Health and Safety at Work etc. Act 1974 (General Duties of Self-Employed Persons) (Prescribed Undertakings) Regulations 2015
Baroness Altmann Excerpts(8 years, 9 months ago)
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Baroness Altmann
That the draft regulations laid before the House on 22 June be approved.
Relevant document: 1st Report from the Joint Committee on Statutory Instruments
The Minister of State, Department for Work and Pensions (Baroness Altmann) (Con)
Section 1 of the Deregulation Act 2015 gives the Secretary of State the power to make regulations, which limit the scope of Section 3(2) of the Health and Safety at Work etc. Act 1974 so that only those self-employed who conduct an undertaking of a prescribed description will continue to have a duty under the provision.
The regulations set out ways in which undertakings may be prescribed. The regulations will retain duties on all self-employed persons who conduct specified high-risk work activities or may expose others to risks to their health or safety. I am satisfied that the instrument is compatible with the European Convention on Human Rights.
It is important that I set out a little of the background to the draft regulations. In 2011, the Government commissioned Professor Löfstedt, director of King’s Centre for Risk Management at King’s College London, to conduct an independent review of health and safety regulations. One of his recommendations was to exempt from health and safety law those self-employed people whose work activities pose no potential risk of harm to others. The Government accepted this recommendation and asked the Health and Safety Executive to draw up proposals for changing the law.
Currently, Section 3(2) of the Health and Safety at Work etc. Act 1974 imposes a general duty on self-employed people to protect themselves and others from risks to their health and safety, regardless of the type of activity they are undertaking. The proposed change to the law was included in Clause 1 of the then Deregulation Bill to ensure that only those self-employed who conduct an,
“undertaking of a prescribed description”,
will continue to have a duty. The underlying policy is that self-employed people will retain duties under Section 3(2) only if their undertaking involves carrying out an activity which is specified within the regulations. It was intended that the regulations would consist of a short concise list of activities. The proposed policy was subject to two public consultations and was debated in Parliament. The Government carefully considered the consultation responses and listened to respondents’ concerns during the debates in both Houses. The clause was therefore amended at Report in the House of Lords to ensure that those self-employed people whose work poses a risk to the health and safety of others remain subject to the law. It is these amended regulations that are subject to scrutiny by both Houses of Parliament.
The Bill received Royal Assent on 26 March 2015. The regulations have been drafted to ensure that self-employed people still have a duty under the law when they carry out high-risk activities that create risks for themselves or others. This is intended to include the most common activities carried out by the self-employed and those which statistically result in high numbers of fatalities or injuries. This approach puts beyond doubt that these self-employed people will not be exempt from health and safety law, irrespective of what they do.
Work activities in agriculture, on the railways or involving gas and asbestos are included. In addition, the regulations also include any EU requirements that impose a specific duty on someone who is self-employed to protect themselves from risks to their own health and safety. This brings in work with genetically modified organisms and self-employed people who work on construction sites. This is the key part. There is a catch-all provision in the regulations so that self-employed people who carry out an undertaking which may expose others to risks to their health and safety are included. We are exempting only those self-employed people who do not pose a risk to the public and who are not going to sue themselves.
The Government acknowledge that the self-employed will need some help to understand this change and to limit the possibility of incorrectly assessing whether their work activities may expose others to risk. The Health and Safety Executive will therefore produce guidance to support the regulations. This will also signpost existing guidance which explains in practical terms what they need to do to comply with health and safety legislation.
Baroness Altmann
I thank noble Lords for their comments, and I thank the noble Baroness, Lady Donaghy, and the noble Lord, Lord McKenzie, for their, albeit reluctant, welcoming of the proposals.
I want to provide some clarifications that were asked for by the noble Lord. The obligations of the self-employed to others are unaffected. Their obligations to employees are unaffected and Section 3(1) and (2) will still apply.
I also make it clear that the exemptions will be clarified in specific, detailed guidance from the Health and Safety Executive. The definition of self-employed that the noble Lord, Lord McKenzie, asked me about is in Section 53 of the Health and Safety at Work etc. Act and is rather broad, stating that,
“‘self-employed person’ means an individual who works for gain or reward otherwise than under a contract of employment, whether or not he himself employs others”.
A director of a limited company is an employee of that company. If that company employs others—that is, is an employer—it will have duties under Section 2 of the Health and Safety at Work etc. Act towards its employees.
I take my noble friend Lord Cormack’s point about the term “probabilistic”, which seems to have been more ballistic today than one might have expected, and I will relay his request to the department. As far as banning acronyms is concerned, as someone who is steeped in pensions, these have often been the bane of my life and I sympathise to some degree.
