Small Business, Enterprise and Employment Bill

Debate between Baroness Hollis of Heigham and Lord Stoneham of Droxford

Wednesday 11th March 2015 Lords Chamber

[Baroness Hollis of Heigham]

My Lords, I hope that your Lordships will forgive an amendment that superficially seems nerdish, but it is an issue that will make or break many people’s lives. Please bear with me.

National insurance is a contributory system entitling you to sick and holiday pay, and, above all, the state pension. You come within it if, in any one waged job, you earn £5,700, which is about 16 hours a week’s work at minimum wage, which is the lower earnings limit—the LEL—although you do not actually pay national insurance until you earn £7,500. Over the years, all parties have rightly recognised that people in unwaged work—primarily women caring for children or elderly people—should be credited into NI and not lose their right to the state pension because they put their family first. All around the political spectrum, we have also respected the position of disabled people with difficult work prospects, who are also credited in, and those who are unemployed on JSA—assuming, of course, that they are properly searching for and training for work. They, too, get credited into national insurance.

Who, then, is left out? It is workers with part-time jobs, which includes two groups in particular. The first is middle-aged women. They have juggled a portfolio—to put it grandly—of part-time jobs, such as cleaning and shop work, with family care. It is a splintered workload, none of which separately qualifies them for national insurance. At least in the past married women could rely on the 60% dependency pension from their husbands. That disappears from 2016, so they will then not get a pension from their husband and currently they do not get one from their own waged and unwaged work. Depending on their back history, they will not get much from the state either. That is how we will reward them for doing what most of us believe is right: fitting their work around their family responsibilities. As a result, they lose years of state pension.

The second group is young people. They may be on JSA. They do everything that is required of them. They apply for countless full-time jobs and do not even get their application acknowledged. Going to Jobcentre Plus, nearly all of the jobs available are part time; many of them are also on ZHCs. It has been estimated that one-third of young people under the age of 30 are in short-hour or ZHC jobs. They do what we should be cheering them on to do. They come off JSA and cobble together a portfolio of perhaps three part-time jobs such as a sandwich job at lunchtime, security work in Boots of an afternoon and bar work in Wetherspoons of an evening. It is hard, risky, expensive and tiring work travelling to and maintaining several insecure jobs whose hours may change and clash with each other every week. They just hope that one of those jobs may lead to secure work but with the portfolio work they lose the NI rights they had when they did nothing but remain on JSA. Stay passively on JSA, come into national insurance and get your pension; come off JSA into several part-time jobs, work 30 hours a week or more but because no one single job is above the LEL lose your national insurance rights, holiday pay, sick pay and, above all, pensions. Can you imagine anything more morally perverse?

The national insurance problem is not exclusive to ZHCs; it affects perhaps up to 6 million people, largely women, with part-time jobs, but ZHCs make it far worse. On ZHCs you may work 20 hours in week one, 10 hours in week two, 20 in week three and, because that is all your employer wants, 10—back down the snake—in week four. So in weeks one and three with 20 hours a week you seek tax credits from HMRC to top up your wage. In weeks two and four on 10 hours you cannot, so instead you turn to the DWP for JSA, only you will probably not get it because you are not fully available for work and, as your 10 hours may suddenly become 20 hours, if that is what the employer requests, you are excluded from JSA. Simultaneously you are dealing with HMRC for tax credits, the DWP perhaps for JSA and the local council for fluctuating housing benefit payments and council tax support. It is a nightmare. It is a full-time job just applying for benefits.

Universal credit will help, and I support it, but it will take until 2020—another five years—before it is fully rolled out, if then. It should help that lone parent but not the older woman whose partner’s earnings float them off universal credit, nor the young man with the sandwich shop job, security job and bar work. Even for the lone parent, UC is paid monthly and in arrears, so what does she do in a low-pay job in a low-hour week? She goes for payday loans.

