems obvious, does it not, that if we want people to build a pension they must know how they are doing, how far they have got and what they may get? We expect this from the private sector. Most of us get not only yearly but six-monthly statements about our ISAs, for example, and how they and we are doing. Usually—not always—it encourages us to save more. We all agree that we need transparency about charges and better information and guidance about our financial choices. The Government set up a money advice service to help people do precisely that.

Along with my noble friend Lord McKenzie, who regrettably cannot be in his place today, I was again taken aback in Committee to learn that there will be no such service and support in the field of state pensions. On the biggest investment a person may have—their pension—which, for many people, will be worth more than their home, they are working blind. People will be working and contributing, or not, and claiming credits to which they are entitled, or not, without any information and guidance to help them until shortly before they retire, when it may be far too late to change the hours of their job or claim a carer’s credit which might have brought them safely into the NI system.

How many women in their 40s and 50s with teenage children know that if they work 16 hours a week at minimum wage they will not usually be building a state pension, but at 18 hours a week they will? How many women know that by caring for elderly relatives for 20 hours a week they could, and should, get a carer’s credit? Not many, yet it is one of the most important things they need to know. How many women even know that they will not get a married woman’s dependant pension from 2016 on? Very few, I suspect. We do not and will not tell them, unless they have the wit to ask, until it is almost too late to do much about it. It is absurd and shameful. The DWP’s refusal to provide a level of service is unacceptable. None of us would accept this from the private sector. Indeed, the private sector would probably be pursued and prosecuted if it behaved like we do.

What is the Government’s position? They will respond to a query, which is likely to come from the alert, educated and informed, but they will not bother to trouble those who most need advice, information and guidance. Those who do not inquire and those who leave it too late are most likely to retire with a pension shortfall. Who are the people who are most likely to retire with a shortfall and who will not know until it is too late? What a surprise—women, I fear.

In Committee, the DWP quoted the cost of providing annual statements as a deterrent—a cost which, none the less, we expect the private sector rightly to bear. I therefore suggest that we consider the “nudge” theory: that if we cannot afford to provide annual, or even five-yearly, individual statements, at the very least DWP sends out periodically a standard letter, in bright bold print, two paragraphs only—I offer a draft— saying for example:

“You are able to draw your state pension at 65. To get a full state pension you need by 65 to have made 35 years of contributions into the National Insurance Fund which pays out your pension. Pension contributions may come from your job or you may be receiving free contributions credited towards your pension if, for example, you have children under 12, you are a carer, you are on universal credit, you are disabled or in other circumstances”.

Paragraph 2 would say:

“You may want to find out how many years contribution you have already built up. If so, please contact us either by phoning us on “x” or online at “y”. If as a result you think you may not have made enough contributions by the time you reach 65, we can send you a leaflet which tells you what steps you can take to build a full pension”.

I offer this template letter to the Government as a possible way forward. One standard letter—a nudge—telling people what they may wish to know, in bold print, going out to everybody at five-yearly intervals from the age of 45. It is a nudge for people to find out where they stand and if necessary to do something about it, to help people to help themselves. Otherwise why bother with a Pensions Bill—one that is more generous and certainly one that I support—if we do not want or seek to encourage people to build a full state pension at the end of it? Why bother? It must make sense to nudge people. I beg to move.

[Baroness Turner of Camden (Lab)]

I support my noble friend Lady Hollis on this amendment. I am sorry that the noble Lord, Lord McKenzie, is not here to second it, The Government have had a long-term policy—they kept telling us about it at every stage of this Bill—of being in favour of people saving for themselves in addition to having the pensions provided in the Bill. They expect people to save for themselves and they regard the pensions provisions that they are making as a kind of platform from which people can then make savings for themselves.

How are people to save for themselves if they do not have the necessary information about what their entitlement is? The amendment addresses the entitlement to a pension statement and notification of entitlement to a statement. All that is very necessary if people are to make sensible arrangements for their retirement. I am amazed to think that the Government may not accept this amendment. I hope however that they will because it is in line with their own thinking on the Bill. They want people to save. How do they expect people to save if they do not know what their entitlement is? They have an obligation to tell them what it is. Certainly it happens in the private sector; I belong to a private pension scheme and I get a regular statement as to what my entitlements are. Why can that not be the case for people who are receiving state benefits?

[Baroness Sherlock (Lab)]

My Lords, my noble friend Lady Hollis has raised some significant questions and I look forward to hearing the Minister’s answers. This amendment follows an ultimately rather unsatisfactory discussion we had in Committee during which my noble friends Lord McKenzie and Lady Hollis, along with the noble Baroness, Lady Greengross, and others tried valiantly to get the Minister to explain exactly when somebody would receive a communication from DWP to warn them that the state pension they would get in future would not be the same as what they might have expected. I went back and reread the record. I think the answer we got was that they would get a statement if or when they asked for it and then normally only digitally. The Minister kindly arranged for officials to explain their communications strategy to Peers, and I am genuinely grateful for that. However I think it is fair to say that the exercise did not entirely allay our fears or perhaps fill out all the gaps in our knowledge. I hope the Minister is looking forward to finding a consultancy fee for my noble friend Lady Hollis for her contribution to what will doubtless be the next mailshot from the department.

In Committee I raised comments that had been made during the Select Committee inquiry and elsewhere from quite a wide variety of bodies about this subject. It is worth highlighting a couple. Citizens Advice has been stressing that considerable complexity inevitably remains in the system because of the transitional provisions. It says that,

“a sustained communications programme could improve outcomes, manage expectations, minimise misinformation, promote action on NI contributions, and support personal saving for retirement”.

That last point is one made by my noble friend Lady Turner. The Association of British Insurers had also stressed that adequate communication was essential because it was important that people did not feel unclear about how much they would receive, and it should be clear that they would need to save. That is a crucial drive behind all of these reforms and the Labour reforms that preceded them. People need to understand what they are going to get to make sure they save enough for their retirement.

The Select Committee certainly found that there was a lot of confusion out there. Many people thought that from now everybody would get £144 a week instead of the current state pension. Many people thought that all means-testing would disappear and that if they would have got more than £144 now that they would lose that in future. The committee stressed how important it was that people have full information about their future entitlement.

I reiterate three simple questions which I raised in Committee; they did not get answered at the time but I think the Minister has had an opportunity since then to reflect on them. First, how and when do the Government propose to contact people to tell them of the changes to their entitlement? Secondly, at what point will the Government contact people who have previously requested and received a pension statement to warn them that it may no longer be accurate? Finally, in setting up a communications campaign on this new scheme, what outcomes are the Government seeking and how will they measure them? I look forward to the Minister’s reply.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)]

My Lords, the single-tier pension reforms are designed to simplify the current state pension system, to make it easier for people to understand what they will get from the state in retirement. More so than for other reforms, therefore, communication is critical to success, so I certainly share the interest that noble Lords have shown in this issue. Effective communication requires both the right message and the right channel for delivering that message. This forms the basis for our communication strategy to support these reforms, a summary of which I circulated to noble Lords this morning and which will be placed in the Library.

We will deliver a phased approach to our communications, building from Royal Assent towards the implementation of the reforms and beyond. This will allow us to provide accurate and up-to-date information as quickly as possible before we issue more tailored communications through a range of channels to reach all our audience groups.

State pension statements will remain a key communication with future pensioners and will be an important vehicle for helping individuals understand how they are affected by the reforms. The introduction of these reforms gives us the opportunity to radically transform the way we currently provide this statement service. Our ultimate vision is to provide an online system that is integrated with HMRC’s national insurance data, enabling people to access this information at a time to suit them and in a way that allows them to model the impact of gaining further qualifying years.

In Committee I said that we would provide statements that reflect the single-tier rules once we have the new IT in place and individuals’ NI contribution records are complete up to and including the 2015-16 tax year. Prior to April 2016 our plan was to continue to provide statements based on the current rules accompanied by additional information on the single-tier changes to those affected by the reforms. However, we believe there is trade-off in terms of providing information we have available based on current system amounts while trying to minimise the distribution of information that is potentially misleading or simply begs further questions. Noble Lords may wish to note that we are therefore currently reviewing the information we can provide to customers prior to April 2016 to ensure that it is as accurate and helpful as possible. We will make a decision on this by the end of March when we will make our plans more widely known through discussions with our stakeholders and within our broader communication materials.

The noble Baroness, Lady Sherlock, asked when we might contact previous recipients who will be affected by the changes. We will consider this to be part of the process. It is important to note that our data retention rules mean that our statement IT systems hold only a limited number of historic requests going back a maximum of 18 months, and therefore we cannot contact all previous statement recipients. The statements make it clear that the estimates they provide are based on the current rules and may change if individual circumstances alter or the law changes.

19:00

I turn now to the specifics of the amendment. It sets out an approach for issuing periodic notifications to all citizens over the age of 45 advising them of the state pension statement service. The department has previously undertaken various forms of direct mailing to people in relation to state pensions. Indeed, between 2003 and 2006 the department issued many millions of unsolicited automatic pension forecasts across the working age population. Unfortunately, independent research found no real evidence of any significant response to these mailings. Only 33% of recipients could recall without prompting having received the forecast, and only 31% actually read the mailing. More importantly, the research showed that there was no significant difference in the retirement planning actions undertaken by recipients of the forecasts when compared with non-recipients. This, combined with the operational costs, resulted in the termination of unsolicited pension forecasts.

When people receive something that they have not asked for, it is most likely to be forgotten or ignored. However, when people ask for information, they are ready to get it and do something with it. Our communications approach will sow the seeds of the change, setting out the store in the channels that people read and hear every day, providing them with reasons to seek further information for themselves at the right time for them. It may or may not be that the draft provided by the noble Baroness is exactly what turns people towards wanting to investigate, but we will do the research to find out what actually works. The noble Baroness referred to nudge approaches and the use of behavioural insights. We are absolutely committed to testing such approaches. We believe that there is merit in getting messages to people through the newspapers they read and the magazines they buy. We have already seen the success of such approaches and we can see that they do prompt or nudge people to consider their plans for retirement.

Our past experience is not proof that direct mail will never be an effective method of communicating with members of the public, particularly given the behavioural change we are witnessing as automatic enrolment is rolled out. However, undertaking direct mailings comes at a cost, and an initiative such as that proposed in the amendment could cost in excess of £5 million in the first year of implementation alone. Before committing to such expenditure, we think it is essential to test different approaches to raising awareness of the statement service to understand their effectiveness. Noble Lords will already be aware that I am committed to this type of approach, such as in the support provided for the introduction of universal credit. During 2014-15 we will be undertaking trials of direct mailing alongside other communication approaches. This will allow us to identify how the right balance of timing, message, channel and environment can lead to greater awareness among individuals and encourage them to take action as appropriate. Depending on the outcome of these trials, we will decide which communication approaches are most effective as part of our ongoing communications activity.

Next year we will set a baseline across all our audience group to measure awareness and understanding. This will be remeasured every six months and will be published, which will inform our approach as we refine and improve it. I can assure noble Lords that following Royal Assent we will track levels of awareness about state pensions and the reforms across the population on a regular basis. The research findings will enable us to identify specific groups that our messages are not reaching, or where the messages are not easily understood, so that we can take action accordingly. Our communications strategy is designed to cater for the needs of different audiences. We recognise the need to test our approach as we go, and as part of this we will undertake the trials that I have mentioned. It is right to do this before committing to undertaking full-scale direct mailings, or indeed any other form of communication, which may not deliver any significant increase in awareness or action. In the light of this, I urge the noble Baroness to withdraw her amendment.

[Baroness Hollis of Heigham]

My Lords, I should like to thank my noble friends Lady Turner and Lady Sherlock for their contributions. I understand that the Minister is as committed as could reasonably be expected to trying to ensure that people are aware of and fully knowledgeable about their entitlements. I accept and absolutely understand that there is considerable virtue in having an evidence-based policy by building it up on the results of research into the most effective lines of communication. I also agree that a variety of responses may be wanted, including press, mailings and online, but I have to say that I would worry if it was largely dependent on online information, given what we know about many people’s recalcitrance over using online facilities as UC is rolled out. It may be that it is a generational thing and that over the next decade to 20 years the recalcitrance begins to disappear, particularly if places such as Norfolk end up actually having access to broadband.

My difficulty is that the Minister has a policy premised on the fact that those who know that they do not know will make the inquiry. The problem is around those who do not know that they do not know, and I am not confident that he has in place a strategy to make them aware of it. In the past, the people who were most vulnerable would have been married women who had been in and out of the labour market according to their caring responsibilities. They had a very straightforward safety net by the fact that they could have 60% of the husband’s pension as a baseline, and only if their own contributions exceeded that, as increasingly they have begun to do, would they draw on their own contributions. That is no longer the case. So the 60% married women’s pension is being withdrawn without, as far as I can see, ensuring that those women know, first, that they are losing what they would have counted on in the past and which is common knowledge, and secondly, what other benefits—or credits, I should say—they may be entitled to claim because that information is not being sent out to them in lieu.

I think that the Minister has a problem here. We are on the same side and I fully accept that he wants to make sure that people are aware of this, but I do not think he really understands what happens when the safety net of the married women’s dependency pension which has existed for 50-odd years is pulled away and women are told that they are on their own. He does not actually know, understand or appreciate what it may be like to find the headspace, resources and capacity to change behaviour in order to build up a pension. I am sure that this is not a gender point, but I really do not think that the Minister understands where women like that may be coming from. In the past, as the Minister will know, we had deficiency notices under NIRS 2. They told you whether you had incomplete NI records. When the computer, on which the Minister is relying so heavily, toppled over in the late 1990s or thereabouts and we could not get it back on its feet for several years, we increasingly lengthened the period during which someone could buy back their NICs or make contributions accordingly to cover the lack of deficiency notices. We were willing to do it then for everybody on an annual basis, as far as I recall, before the computer toppled over, yet the Minister is reluctant to go back to that. I understand the point about mailings and so on, but at the very least I press the Minister to identify in his research the at-risk group. For my money, the at-risk group are women, particularly married women, who had relied on the 60% married women’s pension, who were perhaps unaware in the past of the credits they could have claimed, including carer’s credits, and they are not on the list.

I would like some assurance from the Minister—it could just be a nod if he likes—that the at-risk group in particular can be identified. At 65 or 66, they could find themselves on their own with an incomplete state pension and it is too late to do anything about it because we have failed to keep nudging them. If the Minister could give me that assurance, I would be content.

[Lord Freud]

I would be very comfortable giving the noble Baroness that assurance. Clearly, a generalised mailing out is exactly what we are concerned about. The evidence is that people will get official-looking letters which they do not look at. We have to find a way of getting to the most vulnerable groups, who may take a Rumsfeldian attitude—they do not know what they do not know—and we have to find a way through that. Therefore, I can give the noble Baroness that assurance. I think we are basically agreed around this Chamber about the need to get the communication right, but we need to do the research. There is no point in us making it up without that knowledge.

[Baroness Hollis of Heigham]

With those assurances, I am content to withdraw the amendment.

Amendment 3 withdrawn.

Schedule 1: Transitional rate of state pension: calculating the amount

Amendment 4

Moved by

[Lord Freud]

4: Schedule 1, page 31, line 34, at end insert—
“( ) Where regulations under section 22(5ZA) of the Contributions and Benefits Act have the effect that a person is credited, on or after 6 April 2016, with earnings or contributions for a tax year starting before that date, the earnings or contributions are to be treated for the purposes of calculating the rate under this paragraph as having been credited before 6 April 2016.”

