Pensions

Baroness Hollis of Heigham Excerpts

Wednesday 19th July 2017 Lords Chamber

[Baroness Buscombe]

I thank my noble friend for her question. Together with my noble friend, I have the good fortune to have not so young children with young families. They are questioning how sustainable even our current proposal will be, given that the burden on the next generation of funding public services in this country is ever increasing. I have talked to some in their late teens and early 20s who seem surprised that the working age should cease at 68: they think it should go on rather longer. Indeed, your Lordships’ House is an example where people want to and are capable of working late into life. There is no question but that we should keep the whole issue of state pension age under review. That is why we have set out a clear pathway for the future.

[Baroness Hollis of Heigham (Lab)]

My Lords, I think we all share the Minister’s view that any future settlement needs to reflect life expectancy, fairness and public finances, but the fourth question, which she referred to briefly in response to the noble Lord, Lord Kirkwood, is not mentioned at all in the Statement—although John Cridland has tried to address it in meetings that we have had with him where some of us have pressed him on this issue—which is healthy life expectancy. We know that the gap in life expectancy between men and women is narrowing, which is good. We also know that the gap in life expectancy by social class—As and Bs as opposed to Ds and Es in the old census formula—is widening. For them, for every extra year of life expectancy, anything between six and 10 months of it will be in very poor health. In other words, every year gained in life expectancy for the bottom third of our population is a year in poor health. Therefore, people can leave their working life without a healthy year of retirement in their future: they will start with disability. The Minister mentioned that there would be responses in the benefit system to those in that situation. Will she move away from the concept of benefits and all the problems associated with universal credit, PIP and the rest of it, which are now coming through in horrifying forms, and instead think about the expansion of pension credit, which is much more closely connected to pensioner incomes rather than working-age incomes, as a way of ameliorating the situation of those who are unable to draw their state pension at an early enough age, denying them even a single year of healthy retirement?

[Baroness Buscombe]

I thank the noble Baroness for her question. We are trying to look at what a suitable state pension is that rises in line with life expectancy and is fair across the board. I know the noble Baroness is very keen on the whole issue of fairness across all the socioeconomic areas, as it were. We are quite clear in our minds, having studied Cridland, that the reality is that our strategy is built on a solid evidence base that has been aided substantially by the two contributions from John Cridland and the Government Actuary. In fact, Cridland’s review took into account evidence provided by over 150 stakeholders. The question of life expectancy has gone up for all socioeconomic groups over the last 30 years, and for all constituent countries of the UK over the past decades. As I say, John Cridland did extensive work on this and concluded that a universal state pension age remains the best system as it provides simplicity and clarity, which enables people to plan for their retirement. As I have said, Cridland concluded that there are no practical or workable ways to factor in variations in life expectancy, and there is no evidence of regional options being any fairer or more targeted at disadvantaged groups. Allowing early access to the state pension on a reduced basis would risk leaving people with an inadequate pension. We believe that disadvantaged groups should be assisted through the working-age benefits system rather than through changes to the state pension age.

It is important to add that we should not see the issue of increasing the state pension age as one whereby we are bringing in a situation that is necessarily making it more difficult for people as they grow older, given that older workers can bring decades of valuable knowledge and experience to the workplace. This is all seeming rather doomy, but actually we should celebrate the fact that life expectancy is increasing. There are now 8.7 million people aged 50 to 64 in work, which is a record high, and more than 1.2 million people aged 65-plus who choose to remain in work. In 2017, we launched the Fuller Working Lives strategy in order to encourage more employers to take advantage of the benefits that older people bring. We are calling on employers to boost the number of older workers, not write people off once they reach a certain age.

Personal Independence Payment Regulations

Baroness Hollis of Heigham Excerpts

Wednesday 15th March 2017 Lords Chamber

[Lord Henley]

My Lords, individuals will continue to get their personal independence payment and will continue to be able to apply for it in the usual way. It is just that we have new regulations that bring clarity, as I am sure my noble friend will be aware, to the lack of clarity that the Upper Tribunal complained of.

[Baroness Hollis of Heigham (Lab)]

My Lords, following the pertinent questions of my noble friend Lord McKenzie, two days ago the Social Security Advisory Committee pointed out the error made by the DWP in a previous submission to the Upper Tribunal in 2015, which led in turn to the inconsistency of determinations by decision-makers on PIP. Yet the DWP has still failed to clarify the ambiguity of the psychological distress criteria for people who are concerned about travelling by themselves and cannot successfully do so. Does this not show that SSAC should have been properly consulted throughout this procedure before the revised, tougher—yet still ambiguous—regulations were issued, given the errors, inconsistency and ambiguity in the DWP’s handling of PIP in the past? Frankly, should the department not stop digging?

