(1 month ago)
Lords ChamberTo ask His Majesty’s Government what plans they have for the future of the local authority Household Support Fund, due to expire in September.
My Lords, the household support fund is a scheme to provide local support to those most in need. For the period April to September 2024 DWP has provided £500 million, of which £421 million is for local authorities in England to spend at their discretion, with the balance going to the devolved Administrations. No funding was budgeted beyond September. As a new Government, we keep all policies under review, including the household support fund.
My Lords, I welcome my noble friend to her rightful place. May I urge her to impress on her government colleagues the urgent need for the fund’s extension for at least six months, to give local authorities certainty and to enable the development of a longer-term, ring-fenced local crisis support scheme to replace also the discretionary welfare assistance that many authorities have scrapped and that is vulnerable to further cuts? As she knows, the alternative is even greater hardship for people in very vulnerable circumstances and even greater reliance on food banks.
My Lords, I thank my noble friend for that question and for the warmth of her welcome. We appreciate very much the crucial role that local authorities are playing in providing crisis support to vulnerable people in their areas. Indeed, my department is engaging closely with each local authority in England to make sure that we understand the ways in which they are using the household support fund.
She mentioned that it is not the only source of support; some local authorities still have local welfare assistance schemes and there are other forms of localised support. But the Government are very conscious of the financial pressures facing local authorities and we are committed to ensuring that councils have the resources they need to provide public services to their communities. As I say, the policy is under review but my noble friend’s points are well made and I will take note of them.
My Lords, I have relevant interests recorded in the register. Prevention is better than cure, for the reason that it can improve lives at a lower cost. Does the Minister agree with that and will she consider working with councils and the Local Government Association to develop a scheme that enables preventive work, rather than the existing household support scheme?
I am grateful; that is a really important point and I thank the noble Baroness for making it. Prevention is always better than cure, even if it is not always possible to replace cures entirely with prevention. There may always be the need for some support locally. The way that the fund runs has been designed deliberately so that every local authority can choose how it spends it; and they have chosen to do it in different ways. DWP has given guidance about the nature of the groups that need supporting, and it is for essential support. Some authorities have given grants to third parties; others have given money directly to people and some have even given food. But her broader point is well made. I certainly know that my colleagues in the Ministry for local government—MHCLG—are talking closely with local authorities about how we can get better at doing multiyear funding, giving stability to local government and engaging more effectively in the way that we spend this money.
While we are talking about poverty and children, can I ask a very cheeky question? Why is it that the Government are punishing seven members of the Labour Party who have put the party behind the interests of the people? Why are they doing this? This is a very disgraceful thing to be doing so early in their Administration.
My Lords, I assume that the noble Lord is talking about a vote in the other place on the two-child limit. I certainly would not comment on the decisions of the Chief Whip here—never mind at the other end—who is of course always right. I simply take gentle issue with the suggestion that people taking a particular view are putting party before country. I recognise that there is a concern about the two-child limit, but our new Prime Minister could not have shown a greater commitment on child poverty. One of the earliest major announcements he made, in his second week, was to create a major commission on child poverty, with Ministers drawn from across government. It will of course look at important questions such as household income, but poverty is not just about that. It is going to draw in and look at education, childcare and health—all the things that prevent our children having the best start in life—and I am really excited about that.
Does the Minister recall that, the last time we debated this, the outgoing Government agreed to extend the household support fund for a further six months until September? Does she recall that, at that time, I intervened to suggest that, instead of a cliff edge at the end of September, there should be some form of taper? Will the Government consider that?
I remember that very well. In fact, I read the Hansard of the last time this came up and noticed that the noble Lord made that point. When I looked at how the financing had been provided, I saw that the money had been provided for only six months. Therefore, there is currently nothing in the budget to go beyond that. But I take his broader point about cliff edges and short notice being unhelpful. As I said, we need to get back to a space where we can support councils with longer, multiyear funding to give them the kind of stability they need but simply have not had recently.
Something like seven out of every eight local authorities now use this money to alleviate holiday hunger among our children. Can we have any hope that the Government will look at a more strategic way of helping children cope with hunger during the school holidays? Many of the churches in my diocese, and those of my right reverend friends here, are having to put on voluntary projects to support children during those periods. What can we hope for?
I pay tribute to the Church and other faith organisations, which do such important work with children, families and their communities. I commend them for that. The question of holiday hunger, and indeed of children and food, will clearly be considered by the child poverty strategy and the task force when it gets together. We will set up a child poverty unit in the Cabinet Office that will work with the task force. We have already begun talking to stakeholders of different kinds, asking for experiences and getting expertise from inside and outside government to look at the best ways we can make this better. But we are also making some specific starts. For example, we are committed to making sure we have breakfast clubs in every single primary school. That is a simple measure that helps with the cost of living for families and helps children to start the school day able to concentrate because they have had something to eat. So I fully accept the importance of ensuring children have food and of being consistent; that will be part of what we look at.
My Lords, it will be music to the local government sector’s ears that the Government are looking at multiyear funding. I ask them also to consider ending the begging-bowl regime, where councils have to bid every year against each other for funding. As we have heard in this House just in the last two days, funding is ending in September and ending in March. We need to move away from that to give much more financial sustainability to local government.
My Lords, certainly in this Parliament, we will provide councils with more stability and certainty through multiyear funding settlements. The aim is to ensure that councils can plan their finances for the future properly. But we will also work with local leaders to try to end competitive bidding for pots of money, and to reform things such as the local audit system to ensure value for money for the taxpayer. I know that my colleagues in MHCLG are very interested in working together with local government to find a better way of funding local councils.
My Lords, I am sure everyone welcomes the government scheme to introduce free breakfasts, but I am concerned about the rates of obesity, especially in lower-income areas. When kids come in at five, 25% are obese, and when they leave at 11, 47% are obese. What are the standards of these breakfasts? Many breakfasts that schools offer are bagels and high-sugar cereal, because these get donated by companies trying to “look good” in the eyes of their shareholders. I have not read anywhere what the standards of food are and I would be very interested to meet with the Minister to discuss this, because it is critical if we are to have a genuine health impact.
The noble Baroness makes a good point and I commend her for raising it repeatedly in this House. It is an important question and I have two things to say. First, the breakfasts will be fully funded; they will not be done on the cheap. Secondly, colleagues in the Department for Education will consider carefully the question of the composition and health nature of the breakfasts; I am sure that will be taken into account. I will make sure that point gets passed back.
My Lords, despite household support fund guidance making it clear that local authorities should consider the needs of low-income families that cannot work, particularly those with disabilities, we know that people with learning disabilities are disproportionately impacted by the cost of living crisis. So can the Minister say whether the Government will commit to an additional tranche of funding that is strategically targeted at disabled people in crisis, while a longer-term plan for their financial well-being is implemented?
My Lords, I regret that I am not in a position to commit to another tranche of funding. What I will say is that one reason why the scheme was designed to give maximum discretion to local authorities was a recognition of the difference in composition in local areas and different sets of needs, but also the different resources available. We have given some guidance out from DWP about the nature of the client groups, and we have said previously that at least part of the money should be available on application. I can certainly feed that point back in. At this stage we do not know what the future of the fund is—but it is an important point and I shall make sure that it is taken back to the department.
(3 months ago)
Lords ChamberAlthough I do not have the figure to pass on to the noble Baroness, I can say that the other main category for overpayments comes under the title of “conditions of entitlement”. That represents 2.8% of the total. This is when claimants have stopped caring and neglected to tell us, or when the claim has been fraudulent from the outset. I am aware of some extreme cases highlighted in the press—which, by the way, have been building up over many years—where the amount of repayment is particularly high. That amount is not particularly high, but I will certainly get the figure to the noble Baroness.
My Lords, let me give an example. Carer’s allowance is a cliff-edge benefit. If you are caring for 35 hours a week and you earn £151 a week or less, you get the lot. If you earn £1 more, you get nothing. So the people the Minister is talking about include someone like Helen, who cared for her parents for 10 years. She breached the earnings rule because she worked in a hospital. They used to dock her wages automatically to pay for her parking. When they stopped doing that, her net pay went up. She was over the earnings limit by an average of £2 a month for two years, and she was told to pay back £1,700. DWP has known about this for years. Why is it not telling carers before they get into this kind of debt?
