Pensions Bill

Baroness Dean of Thornton-le-Fylde Excerpts

Tuesday 8th April 2014 Lords Chamber

[Lord Forsyth of Drumlean (Con)]

My Lords, I say to my noble friend that the noble Baroness makes a devastating case in favour of those people who take advantage of flexible labour markets. All my political life we have been trying to create more flexibility in the labour market and more opportunities for women. As at an earlier stage, the noble Baroness, with her characteristic incisive, forensic approach and her considerable knowledge of social security and other matters, this afternoon has made an overwhelming case. It all goes to show that the Whips’ advice of never listen to the arguments before you vote is well founded for those people who only want to win the votes.

The noble Baroness has won the argument on this and so I have a question for my noble friend. He is going to carry out a survey: what are the criteria by which he will decide what to do on the basis of that survey? Is this a numbers game? Does it depend on a certain number of people being affected by it? If it does, what is the number? To my mind, if it is one, that is one too many. The Prime Minister constantly talks about supporting strivers and people who do the right thing. In my book, someone who does not sit on benefit but goes out and does the kind of jobs to which the noble Baroness has referred has exactly that character. Such people have considerable difficulty in doing the right thing and yet find themselves penalised when they are at their most vulnerable in old age.

I understand the Government’s position. My noble friend said that the amendments were unnecessary because the Government already have the power to deal with this matter. I have two questions for him: first, what will the criteria be by which they decide whether to do something; and, secondly, what is the timetable for this? Can we have a commitment from my noble friend? If as a result of the survey the noble Baroness is proved right and it is 250,000, is that not a quarter of a million too many? If it is 10,000, is that not too many? What are the criteria?

What is the timescale? My noble friend will carry out his survey and we will have the results by the summer. Can we have an assurance that if he finds there is a problem he will do something this side of Christmas and that he will not use it as a delaying tactic? Certainly when I used to stand at the Dispatch Box there were certain techniques that one could apply when one had run out of arguments and could no longer win the debate. One was to set up a commission and the other was to commission a survey and hope that by the time the survey had been reported the matter would have gone away. One thing we can be sure of is that the noble Baroness will not go away.

[Baroness Dean of Thornton-le-Fylde (Lab)]

My Lords, I support the two previous speakers, particularly my noble friend Lady Hollis. This issue was well aired in Committee and at later stages. At the moment it predominantly affects women. I welcome the Minister’s statement, but I am aware that we are not too far away from a general election and that things may change. The work that is to be carried out will obviously be done only after this Bill becomes an Act of Parliament, so what specific assurances can the Minister give to disabuse me of the notion that in reality this is being kicked into the long grass because it is rather inconvenient?

[Lord German (LD)]

My Lords, I am slightly confused by the remarks of my noble friend Lord Forsyth because he referred to a survey. When my noble friend the Minister spoke, I could have sworn that he was talking about a review, and there is more than a slight difference between a survey and a review. A review means that you look at the evidence and take action as a result. I noted the words used by my noble friend, that the matter will be addressed. Given that, can we have an assurance that if any review turns up evidence that this is a matter which affects a large number of people, action will be taken to address it? That is the difference between a survey and a review; a review implies action at the end of it.

I also wonder if my noble friend can reassure me that this review will look at the differences in zero-hours contracts, on which an enormous emphasis has been placed. They are seen as being at the heart of the problem. The ONS labour market survey shows that although there has been an increase in the number of people on zero-hours contracts, the number of women in part-time and multiple jobs has not been increasing over time. I think that a distinction needs to be made because the issue is not necessarily about zero-hours contracts, so I would be grateful if my noble friend could reassure us that that is not the emphasis. The emphasis here is on people who have mini-jobs or who fall below the lower earnings limit. They are not able to get the stamp which would qualify them for building up their pension. Given the number of years that the new pension requires—35 years—can my noble friend also say whether the review will take into account a lifetime of work? That is because if you have earned up to the limit or you have got your 35 years, whatever you do on top of that is not going to make a difference to the £149 or so that we are expecting to be the figure for the new state pension for a single person. That will have effects elsewhere on people’s personal economic trail.

I welcome the announcement made today by my noble friend, and I hope that he can reassure the House that these caveats will be taken into account when taking action.

Pensions Bill

Baroness Dean of Thornton-le-Fylde Excerpts

Wednesday 8th January 2014 Grand Committee

[Lord McKenzie of Luton]

My Lords, I have added my name to this amendment and I wholeheartedly support the points my noble friends Lady Hollis and Lord Hutton and the right reverend Prelate have raised. The Government are reserving the right to defer but, of course, making it more expensive. I think the savings the Government ultimately get from this are in the order of £300 million, because it is going to be dealt with on an actuarial basis rather than the current way. I do not know if it is possible to split the saving between that resulting from the denial of the lump sum and that which is otherwise simply a result of the different actuarial calculation. It would be helpful to have that split, if it could be done. We await the final rates, which are going to be dealt with in regulations.