[Lord Freud]

My Lords, in Committee, the noble Baroness, Lady Dean, spoke movingly of the case of a service wife. Her husband, a commanding officer, was stationed in Belize. Travelling abroad with him meant she sacrificed a successful legal career in the UK, but she also gave up the ability to build up her state pension. It gives me great pleasure today to be able to present a means to redress this situation. I need to acknowledge, alongside the contributions of the noble Baroness, Lady Dean, those of the noble Lords, Lord McKenzie and Lord Browne, and I particularly thank the noble Baroness, Lady Hollis, for her forensic analysis of this issue and her persistence in seeking a remedy for this group.

This amendment signals our determination to act. It places a duty on the Secretary of State to make regulations to allow service spouses and civil partners, due to reach state pension age from 6 April 2016, to apply for national insurance credits for periods during which they accompanied their partner on a posting outside the UK. The regulations will make provision to allow credits for periods between 1975-76 and 2010. This will ensure that, even in the rare circumstances that someone has spent their entire working life accompanying their spouse abroad, they will still be able to build the 35-year contribution record needed for the full single tier.

This builds on this Government’s commitment, set out in the Armed Forces covenant, to remove disadvantages that the Armed Forces community may face in comparison to other citizens, and to recognise sacrifices made. We continue to work on the finer details of the scheme, which will be set out in regulations. This will include the manner in which applications will need to be made and the precise start date. From information supplied by the Ministry of Defence, we estimate that up to 20,000 individuals could have a higher single tier pension from these credits.

Key to the impact of these amendments will be how effectively they are communicated. We recognise the importance of alerting people to the scheme to maximise take-up, and this will be incorporated into our wider single tier communications strategy. The MoD also anticipates using the ex-service communities’ charitable network and the Service Personnel and Veterans Agency communication channels. This amendment is also grouped with a small number of technical, tidying-up amendments to Schedules 1 and 12. These are all consequential on either Amendment 9 or provisions elsewhere in the Bill.

In summary, those who support our armed services abroad should not be penalised. The prospective earnings credit introduced in 2010 helped to ensure that single- tier pensioners in the circumstances I have discussed could build entitlement to state pension for years after 2010, but not before. These amendments address this and ensure that people who have accompanied their spouse or civil partner on overseas postings are not unjustifiably disadvantaged. I beg to move.

19:15

[Baroness Hollis of Heigham]

I will just say a couple of sentences. I am very pleased indeed that the Government are building on the work of the last Labour Government in recognising the particular obligations that go with the military covenant and ensuring that the spouses of service personnel are not disadvantaged when it comes to a full state pension. I welcome this and am very glad that the department and the Minister have been able to meet the concerns raised in Committee.

[Lord Browne of Ladyton (Lab)]

My Lords, we welcome the Government’s amendment, which requires the introduction of regulations to provide for spouses and civil partners of service personnel to gain national insurance credits for periods spent on accompanied assignments prior to 2010. As my noble friend has just said, these provisions build on the reforms of the last Labour Government, who allowed credits to begin from 2010. I thank the Minister for the generosity of his remarks about my noble friends Lady Dean and Lord McKenzie and, indeed, his recognition of my own small contribution to this outcome.

However, it would be remiss of me if I did not express from these Benches that we are in no doubt who is entitled to the greater credit for this amendment being tabled. It is my noble friend Lady Hollis who is the heroine of the hour. There is no question that the Government have acted because she raised the issue so effectively in an amendment in Grand Committee. Before she did so—and I am sure that the Minister will confirm this—the Government’s position was an honourable one, but, as expressed on page 33 of the document The Armed Forces Covenant: Today and Tomorrow, they stated:

“At present the Government has no plans to make further adjustments to the tax and benefits system for Service personnel and their families but will keep this issue under review”.

The Minister indicated in Grand Committee that he would review it and his officials have kept us all informed of that review going on and it is to his credit that it has resulted in this outcome.

The Government deserve significant credit for responding in the way they have done and now at least we can say in relation to this issue that there is no disadvantage and that members of the Armed Forces community have access to the same benefits as any other UK citizen. As the Minister has said, the challenge now is to ensure that, of those potential 20,000 beneficiaries, the maximum number benefit from this opportunity. The current figures for applications for the 2010 credits are disappointing. Either the MoD now needs to build a process for credits to be automated, or it needs to improve its engagement with its own personnel, to inform people of the availability of the credits and to facilitate and encourage take-up.

I accept that the other government amendments are consequential and uncontroversial and we welcome them also.

Amendment 4 agreed.

Amendment 5 had been withdrawn from the Marshalled List.

Clause 17: Effect of pensioner postponing or suspending state pension

Amendment 6

Moved by

[Baroness Hollis of Heigham]

6: Clause 17, page 8, line 31, at end insert—
“( ) The weekly rate is not to be increased under subsection (1) if a person has opted to receive a lump sum.
( ) The amount of any lump sum to which a person who has deferred entitlement to a state pension shall be set out in regulations.”

[Baroness Hollis of Heigham]

My Lords, we move to a new subject: deferred pension and how it may be taken, whether as income or lump sum. Over the past 15 years, most pensioners have for the first time been lifted out of poverty. In 1997 nearly half of pensioners were below the poverty line. It is now about one in seven: 14%, compared to nearly 50%. Pensions have risen three times faster than earnings, pension credit has topped up their income and now, we are pleased to say, pensioners are no more likely to be poor than any other group in society.

With pension credit for most future pensioners being absorbed into the new, more generous state pension, together with the guarantee of the triple lock, that journey out of poverty continues. Pensioners’ incomes, especially for those with no occupational pension, will be stronger and more stable than ever before. It is good news and I am delighted. I congratulate the Government on it, I really do.

We know, in any case, that most pensioners are very careful and spend up to their income and no more. They cope and they avoid debt like the devil. However, the growing problem is that those pensioners dependent on the state system, who may in future have a more adequate state pension, are also less and less likely to go into retirement with some modest savings as a cushion against rainy days or as a resource to meet lumpy expenditure. Currently, 21% of pensioners—one in five—have no savings whatever; 37%, more than a third, have less than £3,000 in savings; and half have less than £8,000. If the Minister gives us any mean averages, they are frankly a waste of time, as they were in a previous debate about hours.

Pensioners face soaring quarterly energy bills—I imagine other noble Lords, like me, have been slightly shocked in the past week or two to receive an energy bill rather larger than anticipated. The roof may need substantial work, especially after the gales, and may not be fully covered by insurance. Washing machines and boilers pack up. If they live in rural Norfolk, they may need to replace their old car with another, otherwise they are effectively housebound. They may have an outstanding mortgage and want to pay it off. What do the one in five who have no savings at all do when they are hit by a large utility bill? What do the more than one in three who have savings of less than £3,000 do when one of them dies and they face funeral bills?

We have, understandably, concentrated on building up pensioners’ incomes, and rightly so. However, we have largely ignored the issue of accessible pensioner savings for those of modest income. You can always turn capital into income—you just draw it down as you need it for that energy bill—but it is very hard to suddenly find £400 or more to pay the winter quarter energy bill from state pension income alone if you have no savings on which to draw. In other words, pensioners need savings, just as we all do, and too often they do not have any.

We recognised this when we did the deal with what was then Age Concern as we introduced pension credit in, I think, about 2002. The first £10,000 of savings would be disregarded for pension credit, although thereafter there was a high notional tariff rate. We recognised this need for savings when my noble friend Lord McKenzie made means-testing far more light-touch as pensioners became older. That is why, incidentally, I am seriously bothered about the new class 3A contributions, which encourage pensioners to use up capital to buy a year of S2P, taking an unwise gamble on their life expectancy, increasing their income by a bit but heavily reducing their capital. That is very unwise.

Above all, we recognised this when, back in 2005, we allowed pensioners who had deferred drawing their state pension to take that saved-up pension either as an income addition to their future pension—which is what most did—or as a lump sum to give them some savings. The Government propose to abolish the choice of taking that saved-up pension as a lump sum; it will be available to people only as an addition to the state pension. They are removing the choice of a savings sum from future pensioners. Currently, of the 1.2 million who defer their pensions, 63,000 take the lump sum, which was, on average, just under £14,000. In future, that option will be scrapped. Why? The Minister for Pensions, Steve Webb, is absolutely clear that he is doing it to “simplify the system”. It is not about costs at all, he says, just about simplicity. What is so difficult to understand about a lump sum of your two years or so deferred pension? It is complex, the Minister says, because DWP needs a 64-page leaflet to explain the choice. The Minister in your Lordships’ House, the noble Lord, Lord Freud, says the same.

As the Minister would expect, I have that 64-page leaflet. It is well written—well done to the DWP—simple to understand and straightforward. I have worked through it. I calculate that if, in the name of simplicity, you removed the choice of a lump sum and allowed only an increase in the pension, you would remove precisely 11 pages in total—I will give him the references if he wishes—so that the 64 pages would come down to 53. The rest of the pamphlet would remain unchanged apart from occasionally deleting the words “or lump sum” from, for example: what happens when I die, if I get divorced or if I am widowed; can I combine them; what if I live abroad; what are the effects on my benefits or on my tax; where can I find out more; what organisations may help me; and so on. That is what the 53 pages are largely about. All that applies to any deferred state pension, whether it is taken as an increment or as a lump sum—the argument of simplicity does not wash at all. It is a complete myth, and if anybody worked through that pamphlet, they would see it for themselves. I am confident that the Minister has worked through that pamphlet and I am therefore confident that he will agree with my assertion that it removes only 11 pages out of 64 in the name of simplicity, thus denying choice to people who want to exercise that choice. Taking out that choice in the name of alleged simplicity is, frankly, laughable—it is absurd. I have never seen such a trivial justification. It takes 11 out of 64 pages and thereby denies the choice of a savings lump sum to 65,000 people. I presume the Minister thinks people can understand 53 pages but that 64 pages is just too much. Really? Because he thinks, without any evidence, that they cannot manage those extra 11 pages, he will take the decision out of their hands and make it himself. He knows better than pensioners what they should do with their money. He cannot trust people who have been working and scrimping for 50 years not to waste any savings—their money—that they may accrue.

Mind you, if you have a private occupational pension and get a 25% lump sum tax-free, that is fine. You can do what you want with it. If you simply defer your S2P element, your additional pension, for two years you can take that as a lump sum. The Minister will not tell you how to spend that either. However, on a state pension, he is taking away the possibility of a lump sum—your money—that you have saved for, because, frankly, he does not trust you with it and is calling it simplicity if he takes 11 pages out of a 64-page pamphlet.

Some people, after two years’ deferral, may want that £14,000 of their money rather than the alternative of £14 a week. I would. They would be better off taking the £14 per week instead of a lump sum only if they live, I calculate, a further 20 years until they are aged 87. Those without savings are also poorer and least likely even to reach 80, let alone 87. Who are we talking about? They may be husbands working longer until their younger wife also reaches state pension age. They may both work longer, and one takes the income and the other the lump sum. They may have a somewhat impaired life expectancy; perhaps one is a smoker and they want the lump sum up front just in case that person does not survive to 87. The unspent portion of the lump sum can be inherited by the surviving spouse and would help cushion her—but if taken as increased income it dies with him.

We rightly spend hours trying to encourage people of working age to work longer. We rightly spend hours trying to get them to save. We know we need to build a savings culture. In a low-paid job, perhaps the only way they may be able to build savings is to defer their state pensions for a year or two, work a bit longer and take it as a lump sum. That may subsequently save them needing to get loans at huge interest rates because they have a lumpy bill, perhaps an energy bill, to meet. It allows them to make choices, which each one of us in this House takes for granted. Having just that extra margin in savings means that they can decide to help a grandchild, buy a washing machine that works, replace the carpet, celebrate a golden wedding anniversary, turn up the heating when it freezes or give a donation to their local church. They cannot do that out of income. They need savings. It is their choice, not ours. Pensioners, as they enter pension age, are moral adults and we should respect that and respect them. They have earned the right to that choice and we—and the Government—have absolutely no right at all to take that choice away. I beg to move.

19:30

[Baroness Sherlock]

My Lords, although we gave this a fairly good airing in Committee, I confess that I do not yet feel that I properly understand the nature of the Government’s objections to the taking of lump sums. My noble friend Lady Hollis explained her case for this, and there is no doubt that we have a crisis of savings in this country. Too many people do not have a safety net for a rainy day, and British households generally do not have enough money in savings. That amount has been falling in recent years—unsurprisingly, given the pressures on the cost of living. The case made by my noble friend about why people might need access to a lump sum deserves an answer from the Minister. She described when and why the option was introduced and what people might use it for.

However, having gone carefully over the record and the correspondence since, I did not get answers to some of the questions which I put to the Minister in Committee. Those answers would help me because I would like to understand two things. First, are the Government confident that they have worked through who will be affected by this, what the impact will be and what the alternatives are? Secondly, can they explain clearly why they are doing it? On the first point—and I did ask this—we know that 75% of those who are deferring are women, but do we know why?

My noble friend suggested in Committee that those people are waiting until their partner retires to claim their pensions. Have the Government been able to confirm whether that is why they are deferring, or are they deferring because they are still working and have not saved enough to feel able to retire? What do we know about the wealth of those who are deferring their pensions? These questions matter because they would go to the points made by my noble friend Lady Hollis about whether people without savings are going to end up accessing other forms of credit, which we would not want them to do as they may be problematic.

Most of all, I would like to understand what the Government’s objection is. We have had a few arguments made: the argument of simplicity was made and has been pretty well dispatched, so I will not revisit it. Another argument raised was that significant numbers of people deferring and claiming a lump sum are living overseas. However, we know from the data given to us that more than three-quarters of those people are living in the UK, so that is probably not the issue. Is it the administrative burden? Perhaps the Minister could tell us whether it is that or simply the cost.

If it is the cost, I understand that. If the Government’s argument is that the costs are significant, the House, I am sure, will listen carefully. However, it would be helpful at this point if the Minister could simply come out and say whether he would like to do this but cannot afford it or whether the Government think for some reason that it is a bad idea, in which case my noble friend Lady Hollis has laid down a strong challenge which the Minister really should answer.

[Lord Freud]

My Lords, in designing the single-tier reforms our overriding aim has been to deliver a flat-rate pension above the basic level of the means test without increasing spending, and to do so in a way that recognises people’s contributions under the current system. This is not easy to do and it involves difficult trade-offs. Some elements of the transition necessarily generate costs in the early years, particularly the “better of” calculation, which means that people with low amounts of additional state pension, such as carers, receive a boost. There is also the fact that those with high amounts of additional state pension, which take them over the full amount of the single-tier pension, are able to keep the surplus as a protected payment. Nevertheless, we have been able to stay within 1% of projected expenditure until 2040, which is fair to current pensioners and to future taxpayers.

In answer to the blunt question of the noble Baroness, Lady Sherlock, removal of the lump sum option for those who defer their state pension has played a key role in flattening expenditure. The early-year savings that this delivers have been ploughed back into the single-tier design. We are, however, still keen to preserve some flexibility for single-tier pensioners who, by choice or accident, claim after they reach state pension age, so people will still be able to build up an increase to their state pension that is paid on top of their single-tier entitlement for the rest of their lives. As discussed in Grand Committee, there remains the option of backdating a claim for a single-tier pension. By backdating their claim to a state pension, someone who has delayed claiming for whatever reason—either unintentionally or as part of a planned retirement—will be able to get up to 12 months’ arrears when they make their claim for a pension. This would provide someone who has qualified for the maximum weekly amount of £144 with arrears of almost £7,500 at 2012-13 prices.

