Pensions: Women’s State Pension Age

Baroness Bakewell of Hardington Mandeville Excerpts

Wednesday 2nd November 2016 Lords Chamber

[Lord Freud]

I can only repeat what the Pensions Minister, Richard Harrington, said, absolutely and explicitly, that,

“no further moves will be made to assist those women, all of whom will benefit in time from the significant increase in the new state pension”.—[Official Report, Commons, 17/10/16; col. 566.]

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I hear what the Minister says, but the Government must assess the impact of the failure to inform people on their planning for the future. If women did not know, and now face hardship as a result, they should be compensated. Will the Government look to set up a hardship fund?

[Lord Freud]

Let me go through the communications: 14 million personalised pension estimates have been sent out since 2000; 16 million unprompted forecasts were sent out with information on the raising of the pension age; 1 million letters were sent out between 2009 and 2011; 5 million letters were sent out between 2012 and 2013; and, in the 2012 survey it was discovered that only 6% of women retiring within 10 years thought that the pension age was still 60.

Pension Schemes Bill [HL]

Baroness Bakewell of Hardington Mandeville Excerpts

2nd reading (Hansard): House of Lords
Tuesday 1st November 2016 Lords Chamber

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I thank the Minister for setting out so clearly the arguments for and direction of this Bill. Like all the other speakers, I welcome the regulation of master trusts, their trustees and the way in which their businesses are run. It is vital that we protect those investing their money in master trusts so that they feel secure in the knowledge that their savings are safe. The majority of master trusts are run extremely efficiently and effectively. However, with smaller master trusts beginning to enter the marketplace, it is essential that the Government seek to protect those working for smaller employers and offer them the same protection as those covered by larger providers, such as the People’s Pension, Legal & General and others. Master trusts are the scheme of choice for the auto-enrolment market and it must be fit for purpose for the small as well as the large trust.

As we have heard from the noble Lord, Lord McKenzie of Luton, and my noble friend Lord Stoneham of Droxford, some 6.7 million people are now enrolled in some 84 schemes, with £8.5 billion-worth of assets. It is time that there is protection for members of a scheme where a master trust fails and has to be wound up. This Bill helps to provide that protection.

The People’s Pension represents a market innovation which was not anticipated by previous Governments or by the Turner commission, but they do have concerns. It is important to increase and maintain the success of auto-enrolment. The DWP forecasts that auto-enrolment will cost government £3 billion a year in lower tax revenues by 2050, but it will increase aggregate private pension incomes by £5 billion to £8 billion a year in 2011-12 earning terms and reduce government spending on income-related benefits in retirement by £0.9 billion by 2050.

There is also the risk of cross-cutting policies undermining auto-enrolment. There are concerns that policies from other departments may clash with the motivators found in auto-enrolment. Developing policy confusion could be damaging to consumer saving. Clarity and transparency are essential.

It is important that employees continue to save for their pension and increase their contributions. NEST, referred to by the noble Lord, Lord Monks, is countrywide and has some 3 million customers, each with a small pot. The fund has been running since 2012. The average pot is £300. This is unlikely to fund a pension for its members and a degree of realism is needed. People will not be able to afford to retire with so little in their pots. They will be disappointed, and employers will not welcome keeping on employees beyond their expected retirement age. When are the Government going to do something about this?

I welcome the criteria which the new authorisation regime institutes for master trusts and the new powers for the Pensions Regulator. The five essential criteria are: that persons involved in the scheme are fit and proper; that the scheme has financial sustainability; that the funder meets certain requirements; that systems and processes relating to the governance and administration of the scheme are sufficient; and, last but by no means least, that the scheme has an adequate continuity strategy. All the criteria are extremely important, as we have heard, but we will need to ensure that they are enshrined in the legislation as we move through the Bill stages.

Clauses 20 to 35 deal with triggering events around the responsibilities of trustees and the licensing of master trusts and the possible withdrawal of authority. However, I could not find any reference to what would happen to the pot of money in a master trust which had its authority withdrawn. Would this be returned to the employees or used for some other purpose? I am sure the House will want to probe this in Committee and I would be grateful if the Minister could provide some clarification at this stage.