I could not do it. I could not cope, especially if I had children to care for, with not knowing my hours or my wages each week, or what the three bureaucracies of HMRC, the DWP and the local authorities might do about it either. Nor could I cope with not knowing when any or all of the money may come in and when it does, whether it is even correct. These are years when you may lose all entitlement to accrue a state pension. Lose seven years of NI and you lose £30 a week for the rest of your life. Have 10 years on a set of ZHC jobs and lose NI and you lose £45 a week for the rest of your life. What to do?

In a vote a few months ago, your Lordships agreed to allow two jobs below LEL to be aggregated to bring someone into NI. A number of Conservatives—although I do not think any Lib Dems—spoke in favour of it. I am not sure of that. The coalition Government, however, said no and overturned it. I then suggested that we should treat such people as self-employed. That was not accepted by the coalition Government. Could a part-time job or three be regarded as meeting JSA conditionality and, as with JSA, get you into national insurance? That was not acceptable to the coalition Government either. I tried in Committee on the Bill to reduce the LEL, bringing it down to about £3,000; I calculated that the cost would be trivial. That was not acceptable to the coalition Government either. So what then?

[Lord Stoneham of Droxford]

What was the noble Baroness doing for the 13 years of the previous Government, if she is accusing this Government of doing nothing?

[Baroness Hollis of Heigham]

That is a perfectly fair question. I point out to the noble Lord who sat opposite someone like me throughout the passage of the Welfare Reform Act from 2011 to 2012, with something like 17 Committee sittings, that I believe that the phrase “zero-hours contract” was not mentioned once—certainly not by me nor by the noble Lord, as far as I am aware. Therefore, in that context, the issue did not arise.

I tried to reduce the LEL but I could not. This time I suggest we again lower the LEL—the cash threshold at which you come into NI—to the cash value of JSA, which is £72.40 a week or near enough £3,750 a year. On JSA, at £72.40, you are currently credited into NI. With this amendment if you are earning £72.40 per week in any one job, 11 to 12 hours per week at minimum wage, you also get your NI stamp. It is simple and fair. If it is good enough for JSA, it should be good enough for part-time work. Get JSA and get your pension, work hard in three 12-hour jobs, each below the LEL, and do not. What sort of message is that?

The question is do we want social security to support a flexible labour market, to abate some of its risks, to ensure for workers some of its rewards such as the state pension or do we simply not care what happens to them down the line? If so, what are we saying to people about wanting to come off benefits and go into work? Why, under the system we now have, would they want to? It is not rational to do so. Too many people have more to lose than to gain and this amendment would help overcome that moral dilemma. I beg to move.

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[Baroness Hollis of Heigham]

My Lords, I thank my noble friend Lady Drake for her superb contribution. She put it wonderfully well.

Although the noble Lord, Lord Stoneham, intervened, I thought that he might make a fuller contribution. His basic charge was that we did not do anything about this. We did. I do not normally go around shouting about this, but we persuaded James Purnell that grandparents who were caring for children and carers of older people should come into the national insurance system and be credited at 20 hours a week. Previously, carers of older people came into the system only if they worked for 35 hours a week—effectively full time—for one person only. I persuaded the then Secretary of State that a carer doing more than 20 hours a week should get, not carer’s allowance, but national insurance credit. I also persuaded him that grandparents caring for their grandchildren and thus freeing their daughter to work should benefit from what was then HRP. This was effectively transferred from the daughter, who, since in work, would be in the national insurance system in her own right. I thank James Purnell, the last Secretary of State with whom I worked on this, who agreed both those changes.

[Lord Stoneham of Droxford]

I am grateful to the noble Baroness for giving way. Now that she mentions them, I accept that there are things that her Government did. Will she also accept that there is quite a lot that this Government have been doing to look at what is quite a complex problem?

[Baroness Hollis of Heigham]

I do not accept that at all. We shall come back to that point when we talk about the forum. Apart from the wider issue of universal credit, the Government have not done anything to help these groups in the last four and a half years—I can think of not one thing. If the noble Lord, Lord Stoneham, can think of something, then we shall see whether we agree on the evidence. Not only did we persuade James Purnell, who responded generously and positively, but also, as my noble friend rightly said, women had the safety net of a 60% dependency pension. The noble Lord’s party, through his right honourable friend, Steve Webb, has got rid of that 60% dependency pension for married women from 2016 so that a group of women who would have had some pension in retirement have now lost it. I should not be too keen on boasting about that if I were the noble Lord, Lord Stoneham.