I share the concerns of the noble Lord, Lord Kennedy, about the agriculture industry. It is indeed an industry, as is construction, in which there have been an enormous number of accidents and fatalities. The duties on the self-employed to report accidents are not affected in any way by these changes but it is anticipated that they will remove 1.7 million people from the scope of Section 3(2) of the Health and Safety and Work etc. Act 1974 and will result in savings to the self-employed of £4.7 million over 10 years. Obviously, the source of those savings is subject to estimation but it appears that a number of self-employed people who do not pose any risk to others, such as a bookkeeper working from their own home and not coming into contact with anybody else, mistakenly believe that they are required to carry out health and safety assessments or are approached by consultants who lead them to believe that they need to spend money on having such an assessment. I entirely agree with the noble Lord that as long as the guidance is clear and the clarifications are available—so that people who are exempt know they are exempt, and those who could pose a risk to the public and are therefore not exempt will be able to identify themselves—this should indeed result in savings, as recommended by the Löfstedt report.
We have had an independent review. We have listened to the concerns and the requests for amendments that have been made, particularly by the noble Lord, Lord McKenzie, and have responded to those. The catch-all phrase in Regulation 2(b) should make it absolutely clear that we are intending to cover anybody who potentially poses a risk to the public, and they will still have to comply with health and safety regulations.
Lord McKenzie of Luton
The Minister referred to the 1.7 million people who will be taken outside the scope of the Health and Safety at Work etc. Act. What estimate has been made of the number of those people who would have to undertake a risk assessment in the first place to determine whether or not they pose a risk to others?
Baroness Altmann
We would expect that if they are exempt they would not need to undertake a health and safety risk assessment. The idea is that it will be made clear to them if they are working in such conditions that they pose no threat to the public. As I described, if you work from your own home and you do not come in contact with the public, you will not need to do a health and safety self-assessment, and somebody will not come along and say, “Oh, by the way, everybody has to conduct a health and safety assessment”. However, of course, if you are employing other people, that will still be required. I hope that that answers the question.
I understand that it is difficult to imagine how this will work until it is actually working, but the guidelines and the guidance will be available six weeks before the regulations come into force. There will be an extensive campaign to publicise this change and to explain it to the public. Our estimates have been made and we are accepting the recommendations of an independent review. We are talking only about someone who is self-employed so our expectation is that this will save both time and money; it will also save those self-employed people who are now exempt from having to keep up to date with any changes in health and safety regulation, which in itself can take time or cost money.
We are aiming to help businesses. We expect that more new businesses will start up as a result of this. Again, one cannot demonstrate precisely how many—
Lord McKenzie of Luton
I am sorry; I promise not to interrupt again. Is the Minister seriously saying that an estimated 15 minutes a year has been prohibiting self-employed businesses from starting up and flourishing; or that the minuscule savings that, in aggregate, even on these estimates, are expected to accrue will affect the growth of self-employed businesses? There have been some 200,000 new businesses in recent times in any event. They do not seem to have been inhibited by overburdensome health and safety regulations.
Baroness Altmann
I accept that it is impossible to prove but that is the expectation of the department. At the margin—these decisions are often important at the margin—some people will be reassured to know, if they are intending to set up only as a self-employed person working from home, that they are not included in the health and safety requirements they are now being exempted from. It is impossible to say, as with all such things, but we certainly have been advised that, and it is the view of the independent reviewer that, this will make a difference. Therefore, we are recommending these changes.
Lord McKenzie of Luton
I said that I would not intervene again, but I want to stress to the Minister that the statement made that those working at home can be outside the Health and Safety at Work etc. Act is very dangerous. To make blanket assertions in such a bold way—that no one in that situation will pose a risk of harm to others or need to undertake a risk assessment—is highly dangerous. I apologise for interrupting. I will not do it again but we have to stress the importance of not going down that path of encouraging people to think that they are outside the provisions of this very important legislation.
Baroness Altmann
I absolutely share the noble Lord’s view that this is very important legislation. The advances we have made in health and safety and the consequent reductions in accidents, along with the measures introduced all those years ago, are a significant achievement and success. However, I am suggesting that certain businesses can be exempted from this provision because they pose no risk to the public. I certainly would not wish to give the impression, and I hope I have not, that everybody who works from home is exempt. One million self-employed people will still be covered by the regulations. They will apply only to certain types of activity and they will be made clear. They will be clarified by the guidance and by the campaign that will be launched six weeks before these measures come into effect.
Lord Hodgson of Astley Abbotts (Con)
Perhaps my noble friend might like to explain to the noble Lord, Lord McKenzie, and the party opposite that what is actually needed here is common sense, not risk assessment. Risk assessment is a formal legal process. People should use their common sense to make sure that they look after themselves. I think that is what my noble friend is trying to drive at and it must be the right way to proceed—to avoid paper form-filling and unnecessary diversion of effort for people who, with common sense, could work it out for themselves.