The issue about lump sums is very important. We need to think about people who might have a health impairment. There is no impaired annuity equivalent under state provision, so far as I am aware. Surviving spouses cannot inherit increments arising from deferral, as I understand it, but they can, of course, inherit a cash sum that has been saved.

The point has been made about the equivalence between the private sector and the state sector. Many people to date have not accessed private savings. Thank goodness auto-enrolment is in place now, courtesy of my noble friend Lord Hutton, who was Secretary of State when big advances were made on that. Over time, people will get better private sector provision and that will provide them with an opportunity many of them do not currently have to access a lump sum.

Can the Minister say what this all means for the public finances? I presume a lump sum paid on day one in a sense scores against public finances in that year while a deferred amount does not score until it is received, and is then received at a higher rate going forward. I do not know whether this is part of the Government’s considerations, but I hope not because I think it would be modest at best.

There are also differences in relation to pension credit. A modest capital sum is ignored for pension credit but, of course, a supplement and income increase arising from deferral would not be. That would be a further denial and scraping away of benefits from these provisions. I very much support the point that no great rationale has been advanced why the lump sum and other deferments should be denied and I hope we can agree across the Room that it should be reinstated in the Bill.

[Baroness Dean of Thornton-le-Fylde (Lab)]

My Lords, I, too, will not detain the Committee very long. When we go through a Bill, there is always something that comes up quite unexpectedly. My noble friend Lady Hollis has alighted on one here, which I do not think is going to go away. If we are not able to progress it at this level, perhaps we shall need to return to it later in the debate on the Bill.

I do not know where the Government have the mandate for this, but it is there now. They are understandably trying to look at pensions as a whole, and saving for retirement, hopefully through a personal pension scheme and through the state scheme. We would support that. However, it is taking a very different principle to the one that applies in private schemes. It will only apply, of course, where the individual says, “I am going to defer my pension”. It is not a case of saying, “I want to take some of my pension in a lump sum”. It is also taking choice away from people. You cannot say, on the one hand, that we want people to have choice, to save and to be in charge of their own income when they retire, and do everything you can to encourage them, but then, in this particular aspect, say, “No, we the state know better than you do”. Even if the Minister cannot do so today, I hope he will be able to reflect on this and give due consideration to making some movement in the Bill on it.

[Lord Browne of Ladyton]

My Lords, in speaking to these amendments, I seek to achieve a better and more precise understanding of the nature of the Government’s objections to the taking of lump sums. My noble friend Lady Hollis has done your Lordships’ Committee two favours. One is in raising this issue, which has captured the mood of the Committee quite clearly. The second is in rehearsing accurately the explanation by Steve Webb, the Pensions Minister, in the House of Commons, as to why there is opposition to the taking of lump sums. In my recollection, the arguments were as thin as my noble friend made clear.

My noble friends, and the right reverend Prelate the Bishop of Chester, have explained very clearly the case for allowing lump sums. Undoubtedly there is a savings crisis. Too many people do not have the safety net of a rainy day fund or, in some cases, of any fund at all. British households do not have enough money in savings, and the amount they do have has been falling in recent years. This is, perhaps, unsurprising given the cost of living crisis that we have been experiencing. The data on this are very persuasive. ONS data show that 6% of pensioners—over half a million people—live in households where the total financial wealth is less than £10,000. Half—more than 4.8 million—live in a household where it is less than £20,000. However, that is not the whole story. Given the distribution within those bands, there must be a significant number of retirees with little or no cash available in savings. Interestingly, the ninth annual Scottish Widows pensions report stated that, of those already retired, one-third are still paying off debts, including mortgages. The average amount owed is in excess of £5,500—£5,682 to be precise. It is not as if those people are in a position to add to their savings in retirement. In a survey in June 2013, the insurance giants LV reported that nearly 2 million pensioners have an average £8 per week of disposable income. By way of comparison, that is less than the average eight year-old has as pocket money, according to another survey.

The case made by my noble friends and the right reverend Prelate about why people might need access to a lump sum deserves an answer. The lump-sum payment option was introduced in April 2005. I think my noble friend Lady Hollis was the Minister who oversaw its introduction. The reasoning then was the same as the case she has made today. Even if pensioners go into retirement with a just adequate income, they may well not have enough savings to deal with the rainy day problems we all face. Never mind the challenge of the eventual cost of their own burial, what happens if the boiler fails in a bitterly cold winter? Or the car that they require in a rural environment breaks down and they are otherwise trapped in their home? We can all think of circumstances in which a bit of capital would be of help.

We know who chooses to defer their pensions. Drawing on the DWP’s own statistics, in March 2013, 1.2 million pensioners, or 9%, were receiving an income arising from a deferred pension, of whom 75% were women and 77% were living in the UK. We know that few of those who choose to defer take the lump-sum option; 63,000 payments were made in 2011-12, and the DWP forecasts that that will fall to 35,000 by 2017-18. In 2011-12, the average lump sum was £11,500, with the UK average being £13,700 and the overseas average £4,100. These are not significant sums, and the calculation could be done as to what this is likely to cost based on these statistics.