[Baroness Hollis of Heigham]

Can the Minister help me with a technical point? With arrears, is the assumption that interest will be paid on the deferred money?

[Lord Freud]

What happens is that the amount is repegged to the year in which it is taken. If, for instance, someone’s delay in claiming exceeded a year, they would get an increment on top of the single-tier entitlement.

[Baroness Hollis of Heigham]

I am sorry but I still do not understand. This is a very simple point. At the end of the year in which you have not drawn your pension, do you get the equivalent of a return on capital—in other words, an interest payment—over and beyond the direct addition of 12 months of state pension?

[Lord Freud]

No, you do not get interest on arrears, but let me take the example of someone who delays claiming the maximum amount for two years and wants to backdate their claim for the 12 months. If we take the £144 example, they would get an increment of around £7.50 to £8 a week, depending on the value of the uprating, which would be added to their weekly entitlement. It would also include the calculation of arrears due to them for the backdated period. That would boost the overall arrears payment to more than £8,000, so that is the mechanism through which the delay works.

On the question from the noble Baroness, Lady Sherlock, about why women in particular are deferring, one of the main reasons is that women have a lower state pension age than men, although of course the reasons will vary with individual circumstances. I am loath to go too deeply into the simplicity argument because we will have a row which will go on for ever. However, to conflate complexity with the number of extra pages in a particular pamphlet is, bluntly, a somewhat bizarre argument. The difficulty for individuals is in making the decision on what option is best for them in the longer term and what is best for their surviving spouse.

[Baroness Hollis of Heigham]

Has the Minister actually read the pamphlet?

[Lord Freud]

I must confess that I have not counted up the pages or gone through it in detail. I suspect that I have gone through it but I cannot remember it and have not done the counting job on pages that clearly I should have. I knew that I should not have said this. However, I am not going to back down and I will stay with my “bizarre” comment.

[Baroness Hollis of Heigham]

Is this evidence-based policy? The Minister has not read it but it is “bizarre”.

[Lord Freud]

My Lords, I am most grateful for having a superb staff, some of whom have not only read the document but written it, so I am confident in the statement that I have just made.

The removal of the lump sum is not because we do not trust people; in fact, it is quite the opposite. We believe that people can make savings decisions for themselves. If they can afford not to claim the state pension, they can choose to save it.

Let me go to the figures on pensioner capital. We do not recognise the figures quoted by the noble Baroness. The figures I can quote—which are not averages, which I know the noble Baroness would scorn—are that almost three-quarters of the pensioner population already have more than £5,000 in capital, and more than half of all pensioners have more than £12,500 in net wealth.

[Baroness Hollis of Heigham]

The Minister challenges my figures. Is that households or individual pensioners?

[Lord Freud]

It is households.

[Baroness Hollis of Heigham]

My point precisely.

[Lord Freud]

I am not sure why that was the point precisely, but those are the figures I have. The proposed amendment would allow for regulations to introduce a lump-sum payment into the new scheme. That would bring costs forward and would undermine the cost neutrality of the single-tier package, as well as the simplification.

Bringing costs forward may sound like a technical concern, but the timing of expenditure is vital. Without making offsetting savings elsewhere in the single-tier package, Governments in the early years of single tier would be forced to divert more spending towards the state pension system than under the current scheme, which means more government borrowing for future generations to shoulder, or less to spend on today’s priorities. We simply do not believe it is right to make this trade-off to enhance the personal financial management options for a relatively small group of people who do not need to draw the income from their state pension and are therefore able to exercise their option to defer.

We understand that a one-off payment can help people build up capital, and the backdating option can provide flexibility in this respect. However, we question whether there is a widespread problem of low capital for those in retirement. Introducing a lump sum would require us to make alternative savings from elsewhere in the single-tier package, most likely by reducing coverage. We simply cannot agree to that, and so I urge the noble Baroness to withdraw her amendment.

[Baroness Hollis of Heigham]

My Lords, that was a very interesting reply. I only wish we were in Committee so we could show up more of the thinness of the Minister’s reply. For somebody who is so evidence-based—which is something I greatly respect about the Minister—he was dismissing it rather wildly out of hand.

The Minister pushed the argument that this is about cost and said that this removal played a key role in “containing expenditure”. That is very interesting. I had a discussion with his right honourable friend something like three weeks ago on precisely this point. He assured me most emphatically and vigorously—I am sure he would confirm the conversation, and there were witnesses—that this had nothing to do with cost but was only about simplicity. May I at least suggest that the Minister talks to his right honourable friend and agrees a common line on this? At the moment, one says it is all about cost and the other says it is nothing to do with cost but is all about simplicity. I suspect that the Minister in our House is probably correct about the cost argument, but that is not the position presented by the Minister responsible for pensions, who assured me emphatically to the contrary.

As to the point about simplicity, frankly, it is absurd. I checked my pages again. Pages 11 to 17 are a table showing the cost value of a lump sum compared with increments, and pages 26 to 29 are on taxing the lump sum. That makes 11 pages in total, and probably only three of those, on taxing the lump sum, would be regarded as any form of challenge beyond a reading age of seven and a quarter—so the Minister’s argument about simplicity is frankly absurd, patronising, condescending, lacking evidence and without any factual basis whatever. Frankly, we expect rather better from the Minister.

As for pensioner savings, as I suspected, the difference between us is that my figures are based on individuals, and I stand by them, and his figures are based on households, which does not help the argument very much. He seems to think that 64,000 people denied a lump sum is such a small number that we do not need to bother about them. It is three times the number of service spouses, if I remember correctly, that he is going to help through the military covenant, and no one said they were too small a number to bother about—yet the figure for a lump sum possibility which is three times larger is too trivial to be worth troubling ourselves with.

Frankly, I do not think the Minister believes a word of his argument. I think he does believe his argument about cost, but I do not think he believes anything else about it. He knows and understands that pensioners need savings. He knows that this may be a way for those who take this lump sum to exercise that choice. He knows that it is not difficult to understand. It could not be simpler. Do you want to take this two years’ worth of pension as a lump sum or do you want to add it on? If you are taking away the increment, that would be complicated to explain. A lump sum is the easier and simpler of the two options, and that is the one the Minister is taking away, to the pain of the individual who I calculate will reach their cross-over point—I asked the Minister for this figure, but it has never come to me—at about 87: I stand to be corrected if the Minister thinks I am wrong.

We are left with backdating—fine. All I can hope, and I am sure others do as well, is that we will keep up the pressure on Ministers to ensure that people are aware that they can take their pension lump sum in arrears, as a form of saving, after 12 months and get £7,500 or £8,000 for that sum, which will still keep them below any risk that other benefits, if they are necessary, including housing benefit, will be lost.

I am disappointed by the Minister’s reply, and I think that the Minister is disappointed by the Minister’s reply. He knows that it does not stand up to a scrap of scrutiny—not one scrap—but there is nothing much we are going to do about it at this time of night, so I beg leave to withdraw the amendment.

Amendment 6 withdrawn.

Consideration on Report adjourned until not before 8.47 pm.

UK National Action Plan on Women, Peace and Security

Monday 24th February 2014 Lords Chamber

Question for Short Debate

19:47

Asked by

[Baroness Prosser]

To ask Her Majesty’s Government what progress they have made on the development of the UK National Action Plan on Women, Peace and Security.

[Baroness Prosser (Lab)]

My Lords, it is with great pleasure that I stand to introduce this Question for Short Debate on women, peace and security, but not because the subject is a pleasing one. No, I am pleased because the more we debate these matters, the more we place our commitments and concerns on the record, the more likely it is that women in areas of conflict, who desperately need our voices and our support, will grow in confidence themselves and will feel stronger and more able to fight off the degradations and humiliations all too frequently suffered.

I can also express my pleasure at the work currently being done by our Government. The UK leads on the women, peace and security agenda in the UN Security Council, which is a very practical demonstration of commitment to this issue. During the period of our leadership two further Security Council resolutions have been agreed. Security Council Resolution 2106 notes that rape and other forms of sexual violence in armed conflict are war crimes and calls upon member states to comply with their obligations by investigating and prosecuting those who are subject to their jurisdiction who are responsible for such crimes. Further, the resolution recognises the need for accurate information and monitoring and, importantly, calls for further deployment of women protection advisers. A second resolution, UN Security Council Resolution 2122, unanimously agreed in October 2013, looks at the UN’s own responsibilities by, for example, strengthening the Security Council’s commitment to deliver this agenda by ensuring UN departments provide effective reporting and increase women’s participation in conflict resolution and peacebuilding processes. It also reiterates the Security Council’s decision to hold a high-level review of UNSCR 1325 in 2015.

I am also particularly pleased by the Government’s commitment to the elimination of rape as a weapon of war, as demonstrated by the Preventing Sexual Violence Initiative. In November 2013, when announcing the global PSVI summit, William Hague said:

“We intend it to be the largest summit ever staged on this issue. We want to bring the world to a point of no return, creating irreversible momentum towards ending warzone rape and sexual violence worldwide”.

These are, indeed, welcome words.

We welcome the positive moves taking place which we are all pleased about and which give us confidence on behalf of our sisters around the world. Now here comes the “but”. With any such complicated initiative with far-reaching implications, both across and between Governments, nationally and globally, there will always be room for improvement, both by better co-ordination and clearer resourcing. This is, therefore, a two-stage process with immediate and longer-term objectives. The need to focus, in the first instance, on keeping women and girls safe is absolutely understood. However, this is a problem based on power and women and girls will not be safe while they remain powerless. Plans which build on women’s involvement and participation in the decision-making processes in their neighbourhoods, regions and countries will contribute towards shifting the power away from men and towards women and will help to bring about the cultural shifts which are so badly needed.

The national action plan and the review document published in October 2013 both recognise this argument and there is government commitment to putting women’s participation at the heart of the new national action plan. What is meant by participation? I would argue that participation must be seen in its deepest and widest sense: at local, regional and national level; in policy development around access to education, healthcare, employment, finance, et cetera; in the drafting of relevant legislation; in constitutional change and in access to democratic processes which enable women to become involved in all levels of public life. I am not always a fan of quota systems but they can kick-start a change to traditionally biased bodies and the need for the presence of women throughout society is so great that quotas would be essential. Will the Minister confirm that Her Majesty’s Government’s negotiation and mediation teams will be at least 30% female, in line with agreed best practice guidelines?

We also need to see meaningful and robust consultation with in-country women’s organisations. That way, national action plans can best be developed and implemented and progress monitored to ensure the delivery of the NAP objectives. This work must also ensure that women’s NGOs are invited to participate in official meetings, particularly when those meetings are attended by Ministers or other decision-makers, where local voices can well make the decisions taken more relevant and more easily implemented. Involvement of local women’s organisations also informs and guides priorities; changes to so-called social norms can best be led by these organisations. Continued efforts need to be made to build on the in-country workshops which so helpfully informed the 2012 national action plan review and which should set the template for the development of the 2014-17 national action plan.

Turning to the question of funding, there needs to be the political will to allocate ring-fenced resources for this particular work, and there needs to be exemplar interdepartmental co-operation to make sure we get the biggest bang for our buck. Although significant sums have been allocated to various programmes, some run by DfID, some by the FCO and others through the MoD, there have never been any dedicated or ring-fenced moneys allocated to the national action plan. This can cause uncertainty and can also lead to a less than strategic approach. For example, women, peace and security criteria have been included in Strengthening Alliances and Partnerships within the Conflict Pool as part of the Building Stability Overseas strategy but it does not ring-fence funding for thematic priorities such as women, peace and security. Also, the Conflict Pool does not have a centrally driven approach and, although local influences are invaluable, an overarching strategy must surely be key to achieving the best delivery outcomes. With this in mind, how will DfID, the MoD and the FCO be sure that posts are implementing projects and that they are aligned to the principles of the NAP?

In summary, much good work has been and is being done. I have tried to capture the need to shift our emphasis away from dealing with the results of powerlessness towards enabling women to drive the agenda by knowledge, education, participation and influence. We need to ensure that the funding strategy enables local decision-making which fits into the overall strategy of the national action plan and that all departments involved in this project are taking an integrated approach. Successful outcomes will change women’s lives and, in turn, will provide security to the lives of all in areas that for so long have suffered conflict and a lack of security.

[Lord Wallace of Saltaire (LD)]

My Lords, this is a rather tightly timed debate and the right reverend Prelate the Bishop of Wakefield has asked if he might speak in the gap. It would, therefore, be a help if all noble Lords could complete their speeches well before “6” comes up on the clock.

19:56

[Baroness Jenkin of Kennington (Con)]

My Lords, having flown overnight from a different time zone, I was rather tempted to scratch from today’s debate and I now feel a bit guilty that I did not. However, as I was just discussing with the noble Baroness, Lady Prosser, in the Prince’s Chamber, these matters are so crucial that, although we seem to debate them regularly, it is important for the rest of the world to know how much we in this Chamber care and worry about our sisters across the world. I am grateful for the opportunity to participate in this debate and thank the noble Baroness for so ably introducing it.

I will start by going back to basics with a reminder of what the NAP actually is. The UK national action plan provides a framework to ensure that the provisions of UNSCR 1325 and associated resolutions are incorporated into the Government’s work on violent conflict. The creation of a new UK cross-government plan provides an opportunity to outline how UNSCR 1325 can be integrated into wider defence, diplomacy and development measures, and adopted in armed conflict and post-conflict situations. It helps the Government to identify priorities, determine responsibilities and develop measurements against which progress can be measured at the national level.

Why do we need such a plan? The horrendous impact of conflict on women around the world has long been underestimated and, in many cases, brushed under the carpet. More than half of armed conflicts reignite within a decade of peace. At the heart of this problem lie flawed peacebuilding efforts which have often excluded 50% of the affected population: women. Over the past 50 years, the nature of conflict has changed; almost all modern conflicts are intra-state, although external dynamics still influence conflict realities. This means that it is more dangerous than ever to be a civilian in today’s conflicts.

As wars shift from the battlefields to communities, civilians now suffer more than ever. In World War I, approximately 10% of all deaths were of non-combatants; in Iraq, since 2003, civilians account for around 90% of all fatalities. These changes have impacted enormously on women and modern peacebuilding and security agendas must address this challenge. As Major General Patrick Cammaert—I hope I have pronounced that correctly—former military adviser to the UN Secretary-General, famously stated:

“It is now more dangerous to be a woman than to be a soldier in modern conflict”.

I do not suppose I will be the only person using that quote today. It is time for the UK and the international community to recognise this and move forward to an era where women are free from impunity. The UN Security Council’s renewed determination to bring women into the centre of all efforts to resolve conflict and promote peace is to be welcomed. The goal is not merely to ensure that women have seats at the table of all conflict resolutions, but also to ensure that communities and societies as a whole can benefit from their expertise and knowledge.

I welcome and acknowledge the UK Government’s commitment to this issue, particularly the Foreign Secretary’s passion to achieve greater justice for women and girls. As he said at the launch of the “No Women, No Peace” campaign, no lasting peace can be achieved after conflict unless the needs of women are met. This means not only justice for the victims of crimes of war, but their active involvement in creating a society in which their rights are respected and their voices are heard.

In the short time available I am sure that others will speak in detail about the importance of June’s conference, where the updated NAP will be launched. I look forward to hearing from others with expertise on the subject.

Credit is also due to Ban Ki-moon for leading the way. He confirmed at the end of last year that women must be involved at every stage of efforts to reassert the rule of law and to rebuild societies through transitional justice.

