Bereavement Benefits

Debate between Baroness Bakewell of Hardington Mandeville and Lord Henley

Thursday 6th April 2017 Lords Chamber

[Lord Henley]

My Lords, those requirements were explained, I think, by my honourable friend Caroline Nokes when the regulations were dealt with in the Commons. They are complicated but the simple fact is that universal credit and other income-related benefits are there to fill the gap after that 18-month period. We believe that, with a contributory benefit such as bereavement support benefit, it is quite right to make that very generous initial payment, to then provide some support for those with children for 18 months and thereafter to let people seek help from income-related benefits.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, we understand the Government’s need to reduce the benefits bill; however, we believe that this is not the right place to do it. Given the spotlight that has recently been shone on the devastating impact of children suffering bereavement by the programme on Rio Ferdinand, I ask the Minister to talk to his colleague, the Secretary of State, and ask him to reconsider this policy and the devastating impact it will have.

[Lord Henley]

My Lords, I have been trying to explain that I believe that this benefit is an improvement in offering support at the initial stage, which is where it is important. I do not believe, and I do not think that the noble Baroness would believe, that any sum of money is going to deal with the problems of bereavement suffered by the surviving spouse or the children, but I believe that appropriate support ought to be offered for a period. That is what we have done, that is what we consulted on, that is why we made changes after that consultation, having listened to what people said, and that is what this new benefit will do. I think that that is the right way forward.

Universal Credit

Debate between Baroness Bakewell of Hardington Mandeville and Lord Henley

Thursday 9th March 2017 Lords Chamber

[Lord Henley]

My Lords, we have all on occasions had moments when we have had doubts about what goes on in the Treasury, but I shall not go into that at the moment. I shall go back to what the noble Lord said about the administration of the benefit. From my experience some 25 years ago in the old Department of Social Security, and seeing how things are operating now in the DWP with universal credit, I think that there is a very real change taking place. It is important that noble Lords get a look at what the work coaches are doing and how they are getting this over to claimants who are coming to them. The offer that I made to the right reverend Prelate is one that I repeat to the noble Lord.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, it is a fundamental design of universal credit that people have to wait a month for their benefits to mirror what happens in real life, but that is not actually what is happening. Many families are experiencing delays of up to 12 weeks in the payment of universal credit, forcing them to use food banks and borrow from loan sharks. I have heard what the Minister says about the mechanism in place to prevent it happening, but is he aware that it is just not happening?

[Lord Henley]

My Lords, we were grateful for the support of the Liberal Party as part of the coalition Government in the passage of the Bill and in reaching that appropriate design, whereby we were looking for something that mirrors the world of work. That is what we are doing. That is why we also built in, as I made clear in my original Answer, the safeguards that we have. That is why, for example, I have stressed that there are universal credit advances for certain individuals who are having problems coping with that four-week waiting period.

Homelessness: Housing Benefit

Debate between Baroness Bakewell of Hardington Mandeville and Lord Henley

Thursday 9th March 2017 Lords Chamber

[Lord Henley]

My Lords, I simply do not accept the point that the noble Lord makes. Yes, we supported that Bill and will support it again tomorrow, when I think it will have its Committee stage in this House. We will continue to do so and we will continue to protect the most vulnerable in relation to housing. But we also wish to make sure that young people do not slip into a life on benefits. That is what this change is about.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, currently, 19,000 18 to 20 year-olds on jobseeker’s allowance claim housing benefit. They are simply unable to live at home for a variety of reasons, including physical and sexual abuse. If housing benefit is withdrawn, how does the Minister think that these young people will be able to find jobs if they are living on the streets?

[Lord Henley]

My Lords, not one of the individuals on jobseeker’s allowance to whom the noble Baroness referred will be affected. As I made clear in my Answer, this matter relates to those on universal credit. As we also made clear in another place, and I will make clear now, there is a considerable number of exemptions. I think that some 25 are listed in the regulations—I can go through them if the noble Baroness wishes me to do so—which offer protection for those who need it.

Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2017

Debate between Baroness Bakewell of Hardington Mandeville and Lord Henley

Thursday 9th March 2017 Grand Committee

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

My Lords, this order was laid before the House on 2 February 2017. I give the Committee the usual assurance that the draft statutory instrument is compatible with the European Convention on Human Rights.

The order reflects the conclusions of this year’s annual review of the automatic enrolment thresholds required by the Pensions Act 2008. The review considered both the automatic enrolment trigger, which determines the point at which someone becomes eligible to be automatically enrolled into a qualifying workplace pension, and the qualifying earnings band, which determines those earnings of which the enrolled employee and their employer must pay a proportion into a workplace pension.

The order sets a new lower and upper limit for the qualifying earnings band and is effective from 6 April 2017. The earnings trigger is not changed and so no further provision is required in this order. The earnings trigger remains at the level set in the automatic enrolment threshold review order of 2014-15. Automatic enrolment continues to be a programme that works; nearly 7.3 million people have been enrolled, more than 400,000 employers have met their duties and the opt-out rate remains low at around 9%. We are now in the final year of rollout and the most challenging phase of automatic enrolment, with small and micro employers staging in peak volumes throughout 2017. Against this backdrop, it is more important than ever to maintain simplicity and consistency for employers. This year’s order will provide this through to the end of rollout in February 2018.

