Pensions Bill

Baroness Hollis of Heigham Excerpts

Monday 31st October 2011 Lords Chamber

[Baroness Hollis of Heigham]

Like the noble Lord, Lord Freud, and my noble friend Lord McKenzie, I, too, pay a very warm and genuine tribute to Evelyn Arnold. When, back in 1997, I was trying to put women’s pensions on the political agenda, I remember being told by one Minister in the then Government—we were preparing a Green Paper on pensions and I wanted a chapter on women’s pensions—that they did not think there was anything to write about, so they did not want the chapter, but Evelyn was always a wise, staunch and fair support in ensuring that whenever we considered pensions, we ensured that the gender filter was put up in ways that were appropriate to the pension issues we faced. All of us who have been at the receiving end of her guidance are warmly appreciative of it.

We all appreciate the moves the Government have made so far. We all absolutely understand the dilemma that the Minister believes he faces: that he cannot go any further because in his view the equality directive, requiring equal treatment between men and women, takes precedence over the need to be fair to this group of women in particular. He is seeing the one against the other and believes that protecting women, as my noble friend Lord McKenzie argued in his eloquent opening speech, would mean that the rise in men’s pension age would be delayed and therefore that the cost is unaffordable. Also, goes his legal advice, we should treat men and women equally on pension age, even though through most of their working lives they have had very unequal treatment and experiences.

One of the things that struck me going into government after being in local government was that whereas local government lawyers sought to enable you to deliver your policy objectives, central government lawyers were charming, but conservative and often unhelpful, and the more unhelpful they were, the more charming they were. Discussing the equal treatment directive over the weekend with a solicitor friend who specialises in the equality directive, his immediate response was that this is “gold-plated conservativism”. The Minister said that if we tried to follow the principle in the original amendment tabled by my noble friend Lady Greengross—to separate the timetable for women from that for men, which would deliver an objective we could all share and produce most of the savings that the Government want—it would risk breaching the European directive. He did not say that it would do so, but that there would be a risk. My solicitor friend told me that, on the contrary, it is for member states, not the EU or any other body, to determine the timetable for equalisation. The advice I was given was that there is no good reason why we should not pursue this detachment of women’s equalisation from men’s in the way that my noble friend’s amendment would allow as a fallback if we cannot defer men’s pension age along with that of women.

I think the Minister still has time to be brave. I think he has gone some way, and we understand the pressures he is under and appreciate what he has done so far, but what is the risk? If the advice I have received does not hold up, then women will be no worse off than they are now, but the Government, this House and women out there will know that the Government have made their best endeavours to deliver a fairer deal for women. If it does hold up, and I think there is a reasonable case that it could, some of the poorest women will have been treated fairly and decently. We know that at the moment women are carrying the burden, as my noble friend so rightly said, of benefit cuts, job cuts and public service cuts and many will now face extra conditionality—which appals me, actually—under universal credit. We have to come back to that because too many women will not have the resilience or the capacity to cope with the new burdens that the Government are putting on them at the time that they face the cuts agenda that the Government are also introducing. That is unfair. It is about political choices. I need only remind the House of the up to £8 billion that goes on the additional cost of higher rate tax relief for pensions to realise that there are still plenty of choices if the Government choose to make them or seek them.

I support my noble friend’s amendment warmly. I hope that, at the very least, the Government will consider the original purport of the compromise amendment of the noble Baroness, Lady Greengross. I understand where the Minister is coming from and am grateful for even that which he has done, but we should go further, and could go further, at reasonable cost, by deferring the equalisation issues until after we have protected women who are at the receiving end of most of this Government’s most savage cuts.

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

My Lords, I thank noble Lords for speaking with the expertise and knowledge that we have grown accustomed to in this Chamber. I am particularly grateful for the mathematical expertise of my noble friend Lord German.

As I have already mentioned, the Government have acknowledged that the original timetable was too harsh on some women and have amended this. We have listened. We have amended. This is the very point of the legislative process. The elected Chamber brought forward and agreed Amendments 1 and 2 after significant and lengthy debate. Due consideration has been paid to the issue and I believe that we have reached an agreeable and responsible conclusion.

Indeed, I confess that I am slightly perplexed. We find ourselves considering a timetable that has already been proposed and defeated in a vote by both Houses. We appear to be back at square one. This should not be the case. The Government have reconsidered their original proposal and brought forward a reasonable amendment. Yet, the noble Lord opposite has still reinserted his familiar friend. I feel that we have offered a hand here and the noble Lord, like Beowulf, treats me like Grendel and tries to rip my arm off.

We have heard many of the issues today, but we have been here before and the facts have not changed. We are still talking about an £11 billion reduction in savings that the Opposition are proposing. In terms of fiscal sustainability, I hope that noble Lords can agree that this is simply not feasible.

Several issues have been raised and I want to touch on some of them. One that is of great concern was raised by the noble Lord, Lord McKenzie, and by the noble Baronesses, Lady Howe and Lady Drake, in respect of the burden on women who are carers. Only around 3 per cent of women in the 55 to 59 age group are currently entitled to carers’ allowance.