“Their needs for security and justice must be addressed. Their voices must be heard. Their rights must be protected”,

he said, urging the council to deal with the full range of women’s rights violations during conflict. He is leading by example by appointing more women to senior positions throughout the UN. For the first time in history, five UN peacekeeping operations are led by women: in South Sudan, Liberia, Cyprus, Haiti and Côte d’Ivoire. He has also appointed the UN’s first woman lead mediator in a peace process: Mary Robinson, the UN special envoy for the Great Lakes region of Africa.

While that is much to be welcomed, it is important to look beyond the top leadership positions. We need to examine where women are in the overall architecture of peacekeeping missions. Those in middle-ranking positions are just as critical because they are the ones who directly interact with the local populations who are directly affected by the conflicts.

I am going to cut most of the rest of this so as to give the right reverend Prelate a fair whack. I will say only that the only way to combat the dire threat to women across the world is to include them in peace processes. Without their input, no peace will ever be lasting.

20:02

[Baroness Falkner of Margravine (LD)]

My Lords, I thank the noble Baroness, Lady Prosser, for securing this debate. I declare an interest as vice-chair of the All-Party Group on UN Women. In doing so, I immediately seek an assurance from my noble friend as to whether the All-Party Group on UN Women will be involved in the London conference in June 2014.

This has been a proactive Government in pursuing this agenda. Looking back over the 14-year period, the past three have probably been the most proactive that we have seen, the credit for which must of course go to the Foreign Secretary, who has taken such a personal stand and has championed this; and to my honourable friend in the other place, the ministerial champion for tackling violence against women overseas, Lynne Featherstone.

There has been a great deal of progress. We achieved a declaration on the issue for the first time at the G8 last year. Also last year, we had an inclusion in the Commonwealth Heads of Government Meeting communiqué. I know well how difficult it is to get the 54 countries of the Commonwealth to come to any sort of consensus, so that was really quite a remarkable achievement. Nevertheless, these fine steps along the road of progress have not necessarily been followed by much action. I will give my noble friend some evidence for this.

Of the core group of the G8 member states, a significant one, involved in ongoing conflicts in the Caucasus, is Russia, which has not adopted a national action plan. In the Commonwealth, the evidence leads to even greater pessimism. Of the 54 countries of the Commonwealth, only eight have adopted national action plans to date. Three were among the old Commonwealth—Australia, Canada and the United Kingdom—so I think that one would expect that. However, the five remaining nations, of the new Commonwealth—Ghana, Nigeria, Rwanda, Sierra Leone and Uganda—which signed up to these norms represent a counsel of despair. We know well that countries of the new Commonwealth, predominantly in Africa and south Asia, have very poor records of violence against women. Yes, we have come far but we still have a long way to go.

Particularly instructive about the absence of sign-up to national action plans is south Asia, as a region. Of the five countries in south Asia, four—India, Pakistan, Bangladesh and Sri Lanka—have persistent, ongoing and long conflicts, yet not a single one of them has signed up to their commitments in this regard. Moreover, not a single country in the Middle East or north African region has signed up: not one Arab state is represented in the list of 43 countries that have developed national action plans. We might have made some progress, but we have done so within what I would describe as the “usual suspects”, rather than among those where the need is greatest. Looking at the extent of conflict in the Middle East now, our failure to achieve any progress there is significant. I ask my noble friend whether Her Majesty’s Government will now—having got this far, through its leverage as a UN Security Council member, its role in funding UN Women as extensively as it does and having such a fantastic Conflict Pool—contemplate some form of conditionality in the aid and assistance they give to some of these countries, to pressure and leverage them to move forward and to prioritise action against violence against women.

Finally, I turn to the role of civil society and cross-learning, upon which both the UN Secretary-General in his report and, indeed, we, have put quite a lot of emphasis. It is not clear to me how much of our funding supports cross-learning. As an example, I draw the House’s attention to a Zambian programme supported by Oxfam, called “I Care About Her”. The programme is an illustration of where they have given up on trying to educate men through the conventional methodologies—the church, educational programmes, leaflets and so on—and have decided to educate men in a rather different way: by asking them which women were important in their lives. The answer came back quite clearly that men in Zambia considered mothers, sisters and daughters to be the important women in their lives, not their wives. The greater extent of the violence against women was against wives. The re-education focused on showing that the women who were the subjects of violence were somebody else’s mother, daughter or sister. It has been a hugely successful programme, and Oxfam should be commended for it. I hope my noble friend will be able to tell us if they are funding cross-learning of that sort from one country to another.

In conclusion, I very much welcome this new United Kingdom national action plan which is to be developed and implemented through 2014 to 2017. While achieving a great deal across our own Whitehall departmental functions, the UK should also use its lead to influence, to cajole and, if necessary, to push this issue across other parts of the world. That will be the demonstration of its leadership.

20:07

[Baroness Hodgson of Abinger (Con)]

My Lords, I thank the noble Baroness, Lady Prosser, for securing this debate. I know that she has a long history of support for UN Security Council Resolution 1325. I am glad that in this debate we have the opportunity to highlight the important issues while Her Majesty’s Government are in the process of developing the next UK national action plan. I declare my interests as the chair of the advisory board of GAPS and a member of the steering board of the Foreign Secretary’s PSVI initiative.

The UK is a world leader in setting the women, peace and security agenda and played a crucial role in ensuring that UNSCR 1325 ever came into being. This resolution addresses both the impact of conflict on women, and the vital role that women do and should play in conflict prevention, conflict resolution and sustainable peace. This includes women’s role in preventing conflict, preventing violence against women, protection of women, and women’s social, economic and political participation. The new UK NAP provides a key opportunity for the UK to commit to an ambitious plan to take this forward.

Women’s participation in peace processes is a key element of UNSCR 1325, yet almost 14 years after its adoption there is still little progress in this area. Over the past 25 years only one in 40 peace signatories has been a woman, and only 12 out of 585 peace accords have referred to women’s needs. Therefore, I pay enormous tribute to our Foreign Secretary for speaking out so strongly about including Syrian women at the Geneva II peace process and his groundbreaking work through the Preventing Sexual Violence Initiative that is making a huge impact with leaders around the world.

The next two years are key for women, peace and security both domestically and internationally, with the preventing sexual violence summit in June, the NATO summit in September, international drawdown of NATO troops from Afghanistan, the post-2015 framework, and the 15th anniversary of UN Resolution 1325 in October 2015. This new NAP gives an excellent opportunity for Her Majesty’s Government to consolidate and bring their women, peace and security agenda under one framework, maximising opportunities to ensure that women are at the heart of conflict prevention, peacebuilding and recovery.

Domestically, government co-ordination is central to enable the UK to meet its international women, peace and security commitments. To guarantee consistency of policy, the Government need a more joined-up approach to ensuring that all departmental policies and initiatives stem from the NAP, including policies relating to violence against women and girls, the PSVI and DfID’s call to action on violence against women and girls in emergencies.

Stronger mechanisms to mainstream gender and women, peace and security internally within departments need to be established, and gender training needs to be mandatory for some jobs in the UK and overseas. The Ministry of Defence has not yet developed distinct policies and training in line with UN Resolution 1325, and when the UK trains other national armed forces, all training should include women, peace and security. The PSVI summit in June will provide a good opportunity for the MoD to announce developments in this area, and for it to display its commitment to the women, peace and security agenda and preventing sexual violence on a global stage. At a country level, commitments to women, peace and security need to be reflected in FCO country business plans and DfID operational plans, and those commitments should be outlined in the new NAP.

As has already been mentioned, there is concern that the NAP has no dedicated funding. Neither do the Government currently use any systems to monitor their funding on this. For example, we know that the UK has women, peace and security programmes in many conflict-affected countries but we do not know how the UK prioritises this in its funding, and the use of the OECD gender marker would enable this.

As has already been mentioned, in-country consultation through talking to women and girls at grass roots is essential to ensure that the UK’s NAP and women, peace and security priorities reflect the needs of women and girls in conflict-affected and fragile environments. The new NAP should contain a plan for ongoing consultations in its focus countries. Most importantly, the NAP should acknowledge the role of local women’s rights organisations in prevention of conflict and violence against women, and their contribution to peacebuilding. Thus the NAP should commit to ensuring women’s civil society organisations have access to necessary funding including for campaigning and advocacy. This will transform their role and status so that they can fully participate in their community and national peacebuilding.

Monitoring and evaluation of the NAP is also important and the new NAP indicators should demonstrate impact, rather than just output, to enable identification of where its programming, systems and policies are effective, and where changes are required. The annual NAP report to Parliament is key and I hope that my noble friend the Minister can confirm that this will continue under the new NAP.

I am pleased to understand that Afghanistan remains a focus country, as women’s rights there was one of the reasons for our engagement, and we must not allow the gains that have been made for women there to roll back. The NAP provides an opportunity for the Government to demonstrate commitment to women’s rights in Afghanistan and support to Afghan women who so desperately need it. It is also essential that women from Afghanistan are included in the NATO summit in September so that their views are heard and that security for women in Afghanistan is not forgotten as NATO withdraws.

In conclusion, I congratulate the Government on all that they are doing on the women, peace and security agenda. This NAP is an excellent opportunity to push forward this work and to demonstrate the UK’s strong commitment, through funding programmes and ways of working, to ensure women truly are at the heart of conflict prevention, peacebuilding and recovery.

20:14

[Baroness Kinnock of Holyhead (Lab)]

My Lords, there is actually currently no dedicated funding for the NAP. The UN Secretary-General has called for 15% of peacebuilding funding to be allocated to women, peace and security. However, when the NAP was discussed in the other place, the Minister, Mark Simmonds, refused to make such a commitment, saying that the Government do not want to be restricted to any percentage amount. In view of this, will the Minister tell the House how we can be confident that women, peace and security is integrated into all funding in conflict-affected countries, and how funding is likely to be monitored, such as through a gender marker? Further, could we have clarification on whether the conflict, stability and security fund will include a focus on women, peace and security? Can we have an assurance that women’s protection and participation and the prevention of violence against women and girls will ensure that women, peace and security is a priority for the fund?

On leadership and participation, UN Resolution 1325 makes it very clear that there must be women’s participation and leadership in domestic and international peace, security and justice issues. The facts are, however, that since 2010 only one in five ambassadors has been a woman; there has been very little representation of women in leadership positions in the Armed Forces and MoD; and there are no women as chairs or deputy chairs of the Cabinet committee. Against that rather discouraging background, how does the Minister consider that in the new NAP the issue of women’s leadership in the UK will be addressed? In addition, how will we fulfil commitments made to UN Resolution 1325? Women’s participation must feature as a priority across diplomatic, military and development policy and programmes, and must include women at grass-roots level. We need an assurance that this approach will be rigorously pursued. We need to know what has been done to incorporate women, peace and security and UN Resolution 1325 into the MoD. It seems to me that specific and dedicated women, peace and security doctrine, including training for armed forces and staff, should be incorporated into training of other national forces. I hope that we will, this evening, have a reassurance that this will be a commitment under the new NAP.

On co-ordination, I remain concerned that we need, under the new NAP, to see all the WPS initiatives, including DfID’s various activities and the Preventing Sexual Violence Initiative, brought together under a broader women, peace and security agenda rather than being distinct policies led by different government departments. It would surely also be an improvement if the precise roles of the violence against women and girls champion, Lynne Featherstone in DfID, and the FCO lead on the NAP, Mark Simmonds MP, were to be included in the NAP, including the funding attached to each post. This would surely improve co-ordination between departments and bring some much-needed coherence to the process.

Addressing the root causes of violence against women and girls obviously has to be an essential element of efforts to build peace and stability. Is not it essential now to focus on those root causes—namely, gender inequality and discriminatory social norms?

I remain concerned about the murder and abuse of Afghan women human rights defenders and seek an assurance from the Minister that the recent high-profile killings are being raised forcefully with the authorities and that these brave women are being protected. In March last year, the DfID Secretary of State made violence against women and girls in Afghanistan a strategic priority. As we know, since then, things have become considerably worse for Afghan women and their rights. Eleven months after the statement, the Secretary of State is yet to announce what this priority will look like and how it compares with the financial commitment made to the other two strategic priorities for Afghanistan. Can the Minister therefore confirm that violence against women and girls will be a strategic priority in the new DfID operational plan for Afghanistan from 2015 and that women will be properly consulted in the development of the strategic priority?

As Syria is likely to be a focus in the next NAP period, can the Minister tell us how Syrian women’s future participation in the design, implementation and programming will be managed, prioritised and made more meaningful? It is surely time that the role of women in conflict prevention, peacebuilding and recovery is recognised, and is not the new NAP an opportunity to do exactly that?

20:16

[Baroness Tonge (Ind LD)]

My Lords, I, too, congratulate the noble Baroness on introducing this debate, looking forward as it does to the publication of the new action plan. Of course, I am very pleased that the UK is leading on this issue, but I want to widen the debate a little. We talk constantly of the empowerment of women, which is a very noble debate, but empowerment is hindered by two main factors. The power of men, of course, is the number one factor and very important. I remember in South Sudan years ago being asked to talk to the women of a certain area about their problems and possible ways of engaging them in decision-making. It took me all morning to persuade the men that we did not want them present at the discussions. A compromise was eventually reached in the end and the men encircled us, but at a distance where I thought that if we talked quietly they would not hear our conversation. I hope the women did not get beaten that evening, but they probably did.

The other factor holding women back is our own physiology. Women cannot be empowered if they have too many children and too much work to do. They have not the time to sit on councils and engage in decision-making at any level. As chair of the All-Party Parliamentary Group on Population, Development and Reproductive Health, I must impress on Ministers over and again that the most useful intervention that we can make to empower women is to ensure that family planning supplies are available to control their fertility voluntarily. Some 220 million women are still without access to contraceptive supplies, with 250,000 women dying in childbirth and millions more suffering chronic ill heath and injury as a result of there being no healthcare when their babies are born. There is no empowerment for them or for the women raped in conflict with no access to emergency contraception or safe abortion in conflict situations, even though humanitarian law and the Geneva conventions decree that it should be available. No empowerment either for the girls who leave education at puberty to be married and start having babies far too early for their immature bodies. Empowerment is but a dream. Therefore, engagement in any of these decision-making processes is impossible.

Look at our own history. Our less well-off grandmothers took little part in society or decision-making, even if they had accessed higher education, because of the burdens of unplanned pregnancies. Contraception freely available will also help to prevent overpopulation and diminishing resources, especially water. There is more and more evidence showing this. This is another and major cause of conflict—the battle for scarce resources. Too many youths in particular, with little hope of jobs, are fighting for scanty food and water, which means more conflict, more suffering for women and less chance of their empowerment.

This Government have made huge progress in reproductive health rights, maternal health, family planning and safe abortion provision, in particular, in the past three years, and I thank them and commend them for that. But I am concerned about this action plan, and I hope that, when it is published, it will keep up this momentum and acknowledge the importance of these issues if we are ever to give women a share in decision-making and contribute to peace and security in future.

20:23

[The Lord Bishop of Wakefield]

My Lords, I, too, congratulate the noble Baroness, Lady Prosser, on securing this debate. I reassure noble Lords that I am not speaking simply to bring a modicum of gender balance to the Chamber.

Many years ago now, when we were living in the East Midlands, my wife was a volunteer at a women’s refuge. She was scrupulous in maintaining confidentiality about those who used the refuge. None the less, on occasion, she would return home shocked and distressed at the violence that women had experienced, even here in our own country. It was a phenomenon that did not relate to just one stratum of society.