However, there are things that we do not know. First, we do not know why people choose to defer. Of those deferring, 75% are women, but the question is whether they are waiting until their partner retires to draw their pensions or there is some other motivation we do not know about. Are those who defer still working, deferring their retirement perhaps because they have saved too little and it is too early for them to retire? What do we know about the wealth of those who defer? Very little. The statistics already deployed show that 25% are overseas residents. Do we know why they make the choices that they do? We do not.

These Benches would like to understand the costs better. The DWP tells us that spending on lump sums currently costs about £800 million per annum and is due to fall to £700 million in real terms, although I am not sure by when. Obviously, these people have not been drawing their pensions for the period during which they deferred, so I presume that that is not a net cost—but maybe my presumption is wrong and it is. If it is not, what is the cost of the lump sum minus the pension forgone? What is the net cost of these deferrals in real terms? If there is a net cost, what rate would have to be offered to make the lump sum a cost-neutral choice?

Finally, I would like to understand why the Government want to end this. Is it the cost? Is it the administration? Is it the desire for simplicity? Are the Government sure that they know enough about the impact of this policy and the relatively small numbers who choose to defer? If not, has the Minister or his department considered further research on who is deferring? If it turns out primarily to be people with no or too little savings, what other option would he suggest for those who are retired and have no nest egg now, on what are likely to be low incomes with no means or opportunity to build up such a nest egg or capital?

Pensions Bill

Baroness Dean of Thornton-le-Fylde Excerpts

Wednesday 18th December 2013 Grand Committee

[Baroness Hollis of Heigham (Lab)]

My Lords, this is a very simple and brief amendment about service wives. Service wives without children who accompany their husbands abroad have in the past relied on receiving the 60% married women’s pension as a default. Obviously the option for NI contributions through work does not easily apply if you are abroad, and voluntary NICs become expensive if you are there for a long period.

The married women’s dependency pension is going to disappear. The previous Government recognised the particular difficulties of service wives when in 2010 they introduced credits for spouses or partners accompanying service personnel abroad, so the principle is rightly established. Since then, there has been easement for JSA and ESA entitlement.

However, if you are in your late 30s you may have a decade behind you with no NI cover until the 2010 provisions kicked in. This amendment simply allows backdated credits for, frankly, an arbitrary 10 years which, if he is on a 22-year contract, should allow her sufficient cover, and later sufficient time to make up the rest of her contributory years. I do not know the numbers, and I do not know the cost. I hope the Minister will help me out. There may be a better way to do it—for example, as with the reduced married women’s stamp election, which is being turned into a 60% dependency pension, which retains the service wife’s eligibility for a 60% dependency pension, although the problem there will be split years.

I believe that the Government may have found a way to address the problem—this was a hint I received from the Minister in the other place. I hope so. If it is true, it would be great to know about it; and if it is not, this amendment, or something similar offered by the Government, might do the job. We owe it under the service covenant to support wives who do the right thing, perhaps, by accompanying their husbands abroad and then pay the price by lacking a pension when they retire. I beg to move.

[Baroness Dean of Thornton-le-Fylde (Lab)]

My Lords, some years ago I was chair of the Armed Forces Pay Review Body and I saw the way that wives were discriminated against. I remember one case. We went to Belize, where the commanding officer had been offered promotion conditional on his wife accompanying him. She was a very successful lawyer in London and they had to make a decision. She decided to give up her career. While she was abroad—a two-year posting—she was unable to contribute to a private pension fund because she was not doing recognised work. She was working as his partner in Belize on behalf of the British people looking after Army wives. She gave up her career and she lost the opportunity of a good private pension here as she could not contribute because she was not working in this country. She was also losing out at the end of her life because she could not contribute to the state pension scheme either. The changes made in 2010 helped, but this Bill will almost send us backwards. The changes made by my Government in 2010 did not fully resolve this issue. That is one case.

Among the officer cadre in all three services you still find wives giving up their job to accompany their husband, and they get a very raw deal. Until recently, other ranks would have gone to Germany for a two-year posting, and they, too, would lose out. Under the Armed Forces covenant and the updated report issued only this week by the noble Lord, Lord Astor, it is taken into account that we should be looking after families. I have no idea what it would cost and I cannot imagine that it would cost an awful lot of money, but maybe the Minister can help us. As my noble friend says, this may not be the way of dealing with the problem, but somehow it has to be recognised that, in bringing in a Bill that has cross-party support and in general terms is certainly advantageous for most, if not all, women, here we have a group who will continue to lose out, despite the changes that are being made. So it is with a deal of pleasure that I support the amendment, and I hope that the Minister will agree to go back and look at the issue. Perhaps he will come up with something that may not use this wording but which recognises the contribution that these women have to make—and, indeed, by which they lose out when they help their husband’s career, because the post requires accompaniment. If that solicitor, going back those few years, had said, “No, I’m not giving up my career”, the husband would have had to refuse that promotion. There are parts of the Armed Forces where the divorce rate is higher than normal. I am not suggesting that this is the only reason, but I think that it is perhaps one of a whole number of reasons, stress and overreach being another couple.