I think the noble Baroness will know that, each year, there is an uprating letter, so the communication is there for individuals. However, it is fair to say that we are looking at what more we can do to help our customers. I say again that it is their responsibility to tell us whether they exceed the earnings limit. Equally, we are looking to see whether, for example, under the RTI, the information that we receive instantaneously from the HMRC can be utilised so that we can send a text to customers. This is something that we are looking at very seriously— so her point is well made.
(3 months, 1 week ago)
Lords ChamberMy Lords, I am grateful to all noble Lords for the depth and breadth of this fabulous debate, and particularly to my noble friend Lady Hughes of Stretford for the very comprehensive and helpful way in which she framed it. As she pointed out, we are debating the challenges facing nearly one-quarter of our population. That makes it a major issue for any Government.
Let me start by setting out a couple of principles behind Labour’s approach. Just for the record, Labour is committed to using the social model of disability. We will look to produce policies in partnership with disabled people that have dignity and respect at their heart, and we are determined to provide support and break down barriers to opportunity for disabled people. I shall try, in the limited amount of time that I have, to offer some of the things that a Labour Government would do, if we were elected—not to make party-political points but simply to offer accountability from our side as to the kinds of things we would want to do were we to be entrusted with government in future.
Disabled people who can work should have the same right to access decent jobs as those who are not disabled, but that is not where we are—a point well made by the noble Lords, Lord Holmes and Lord Shinkwin. At the end of last year, the disability employment gap was 28 %, and it has barely moved in recent years. Disabled people are more likely to be unemployed and much more likely to be economically inactive. Only 13% of those with complex disabilities are in full-time jobs. The position of autistic people was highlighted very well by my noble friend Lord Touhig. I pause briefly to say that I hope that autistic people realise what a good advocate they have in both him and in the noble Baroness, Lady Browning, and how well their interests are represented in this House. I commend them for that. The contrast that the noble Lord drew between the vast majority of autistic people who want to work and the minority who are doing so is stark, and I look forward to a cup of coffee in the Fair Shot cafe at some point.
The quality of work is also poorer. The Learning and Work Institute tells us that, in the last decade, disabled people in Britain have seen sharper increases in rates of flexible working, self-employment, zero-hours contracts and jobs at risk of automation than have non-disabled workers. I wonder whether that is a contributing factor to the fact that the ONS says that the disability pay gap is 13.8%, as my noble friend Lady Donaghy pointed out. That is two percentage points higher than 2014. We are not going in the right direction, but I can take the opportunity to reassure the noble Lord, Lord Shinkwin, that Labour’s new deal for working people will introduce mandatory disability pay-gap reporting for firms with more than 250 staff, as well as stronger family-friendly rights, including carer’s leave. Will the Minister match that today at the Dispatch Box and send his noble friend home happier than perhaps he arrived?
On how government helps disabled people to get and progress in work, Scope says that it is just not working, with disabled people saying that coaches do not understand the true impact of conditions and impairments. There is the Access to Work scheme, but polling for Scope found that 40% of those who had left work because of their disability or impairment had never heard of it, and those who do apply face long delays. In March 2021, under 5,000 people were on the waiting list, which was bad enough. Last month, the figure was over 32,000.
A Labour Government would overhaul Access to Work, with improved targets for assessment waiting times and also in-principle indicative awards, so that disabled people would know what kind of equipment, adaptations or support they could get before they start work, to give them more confidence to take the plunge. We would also reform jobcentres, with a new focus on tackling the barriers to good employment, devolving powers over employment support and requiring better collaboration with the NHS and other support agencies. We would make it simpler to secure reasonable adjustments in a timely manner, such as when jobs or circumstances change, and we would introduce an into-work guarantee, so that sick and disabled people could try a job out without being pushed back to square one if it did not work.
That takes me to social security. I am very grateful to the noble Baroness, Lady Thomas of Winchester, who it is lovely to see in action, and the noble Baroness, Lady Browning, for their accounts of the way the system is working at the moment—or rather is not working. PIP was created by the Government: in 2013, they abolished DLA and created PIP, which they promised us would be better, more sustainable and more sensitive to issues of mental health, and sensory and cognitive impairments. After various reviews and consultations, in 2021, the Government published a health and disability Green Paper, launching a consultation on PIP and ESA. Last year, they published a health and disability White Paper, which promised to change how universal credit supports those who cannot work and abolish the work capability assessment, which was people’s gateway to those benefits. They then said that there will be only one health and disability functional test in future: the PIP assessment. Roll forward a year and we now seem to be going backwards.
Having said that DLA was the problem and PIP was the answer, the new Green Paper says that PIP is the problem and that the PIP assessment will be abolished as well. No one loves the PIP assessment, but how is anyone going to get assessed for anything? People who depend on PIP are panicking. Carers want to know how they will get support, because PIP is the gateway to carer’s allowance—and that is on top of the issues with carer’s allowance highlighted by my noble friend Lady Andrews, for which I thank her.
The Minister says gently that there will a conversation, and I have a lot of respect for his character and the way he approaches these issues. I am sure he believes that things can be worked out. Meanwhile, his colleagues in the Commons are chasing headlines about getting tough on “sick note” Britain. I am sorry, but it all feels rather more about politics than policy.
A record 2.8 million people are locked out of work due to long-term sickness, but how much of that is down to the Government’s own policies, a point flagged up by my noble friends Lady Donaghy and Lady Hughes of Stretford? The chair of the Work and Pensions Committee told the Commons that
“PIP assessment providers confirm that worsening delays in NHS treatment are a big factor in the increase in the number of people applying for PIP”.—[Official Report, Commons, 29/4/24; col. 52.]
This needs urgent attention. A Labour Government would drive down NHS waiting lists, with 2 million more weekend and evening appointments, and would provide specialist mental health support in every school, and walk-in access in every community.
The noble Baroness, Lady Brinton, and others spoke about the wider challenges of healthcare for disabled people. We have heard about problems with transport, costs and long waiting lists, and a lack of understanding. Sense reports that many people with complex disabilities are still getting letters that they cannot understand, and cannot get the communication support they need for appointments.
The pandemic shone a light on healthcare and disability. The ONS reported that disabled people in the UK were more likely to die as a result of Covid, and the Marie Curie briefing that we have all seen shows that the approach to making “do not attempt CPR” decisions during the pandemic revealed a lack of understanding and that assumptions were being made about people’s quality of life that were key barriers to involving them appropriately in decisions about their own health and life. Can the Minister tell the House what the Government are going to do about this?
I do not have time to go into social care but I am grateful to the noble Baroness, Lady Brinton, the noble Lord, Lord Palmer of Childs Hill, and some of my noble friends for raising this. I hope the Minister will have something to say about that as well.
As we heard from a number of noble Lords, we have problems with accessibility, the condition of housing and poor landlord behaviour in the private sector, and with challenging conditions and costs in social housing. The RICS says we have an “accessible housing crisis” which is getting worse. Can the Minister tell the House what systematic work is being done in government to address the crisis in accessible housing?
A number of noble Lords highlighted some of the challenges in education, both in differentials in qualifications and the real challenges, raised by the noble Lord, Lord Palmer, and others, for young people with special educational needs and disabilities. ONS research shows that parents are struggling to access appropriate schools and get support plans, and that schools are just not responsive enough to young people’s needs.
There are big issues around transport, as the case raised by my noble friend Lady Andrews highlighted so clearly. I am grateful to the noble Lord, Lord Addington, for his strong challenge on what it is we measure, why we measure it and how we use, understand and value the technology that enables people to engage in society and take the steps forward that are needed. What are the Government doing about this?
I am a follower on Twitter of the noble Baroness, Lady Grey-Thompson, and follow her adventures in attempting to turn up and go at many stations around the country on a regular basis. I commend her tweets to noble Lords who want an insight into the day-to-day life of someone with a disability, and I commend her on a fabulous speech. She revealed that the journey of life is like a swimming test, in which everybody else is allowed to swim downstream and disabled people are made to swim upstream, and then someone asks why they are not going as far or as fast. At every single stage, things are thrown in their way. I thank her for highlighting that so comprehensively and brilliantly.