More widely, my own experience internationally as the Archbishop of Canterbury’s International Secretary in the 1990s and, more recently, with the international links that I have nurtured since being a diocesan bishop, I have been appalled by many of the stories of violence and abuse of women across the world. From widespread genital mutilation in Ethiopia to violence against women employed in gold-mining ventures by unscrupulous individuals in Tanzania, the stories continued to be manifold. Also included was violence against women in the terrible civil war at the end of the Mengistu regime in Ethiopia.

The churches have played a key part in addressing all these horrors, particularly the issue of genital mutilation. In the continuing conflicts in both the Central African Republic and the Democratic Republic of the Congo, each tells its own horrific tale.

I was fortunate enough to secure a debate in this Chamber last March on just this subject. In that debate I paid tribute to the Secretary of State for Foreign and Commonwealth Affairs for his very important initiative on sexual violence in conflict, which has already been mentioned on a number of occasions. As we all know, the first National Action Plan on Women, Peace and Security finished last year. Noble Lords have already heard, most notably from the noble Baroness, Lady Thornton, of the patchiness of plans across different nations on women, peace and security. As plans advance for the next stage of the national action plan, I ask Her Majesty's Government: will they conduct in-country consultations with civil society organisations, including faith leaders and churches, in each of the priority countries, before the development of the next UK national action plan?

20:26

[Baroness Thornton (Lab)]

My Lords, I congratulate my noble friend Lady Prosser on this debate and, indeed, all the speakers across the House, who, as usual, spoke with passion and expertise about this subject. I also thank Womankind and the Library for the excellent briefings they produced.

Hardly a week goes by without reports of the effect of conflict on women and children, whether it is in Syria, Sri Lanka or Afghanistan. As this debate reflects and as all the speakers have said, the world faces dealing with the normalisation of rape and sexual violence in conflict and, too, the disproportionate impact the conflict is having on women and children. Yet the irony is that women always offer the best hope for building lasting peace in any conflict situation.

Women’s voices should be heard not only because they are the victims of war; their active participation in peace efforts is essential, because they are the most effective peacebuilders. As men take up arms, women hold communities together in times of war. That makes them stronger and better equipped to play a key role in securing real peace. As the noble Baroness, Lady Jenkin, said, Ban Ki-moon is to be congratulated on his recognition of the importance of women. As my noble friend Lady Kinnock pointed out, the importance of women is at all levels.

Peacebuilding involves not just political leaders, but all of civil society, including women. I think we would all agree that without their full support and participation, no peace agreement can succeed in the long run. We know from our own experience that women leaders can often be successful in what seem to be intractable situations; we can point to the work of the noble Baroness, Lady Ashton, in Europe and Iran.

The three-year review is very important indeed. I intend to spend most of the rest of my time listing questions that were in the briefings that we have been given and which have not necessarily been mentioned by other participants in the debate.

The right reverend Prelate was quite right in his question about the importance of consultation with civil society organisations. I, too, seek reassurance about that and on whether the Government are incorporating commitments to ongoing engagement and consultation with civil society organisations, particularly those to do with women’s rights, into the UK NAP to monitor and review its implementation and impact.

On capacity, co-ordination and consistency, will the Government seek a more joined-up reporting approach by departments in the new NAP? How will the Government ensure that desk officers, posts, country offices and the military use the new UK NAP content as guiding principles of their work? Will the new UK NAP link women, peace and security into the wider conflict and human rights work undertaken by the Government? Will there be commitments in the new NAP on how the UK will implement women, peace and security principles within its own security and justice systems, including the police and the military?

The MoD has already been mentioned by other speakers. Will it train UK forces on gender and incorporate WPS in efforts on security sector reform? Will the MoD appoint a gender adviser to take forward its work on WPS? Will it ensure that it includes WPS components when it trains other military organisations?

How will the Government measure the impact of their participation work? How will they work with and support local women’s rights organisations to support their capacity and participation? How will the Government ensure that women make up at least 30% of all negotiation and mediation teams in line with best practice guidelines? Finally, will the UK develop a roster of women whom it can nominate for peace negotiations?

20:31

[Baroness Northover (LD)]

My Lords, I, too, thank the noble Baroness, Lady Prosser, for securing this important debate and for her tireless work in this area. I thank her and other speakers for the tributes they paid to the Government on the work that has been done, and note the comments about progress that is yet to come.

The noble Baroness, Lady Prosser, is right to say that the powerlessness of women is at the root of this problem, which is why the education of women, ensuring that they are independent, have bank accounts and participate at all levels of society is key. As she said that, I found myself thinking about groups that I met in India over the past few days. I could see that DfID’s support for women and girls was transformational, but also how far we have to go. It is in the light of this that we need to assess what is happening in terms of women, peace and security.

We firmly share the view so powerfully expressed in this debate that women must be at the heart of peace and security. They are central to efforts to prevent violent conflict overseas and to build strong societies yet too often, as speakers have said, women and girls are excluded from peace processes and continue to be especially vulnerable to violence, with dreadful consequences.

The UN estimates that at least one out of every three women around the world has been beaten, coerced into sex, or otherwise abused in their lifetime. Although women and children represent 90% of casualties of conflict, only 8% of participants in peace negotiations have been women. Of nearly 600 peace agreements signed between 1990 and 2010, only 16% contained references to women. Looking more widely, women are too often marginalised in society generally. For example, they account for only 21% of parliamentarians globally, and would not be at that level but for quotas.

There is international consensus on what needs to be done. The UN Security Council set this out in 2000, in its Resolution 1325, and in the six resolutions since mentioned by the noble Baroness, Lady Prosser. The council called for action under four pillars: women’s participation in building peace; preventing conflict and preventing violence against women and girls; protecting them; and making them central to the provision of humanitarian relief and a society’s recovery from conflict.

The UK can be pleased with how far we have come across government to put women and girls at the centre of policy. As my noble friend Lady Jenkin mentioned, my right honourable friend the Foreign Secretary is leading an international effort to shatter a culture of impunity for sexual violence in conflict, building global momentum and taking practical action on the ground, including deploying experts to help in countries ranging from the DRC to Syria, and from Bosnia to Mali. The Global Summit to End Sexual Violence in Conflict, to which noble Lords referred, will take place in June, and 140 countries, international organisations and members of civil society will come together to discuss and agree what more we can do to tackle these terrible crimes. I will take back my noble friend Lady Falkner’s suggestion about the All-Party Group on UN Women.

My noble friend Lady Falkner flagged up those countries that do not have national action plans. I assure her that we are working bilaterally with such countries on security and justice reform, preventing violence against women and girls, empowerment, and tackling violence against women and girls in humanitarian settings. We are certainly encouraging those various countries to take that forward.

The noble Baroness, Lady Kinnock, mentioned Syrian women’s participation, and she will have noted that my right honourable friend the Foreign Secretary has been urging that women are included in the discussions on Syria’s future, and we will continue to do so.

The Department for International Development, as many noble Lords will know, works very hard to try to prevent violence against women and girls. Its strategic vision for girls and women promotes women and girls’ health and rights, and their access to economic resources and education—very much building upon the ideas that the noble Baroness, Lady Prosser, outlined. It builds women’s political and civil participation and puts women’s and girls’ needs at the centre of our humanitarian response. It makes the policy arguments, including at the UN Commission on the Status of Women and in the debate about what follows the 2015 millennium development goals. Noble Lords will know that the United Kingdom is pushing hard for a stand-alone goal on gender. My honourable friend Lynne Featherstone is the Government’s champion on tackling violence against women and girls, and has led groundbreaking work in this area, including on tackling FGM.

A number of noble Lords mentioned the Ministry of Defence. Its goals cover personnel, training and operations, as noble Lords will know. It regularly reviews the employability of women in the Armed Forces and aims to ensure that gender is understood in all that the MoD does. The noble Baronesses, Lady Kinnock and Lady Thornton, flagged up this area in particular. The MoD constantly reviews training and includes sexual violence scenarios in pre-deployment. Operational planning for new theatres will take into consideration tackling sexual violence. NATO has carried out a lot of work towards integrating UN Security Council Resolution 1325 and gender perspectives into its command structure. This is a template that the Ministry of Defence can apply. We are also looking at the example set by Canada in terms of training overseas, and are seeking to see whether that can be brought into the way in which we do things through the Ministry of Defence. In terms of senior leadership, which the noble Baroness, Lady Kinnock, mentioned, we have, according to this note here, two female air vice-marshals in the Ministry of Defence, so we are making some progress but are acutely aware of the challenges that the MoD faces. I am sure that her comments will be taken note of.

Action at home is equally important, whether through the Home Office’s work to end violence against women and girls or the Government’s agenda to see women play a greater role in public life. We want women to represent half of new public appointees by the end of this Parliament, and we have reached a figure of 45%.

The noble Baroness, Lady Prosser, raised the subject of quotas and whether negotiation and mediation teams will be at least 30% female. The Government are reluctant to set a specific figure on women’s representation, but we are pushing hard to improve numbers. I am sure that this will be kept under review.

The UN Security Council calls for member states to deliver on all four pillars through national action plans. The UK adopted its first such plan in 2006 and we will soon, as noble Lords mentioned, launch our third plan, for the next three years. My noble friend Lady Hodgson is right that this needs to be strategic and joined up across government for it to have its best effect. I read with enormous interest the independent review of the previous national action plan, which makes this point very clearly.

The challenge for the next plan is to bring together all the work that we do—we recognise that—and to ensure that we deliver both globally and on the ground and test our plans against what those in this field are saying to us. We will bring under one framework our work on the Preventing Sexual Violence Initiative, the strategic vision for girls and women and the call to action on protecting women in emergencies, as well as our work at the UN Security Council and at the Commission on the Status of Women. I hope that this reassures noble Lords, including the noble Baroness, Lady Kinnock, that that is the approach that we are taking. My noble friend Lady Hodgson asked about the review of the national action plan and whether it will continue to be reviewed annually and reported to Parliament. We will continue to report annually on this, as well as to hold frequent meetings about it.

We are also learning from what appears to be working. DfID has a fund of, I think, £25 million—I do not have the exact figure in front of me—which is a research and innovation fund. My noble friend Lady Falkner asked about what we were learning; that fund is seeking to analyse what works and, therefore, what should be taken forward further. We are seeking to bring all this together; I think that that is vital. We will deliver multilaterally, through the United Nations, NATO and the European Union and now also in partnership with the African Union. We will put in place stringent monitoring and evaluation to assess the impact and outcomes of our actions and to capture the changes that our national action plan will make for girls and women on the ground. We will integrate women, peace and security issues into the work of the new Conflict, Stability and Security Fund. I hope that that reassures the noble Baroness, Lady Kinnock.

I can reassure the noble Baroness, Lady Prosser, that there will be central guidance from the fund on women, peace and security, although our conclusion is that a ring-fenced allocation would in fact encourage programme designers to take a compartmentalised approach to women. We think that it is extremely important, as that review indicates, to look at this strategically and make sure that it runs right through all the various programmes, but I understand people’s concern and the necessity to make sure that is does indeed run though every programme.

We will also be consulting both in the UK and on the ground and we take very seriously the Associate Parliamentary Group on Women, Peace and Security and Gender Action for Peace and Security. They were instrumental in delivering a successful workshop at our embassy in Kabul in December and will remain invaluable as we plan and carry out more workshops before April. We continue to be very engaged as far as the position of women in Afghanistan is concerned.

As we prepare to adopt and implement a new national action plan, we can be proud of what we have achieved but we recognise that we have much more to do and that we need impact that helps to shift general attitudes in society, protects women and girls and secures a better place for them in delivering peace and security. What lies behind all this, as noble Lords have made clear, is gender inequality. They are right that addressing this is fundamental to ensuring that women and girls are at the heart of all that we do, everywhere and in everything.

[Lord Wallace of Saltaire (LD)]

My Lords, we began this debate by having 62 minutes for a 60-minute debate, including the intervention in the gap. Thanks to the immense self-discipline of speakers—in particular, that of the opposition final speaker—we have now ended with three minutes to spare. Therefore, I beg to move that the House do adjourn during pleasure until 8.47 pm.

20:44

Sitting suspended.

Pensions Bill

Monday 24th February 2014 Lords Chamber

Report (1st Day) (Continued)

20:47

Clause 23: Amendments

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)]

My Lords, I am aware that the noble Lord, Lord McKenzie, cannot be present today for personal reasons. Given the circumstances, I should be happy to have further discussions with him about his Amendment 7.

[Baroness Sherlock (Lab)]

My Lords, I know that my noble friend would wish to bring back his amendment at Third Reading. Would that be okay with the Minister?

[Lord Freud]

Yes, that would be all right.

Amendment 7 not moved.

Schedule 12: State pension: amendments

Amendments 8 to 10

Moved by

[Lord Freud]

8: Schedule 12, page 51, line 37, at end insert—
“In section 1 (outline of contributory system), in subsection (1)(a), after “this Act” insert “or any other Act”.
In section 13 (Class 3 contributions), in subsection (2), omit “contribution”.
After section 19A insert—
“19B Extended meaning of “benefit” etc in Part 1
In this Part references to “benefit” or “contributory benefit” include benefit under Part 1 of the Pensions Act 2014.””

9: Schedule 12, page 52, line 17, at end insert—
“(5ZB) Regulations under subsection (5ZA) must provide for crediting a person with such contributions as may be specified in respect of periods on or after 6 April 1975 during which the person was—
(a) a spouse or civil partner of a member of Her Majesty’s forces,(b) accompanying the member on an assignment outside the United Kingdom, and(c) not of a description specified in the regulations.”

10: Schedule 12, page 52, line 17, at end insert—
“In section 122(1) (interpretation), in the definition of “benefit”, after paragraph (c) insert—
“(For the meaning of “benefit” in Part 1, see also section 19B)”.”

Amendments 8 to 10 agreed.

Clause 24: Abolition of contracting-out for salary related schemes etc

Amendment 11

Moved by

[Lord Whitty]

11: Clause 24, page 11, line 38, at end insert—
“( ) The power conferred by subsection (2) on employers to amend occupational pension schemes does not override the powers and duties of Trustees of such schemes nor any duty to consult members of such schemes and their representatives in accordance with the terms of such schemes.”

[Lord Whitty (Lab)]

My Lords, with Clause 24 and Schedule 14 we deal with the impact of the ending of contracting out on existing occupational, or work-based, pension schemes. The impact is pretty severe, being up to 5% of the income of those schemes. The Government have provided some measures in Schedule 14 and Clause 24 that allow employers effectively either to increase the contributions of employees but not of employers or to cut back on the benefits of those schemes. I do not approve of that way of dealing with the situation for either the public or the private sectors. Of course, ending contracting out impacts on both sectors. Although Clause 24 is primarily about the private sector, there are a couple of related questions on the public sector that I should like to put to the Minister.

I declare an interest as a vice-president of the Local Government Association and as a long-term member of the GMB. I am therefore particularly concerned about the local government scheme but other public sector schemes are also affected. In Committee the Minister indicated that he was prepared to have discussions with the LGA—and, presumably, parallel discussions with other public sector employers—to consider how the loss to its funds could be made up.

I understand that a meeting took place on 14 January and that the noble Lord, Lord German, was present at that meeting and may be able to elucidate. However, from the note of the meeting that I have seen, I am not clear as to the Government’s position on follow-up to that meeting in relation to the Local Government Pension Scheme. Of course, the Local Government Pension Scheme affects a large number of employers, not only local authorities but others in the public, private and third sectors. It is therefore important that some understanding of the stability of those schemes in future public expenditure allocations is established. It would be useful to hear of any progress on that or parallel fronts, so can the Minister update us on progress?