Part 2 deals with exit penalties. Exit fees were not anticipated in the original legislation. These are set by the providers and have been as much as 5% of the pot which investors are wishing to transfer. The Government have introduced a cap of 1% on exit fees, which is to be welcomed. I am not as sanguine as the Minister about Clause 40, which is very vague. I remain concerned about Clause 40(2). Should the Government grant themselves the right to break contracts? This sets a very dangerous precedent. Are we opening up the way for Secretaries of State to override contracts? People may have legally prepared, signed and executed these in good faith, only to find that they are to be overridden at a later stage without any real justification. Again, this is a subject we will be returning to in Committee.

The Bill contains a great deal which is to be welcomed, but there are some serious omissions. A central advice scheme has already been mentioned by the noble Baronesses, Lady Altmann and Lady Wheatcroft, and others. Also, as part of pension freedoms the Government planned a secondary annuities market, where original purchasers who had a poor or inferior quality product would be able to sell it and buy a better one with the cash. I believe that this was included in the Conservative manifesto for 2015. There was heavy lobbying against this by the pensions industry which claimed it would be hard to set up a secondary market and difficult to provide consumer protection. As we now know, the Government have changed their minds and this has left people with poor annuities which they now cannot get rid of. Consumer protection could be problematic but it is not rocket science. We are disappointed that the Government have reneged on their promises and left people in the lurch. This could be corrected in the Bill and is a big omission.

This is also an excellent opportunity to mention concerns that we have about cold calling and pension scams. I know that my colleague Steve Webb, the previous Pensions Minister, was also worried about this development. When we get to Committee we will probe the Government on their latest thinking on pension scams. In the meantime, I would welcome the Minister’s views at this stage.

In summary, this is a piece of legislation which is largely to be welcomed, as it will provide the safeguards needed for small to medium-sized businesses and their employees. The Bill is very technical in nature. I and my colleagues look forward to debating the issues across the Chamber in more detail at a later date.

Improving Lives: Green Paper

Baroness Bakewell of Hardington Mandeville Excerpts

Monday 31st October 2016 Lords Chamber

[Lord McKenzie of Luton (Lab)]

My Lords, I start by thanking the Minister for repeating the Statement, although it is a Statement that is, frankly, thinner than we would have hoped.

We support the ambition to halve the disability employment gap, the clear pathway to its attainment, and the proposition that we have debated on endless occasions that there should be work for those who can, support for those who could and care for those who cannot. That has characterised labour market approaches from several Governments over recent times. I found on my shelf a booklet entitled Improving Health and Work: Changing Lives, from 2008, at about the time the Minister was an adviser to the then Labour Government. We have a shared ambition and recognition of those issues. The challenge is to convert the intent into policy and the policy into action that can be delivered. That needs resourcing. I do not think the Minister said much about the cost of his proposals; it would be good if he could give us an indication.

There was a suggestion that too many people were taken off the books, as I think was the expression, in 2010, but that does not give proper credit to the work undertaken at that time. There was a gradual realisation of the importance of the Waddell and Burton thesis, which characterised much of the work of the Labour Government, the coalition Government and this Government.

So far as the welfare measures are concerned, we have not seen the detail, but we can see the innate merit of a personalised support package for disabled people. As for community partners, can we know the basis on which they are likely to be allocated across jobcentres? I think the figure was 200 of them; I guess they would be spread fairly thinly across those centres. The Minister said there is to be a consultation on further reforms to the WCA. Can we hear a little more about the thrust of this consultation and what it will entail?

So far as health is concerned, we had a revolution announced—a new era: there will be some joint working between the Department of Health and the DWP. Of course, that is to be welcomed. The idea of ingraining the concepts of work and health in training is something that again we can see the merits of and would support. We certainly would need to understand the basis of any review of SSP and the fit note, which has had a patchy existence since it was changed from the sick note, but the underlying concept that it should focus on what can be done, rather than on what cannot, is right and something we would support.