[Lord McKenzie of Luton (Lab)]

My Lords, I speak briefly in support of my noble friends and the thrust of this amendment. I should like to ask one or two questions. As I understand it, there is currently a class 1 credit going to people in this service category, which helps to build up not only pensions but access to contributory benefits such as JSA and ESA. In respect of the latter, there is also an easement that was introduced in 2011 in respect of the first contribution condition, because for contributory ESA and JSA you need both to pay an amount in a certain period of time and to have sufficient credit. My first question is whether that credit arrangement is going to continue under the new regime and whether the easement will be continued, because that is important, too.

Of course, the credit has to be claimed; it is not automatic. I wonder whether we could do something to address that issue, because we have a group of people here who would qualify only under certain clear conditions, and one would have thought that arrangements for these individuals could somehow be organised centrally, or perhaps by the separate Armed Forces, so that the information goes in directly and there is an automatic credit, rather than people having to claim. I understand that the take-up is limited at the moment, with only 601 applications in 2012-13, or maybe in the previous year. That is not as many as one might have expected. Perhaps we could also have clarification as to who is treated as a member of the Armed Forces for these purposes. I am not sure that the TA or reserves will be included within this.

This issue draws a wider question about crediting national insurance contributions. My understanding, based on some helpful information from the Bill team this morning, is that if, at the moment, you are in a category of benefit or activity that gave rise to a class 1 credit, that would continue post-April 2016. If you are receiving a class 3 benefit for a particular activity or being in a particular position, that would become a class 3 contribution credit also, under the new regime. So nothing has changed in that respect. These things are important, because a class 3 contribution builds up entitlement only to the state pension and bereavement benefits, not to contributory benefits. This gives rise to the broader question of universal credit. At the moment, if you are on JSA or ESA, you would get a class 1 credit. In the world of universal credit, my understanding is that you would get a class 3 credit, which means that you do not build up entitlement thereby to contributory JSA and ESA, which sit outside universal credit.

I apologise for this rather convoluted series of questions, but this very important issue prompts them, and it would be useful to have clarification on them either today or later by correspondence.

--- Later in debate ---

[Lord McKenzie of Luton]

I hesitate to follow those two powerful speeches, but I wanted to ask the Minister a question around RTI. It is understood that, so long as an employer has a PAYE system, RTI requires reporting of all earnings whether or not the individuals are earning each week at a rate in excess of the LEL. That would not apply to an employer where all employees were below the threshold and nobody was issued with a tax code. We are now in a position whereby, at least in theory, HMRC has within its system details of earnings per paid period of each employee with each employer. Even if that is not the basis of a calculation, it would at least provide a basis on which individual claims might be verified. That seems a potential change that ought to help with this important issue.

[Baroness Dean of Thornton-le-Fylde]

My Lords, I shall not detain the Committee long except to give my support to this. It is quite interesting that the changes that HMRC has carried out actually help this particular argument. The situation as it stands is completely counterintuitive to what the Government are trying to achieve, which is that we all save while we are working so that when we retire we have built up a state pension. If people do not have a state pension, they will be reliant on welfare benefits, or whatever the Government of the day decide. So it is a matter of independence.

My noble friend Lady Drake is so right: women find it offensive that they are excluded from contributing when they are able to towards their own pension. I said “women” deliberately, because the nature of work today will change that argument. Since the recession, we have seen more and more men also working part time. So what has been traditionally an argument on equality for women is being diluted by the nature of work in the country today. The argument that we are putting forward is not just for women—it is for citizens who may, by force of circumstance or choice, have more than one job.

The Inland Revenue has no problem in finding solutions to quite complex issues when it comes to collecting tax, and this goes hand in hand with that. Citing the excuse or reason that it is very complex and impossible to do is wearing very thin. Given the remit to do it, I am sure that the Revenue would have to find a way through. The issue is not going to go away; it will be raised at every opportunity, and it is one that runs four-square with what the Bill is trying to achieve, which is for us all to contribute to a state pension while we are working.

[Lord Browne of Ladyton]

My Lords, in engaging with this issue, your Lordships’ Committee has had the benefit of comprehensive speeches by my noble friend Lady Hollis and, despite her reluctance, my noble friend Lady Drake. Between them they have demonstrated a level of adequacy on the detail of this which, for the rest of us, makes her feeling on following our noble friend Lady Hollis pale into insignificance.

In the interest of brevity I intend to ignore a substantial number of the notes that I have before me and engage with just two issues in order to focus the Minister’s mind on them. I shall make these two points because we also have the benefit of the Government’s position. It is summed up in one sentence, which is that addressing this issue by combining hours in some way addresses a problem which is a perception rather than a reality. That is not a direct quote, but it is what the Pensions Minister said in the House of Commons. That argument relies on all those elements that my noble friend Lady Hollis articulated. I have a list of them here which is presented in a slightly different way.