[Lord Henley]

My Lords, I do not think the last comment was worthy of the noble Baroness. The point we are making is that the Upper Tribunal saw a lack of clarity in these regulations. It was appropriate that the department acted quickly. In a previous Statement we made it clear that we were going to act quickly and that we were going to consult SSAC on this matter. The matter was put to SSAC. SSAC considered it. SSAC then wrote to the department earlier this week and today my honourable friend the Minister for Disabled People wrote back to SSAC. The noble Baroness can see that letter in due course—she seems to indicate that she already has a copy of the letter. I have a copy, but there is no need for us to read it out to the House. The noble Baroness has a copy of the letter that deals with those matters. I believe that we have done this in exactly in the right way and that we are bringing clarity to a matter that needed some clarity, following the remarks of the Upper Tribunal.

Universal Credit

Baroness Hollis of Heigham Excerpts

Thursday 9th March 2017 Lords Chamber

[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.

[Baroness Hollis of Heigham (Lab)]

My Lords, I am sure that all of us in this House want universal credit to work, but it is not. There have been pilot schemes showing how people are being plunged into debt through no fault of their own. There are three simple administrative changes, as my noble friend on the Front Bench mentioned, that would transform the easy delivery of UC and prevent people spiralling into deep debt from which many can never recover. The first is to get rid of the seven-day waiting period; the second is to pay people fortnightly as well as monthly in advance, if they so wish; and the third is to pay housing benefit, if tenants so wish, direct to the landlord. Those three things together would transform the ability of people who are not particularly sophisticated about the benefit system—why should they be?—and give them the opportunity to get money that will help them back into the labour market, as we all want, and not have a lifetime of debt hanging over them.

[Lord Henley]

My Lords, I am very grateful that the noble Baroness offers support for universal credit. Like her, we wish to see it work, which is why, as my noble friend Lord Freud always made clear, we want to see a very slow rollout of universal credit. The noble Baroness, Lady Hollis, will be aware just how slow that rollout has been—deliberately so, before the noble Baroness, Lady Sherlock, giggles too much—so that we can learn as this goes along. I do not necessarily accept the three points that the noble Baroness made, but they can be taken into account as we continue with that rollout as it accelerates over the coming year.

Personal Independence Payments

Baroness Hollis of Heigham Excerpts

Tuesday 28th February 2017 Lords Chamber

[Lord Henley]

Can I again make it clear to the House that we are not in any way trying to suggest that people with any particular condition should be deprived of PIP? As the noble Baroness and the House will be aware, when we brought in PIP the arrangements were much more generous and reached far more people than DLA did in the past. It is not any specific condition that is being looked at here; people are not awarded PIP on the grounds of any specific medical condition but because of the way that particular impairment or medical condition affects their ability to live an independent life. That is what we are trying to do with PIP, or it is what we were trying to do and want to try to get back to.

[Baroness Hollis of Heigham (Lab)]

My Lords, it is not the case that PIP is more generous than DLA. The Minister has only to consult the information produced by Motability on the number of the people losing cars to know that that is not a correct statement. Let me go back to the substance: we all know that DLA, followed by PIP, is not an income-replacement benefit but an extra-costs benefit associated with disability. What analysis have the Government made of the extra costs facing people with mental health problems, which would underpin their eligibility for the points assessment in assessing the awards for PIP? Given that there is not a clear answer, which I accept, would it not be wise and prudent to refer it to the Social Security Advisory Committee, whose job is precisely to steer the Government in areas such as this?

[Lord Henley]

On the noble Baroness’s first point, I go back to what I originally said: there are many more claimants on PIP with mental health conditions who are claiming the mobility component. It is 29% compared to the 9% who were on DLA, which was not as good at reaching these people as PIP is. As regards her second point, it was right that, the decisions of the two tribunals having been made, and complaints having being made by the tribunals about a lack of clarity in the original directions, or words to that effect, we should correct those directions and get back to what Parliament originally intended. That is what we are trying to do and will do in these regulations.