As to some of the schemes which are now in the private sector, Amendment 14 goes some way to meeting the concerns expressed on behalf of the post-privatisation schemes where guarantees were given that there would not be any diminution in the benefits from such schemes at the point of privatisation. So anyone who was in a scheme before that point should have been covered. I welcome that. However, I have a concern about the definition of “protected person”. The amendment refers to it being defined in regulations, whereas the schemes to which the Government have referred in their statements on electricity, railways, nuclear decommissioning and coal do not cover all the people who were given guarantees post-privatisation. For example, the guarantees for gas workers were written into the deeds of the scheme but were nevertheless promises backed by the Government. I should therefore like to know how far into the area of protected persons the regulations are likely to go. If the noble Lord wishes to write to me on that front I would be grateful but, in any case, out of equity, it ought to be addressed in the same way for every group of workers affected during that period of major privatisation of the utilities and other nationalised industries.

Of course, the Government have provided in Clause 24 and Schedule 14 a way out for others who are in private sector schemes. The way out is hugely detrimental to the members of those schemes in that it gives the right of override to employers—not to the scheme—to alter the terms of that scheme in order to make up the effects of the ending of contracting out, which can be up to a 5% deficit in such schemes. As the Bill stands, that ability to override is without reference to trustees, without invoking any consultation with members and without negotiations with trade unions or other worker representatives. Amendment 11 seeks to ensure that the rights of trustees are protected and that their legal responsibilities are recognised; that the trustees will be involved in any alteration of the scheme; and that consultation will be conducted in accordance with the terms of the scheme. Amendment 13, tabled by my noble friend Lady Turner, goes further and requires a ballot of members of such schemes. Unless we do that, we are seriously undermining the whole system of trusteeship of private sector occupational schemes.

I hope that the Minister will be able to tell me that Amendment 12 is unnecessary because it is in the existing law. I hope that is the case but the terms of Clause 24 and Schedule 14 which allow for override and alteration are extremely wide. It should have been the law and it was generally accepted that it was the law post the Maxwell scandal and the reforms that led to the requirement that schemes could not at any point retrospectively change the accrued benefit of members up to that point. In other words, the scheme could be altered subsequently but anything accrued up to the point of change could not be retrospectively downgraded. Amendment 12 seeks to ensure clearly that this is the case.

We need clarity from the Government on this and we need their vision for the future of occupational work-based schemes because there is a contradiction in the Government’s position. On the one hand, we are engaged in a system of auto-enrolment to increase the coverage for workers who hitherto have been outside occupational schemes, and in principle we welcome all that. On the other hand, the effects of the Bill, without mitigation of the kind I am suggesting in Amendments 11 and 12, will undermine and even destroy the viability of many existing schemes. It is not just the final salary schemes that we are talking about here, or career average schemes or simply defined benefit schemes. It will also apply to or have implications for all occupational pension schemes, partly because of the financial effect but also because the viability of pension schemes depends not only on the funding arrangements and the rigour with which those schemes are managed, but on the mutuality between the members, the employers and the funders under which those schemes are set up. That is reflected in the trustee arrangements; expectations are based on that mutuality continuing and on that trustee protection. If that goes, then members’ and potential members’ trust in such schemes goes too. We need to hear clearly from the Government what their intentions are for this sector.

If trust goes, then the level of opt-out from such schemes will increase. Pension schemes will be seen as non-viable. Some pension schemes will fail and the workers and the employers who have hitherto seen their pension contributions as part of deferred pay may no longer regard them in that light. Therefore, pressure might grow for them to be paid immediately. Pension schemes are the most effective form of savings but they will not appear that way if trust in such schemes disappears. That is bad for future pensioners but it is also bad for the economy if that element of relatively automatic saving is undermined. To maintain the trust, the role of trustees is vital. I would therefore like the Government to accept Amendment 11 and to indicate that the role of trustees, and therefore the trust in such schemes, would be maintained. That is not to say that alterations could not be made, but they would be made through the way in which the role of the trustees and the consultation is laid down in such schemes.

At a minimum, I hope that the Government can accept Amendment 11, confirm my understanding that Amendment 12 is indeed the law as it stands and clarify the situation of protected persons in the post-privatisation schemes. I would also like them at least to consider accepting the amendment tabled by my noble friend Lady Turner, which would delete Schedule 14 entirely, because the idea behind this whole way of overriding long-standing schemes is pernicious. Amendment 11 gives a way of doing it in effect, but doing it by consent, which is far preferable and will preserve a very significant part of the remuneration package and savings structure of the country. I beg to move.

20:59

[Baroness Turner of Camden (Lab)]

My Lords, in this section of the Bill employers are given a new power to change the provisions of a scheme in order to cover the NI costs to which they will be subjected. They may apparently do so without having to seek the agreement of staff or their unions. As my noble friend has pointed out, this is an overriding power to which a number of us objected at earlier stages when discussing the Bill. Schedule 11 sets out the provisions in some detail.

At Second Reading I referred to the development of what we now call defined benefit schemes, and what used to be called final salary schemes, as a result of which generations of pensioners have enjoyed excellent retirement provision. There was a move some years ago to change such schemes to money purchase schemes or schemes with less generous protection. Where the workforce was strong enough, probably with active union involvement, such schemes have been maintained. There is now, as a result of this Bill, concern among those who have not yet reached retirement age that these schemes will not continue and that employers will utilise the provisions in Schedule 11 to undermine or change them. Hence my amendment, which stipulates that an employer may not change these benefits without the agreement of the current scheme members, which under my amendment could be ascertained through a poll. I hope that the Government will agree that it is reasonable for the members of the scheme to have the final say. If an employer wants to change the existing arrangements, it must be by negotiation with the staff and their representatives and by agreement. Again, I hope the Government will agree that that is reasonable. If they do not, I would like to oppose the whole clause and the schedule.

I want to make another point about so-called protected persons. This was raised during earlier discussions and referred to again by my noble friend today. The Government have agreed in principle that individuals who were members of schemes when their employing companies were being denationalised would retain their pension provision. I believe the assurance is that where this protection has been agreed by statute, it will continue. I welcome that, and would like to see an endorsement of the point by the Minister. There are others who believe that they are covered not by statute but because their own private scheme gives them cover. Because of a change of ownership that might happen, they are concerned about their position in the future. Their position is not protected by statute, only by their own scheme. These people have concerns about what might happen to their DB scheme. My amendment would provide some cover because of the necessity to get the agreement of scheme members to any changes to benefit.

I wait with interest to hear what the Minister has to say to this, and in particular what he will say about his own Amendment 14, which looks like a tentative step in our direction. I hope that it is more than a tentative step and that he is undertaking to do something of the kind that we have been campaigning for and would like to see in the Bill before it leaves this House. I support the amendments already spoken to.

[Lord Browne of Ladyton (Lab)]

My Lords, it is a pleasure to follow my noble friends Lady Turner and Lord Whitty, who have robustly set out a fundamental challenge to Clause 24 and Schedule 13, which I think the Minister is required to engage with. Would the noble Lord and the Pensions Minister argue that the loss of the rebate, without some consequential provisions, would lead to the closure of defined benefit schemes? In short, my noble friends argue that this is where it will lead, even with the override which is designed to prevent their loss. There is a fundamental difference which deserves to be addressed in the way specifically asked for by my noble friend Lord Whitty. I am sure that the Minister will be conscious of that.

On the issue of protected persons, I welcome the Government’s concession, set out in Amendment 14, confirming that they will honour the specific undertaking given to the members of these schemes to encourage them to accept privatisation of the industries for which they worked. That is exactly why this undertaking was given to them. It has been promised for some time. Belated it may be in its delivery, but it is none the less welcome and it will be a relief to the 60,000 or more members of those identifiable schemes who have been awaiting this decision.

My noble friend Lord Whitty raised an interesting question about whether this concession can be made to apply in some form to gas workers who have a similar undertaking, but which was enshrined in a different way. I would be interested in what the Minister says about that.

Were my noble friend Lord Whitty’s Amendment 11 enacted it would ensure that:

“The power conferred … on employers to amend occupational pension schemes does not override the powers and duties of Trustees of such schemes nor any duty to consult members of such schemes and their representatives”.

To the extent that this amendment requires consultation with trustees, we support it. We had an extensive debate on these issues in Grand Committee and I made clear then that our position is one of broad agreement with the change to a single-tier pension and the aim of introducing simplicity into the state pension system. We also accepted that this required an end to contracting out. However, we agreed with the arguments put forward in Committee by my noble friend Lady Drake that statutory overrides are strong measures and should be used with care in all cases, at the very least requiring an employer to consult pension trustees before exercising the power to amend a pension scheme.

It would be to the benefit of understanding the Government’s position if the Minister would make clear in his response why the Government had set their face against consultation with trustees, especially when it is preserved in the statutory requirement to consult scheme members. It surely cannot be the case that the different approach to these forms of consultation is that consultation with trustees would be meaningful, but that consultation with individual members would be anything but—indeed it would be pointless. Like my noble friend Lord Whitty, I hope that the Minister’s response to Amendment 12 will be that it is unnecessary. It is my view that this is an expression of the current state of the law.

Finally, my noble friend raised an interesting point about public sector pensions, from his knowledge of the understandings that appear to have been implied by the meeting with the LGA. We would all be interested to know when further follow-up can be expected.

[Lord Freud]

My Lords, under the current system it is possible for defined benefit schemes to contract out of the additional state pension, giving up entitlement for additional state pension in return for a broadly similar occupational pension and payment of a lower national insurance rate for both employer and employee. When single tier is introduced, there will no longer be an additional state pension for defined benefit schemes to contract out of. Employers with such schemes will therefore no longer receive a national insurance rebate in respect of contracted-out members.

Employers will need to find ways to recoup the costs that the loss of the rebate brings. Unless they are able to do that, many employers will be forced to close their schemes. Clearly, members are not served by their pension schemes closing and the Government are committed to supporting the continuation of defined benefit pension provision. To that end, we are providing a statutory override to allow private sector employers to make limited changes to their schemes to adjust for the additional cost due to the end of contracting out. This is part of our wider state pension reforms. The majority of contracted-out workers in the private sector who reach state pension age in the first two decades of single tier will get enough extra state pension to offset the increase in national insurance they will pay over the rest of their working lives and any potential adjustments to their occupational pension schemes.

Noble Lords have made clear their concerns that the override is not abused by employers and that trustees and members are properly consulted about any changes. I fully recognise those concerns. The override allows for limited changes to future accruals and/or future contributions where the scheme rules would otherwise prevent that. I make it absolutely clear that the override does not permit the employer to ignore other rules about how the scheme operates. For example, it does not mean that an employer can avoid notifying trustees or members of a change, or refuse to carry out a consultation, if scheme rules would require this. Indeed, existing legislation requires that members are consulted on any significant rule changes before they are made. In response to the query from the noble Lord, Lord Whitty, that will remain the case. In addition, we have every reason to believe that employers will want to engage with trustees about how best to respond to the end of contracting out and believe it is in their best interest to do so.

Schedule 14 provides important safeguards, such as limits on the use of the override to prevent an employer from making changes beyond those necessary to recoup their increase in national insurance contributions, the need for an actuary to certify the changes and protection for members’ accrued rights. We will put further safeguards in regulations—for example, to ensure that the employer cannot create their own assumptions for the purposes of the calculation but must draw on existing assumptions used by the scheme.

Amendment 11 concerns protection for trustee powers and duties. As I have said, the override does not prevent the scheme operating normally. The only powers or duties that the override applies to—and therefore that the amendment would protect—are those that require trustee consent to changes or provide that only trustees can change scheme rules. Where these powers stay in place, they would make the override unusable, which in turn could encourage employers to close their scheme. Amendment 11 also seeks to ensure that the statutory override does not trump any duty to consult scheme members and their representatives. Such an amendment is unnecessary as scheme rules and existing legislation requiring member and representative consultation are not affected by the override.

The Government recognise that a trustee’s fiduciary duty to the scheme’s members may put them in a difficult position if they are required to agree scheme changes that, at face value, are detrimental to the member. However, the statutory override does not prevent the employer from engaging with the trustees on any scheme changes they are considering. It is in the employer’s interest to engage with trustees on proposed changes. Trustees are responsible for administering the pension scheme. All schemes need lead time before any changes can take place, to allow for IT systems to be updated and changes to the title deed to be made.

Part of Amendment 12 seeks to protect current members’ accrued rights. The Government absolutely agree that any accrued rights should be protected and preserved, and I reassure the noble Lord, Lord Whitty, and other noble Lords that the Bill already provides such protection by way of paragraph 3 of Schedule 14. This refers to the protection of “subsisting rights”—the term used in pension legislation—for both scheme members and their survivors.

Amendment 12 would also remove the stipulation that changes made in respect of future members have to correspond to changes made in respect of current members. It is important to remember that the override will enable employers to offset the additional cost of national insurance that arises from April 2016. The amendment would broaden the override. An employer could set different contribution rates or different rates of accrual for current and future members. I do not believe that that would be right. The increased national insurance costs to the employer from 2016 will be the same for both groups of members, and the Bill as drafted ensures that the override reflects that.

21:15

Where an employer chooses to use a statutory override to reduce future benefits rather than increase contributions then Amendment 13, tabled by the noble Baroness, Lady Turner, would require present members of a pension scheme to agree to the proposed reductions. This would place an additional burden on the employer, as it goes further than the existing requirements to consult. It would also mean that employers would be more likely to choose to make changes to contributions simply to avoid the administrative expense and burden of conducting a poll. It therefore removes much of the flexibility for the employer to make changes to future benefits or contributions, or a combination of these two. Instead, they would be faced with increasing contributions or closing the scheme.

Amendment 15 would simply remove Schedule 14 from the Bill. I have already explained that Schedule 14 is vital. It sets the parameters for the override and contains many safeguards for members.

I turn now to Amendment 14, tabled in my name. This relates to the long-awaited response—long-awaited by the noble Lord, Lord Browne, if no one else—to the protected persons consultation. It provides that protected persons are excluded from the scope of the statutory override. Noble Lords will be aware of a small group of approximately 60,000 individuals employed on the railways, including by Transport for London, and in the electricity, coal, nuclear waste and decommissioning industries who were given guarantees at the time of privatisation. Legislation passed at that time limits employers and trustees in their ability to change scheme rules.

The Government consulted on whether employers should be permitted to use the statutory override in respect of these workers and published the outcome earlier this month. This is a finely balanced issue where the arguments are highly polarised. We received many responses with strong views expressed on both sides and from many different and conflicting interests. On one side, we were strongly urged to honour the promises made to this small group of individuals at the time of privatisation. On the other, employers and their representatives argued that it is important for all scheme members to be treated the same way when contracting out ends and said that, if protected persons are excluded, they would seek other ways to offset the loss of the national insurance rebate.

The Government have decided to honour the promises made at the time of privatisation, which in many cases have been subsequently reaffirmed by Ministers. Due to the interest expressed in the outcome of this consultation, my Amendment 14 seeks to make explicit the exclusion of protected persons from the scope of the statutory override. Regulations will specify who is considered a protected person in relation to the affected schemes. We intend to set this out to capture those persons who we described in our consultation response. In that response, we set out that we are aware that relevant legislation covers protected persons in the electricity, nuclear waste and decommissioning, coal and rail industries, including Transport for London. The gas workers, who were mentioned by the noble Lord, Lord Whitty, are not protected by statute. The matter of the gas workers was consulted on and the current intention is to exclude people protected under legislation.

