Universal Credit
Lord Sharma Excerpts(6 years, 8 months ago)
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The Minister for Employment (Alok Sharma)
The implementation of universal credit continues to make good progress. The full service is now operating in 250 jobcentres and we expect to complete national coverage and be in all jobcentres as planned by December 2018. Within this timetable, I am announcing today some modifications to reflect local considerations and discussions.
We continue to make progress in delivering a Welsh language capability within the full service. While it has always been possible to speak to DWP in Welsh, either in jobcentres or on the telephone, and to have dialogue in Welsh on online journals, we want to be able to offer full Welsh functionality as soon as we can for those areas of Wales with the highest density of Welsh speakers. In order to increase the chances that functionality will be in place in time with local roll-out, we are moving the 13 jobcentres with the highest density of Welsh speakers to December 2018.
In addition, Barrow Council has asked if its roll-out date could be changed to December to reflect the fact that it is bringing its housing benefit administration back in-house and it would like to sequence that change before universal credit rolls out. This is sensible planning and we have agreed to meet that request.
Finally, in order to balance resources more effectively within DWP we are making several other modifications to the roll-out timetable, as set out in the table available as an online attachment. We will modify the master schedule on gov.uk to reflect these changes. District managers are contacting local stakeholders about these changes and writing to their local MPs with details.
Attachments can be viewed online at: http://www.parliament. uk/business/publications/written-questions-answers-statements/written-statement/Commons/2018-03-22/HCWS577/.
[HCWS577]
Employment, Social Policy, Health and Consumer Affairs Council
Lord Sharma Excerpts(6 years, 8 months ago)
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The Minister for Employment (Alok Sharma)
The Employment, Social Policy, Health and Consumer Affairs Council met on 15 March 2018 in Brussels. I represented the United Kingdom.
Under an agenda item on the European semester, the Council adopted the joint employment report (JER) and Council conclusions on the annual growth survey (AGS).
The Council received a presentation on the 2018 country reports on the implementation of 2017 country specific recommendations.
The Council endorsed the opinion of the Employment Committee (EMCO) on the latest biennial assessment of member states’ progress against the non-binding Council recommendation of 2013 on a youth guarantee for tackling youth unemployment.
The Council adopted a recommendation for a European framework for quality and effective apprenticeships.
The Council then conducted policy debates on the future of social Europe post 2020 and closing the gender pay gap: contributing to the achievement of the goals of the European social pillar.
Under any other business, the Commission presented information on its awaited social fairness package, the Commission and the President presented information on the tripartite social summit, and the chairs of the EMCO and the Social Protection Committee (SPC) provided information on their respective 2018 work programmes.
[HCWS575]
Scottish Welfare Powers
Lord Sharma Excerpts(6 years, 8 months ago)
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The Minister for Employment (Alok Sharma)
It is an absolute pleasure to serve under your chairmanship, Mr Rosindell. I congratulate my hon. Friend the Member for Ayr, Carrick and Cumnock (Bill Grant) on securing this debate on a key issue for the citizens of Scotland.
We have had an incredibly spirited debate, in which a range of views have been expressed. Of course there have been disagreements, but that demonstrates, as my hon. Friends the Members for Ochil and South Perthshire (Luke Graham) and for Berwickshire, Roxburgh and Selkirk (John Lamont) noted, that ultimately we all care about our constituents and want to do the best by them. That is why we need to work together, across all parties, to ensure that we deliver for the people of Scotland.
Alok Sharma
No, I will not, if the hon. Lady does not mind. A lot of comments have been made, and I want to deal with them.
The devolution of welfare powers represents a considerable and positive change, but it will require strong collaboration and co-operation from all sides if it is to be a success. The hon. Member for Airdrie and Shotts (Neil Gray) asked about the UK’s commitment. I can tell him that we have set up and resourced dedicated teams to lead on Scottish devolutions; we have shared—and we continue to share—our learnings and experience with the Scottish Government; we have run more than 100 workshops and operational visits; and we have shared many hundreds of pieces of information. We are absolutely committed to working in partnership with the Scottish Government to ensure a safe and secure transfer of the welfare powers for which they now have responsibility.
Scotland is an integral part of the United Kingdom, and our economic and welfare reform policies recognise that. Unemployment in Scotland is at a near historic low, which we should all welcome, and more people see greater security in retirement. Following the decisive result of the 2014 independence referendum and the ensuing Smith commission, we are delivering on the promises we made to people in Scotland by devolving £2.8 billion in welfare powers.
Neil Gray
If we are working together and in partnership, will the Minister support the private Member’s Bill of my hon. Friend the Member for Central Ayrshire (Dr Whitford)? That would negate the need for the Scottish Government to have to negotiate with the Department for Work and Pensions and would pay for the DWP to deliver split payment services under universal credit.
Alok Sharma
If I may, I will come on to how we are co-operating with the Scottish Government. At the end of the day, there is of course also a requirement on the Scottish Government to play their part. Many of the powers are being devolved: that involves not only a right for the Scottish Government, but a requirement for them to deliver.
The Scotland Act 2016 was an historic moment that created a shared welfare space for the first time. Since September 2016, the Scottish Government have had power to deliver employment programmes for disabled people and those at risk of long-term unemployment, and to vary the housing cost elements of universal credit through the universal credit choices. They have also had the power to top up reserved benefits using their own resources and to create new benefits in areas of devolved responsibility.
We have seen progress in some of those areas, with the DWP providing considerable support to enable the Scottish Government to deliver their transitional employability programmes from April 2017. From April this year we will support the introduction of their successor employment programme, Fair Start Scotland, which relies on Jobcentre Plus work coaches playing a key role in the referral process.
Since 4 October last year, we have been delivering universal credit Scottish choices through the universal credit system. That has allowed those living in Scotland who make a new universal credit full service claim a choice on whether they are paid twice monthly, instead of monthly, and whether their housing element is paid directly to their landlord. Since January this year, regulations allow for those universal credit Scottish choices to be extended to those who were universal credit full service claimants before 4 October, as well as to those claimants transferring from live to full service, once their claim has been established.
We are yet, however, to see any proposals for how the Scottish Government intend to use their powers to top up benefits or to create new benefits in areas of devolved responsibility. The Scottish Government are proposing to pay a carer’s allowance supplement to carers living in Scotland from this autumn, but they have still not put forward proposals on the disability benefits such as personal independence payments, disability living allowance and attendance allowance for people in Scotland.
My hon. Friend the Member for Ayr, Carrick and Cumnock asked about joint working. As he may know, there is a joint ministerial working group on welfare, which is jointly chaired by the Secretary of State for Scotland and the Cabinet Secretary for Communities, Social Security and Equalities in the Scottish Government. It continues to oversee the transfer of the new employment and welfare responsibilities. The Secretary of State for Work and Pensions also attends the working group. My Department has worked hard to share our knowledge and experience and has invested significant resource to support the Scottish Government’s thinking and planning.
It is two years this week since the Scotland Act received Royal Assent, and I agree with my hon. Friend the Member for Ayr, Carrick and Cumnock that the public need clarity, as there is still much to do. Meaningful devolution in such areas cannot happen until the Scottish Government make their policy intentions clear and put in place the infrastructure to deliver them.
The hon. Member for Airdrie and Shotts asked specifically what we were doing with the Scottish Government. I can tell him that, obviously, we have been supporting them in a whole range of areas, as outlined, but we are keen to understand in greater depth the Scottish Government’s plans for post-wave 1—when I say that, I mean the disability benefits that I have already outlined.
The reality is that if the Scottish Government fail to deliver those welfare powers by 2020, the people of Scotland will need to be protected. Plans are in place to ensure that the DWP will be able to continue to administer and deliver the devolved benefits, as we do now, under an agency agreement for a defined time. We will ensure that we provide the greatest support and the greatest protection for the people of Scotland.