Lord McKenzie of Luton
But is risk assessment not a matter of common sense?
Baroness Altmann
I thank my noble friend Lord Hodgson for his comments. I would certainly be of the view that in the cases one could imagine these regulations applying to, it would be common sense to identify whether you pose no risk to the public in the work you are doing. You would therefore not need to carry out a health and safety assessment on yourself or your place of work if you do not pose any risk to anybody else. As I have said, a self-employed person who is an employer will continue to have duties under the Act; so will anyone who carries out high-risk activities.
Lord Kennedy of Southwark
I made reference to the problems in the agriculture industry, which is the most dangerous in which to work in the whole of the UK. I am certainly of the opinion that either the regulations are not strong enough at present or they are not enforced properly. Will the noble Baroness look at the list of injuries—drownings and electrocutions? It is a shocking tale in that industry and something really needs to be done about it.
Baroness Altmann
I certainly agree with the noble Lord, Lord Kennedy, about agriculture, which is a prescribed activity. All self-employed persons undertaking agricultural activities will continue to have duties under Section 3(2) of the health and safety Act. Indeed, if the noble Lord so requests, we will be happy to look at the situation with agriculture. We certainly recognise the importance of keeping agriculture within the remit.
I beg to move that the House has considered these regulations.
Occupational Pensions: Survivor Benefits
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Lord Naseby (Con)
My Lords, in asking the Question standing in my name on the Order Paper, I declare an interest as a trustee of the parliamentary pension fund, and that my wife is a retired full-time NHS GP.
The Minister of State, Department for Work and Pensions (Baroness Altmann) (Con)
My Lords, the Government are absolutely committed to equality. Current legislation requires all couples to be treated equally and survivor benefits are built up on an equal basis going forward. The review covers complex issues of legislation and entitlements built up in the past. Any changes could have significant implications, including costs, for private and public sector pension schemes so we must consider the review’s findings thoroughly and understand those implications fully before making a decision about whether retrospective changes should be made.
Lord Naseby
I am most grateful to the Minister for that Answer but I would like to focus on the situation of female GPs, many of whom retired around the beginning of this century. They contributed an identical amount to that of their male counterparts. The widows of the male doctors get a 50% pension. Is my noble friend aware that current widowers, and possibly those in the future, get only about 18%? Can she rectify this anomaly, bearing in mind that both parties, male and female, have contributed an equal amount of money to the pension?
Baroness Altmann
My noble friend will know that the specific differences in treatment between male and female scheme members for the purpose of survivor benefits in public service pension schemes for service prior to 1988 were held to be lawful in 2011. This judgment was made in the Cockburn case, which specifically discussed a widower whose partner was a member of the National Health Service Pension Scheme. The judgment effectively said that there was in that case,
“an objective and reasonable justification”,
not to make retrospective changes in relation to new policy being introduced.
Benefits for widows were introduced much earlier than for widowers. The Social Security Act 1975 first imposed obligations on contracted-out schemes to provide a surviving female with a survivor pension. In those days it was usual for the man to be the partner who was working, with a dependent female partner. A female worker with a dependent husband was not the social norm. The scheme funding would have been based on the expectation that a female member would not have a dependent survivor, whereas the male would have a dependent survivor.
Lord Cashman (Lab)
My Lords, does the Minister agree that this issue of equality should have been dealt with prior to the Civil Partnership Act and the same-sex marriage Act? People who survive their partners are having to cope at the time of death with appalling inequality, which should be unacceptable. Will the Minister act with expertise and expedite this matter urgently?
Baroness Altmann
My Lords, the Government are very sympathetic to the principles of equality and if we were confident that equalising these benefits would be straightforward, affordable and sustainable we would be happy to support more equalisation. But we have to think carefully before imposing on schemes retrospective costs which could not have been taken into account in past funding assumptions. We are absolutely committed to tackling discrimination in all its forms and creating a fairer society for everyone, regardless of sexual orientation or gender identity, but the benefits people receive—
Baroness Altmann
The benefits people receive from a pension scheme are based on their personal circumstances rather than the contributions they have paid. The overall contributions are assessed on the basis of assumptions relating to the entire membership and there is a degree of cost-sharing between members. In order to equalise—
Baroness Altmann
My Lords, these issues are complex, involving significant sums of money. They would potentially impose significant retrospective costs on pension schemes that are already struggling with large deficits and, if closed, would not have a means of recouping the costs from members in future. It would be very difficult to make newly retrospective changes and difficult to make changes to some schemes but not others. That is why the Government must consider these issues most carefully.