[Baroness Hollis of Heigham]

There are 6 million carers and only about 500,000 of those qualify for carers’ allowance because of the very high hurdles: you have to care for at least 30 hours per week for one person in order to receive the carers’ allowance for somebody who is on middle or higher rate DLA. Those are very tough hurdles. Very many other women—hundreds of thousands—are, I know, actively caring in ways that do not permit them to be full time in the labour market or build a pension, but they do not meet those very high hurdles.

[Lord Freud]

My Lords, we do not have the figures on more informal care; we do not know how many are in this age group. That is not broken down—I certainly do not have the figures to hand. I am providing the figures for the women most affected with full-time caring responsibilities.

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In conclusion, I repeat—in case it was lost first time around—that I am absolutely delighted that the Government are taking powers to cut charges to deferred members. I am equally delighted that the Bill means the Government are pressing ahead with auto-enrolment for millions of workers. As the Bill has returned to this House, would the Minister repeat the assurance that the new employer duty for all employers will start to be phased in from October 2012, according to the published timetable?

[Baroness Hollis of Heigham]

My Lords, I support my noble friend, particularly on the issue of orphan assets and the situation of deferred pensioners. As the noble Baroness explained, most men will have up to eight job changes and women will have something like 11 job changes in their lifetime, particularly when they are younger. For example, women in modest jobs, such as hairdressing or in the service industry, may at some points be self-employed and at other times be employed by different employers. They could very well end up with a pot in NEST, or its equivalent, of some £20,000 to £25,000, and several small pots of £2,000 or £2,500 from previous employments. Those little pots are too small to be annuitised, but there is no way to transfer them into the larger pot of NEST, and they cannot be trivially commuted because the NEST pot is over the £18,000 ceiling. Could the noble Lord share with the House his thinking about what women, particularly, on very modest earnings with very modest savings but with a possible multiplicity of small pots so that they can neither annuitise nor aggregate not trivially commute, are expected to do? Can the Minister assure us that he is making arrangements so that, at least at the point of retirement, they will be able to bring those miscellaneous small pots with orphan assets into the NEST pot to ensure that they get the best possible outcome in retirement?

[Lord McKenzie of Luton]

My Lords, I thank the Minister for his explanation of this group of amendments, the helpful background he has given us and his kind words. As the Minister said, the amendments focus on the auto-enrolment provisions, and we put on record our support for the Government’s commitment to take these forward. My noble friend Lady Drake asked the question that I was going to ask, about timing. Could the Minister confirm that it is on track? I do not know whether the Minister can update us on issues around self-certification arrangements, and whether any progress has been made, but maybe that is a matter for correspondence outside the debate.

We remain unhappy with some of the changes to the scheme introduced by the Bill, particularly the hike in the earnings threshold, but now, frankly, is the time to make progress. Turning to the specific amendments, there are just a few points. Amendment 3 deals with continuity of scheme membership and achieves this by requiring automatic re-enrolment to take effect from the day after the day on which the jobholder ceases to be an active member of a qualifying scheme. However, the alternative of allowing a period of time for re-enrolment is preserved whereby the Secretary of State can allow for that period. Given the “day after” requirement, when is the alternative approach likely to be invoked? A similar point arises in connection with Amendment 7.

We support the extended protections dealt with by Amendments 4 and 8. My noble friend Lady Drake has given her welcome to Amendment 11, which has my welcome as well. She talked authoritatively about how important this issue is and about the changes happening in the marketplace. That is therefore a particularly important amendment.

We have no problems with Amendment 12, which deals with a test scheme for certain types of defined benefit schemes, or with Amendments 13 and 14, which deal with certification of schemes where the main administration is within the EEA.

A clarification on protections of back payments for jobholders enrolled into workplace personal pension schemes obviously has our support, but perhaps the Minister could provide us with a little more detail about the scope of Amendment 17, which provides a regulation-making power to exempt employers from auto-enrolment duties where a person is a European employer. What assurances do we have that employers would not be able to organise in such a way as to bring themselves within those “European employer” provisions and therefore be outwith auto-enrolment? An assurance on that point would be helpful but, subject to anything arising from these points, we are content and will support these amendments.

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[Lord Freud]

My Lords, I pay tribute to the noble Baroness, Lady Drake, for her precision analysis in this area, which—I say this as a compliment—has had the team seriously thinking about the issues involved. I also pay tribute to the noble Baroness, Lady Thomas, and the Delegated Powers and Regulatory Reform Committee, for applying such scrutiny to the powers contained within the Bill. I trust that noble Lords are as content with the Government’s amendments, even though they have some broad powers within them, as the committee was after its consideration.

Let me turn now to Amendment 29A. The noble Baroness, Lady Drake, highlights a key question. How do we ensure that those people whose benefits are classified as money purchase benefits in payment, because their scheme has bought an annuity to match the liability, actually benefit from that annuity? The Government share the noble Baroness’s aim in laying this amendment, but the issue is how one ensures the right outcome. I have concerns that the way this amendment is designed could have desirable consequences and place an unnecessary regulatory burden on schemes.

[Baroness Hollis of Heigham]

I think that perhaps the noble Lord meant “undesirable” consequences.

[Lord Freud]

My Lords, when I look down at my notes, which perhaps I should do more frequently, I do notice that the word is “undesirable” and not “desirable”. I am most grateful that we have the record absolutely correct on this.