Alok Sharma
My intention is not to create any kind of ranking—we want to work with the Scottish Government. The point that my hon. Friend the Member for Ayr, Carrick and Cumnock made, rightly, is that he has concerns about the pace at which things are moving. I repeat: the faster the Scottish Government move forward, the faster and more easily we can work together to deliver, ultimately, for the people of Scotland. That is what are here to talk about—not the politicians, but the people of Scotland.
Luke Graham
It is good to hear about the support that the Minister is providing to the devolved Administration, but will he assure me and other Members that, although some devolution of powers will be helpful, he and his Department will work with them to ensure against duplication and our constituents receiving a lower standard of service? Creating a new welfare agency is another layer of bureaucracy and cost. Benefits are already confusing enough for our constituents. Will he make that guarantee? We are MPs in this place to influence Government directly for all the UK, not to devolve our responsibility away.
Alok Sharma
As I said, we are here to work together to deliver for the people of Scotland. I know a number of colleagues have castigated universal credit, but it is a welfare system that has simplified the whole infrastructure of welfare. Having gone to jobcentres around the country and talked directly to claimants, I can say that for them that has made a big positive difference.
I only have a couple of minutes left, so I will deal with a couple of points made during the debate. One was with regard to disabilities. There was an implication that we may be cutting disability benefits, but that is not the case. In fact, PIP and DLA are just one part of more than £50 billion that we will be spending this year alone to support disabled people and those with health conditions.
The hon. Member for Glasgow Central (Alison Thewliss) mentioned the Equality and Human Rights Commission. We do not accept the commission’s analysis, because it only represents a partial picture, does not consider the effect of spending on public services and makes unevidenced assumptions about income sharing in households. She made a specific point about women of Pakistani origin. We are committed to increasing opportunity for them, which is why, as part of the work we have done in the race disparity audit, we have identified 20 challenge areas in which to have pilots, to ensure that we can get people into work.
In conclusion, we look forward to the Scottish Government ultimately making progress with the ideas outlined. We, of course, stand ready to work with them to deliver for the people of Scotland. That is certainly the case that my hon. Friend the Member for Ayr, Carrick and Cumnock made in his opening speech, and I commend him for that.
Bill Grant
It is left to me simply to thank all Members and the Minister for coming along this afternoon—and indeed you, Mr Rosindell, for chairing the debate.
Question put and agreed to.
Resolved,
That this House has considered Scottish welfare powers.
Women and Work
Lord Sharma Excerpts(6 years, 8 months ago)
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This information is provided by Parallel Parliament and does not comprise part of the offical record
The Minister for Employment (Alok Sharma)
It is a pleasure to serve under your chairmanship, Sir David. I congratulate my hon. Friend the Member for Redditch (Rachel Maclean) on securing this important debate. In her speech, she spoke with passion and from the heart about her own experiences. It is often our shared experiences that drive us to bring about change and improvements. There was a discussion about role models, as raised by my hon. Friend the Member for Aldershot (Leo Docherty), and he is right: they matter as well.
Many colleagues noted that last week we celebrated International Women’s Day, when we reflected on the achievements and progress of women not only in the workplace but in everyday life. This year’s theme encouraged everyone, regardless of gender, to press for progress—to think, act and be more gender-inclusive every day. I agree with my hon. Friend the Member for Redditch that it is important that we celebrate the success and the progress that we are making for women in work, but I also agree with many colleagues that, as my hon. Friend the Member for Angus (Kirstene Hair) noted, there is more to do.
The hon. Member for Strangford (Jim Shannon) and others talked about the joint-record high for female employment, which, at 70.8%, is five percentage points higher than in 2010. I have no wish to introduce any note of rancour in the debate, but I point out that under the last Labour Government the highest rate was 67%, back in 2008. I agree that all of us—politicians and businesses—should be working together to improve the employment rate further.
Laura Pidcock
It is irrefutable that there are more people in employment, but does the Minister acknowledge that work is more precarious, and that people have to do two or three jobs?
Alok Sharma
Unfortunately we do not have time for a long debate on this, but as I have said previously in the House, the welfare changes we have brought forward actually ensure that work pays. The hon. Lady will disagree, but I am sure that she will welcome the money made available in terms of childcare costs, as the hon. Members for Burnley (Julie Cooper) and for Airdrie and Shotts (Neil Gray) and my hon. Friends the Members for Chippenham (Michelle Donelan) and for Angus did. When I was first elected in 2010 and talking in my constituency to many parents—especially mums—of young children, the cost of childcare was a key barrier to returning to work and increasing their hours. We have acted by introducing 30 hours’ free childcare for working parents of three and four-year-olds and tax-free childcare, and under universal credit the Government will cover up to 85% of childcare costs for eligible claimants. It is worth noting that an independent evaluation of the early roll-out of the childcare offer shows that parents are working much more flexibly and about 23% of mothers have been able to increase their hours as a result of that support.
My hon. Friend the Member for Redditch and others referred to returners. Of course, putting in £5 million to fund specially designed programmes to help returners to the workplace in both the public sector and the private sector is very important. We should encourage that.
I do not think anyone mentioned the issue of women of black, Asian and minority ethnic backgrounds, but we should be celebrating that the employment rate for BAME people is at its highest rate since records began, at 64.8%. An extra 1.1 million people of BAME backgrounds have got into work since 2010, and almost exactly half of that increase is women. However, there is much further to go. Women from some BAME backgrounds have an employment rate of only 51.6%, and as part of the Government’s race disparity audit follow-up we are working on pilots to see how to address that issue in the 20 challenge areas identified around the country.
We discussed the gender pay gap. The Prime Minister has made it clear that tackling injustices such as the gender pay gap is part of building a country that works for everyone. I am proud that last year we introduced groundbreaking regulations requiring large employers in all sectors to publish the differences between what they pay their male and female staff in average salaries and bonuses.
The hon. Member for Wirral West (Margaret Greenwood) talked about what we are doing further. Of course, we are encouraging organisations to go beyond the mandatory requirements and, for example, publishing an action plan that sets out how they will close the gender pay gap in their companies. She is right that reputation does matter. In my role as Employment Minister, I talk to people who run companies, and they recognise that having a workforce that is representative of the country is important, so they will take this matter seriously.
We had a discussion about the increase in the percentage of women on boards, which the hon. Member for North West Durham (Laura Pidcock) did not think was making a difference. Actually, if the people at the top of a company are representative, that makes a huge difference. I have to say, I really welcome the fact that we have a second female Prime Minister.
I am fast running out of time, but we had a discussion about the Taylor review and flexible working. One of the review’s key outcomes is a recommendation for employers to offer more flexible working.
A number of points were raised on shared parental leave by my hon. Friends the Members for Chippenham and for Redditch. I confirm that the Government Equalities Office and the Department for Business, Energy and Industrial Strategy have launched a £1.5 million campaign to promote shared parental leave. There was also a discussion on encouraging women into science, technology, engineering and maths jobs, and the Government are making more funding available for that.
The hon. Member for Ellesmere Port and Neston (Justin Madders) spoke about discrimination. He will be aware that maternity discrimination is against the law, and the Government are working with ACAS to update guidance. As I said, there was a discussion on the Taylor review, and the Government have launched a number of consultations, which will make a difference.
We are almost out of time, but we have had a really thoughtful and comprehensive debate. Hon. Members have highlighted the significant progress made since 2010, but we should be under no illusions: there is further to go, and it is absolutely imperative that all of us strain every sinew to ensure we have a workforce in Britain that reflects the modern, diverse country that we are.
Question put and agreed to.
Resolved,
That this House has considered women and work.