Finally, there have been discussions between the LGA and others, and there was a meeting with the DWP and HM Treasury as well as the DCLG, and they have agreed to meet further with the LGA to ensure that options are considered in an informed way as part of the next spending review. I understand that other sectors, such as the higher education sector, are likely to be party to these discussions.

[Lord German (LD)]

Will my noble friend allow me a moment’s intervention? I was present at that meeting, and I found it very interesting to have a representative of HMRC there. One of the principal conclusions I drew from that meeting was that there was an agreement between the LGA and HMRC that they would examine up front any arrangement for the distribution of additional funds from HMRC to local government pension funds, and would get the process sorted out in advance so that if money became available the method of distribution would be quick and would help them in their procedure. Can my noble friend confirm my understanding that HMRC is onside with this?

[Lord Freud]

My noble friend is probably way ahead of everyone in this Chamber at this moment on this matter, but I think I can simply answer yes to his understanding. As he says, whereas final decisions tend to get taken at a relatively late moment, if the processes are well organised, that matters less and they can be effectively activated.

The ending of contracting out is an inevitable consequence of the state pension reforms. We want to manage this as smoothly as possible and to minimise impacts on employers, schemes and individuals. I have set out why the override is necessary and why the amendments tabled by the noble Baroness and the noble Lord would make the override unworkable. Amendment 11 would in many cases allow trustees to block changes to the scheme and would increase the risk that employers would simply close their schemes. That is why I urge the noble Lord to withdraw his amendment.

[Lord Whitty]

My Lords, I thank the Minister for that. There is quite a lot in there which has cheered me up slightly—not everything, but bits of it. I am grateful for this update on the LGA position. We will watch this space. I am interested to see that there are other sectors that could be involved in that. I welcome the Minister’s statement in relation to the consultation of members of the scheme. I think I am quoting him correctly that the override does not affect the duty to consult, that the Government support the continuation of DB schemes and that the rules of such schemes on consultation are not affected by the override.

That deals with the consultation with members of the scheme, but it does not effectively deal with the trustee position, and the role of the trustees is very important in the future of the schemes and in future faith in them. The Minister said that trustees are bound to consult; yes, they are possibly bound to consult. The override clearly applies in his mind, and I presume the intention of the override is that in those schemes that require trustee consent, the employer, using Clause 24 and Schedule 14, can override the need for that consent. That seems a pretty fundamental alternation in the role of trustees. I hope that, even at this late stage, the Government would reconsider that position.

I am grateful for the Minister’s view on accrued rights and the fact that Amendment 12 is not, therefore, needed. I am less grateful for his indication that “protected workers” will not apply to those who are protected on the word of the Government of the day but not actually embedded in statute. This applies principally to the gas workers and I suspect I will be in correspondence with him about that.

The central point of this group of amendments is that, in this clause, the Government have, effectively, overridden the governance structure of work-based occupational schemes by attacking the very fundamentals of trusteeship. That is a mistake. Over the years, many changes have been made at the behest of employers and with the agreement of trustees. Some of these were detrimental to future members because of the financial position of the scheme or legislative changes. Trustees are unlikely to be unable to recognise the need for such changes, but to override and delete trustee consent is a very serious step which the Government should be much more hesitant about taking. However, for the moment, I beg leave to withdraw the amendment and thank the Minister for some of his other remarks.

Amendment 11 withdrawn.

Amendments 12 and 13 not moved.

Amendment 14

Moved by

[Lord Freud]

14: Clause 24, page 11, line 42, leave out subsection (4) and insert—
“(4) The power may not be used—
(a) to make amendments that apply to a member who is a protected person in relation to a scheme, or(b) to amend a public service pension scheme or a scheme of a description specified in regulations under this paragraph.(5) Regulations must define what is meant by a protected person in relation to a scheme for the purposes of subsection (4)(a).”

Amendment 14 agreed.

Schedule 14: Power to amend schemes to reflect abolition of contracting-out

Amendment 15 not moved.

Clause 27: Periodic review of rules about pensionable age

Amendment 16

Moved by

[Baroness Turner of Camden]

16: Clause 27, page 13, line 29, leave out from “to” to “and” in line 30 and insert “the type of work undertaken and the degree to which this may impact on health and life expectancy”

[Baroness Turner of Camden]

My Lords, this is a short amendment dealing with the section of the Bill that allows for the periodic review of rules about pensionable age. When I read it, I was concerned that there was nothing at all about the type of work people undertook before they retired. At Second Reading, I said that there were many people who were quite happy to go on working past normal retirement age but it depends on the kind of job you do, whether you are well paid, whether your job has authority, whether you enjoy your job and so on. However, there are many people who do work that is very necessary if the rest of us are to lead reasonably comfortable lives, such as people who work in construction and other industries where there is strenuous activity and, sometimes, danger. It is not a good idea to have elderly people in this kind of work.

It is too late in the day to make a long statement about this, but if there is to be a review of retirement ages it must be understood that people do very different types of work and it is not a good idea to think that one size fits all. I hope the Government will realise that in a periodic review of retirement ages it is sensible also to take on board the kind of work being looked at and the sort of people who are expected to do it. If they do not, it will not be very popular and may lead to problems in the future. You do not want future problems in a pensions Bill, so I suggest the Government think very seriously about this. I quite like Amendment 17, which is also concerned with a review of how retirement age is judged and brings a range of representatives of parties, including trade unions, into consultation, which is also very sensible. In the mean time, I beg to move.

21:29

[Baroness Sherlock]

My Lords, in speaking to Amendment 16, I shall also speak to Amendment 17 in my name and that of my noble friend Lord Browne. We on these Benches agree with the principle of raising the state pension age to reflect longevity. We accept the need for periodic reviews of the state pension age. Where we differ from the Government is on how best to do that.

Fixing the state pension age is never easy. There is always an issue of fairness at stake. Having a careful, evidence-based review before taking any future decisions on changes to the state pension age is a crucial element of ensuring fairness between generations. However, sometimes fairness requires a consideration of difference, particularly differences in longevity and health. The Government are setting considerable store by actuarial information on average life expectancy. However, while average life expectancy tells us something—mostly quite a lot about medical advances and their ability to keep us alive for longer—it does not tell us very much about our health in retirement or differential mortality rates.

We heard a great deal of evidence in Committee to inform our debate, and I certainly will not rehearse it all here, noble Lords will be relieved to hear. However, maybe the headlines are worth briefly restating. People are living longer, but the proportion of years in full health is not keeping track at the same rate. We have significant inequalities in health within the UK, and significant variations in mortality as a result. There are clear socioeconomic differences. There is a class divide, as managerial and professional classes live longer than manual workers by 3.8 years for women and 3.1 years for men. There is a clear geographical divide.

There is then the effect of this differential life expectancy on state retirement incomes, with the irony that those living the shortest lives post-retirement—the poorest and least skilled workers—will receive less in state pension than their better-off counterparts, but they may well have contributed for longer as a result of having spent less time in education.

If we want people to save for retirement, they need to trust the Government, to trust Parliament and to believe that their pensions are safe in our hands. The public need to know that they will not be at the mercy of political expediency, and that they will be protected from any adjustments that need to be made by ensuring that they are not made too quickly. Rather than simply being a matter for the Secretary of State, as the Bill proposes, we need a genuinely independent panel which has the kind of cross-party and independent representation that will reassure the public and give confidence to parliamentarians from across the spectrum. Our amendment proposes simply that the review body should include representatives of the opposition parties and of the Cross Benches of this House to ensure that Parliament as a whole is at the heart of this process. It would also include representatives of trade unions, who are themselves the representatives of those who are spending their ever-longer working lives saving for retirement. This broader representation will give people confidence that a wide range of views will be heard. I urge the Minister to accept it.

[Lord Freud]

My Lords, as your Lordships know, the purpose of the review of state pension age is to inform the Government. The reports from the Government Actuary and the independently led review, which will feed into the review, should collect and analyse the latest data, and give the Government of the day the information they need to make what will always be a difficult and contentious decision.

We are all keen that the Secretary of State receives a report that is impartial. Because we are requiring that all reports compiled as part of the review are published and all future changes to state pension age continue to go through primary legislation, any proposal based on a report that is not impartial, credible and comprehensive will quickly fall apart when scrutinised by stakeholders and both Houses of Parliament.

Turning first to the substance of the amendment tabled by the noble Baroness, Lady Sherlock, and the noble Lord, Lord Browne, if one thing is apparent it is that there is no clear consensus on who should sit on the review, what they should look at, or how they should collect the necessary evidence. We have been clear in Grand Committee and in the other place that this Government’s vision of the review is one similar to the independent review of public service pensions. That review was run by the noble Lord, Lord Hutton, a member of the opposition Benches and an expert in his field. It was transparent, comprehensive, independent and established a consensus.

Noble Lords will also be aware that the Pensions Commission, set up by the previous Government, had three commissioners from the areas of business, trade unionism and academia: not a single politician or Cross-Bencher. That commission gained support through comprehensive and open debate about the issues and trade-offs, rather than being based on the inherent characteristics of the commissioners’ backgrounds.

In short, the amendment tabled by the noble Baroness, Lady Sherlock, and the noble Lord, Lord Browne, would preclude these two successful models. It would result in a body of at least six individuals from stakeholder groups, the other place and this House. It would not necessarily have the expertise to review the relevant data and would effectively create a mini parliamentary process before the parliamentary process proper. We do not think that is the right way to run a review designed to inform the Government. In the Bill as currently drafted there is nothing to prevent a future Government running the review in whatever way they think best. That is a key point underpinning our approach to the review—getting future Governments to take active ownership of and responsibility for all aspects of the review, instead of just going through the motions.

Turning to the factors to be considered as part of any review, I must note that in response to the recommendation made by the noble Baronesses, Lady Turner and Lady Sherlock, we do not have the data regarding the relationship between specific occupations or types of work and life expectancy and healthy life expectancy. Beginning to collect such data would be both burdensome and, I imagine, for some professions simply impossible. More generally, we do not think it is necessary to specify any factors to be considered in legislation. We have already consulted stakeholders on what factors they think are important, and stated the factors we expect to be considered in the White Paper. The Opposition are worried that by not specifying the factors in legislation, future reviews simply will not consider important variables. However, what kind of support would such a review generate?

We want to encourage all interested parties to feed in their thoughts and contributions to better involve them. Specifying factors in the Bill could send out the message that we have already thought of everything important, and that future Governments do not need to consider additional factors as they are not set out in primary legislation. Such an approach could lead to a tick-box mentality, with Governments simply going through the motions instead of taking a proper, considered approach to each review. My point is illustrated by the fact that another factor has been added to the Opposition’s amendment since its predecessor was tabled only a month or so ago. Other noble Lords have also previously suggested additional factors, including life expectancy of the lowest income decile, prevalence of smoking and quality of diet. This demonstrates that the determination of relevant factors should take place after a thorough and extensive consideration and on an iterative basis for each review.

I turn now to the review’s remit. We believe that the Government should maintain control of this to keep it focused on the task at hand. There is nothing in the Bill to prevent the Secretary of State of the day updating the remit of the review, and we—or, more importantly, stakeholders—would fully expect him or her to do just this if new and compelling factors were identified during the course of the review.

The amendment of the noble Baroness, Lady Sherlock, also requires evidence to be gathered in public sessions. Although there is nothing in the Bill to prevent some evidence being taken orally—rather as Select Committees do—noble Lords will be aware that the nature of the analysis around state pension age, such as the myriad tables, charts and graphs, does not lend itself well to public sessions. Underpinning our approach is the idea that each Government will fully own and be responsible for the review. Setting out membership and factors to be considered restricts rather than increases that responsibility. It would instead limit the scope of reviews and reduce engagement by stakeholders. I therefore urge the noble Baroness to withdraw her amendment.

[Baroness Turner of Camden]

I thank the Minister for his response. It does not surprise me, but, on the other hand, I still think that the type of work that people do is very important. There are, of course, already industries in this country in which there are different ages of retirement for different types of work. It is not unusual for that to happen; indeed, it is quite a common practice, if an industry is particularly stressful or difficult, for there to be a lower retirement age for that kind of work. It is not an unusual state of affairs but one that is highly regarded where it applies—and people accept it. They think, “Oh well, that sort of work is very tough, but at least you go a bit early for it. You don’t have to stay and work there—after a certain time you can go”.

My husband, who was a pilot in the war, tried to stay in the Air Force because they were recruiting people to fly civil aircraft when the war ended. He tried to get into civil aircraft because he was a pilot, with decorations, but he was disappointed to find that he could not do so. He wanted to get into the civil air force because they had an early retirement age; he thought that he could retire at 50 and start becoming a full-time artist, which is what he had always wanted to do. But he did not manage to do that. I give that as an example, because the age of retirement was different than for general people. So it is not an unusual situation.

I still think that it is quite sensible to have a provision under which it is possible for a review to take seriously into account the type of work that is involved. However, I note what the Minister has said this evening and I shall study it with interest. In the mean time, I beg leave to withdraw the amendment.

Amendment 16 withdrawn.

Amendment 17 not moved.

Clause 30: Bereavement support payment

Amendments 18 to 21 not moved.

Amendment 22

Moved by

[Baroness Hollis of Heigham]

22: After Clause 30, insert the following new Clause—
“Assessed income period: indefinite period
Notwithstanding sections 28 and 29 above, any recipient of pension credit may from the age of 75 years have his or her assessed income period set for an indefinite period.”

[Baroness Hollis of Heigham]

My Lords, pensioners usually have stable incomes, especially compared to those who work, and they do not fluctuate by much. At the moment, existing pensioners on pension credit have their income and thus their eligibility assessed every five years at 65, 70 and 75. Thereafter, no further means-testing is required, although people need to report the death of a spouse or when they move into residential care. The Government are proposing to replace this light-touch system with annual means-testing every year until death, with the modest exemption of those currently already over 75, for whom means-testing has been suspended. All future pensioners will have annual means-testing until they die, which means that they will means-test, for example, a frail, 90 year-old widow.

In Committee, we argued that we would retain the current system of five-year assessments of income for pension credit eligibility and the suspension of means-testing after 75, both of which the Minister wishes to replace with annual means-testing. The Minister was not sympathetic; he tried to suggest to my noble friend Lady Sherlock that the new system would be simpler, whereas on any ordinary understanding of the word it is becoming more complicated. Eventually, he fell back on the necessity of making these savings—all £65 million or so extracted from some of the poorest people in the country.

This amendment is modest and targeted. It would permit the Government to means-test pensioners annually, as they propose to do, until the recipient is aged 75, and from then on as now those means tests would be suspended. Why this proposal? My concerns are threefold. First, the proposed changes will discourage pensioners from claiming pension credit. Secondly, it is profoundly unfair. Thirdly, it is not worth the relatively small savings that may follow.

21:45

On the first point of discouraging pensioners from claiming, we know that pensioners do badly out of means-testing, perhaps through ignorance. Many do not know what they are entitled to, especially if the husband who has always handled the finances of the family dies and his widow is not aware of what she may be entitled to.

Then there is the stigma. Even those who are aware of pension credit may deem themselves ineligible, as DWP’s own research shows, because years before they were refused another, and different, benefit. A third of pensioners now do not claim pension credit who should. They miss out on very large sums indeed—a mean average of £34 per week. Similarly, some 40% of pensioners do not claim what used to be called council tax benefit—which now has been very foolishly localised—although they should. Others do not claim attendance allowance, although they could. My late mother was entitled to attendance allowance for my late father, but I could not persuade her to claim it, because of the stigma of means-testing. It was in part because means-testing was not an effective way of helping many pensioners that I was delighted when it was built out of the new state pension, and I remain delighted.