There is so much more I want to say but time is running out. What we have heard today is a scandal. If I want to criticise the Government for what has, or has not, happened in the last 14 years, I need to look back at Labour’s record. There is much there that I am really proud of—the Disability Rights Commission, EHRC legislation, the Disability Discrimination Act 2005, the landmark Equality Acts of 2006 and 2010, and legislation on public transport and discrimination against disabled pupils—but listening today I know that there is so much more to do. If we get the opportunity to serve again, a future Labour Government will work with disabled people to create policies that remove barriers to opportunity and will try to level the playing field.
It is wonderful to hear as part of this debate from so many disabled Members of this House who have achieved so much and continue to do so. It is a sign for all of us that we need to change society, not only to make life better for disabled people—though we should do so—but because of what we are missing out on from all those who cannot play a full part in society, through no fault of their own. We have to do better than this.
(3 months, 2 weeks ago)
Lords ChamberThat is absolutely right and I could not have put it better myself. That is why it is so important that at particular stages of life—that is, from the age of 14, and particularly 16, until the age of 25—initiatives are taken forward to look after this often very vulnerable group. I have outlined a number of those, and the initiatives are kept under review. I do not think I have yet mentioned the DWP Youth Offer, which is designed to help work coaches to support young people aged 16 to 24 and to encourage them to get into work as soon as possible.
My Lords, the Minister will be aware that in 2017 the Children’s Society did some research into care leavers and benefits. It reported that care leavers were five times as likely as anyone else to be sanctioned by the benefits system, and that they were less likely to challenge that. Since then, the DWP now has a care leaver covenant saying that there should be a special point of contact who has to be notified before such a sanction can be applied. Can the Minister tell us how that is going and whether it has reduced the numbers?
I cannot tell the noble Baroness whether it has reduced the numbers, but it has been a considerable success. It is all part of what I was saying about our joined-up thinking in working with local authorities, as well as across government. She will be aware that we have a cross-government support group for care leavers, covering in particular the DfE, the DWP, DLUHC and, as mentioned earlier, local authorities.
(3 months, 3 weeks ago)
Lords ChamberMy Lords, I am grateful to have the opportunity at last to ask some questions about this Statement, because the route here has not been pretty or swift. The Prime Minister made a speech on 19 April about the need to reform sickness and disability benefits. Cue lots of headlines about sick note culture and the need for a crackdown. Then, there was silence: 10 days of expecting a Statement which did not come; 10 days of asking for detail; 10 days during which, if noble Lords are anything like me, they will have had a succession of messages from sick and disabled people who were very anxious about what was going to happen to their benefits.
When the Secretary of State finally talked, it was not to Parliament but to the media, of course, so we began to find details there. The Telegraph ran the headline, “Disability benefits could be vouchers, not cash”. The Sunday Times said, “Depressed and anxious face losing … benefits”, with the sub-headline, “Tories plan welfare reform as election divide”. I sorry to say it, but there we have it. The Secretary of State was quoted in the Sunday Times as saying that
“it was ‘extraordinary’ that Labour was refusing to say whether it supported his benefit changes”.
At this point, there was no document, there had been no Statement in Parliament, and no details were available. In fact, when the Statement was made in Parliament, the Secretary of State did not even observe the usual courtesies of giving an advance copy to the Speaker and the shadow Secretary of State. I do not know why the Government would sit on the Statement and document for 10 days and then publish them in the week of the crucial local elections—it is a mystery.
Now we have the details, although it is not very detailed. I read the Green Paper from cover to cover, and if you exclude questions and the padding in the annexes, there are 14 pages of content. The Green Paper could hardly be any lighter green.
How did we get here? In 2013, the Government abolished disability living allowance and created PIP. According to the Green Paper:
“PIP was intended to differ from DLA by being fairer (by paying greater regard to needs arising from mental health, sensory and cognitive conditions)”.
It was also to be
“more consistent … objective … transparent … sustainable … modern and dynamic”.
The Government committed to undertake an independent review of PIP after two years and again two years later. There have been two consultations covering PIP since then.
Then, in July 2021, the Government published Shaping future support: the health and disability green paper, which launched a consultation on PIP and ESA. Nearly two years later, in March 2023, the Government published a health and disability White Paper which set out the Government’s vision
“to help more disabled people and people with health conditions to start, stay and succeed in work”.
That paper announced the plan to remove the existing universal credit limited capability for work and work-related activity element and replace it with a new universal credit health element. It was also going to abolish the work capability assessment, which was people’s gateway to those benefits, so there would be only one health and disability functional test in future: the PIP assessment.
Now, a year after that White Paper, we are back to a Green Paper, which proposes abolishing the PIP assessment. What is going on? How will anyone be assessed for anything? Will the Minister tell us what happens to people who are clearly too sick to work at the moment but are not disabled? How will they have their support assessed when there is neither a work capability assessment nor a PIP assessment? Is the plan still to have a new universal credit health element, or is that under consideration again as well? The Government suggest that some health conditions can be taken out of PIP assessments. Can the Minister tell us which conditions they have in mind? PIP is also passport to the carer’s allowance. How will that work if there is no PIP assessment? Do people risk losing their benefits and their personal care from family or friends at the same time?
The Government said that DLA was the problem and PIP was the answer; now it seems that PIP is the problem. The fact is that we have a problem in this country: we have a record 2.8 million people locked out of work due to long-term sickness. But what or who is to blame? How much of that is down to the Government's record on the NHS? When the Statement was debated in the Commons, the chair of the Work and Pensions Select Committee pointed out that:
“PIP assessment providers confirm that worsening delays in NHS treatment are a big factor in the increase in the number of people applying for PIP”.—[Official Report, Commons, 29/4/24; col. 52.]
We have also been hearing strong hints that the real problem is people with mental health problems. I do not doubt the Minister on this, but politicians in general need to be very careful about how we speak about mental health, for risk of stigmatising people or making them afraid to speak out or seek help. Can the Minister say whether the Government’s plans involve treating people’s mental and physical health differently? If so, can he explain the legal basis for making such a distinction? Can he also say what the Government will do about the near impossibility, for many people, of getting any timely mental health support at the moment?
A Labour Government would take a different approach. Among those who need the help of the state, there are some people who are temporarily or, in some cases, permanently unable to work and who need support to have a decent life. There are many others who need extra help to get, keep and advance in a job, and it is the state’s job to give that to them. For those people, health and work are two sides of the same coin.
Rather than blaming people for being sick, a Labour Government will support our NHS. The last Labour Government delivered the highest patient satisfaction level on record, and that is the record on which we want to build. We will drive down NHS waiting lists by getting patients treated on time, with 2 million more weekend and evening appointments, and we will ensure more support for those with mental health problems through an extra 8,500 mental health staff.
We will focus constructively on work, the other side of that coin, because the costs of failure in this area are a disaster for individuals and the country. Where it is possible, work is good for us—for our mental and physical health. Labour will have a new deal for working people, improving rights for the first time in a generation. We will drive up employment in every region, devolve employment support and end the tick-box culture in jobcentres. We will tear down the barriers to work for disabled people and provide help for young people.
Labour will carefully review the issues raised by this latest Green Paper. Clearly, sick and disabled people need appropriate help and support, but we also want to be a country where disabled people have the same right to a good job and the help to get it as anyone else. We will judge any measure that the Government bring forward on its merits and against that principle. I look forward hearing more from the Minister.
My Lords, I will not repeat what the noble Baroness, Lady Sherlock, has just said about the lead-up to the publication of this Green Paper, but it can hardly be described as ideal. When announcing the Green Paper and the reforms to PIP on Monday, the Prime Minister said that something had gone wrong since the pandemic, leading to more people not working because of long-term ill health; he singled out the rise in people unable to work because of mental health conditions. Of course, I agree with helping people to get back into work, where that is possible, and I agree that for some people with mental health problems, it can improve their well-being. What I worry about greatly is putting the spotlight on people with mental health problems in such an unhelpfully divisive and—I agree—stigmatising way.