Employment, Social Policy, Health and Consumer Affairs Council
Lord Sharma Excerpts(6 years, 8 months ago)
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The Minister for Employment (Alok Sharma)
The Employment, Social Policy, Health and Consumer Affairs Council will take place on 15 March 2018 in Brussels. I will represent the UK at the Council.
The Council will be invited to conduct a policy debate on The Future of Social Europe Post 2020.
Under an agenda item on the European semester, the Council will be invited to adopt the following documents of the European semester: the Joint Employment Report (JER) and Council conclusions on the Annual Growth Survey (AGS).
The Council will receive a presentation from the Commission on its 2018 country reports on the implementation of country specific recommendations (CSRs) from 2017.
The Council will be invited to endorse the opinion of the Employment Committee (EMCO)’s on the latest biennial assessment of member states’ progress against the non-binding Council recommendation of 2013 on a youth guarantee for tackling youth unemployment.
The Council will be invited to adopt a recommendation for a European framework for quality and effective apprenticeships. The Council will then conduct a policy debate on closing the gender pay gap: contributing to the achievement of the goals of the European social pillar.
Under any other business, the Commission will present information on its awaited social fairness package, the Commission and the President will present information on the tripartite social summit, and the chairs of the EMCO and the Social Protection Committee (SPC) will provide information on their respective 2018 work programmes.
[HCWS529]
Work and Pensions Committee
Lord Sharma Excerpts(6 years, 9 months ago)
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Frank Field (Birkenhead) (Lab)
I hope I will also leave the House silenced by my report, and I hope to do so in record speed.
The House passed a motion on 5 December 2017 agreeing that the Select Committee on Work and Pensions should review the five project assessment reviews on universal credit. The Government went beyond that and gave us other papers. All the papers were almost unreadable, and the fact that they are now turned from pigs’ ears into a silk purse owes everything to our Clerk, Adam Mellows-Facer. When Members read the report, they will understand precisely our debt to him.
Mr Speaker, I request your help on two fronts. First, this huge project—huge in Government finance and huge in what it might do to our constituents—is based on no business case at all. I am therefore pleased to see my friend the hon. Member for Salisbury (John Glen), who is now the Economic Secretary to the Treasury, sitting on the Treasury Bench. I ask through you, Mr Speaker, that he does not approve further development of universal credit until the Treasury has received the business case from his colleague the Minister for Employment, the hon. Member for Reading West (Alok Sharma).
Secondly, the project assessment reviews talk about the industrialisation of claims. This is the roll-out of a benefit that is, to put it at its kindest, hit and miss. The problems that our constituents could face are beyond imagination, and the cost to taxpayers will be enormous. Mr Speaker, at another time, might I seek your help in getting time to allow many more Members of the House of Commons to comment on how universal credit is affecting, or not affecting, their constituents?
I end by thanking you, Mr Speaker, for the opportunity to present the Select Committee’s report to the House.
The Minister for Employment (Alok Sharma)
I thank the right hon. Gentleman for his report. I have appeared before the Work and Pensions Committee in the past few days, and a number of the points raised in the report were raised in that session. I will of course consider the report, and my hon. Friend the Economic Secretary to the Treasury has indicated that we will work closely together on reviewing its content.
Jobcentre Closures
Lord Sharma Excerpts(6 years, 9 months ago)
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The Minister for Employment (Alok Sharma)
I congratulate the hon. Member for Glasgow South (Stewart Malcolm McDonald) on securing this important debate, and I thank all Members for the kindness that they have shown by inviting me to their constituencies. I have never felt quite so loved by Opposition Members as I have this evening.
Alok Sharma
That is what worries me.
Employment in the United Kingdom is at a record level. In the hon. Gentleman’s constituency, the claimant count has dropped by 50% since 2010. That drop has been replicated across Glasgow city, where there has been a fall of 11,000 in the number of claimants since 2010 to just 13,500 today. In Scotland as a whole, unemployment has fallen by 107,000 since 2010, and I know that all hon. Members will welcome those figures.
Neil Gray
The Minister appears to be saying that a reason for closing these jobcentres is that unemployment is down, and therefore the usage of jobcentres may be down. However, the increased conditionality that is attached to universal credit will increase the need for services and the requirement for people to visit jobcentres. Will he not reflect on that and understand why my colleagues are so keen for the centres to be kept open?
Alok Sharma
Because of the timing of the debate, I have plenty of time to respond to a whole range of issues that have been raised, and I will try to do so throughout my speech.
As I was saying, as the unemployment rate has fallen, the use of jobcentres has also dropped. Right now, across the whole country, there is a 30% under-utilisation of the Jobcentre Plus estate. It is therefore absolutely right that we reconfigure the estate after a 20-year period and make jobcentres fit for the 21st century as not just places where people go to “sign on”, but places they regard as somewhere that will genuinely help them on the road to employment.
Hon. Members have made this point, but let me repeat it. In March 2018, the contract covering the majority of the DWP’s current estate of more than 900 sites comes to an end. This presents a significant opportunity to re-evaluate what we need from our estate. The estate that we required at the start of the contract 20 years ago is different from what we need now. We want an estate that enables us to create more modern, digitally enabled and engaging environments that fit the ethos of universal credit and reflect the falling claimant count.
Stewart Malcolm McDonald
It is not really modernising it if it is no longer there, so why were we not offered a debate that could have been constructive, reflecting what the hon. Member for Glasgow North East (Mr Sweeney) said about co-locating with other services that are provided, instead of a high-handed closure programme on which the public would not even be consulted?
Alok Sharma
I was coming to co-location. Our proposals seek to reduce the floor space we occupy in Glasgow while retaining sites and locations that are accessible to all residents. Of course, we explored options for co-location in sites that we are retaining, but we were not able to identify suitable locations in Glasgow.
Alok Sharma
In Glasgow, where this is particularly relevant, we started with 16 jobcentres that, on average, were only 40% utilised—small, half-empty offices that made it challenging to create a welcoming and positive environment. Back in 2010, with nearly 25,000 claimants, this may have been suitable, but it clearly no longer is. This dated estate across the country comes at a significant cost. Our changes will lead to savings to the taxpayer in the order of £135 million a year over the next 10 years. This money can be reinvested in delivering services for claimants, which I am sure hon. Members agree is a good thing.
Colleagues have mentioned the consultation and what methods were used. We did contact claimants, and jobcentre staff did speak to claimants throughout the process, informing them of the change and supporting them through it. Additionally, there was a discussion about what method was used to work out travel priorities. We got input from local DWP colleagues, who know the local transport available, so the idea that we did not speak to anyone on the ground is unfair.
Stewart Malcolm McDonald
I do not doubt the Minister spoke to DWP people on the ground; I spoke to them—they told me they googled the transport options. That is how they worked this stuff out. On co-location, he did not bother to inform Members of Parliament of the decision; we had to read about it in the press. I understand that there was no dialogue with the city council about co-location at the time either, and the Scottish Government were not even consulted—they, too, had to read about it in the press. I am afraid that that does not stack up.
Alok Sharma
I think I have made the point about co-location. We are having an estate that is fit for the 21st century. Where a new jobcentre was over 3 miles and 20 minutes away by public transport, online public consultation was held, as hon. Members will know, and we operated on evidence, and we listened and took action as a result. For example, we are introducing a new employability suite at Atlantic Quay and, as hon. Members know, we decided to retain the jobcentre in Castlemilk because of the feedback we received. I hope that hon. Members will therefore feel that we have listened on that point.
As we deliver these changes, this local approach is continuing with stakeholders and through partnership events, and we are working with claimants to find the best solutions for them. So far, we have moved out of 70 sites across the country with success, and these moves are being well received both by claimants and staff, as well as our partners. There was a discussion about how staff and claimants were reacting to the move. The feedback from claimants on the move from Maryhill to Springburn is that the move has been extremely positive, and they welcome access to more facilities. One claimant said:
“I never expected it to be as good as this”.