Baroness Symons of Vernham Dean (Lab)
My Lords, in her initial Answer the Minister said that the Government were absolutely committed to equality. Everything she has said subsequently has mitigated that absolute statement. Will she please reiterate: are the Government absolutely committed on this issue, or are they going to equivocate in the ways that her answers have so far done?
Baroness Altmann
My Lords, the Government are absolutely committed to equality, and all accruals from now are on an absolutely equal basis. However, past funding of pension schemes would not have built in the cost estimates for equality. That is why we have to be careful and consider the issue most carefully before imposing a cost of £3.3 billion on these pension schemes. The cost for public sector pension schemes would be £2.9 billion, which has not been funded, and the cost for private sector schemes would be £400 million, which has also not been funded. Finding that kind of money when employers are already struggling is not straightforward.
Lord Bradley (Lab)
My Lords, the Minister said in the Sunday Times last November:
“There has been so much unfairness in pensions over the years. Sadly, this is another unfairness, and should not be permitted these days”.
In the light of that, are the Government going to bring forward proposals quickly to match those words? What provision have they now made to meet the costs of addressing restrictions on survivor benefit payments if that decision is lifted?
Baroness Altmann
The current treatment has been challenged in the courts and been found to be lawful. If the Government had a ready source of funding, the issue would have been dealt with by now. These issues are complex and are still being considered. We will issue our response in due course.
Disabled People: Access to Work Fund
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Lord Touhig
To ask Her Majesty’s Government what assessment they have made of the effectiveness of the Access to Work fund and what plans they have to help people with disabilities into work.
The Minister of State, Department for Work and Pensions (Baroness Altmann) (Con)
My Lords, last year Access to Work helped more than 35,000 disabled people to work, including almost 2,000 into self-employment. Disabled people and stakeholders consistently tell us of the effective support that Access to Work offers. A wide range of employment support programmes underpins our success. We are building on this by launching specialist employability support, expanding the Disability Confident campaign, extending work choice and expanding the use of our Access to Work mental-health support service.
Lord Touhig (Lab)
My Lords, an Access to Work grant is a lifeline helping disabled people to find a job and stay in work, so I am sure I was not alone in being surprised last week when the Minister for Disabled People seemed almost to boast about the fact that his department had underspent the fund’s budget by £3 million last year. In those circumstances, will the Minister tell the House why the Government are cutting the grant that disabled people can receive under the fund and why they have failed to publicise the fact that the fund even exists? How will this help the Government to honour their pledge to cut the number of unemployed people by 50%?
Baroness Altmann
My Lords, Access to Work is not being cut. We are introducing a cap, which means that the resources available can support growing numbers of people. We are determined to reduce the disability employment gap by half and to spend more money on these programmes. It is a demand-led programme. The cap will ensure that we can reach far more people, and, indeed, we did just that over the past year.
Baroness Thomas of Winchester (LD)
Does the Minister accept that when the bulk of personal independence payment reassessments start in October, when thousands may lose their Motability cards, the Access to Work scheme is likely to be overwhelmed by disabled people trying to get to work, particularly in rural areas?
Baroness Altmann
As I said, Access to Work is a demand-led scheme. Nobody has ever been turned away from it. The reforms to PIP are about taking money away, but not from those who need it. Therefore, the reforms will deliver a more dynamic benefit system whereby we can tailor support to meet people’s needs as they change over time, and Access to Work will be available to more people.
Lord Low of Dalston (CB)
My Lords, as the Minister said, the Government aim to halve the disability employment gap so that hundreds of thousands more disabled people who can work, and want to be in work, find employment. This is an ambitious aim, and I wonder how far the Minister believes it will be assisted by capping the amount that an individual can receive from the Access to Work programme. A cap at one and a half times the mean average salary may sound generous, but it could limit the effectiveness of the scheme for those with the greatest obstacles to labour-market participation, such as deaf people who need the support of a sign-language interpreter. Will there be any flexibility in the administration of the cap to cater for cases such as these?
Baroness Altmann
I reassure the noble Lord that the cap for existing claimants will not be introduced until 2018, and we will work sensitively with all those affected to ensure a smooth transition from the support they currently get to an alternative form of support under the new arrangements. More than 35,000 people are currently in the Access to Work programme and 200 will be affected by the cap. As I said, nobody currently receiving more than the cap will lose any of their support until we have worked through the programme of transition over the next three years.
Lord Fink (Con)
My Lords, does the Minister agree that misconceptions about people with disabilities, particularly mental health problems, could cause them real difficulties in finding a job? What are the Government doing to help to remove this sort of stigma, particularly among employers?