I am sure the Committee will share my enthusiasm about the very exciting juncture of automatic enrolment at which we find ourselves, with the review of the policy and its operation being undertaken by my department this year. With that review, it is time to reflect on the successes we have achieved so far, take stock of the current position and consider how to build on this so that automatic enrolment continues its success in helping to rebuild a culture of saving. As such, it is important that this year’s thresholds decision avoids pre-empting the outcome of the 2017 review but still delivers on the established principles of increasing the opportunity for people to make meaningful savings into a workplace pension while balancing costs for employers.

To describe the impact of the order, I turn first to the qualifying earnings band. As signalled by my honourable friend the Minister for Pensions on 12 December 2016, the order will, as previously, align both the lower and the upper limits of the qualifying earnings band with the national insurance lower and upper earnings limits of £5,876 and £45,000 respectively. By maintaining the alignment with the national insurance thresholds, both at the point where contributions start for low earners and are capped for higher earners, the overall changes to existing payroll systems are kept to a minimum. This decision therefore both ensures simplicity and minimises the administrative burden of compliance for employers in 2017-18, while maintaining consistency for hundreds of thousands of small and micro employers implementing automatic enrolment over the coming year. As I said, the order does not change the earnings trigger, which remains at £10,000, as set in the 2014-15 order.

Automatic enrolment continues to bring into its eligible target group those least likely to save for retirement. Low-paid workers and women, who are often likely to be low earners, have traditionally been underrepresented in workplace pension savings. Between 2012 and 2015 the private sector saw a 30 percentage point increase in eligible female participation in workplace pensions, and in 2014 there was no gender gap at all in participation. In fact, 2015 has seen more eligible women in the private sector participating in a workplace pension, exceeding the participation of men with 70% to 69% respectively.

Due to anticipated wage growth and with the maintenance of the existing trigger, we expect that an additional 70,000 individuals will meet the earnings criteria and be brought into the automatic enrolment population, of whom around 75% are women. Individuals earning below the £10,000 earnings trigger but above the lower earnings threshold will still be able to opt into a workplace pension and benefit from their employer contributions, should they so wish.

In conclusion, the decision to maintain the earnings trigger at £10,000 will increase the number of low earners who meet the earnings criteria and are therefore automatically enrolled in a workplace pension. The decision will increase the total number of people saving into a pension and the total savings. In addition, the decision to maintain the alignment of the lower and upper earnings qualifying bands with those for national insurance contributions maintains simplicity and consistency and minimises the burdens on employers at a crucial stage of the programme’s wider rollout. Taken together, that means that the total pensions saving is expected to increase by some £71 million. The order therefore ensures that automatic enrolment will continue to provide greater access and opportunity for individuals to save into a workplace pension and build up meaningful pension savings. I commend the order to the Committee.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I thank the noble Lord the Minister for his instructive introduction to the order and for the fact that the number of women who are now enrolling has increased considerably. That is very good news.

I welcome the fact that the earnings trigger above which people will be automatically enrolled will remain at £10,000, which seems very reasonable. A lower threshold would bring more people into pensions, but, as the Minister indicated, with a state pension currently providing over £8,000 in retirement, there is obviously a limit to how far the Government want to be enrolling people who earn approximately £9,000, taking into account the cost to employers of setting up schemes, making payroll changes and so on. As has been indicated, the earnings trigger will undergo a fundamental review as part of the automatic enrolment review later this year. It would perhaps be better to wait for that and to look then at altering the trigger threshold.

The lower and upper limits for the band of qualifying earnings, on which contributions are due, are currently linked to the lower and upper limits for national insurance contributions. The order maintains that connection. However, I note that the Chancellor of the Exchequer raised the upper limit for national insurance contributions from £43,000 to £45,000. The order does the same and means that higher earners will be putting pension contributions in over a slightly wider band. That is welcome, but they can of course opt out if they wish to.

Although I welcome the regulations, I flag up my concern about people who have multiple jobs whose individual incomes will be below the threshold but cumulatively above it. They might earn £6,000 in one job and £5,000 in another. Such people are excluded from automatic enrolment; perhaps that can be considered on another occasion.

The Review of the Automatic Enrolment Earnings Trigger and Qualifying Earnings Band for 2017/18: Supporting Analysis report, which was published in December 2016, refers to an important point about the 280,000 people who earn between £10,000, the automatic enrolment trigger, and £11,500, the current tax threshold, who get tax relief. However, they get their tax relief only if it is administered according to the relief-at-source tax system, but not if their tax relief is administered according to another system, the net pay arrangement. That arrangement is somewhat obscure and the Government have failed to address the issue in the order. Those are minor points, however, and I generally welcome the order.