Furthermore, 23 claimants have transferred to Partick because it is easier for their own journey.
I agree it is vital that staff are looked after, but staff have told us that they are happier being part of a bigger team and office, that it allows them to provide an evolving and improved service based on customer needs, that the teams have come together seamlessly and that the team culture, which is incredibly important in any organisation, is developing to maximise benefits to claimants. The idea that this is having a detrimental effect on claimants and staff does not hold true.
Hugh Gaffney
I think that this is sarcasm; we call it Glasgow banter. The Minister says the staff are happy, but that is not the feedback that we are getting. I am also concerned about disabled people who have had to travel for an extra half hour to the locations that the Minister is talking about. It costs £4.50 to use the local bus service, and many of those same people are going to food banks.
Alok Sharma
I am sorry that the hon. Gentleman feels that there is sarcasm in what I am saying. That is certainly not my intent, and I do not think it is the intent of the DWP staff who have sent us feedback. I can give the hon. Gentleman a list of the things that staff and claimants have said about the moves involving Broxburn and Anniesland. Perhaps things are not quite as some Members feel that they are.
Alok Sharma
No. I want to continue.
Claimants moving to Springburn have reported how much better the facilities are, and how welcoming the environment is. Claimants have also said that they have appreciated the individual tailored support. For instance, during the recently completed move of Anniesland to Drumchapel, some claimants who preferred to move to Partick instead were easily accommodated. The impact on staff is also being well managed. The vast majority of staff affected are moving to other locations. A very small number will leave the department, but the vast majority have accepted voluntary redundancy.
David Linden
I do not want to test the Minister’s patience, but when I saw that red folder with all the little tabs on it, I rather hoped that he would not just read from a civil service briefing. Members representing constituencies across the city of Glasgow have come here tonight and made very sincere speeches about some of the profound difficulties that are being experienced. The Minister is now the best part of 10 minutes into his speech, and he has not touched on the territorialism, the transport or the digital exclusion. May I ask him, in the time that remains, to address the points that we have raised? It is all well and good for him to reel off place names like Atlantic Quay, but I do not think he would know where Atlantic Quay was in relation to Gartloch. The best thing he could do is agree right now to come to the city of Glasgow and listen and respond to local people—not DWP bigwigs, but local people in citizens advice bureaux and police stations, and those who will be affected.
Alok Sharma
I do not think that the people who are working incredibly hard in these jobcentres would appreciate being referred to as bigwigs. Since becoming the Minister in this particular role, I have been to a number of jobcentres, not in Scotland but in England, and I can tell the House that those people are extremely motivated to help the people whom they are serving and helping to get into work. I agree with my hon. Friend the Member for Moray (Douglas Ross) that we should pay tribute to them rather than suggesting that they are either joking with us or doing something worse.
Let me make clear that in the Glasgow Jobcentre Plus network, no redundancies are expected. The overall rationalisation of the estate is definitely not a staff reduction exercise. Indeed, the number of jobcentre staff will be higher at the end of this process than at the start, with an additional 5,000 work coaches across the country. After the rationalisations there will still be 10 jobcentres in Glasgow, which—as we heard earlier—is more per head of population than in nearly all other cities in the UK. Those 10 jobcentres will be welcoming, positive places, offering training sessions, with employers helping people to get back into work. They will create a sense of partnership between work coaches, claimants and other organisations. For staff, they will offer greater progression and development opportunities. They will enable staff to do the job that they cherish, which is helping people to move into independence and lifelong careers.
A number of other points were raised, and, as I have enough time, I will address them. As part of the consultation, some of which was online, we talked to members of staff and trade unions. A point was raised about equality impacts, and I know the hon. Member for Glasgow South raised this with the former Secretary of State during the July debate. The then Secretary of State said about the equality impact assessment that the Government had fulfilled our statutory duties, as we always do. Throughout the redesign of our estate, the Department has been mindful of its duties under section 149 of the Equality Act 2010 and the impact of its plans on its colleagues and customers. Equality analysis carried out in respect of individual sites has not been published; that is not the policy, but the DWP will respond to freedom of information requests for equality analysis reports in the normal course of business.
A point was made about travel costs. The reimbursement of travel costs is available to claimants when they are required to attend the jobcentre for appointments other than mandatory fortnightly signing appointments. Additionally, jobseekers who have been claiming universal credit or jobseeker’s allowance for more than 13 weeks can apply for a Jobcentre Plus travel discount card.
The hon. Member for Glasgow East (David Linden) raised a point about having written to me; I have indeed written back to him and I hope he will receive that letter very shortly. A number of colleagues have invited me to visit their constituencies. I committed in DWP orals earlier today to come to Scotland, and said I would have a discussion with the hon. Gentleman about potentially coming to his constituency, but as part of my job I go around the country—across England, Scotland and elsewhere—to make sure I am hearing at first hand the experiences of people working in these centres, the claimants and also employers in those areas.
There was a discussion about sanctions, and I want to make it clear that a decision maker takes all the claimant’s individual circumstances into account before making a decision, and there has to be very good evidence. Claimants have the opportunity to come back and set out their case. This discretion is available and I hope it will be used by decision makers in the case of sanctions.
Ian Murray (Edinburgh South) (Lab)
Does the Minister have any statistics on users of these jobcentres who have been sanctioned as a result of the amalgamation?
Alok Sharma
I have no figures in front of me now, but I undertake to write to the hon. Gentleman if these figures are available within the system.
The hon. Member for Glasgow East mentioned gangs. That is an important point. As part of our consultation, we engaged with Community Safety Glasgow and the Glasgow City Council strategic community partnership group, and they were not aware of any gang-related issues pertaining to potential jobcentre closures.
David Linden
As someone involved in the local community, I would have thought that if we want to ask people on the frontline about crime, we might ask the police. Did the Minister speak to local police officers?
Alok Sharma
As the hon. Gentleman knows, I have moved to this post in the last few weeks, but I understand that a dialogue takes place with Police Scotland.
The hon. Gentleman also raised the issue of people who cannot access online services and find it hard to get to a jobcentre. Face-to-face support with work coaches is available at jobcentres and continues to be a core part of the service we deliver. People can also interact face to face, by email or telephone or by post.
I have a point of correction to make. The hon. Member for Glasgow North (Patrick Grady) suggested that Caxton House was owned by Telereal Trillium. It is not; there is an underlying lease.
We have had a wide-ranging debate and I have listened to colleagues, and I completely understand that they put forward the view of their constituents and the people they know locally. I have set out what we have heard through our dialogue with people working in jobcentres and with claimants who have transferred to other jobcentres. I will come to Scotland and I will meet and talk to a range of individuals there.
We have had a long debate, and I should like to conclude by saying that this is obviously a major change for the Department, as well as for our claimants and staff. However, retaining our current estate would miss the opportunity to improve value for taxpayers’ money and to create an estate that will meet the needs of DWP claimants now and in the future. These changes are the result of careful analysis and planning. I appreciate hon. Members’ concerns about the closures, but the rationale for these changes and the benefits that they will deliver for claimants and our staff are clear.
Question put and agreed to.
Oral Answers to Questions
Lord Sharma Excerpts(6 years, 9 months ago)
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Yvonne Fovargue (Makerfield) (Lab)
The Minister for Employment (Alok Sharma)
The Government have taken a number of steps to reduce the risk of problem debt, including capping payday lending costs and promoting savings.
Within universal credit, we also have interest-free advances and a system of priority deductions to help claimants who have got into arrears.