At the heart of them, there are two arguments. The first is that this is a temporary phenomenon, often coming at the end of a working life, and as one will get a pension for 35 years’ contributions over a working life of about 50 years, the better option for most people is not to pay national insurance. It was argued that at present many of these people are not paying insurance and would not thank the Government for requiring them to do so because no one volunteers to pay tax. If that is true, it is a powerful argument.

The other argument is that the Government’s estimate is that only in the order of 50,000 people are in this position, that that number has grown only slightly recently and that, in any event, one in five of them may be on national insurance credits as a result of claiming universal credit. If that is true, that is also a powerful argument. It does not undermine all the arguments that my noble friends have made, but it is powerful.

I want to address both arguments. Of course it is difficult to challenge them because the data do not exist, but we all live in this world. My sense is that large numbers of people working two or more low-earning jobs, many of them on zero-hours contracts, is a phenomenon that is growing throughout the country. That is my experience of living in the United Kingdom and of travelling, because of where I live for parts of the week, across two very distinct communities. I see it growing in both communities that I have contact with.

In fact, I believe that this is a strong and growing characteristic of the modern UK labour market. It is at the heart of the flexibility that has allowed the UK labour market to be able to maintain and grow jobs in circumstances where one would intuitively have expected unemployment to have increased significantly more because of recession. It is a part of the flexibility of the labour market that, in a sense, we celebrate, and spent a period trying to get other countries to follow.

My sense is that this is much greater, and I shall share this short anecdote because it is instructive about how it is affecting people in the communities in which we live. On my way home from our debates on Monday, I overheard a conversation among three young people in a very quiet overground train. I sometimes find it difficult to estimate age, but they were all in their mid-20s. They were all coming back from employment with one employer, which was a mini-job. From their conversation, it was clear that they had, by my reckoning, seven jobs among them at least. Each of them had at least three jobs. Most importantly, they had all had the benefit of a tertiary level education. I could not guarantee that they were all graduates, but at least two of them were, from what they said, and the third also had the benefit of a tertiary level education. These were not your traditional B&Q employees at the end of their life. They were well educated young people coming into a labour market where that was the expectation. That fundamentally challenges the idea that this is a temporary phenomenon and that it can be dismissed, as it has in the past.

Pensions Bill

Baroness Dean of Thornton-le-Fylde Excerpts

Tuesday 3rd December 2013 Lords Chamber

[Baroness Dean of Thornton-le-Fylde (Lab)]

My Lords, as a number of fellow Peers have said, this is a substantial and important Bill. It deals with the state pension fund, but it also covers elements of private pension funds. After buying their home, most people’s biggest investment in their life is their pension scheme. The Bill will be important for the quality of life of the whole nation at the end of their working life, so it is important that we get it right. We have a chance to get it right because it is very much cross-party; the single-tier pension has general consensus. Compliments have been passed. The Minister was generous enough to recognise the work done by my noble friends Lady Drake and Lord Hutton.

So the Bill has a very good start with a lot of cross-party support. I would like to be the first to sign up for the campaign of my noble friend Lady Sherlock to make pensions interesting. They are very important but, unfortunately, when you mention pensions, people’s eyes go to the ceiling—until they find out just what is wrong with their pension. Then, their interest is alerted but it is too late.

What we are considering today is important, but the Bill is inferior in some respects to the Green Paper which the Government issued. The Green Paper said that the changes would be cost-neutral, but the Institute for Fiscal Studies stated that,

“these proposals imply a cut in pension entitlement for most people in the long run”.

I would welcome the Minister’s comments on that when he responds.

The Bill covers a whole range of issues, all of them in their individual ways important, but I shall concentrate my remarks on its impact on women. There is no doubt that the change to a single-tier pension is one of the biggest and best changes to state pensions for women in this country. In my view, the women who will benefit from it do not want to get those improvements on the back of the women whom the Bill does not treat fairly in the transitional stage. That is where my real concerns arise. I hope that we will propose to amend the Bill to deal with those anomalies.

It is established and generally accepted that women make up by far the largest number of those on pensions living in poverty. The number is substantially different; far more women than men are in poverty on pensions. The Bill does not change that for a whole group of women. It is also true that women pensioners have a lower income than men. The Bill does not change that in the transitional period. We must deal with those issues.

For instance, currently, a woman who has been married or in a civil partnership may be able to use their partner’s record to receive a state pension or increase the amount they receive of their own accord. There are some transitional protections in the Bill, but they do not cover everyone. For instance, in the years ahead, some would reasonably expect to receive either a married woman’s pension or a full basic pension, if they were widowed, or would not have had the time before retirement age to make up the contributions. Are the Government going to change the Bill to protect those people?