Pension Schemes Bill [HL]

Baroness Hollis of Heigham Excerpts

Report stage (Hansard - continued): House of Lords
Monday 19th December 2016 Lords Chamber

[Baroness Hollis of Heigham (Lab)]

My Lords, I hope that my noble friend will pursue this point because, unless the Minister can give a categorical assurance, this is the only way to ensure that the Government take the issue seriously and pursue a remedy that is appropriate to the risk that she has outlined.

[Baroness Drake]

I thank my noble friend for her support. I am not coloured by the defined benefit experience at all because I am quite capable of distinguishing between the two. I am sure that I understand the risk posed in this draft legislation. However, I come back to the point. The Government may wish to assert that the costs of winding-up and transferring could be considerable if the records are in disarray, if no master trust is willing to pick up the pieces, or if other problems occur. The Government can assert as a matter of policy that the costs will not fall on the member, but there is nothing in this Bill to copper-bottom that they will not. I feel that the Minister has not answered that question. I am not proposing a sledge-hammer and I am not tying the Government’s hand, but they must introduce a provision which states that if the policy is to prohibit increasing members’ costs when a wind-up after a failure occurs, in extremis if there is regulatory failure that provision will come into effect. I am not persuaded by the Minister’s reply and on that basis I wish to test the opinion of the House.

Pension Schemes Bill [HL]

Baroness Hollis of Heigham Excerpts

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

[Baroness Hollis of Heigham (Lab)]

My Lords, the Bill is focused on master trusts, to which I will not speak. However, the Explanatory Notes open with the statement:

“The Bill’s focus is on protecting savers and maintaining confidence in pension savings”,

to which I will speak, as did the noble Lord, Lord Naseby.

Much recent government policy has been misguided. The bit we got right, after our campaigning, was the single state pension. However, those on, say, three zero-hour contracts, each of 10 hours, making 30 hours in total, still cannot aggregate their hours to come into NI and build a state pension, while someone on JSA does. There are 1 million people on ZHCs, working in the flexible labour market without access to NI and thus, potentially, to a state pension. It is wrong but, with RTI, easy to rectify.

The Government then cut projected new state pension costs by suddenly raising retirement ages faster. Steve Webb claims he did not fully understand the implications of that. Really? Equality, yes—but as our worker-pensioner ratio in 2025 will be more favourable than that of any other EU country, from Germany to Greece, apart from some smaller countries such as Ireland, the Czech Republic and Luxembourg, we argued that we could afford a slower timetable, but were refused. We argued for transitional arrangements for those WASPI women, but were denied. Women are especially dependent on a state pension, as most lack a decent OP, and caring for children and elderly parents, their pay and their hours all hobble them. The WASPI women continue to fight on, and I hope that, despite the remarks of the noble Lord, Lord Freud, today, the Government will respond.

The Government are capping costs by tying SPA to longevity. A third of your life will be spent in retirement, hence those healthy elite pale males, breezily contemplating an SPA of 68, 69 or 70. Life expectancy is rising, but not evenly. The gender gap has narrowed, while the socioeconomic gap widens. Within Norwich—a tight city with common services and standards—two city wards are one mile but some 11 years of life expectancy apart. In the council estates, most people started work six or seven years younger than in the owner-occupier ward. They start work young and they die young, but without receiving much of the pension that they paid for and we enjoy.

However, it is worse than that. Although we are living longer, healthy life expectancy has not risen pro rata. More of those extra years are spent in poor health, especially for those in manual work, who have double the rate of poor health than those who are better off. Women, for example, live longer than men but proportionately spend much more of their later life in poor health. A woman reaching 65 in Richmond can expect 16.7 years of good health; in Tower Hamlets she can expect just 3.3 years. The second woman faces fewer years of retirement and then even fewer of those years disability-free—she is doubly disadvantaged.

We have to change this, and I look to Cridland. A single SPA is profoundly and increasingly unfair. It needs to be tailored but not means tested—only half of those entitled to pension credit ever claimed it. Like NI, it should be a universal and contributory entitlement, easy to understand and administer, fair to men and women alike, and affordable. The Pensions Policy Institute reckons that 38% could draw their SPA earlier if they qualified with 45 years of NI contributions, costing around just £200 million a year. Passporting from ESA or from caring responsibilities within five years of retirement might double that. Refuse collectors in Norwich often die within two years of retirement—two years. Is it right that their lifetime NI, which barely benefits them, should pay for 20-plus years of all our state pensions? I think not.