Baroness Altmann
I agree with my noble friend, and that is why the Government’s campaign to make Britain disability-confident is so important. For individuals with mental health conditions, we provide a wide range of support across our programmes—and there are many such programmes—targeted at supporting work for both employers and individuals. We are very conscious that all disabled people who wish to work have a right to support from the Government to help them to do so.
The Lord Bishop of St Albans
My Lords, perhaps I may press the Minister a little about the very real concerns of many people in the deaf community about the use of British Sign Language, not least because currently four-fifths of the highest-value awards are paying for BSL services. Indeed, the DWP’s own figures show that almost 90% of the users who will be affected by the cap that is to be brought in are deaf. How do the Government plan to continue to support and encourage deaf professionals on a par with the hearing community in the light of this cap?
Baroness Altmann
I reassure the right reverend Prelate that we will continue to support deaf people and people with hearing loss. Specialist teams will help customers and their employers with advice on adjustments and technological support and with personal budgets so that users can manage their support flexibly themselves when the scheme is rolled out later in 2015-16. We are also in discussions with relevant stakeholders about how best to plan the implementation. As I said, existing customers will be protected until 2018 while we work through the transition.
Baroness Wilkins (Lab)
My Lords, how will the department monitor the impact of the cap on Access to Work funding from the day it is introduced?
Baroness Altmann
We will carefully monitor all our programmes. Access to Work is one of the many programmes that we have introduced and are planning to roll out to protect the disabled and help them to work if they want to, as many do. Last year, we ensured that nearly a quarter of a million more disabled people had work. That is a tremendous success, and our programmes are working.
Baroness Sherlock (Lab)
My Lords, it has been rolled out. It is already out there, and the Government are limiting the budget. Will the Minister follow up on the questions asked by the noble Lord, Lord Low, and the right reverend Prelate? Of the 200 people affected, 90% are deaf. They will not be protected in the long run; they will lose the money to pay for their interpreters. Advice is helpful. Interpreters are essential. How will the Government protect them?
Baroness Altmann
We are introducing a range of programmes. Access to Work was never designed to be an unlimited-cost programme. We will ensure that all those who are potentially affected by the cap will have more flexible support to help them as they require it.
Family and Relationship Support
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Baroness Tyler of Enfield (LD)
In asking the Question, I declare an interest as vice-president of the charity Relate.
The Minister of State, Department for Work and Pensions (Baroness Altmann) (Con)
My Lords, I am the Minister responsible for family and relationship support policy. We are working with several organisations to develop and deliver provision. This includes preventive support, help for those experiencing difficulties, piloting relationship education in perinatal classes, and supporting local authorities to improve family relationships. I confirm that the total funding for this in 2015-16 is at least £7.5 million. We are currently planning how to make the most effective use of this funding.
Baroness Tyler of Enfield
I thank the Minister for her Answer and welcome her to her new role. The last time I counted, there were five government departments with a direct interest in family relationships: indeed, six if you count the Home Office’s interest in domestic violence. Given this fragmentation and the fact that relationship breakdown is estimated to cost the country some £46 billion per year, what mechanisms will be used at Cabinet level to ensure that family policy is co-ordinated across government, and how will each department be held to account for the family test announced by the Prime Minister last year?
Baroness Altmann
I can inform the noble Baroness that the family test will be applied to all new policies that are being developed by government, and it will be strictly applied. The idea at the moment is that we transfer the Department for Education’s responsibility to the Department for Work and Pensions so that these policies are more integrated for the benefit of the families who we are trying to support.
Baroness Afshar (CB)
Has the Minister considered the plight of Muslim women, who are very often home-based and therefore not likely to go out to seek advice? Are there any provisions for dealing with Muslim women in their own homes in order to counter what violence there is, which in some cases could be quite considerable?
Baroness Altmann
The noble Baroness asks an important question. We are working with a number of different organisations to ensure that the relationship support that we deliver covers a whole variety of different types of relationship, including Muslim relationships and those where there is an element of domestic violence. I reassure the noble Baroness that that is being included.
Lord Kirkwood of Kirkhope (LD)
At the family summit last August, the Prime Minister indicated that the budget for family relationship support would double to £19.5 million, whereas the Conservative manifesto in May merely referred to “at least £7.5 million”. Can the Minister confirm that there is a budget line in the DWP departmental expenditure limit for fiscal year 2015-16 that has at least £7.5 million in it? How long will that programme last, and is it exempt from the forthcoming budget cuts?
Baroness Altmann
I can confirm for the noble Lord that the commitment to £7.5 million per annum is a firm one, and we will be spending at least that amount. The total government-wide spending for family, parenting and relationship support is approximately £6.5 billion, with a number of different programmes, including the troubled families programme, help and support for separated families, the innovation fund and, of course, childcare support. In our manifesto we have guaranteed funding for relationship provisions every year over the Parliament. We were the only party to do so.