The Government said that in 2020, there will be between 20,000 and 40,000 married and widowed individuals affected by a pensions loss. I find that unacceptable. Given the magnitude of what we are dealing with, we could amend the Bill to deal with that. I am joined in that view by the Work and Pensions Select Committee in another place. The committee has asked the Government to conclude a solution by allowing individuals within 15 years of state pension age to be allowed to retain that right. That would be a transitional measure and, in the nature of things, would not be hugely expensive. Will the Government accept the Select Committee’s recommendations?

Another group of women has been mentioned in this debate several times: those born between April 1951 and April 1953. Those women feel that they are being subjected to a double disadvantage. First, their state pension retirement age will increase. That is an issue that would have faced any Government. Any Government would have had the unpalatable task of changing the retirement age; I fully accept that. However, this group of women will face a later retirement age but will not go on to the single-tier pension, as I understand it. Will amendments be brought forward to rectify that situation?

Another issue has come up several times. Because an element in the Bill deals with private pensions, I feel able to raise it. That is the issue of part-time workers. We had a long debate on the previous Pensions Bill about the fact that although part-time workers who do not earn up to the national insurance level cannot join a pension scheme, they may have two jobs which, put together, would take them through that barrier and they would qualify for a pension. Those in that category are predominantly women. It is grossly unfair that we are having a major pensions change in this country which, I think, will put it on the right path for the future—although I think that we will have to make further changes later—without dealing with that issue.

Indeed, the Department for Work and Pensions showed in its own analysis that in 2012-13, some 50,000 employees fell into that category of having more than one part-time job but not being able to have a pension cover because both jobs, or three or whatever it was, fell below that level. Of that 50,000 people, again, 40,000 were women. In a Bill which marks a substantial and improved change on pensions for women in this country, there are those anomalies which I believe we should deal with. It will be our responsibility to try and do that. They are all transitional issues, not issues which will last for ever and a day, and we should be about to deal with them in the nature of things.

There are other aspects of the Bill which obviously cause concern. On the bereavement provision, it is a bit cack-handed to withdraw the pension on the first anniversary of the death of the spouse. After the bereavement of your spouse, the first year is always the most difficult. We need to consider what it would be like to be reminded of it. There are also the pension charges. I congratulate the Government on their announcement this week that they are looking at those. It may be that we will have something to discuss on pension charges during consideration of this Bill. I look forward to taking part in debates on this Bill which, if we get it right, will be a landmark for British citizens.

[Baroness Sherlock]

Before my noble friend rises, my Lords, I should say that I realised after I sat down from speaking earlier, with something of a sinking heart, that I had forgotten to draw the attention of the House to my interests in the register. I am the senior independent director of the Financial Ombudsman Service—a remunerated position. In an unremunerated position, I also chair a charity which has employees in pension schemes that could be affected by the Bill. I apologise to the House both for that omission and for interrupting the debate now to have to rectify it.

Leveson Inquiry

Baroness Dean of Thornton-le-Fylde Excerpts

Friday 11th January 2013 Lords Chamber

[Baroness Dean of Thornton-le-Fylde]

My Lords, we owe a huge debt to Lord Justice Leveson and his report. The press do, too, although it may not choose recognise it at the moment. In retrospect, in the years to come, I think that it will accept that it was very helpful to its industry.

After many months of listening to over 300 witnesses and taking over 300 written submissions, paragraph 8 of the executive summary of Lord Justice Leveson’s report says that,

“the British press—all of it—serves the country very well for the vast majority of the time. There are truly countless examples of great journalism, great investigations and great campaigns”.

Those great assets are something that all of us in this debate today are seeking to protect and enhance. I agree with that view, as I agree with most of the report. I recalled, when reading it, many journalists losing their lives to bring us a story, such as Maria Colvin last year. Indeed, News International, which has received quite a hammering in the debate today—and rightly so—has even over the past few months run an extremely good campaign on the sexual grooming of young women in the north-west and other parts of the country. Yet the Leveson inquiry was the culmination of the pent-up contempt of the British public for the appalling actions of journalists and photographers, but not all; of editors, but not all; and of the police, but not all. There have been 90 arrests, a damning statement in itself.

I declare an interest: in my previous career, I was proud to be the general secretary of the one of the unions involved in the national newspaper industry. Indeed, the noble Lord, Lord Stevens of Ludgate, who is not in his place, referred to proprietors. I believe that I have negotiated with every single one of those that he named. Indeed, I well remember having to go to Paris to negotiate with the late Lord Rothermere because he was a tax exile.

I was also a member of the Press Complaints Commission, as the noble Lord, Lord Wakeham, said, in his time there. That was a complaints commission; it was not a regulatory body. It had, and has today, something called the editors’ code. It was not just for the editors—the editors wrote it. It was that which the commission had to follow.