I turn now to occupational pensions, especially as they affect the worse-off. Auto-enrolment was for those too low-paid to build a private pension, but instead of the entry point being pegged at an LEL of £5,800, it became a rising tax threshold which over the years excluded 1 million people, mainly women. The industry complained noisily about managing small sums, but even a £5,000 pot may be transformational for a woman who has never had any capital in her life. It has been frozen this year at £10,000, which is very welcome, but will the Government be reviewing this issue in 2017?

However, the biggest worry for me in recent government policy is pension liberation at 55. Spend it on a Lamborghini, government Ministers suggested; it is your money. Except it is not. Two-thirds of “your” pot actually came from others, employers and taxpayers, privileged with billions of pounds of tax relief precisely— as the Explanatory Notes state—to build pension savings, not to provide a honeypot for some to blow in middle age, perhaps leaving taxpayers to fund their later-life care for the second time round.

What is needed for a decent private pension? We all know that you must: save early, but with student debt or saving for a deposit you cannot; save regularly, but mothers in and out of waged labour mostly cannot; save enough, but with employers now contributing a meagre 44% on average through DC pots, you cannot; leave it untouched until retirement, but that is gone, so many will not; and then be rewarded proportionately, live to enjoy it, but if you are poorer you will not, so do not. Government policies in this respect are contradictory and regressive.

What might we do? ISAs attract more money than personal pensions. Why? Easy access. Only the better- off can afford to fund both ISAs for working-life access and pensions for retirement. Low-paid women, part-time workers, the self-employed and those on ZHCs, with average earnings of £11,000, can barely afford one, certainly not both financial instruments.

If, through auto-enrolment inertia, most pay into a pension they cannot access until 55, that is too late to help with divorce, disability or disaster before then, but they may have no other resources. ONS statistics show that a third of all men and women, and about half of those separated or divorced, have less than £500 in accessible savings. Many turn to debt and are trapped.

We should instead combine aspects of ISAs and pensions in one simple product. You save, and perhaps save more, into a pension if you know that you can access emergency savings from it, borrowing cheaply from yourself rather than expensively from others—which may have caused you to stop contributing to your pension entirely. FCA figures show that, of pensions accessed between October and December 2015, more than half—mainly, of course, the small pots—were fully cashed out. The PLSA shows that in the first six months of pension freedom, of those taking cash, 14% were paying off loans or debts, perhaps after years of carrying charges. Modest savers in Norwich Credit Union use its loans for holidays, Christmas, cars, household improvements and goods, yes, but also significantly for the consolidation of debts.

How to combine pension and savings in one simple product for those who, I fear, may otherwise not build either? Here are two of many possibilities. You pay into your pension account. Effectively, 75% remains ring-fenced for retirement, but 25%, the tax-free lump sum, is your easy-access savings slice floating on top. Build your pot to, say, £5,000, and you can take a quarter of it; to take more, you must rebuild. Cap it, so that there is no recycling by the wealthy.

Alternatively, StepChange, the debt charity, to which I am grateful for its help, proposes embedding a £1,000 accessible savings slice within your pension pot, which it says would remove 500,000 families from problem debt—debt that helps to lock people into poverty for years on end. Could this be part of the 2017 review, perhaps?

To conclude, we should be offering transitional arrangements for WASPI women, given that we have one of the strongest worker-pensioner ratios in the OECD, and certainly in Europe. We should allow aggregation of hours for those with multiple jobs. We should tailor state pension age to reflect morbidity. All that may help to secure fairer state pensions, which I am sure we all want. Overlay that with a fairer and more attractive private pension. How? Reduce the auto-enrolment threshold back to LEL. Consider a default de-accumulation strategy. Allow access to a savings slice embedded in a pension, and thereby encourage what the Explanatory Notes state is the purpose of the Bill—both a savings culture and a pensions culture—and do so in one product. And, of course, support capping charges and regulating master trusts.

Housing: Under-occupancy

Baroness Hollis of Heigham Excerpts

Monday 17th October 2016 Lords Chamber

[Lord Freud]

We put out a Ministerial Statement in September outlining our approach to supported housing, including sheltered housing, which looks to divide the support into two, with one element coming out of the housing benefit bill up to the limit of the LHA amount in each area, which is then topped up by local authorities through a fund. This will help them drive the commissioning of the appropriate level of housing, and supported housing, for the people in their area.

[Baroness Hollis of Heigham (Lab)]

My Lords, given the harsher council tax support scheme, it is estimated that one in three of those affected is in arrears and debt. Of the people affected by the bedroom tax, two-thirds are estimated to be in arrears and debt. Of UC claimants for housing allowance, it is estimated that more than three-quarters are in arrears and debt. These debts are manufactured by government policy and will blight lives for some in deep debt for many years to come. We have a new Government and I am sure that neither the Minister nor the Prime Minister wishes this state to continue. What are the Government going to do about it?