The Minister asserted that universal credit always makes work pay. Would he care to write to us on that proposition with the evidence, taking account of the work of the Resolution Foundation and its recent pronouncements on it, and the cuts to the work allowance? Universal credit started life with a very clear ambition to do exactly what the Minister said. Successive cuts to the programme have certainly impaired that ambition and that outcome. We should be clear on the basis of the Government’s assertion that work will always pay.

Finally, the Disability Confident business leaders’ group seems a worthwhile development. We need to understand how it would be funded and the extent to which individuals would engage.

We see in the Statement a good deal of consultation, further work and quite proper engagement with a range of people, particularly disabled people themselves and their carers, but that is a long way from having a clear, funded policy to make a real difference to the lives of the people we are talking about today.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I, too, thank the Minister for repeating the Statement. We on these Benches are pleased to finally see this Green Paper. It has been delayed time and again and many of us were wondering whether it would ever see the light of day.

Reducing the disability employment gap is a worthy aim. There are many people with disabilities whose skills and talents are not utilised. Working with employers to ensure that they recognise the benefits to their businesses of employing disabled people is vital for both the health and well-being of those disabled people who are able to work, and for our economy as a whole.

The move to reform the work capability assessment is an overdue step in the right direction. However, at its heart the structure of the WCA remains fatally flawed. This is in part because of a failure to assess what types of jobs may be available to claimants, and whether they can find such jobs within their skill set and in their local area. I therefore ask the Minister whether, in reforming the system, he will look to create a process that assesses not just whether a claimant is fit to look for a job but whether the jobs available are fit for the claimant.

I also impress upon the Minister the importance of conducting a fundamental overhaul of the system. Tweaking at the edges is unhelpful. Sick and disabled people have little confidence in the WCA, rendering it unworkable. This is particularly important given the incredible mental pressure that the lack of trust in the system puts on claimants, many of whom already suffer from mental ill health. I suggest the Minister seeks to restore confidence as a priority.

On the Government’s plans for helping those disabled people who can work back into work, we welcome the creation of a business leaders group. However, will the Minister look at rewarding the best practice of businesses that are good employers of people with disabilities? For example, Liberal Democrats have proposed that those employers who meet a strengthened version of the two-tick system for mindful employers of employees with mental health conditions are able speedily to access funding, such as Access to Work. It is important that those employers who have a good track record are given a facilitated route to employing more people who may need additional support.

Finally, will the Minister explain why a proper analysis of the failings of personal independence payments is not included in the Green Paper? This has affected people’s ability to lead independent working lives. Will the Government look again at the demands of many in this House, not least my noble friend Lady Thomas of Winchester, on the 50-metre rule and its inappropriateness in assessing mobility? The impact of disability varies greatly between rural and urban areas, and PIP as a supposedly personalised benefit should assess these barriers.

All in all, the Green Paper is welcome, but until the Government address these myriad other problems we will still fall well short of providing the support that people with disabilities should be able to expect.

[Lord Freud]

I thank both noble Lords for their very thoughtful contributions and for their general welcome, with maybe a little complaint in one case about thinness. I take the point.

Both noble Lords made the point, in different ways, about the level of engagement going on now with this Green Paper. We make no apology for that. We need a process that fully brings on board the disabled groups, so that they have full impact. We want to take the time necessary to do that properly. The noble Baroness, Lady Bakewell, looked at the health and work relationship; it is confined to the area that it is because the process is not about PIP at this stage. There will be other times to look at PIP but it is not part of this consultation.

As the noble Lord, Lord McKenzie, pointed out, fundamental here is the Waddell and Burton report of September 2006. It was very valuable for me when I was writing my first piece of work on what to do with the benefits system. It turned on its head the traditional relationship between the benefits system and work when it said that work, particularly good work, is good for people. It is not one of the problems; it is one of the solutions. It has been really hard to move and change a system that is designed to protect people from work, which made sense when there was heavy industry. It now changes at every level.

We all feel that this is taking a long time, but there is a good reason for it. We are transforming a system that put people in a silo of disability and did not let them back into work. Transforming that requires universal credit as a fundamental base where you do not just have those different groupings; you have everyone able to do what they want, with their pay adjusted accordingly. That is the answer to the noble Lord, Lord McKenzie, about universal credit: it makes work pay.