We need to go back to the root causes here. Can it be any surprise that so many people are claiming sickness and disability benefits when millions are still waiting for NHS treatment, and mental health wait times are through the roof, due to an acute shortage of mental health professionals, including doctors, nurses and counsellors? Does the Minister agree that if the Government are serious about getting people back to work, they need first to reduce waiting times for NHS treatment and tackle the crisis in our mental health services which makes accessing mental health treatment so difficult and protracted?
The Prime Minister also claimed that these changes are about “compassion”, but does this not rather miss the point that most young people claiming PIP are doing so because they have ADHD or autism, rather than anxiety and depression? Last year, 190,000 young people claimed PIP due to autism, ADHD or other learning disabilities, compared to just 129,000 claiming for all other disabilities. Could the Minister explain why, in the announcement of these proposals, there has been such a strong focus on anxiety and depression and how far this is based on the evidence?
I am concerned that potentially stopping cash payments will be seen as an affront to the dignity of benefit recipients. The BBC News website yesterday quoted one 71 year-old recipient, who said that for her PIP is about
“maintaining independence, not being a burden on my family and keeping my dignity”.
It could hardly be said that the reaction from the sector has been favourable. The charity Scope has said that these plans do not fix the underlying issues faced by disabled people. The chief executive of the charity SANE has pointed out that
“mental health problems are often invisible and fluctuate from month to month or day to day, and … assessments for benefits are all too often based on ‘snapshot’ judgments that do not take account of how hidden and disabling mental illness can be”.
Can the Minister say what consultation took place with the mental health sector and those who work closely with people directly affected by these issues prior to the Green Paper being published?
Finally, I turn to a wider issue. The Statement talks about a
“new conversation about how the benefits system can best support people to live full and independent lives”.
I am sure we can all agree with that, but we need to look at these issues in the round. Being able to live independently in the community can often rely on the help and support of unpaid family carers. Does the Minister agree that it is simply unacceptable for over 150,000 unpaid carers to be facing severe financial penalties—pushing many into debt or financial hardship —for often quite unknowingly breaching the earnings limit while caring for a loved one? What urgent steps are the Government taking to stop this outrage, and will they agree to an amnesty while it is being sorted out? If the Minister cannot answer that now—I accept it is not within the immediate focus of this Statement—would he please write to me?
(3 months, 4 weeks ago)
Lords ChamberMy Lords, I thank the noble Lord, Lord Bird, for securing this debate and all noble Lords who have spoken. Before I say anything more, I add my reflection to those of my noble friend Lady Lister and the noble Baroness, Lady Bottomley, in memory of Lord Field. He was an example to all of us of what it means to take a whole lifetime and yet, at the end, never cease to be outraged by the level of child poverty in a rich country. We all owe him a debt.
Tonight’s debate has highlighted the multifaceted nature of poverty. Whenever we have debates on poverty, there is always a temptation for some people to say that it is not about money and other people to say that it is only about money. Manifestly neither is correct. It is not just about money but it is not not about money either. The noble Baroness, Lady Janke, the right reverend Prelate the Bishop of Lincoln and other noble Lords made a very clear point of explaining what happens when you simply do not have enough money. If that is the case, all the strategies and all the preventive work in the world does not help you feed your kids that night; you simply cannot afford to do it.
On the basic level of access to resources, Britain is not in a good place. Over a fifth of our population lives in relative poverty. I know that the Government prefer absolute poverty as a measure, probably because it normally falls as real incomes rise, but, in the latest statistics in the document Households Below Average Income, we learned that the share of people living in absolute poverty is going up again, as the noble Baroness, Lady Janke, pointed out. There are 600,000 more people, half of them children, living in absolute poverty, in what is still one of the richest countries in the world by global standards. We should not be in this space.
Look at how this cashes out. The IFS has been pointing out that the number in material deprivation rose by 3 million in the three years to last year. In that same time, the proportion of those who could not adequately heat their homes jumped from just 4% to 11%. I must say to the Minister that, although the Government chose to give people cost of living support, they gave the same amount of money to everybody, whether a single person living in a studio flat or somebody with a family living in a larger house. As a result, the official statistics said:
“Incomes for those with children reduced the most. This reflects the flat nature of the cost of living and additional support payments, meaning for larger households they are split between more household members”.
Have the Government reflected on the best way to support people in these circumstances?
I fully accept that it is about not just incomes but support and opportunity. But child poverty has combined with the impact of 14 years of public service neglect, frankly, and the differential impacts of the pandemic to produce an attainment gap between children who experienced deprivation and their peers, with a lifelong impact on their life chances.
What should happen now? The last Labour Government lifted 2 million children and pensioners out of poverty. I know the noble Lord, Lord Bird, said at the start that he thinks, essentially, “A plague on all your houses. None of you has done anything”, but I am proud that the last Labour Government introduced Sure Start. As the noble Lord, Lord Shipley, pointed out, not only did it have an effect at the time but children had better GCSEs later as a result of having been part of Sure Start back then. I had a privilege of being part of the Treasury team working with Gordon Brown on questions of poverty when Sure Start was being introduced.
I just want to say that I used Sure Start. In spite of appearances, I was a very young father, and it was the most wonderful thing. I lived on the largest housing estate in south London and Sure Start was absolutely brilliant, so I am 100% behind it.
I am grateful to the noble Lord for clarifying that. One of the most depressing points of my career, frankly, was coming into the Lords in 2010 and having to sit on the Opposition Benches watching everything that I had worked on introducing being dismantled stage by stage in the name of austerity. However, we are where we are.
What should happen now? If the British people were to trust Labour again in an election—and obviously I hope they will—then we would want to introduce a mission-driven Government, and one of our five key missions would be to break down the barriers to opportunity for every child at every stage, with a strategy to tackle child poverty. It would be the responsibility of all government departments to tackle the fundamental drivers of poverty. We would address that by having cross-departmental mission boards looking at exactly how that was being driven across departments.
We would focus on increasing the number of young people in education, employment or training. We would look to reform childcare and early years support, introduce free breakfast clubs, and improve school standards. I agree with the noble Earl, Lord Effingham, about the importance of the nutritional content of school food and of access to sports.
On financial education, I am split. I agree with the noble Earl about the importance of financial education. However, recently I have met people who work for charities that traditionally have given debt advice. They told me in the past they would bring people in, sit them down, look at all the sources of income and all their outgoings, and help them to manage their budgets. They are now saying that more and more—sometimes most—of the people they come across literally do not have enough money to do it. Their budgets cannot be balanced; even the charity workers cannot balance them, with all their skills in financial education and management. So we have something of a crisis here. We need people who can manage to be taught how to manage well, while those who simply cannot manage it, however good they are, need to be helped to find a way through that. We would therefore want to support our social security system, strengthen rights to representation at work, improve social security and extend sick pay. We would boost wages by removing the minimum wage bands and expanding the remit of the Low Pay Commission.
We would want to tackle the housing crisis by retrofitting homes, strengthening renters’ rights and building more social and affordable housing. I take the underlying point that the noble Lord, Lord Bird, is making: decent, affordable and safe housing is a necessary but not sufficient condition to enable people to move out of poverty. It is both of those things. It is necessary because many of the people who would not be in social housing would otherwise be in bed and breakfasts, insecurely housed or, even worse, out on the streets.
We need nothing short of national renewal in this country. It will not happen overnight and will not be easy, but it should surely be the priority of any Government to guarantee opportunity to all our children. That is something I think we can all get behind.
(4 months ago)
Lords ChamberAs the noble Baroness will know, you can claim PIP whether you are in or out of work. More than 5 million disabled people are in work. One of the aims is to continue to encourage those who are disabled to take up some form of work. I say again that it is incredibly important that this is done in a measured and targeted way in line with the needs of the individual.