Yvonne Fovargue
The Government’s own data shows that rising numbers on universal credit are falling into rent arrears, and many claimants in my constituency are going to food banks or approaching payday lenders. Although an advance is available, this is a loan, which is to be repaid at 40% of the standard allowance. Another 40% can be deducted to repay creditors—for example, utilities. That is a total of 80%. Can the Minister reassure me that 80% of the individual allowance cannot be deducted, and that affordability checks, like those that all payday lenders have to do, are carried out before any deductions are actioned?
Alok Sharma
Of course the hon. Lady is absolutely right to highlight that we want to make sure we help those who are in arrears. She will know that research done by the National Federation of ALMOs—arm’s length management organisations—has reported that three quarters of tenants were in rent arrears already before they moved into universal credit. She talks about deductions; the percentage is 40%. However, I am happy to meet her to discuss this matter further.
Kevin Foster (Torbay) (Con)
It is a genuine pleasure to welcome the Minister to his place and, through him, to thank his Parliamentary Private Secretary for arranging a visit for me to see universal credit working in his constituency this Friday. Further to the question, will my hon. Friend outline the steps being taken to ensure that organisations on the ground help vulnerable people access 100% of universal credit advances rather than get into debt?
Alok Sharma
Yes, I can confirm that work coaches and those who perform the interviews at jobcentres make people aware that they can access 100% advances, which are of course interest free, as I said. The other aspect that is available is personal budgeting support, which individuals who need it can also receive.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
The Minister for Employment (Alok Sharma)
Universal credit transforms the welfare state and the rollout is proceeding to plan, with universal credit now available in one third of all jobcentres in Great Britain.
David Linden
Easterhouse Housing and Regeneration Alliance is a coalition of eight independent housing associations that has been based in my constituency and operating for pretty much my entire lifetime. It has profound concerns about the rollout of universal credit in Glasgow. Given that the Government have given a lot of commitment to go and meet various people on their Benches today, will the Minister come to my constituency to meet it and listen to its concerns?
Alok Sharma
When we have rolled out universal credit, we have done it in a manner that makes sense and works. Right now, 9% of those who will eventually end up on universal credit are on universal credit, and it will reach 11% by June this year. I am, of course, undertaking a whole range of visits to jobcentres across the country. I will make sure that I make a visit to Scotland, and we can have a discussion about whether there is an opportunity to visit the hon. Gentleman as well.
Drew Hendry
A terminally ill man has won the right to raise a landmark challenge to the Government after the introduction of universal credit left him significantly worse off. Having already acted unlawfully to 1.6 million PIP claimants at a cost to taxpayers of £3.7 billion, does the Minister guarantee that his Government will not be found guilty of unfairly treating the terminally ill?
Alok Sharma
I want to be absolutely clear: the changes that we are making in universal credit and in the benefit system are there to focus on protecting the most vulnerable. That is the underlying policy of universal credit and we will continue to do that.
Stephen Timms (East Ham) (Lab)
Has the Minister had any discussions with colleagues in the Department for Education about their proposals for the eligibility of universal credit claimants to free school meals? If the current proposal were to go ahead, it would introduce a huge new benefit trap into the system, far worse than anything in the old system. Universal credit was supposed to remove such traps, not create new ones.
Alok Sharma
Currently, 1.1 million young people—students—receive free school meals. If the policy that has been put forward as part of the consultation goes ahead—where there is an earnings threshold of £7,400—an additional 50,000 young people will benefit from free school meals.
Diana Johnson (Kingston upon Hull North) (Lab)
Kevin Hollinrake (Thirsk and Malton) (Con)
The Minister for Employment (Alok Sharma)
Through universal credit, we are providing personal budgeting support, which is available through conversations with work coaches. That is making a great difference to those who need such help.
Mr Speaker
Front Benchers will have to be very brief, because we are running short of time on account of the length of questions and answers. A pithy sentence, or whatever, will suffice.
Neil Gray (Airdrie and Shotts) (SNP)
What is the Secretary of State’s response to the report from the European Committee of Social Rights that said statutory sick pay and support for those seeking work or the self-employed is “manifestly inadequate” and therefore in breach of the legally binding European social charter?
Alok Sharma
I am happy to have a discussion with the hon. Gentleman on this point. All the policies we have put forward are based on being as fair as we can be to all recipients.
Gordon Henderson (Sittingbourne and Sheppey) (Con)
Alok Sharma
Of course I join my hon. Friend in congratulating the staff at Sittingbourne and Sheerness jobcentres. When I have spoken to work coaches in the visits I have made, they are incredibly enthused: they tell me this is the first time they are able to do what they want to do, which is help people into work.
Jack Dromey (Birmingham, Erdington) (Lab)
The behaviour of Philip Green on BHS pensions was outrageous; likewise, Carillion paying dividends and big bonuses, while running up a £900 million pensions deficit. We expect better from our universities; does the Secretary of State agree that it cannot be right that they are proposing to cut the pension benefits of staff just when one vice-chancellor alone at Edinburgh university has accepted a 33% salary hike as part of a package worth £410,000?
Mr William Wragg (Hazel Grove) (Con)
Developing a theme from this side of the House, I had the pleasure of visiting my local jobcentre on Friday. Will my hon. Friend pay tribute to the hard-working staff who are delivering record levels of employment in my constituency?
Alok Sharma
Absolutely: I congratulate the staff in my hon. Friend’s jobcentre, and by the end of the process of rolling out UC, we will have 5,000 extra work coaches across the country.
Maria Eagle (Garston and Halewood) (Lab)
Alok Sharma
It is absolutely the case that under the Scottish system individuals will be at a cash-flow disadvantage after a number of weeks. I would point out that, of course, alternative payments are available in England, too.
Stephen Morgan (Portsmouth South) (Lab)
Stephen Lloyd (Eastbourne) (LD)
Alok Sharma
As the hon. Gentleman knows, universal credit works on a monthly basis. When someone earns a large amount in a month, we apportion that over the following months. It is worth pointing out that it is entirely possible for people with those kinds of earnings to budget over the year, just as many businesses do.
Lucy Allan (Telford) (Con)
The GKN takeover proposal announced last Thursday seeks to pay a £1.4 billion sweetener to shareholders, despite a £2 billion pension deficit. Does the Minister agree that the Government should act to protect the interests of GKN pension fund members?
Michelle Donelan (Chippenham) (Con)
Some 70% of the rise in UK employment involves higher-skilled jobs. This is true in Wiltshire, which expects more than 2,500 jobs from Dyson alone. What work is the Minister doing with other Departments to tackle the science, technology, engineering and mathematics skills gap in the UK, so that Wiltshire can benefit from those jobs?
Alok Sharma
I have started to have conversations with ministerial colleagues, and my hon. Friend is absolutely right to say that we need to work as one Government to ensure that high-skilled jobs are created across our country.
Gareth Thomas (Harrow West) (Lab/Co-op)
Given the significant rise in household debt and the fear that payday lenders will seek to take advantage of that situation, is not this the right time to seek a significant expansion of credit unions across the UK? What might the Minister do to facilitate such an expansion?
Ruth George (High Peak) (Lab)
Bearing in mind the Secretary of State’s call for clear statistics, will she welcome today’s Library paper, which clarifies that 113,000 children will cease to receive free school meals under the proposed changes to universal credit, withdraw the claim that 50,000 more children will benefit at one point in time and bring that to the attention of the House?
Alok Sharma
A consultation is taking place, and the Department for Education will respond to it. Everyone who is currently on universal credit will have that benefit protected as long as the children remain in that education setting.
Several hon. Members rose—
Food Poverty: Merseyside
Lord Sharma Excerpts(6 years, 10 months ago)
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The Minister for Employment (Alok Sharma)
It is a pleasure to serve under your chairmanship, Sir David, in this important debate—my first as Minister for Employment—and I congratulate the hon. Member for Liverpool, West Derby (Stephen Twigg) on securing it.