At that time we were also told that the number of people with multiple jobs was only 20,000—mostly women, so they did not count. Now we have 50,000 and apparently they still do not count. The noble Lord, Lord Stoneham, said earlier today that zero-hours contracts were a response to the recession. The increase in jobs has come largely since 2010 and has only been apparent for most of us since about 2012. We went through very many mostly happy hours in which this was never discussed when we were considering the Welfare Reform Bill.

[Lord Stoneham of Droxford]

The zero-contracts did not come about—

[Lord Popat (Con)]

Order please. We are on Report. I am afraid that intervention is limited.

Pensions Bill

Debate between Baroness Hollis of Heigham and Lord Stoneham of Droxford

Monday 16th December 2013 Grand Committee

[Baroness Hollis of Heigham (Lab)]

My Lords, I would like to ask a simple question that relates to one of the hopes that some of us had a year or so back. The greatest proportion of those claiming pension credit tend to be elderly widows—when the husband died, the pension died with him—over the age of 80 or 85. I fully understand that to bring all pensions on to this would be a big-ticket item for any Government to contemplate; that is not in doubt, as the previous speaker mentioned. However, what if we were to introduce the pension not just for people reaching pension age in 2016 but for those over 85, and then for the next decade bring the 85s down by a year, with the 65s going up a year, as they will? They would meet in about a decade for men, perhaps slightly later for women. In about a decade or so, virtually all pensions would be covered on an incremental basis. I have not been able to cost that. I was told, teasingly by the Minister in the other place, that he thought it would probably cost half a billion pounds, but whether that was per year or in total was not made clear to me. Have there been any thoughts about how we might progressively increase the coverage?

[Lord Stoneham of Droxford (LD)]

I would like to make three points. I hope that there will be cross-party support but, if we are now saying that the higher pension should apply to everybody, clearly we need to know the cost. I have to ask the question: why did Labour not do this in its 13 years if it does not cost money? The point has to be made. Resentment could build up among those who see younger people coming forward on larger pensions. We know that there is a problem with women in the 1951 to 1953 age group. We have to understand exactly how much this is going to cost. The noble Baroness, Lady Hollis, is absolutely right: it is not necessary for this legislation, but in the future obviously we should look—as the country can afford it—at how we can phase in for various groups of pensioners the higher rate and get rid of means-testing for them. We need to know about the money but we also have to be realistic. You have to start somewhere on this higher-rate pension, and where the Government have tried in difficult circumstances to start is the best that can be done at the moment, I think. Obviously we should look at the future at some stage, once we are aware of the cost and how we can afford it.

Pensions Bill [HL]

Debate between Baroness Hollis of Heigham and Lord Stoneham of Droxford

Wednesday 30th March 2011 Lords Chamber

[Lord Stoneham of Droxford]

We are very sympathetic to the noble Baroness’s amendment. I congratulate her on an important contribution to this debate on an issue that the Government must address. A number of reasons have been explained, in this debate and in the preceding debate, on why that is important. Men are not being disadvantaged by more than one year, but over half a million women are. The period of notice is inadequate. Women in this age group are some of the most disadvantaged in terms of their pension provision. We have to accept that there is a contradiction with the coalition agreement. We are expecting some assurances from the Government in this debate, but we also accept that this is largely a negotiating matter with the Treasury. We welcome the announcement in the Budget of the new basic pension.

The noble Baroness, Lady Hollis, complained at Second Reading that the Pensions Bill ignored the £140 new basic pension, and said that it was like Hamlet without the prince. Now we have Hamlet with the prince but without a script. We want to see some details of the government proposals before committing ourselves to new transitional arrangements. We know that in present value terms the amendment will cost £7 billion, but the Government need to address the problem and come back with a considered amendment during the passage of this Bill in the other House with regard to how women affected by these transitional arrangements will benefit from the new higher basic pension.