[Lord Freud]

There is a lot of complexity around the arrears issue, which we are looking at. The overall figures on arrears are much lower than some of the dramatic specific figures that the noble Baroness mentioned. The overall position is that housing association rent collection is running at 99% on average, and the bulk of housing associations—92% of them—say that they are outperforming their business plans on levels of arrears. There are specific issues, but there are a lot of definitional problems—I have said that to the House before—about what is an arrear and whether, if you are a day late, you go into arrears. We are trying to separate out what one could call book arrears from genuine arrears of the kind about which the noble Baroness is concerned.

Children: Parental Separation

Baroness Hollis of Heigham Excerpts

Wednesday 27th April 2016 Lords Chamber

[Baroness Altmann]

My Lords, the Government are considering their future policy on children’s centres, which are currently the responsibility of the Department for Education, as part of the development of the cross-government life chances strategy. We will publish more details on that in the summer.

[Baroness Hollis of Heigham (Lab)]

My Lords, the Minister said that since the 2012 Act, the new arrangements have been a great success. How much additional money has gone to separating parents and their children; in other words, how much better off are those children, knowing that in the past many fathers would change their job, their address, their country and their name to avoid paying maintenance? Can she tell us how much additional money is going to children? If she cannot, because a lot of this is now voluntary, how does she know that it has been a success?

[Baroness Altmann]

I can assure noble Lords that we will be making a full report in the 30-month review of the scheme. However, the indications so far are that it has achieved its objective of helping parents agree between themselves how to arrange maintenance.

Welfare

Baroness Hollis of Heigham Excerpts

Monday 21st March 2016 Lords Chamber

[Lord Freud]

I have known Stephen Crabb for a time. He was a Whip for the department and then he was in Wales, where he dealt with welfare issues. I have high hopes for him in pursing the reform agenda. He is up for it and he will be pretty effective at it. I look forward to providing him with all the support that I possibly can in this agenda. Clearly, in getting this reform going, the conversation has to be balanced with the speed. He is conscious of that and will look to get something going at the fastest possible speed, commensurate with making sure that we get it right and get the views of quite a complicated set of constituencies.

[Baroness Hollis of Heigham (Lab)]

My Lords, as my noble friend said, I think the whole House recognises the honourable way in which the Minister has behaved over recent days. I would like to associate myself with her remarks to that effect. However, I want him to return to the answer that he gave to one of her questions: she asked whether he would accept that the original decision to cut PIP was wrong. Listening to the Minister, I think he appeared to suggest that what was wrong—he used the word “wrong”—was its conjunction in the Budget with reduced wealth taxes for the better off. Do I understand from that that according to the Minister, had it not been conjoined with those Budget changes benefiting the better off, he would have supported, welcomed and gone ahead with the PIP changes?

[Lord Freud]

The noble Baroness deals me a compliment with one hand and a blow with the other in the way that I enjoy so much, as a masochist. I am not sure it is worth chewing over what I thought last week. We could do it, but I am not sure that it would be a valuable use of Hansard inches.

[Baroness Hollis of Heigham]

To clarify, it was what the Minister said—

[The Lord Privy Seal (Baroness Stowell of Beeston) (Con)]

My Lords, this is not a debate; it is a Statement. The noble Baroness has asked her question and my noble friend is responding to it. He will respond to it in one go and then we will move on to the next question.

Motability

Baroness Hollis of Heigham Excerpts

Monday 7th March 2016 Lords Chamber

[Baroness Altmann]

A very small number of the cases actually go to appeal. At this moment we are confident that the processes in place are doing the work that they need to do.

[Baroness Hollis of Heigham (Lab)]

My Lords, I estimate that perhaps 200,000 people who currently have Motability cars will lose them as a result of the PIP activity. Very many of them will appeal, and they will win. Given that the Minister has accepted, admitted and shared with the House that the appeals procedure is infinitely more reliable than the original PIP decision by virtue of the additional information that it has, can I ask her to reflect on the previous answer that she gave so that people can keep their cars until their appeal has been completed?

[Baroness Altmann]

The current level of appeals is extremely low and we do not wish to give people any incentive to appeal. I also point out to noble Lords that more people are getting Motability cars now than before PIP was introduced.