The Prime Minister is absolutely clear: the Government are committed to building a country that works for everyone, where no one and no community is left behind. I would like to think that all Members of the House share that ambition. I completely agree that we need to provide appropriate support for the least well-off and most disadvantaged people in our society, and we must do all we can to improve their lives and the lives of their children. Part of that is making sure that people get help with the cost of living.
Several hon. Members rose—
Alok Sharma
Perhaps I may make a little progress—there will be plenty of time to intervene.
The introduction of the national living wage has given the UK’s lowest earners their fastest pay rise in 20 years. With the increase in personal allowances, the Government have cut income tax for more than 30 million people and taken 4 million low earners out of income tax altogether.
Ms Angela Eagle
The Minister speaks about the income tax threshold, but does he realise that most of the people we are talking about are on zero-hours contracts and really low pay, and they do not pay income tax? None of those tax giveaways have any effect on their weekly income.
Alok Sharma
Four million of the lowest earners have been taken out of income tax altogether, which I hope the hon. Lady will welcome. A typical basic rate taxpayer will now pay over £1,000 less in income tax than they would have done seven years ago.
Maria Eagle
If what the Minister describes is supposedly helping the situation, how does he explain the fact that year on year in Liverpool, the number of people who have to go to food banks to get help with feeding themselves and their families is increasing?
Alok Sharma
Perhaps I may make a little progress, and hopefully I will provide some of the answers that the hon. Lady is looking for.
We plan to further increase the tax-free personal allowance to £12,500 by the end of this Parliament. Working parents are now entitled to up to 30 hours of free childcare, saving them around £5,000 a year. I hope that, whatever our political differences, all Members of the House will welcome those measures. We have also frozen fuel duty, saving the average car driver £850 over the last eight years, compared with the pre-2010 fuel duty escalator.
Mrs Ellman
The information the Minister provides is, of course, welcome, and we are familiar with those announcements. Does he agree that the people in Liverpool, and Merseyside generally, who are going hungry—the people to whom Labour Members are referring today—are those who are, in the words of the Prime Minister, “left out”? What is he going to do about it?
Alok Sharma
Let me come on to that—there is plenty of time left in the debate.
The basic state pension is now at one of its highest rates relative to earnings for over two decades, reversing the trend of decline that we saw between 1997 and 2010. Ultimately, however, work is the best route out of poverty.
Alok Sharma
I thought that the hon. Lady would react as she did, but she should not take my word for it. Let me quote from a recent report by the Joseph Rowntree Foundation:
“People who live in workless households have much higher rates of poverty than those who live in households where at least one person is in work… Rising employment, skills and pay contributed greatly to reductions in poverty over the last 20 years.”
Maria Eagle
The biggest reason now for food bank use in Liverpool—apart from benefit delays and the things that the Minister’s Department does to people—is low income. It is people who are in work, so his point is simply not accurate.
Alok Sharma
I am not sure that I completely understood the hon. Lady, but I was quoting from a report by the Joseph Rowntree Foundation. If she feels that it is inaccurate, she should talk to someone there.
Maria Eagle
Perhaps the Minister will allow me to try again. One of the main reasons that people go to food banks in Liverpool is low income. The income they get comes from work—they are working-age people who are working but do not have enough money to feed their families. The Joseph Rowntree Foundation report is about a countrywide situation. I am talking about what is happening in Liverpool and to my constituents. A lot of people are in work but cannot afford to feed their families on the income they receive. It is simply not good enough for the Minister to say that that is not a problem.
Alok Sharma
I did not say that it is not a problem, and of course I want to ensure that everyone, both in Liverpool and across the country, gets the help they need.
Adults in workless families are four times more likely to be in poverty than those in working families, and children who live in workless households are five times more likely to be in poverty than those in a house where all adults work. We want to see more people in work, and we want to support more people into work. In recent years, the Government have undertaken the most ambitious reform to the welfare system in decades to ensure that work always pays. This reform is already delivering real and lasting change to the lives of many of the most disadvantaged people in our society. Nationally, there are almost 1 million fewer workless households than in 2010. Indeed, workless households are now at an all-time low. In the north-west, the region that many Opposition Members represent, there are around 87,000 fewer workless households than there were seven years ago.
Stephen Twigg
I am grateful to the Minister for giving way. In a sense, he is answering the earlier question, because if the numbers of workless households are going down, yet food bank usage is going up, surely we have a real challenge about families where people are in work still having to access food banks, because of low pay and insecure work.
Alok Sharma
I know that this a very emotive subject and I understand that hon. Members are keen to get answers. I will seek to provide some of those if I may make progress. The latest data shows that the employment rate in the Liverpool city region has seen a 4.1 percentage point increase since 2010 and the comparable national figure shows an increase of 4.2 percentage points.
We have had a discussion about food poverty and more generally about poverty rates. The case is, whichever way you look at poverty rates—relative or absolute; before or after housing costs—none are higher than in 2010. The proportion of people in absolute poverty is at a record low. Across the country, there are 600,000 fewer people in absolute poverty compared with 2010, and in the north-west there are 100,000 fewer people in absolute poverty compared with the three years up to 2010.
Of course, we want to do everything that we can to make sure that those numbers go down further. Let me explain what we are doing in welfare reform to make that happen.
Maria Eagle
The Minister is being very generous with interventions. Given the statistics he has read out, which are trying to show that things are getting better in terms of poverty reduction and more people being in work, can he please explain why the number of people on Merseyside who are having to access food banks in order to eat and to feed their families is still going up?
Alok Sharma
I will come on to that point, but there are complex reasons why people use food banks. I want to go back to the point about work being the best route out of poverty. It is the case that across the country around 75% of children from workless families moved out of poverty when their parents entered full-time work.
Let me come on to universal credit.
Alok Sharma
I will make some progress. I have taken a lot of interventions. Perhaps the hon. Lady will let me continue for a moment.
When it comes to reform, universal credit lies at the heart of transforming the welfare system. Universal credit supports those who can work and cares for those who cannot, while being fair to the taxpayer. [Interruption.] I would just say to the hon. Member for Garston and Halewood (Maria Eagle) that before this role I was the Housing Minister and I had the opportunity to do an engagement tour around the country, meeting social housing tenants with the aim of producing a Green Paper, and I met around 1,200 social housing tenants across the country. There was a discussion around universal credit and I have to tell hon. Members that the vast majority of people I talked to felt that, in principle, universal credit was absolutely right: it is simple, it makes sense and it helps to deliver the benefits that people need on a timely basis. I will come on to talk about the changes that were introduced in the Budget, because we always want to ensure that things can be done better.
Alok Sharma
No. If I may, I will continue for the moment.
There is always a comparison of universal credit with what came before. It is the case that, because of withdrawal rates, tax credits encouraged lone parents to work for 16 hours and couples to work only 24 hours a week between them. Universal credit provides the opportunity for the first time to support people who are in work to progress, so that they can increase their earnings and become financially independent. We have reduced the universal credit taper to 63%, so that people who progress into work can keep more of what they earn. Under universal credit, work always pays.
Alok Sharma
I have to disagree with the hon. Lady’s comment from a sedentary position. It does, because for every extra hour people work, they get to keep more of the money they earn.
Universal credit claimants are able to find work faster and stay in work for longer than those under the system it replaces. Indeed, 86% of people under universal credit are actively looking to increase the hours that they work, compared with only 38% on jobseeker’s allowance.
We have to ensure that help is provided as people seek to find employment. The Government are providing a wide range of support targeted to each individual’s personal circumstances. Under universal credit, people have access to more tools than ever before to underpin their work search and help with budgeting, digital skills, preparing CVs and getting ready for job interviews.