Baroness Sherlock (Lab)
My Lords, I welcome the Minister to what I think is her first Oral Question and I look forward to debating with her on DWP matters. The Minister mentioned the family test, which the Prime Minister announced in 2014 and that was going to be five questions that all policy or legislation across government would have to be subjected to by civil servants before Ministers would sign them off. Today’s papers are full of reports that, according to the Prime Minister, tax credits for children will bear the brunt of the £12 billion welfare cuts. Could she tell the House whether that policy has been subject to the family test and, if so, what the result was?
Baroness Altmann
Clearly there is speculation in the papers about all sorts of things. I certainly cannot comment on that particular issue, but I repeat my assurance that all polices are subject to the strict family test.
Lord Fink (Con)
My Lords, I welcome my noble friend to her new post. I want to ask about support for families in terms of advice. A recent Department for Education report tells me that each £1 spent on advice yields approximately £11.50 in savings to the taxpayer as well as adding to family stability. Could my noble friend confirm that paying for such continuing intervention will be part of the Government’s plan?
Baroness Altmann
I thank my noble friend for that question. Studies have indeed suggested that the amount that we are spending yields £11.50 for each £1 spent, which is of course excellent value for money. We are continuing to rationalise some of the contracts, and have introduced a 20% payment-by-results scheme. We are ensuring that we continually monitor the effectiveness of all the policies that we have introduced under this programme and will continue with challenging stretch targets as well.
The Lord Bishop of Bristol
My Lords, I, too, welcome the noble Baroness to her new role. Is she prepared to confirm that the current funding will be used for the whole spectrum of relational support as well as for the valuable services targeted at the effects of family breakdown?
Baroness Altmann
The whole spectrum of relationships is covered in our spending programme for relationship support, including same-sex couples and older people—a whole, wide range, as I indicated to the noble Baroness. So yes, I can confirm that.
Pensions: Reforms
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The Minister of State, Department for Work and Pensions (Baroness Altmann) (Con) (Maiden Speech)
My Lords, I am proud and honoured to stand here today as a Member of this House and thank my noble friend Lord Flight for initiating this debate and for the many important and interesting points he raises, which I look forward to discussing with him. I also thank other noble Lords for their kind words. I must say that I am finding this such a friendly place. I am enormously grateful to my two supporters, my noble friends Lady Wheatcroft and Lord Freud, and to the doorkeepers and all the wonderful people who make this great House work so well.
I am particularly pleased to be among so many notable experts—especially all the noble Lords who have spoken so eloquently today—who have a deep knowledge of the UK pensions system. As someone who has studied and advised on pensions policies independently, I am excited to have joined the Government, with the opportunity it gives me to work inside this House to try to deliver the important pension reforms already under way, and initiated by my esteemed predecessor Steve Webb.
In the past 15 years or so, I have worked really hard to help ordinary pension savers. I have been involved in a number of campaigns trying to achieve justice for those who have lost out in our pension system, and it has been a privilege to have been able to make a difference to so many people’s lives. That is what motivates me. I earnestly hope that, in my new role, I will be able to help many more—time will tell. I thank the many noble Lords who have already shown me such warmth, kindness, support and friendship since arriving in the House.
As this is my maiden speech, I hope I may share with noble Lords a few words about my background. My mother, a wonderful woman, well liked by everyone, tells me that I always had a strong sense of social justice, helping others wherever I could. Even at school I would stand up for those who were bullied. I remember my parents being proud of me for defending my friend one day and telling me, “Don’t stand by, stand up, stand strong”. I often think of those words.
My parents and their families were refugees from eastern Europe who arrived here with nothing. All my grandparents were so grateful for the freedoms and opportunities they enjoyed in this wonderful country of ours. I have been asked why I chose Tottenham as my “place”, and can assure noble Lords that this is not because I have a hidden talent for playing football. Actually, my father’s parents lived at their small shop in Tottenham—the Hale Bargain Store. I have many fond memories of serving in the shop and then walking to football at White Hart Lane, holding hands with my father and granddad in the Tottenham Hotspur glory days. As I am the last member of my family of Altmanns, I have chosen Tottenham as my “place” as it holds so many special memories of my time there.
Sadly, my father passed away in his 50s and never reached retirement. This is quite poignant for me given that my career has focused on helping people prepare for, and enjoy, retirement. After reading economics and studying at Harvard, I completed a PhD on pensions and later-life poverty at the London School of Economics. I then worked in the City and spent many interesting years managing institutional assets, mostly pension funds.