My Lords, the Minister mentions that this as a conversation but that is not how the headlines read, is it? The headlines are that the Prime Minister and the Secretary of State are all about cracking down on young people, mental health problems, people who are sick, and people who do not want to work. The Government created PIP, so if there is a problem with PIP it is their problem. Everything about it is the Government’s responsibility. We have had 14 years. We have a problem with record numbers of people being locked out of work because of long-term sickness. How much of that is to down to the NHS failing? How much is down to lack of mental health services? How much is down to the fact that the systems that the Government have created do not work? We need change but, somehow, it is always jam tomorrow. I want to hear the Government come up with ideas. I do not want speeches that point out that we have spent 14 years buying no jam, then saying that there is no jam, then saying that jamlessness is a problem—but no actual jam comes along. Where is the jam?
I am certainly not going to allude to any jam. It may come with my tea later if I am allowed it. As the noble Baroness has alluded to, this conversation is designed to consider what future support for individuals should look at. That is why we are bringing forward this consultation on PIP. As the Prime Minister said on Friday morning, and I was there in person to see him deliver what I thought was a brilliant speech:
“This is not about making the welfare system less generous”.
It is for a greater focus on those “with the greatest needs”, for whom
“we want to make it easier to access”
support “with fewer requirements”. Those who need support will continue to get the support that they need. The consultation will explore changes to the eligibility criteria, the assessment process, as alluded to earlier, and the types of support that can be offered so that the system is better targeted towards individual needs.
(4 months ago)
Grand CommitteeMy Lords, I thank the noble Baroness, Lady Kidron, and my noble friend Lord Sikka for introducing their amendments. I also thank all noble Lords who have spoken. I will speak to Amendments 223, 299, 302 and 303 in my name. I should probably say at this point that I am late to this party but, unlike the noble Lord, Lord Vaux, I am not a data protection specialist, I am afraid. However, I am a social security nerd, so I am here for this bit right now.
Since this is the first part of the Bill on DWP powers to tackle fraud, I need to add my little statement on the “fraud is bad” move. Fraud is a problem and has been getting worse across this Government. There have been scandals in procurement, of which the infamous PPE contracts are just one example. There is tax due that goes unpaid at scale and, in social security, the percentage of benefit expenditure lost to fraud has been rising under this Government. However, as my honourable friends made clear in the Commons, a Labour Government would take fraud seriously and pursue all those who seek to take money fraudulently or illegally from the state. They would also focus on helping people to avoid inadvertent overpayments rather than just waiting for them to make mistakes then coming down hard on them at that point. This should not need saying but, in some of the discussions on this Bill elsewhere, there has been a tendency to frame the debates rather along the lines of a classical fallacy: “Fraud is really bad. This will tackle fraud. Therefore, this must be really good”. I know that we are fortunate that in the Minister we have someone who is able to have a much more nuanced debate. I look forward to having exchanges in a way that recognises the important role of this House in scrutinising the powers that the Executive want to take unto themselves, which is exactly what Committees in the House of Lords do so well.
Scrutiny particularly matters here because, as the noble Lord, Lord Vaux, and my noble friend Lord Davies pointed out, all these amendments—more than 200 amendments, 38 new clauses and two new schedules—were introduced on Report in the Commons. My honourable friend Chris Bryant tried to recommit the Bill so that the Commons could discuss it, but the Government refused. The interesting thing is that in their anti-fraud plan back in May 2022, the Government announced that they planned to boost the DWP’s powers to get information from third parties when parliamentary time allowed. The noble Baroness, Lady Buscombe, made a fair point that departments have to wait for the right Bill to come along in order to use it, but the Government have known about this since 2022. They have had two years to draft the amendments, so although they might have had to wait for the Bill to come along, that does not seem a good enough reason for them to have waited until Report in the Commons to deposit them into the process. I hope the Minister will be able to explain the reasons for that.
My noble friend Lady Chakrabarti and others have asked some important questions about the scale on which these powers will be used; I am going to come back to that in our debate on the next group. It is hard to know the scale from the information we have so far, but DWP clearly does know, or has a sense of it, because paragraph 85 of the impact assessment states:
“Using our model to estimate volumes of hits for this measure, over the 10-year appraisal period, internal analysis has estimated that in total there will be an additional 74,000 prosecution cases, 2,500 custodial sentences and 23,000 applications for legal aid”.
It has modelled the volume of matching hits that would require investigation. Can the Minister tell the Committee what that number is? Also, what assurance can he give us that DWP has the resources to investigate that number of hits in a timely manner?
Paragraph 2 of new Schedule 3B says that the account information notices can only cover data going back a year and that they must be done in the week before they are given to DWP. Is there any time limit on how long DWP has to act on the results that have been handed over to it?
I turn now to the amendments in my name. Some of them are quite detailed because these powers are astonishingly wide and it is not at all clear how they could be used. I have deliberately tabled a series of amendments—in three groups in order to make sure that we have a chance to go into detail—to try to get information out of the Government and find out what this is about.
Amendment 223 is a minor probing amendment that would delete paragraph 3(1) of new Schedule 3B, which Schedule 11 to the Bill would insert into the 1992 Act. I will not rehearse it here but can the Minister explain what that provision is for and what its limits are? Neither I nor the people I have spoken to in financial services can understand why it is needed.
The noble Baroness, Lady Kidron, and others mentioned the fact that the Information Commissioner said he could not provide to Parliament his assurance that this measure is proportionate. My other amendments in this group are therefore designed to try to understand the impacts better. Amendment 302 would prevent these new powers coming into force automatically, while Amendment 303 would require the Secretary of State to fulfil several requirements before laying regulations to commence the powers. Amendment 299 is a minor consequential amendment. The effect of this is that the Secretary of State would have to issue a call for evidence, to inform the creation of the first code of practice, and consult relevant bodies. They would also have to lay before Parliament statements on key issues, of which I will highlight two.
The first would say whether and how AI will be used in exercising these powers, as well as how those proposals will take account of protected characteristics; this was touched on by my noble friend Lady Lister and others. That benefits often engage protected characteristics is in the nature of social security. Sickness and disability benefits engage disability, obviously; pensions engage age; benefits relating to children may engage age and also indirectly engage sex; and so on. The National Audit Office has warned that machine learning risks bias towards certain vulnerable groups and people with protected characteristics. So, what external governance or oversight is there to ensure that, once data are collected on the scale envisaged here, we do not end up with a mass breach of equality law?
The second issue I want to highlight concerns the provision that will be made to ensure that individuals subject to investigation do not experience hardship during it or lasting detriment afterwards. Given the comments of my noble friend Lady Lister about the cases from CPAG, can the Minister say whether a claimant’s benefits will be kept in payment while they are investigated following the data that are surfaced as a result of these trawls?
I am concerned that, given the potential scale of hits, a claimant who had, say, inadvertently breached the capital limit but then found themselves at the back of a long queue to be investigated could find themselves ending up paying back really large sums. The Minister will be aware of the recent media coverage, which others have mentioned, of how the DWP is treating people who were overpaid the carer’s allowance, a benefit that gives £81.90 a week to people providing at least 35 hours a week of unpaid care. It is a cliff-edge benefit—if your net earnings are under £150 a week, you get the lot; if they are over it, you get nothing—so a small rise in the minimum wage or a change in tax thresholds or rates can be enough to make someone entirely ineligible overnight, even if nothing changes in their circumstances.
As my noble friend Lady Lister said, apparently, DWP’s IT systems can flag when a carer’s income breaches the threshold but it does not necessarily do that, allowing them then to rack up potentially thousands of pounds’ worth of overpayments. The Guardian has investigated this issue; I shall mention two cases that it offered. First, an unpaid carer with a part-time charity job unknowingly breached the threshold by an average of £4.40 a week—£58 in total—caused by the automatic uprating of the national minimum wage. Because that left her not eligible for anything, she ended up being told to repay £1,715, including a civil penalty.
In the second example, a woman caring for her husband with dementia and Parkinson’s was told to repay nearly £4,000 for inadvertently exceeding the earnings threshold by calculating earnings from her zero-hours job on a monthly basis, as she thought the rules required, rather than a four-weekly basis, which they actually do; the rules around allowable costs and earnings are quite complicated. Crucially, according to the Guardian, she was told that, if she appealed, it could cost her even more. The Guardian quotes from a DWP letter telling her that, if she challenged the repayment order,
“the entire claim from the date it started will be looked at, which could potentially result in the overpayment increasing”.