Stephen Twigg
The Minister is obviously ranging somewhat more widely on universal credit. Will he respond to the very specific question that the shadow Minister and I raised about the cliff edge in the rules in universal credit that relate to free school meals? Will he and the Government look again at a very significant negative side of the reform?
Alok Sharma
The hon. Gentleman knows that free school meals are universal for all children from reception to year 2, and currently all children who are the offspring of universal credit claimants are entitled to free school meals. There has been a consultation, which has closed, and the Department for Education will respond.
I am undertaking a programme of visits to jobcentres across the country. It is important for me as the Employment Minister to talk not only to the people who work in those jobcentres, but to those people who are there as customers. Last week, I visited the jobcentre in my local area, Reading, twice, first to talk to the people who run it; and secondly to talk to individual claimants. I sat in on one of the interviews and asked one of these ladies what she made of universal credit. She said:
“Universal credit is amazingly simple.”
Those are not my words, but the words of an individual who went—[Interruption.]
Alok Sharma
That is the word of an individual who actually has made use of the system.
Ensuring that people get the benefits they are entitled to is important. Whether in work or not, jobcentre staff help their customers to ensure they access their full entitlement to benefits and any other support, such as free school meals and free prescriptions. They also have tailored support for those people who face the most complex employment barriers. That can include temporarily lifting requirements where claimants are homeless, in treatment for drug or alcohol dependency, or victims of domestic abuse.
The hon. Member for Liverpool, West Derby raised a point about people having delays in getting money paid to them. The statistic on universal credit is that 92% of all claimants get all the money they are due paid on time. Of course, no one wants to wait for money if they need it—advances can be claimed on the same day in an emergency.
Margaret Greenwood
The Minister is being generous with his time. He is talking about support for the most vulnerable, so would his Government reverse the cuts to support for disabled people under universal credit?
Alok Sharma
Hopefully I will have enough time to respond to that point—I believe the hon. Lady is talking about the higher rate of disability premium.
A number of other points were raised about food banks. Jobcentre staff also work in partnership with a variety of local agencies and signpost claimants to local services, including food banks, to help them access the full range of support available. The hon. Member for Liverpool, West Derby quoted from a report from 2016 by Taylor and Loopstra based on UN data. There are a number of reports, including one on income and living conditions produced by Eurostat, which found that the UK has a lower percentage of food insecurity than the EU average and a lower percentage than Germany, France and Italy. Ultimately, we need to ensure that we get help to people who need it, and that we help them into work so that they can support themselves.
Alok Sharma
I have given way quite a lot in this debate. If I may, I will continue. If I have time at the end, I will of course take further interventions.
Food inflation has been discussed. Food prices have fallen in three of the past four years, which has a positive impact. Let me address up front the question about the use of food banks. The Government do not propose to record the number of food banks in the UK, or indeed the potential number of people using them or other types of food aid. There is a range of available food aid—from small local provision to regional and national schemes—and the all-party parliamentary group on hunger, which set up an inquiry to thoroughly investigate the use of food banks, said that there were numerous complex reasons why people use food banks.
Jobcentres engage regularly with the Trussell Trust, and are encouraged to foster good relationships with local food banks. In Merseyside, all jobcentres have a food bank single point of contact, and jobcentre staff have been working actively with food banks to ensure that staff are up to speed with the changes resulting from universal credit.
The hon. Member for St Helens South and Whiston (Ms Rimmer) mentioned international comparisons. I refer her to statistics produced by the OECD showing that, since the mid-2000s, the UK has been one of only two major advanced economies with increasing redistribution. It found that, since 2010, growth and income from work for the lowest-income households in the UK is higher than in any other major advanced economy.
The Government have always been clear that universal credit would be introduced in a way that allows us to continue making improvements. That is why, at the autumn Budget, we announced a comprehensive and wide-ranging package of measures worth £1.5 billion to address concerns about the first assessment period and the budgeting issues faced by some claimants at the start of their claim. Since the start of this year, claimants have been able to get 100% of their estimated universal credit payment up front as an advance that they can pay back interest-free over 12 months.
I will address a couple of other points, as I have a few minutes. On the point about disability payments, as the hon. Member for Wirral West (Margaret Greenwood) knows, income-related employment and support allowance and the link to disability premiums, including the severe disability premium, are being replaced by universal credit as part of simplifying the benefit process and to address overlaps. Universal credit has two disability elements for adults, mirroring the design of ESA. The higher rate is set substantially higher than the ESA support component equivalent.
Margaret Greenwood
That being the case, why will some disabled people receive £65 a week less than they would have before universal credit?
Alok Sharma
I am happy to have a dialogue with the hon. Lady, particularly in my new role, but I point out, as I have said, that the rate is set substantially higher than the ESA support component equivalent. However, I am happy to enter into a dialogue with her outside this debate.
Maria Eagle
The Minister has spent most of his time replying to this debate talking about universal credit, but the debate is about food poverty. Is he suggesting that, over the next year, as universal credit is rolled out on Merseyside, the number of people having to visit food banks will go down?
Alok Sharma
I cannot predict the future. The reason why I have talked about universal credit is that it is a matter raised by Opposition Members, and because I think that it is important, if we talk about welfare reform, to talk about the current reforms that the Government are putting in place.
In conclusion, the Government’s track record on helping people into work is clear. Unemployment is at a 42-year low at 4.3%, with nearly 1 million fewer workless households than in 2010. Incomes have been rising. Data published last week by the Office for National Statistics showed that in the year 2016-17, real average incomes of the poorest fifth of households had risen by £1,800 since 2007-08.
However one looks at it, poverty rates in the country—relative or absolute, before or after housing—are no higher than in 2010, and within the working-age population, all headline poverty rates are lower than in 2010. Yes, there is absolutely more to do—we certainly cannot be complacent, and I have no wish to do so—but the Government’s reforms have demonstrated real progress in tackling poverty and disadvantage.
AEA Technology Pension Scheme
Lord Sharma Excerpts(9 years, 8 months ago)
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Geoffrey Clifton-Brown (The Cotswolds) (Con)
I am grateful to you, Mr Robertson, and to Mr Speaker for giving me the opportunity to raise the matter of the AEA Technology pension scheme, following the company’s pre-pack administration in 2012. I am also grateful to the Minister, my parliamentary neighbour, for being here to respond to the debate, and to my right hon. Friend the Member for Saffron Walden (Sir Alan Haselhurst) and my hon. Friends the Members for Newbury (Richard Benyon), for Reading West (Alok Sharma) and for Oxford West and Abingdon (Nicola Blackwood) for being here to support me. I give special thanks to the Minister for Culture and the Digital Economy, my hon. Friend the Member for Wantage (Mr Vaizey), and to his staff. He is the constituency Member concerned with the matter, and he and his staff have been very active on it, as have lots of other right hon. and hon. Members.
I have received continuing representations from my constituent Dr Ken Nicholson, who has been affected by the issue. I know that constituents of other Members have also been affected. I will start with some background information for context. The AEA Technology pension scheme is a defined-benefit final salary scheme, set up when AEA Technology, which was previously the commercial arm of the United Kingdom Atomic Energy Authority, was floated on the stock exchange in September 1996. AEA Technology had become a Government-owned company that April, although staff remained members of the UKAEA pension scheme until flotation.
The Atomic Energy Authority Act 1995 detailed the conditions for the privatisation of AEA Technology and included specific information regarding the pension arrangements for transferring staff. A schedule to the Act stated that benefits from the daughter scheme should be “no less favourable” than those that would have arisen from the UKAEA scheme as it was at the time. There was a duty to ensure the arrangements for the new scheme satisfied the demands specified in the Act, something the then Energy Minister, Tim Eggar, stressed on Second Reading of the Bill in March 1995.