I took time out after having my third child and then returned to corporate life as an independent consultant, working on pensions and investment policy. I advised the Treasury and the No. 10 Policy Unit, while also working with many top international firms on pension investment, risk management and member security. That work led to public recognition as a pensions expert and consumer champion, which is ultimately why I am here today, among such distinguished company.
Turning to the subject of today’s debate, I first express my gratitude for the important work done by the Pensions Commission in generating the momentum that has brought us to the point we have now reached. The commission’s excellent analysis showed that any system of private pension saving needs to be considered against the background of the state pension and, rightly in my view, concluded that means-testing must be reduced; state pensions should be flat-rate with the widest possible coverage and should rise in line with earnings; and that private saving must be facilitated. That is why the delivery of the new state pension, rolling out auto-enrolment to all employers and ensuring that customers are treated fairly in the new pensions landscape will be major priorities for me as I do my utmost for the pensioners of today and the future.
The reforms put in place so dedicatedly by my predecessor in the last Government—I echo the many tributes paid to Steve Webb—are now reaching a critical stage. I am well aware that the real tests for success are still to come, notwithstanding the encouraging trends so far. I am also actively aware that, as the noble Lord, Lord Hutton, mentioned, maintaining a consensus is vital. I think there is broad agreement that a base level of state pension is essential. The value of the basic state pension as a proportion of earnings had been in almost constant decline since 1978. However, with the introduction of the triple lock, the previous Government helped to ensure that today’s pensioners now receive the highest share of basic state pension relative to earnings in two decades, so that pensioners are protected even in tough times. I repeat the Prime Minister’s commitment that this triple lock will be maintained during this Parliament.
As many noble Lords have said, the current state pension system is one of the most complex in the world. State pension provision has undermined private pension saving as too many pensioners just ended up on means-tested benefits that penalised their private income. The new state pension introduced by my predecessor—I echo the remarks of the noble Lord, Lord Stoneham, in that regard—will significantly reduce pensioner means-testing. People therefore have a better chance of knowing what to expect from the state pension, so they can plan any additional personal retirement income they may want or need on top. Unfortunately, the new state pension has not yet been properly understood. This is mainly because of the complexity of contracting out, and we need to communicate this more clearly. I absolutely agree with the noble Lord, Lord Stoneham, about the importance of communication. This is an area on which I have already spent an enormous amount of time in my new role. I reassure my noble friend Lord Kirkwood that among the plethora of briefings that I have requested from my team, I have already asked for submissions on winners and losers and will now add to that ever-growing list a request regarding the Pension Provision Group. I should also let him know that I hope to be in Edinburgh in the middle of July and look forward to the band.
Rising longevity means that successive generations are spending longer and longer in retirement. This is, of course, pretty good news. However, we all know that there are also huge cost implications for state pensions, which is why we will have an independent review of the state pension age by 2017. I want the review to consider not only rising life expectancy but wider social, occupational and gender factors. I reassure the noble Baroness, Lady Drake, and the noble Lord, Lord Kirkwood, that I am acutely aware of the disadvantages faced by women in our pension system.
Let me now address the pension freedoms. There are some who say that the financial industry or the Government know best what people should do with their private pensions and that most people cannot make sensible decisions for themselves. I disagree. Yes, some may be reckless and most will certainly need protection, guidance and even advice but the new pension freedoms are right, in my view. I have long been an advocate of trusting people with their own money. I was acutely aware of how the one-size-fits-all approach of the past meant that too many people—unless they had very large pension funds—were forced to buy annuities that were often not suitable for their needs. I am most grateful for the support for the new pension freedoms, in particular from the noble Lord, Lord Bradley.
The previous system most benefited the wealthy but we have now offered more choice and flexibility for the majority of savers as well. I should like to stress an important point: the reforms are particularly helpful in that they use the tax system to incentivise people to keep money in their pensions into later life. By taxing lump sum withdrawals, removing the 55% tax on death and allowing pension savings to pass to the next generation free of inheritance tax, there are strong reasons for people to keep pensions rather than spend them too soon. Most importantly, these reforms will also encourage more people to save in pensions in the first place.
Of course, we must also make sure that customers have good value options to choose from. The pensions industry needs to help individuals to act as they would like to and as the law now allows but, so far, too many firms are not offering many of the new options to their customers, or they are imposing hefty charges, lengthy delays or exit penalties on those wishing to transfer to other providers. This is most disappointing.