Is that standard practice? Is DWP currently acting on all the alerts it receives of overpayments? If these powers are switched on, what safeguards will there be when that happens to protect millions of people from ending up paying back years of overpayments that DWP could have prevented?
Before embarking on investigations on this scale, we need to understand more about how this measure will work. We have had some excellent questions in Committee from the noble Lord, Lord Vaux, and others; I look forward to the Minister’s reply.
My Lords, I thank all those who have spoken today. I have been made well aware of the strong views expressed about this measure in Committee. I thank the noble Baroness, Lady Sherlock, for her kind remarks. She is right: I take all these matters extremely seriously. I have listened carefully to all the speeches, although I might not agree with them. Many questions have been asked. I will attempt to cover them all, of course; I doubt that I will be able to but I assure noble Lords that it is likely that a long letter will be required after this. Obviously, I will reflect on all the speeches made in Committee today.
I start by talking about the timing of the introduction of this measure. The noble Baroness, Lady Sherlock, said that the measure was introduced, in her words, “on the late side”. As she alluded to, the DWP published the Fraud Plan in May 2022, where it outlined a number of new powers that it would seek to secure when parliamentary time allowed. In answer to her question and others, in the parliamentary time available, the DWP has prioritised our key third-party data-gathering measure, which will help it tackle one of the largest causes of fraud and error in the welfare system. We will not sit back and ignore an opportunity to bring down these unacceptable losses and better protect taxpayers’ money. I will expand on all of that later in my remarks.
Before attending to the themes raised and addressing the amendments, it is important to set out the context for the power for which we are legislating. Fraud is a serious and damaging UK-wide issue, accounting for more than 40% of all crime. To be fair, many speeches alluded to that. The welfare system is also a target for fraudsters, and we are seeing increasingly sophisticated attacks occur on a scale that we have not seen in the past. We all have our own experiences at home of fraudsters who try completely different methods, not linked to the benefits system at all, to try to gain money through ill-gotten uses and methods.
In 2022-23, the DWP paid out more than £230 billion in benefits and payments to people across Great Britain. I very much took note of the figure that my noble friend Lady Buscombe raised. I say to the Committee that this figure is forecast to rise to nearly £300 billion by 2024-25, in quite short order, so this is a really serious issue to address. However, more than £8 billion has been overpaid in each of the past three years because of deliberate fraud against the state or because genuine errors have been made.
To assist the noble Baroness, Lady Lister, to whose speech I listened carefully, fraud, not error, is the biggest cause of welfare overpayments, totalling £6.4 billion of the £8.3 billion overpaid last year. The noble Lord, Lord Vaux, also asked about the figures. These losses are largely because people are intentionally and knowingly taking money that they are not entitled to. This is not organised fraud either; the vast majority comes from individuals who are not entitled to the money. We cannot underestimate the lengths to which some will go in order to take money they are not entitled to or promote ways to defraud us to a wider audience. This new legislation is not just about protecting the taxpayer; it will help those who make genuine mistakes in their claim, and our swift action will avoid them building up large overpayments.
Some people have said that the department has the powers that it needs to fight fraud and error—I think that was alluded to even today. However, some of the current powers that we have to ensure benefit correctness are over 20 years old—a point that I think my noble friend Lady Buscombe made. In this time, fraud has evolved and become increasingly sophisticated and we must keep pace with the fraudsters. It is for this reason that the Government are bringing these new third-party data powers, as set out, as said earlier, in the fraud plan.
My Lords, I will also speak to the other amendments in my name, which are designed to dig further into exactly what the Government plan to do with these powers. Amendments 220 to 222 are probing amendments which seek to establish what would happen if the powers to give account information notices were used only where there is suspicion that benefits are not being paid as the law intends. I will try to use this to find out exactly what will happen with the signal that the noble Lord, Lord Clement-Jones, has been referring to.
My Lords, the debate on this group has focused largely on the amendments from the noble Baroness, Lady Sherlock, regarding using powers only where there is a suspicion of fraud, making provisions so that information collected can be used only for the narrow purpose of determining overpayment, removing pension-age benefits from the scope of the powers and requiring approval from Parliament before the power can be used on specific working-age benefits.
I was going to go over the reason behind these measures once again, but I will not delay the Committee on why we are bringing them forward. I believe I did that at some length in the previous group, so I am going to turn to the amendments raised.
Narrowing these powers as suggested by the noble Baroness, with Amendments 220, 221, 222 and 222A, will leave us exposed to those who are deliberately aiming to defraud the welfare system and undermine the policy intent of this measure. In fact, taken together, these amendments would render the power unworkable and ineffective.
To restrict the power to cases where DWP already has a suspicion of fraud, as suggested by the noble Baroness, would defeat the purpose of this measure. The intent is to enable us to use data from third parties to independently check that benefit eligibility rules are being complied with. We use data from other sources to do this already. For example, we use data from HMRC to verify earnings in UC and check that the benefit eligibility rules are being complied with. Parliament has determined that, to be eligible for a benefit, certain rules and requirements must be met, and the Government have a responsibility to ensure that taxpayers’ money is spent responsibly. Therefore, the DWP should be able to utilise information from third parties to discharge that duty. This is an appropriate and proportionate response to a significant fraud and error challenge.
The noble Baroness, Lady Sherlock, also proposed that the power should be restricted such that it would not apply to persons who hold an account into which a benefit is paid on behalf of someone who cannot manage their own financial affairs—such persons are referred to as “appointees”. An appointee is a person who may be appointed by the Secretary of State to act on behalf of the benefit customer. Usually, the appointee becomes legally responsible for acting on the customer’s behalf in all matters related to the claim. It is also made clear to the appointee, in the documents that they sign, that we may get information about them or the person they are acting for from other parties, or for any other purposes that the law allows, to check the information they provide.
Under our proposed legislation, it is right to say that there may be some people who are not themselves benefit claimants but who have given a person permission to pay benefits into their bank account, who may be picked up in the data returned by third parties. Under the noble Baroness’s amendment, we would not be able to gather data on appointees, which would make the power unworkable, because third parties would not be able to distinguish between an individual managing their own benefit and an appointee. It also assumes that no fraud or error can occur in these cases, which is definitely wrong. I assure the noble Baroness that we handle such cases regularly and have robust existing processes for identifying appointees on our own database and for carefully handling cases of this nature.
The noble Baroness would also like to see the power—
Rather than asking all my questions at the end—I only have four—I will try to get answers as we go. On the appointees, I think that the Minister has just said that the reason the Government need these powers is that some appointees will have their benefit money paid into their own account, not into a separate second account, so that therefore needs to be the case. I am very happy to reword this amendment to make that clear. I was talking specifically about the linking arrangements; the amendment does not talk about excluding appointee accounts. It specifically says that accounts that are linked to an account into which the benefit is paid are not there. I am happy to reframe that in a way that defines it—I am sure we can find a way around this—but does the Minister accept the principle behind this: that, if there is a separate account that, say, I hold for a child who is there, this should not give a reason to look into my own accounts? Or is he saying that the Government want to look into my own accounts, or business accounts, or family accounts as well? Which is it?
The Government do wish to have that power. I should make it clear that an appointee could be a claimant as well, so there is a dual issue. It is important that we retain that power, to be sure that we cover the whole ground. But I will reflect on the noble Baroness’s point.
That is understood. I know that I need to provide further reassurances. Attorneys are included for the reasons that I set out for appointees.
My Lords, I thank the Minister for taking the time to try to answer the questions. I know that we have given him a hard time, but I thank him for responding so graciously.
He did not take the opportunity to explain the process simply to the Committee. It may be that it is too difficult to explain simply or that, in fact, he can explain what they intend to do, but the powers allow them to do something much wider than that. It would be helpful if he could reflect before he writes as to how best to frame this. I think I heard him trying to say to the Committee that people think that more information is being handed over than will in fact be handed over. If that is the case, it would be helpful if he could spell that out because that would at least begin to help people understand better what is going on.