[Baroness Hollis of Heigham]

My Lords, I will be brief because a lot of the arguments were effectively aired on all sides on the previous amendment. I support this amendment. I spent many hours—I will not say happy hours—last weekend trying to find a compromise, what I would call a fallback amendment, that would address the issue that we have all identified today. That issue is the women who are seeing an acceleration in the time that they have to wait—if that is not a reverse phrase—for their pension.

The Government are proposing to accept the existing timetable to 2016 but, instead of continuing it to 2020, to collapse it to 2018, so that what would have happened over four years is happening over two. That is what is producing the problems of bunching, the unfairness, the lottery, the roulette, one sister against another, one neighbour against another and the like.

We have heard the arguments. I tried, as I said, over many hours at the weekend to find a fallback compromise that overcame the problem of bunching without taking us up to 2020, but could not find one. What the noble Baroness, Lady Greengross, has done, for which she has our warmest congratulations, is none the less concentrated on the post-2020 period and reduces somewhat the period by which pensionable age would rise to 66. That produces the £3 billion of additional savings that the Government are so anxious to secure. It also protects the situation of women. It is smooth, as no woman waits more than one year for every additional year of her age. It is fair to all women. It is a compromise: we get to 66 somewhat earlier than I would like. None the less, it overcomes the basic unfairness of women having random times until which they must wait, according to the random month in which they were born. You cannot make state public policy on the basis of such a lottery. The amendment of the noble Baroness, Lady Greengross, addresses that issue, compromises on the later point and makes savings. I hope it will enjoy the support of the whole House.

Like others, I am thrilled by the proposal for a new state single pension of £140. I warmly congratulate the coalition in this House and the Ministers in the other place on it. Had there been eight bullet points, I would have agreed with eight out of eight instead of seven out of seven. I do not want to put this in a way that makes the noble Lord thump the Dispatch Box, but I hope he will today restore the honour of the coalition agreement by making it clear that he can accept this amendment or a version of it. The substance of what was promised in the coalition agreement by both parties forming the Government—that women’s pension age would not rise to 66 until 2020—will then be honoured, either through this amendment or the Government’s promise to come back with another. All sides of this House could then feel well content that they have protected some of the most vulnerable women, who rely solely on their state pension for their income in retirement. We will have treated them honourably, fairly and decently.

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[Lord Stoneham of Droxford]

I support the proposal in the Bill that the threshold should be reviewed in line with the Johnson report. I do so particularly in the light of the reassurance given by the Minister in Committee that there is no proposal from the Government to link the increase in the thresholds to the increase in tax thresholds.

[Baroness Hollis of Heigham]

The noble Lord’s honourable friend in the other place, Mr Steve Webb, has made the contrary assertion.

--- Later in debate ---

[Lord Stoneham of Droxford]

Perhaps the Minister can clarify that, and I am sure he will. I do not know what the noble Baroness is quoting from since we remain committed to raising the tax threshold to £10,000, but we do not want this particular proposal undermined.

I shall come back to a further point that I think is important. The other interesting development is the new basic state pension. I am sure that my honourable friend the Minister in the other place will have had in mind his proposals on the threshold to align with what we are now proposing for the new basic pension. That makes sense. Too low a threshold, as we discussed in Committee, gives rise to considerable administrative problems and the issue of very small pension pots. I am sorry, but they are very small. They will be insignificant in the context of the improvement we will be making in the new basic state pension.

It is all very well for the noble Baroness to shake her head, but it is extremely dishonest to encourage people on low earnings to make contributions to their pensions which actually result in a low rate of return when they come to receive the benefit. Not only will they get that low return until we introduce the new state pension, but if they were in receipt of housing benefit they would actually lose income that they would have achieved through any increased pension.

[Baroness Hollis of Heigham]

I—

[Lord Stoneham of Droxford]

I have already allowed one intervention and I should like to move on, since this is a short debate.

Finally, it is important to understand that too low a threshold may well encourage more lower income people to opt out than would a more realistic one. For those reasons, I support the proposal set out in the Bill.