My right honourable friend the Chancellor of the Exchequer announced yesterday in another place—this was welcomed by the noble Baroness, Lady Drake—that we will be launching a consultation next month, asking the industry, consumer groups, media and individuals to submit evidence of the reality facing customers in this new landscape. We need the evidence to inform any action that might be required to ensure that the market works as intended and customers are treated fairly. We must not allow consumer rights to play second fiddle to the interests of large financial firms. So far, it is clear that competition has not always addressed consumer detriment but, ultimately, it is in the interests of providers to look after their customers well. Their long-term success requires a new approach, and I assure noble Lords that I am at least as concerned about this as they are. I intend to take action to drive fair treatment of customers. I am also concerned about the transparency of all fees and charges for pensions and savings products. The noble Lord, Lord German, rightly mentioned this. I share the sense of urgency expressed by the noble Lord, Lord Bradley, and I reassure him that I will reflect on his other remarks.
It is also important that the pension freedoms have been accompanied by the creation of Pension Wise. I am grateful for the support of many noble Lords, including the noble Lord, Lord German, and the noble Baroness, Lady Drake, for this service. Pension Wise has already been used by thousands of people. Its free and impartial guidance helps pension savers understand the options available to them and the risks and costs associated with each. People also need to be alive to the risk of scams and we must keep working hard to raise awareness of this important issue. I can tell the noble Lord, Lord Stoneham, that I have also already had conversations with the FCA about this issue, financial advice and the difficulties faced by advisers and their customers in accessing affordable advice. In addition, we need to improve financial education, as the noble Lord, Lord German, rightly said. Public understanding of the long-term savings and investment market is currently inadequate.
As well as problems with pensions, I have, for many years, been concerned about the looming crisis in social care funding. The ageing population means that there will be an enormous surge in the numbers needing to rely on care in coming years, and there is simply no money set aside to pay for this. There is still much more to be done to incentivise saving for later-life care, whether as part of pension provision, separate care savings plans, a widespread insurance system or a combination of all these.
Turning to auto-enrolment, the coverage and adequacy of pension saving had been in rapid decline for many years. Unfortunately, the rising costs and risks of defined benefit pension provision led, as we have heard today, to employers closing traditional defined benefit schemes. I have great sympathy with the many employers who have been struggling with ever-increasing pension liabilities in the current, exceptionally low interest rate environment. Pension provision is clearly moving towards defined contribution, which employers are using to replace defined benefit. It is encouraging, however, that automatic enrolment has so far been successful and that opt-out rates have been really low, especially among young people, so that coverage of workplace pensions is once again increasing.
I can inform the noble Lord, Lord Stoneham, that as of last week 5.25 million people have been automatically enrolled, 44,757 employers have met their automatic enrolment duties and the number of eligible employees participating in workplace pensions has increased by 900,000, to 11.7 million. But we must not be complacent: half of all employees have been automatically enrolled but this accounts for only 4% of employers and contributions are low, as the noble Lord, Lord Hutton, rightly remarked. The hardest work is just starting, as there will be many challenges in ensuring that the huge numbers of remaining employers manage the auto-enrolment process. In particular, I am conscious of the situation of micro-employers and I reassure the noble Lord, Lord German, that I am actively engaged in ensuring that auto-enrolment for the smallest employers is successful and that they are given an easier way to manage this issue. I have already had many meetings on this topic.
Of course, a major factor in people’s retirement income is how much and for how long they save into a pension but, as life expectancy keeps rising, it is also imperative to help people stay in the labour market in later life, including beyond the state pension age if they choose to do so. As my noble friend Lord Flight rightly said, we need to retire the traditional concept of retirement. In that vein, I was amused by and grateful for the remarks by the noble Lord, Lord Kirkwood, about my possible retirement from my new ministerial role, even before I have made my maiden speech.
In conclusion, my aim as Pensions Minister is to try to make pensions work better for people. As I explained to your Lordships at the start of this speech, I have been involved in all aspects of pensions for my entire career. In this work I have always believed that pensions are not just about money. Ultimately, they are about people. We all hope to have a pension one day to help us enjoy our later life. Pensions are precious and need to be nurtured. So many of us have taken them for granted. As the Prime Minister announced to the press when asking me to join his Government:
“What we are doing is taking the country’s leading expert on pensions, on savings, on financial education, and … she will be at the heart of Government, making sure we complete this great revolution where we are giving people much more power to save, to access their pension, to pass their pension on to their children, because we want to create a real savings culture in our country for everybody”.
I realise that my new role in government and as part of this House is a huge responsibility. There is much to do. I have had the privilege of working with a large number of noble Lords from all sides of this House over the years, and I hope I can count many as friends. I would like to get to know and work with more of your Lordships in a spirit of co-operation and consensus rather than confrontation.
These are national and social imperatives in which we all have an interest, and I will try my best to make policy work better for people from all walks of life. With that in mind, I look forward to working with the House on the challenges ahead.