In the whole of this debate over the years, there is one group that I believe has snuck through quite comfortably without enough attention on it, and that is the proprietors of these newspapers. I am not saying that they signed the cheques in hacking; I do not believe that they did and most of them would not have known about it. However, I question them as the owners of these newspapers. If you go back a few years, Clive Goodman, a journalist, and Glen Mulcaire, a private investigator, were jailed for hacking into the Royal Household’s telephones. They went to jail and, when they came out of jail, News International paid them substantial amounts of money in compensation. What company would pay compensation to an employee who had gone to jail, having been found guilty in a court of law, unless there was something else there? That is no leading example.

The proprietors appoint the editors; the proprietors set the environment in which the editors work. None of this would have happened if the proprietors as a group had taken responsibility for the environment within their titles. Yet, when it came to paying the price as we saw the News of the World close—I was not a reader of it; many of us were not—who paid the price? Thousands of workers—innocent people from the production and journalism sides who knew nothing and were not involved in this disreputable activity—lost their jobs. Moreover, they did not go out the door with a multi-million pound settlement, as one of the people wholly responsible did.

The press have been claiming that if you are in favour of some statutory underpinning, then you are in favour of state control of the press. That is nonsense—a three-card trick—and I hope we do not fall for it. Lord Justice Leveson was perfectly clear in the report that not one of the more than 300 witnesses called for state control of the press; he said he never even contemplated it. I do not support statutory control of the press, but I have reluctantly come to the view that to have even a strengthened regulatory body without some kind of statutory underpinning, there is no guarantee that it will work next time either. The press have had no fewer than seven chances in seven reports over 70 years to get their act right. If they had got it right we would not be having this debate today and there would have been no need for Leveson.

I take the point about the Irish regulatory body, which I gather is working well but has not been put to the test in law yet. That is certainly something worth looking at.

The new regulations will not be complete unless journalists have a conscience clause. Lord Justice Leveson refers to this in his report. He also talks about a hotline for whistleblowers. Any decent company today has such a system in place and I hope the new regulatory body will take that on board. He talked about plurality and I totally agree: the trade unions have been asking for that to be addressed for over 20 years. Now perhaps it will be. One big omission in the report is the digital media. The noble Lord, Lord Inglewood, was absolutely right that it is no good regulating for the printed press if we have no control of any kind of standards of the digital media. That is certainly lacking at the moment.

There has to be a cross-party outcome of this. Members of the public had the guts and courage to come forward and speak in public and knew they were being televised. If we do not get this right on this occasion, we will have badly let them down and missed a major chance.

Housing Benefit (Amendment) Regulations 2010

Baroness Dean of Thornton-le-Fylde Excerpts

Monday 24th January 2011 Lords Chamber

The House owes a debt of gratitude to all those who have provided briefings—in particular, the Social Security Advisory Committee. Sir Richard Tilt is a wise man. He has a difficult job but he provides evidence in which I have confidence. That, together with the Shelter report and the work of the Select Committee, demonstrates to me beyond peradventure that there is work to be done here. Risks are being run and, unless we carry out a serious review, obtaining evidence in which we can be confident, we will be selling this very vulnerable client group short in the future, and I do not want that to happen.

[Baroness Dean of Thornton-le-Fylde]

My Lords, this has been quite a long discussion but I would say that its impact on our communities is as important as what we have been discussing in this House over the past two weeks.

Of all the government cuts, the ones in this area are probably the cruellest. They affect people’s homes, where they live and how they live, and how communities operate. Indeed, if a decision in this House were based on merit, the Motions of my noble friend Lord Knight would carry the day in this Chamber. The Minister may have the comfort of getting votes from those around him but I cannot convince myself that all members of the coalition—I am looking particularly at the Liberal Democrat Benches—are sitting comfortably while supporting this policy. That is based on the many debates that we have had in this House in the nearly 20 years in which I have been a Member.

I can picture a House that did not have a coalition but would be faced with support from the Lib Dem Members. It is also telling that the Minister, who I know will put up a brave fight for his Government’s policy, must be feeling very isolated. Not one member of the coalition has stood up in this debate in support of the Government’s policy. I think that speaks volumes about the many Members on the Benches opposite.

I will support, and I hope the Minister will support, the Motion in the name of the noble Lord, Lord Best, who has enormous experience and knowledge of the housing sector and communities. In this rather lengthy debate, we have not covered other areas of the impact of this policy. Naturally, the House has as a priority the impact on single parents and other people in our community who have the narrowest shoulders with which to bear the implications. However, I suggest that this has enormous economic implications, too. We have a shortage of housing in this country; the impact of this policy will be that, in three or four years’ time, that shortage will have increased and will be extremely costly to rectify.

It also means, without being too emotional about it, the increasing ghettoisation in our cities, London most of all. How will our businesses be able easily to get labour when many people in their community have had to move outside of the city because they could not afford the rents inside? So this is a very far-reaching policy; it is not about simply taking an average of £9 out of someone’s weekly income. It has a much more far-reaching impact than that.

I hope that the Minister will accept the Motion of the noble Lord, Lord Best—second best though it may be, and I think it is. The wording is quite specific, and I know the department will carry out a review annually: that is its responsibility. But the Motion of the noble Lord, Lord Best, covers quite specific areas: children, homelessness and the resources that local authorities can allocate to this important area.