Alok Sharma (Reading West) (Con)
My hon. Friend has come quickly to the nub of the matter. People made the transfer because they believed that the terms would be no less favourable than those they were enjoying before they did so. Does he agree that the key question is, who will compensate those who have lost out? I know that it happened many years ago under a previous Minister, but perhaps the Minister will address that point as well when he makes his remarks.
Geoffrey Clifton-Brown
My hon. Friend has made his point cogently. I will return to the matter of compensation later in my speech.
Once part of the new scheme, members were encouraged to transfer all accrued pension service from the UKAEA scheme, by a leaflet presented as impartial advice from the Government Actuary’s Department; it has recently been found that the leaflet was changed several times at the request of the UKAEA to remove references to risks involved in the transfer. Scheme members were assured that their pension would be safe. As both schemes were based on final salary, the decision by scheme members on whether to transfer service to the new scheme or to freeze it in the UKAEA scheme was based on a judgment of what would happen to their own salary in future years. They could not make the decision based on whether the new scheme contained more risk, since they had not been warned of any.
Steve Webb
Let me address that point. The first thing to say is that the trustees of the scheme the money went into agreed the transfer values. They could have said, “You’re not putting in enough money to reflect the benefits we are going to have to pay out,” but they signed off the transfer values at the time.
The notion of a surplus is strange, because this is an unfunded pension scheme until the point of transfer. It is just a liability on the Government’s books for decades to come. A flow of contributions has come in, and those are given a notional investment return in the Government books. The concept of a surplus is not what this means in plain language; it is not like the Government were sitting on a pot of money that they hid. Government accounting for public service unfunded pension schemes is very different from that for funded pension schemes, where a surplus has a real meaning. It sounds as though what we are talking about means something when it does not. This is about the way the Government accounts for public service unfunded schemes; it is not that money was held back.
A valuation was done on quite a prudent basis. If the money transferred across had been invested in quite a low-risk way, it would, at the point of transfer—that is the crucial point—have been enough to pay the liabilities that were transferred across. However, the world changed subsequently for this scheme and every other scheme: people started living longer, investment returns over time started falling and, as my hon. Friend said, accounting practices changed. All sorts of things changed, which meant that all sorts of private sector company pension schemes began to face bigger deficits. The AEA Technology pension scheme was not different or unique in that respect. The trustees accepted the transfer value, which was fair for the liabilities that were transferred across, even on a quite prudent basis.
Steve Webb
I wonder if I may make more progress, to be fair to my hon. Friend the Member for The Cotswolds, as I want to respond on a few points.
The money went across; the firm was then private. Clearly, the business went on trading for 15 years or so. An issue arises about whether it was a prosperous, expanding firm where something funny went on, or on the brink of insolvency. I want to clarify what went on; my hon. Friend referred to it in part. In November 2011, the company issued a trading statement saying its financial position was deteriorating, and it was discussing the situation with its banks. In April 2012, AEA Technology’s latest forecast indicated that the company would be insolvent on a cash-flow basis by June 2012.
It can be simultaneously true that a company is recruiting more people and that it has terrible cash-flow problems. If the point is reached where it cannot meet its liabilities, it becomes insolvent. To give a sense of scale, the deficit in the pension fund as of 2011, on a standard basis, was £315 million, and the company could not afford to pay £6 million towards it. That is how bad things had got. So on the notion that somehow that £315 million deficit, which was £450 million on a buy-out basis, was going to be cleared, that was not going to happen.
Pre-pack administration is controversial and difficult and happens only when the options are insolvency with jobs lost and the pension fund going to the PPF, or insolvency with jobs saved and the pension fund going to the PPF. That was the choice. In fact, because of the pre-pack, hundreds of jobs were saved. To make a comparison with a straight insolvency, I am advised that the scheme would have got about £1 million with a routine insolvency, but the pre-pack enabled it to get between £6 million and £8 million.
My hon. Friend is quite right: frankly, when a scheme is £300 million in deficit that will not make any difference, because it is going to end up in the PPF anyway, so the benefit is to the PPF and not the members. However, the Government do not encourage struggling firms to shovel their pension fund deficits off to the PPF and carry on trading. It is allowed only where insolvency is inevitable. Our judgment was that that was the state of the company at the time, and the goal was to save some jobs, because the scheme was going to end up in the PPF anyway.
My hon. Friend asked about PPF benefits, and he is right: it is a compensation scheme. It is not a pension scheme that replaces and mirrors the benefits that were to be provided in the scheme. The reason for that is that the money for the PPF comes from other pension schemes, so any improvement in the benefits under the PPF is a bigger levy on employers who run other pension schemes. We should bear in mind that it did not exist much more than a decade ago. When it was set up, it was decided that it would offer broad compensation—100% above pension age, and 90% below, and indexation post-1997. That is the statutory requirement; schemes must index post-1997, and not pre-1997, and that is why the PPF does so.
My hon. Friend asked whether, because the firm was privatised, it should be made a special case. Of course I sympathise, but on the other hand vast numbers of workers now work for private companies that were previously nationalised. If AEA Technology were to be declared a special case, the pension funds of all the people who used to work for BT or British Airways and all the privatised companies would have to have special arrangements, too, with huge cost implications.
The question about the advice note given at the time is important. I have read the GAD note, and its introduction says, at 1.1.3:
“The note is not intended to suggest that any one course of action is better than any other. This would depend on individual circumstances, and if you are unsure of the most suitable course of action you should seek Independent Financial Advice which would take into account your particular circumstances.”
That was the point of the note. People could leave the money where it was, transfer it across to the AEA scheme or take a personal pension transfer. The note was explicit from the start that it was not designed to lead people down a particular route. In a sense, from the Government’s point of view it did not matter. The Government were going to transfer across the cash value of the rights built up, so they did not care whether people transferred across. There would have been no reason for GAD to write a note designed to lead people to a particular outcome. It would cost the Government the same either way.
Steve Webb
I am very happy to ask colleagues at the Department to respond to my right hon. Friend’s questions. Obviously, as he said, the issue of PPF is a DWP responsibility, but insolvency policy—pre-packs and so on—is a BIS responsibility, and of course he should get prompt responses to his questions. If my hon. Friend the Member for Reading West still wants to intervene I am happy to give way.
Alok Sharma
I wanted to make the point that people affected by the scheme will be listening to the debate, and the bottom line for them is that what the Minister is saying—perhaps he will correct me if I am wrong—is that no compensation or redress will be forthcoming from the Government.
Steve Webb
Clearly, the Government have set up the Pension Protection Fund. As I have said, more than about 10 years ago, people in the situation we are talking about might have received a tiny fraction of the pension they had been going to get. In the present case, the base calculation for those over scheme pension age is 100%. I take the point about indexation, but it is 100%. It is 90% for those under scheme pension age. That is obviously still a significant part of their pension rights. Clearly, the reduction in indexation is important. I would not play that down.
The other thing to mention—my hon. Friend the Member for The Cotswolds did not refer to it—is that at the moment scheme benefits are capped. There is implicitly a salary cap—a cap on the amount of money that someone can get through the scheme. We legislated during this Parliament, with the support of my right hon. and hon. Friends, for that cap to be raised for long-serving employees. One reason I was keen to do that is if a relatively large pension through the PPF is capped, it may not be because the person in question was a ridiculously high earner; it could simply be because of very long service with that employer. I believe that that is so for many of my hon. Friend’s constituents.
I felt it was unjust that the cap applied quite as brutally as it does in those cases, so we are now working on the secondary legislation necessary to get the cap lifted. It will rise by 3% per year for each year above 20 years of service, so long-serving employees will get a higher cap. We are working on the measure, and if we can get it done this year, we will. I suspect that realistically we are probably looking at this time next year. However, I do not have a pot of money to offer beyond that. Clearly, the PPF is there for all employees of private sector companies.