Secondly, in responding to me, the Minister focused, understandably, on the content of the amendments. I was trying to explain that the reason they are probing is that it is quite hard to get a handle on this. It is a big, sprawly thing, and I am trying to find a way of nailing some jelly to the table; I am trying to find ways of containing it. I still do not know which benefits the Government can use the powers over and which ones they intend to. It is a great step forward to know where they are going to start; that is really helpful. I am also grateful for the clarity, whether people are happy or not, that the Government intend to use the powers on the state pension and make that clear because that was not the impression given in the House of Commons when the matter was debated there. That is a helpful piece of clarity for the Committee and the wider community.
I know this is hard; fraud is difficult. A case was mentioned where an organised fraud gang stole more than £50 million in social security benefits. I know it is hard, and I know it is hard for the DWP to understand precisely where these things will lead when you begin to go there. I understand that if it is too boxed in, it makes it difficult to be able to follow where the fraudsters go, who are often one step ahead of the Government. I get all of that, but there is a risk that when it has spread so widely, the level of concern gets to the point that it will not be as publicly acceptable as the Minister thinks it is. I ask him to take the opportunity, when he goes back to the department, to talk to colleagues and think about what kind of assurances the Government could try to find a way of giving to people, either staging processes or government oversight. I ask him to think about that because the kinds of concerns he has heard here will only increase as the powers start to unfold.
In the next group of amendments, which I think will now be discussed on Wednesday, I want to dig further into the question of who the data and account notice can be given to and what criteria will be used. That will be another chance to flush out some things, so I give notice now that I would like the Minister to look into those areas next. I am grateful for his efforts and to all Members of the Committee who have explored this matter. I beg leave to withdraw my amendment.
(5 months ago)
Lords ChamberMy Lords, I am sure the House will join me in thanking the ombudsman and his staff for all their hard work on this report over a number of years. The product is a serious report that requires serious consideration. The ombudsman has rightly said that it is for the Government to respond but that Parliament should also consider its findings. As my honourable friend Liz Kendall said in the other place on this debate, we on these Benches will study the report and its findings carefully and will continue to take seriously the representations of those affected by these issues.
It was good that the Secretary of State made a Statement soon after the report was published, and it is good that the Minister is here today. The Government have said that they will provide a further update to Parliament on this matter. Can the Minister give the House some sense of the timescale? Should we expect that to happen soon after the House returns from the upcoming Easter Recess? After all, this matter has been under consideration for many years now.
The ombudsman began investigating how changes to the state pension age were communicated back in 2019. In the same year, the High Court ruled that the ombudsman could not recommend changes to the state pension age itself or the reimbursement of lost pensions, because that had been decided by Parliament. The ombudsman's final report, published last week, says that in 2004, internal research from DWP found that around 40% of the women affected knew about the changes to the state pension age. Does that remain the DWP assessment? What is the Government’s assessment of the total number of women who could receive compensation based on the ombudsman’s different options? How many of those are the poorest pensioners, in receipt of pension credit? How many of them have already retired or, sadly, died?
The Statement rightly says that issues around the changes to the state pension age have spanned multiple Parliaments, and it is important that lessons are learned from the events described in the report. The equalisation of the state pension age was legislated for in 1995, giving 15 years’ notice to those affected. In 2011, the then Chancellor, George Osborne, decided to accelerate the state pension age rises, giving much less than 10 years’ notice to many of those affected. His comment that this change
“probably saved more money than anything else we’ve done”
understandably angered many people and will not have made this debate any easier.
At that time, Labour tabled amendments that would have ensured that more notice was given so that women could plan for their retirement, which would have gone some way towards dealing with this problem. Given that the department already knew that there were problems with communicating changes to the state pension age, does the Minister think that it was wise for the Government to press ahead with the changes in the 2011 Act in the way that they did?
The Government have said that they are currently committed to providing 10 years’ notice of future changes to the state pension age. Labour’s 2005 Pensions Commission called for 15 years’ notice. Have the Government considered the merits of a longer timeframe and how they would improve future communications? Labour is fully committed to guaranteeing that information about any future changes to the state pension age will be provided in a timely and targeted way that is, wherever possible, tailored to individual needs. Will the Government make the same commitment?
Finally, the ombudsman took the rare decision to ask Parliament to intervene on this issue, clearly because he strongly doubted that the department would provide a remedy. In the light of these concerns, and to aid Parliament in its work, will the Minister now commit to laying all relevant information about this issue, including all impact assessments and relevant correspondence, in the Library, so that lessons can be learned and all Members from both Houses can do their jobs on this matter? Given the lack of confidence that the ombudsman has displayed in the likelihood of the DWP engaging to provide redress or a remedy, can the Minister say more about how his department will deal with future ombudsmen’s reports? I look forward to his reply.
My Lords, I thank the Minister for bringing the Oral Statement to the House. However, to paraphrase “Hamlet”, methinks the noble Viscount doth protest too much. It is all protest as to why he is not doing things.
From these Benches, we support the WASPI women in their campaigns, and we welcome that, after their years of work, the ombudsman has finally recommended compensation. They must be recognised as courageous women, and their persistence should be rewarded. Sadly, as the noble Baroness, Lady Sherlock, said, some have died along the way.
The noble Lord, Lord Hague, wrote a big op-ed in the Times today about why the WASPI women were not going to be paid. Basically, what he said can be summed up as “They should have known better”. At this late hour, I can think only to quote from The Hitchhiker’s Guide to the Galaxy:
“All the planning … and demolition orders have been on display at your local planning department in Alpha Centauri for 50 of your Earth years, so you’ve had plenty of time to lodge any formal complaint”.
I am afraid that what has happened is that so much time has elapsed that so many of the WASPI women have died or retired, and life has gone on.
The DWP has said, so I have read, that it will comply with the ombudsman’s decision. I would like the Minister to say how many WASPI women have died—a simple calculation, rather than the additional details that the noble Baroness, Lady Sherlock, asked for. Please will he come back to the House and say that the DWP has agreed, after consideration, that it will comply with that ruling, as the ombudsman suggested?
(5 months ago)
Grand CommitteeMy Lords, I thank the Minister for his introduction to these regulations and all noble Lords who have spoken for their contributions. I should perhaps say that nothing in my speeches should ever be taken as actuarial advice or indeed advice of any kind, unless you have money to burn. As we have heard, these regulations implement significant changes to the DB scheme-specific funding requirements in association with the revised DB funding code. I will go through what I understand them to be doing—I invite the Minister to correct me if I have it wrong—and I have some questions.
The changes are driven by the recognition that most DB schemes are closed to future accruals and are maturing, which makes the longer-term strategic management of them important if members are to make sure they get their benefits in full when they fall due. The key principles underpinning the changes are a requirement for schemes to be in a state of low dependency on their sponsoring employer by the time they significantly mature, and better trustee engagement and better understanding and accountability between trustees and the regulator.
The regulations require trustees to agree a funding and investment strategy—an FIS—with the sponsoring employer, which will set out that longer-term funding objective and how it will be achieved over the lifespan of the scheme. Schedule 1 then sets out the matters and principles that trustees must have regard to in setting their FIS, and that they have to think about liquidity and unexpected requirements on the journey and after significant maturity, including the strength of the employer covenant, which I will come back to in a moment.
The trustees have to consult the employer on a statement of strategy on progress in achieving their FIS. In the absence of a Keeling schedule—I confess I am slightly obsessed with them—I went back to the Pensions Act 2004. Section 221B states that
“trustees or managers must, as soon as reasonably practicable after determining or revising the scheme’s funding and investment strategy, prepare a written statement of … the scheme’s funding and investment strategy, and … the supplementary matters set out in subsection (2)”.
Paragraphs (a) to (c) of Section 221B(2) say that the supplementary matters are: the extent to which trustees or managers think the funding and investment strategy is being successfully implemented, and if not, what they will do about it; the main risks faced by the scheme in implementing the funding investment strategy and what they are doing about the risks; and their reflections on past decisions and lessons learned. Paragraph (d) adds:
“such other matters as may be prescribed”.
These matters are now prescribed because they are defined by Schedule 2 to these regulations, which specifies the information to be covered in the strategy statement.