If a citizen does not have a home, he does not have anything. Therefore, I hope the Minister will accept the Motion in the name of the noble Lord, Lord Best, and that this House, operating at its best, as it usually does, will monitor the policy very closely and debate it as often as is necessary, until we rectify some of the cruelty we now face.

[Lord McKenzie of Luton]

I support the two Motions moved by my noble friend Lord Knight of Weymouth and that moved by the noble Lord, Lord Best. The noble Lord, Lord Best, anticipates a significant statement from the Minister, and I look forward to that as well. If it were to signify the withdrawal of these orders at the twelfth hour, the Minister would become an even greater national treasure than that described by the noble Lord, Lord Kirkwood, but I do not hold my breath.

My noble friend was right to signify that he was not going to press his Motions. In many ways, it would be good to test the view of the House to see if we could stop these orders in their tracks, but I think it has helped the tenor of our debate, as the noble Lord, Lord Kirkwood, has said. Of course, if we did defeat the orders, we would have to carve out, perhaps through the welfare reform Bill, those two parts of the order that we do support, as my noble friend has said: the provisions relating to carers and an additional room being allowed, and the removal of the £15 excess. We sought to do this before the election, and some noble Lords may recall that one party represented here was quite opposed to that. I think it is right now to remove that excess.

Others have explored the thrust of these orders. The most damaging are the setting of the local housing allowance at the 30th percentile of rents in each broad rental market area and the introduction of absolute caps relating to the number of bedrooms in a property. The noble Lord, Lord Kirkwood, asked whether the Minister could say what proportion of the rental market is in fact available to housing benefit claimants. I understand that the 30th percentile would mean, at least on day one, that 30 per cent of rents would potentially be affordable. It does not mean that 30 per cent would be available, and once we move to uprating by CPI, not even that first proposition would hold true.

Who bears the cost of the benefit savings is at the heart of the debate we are having. Will it fall wholly or mainly on landlords or on tenants who are, by definition, the poor? In considering these matters, we need to be mindful that they are just part of a package of measures aimed at cutting the cost of housing benefit. Still to come are increases in non-dependant deductions, the uprating of LHAs by CPI rather than by actual movements of rents, the docking of 10 per cent for those on JSA for more than 12 months and the extension of the single room rate for individuals up to the age of 35.

The need to tackle the budget deficit is acknowledged, which is why we accept and, indeed, initiated the withdrawal of the £15 excess, but the speed and depth of the cuts proposed is not something we support, as my noble friend has explained. The distribution of the cuts, which the IFS analyses will mean that by 2013-14 there will be an increase in absolute poverty by 300,000 children and 200,000 working-age parents, largely driven by the housing benefit cuts, is simply not acceptable. The DWP issued an impact assessment in November, together with an equality impact assessment. My noble friend Lady Sherlock spoke with some passion about this. The DWP suggests that it cannot assess the behavioural effects of the housing benefit proposals, although it provided an assessment on the assumption that housing choices on rent levels would be unaffected. As we have heard, it estimated that households would lose £12 a week on average, but declared itself unable to estimate the number of households that may move. In contrast, Shelter estimated that 68,000 to 134,000 would move nationally, and the GLA estimated that some 9,000 households may need to move in London.

In the context of our debates, £12 is sometimes not seen as a meaningful figure, but the right reverend Prelate the Bishop of Hereford brought us down to earth on that, as did my noble friend Lady Sherlock who said that it is better to talk in terms of a pair of shoes or enough food on the table. Excluding the removal of the £15 a week excess, the impact assessment still shows that 68 per cent of LHA claimant households will lose on average £10 a week and that losses for those in five-bedroom accommodation will average £74 a week.

Another consequence the impact assessment acknowledges but does not quantify is the prospect of increased homelessness. It also acknowledges that local authorities have a duty to find school places for children moving into their area and that that can lead to increased costs and that children who experience disruption in their schooling may do less well than would otherwise be the case. It recognises that there may be additional burdens on local authorities when families move into an area requiring a care-and-support package, and for disabled people, as we have heard, the DWP states that the LHA proposals could reduce options to help independence and lead to the loss of informal carers and support networks. They are retrograde provisions indeed, as explained by my noble friend Lady Wilkins. For individuals in work, an enforced move could extend their commute to their place of work.

There is a list of probable consequences, but there is no fundamental assessment of or research into the extent to which these circumstances will arise or into how people’s lives will be affected. There is just a cruel acceptance of the traumas that these proposals will visit on poor families and the damage they will inflict on them, their families and their communities. All of this has to be considered in the context of 48 per cent of people on LHA already facing shortfalls between their benefit and their rent. It is inevitable that people having to move, homelessness increasing and debt rising will become a reality. The Government assert that these matters will be mitigated principally by downward pressure on private sector rents, by transitional relief, by households choosing more appropriate accommodation, and by additional funding for discretionary payments.