If you make a comparison between what somebody who had been in the system would have got and what universal credit does, you come up with different figures. Once you are in the universal credit system, the reality is that you are incentivised to work. That will have a behavioural effect, which we are already seeing in the way that universal credit operates. It helps and encourages people to work more. While we do not yet have many numbers of those who are disabled in the system, there are some and they are going in. Within universal credit we will build evidence as to how best for them to do so. As noble Lords appreciate, we are building the universal credit system very carefully with a “test and learn”, and it is still one of the areas about which to learn a lot.

This is a new era, of joint working. I said it, as did the noble Lord, Lord McKenzie. It is joint working not just between the two departments, which is pretty tough, but also with employers. Getting all that to work well is one of the reasons why we are taking time over our consultation. Clearly we are looking at building on the three types. We now have three tiers of employers in the new two-tick system that was relaunched in July, with the top tier being the leaders. In response to the question from the noble Baroness, Lady Bakewell, about whether there will be the demonstration employer—and we all know individual employers who really have put huge effort into supporting people—I can say that we are setting that up with tiers where the leaders will support others.

On the question from the noble Lord, Lord McKenzie, on statutory sick pay and the fit note, that is clearly at the heart of getting the relationship between health and work and the employment system in the DWP to work better. That is why consultation in this area is so important. One of the most important things is to get the health system seeing employment as one of the therapeutic outcomes for which it is looking. We have already taken that step, and it takes us a long way. I cannot at this stage tell the noble Lord what the allocation of the community partners will be, but we will work on that.

With that, I think that I have dealt with the first level of questions and would enjoy some more.

Housing Benefit: Social Housing Units

Baroness Bakewell of Hardington Mandeville Excerpts

Monday 25th January 2016 Lords Chamber

[Lord Freud]

We are having a very substantial study done on the supported housing sector. That will come out later this year and we are looking at what our policies should be to support that sector.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, as private sector rents are normally higher than social rents, this could lead to an increase in housing benefit paid to private sector landlords, if the volume of private sector rental properties available is outstripped by demand from those renting there instead of in the social sector or from those who cannot afford to buy a property. Does the Minister agree?

[Lord Freud]

No, you have to look at the round trip. A single person in a three-bedroom place, say, may move out to the private rented sector. That might be more expensive, but then you can take a family, who are very expensive in the private rented sector, and put them in the cheaper, social rented sector. That round-trip effect in somewhere like Enfield is worth £2,500 a year to the state; the typical figure for a place such as Lincoln would be more than £600 to the state.

Employment

Baroness Bakewell of Hardington Mandeville Excerpts

Wednesday 21st January 2015 Lords Chamber

[Baroness Bakewell of Hardington Mandeville (LD)]

Given the encouraging increase in the employment figures, will the Minister comment on the disappointing fall of 84,000 in the 16 to 24 age bracket? Can he give any information about regional variations? For example, is the problem worse in rural areas?

[Lord Freud]

My Lords, one of the myths about the improvement in employment is that it is concentrated in the south, particularly in London. The reality is that the bulk of the improvement—75% to 80% of it—has taken place outside London. The youth figures are extremely encouraging, because youth JSA figures are now running at some of the lowest levels we have seen for many years.

Housing: Underoccupancy Charge

Baroness Bakewell of Hardington Mandeville Excerpts

Tuesday 28th January 2014 Lords Chamber

[Lord Freud]

My Lords, that is exactly what the discretionary housing payment is for. It is for local authorities to take decisions, based on their local knowledge, so that they get the funds to the right people. The emerging signs are that we will not spend all the discretionary housing payments this year. I am, however, making sure that a substantial amount of discretionary housing payment goes out next year, for which the total figure will be £165 million.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, some households with a disabled family member who were allocated a larger property which had been adapted using a disabled facilities grant, are now required to move due to the size criteria changes. Does the Minister think that this is a good use of scarce resources?

[Lord Freud]

One of the fundamental objectives of providing discretionary housing payments is to make sure that where there are significant adaptations in homes for disabled people there will be discretionary housing payments for those people.