I assume this means that TPR will now have discretion on the level of detail it can request from a scheme in relation to the supplementary matters. Otherwise, without that discretion, it would have to rely on its existing powers and the setting of the clearer funding standards in these regulations. Is that a correct assumption? How will the DWP monitor whether the regulator is delivering that higher level of probability for which it is shooting? Are the Government leaving the door open to the prospect of increasing the regulator’s powers? That is an interesting one.
To return to the covenant, Regulation 7 puts the employer covenant assessment on a formal legal footing for the first time. The covenant now appears to be central to the new regulatory framework, rather than being left for the regulator to cover in the code. I presume the intention is for this to be an area of increased focus for trustees. This is welcome, given the increasing importance of covenant strength to the decisions made by trustees, although I suspect the law is catching up with trustee thinking as much as driving it.
However, getting access to enough information to assess the employer covenant is not always easy, and trustees and employers may not always align in their view of the strength of the covenant. The Minister mentioned that change can come quickly. We live in a world where changing markets and the impact of technology, mergers and acquisitions, leveraging and new creditors can all make a material difference to the strength of the covenant in pretty short order. The same forces can also reduce trustee confidence in the strength of the covenant in the longer term.
Regulation 7 requires trustees to assess the strength of the employer covenant, looking at current and future developments and the resilience of the business when they are setting or revising the FIS. As the Minister mentioned, funding deficits must be addressed
“as soon as the employer can reasonably afford”.
But we are also told that the impact on the sustainable growth of the business must be taken into account. Does that not put the trustee in the position of being faced with a push-me pull-you set of regulatory requirements, where the two are pulling in different directions?
Trustees will be required to seek more detailed information from the employer regarding its business. The regulator will provide updated guidance on the covenant, which will set out its expectations of both employers and trustees, and the regulations will clearly require trustees and employers to work more collaboratively in future. I have two questions about this, following the issue flagged up by my noble friend Lady Drake. Because placing the assessment of an employer covenant on a legal basis is novel, we need the Minister to make it clear how the regulator will resolve disagreements between trustees and employers on the current and future strength of the covenant, where that is inhibiting agreement on the FIS. If they cannot agree on the FIS because of different views on the strength of that, what will the regulator do about it? Secondly, will the regulator be able to impose its own view of the covenant on trustees?
Regulation 16 strengthens the requirements on the chair in respect of the strategy statement. It seems that the code has been drafted in a manner which assumes that chairs of trustees are appointed by the trustee board. I believe that there are still occupational schemes where the appointment of the chair is wholly the decision of the employer. Does this carry any implications for the requirements placed on chairs appointed in that way?
The costs incurred by trustees, which are funded by employers, will inevitably increase as a result of this. I am quite sure that the Minister will have read the 13th report of the Secondary Legislation Scrutiny Committee. I will not read it out in detail, but it points out the DWP’s assessment that about 16% of DB schemes had deficits in March 2023. It says:
“The Impact Assessment … claims that, as a result of these Regulations, DB schemes’ aggregate ‘deficit reduction contributions’ could be around £0.26 billion lower over the 10-year period compared to the current situation”.
It goes on to point out a range of issues around this, but what interests me is this:
“We note … that the IA states that it is based on data from March 2021, ‘therefore more recent market developments (particularly the rise in interest rates and gilt yields which impacted the estimated liabilities) are not captured in the modelling.’ In the light of market volatility, the House may wish to explore how robust DWP’s assumptions are about the potential benefits of these Regulations”.
I do not have a dog in this fight, but could the Minister put a response to that on the record? What assurances can he give the Committee in response to the concerns of the Secondary Legislation Scrutiny Committee?
Another point was made by that committee in its 17th report. I think the Minister indicated—or maybe he did not; I cannot remember—that this is a revised version of an instrument originally laid on 29 January. The DWP had to amend the content to amend the commencement date of one of the provisions to ensure that it aligned with the policy intention. Yet again, for the record I note a disappointment that once again we are having another instrument laid because of errors made in the original that needed to be corrected. It is becoming a bit of a pattern, I am afraid. But in this case, it provides us with an opportunity. In its 17th report, the SLSC said at paragraph 7:
“Our 13th Report of this session provided the House with extensive supplementary information on how the obligation is intended to work, and we are disappointed that DWP did not take this opportunity to improve its Explanatory Memorandum”.
Can the Minister explain to the Committee why the Government did not take that opportunity afforded to them by the need to reissue the instrument?
I have two quick points to make that were raised by other Members. First, on the Work and Pensions Select Committee report, the Minister said that the Government would respond to that in due course. I recognise that it has only just come out and they will not be able to. However, there is one point that would be helpful in particular—they will already have thought about this—which is that the committee raised the position of open schemes and relayed concerns that, despite some of the changes that had been made, some open schemes still thought that the new regime could require them to de-risk prematurely. Are the Government confident that they have landed in the right space on this?
Secondly, my noble friend Lady Drake asked a very important question about the regime governing investment by schemes that have reached significant maturity, essentially about whether they will no longer be required to balance cash from investments and liabilities going out. It would be very helpful if we could know about both of those.
I apologise to the Minister that I have, yet again, asked a number of questions, but I am grateful and look forward to his reply.
My Lords, I thank all those who have spoken in this short debate. As usual, there were a number of specific and quite technical questions, notably from the noble Baroness, Lady Sherlock. I shall do my best to answer them. I think that some of them may be included in some of my rounding-up answers to other questions—but, as she will expect me to, I shall write a letter copying in all Peers if I fail to answer all of them.
Just on the question that the noble Baroness raised about the draft regulations, we outlined in the consultation response, as she alluded to, on 26 January 2024, that we would legislate for the regulations to come into force from April 2024, applying to scheme valuations from September 2024. That recognised feedback through the consultation about the need to give the pensions industry sufficient time to prepare before the requirements took effect. The regulations as drafted meant that one component of the reforms, the recovery plans, would come into effect on 6 April 2024 and not 22 September 2024. Since laying the regulations, we have recognised that this has the potential to cause confusion and additional administrative requirements for schemes. That is why we withdrew the regulations and relaid a revised version.
For clarity, we made two changes to the regulations. The first amendment was to ensure that the changes to recovery plans took effect only when the effective date of the actuarial valuation to which the recovery plan relates is on or after 22 September 2024. The second, in light of the first, is to clarify that changes which relate to actuarial valuations and reports also apply only on or after 22 September 2024. I reassure the noble Baroness that no other changes were made. These changes restate our intention to give sponsoring employers, scheme trustees and managers the same amount of time to prepare for the new requirements in the recovery plan.
I do not believe that I have an answer to the Explanatory Memorandum question, but I shall see whether I can address that before my remarks have concluded.
I fully accept that some of these questions may have been technical and that the Minister may need to write but, in the case of one question that I asked, I would fully expect him to have come able to answer. The Secondary Legislation Scrutiny Committee took a lot of time taking these regulations apart. It made a number of recommendations and made comments about the Explanatory Memorandum. I fully accept the Minister’s explanation as to why the instrument was relaid—that makes absolute sense—but the committee explicitly asked why the DWP did not take advantage of the opportunity of having to relay the instrument to improve the Explanatory Memorandum. I know that he will have read the report, as I know he holds the committee in high regard, so I am sure that he came briefed and able to answer the question of why the department did not respond to that recommendation. Could he just answer that for us?
Yes, I will do my best to do so. Regarding the Explanatory Memorandum, as outlined, because the changes here were focused on clarifying the date on which the regulations came into effect, the changes to the Explanatory Memorandum were limited to reflect the change. We shall note the feedback for future SIs. That is my answer but let me reflect on it; I might well be able to enhance it in the letter that I am clearly going to have to write.
I will not interrupt further but, just to clarify the question, the point the committee was making was not that the Explanatory Memorandum needed to be changed to reflect the changes in the instrument itself. It was that, since the department was having to relay the whole thing, why not take the opportunity to do a better job of the EM? That is all.
Absolutely. I think I have already indicated that lessons have been learned. From my point of view, I regret that we fell down on the Explanatory Memorandum and that we had to relay the regulations. Just for the record, I wanted to say that.
With that, I hope that we can take these regulations forward.