However, given that only 80% of women will be retiring on a full state pension in their own right by 2020, and as they will no longer be able to rely on a married woman’s pension, thousands will, over time, still remain eligible for pension credit, even after 2016, over and beyond those with disability benefits, for example, and the new state pension. Therefore means-testing, as we all know, is not a good way of helping the elderly or of putting a safety net under them and ensuring that they have an adequate income. That is why I so welcome the new state pension.

My second objection to the Government’s removal of the light-touch regime of my noble friend Lord McKenzie is that it is profoundly unfair. A pensioner who retires after 5 April 2016 will, with 35 years, get a pension that includes an element representing the full non-means-tested pension credit. That has been built into the value of the new state pension. There will be no more means-testing for her. Yet a pensioner who retires a day earlier, on 4 April 2016, will be means-tested each and every year and for a less generous pension in total.

I well understand the need for before and after sets of provisions, known as cliff edges, although it is usually wise to build in transitional arrangements, if possible, to smooth people’s paths, or to produce steps in the cliff face. At the very least, the Minister should not be worsening the situation of those who already fare badly out of the changes. Here we not only see a sharp difference in treatment for pensioners retiring before and after 5 April 2015; the Government are actually worsening, as opposed to improving, the lot of those unlucky enough to be born a day too soon, by replacing five-year periodic means-testing with annual means-testing. Those who already will lose out are going to lose out even more. That is not decent; it is wrong.

If we think it right to abolish means-testing from the new state pension, why are we reimporting it and making it more oppressive for the already unlucky ones who do not qualify for that pension? They are doubly disadvantaged. We are not talking here about the deserving or the undeserving poor, merely the random accident of one’s birth date. The Government are deliberately widening the gap between older and younger pensioners and effectively making older pensioners, through their losses in pension credit or their failure to apply for it, help to cross-subsidise younger pensioners who are—or will be, under the new scheme—better off.

Whose state pension is the higher? Whose savings are completely untouched by the new regime? They are the younger pensioners, on whom more money is being spent. Who will become worse off and more worse off? They are the older pensioners, facing annual means tests for pension credit. It is profoundly unfair. I am surprised that the Minister does not see that and accept it.

Both concerns are heightened for older pensioners, usually widows, as they become increasingly frail and sometimes increasingly confused. As my noble friend Lord McKenzie said in Committee, they do not always keep and file papers or answer official correspondence, and may be puzzled by forms which 10 years before may have been easily understood. Is the Minister really expecting to means-test them at 80 and 85 and, if they live that long, at 90 and every year between? Do we give them no respite at all just because they are one day older than their next-door neighbour?

Bluntly, the older people get, the less likely they are to apply and reapply for pension credit correctly, and receive it. Not having enough money as a result, they turn down the heating or turn it off because they cannot afford it, and risk their health. They cannot afford helpful aids and appliances or contribute to domiciliary social care or their meals on wheels and they deteriorate quite fast—we have all seen it. They will have been means-tested every year for 10 years until the age of 75. Any small pots of money will long since have been taken into account under pension credit. Why do we keep both pursuing them and means-testing them? Their lives will become more difficult as they are widowed, their health declines, disability increases, their sight goes and perhaps their memory as well. Must we make getting an adequate income and accessing pension credit yet another task—frankly, another burden—for them? That is fine if they have family nearby, but many do not.

This amendment is very modest. It accepts, reluctantly, that the Government intend to make some £50 million or so net savings from annual means-testing of pensioners until the age of 75. We do not have the stats to know how much would come from means-testing the over-75s, and the DWP does not know that, although I have tried to find that out. My guesstimate is perhaps £15 million or £20 million. However, after 10 years of means-testing, I suspect that there would be such diminishing returns against the cost of administration that I doubt whether the savings would be worth the distress that annual means-testing of the very elderly, increasingly disabled, increasingly frail, increasingly confused pensioners would create. I believe that the Minister understands this. We all have elderly relatives who have had somewhat difficult lives. I hope that he will accept this amendment and make the situation somewhat less difficult than he at present envisages it. I beg to move.

[Baroness Sherlock]

My Lords, in Committee the Minister came under sustained pressure on this matter from my noble friends Lady Hollis and Lord McKenzie, among others, and I am sure that he did not expect to emerge unscathed from Report. Many noble Lords pressed the Minister in Committee to try to understand what the consequences of this increase in means-testing would be. In particular, they were concerned about what would happen to those older pensioners who inadvertently, or perhaps negligently, fail to report changes of circumstances.

The Minister could not assuage our fears in Committee but wrote to us subsequently. That was helpful as it made clear what would happen. The letter he sent to us, dated 20 January, noted that claimants of any age who commit benefit fraud can be prosecuted. However, it also says:

“DWP may offer an Administrative Penalty as an alternative to prosecution. That penalty is 50% of the overpayment with a minimum value penalty of £350 and a maximum of £2000”.

When a claimant makes an error resulting in an overpayment, the letter explains that,

“a DWP decision maker will consider the full circumstances of the individual case … taking into account the reasons that led to the error”.

The letter then referred us to the guidance for decision-makers. I read this guidance so that noble Lords would not have to, and that is an hour of my life that I will not get back, so anyone who feels that he would like to buy me a drink at any point to say thank you is most welcome to do so. However, having done so, I then discovered the following. Incidentally, CPen means civil penalty and DM means decision-maker. The guidance states:

“Before imposing the CPen, the DM must establish that the claimant

1. has acted negligently and

2. has failed to take any reasonable steps to correct the error that led to the overpayment”.

I accept that the word “negligently” implies something serious. However, on the “Meaning of ‘negligently’”, the guidance continues:

“DMs should note that negligently should be taken to mean acting carelessly, not paying sufficient attention to the task in hand, or disregarding the importance of what is required to be done in relation to the claim or an award”.

In other words, that is a pretty low bar.

A number of noble Lords expressed concerns—as has been done very clearly by my noble friend just now—about what happens to pensioners who might struggle to keep the paperwork together or report every relevant change. The letter from the Minister said that robust safeguards are in place to ensure that matters such as mental capacity are considered. However, the guidance also makes clear that misrepresentation can involve simply leaving a section blank, perhaps because someone cannot figure out how to fill it in at that point and forgets to go back and do so later. The guidance also states at paragraphs 09206-7 that a claimant cannot avoid responsibility for misrepresentation just on the grounds that they claim they did not know what they were doing. It states:

“Non-responsibility is limited to those who are blind, illiterate or do not fully understand a particular form they have signed. Poor education, illness or inborn incapacity alone is not sufficient to show non-responsibility. People are expected to take reasonable steps to understand what they sign”.

This is exactly the sort of reason why so many pensioners dread means-testing and do not claim benefits to which they are entitled. If the Minister does not want to accept this amendment tonight, I plead with him to do one thing. Will he please take this guidance away urgently and have it revised before this legislation ever is introduced, so that pensioners are not expected to follow these kinds of rules?

[Lord Freud]

My Lords, assessed income periods were introduced by the noble Baroness, Lady Hollis, during the passage of the State Pension Credit Act 2002. At that time it was assumed that income and capital for those above pensionable age remained relatively stable and it therefore made good sense to relax reporting requirements, both for the individual and the department in terms of running costs. This was still the case in 2007 when the Government of the day introduced indefinite assessed income periods for those aged 80 or over.

The noble Baroness said just now that income and capital do not fluctuate by much. We have now tested those assumptions, analysed around 100,000 cases and come to the conclusion that there is actually a greater degree of volatility in people’s financial circumstances than she and the department had anticipated at the relevant times. In some cases, assessed income periods have allowed people to continue to receive pension credit following a change in their circumstances when they would not have been entitled to it had they made a new claim at that point. The evidence means that we have had to think again about the viability of the policy and have concluded that AIPs should be abolished. Ultimately, if we were to allow AIPs to continue, the taxpayer would be providing support to people who no longer need it. It would mean retaining a system in which we can only apply changes to retirement provision that would increase an award but cannot take account of windfalls that would otherwise see a reduction in or loss of benefit.

Let me be clear, we are not changing entitlement rules. We are changing the reporting system so that people’s benefit entitlement reflects their circumstances at the time. To that end, we are looking to simplify the reporting requirements so that we are able to support those who need it most and best target our benefit expenditure. I am of course mindful that by changing reporting requirements some people may find it more difficult to adjust, particularly those of the most advanced years who may have the greatest difficulty in contacting us. This is why existing indefinite assessed income periods in place prior to 2016 will continue.

For those new recipients, or those on fixed-term AIPs, we will have the opportunity to explain clearly what does and does not need to be reported at the point of claim or when their existing claim is reviewed. I stress that pension credit is already designed in such a way as to minimise reporting requirements. For example, changes to capital only need to be reported if their total amount exceeds £10,000. Currently, only 12% of people on pension credit have capital above that level. People would need to report new income streams, but we will continue to take into account annual increases in pensions automatically, based on what people tell us. We will also encourage people to tell us if their capital falls below £10,000 or if any income stops, to ensure that we capture beneficial changes.

22:00

The amendment from the noble Baroness, Lady Hollis, would allow for decision-makers to set an indefinite AIP for those over 75. Through our policy of matching entitlement more closely to circumstance, we estimate that annually managed expenditure will fall by around £82 million per year by 2020. Although we have been unable to estimate the exact reduction in savings, since we cannot predict how the overall savings will break down by age group in the future, our analysis indicates that setting indefinite AIPs for those over 75 could reduce savings by around 30%; that is a figure of £25 million, which is not that far different from the £15 million to £20 million that the noble Baroness estimated. It is a high price tag on top of the protection that we have factored in for people already on indefinite AIPs. It is also a sum that we would need to find from savings elsewhere. I acknowledge that this is the upper end of the potential cost of the amendment by the noble Baroness, as discretion could be applied in setting indefinite AIPs.

In reality, as the noble Baroness will know, allowing a decision-maker discretion in an income-related benefit carries the risk of arbitrary or uneven decisions. If an indefinite AIP is not applied consistently to all those over a certain age, this also carries the risk of appeals and disputes. Quite apart from reintroducing further administrative complexity, we would still expect a proportion of these claimants to end up receiving an amount of pension credit to which they were not entitled and so we do not believe that such discretion is appropriate. This change would either increase complexity or reduce savings, or a combination of both. I know that the noble Baroness will be disappointed with this response, but I hope that I have made the Government’s position clear. We will maintain the indefinite AIPs already in place in order to protect those used to the current system. However, we cannot agree to an amendment that would raise false expectations by enshrining a power that we have no intention of invoking.

On the questions raised by the noble Baroness, Lady Sherlock, on our treatment of people who neglect to report change under the system, we recognise that people will need to adapt to the new system so we will look carefully at our communications to ensure that people have a clear understanding of when to report changes. Support is already available for older, more vulnerable customers and this will not change. Where it comes to light that a change has happened but not been reported, the circumstances of each individual case will be considered. There are robust safeguards in place when the decision is taken on whether to pursue sanctions. If, for example, a person’s state of health or mental health is considered relevant and meant that there was a reasonable excuse for their failure to report a change, a sanction would not be imposed in such a case.

On the point raised by the noble Baroness, Lady Hollis, on unfairness, I need to point out that there is not a real cliff edge here; the entitlement rules for these people will remain the same. There is a difference of treatment created by our decision to allow those on indefinite AIPs to remain so, but we believe that it is not right to change the rules that people are used to.

The other issue of concern to the noble Baroness was whether people would be deterred from claiming pension credit. There is no evidence to suggest that there will be such an effect or that having to report changes of circumstances deters people from claiming benefits.

[Baroness Hollis of Heigham]

When the Minister says that there is no evidence, does that mean that he has sought evidence and there is not any, or does it mean that he simply does not know, or what? Has he evidence to prove that there is no deterrent effect? I suspect that the answer is no.

[Lord Freud]

Take-up of pension credit guarantee credit, which is aimed at the poorest pensioners, is already high at 82%. However, I think that it would be better if I offered to write to the noble Baroness on the exact nature of the evidence which I do or do not have. Actually, I do not need to write because I can tell her that her second supposition is correct. We do not have any evidence either way. With that covered, I ask her to withdraw the amendment.

[Baroness Hollis of Heigham]

My Lords, I am not going to pretend that I am not disappointed with the Minister’s reply. I thought that he showed a degree of sympathy and understanding in Committee, particularly of the plight of older pensioners in their late 70s or their 80s, or perhaps older still, who are getting increasingly frail and confused. I thought he understood that. That is why in this amendment I dropped the idea of periodic assessments and simply suggested that, while the Minister does what he thinks is appropriate or is required to do on this in terms of having annual means-testing until the age of 75, at least from 75 onwards he could abandon the annual means-testing system.

I really do not think that the Minister has addressed the issue. He said, first, that he thinks that the savings would be reduced by 30%. I suspect that that is a slightly arbitrary figure, arrived at by dividing the number of years and the percentage of savings, but it takes no account whatever of the fact that means-testing will already have excluded pensioners at an earlier stage. I suspect that at least half his savings will come from the fact that pensioners do not claim what they are entitled to, rather than them not getting what they otherwise would by having annual means-testing.

The Minister said that if those under 75 were annually means-tested but those over 75 were not, that would give rise to appeals and disputes. What evidence does he have for that? After all, we have had periodic means-testing since 2008. How many appeals have there been from people under the age of 75 against the “no further means-testing at 75” rule, and what has been the result of those appeals? I shall give way to the Minister. He ran that argument, so I presume that he has some statistics for us.

[Lord Freud]

I shall have to supply the statistics separately and will do so in writing.

[Baroness Hollis of Heigham]

My Lords, forgive me, but trying to persuade the House that this would generate appeals and disputes and not presenting to noble Lords what is already a firm basis of evidence from the existing situation does not seem acceptable. I rather doubt that the Minister has more than a couple of handfuls of cases but we will see when he digs out his statistics. I just do not think that it is a valid argument and I have not had a shred of evidence from him or the Box to support it, although I have plenty of anecdotal evidence to the contrary.

However, my deepest concern—and it is one that I do not think the Minister has addressed—is just how profoundly unfair this is. I am baffled that he does not seem to accept that argument. He is quite deliberately building means-testing out of the new state pension, and I welcome that wholeheartedly. However, every reason he adduces for building it out of the new state pension applies equally for not continuing to means test after 75. Every argument that supports the new state pension works to support the amendment and not continuing means-testing after 75. If means-testing is so innocent, why get rid of it in the new state pension? The Minister knows, as we all know, on the basis of good and effective DWP research, that means-testing is loathed by pensioners and they do not take up the benefits they are entitled to. That is what the Minister is counting on for his savings and it is profoundly unfair.

Pensioners slightly younger are built out of means-testing because the whole lot of pension credit has been thrown out of their new state pension. One day older and they are not only going to be means-tested but means-tested annually until the day they die, until they are 90. That is shameful. The Minister is widening the gap between younger pensioners, who will be much better off and with no means-testing, and the pensioners who will be staying with the old system, who are already older and poorer and who will have a lower pension and face means-testing. He is widening the disparity rather than narrowing it.

That is not good enough. It is not decent. The Minister is profoundly wrong on this but, given the lateness of the hour, obviously I will not seek the opinion of the House at this time of night. I will withdraw the amendment but with a heavy heart because it is profoundly wrong to widen the gap between older and younger pensioners at a time when we are trying to build means-testing out of the system and the Minister is reinforcing it back in again. I beg leave to withdraw the amendment.

Amendment 22 withdrawn.

Consideration on Report adjourned.

House adjourned at 10.12 pm.